PAR Technology Corporation (NYSE:PAR) today announced results
from continuing operations for the third quarter ended September
30, 2016.
Summary of Fiscal 2016 Third Quarter and Year-to-Date
Financial Results
- Revenues were reported at $61.5 million
in the third quarter of fiscal 2016, compared to $58.1 million in
the same period in 2015, a 6.1% increase.
- GAAP net income in the third quarter of
fiscal 2016 was $518,000, or $0.03 per diluted share, compared to a
GAAP net income of $1.3 million, or $0.08 earnings per diluted
share in the same period in 2015.
- Non-GAAP net income in the third
quarter of fiscal 2016 was $1.6 million, or $0.10 per diluted
share, compared to non-GAAP net income of $1.7 million, or $0.11
earnings per diluted share, in the same period in 2015.
- Revenue decreased to $169.5 million in
the first nine months of fiscal 2016, compared to $172.2 million in
the same period in 2015.
- GAAP net income in the first nine
months of fiscal 2016 was $633,000 or $0.04 earnings per diluted
share, compared to GAAP net income of $2.6 million, or $0.16
earnings per diluted share, in the same period in 2015.
- Non-GAAP net income in the first nine
months of fiscal 2016 was $3.1 million, or $0.20 per diluted share,
compared to non-GAAP net income of $4.1 million or $0.26 earnings
per diluted share, in the same period in 2015.
A reconciliation and description of non-GAAP financial measures
to their comparable GAAP financial measures are included in the
tables following this news release.
“Our performance in the quarter was a result of strength across
both of PAR’s segments evidenced by revenue growth of 5.9% over the
third quarter in 2015 and a 17.0% increase sequentially from the
previous quarter. We are seeing increased demand from our
Restaurant/Retail Tier 1 customers, and also had increased
deployments of our Brink cloud platform-as-a-service solution in
the recently ended quarter,” commented Karen E. Sammon, PAR
Technology Corporation President and Chief Executive Officer. “The
success of PAR’s cloud solutions have favorably impacted our
business as reflected by a 75% rise in our SaaS revenues from the
third quarter last year. I am also pleased to report that our
Government segment had a strong quarter as revenues increased by
4.9% over the prior year third quarter as we continue to add new
contract awards and extensions and our backlog in this segment at
the end of the quarter is a very healthy $122.4 million.”
Sammon continued, “PAR is bringing new technology to market at a
rapid pace to address critical customer needs leveraging cloud
technology, IoT and machine learning coupled with our passion for
customer success. Our value proposition is resonating in the
marketplace, positioning our Company as a mission-critical partner
for companies looking to succeed in the emerging outcomes-based
economy. We are committed to excellence throughout our
organization, with our products and for all of our stakeholders.
Our innovation supported by our proven track record in the markets
we serve is fueling our performance and sets our Company up for
future growth.”
Other Matters
Disclosed in the Company’s Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2016 to be filed with the
Securities and Exchange Commission (“SEC”) today, the Company
discovered and is currently investigating potential improper
import/export and/or documentation of sales activities arising out
of conduct in the Company’s China and Singapore offices. While it
has been determined that no amendments need to be made to the
Company’s prior period consolidated financial statements, material
weaknesses in internal controls with respect to oversight of the
sales operations in China and Singapore have been identified. The
Company has notified the SEC, and is developing and implementing
remediation plans and corrective actions to fully address the
identified material weaknesses in its internal control over
financial reporting. If the SEC or other governmental agencies were
to open an investigation, the Company could be exposed to
sanctions, including fines, penalties, disgorgement and/or
injunctive relief. As a result of the foregoing, the Company’s
principal executive officer and principal financial officer
concluded that our disclosure controls and procedures were not
effective as of September 30, 2016.
Certain Company information in this release or statements made
by its spokespersons from time to time may contain forward-looking
statements. Any statements in this document that do not describe
historical facts are forward-looking statements. Forward-looking
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are
cautioned that all forward-looking statements involve risks and
uncertainties, including without limitation, delays in new product
introduction, risks in technology development and
commercialization, risks in product development and market
acceptance of and demand for the Company’s products, risks of
downturns in economic conditions generally, and in the quick
service sector of the restaurant market specifically, risks of
intellectual property rights associated with competition and
competitive pricing pressures, risks associated with foreign sales
and high customer concentration, and other risks detailed in the
Company’s filings with the Securities and Exchange Commission.
About PAR Technology Corporation
PAR Technology Corporation's stock is traded on the New York
Stock Exchange under the symbol PAR. PAR’s Hospitality segment has
been a leading provider of restaurant and retail technology for
more than 35 years. PAR offers technology solutions for the full
spectrum of restaurant operations, from large chain and independent
table service restaurants to international quick service chains.
Products from PAR also can be found in retailers, cinemas, cruise
lines, stadiums and food service companies. PAR’s Government
Business is a leader in providing computer-based system design,
engineering and technical services to the Department of Defense and
various federal agencies. For more information visit
http://www.partech.com or connect with us on Facebook and
Twitter.
There will be a conference call at 10:00 a.m. (Eastern) on
November 14, 2016, during which the Company’s management will
discuss the financial results for the third quarter of 2016. To
participate in the call, please call (866) 868-9502, approximately
10 minutes in advance. No passcode is required to participate in
the live call or to listen to the replay version. Individual &
Institutional Investors will have the opportunity to listen to the
conference call/event over the internet by visiting PAR’s website
at www.partech.com. Alternatively, listeners may access an archived
version of the presentation call after 1:00 p.m. on November 14,
2016 through November 21, 2016 by dialing (855) 859-2056 and input
conference ID 8561827.
PAR TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(Unaudited) September 30, December 31,
Assets
2016 2015 Current assets: Cash and cash equivalents $ 2,883 $ 8,024
Accounts receivable-net 32,848 29,530 Inventories-net 29,785 21,499
Note receivable 4,406 - Income taxes receivable 482 - Deferred
income taxes 6,424 6,741 Other current assets 5,188
3,808 Total current assets 82,016 69,602 Property,
plant and equipment - net 5,751 5,716 Note receivable - 4,259
Deferred income taxes 11,038 11,038 Goodwill 11,051 11,051
Intangible assets - net 11,298 10,898 Other assets 3,806
3,687
Total Assets $ 124,960
$ 116,251
Liabilities and Shareholders’ Equity
Current liabilities: Current portion of long-term debt $ 170 $
2,103 Borrowings on line of credit 4,795 - Accounts payable 19,269
11,729 Accrued salaries and benefits 5,761 5,727 Accrued expenses
5,056 7,644 Customer deposits and deferred service revenue 11,895
10,819 Income taxes payable - 279 Liabilities of discontinued
operations 5 441 Total current
liabilities 46,951 38,742 Long-term debt 426 566 Other long-term
liabilities 8,802 8,883 Total
liabilities 56,179 48,191 Commitments
and contingencies Shareholders’ Equity: Preferred stock, $.02 par
value, 1,000,000 shares authorized - - Common stock, $.02 par
value, 29,000,000 shares authorized; 17,485,622 and 17,352,838
shares issued;
15,777,513 and 15,644,729 outstanding at
September 30, 2016 and December 31, 2015,respectively
350 347 Capital in excess of par value 46,161 45,753 Retained
earnings 31,182 30,574 Accumulated other comprehensive loss (3,076)
(2,778) Treasury stock, at cost, 1,708,109 shares (5,836)
(5,836) Total shareholders’ equity
68,781 68,060
Total Liabilities and
Shareholders’ Equity $ 124,960 $ 116,251
PAR TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
amounts)
(Unaudited)
For the three months endedSeptember
30,
For the nine months endedSeptember 30,
2016 2015 2016 2015 Net revenues:
Product $ 25,757 $ 24,408 $ 69,285 $ 70,081 Service 12,620 11,611
36,128 34,687 Contract 23,115 22,041 64,042
67,438 61,492 58,060 169,455
172,206 Costs of sales: Product 18,433 17,454 51,012 50,238 Service
8,969 8,491 25,787 25,499 Contract 21,490 20,395
59,002 63,058 48,892 46,340
135,801 138,795 Gross margin 12,600 11,720
33,654 33,411 Operating expenses: Selling, general
and administrative 8,672 6,808 23,271 20,313 Research and
development 2,866 2,744 8,421 7,840 Amortization of identifiable
intangible assets 241 248 724 746
11,779 9,800 32,416 28,899 Operating income from continuing
operations 821 1,920 1,238 4,512 Other (expense) income, net (38)
128 (318) (58) Interest (expense)income, net (12)
(81) 20 (252)
Income from continuing operations before
provision forincome taxes
771 1,967 940 4,202 Provision for income taxes (253)
(670) (306) (1,470) Income from continuing operations
518 1,297 634 2,732 Discontinued operations Loss on discontinued
operations (net of tax) - (2,786) (26)
(4,505) Net income (loss) $ 518 $ (1,489) $ 608 $ (1,773) Basic
Earnings per Share: Income from continuing operations 0.03 0.08
0.04 0.18 Loss from discontinued operations (0.00)
(0.18) (0.00) (0.29) Net income (loss) $ 0.03 $
(0.10) $ 0.04 $ (0.11) Diluted Earnings per Share: Income from
continuing operations 0.03 0.08 0.04 0.17 Loss from discontinued
operations (0.00) (0.18) (0.00) (0.29)
Net income (loss) $ 0.03 $ (0.10) $ 0.04 $ (0.11) Weighted average
shares outstanding Basic 15,770 15,589 15,670
15,549 Diluted 15,822 15,659 15,730
15,650
PAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS (in
thousands, except per share data) (Unaudited)
For the
three months ended September 30, 2016 For the three months ended
September 30, 2015
Reported basis(GAAP)
Adjustments
Comparablebasis (Non-GAAP)
Reported basis(GAAP)
Adjustments
Comparablebasis (Non-GAAP)
Net revenues $ 61,492 - 61,492 $ 58,060 - 58,060 Costs of
sales 48,892 - 48,892
46,340 - 46,340 Gross
Margin 12,600 - 12,600 11,720 - 11,720 Operating Expenses
Selling, general andadministrative
8,672 1,421 7,251 6,808 414 6,394 Research and development 2,866 -
2,866 2,744 2,744
Amortization of identifiableintangible
assets
241 241 - 248
248 - Total operating expenses
11,779 1,662 10,117 9,800 662 9,138
Operating income from
continuingoperations
821 1,662 2,483 1,920 662 2,582 Other (expense) income, net (38 ) -
(38 ) 128 - 128 Interest (expense) income , net (12 )
26 14 (81 ) 26 (55
)
Income from continuing operationsbefore
provision for income taxes
771 1,688 2,459 1,967 688 2,655 Provision for income taxes
(253 ) (625 ) (878 ) (670 ) (255 )
(925 )
Income from continuing operations
$ 518 $ 1,063 $ 1,581 $ 1,297 $ 433
$ 1,730
Loss from discontinued operations,(net of
tax)
$ - $ - $ (2,786 ) $ (2,786 ) Net income $ 518
$ 1,581 $ (1,489 ) $ (1,056 )
Income per diluted share fromcontinuing
operations
$ 0.03 $ 0.10 $ 0.08 $ 0.11
Loss per diluted share fromdiscontinuing
operations
$ - $ - $ (0.18 ) $ (0.18 ) Income per diluted share
$ 0.03 $ 0.10 $ (0.10 ) $ (0.07 )
The Company reports its financial results in accordance with
GAAP, which refers to financial information presented in accordance
with generally accepted accounting principles in the United States.
However, non-GAAP adjusted financial measures, as defined in the
reconciliation table above, are provided herein because management
uses such measures in evaluating the results of the continuing
operations of the Company and believes this information provides
investors supplemental insight into underlying business trends and
performance. Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, the Company's reported
results prepared in accordance with GAAP.
PAR's results of operations are impacted by certain items which
include severance charges from restructuring business operations,
equity based compensation, acquisition related expenditures, and
other one-time charges that may not be indicative of the Company’s
business trends. Management believes that adjusting its operating
expenses, operating income, net earnings and diluted earnings per
share to remove these certain items provides an useful perspective
with respect to our results and provides meaningful supplemental
information to both management and investors that removes these
items which are difficult to predict and are often unanticipated,
and which, as a result are difficult to include in analyst's
financial models and our investors' expectations with any degree of
specificity. PAR believes the adjusted totals facilitate comparison
on a year-over-year basis.
PAR's results of operations are further impacted by costs from
its multi-year ERP system implementation. Management believes that
further adjusting its operating expenses, operating income, net
earnings and diluted earnings per share to remove the impact of the
ERP expenses provides a useful perspective with respect to
underlying business trends and results and provides meaningful
supplemental information to both management and investors that is
indicative of the performance of the Company's underlying
operations and facilitates comparison on a year-over-year
basis.
The Company uses these non-GAAP measures when evaluating its
financial results as well as for internal planning and forecasting
purposes. These financial measures should not be used as a
substitute in assessing the company's results of operations for the
periods presented. An analysis of any non-GAAP financial measure
should be used in conjunction with results presented in accordance
with GAAP. As a result, in the tables that follow, each period
presented is adjusted to remove the certain items noted above. Each
period has been further adjusted to remove expenses related to the
ERP system implementation.
During the third quarter of 2016, the Company recorded charges
within selling, general and administrative of $406,000 of
investigation costs related to certain unauthorized transfers of
Company funds that were made in contravention of the Company’s
policies and procedures, $36,000 related to the initial phase of
the planned implementation of a new enterprise resource system,
$789,000 write off relating to the Company’s previous human capital
management system that is being replaced in connection with the ERP
system implementation and equity based compensation charges of
$190,000. Lastly, related to the acquisition of Brink, the Company
recognized amortization of acquired intangible assets of $241,000
and accreted interest of $26,000. During the third quarter of 2015,
the Company recorded severance and other related charges of
$200,000 and equity based compensation charges of $214,000,
included in selling, general and administrative. The Company also
recognized amortization of acquired intangible assets of $248,000
and accreted interest of $26,000 related to the acquisition of
Brink. The aforementioned charges, along with an associated
adjustment to the Company’s provision for income taxes have been
excluded in the Company’s non-GAAP measures because they are
considered non-recurring in nature and/or are quantitatively and
qualitatively different from the Company’s core operations during
any particular period.
PAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS (in
thousands, except per share data) (Unaudited)
For the nine months ended
September 30, 2016 For the nine months ended September 30, 2015
Reported basis(GAAP)
Adjustments
Comparable basis(Non-GAAP)
Reported basis(GAAP)
Adjustments
Comparablebasis (Non-GAAP)
Net revenues $ 169,455 - $ 169,455 $ 172,206 - $ 172,206
Costs of sales 135,801 - 135,801
138,795 151 138,644
Gross Margin 33,654 - 33,654 33,411 151 33,562
Operating Expenses
Selling, general andadministrative
23,271 3,170 20,101 20,313 1,120 19,193 Research and development
8,421 - 8,421 7,840 13 7,827 Acquisition amortization 724
724 - 746
746 - Total operating expenses 32,416 3,894
28,522 28,899 1,879 27,020
Operating income from
continuingoperations
1,238 3,894 5,132 4,512 2,030 6,542 Other (expense) income, net
(318 ) - (318 ) (58 ) - (58 ) Interest income (expense), net
20 78 98 (252 ) 77
(175 )
Income from continuing operationsbefore
provision for income taxes
940 3,972 4,912 4,202 2,107 6,309 Provision for income taxes
(306 ) (1,470 ) (1,776 ) (1,470 ) (780
) (2,250 ) Income from continuing operations $ 634 $
2,502 $ 3,136 $ 2,732 $ 1,327 $ 4,059
Loss from discontinued operations,(net of
tax)
$ (26 ) $ (26 ) $ (4,505 ) $ (4,505 ) Net income (loss) $ 608
$ 3,110 $ (1,773 ) $ (446 )
Income per diluted share fromcontinuing
operations
$ 0.04 $ 0.20 $ 0.17 $ 0.26
Loss per diluted share fromdiscontinuing
operations
$ (0.00 ) $ (0.00 ) $ (0.29 ) $ (0.29 ) Income (loss) per diluted
share $ 0.04 $ 0.20 $ (0.11 ) $ (0.03 )
During the nine months ended September 30, 2016, the Company
recorded charges within selling, general and administrative of
$1,476,000 of investigation costs related to certain unauthorized
transfers of Company funds that were made in contravention of the
Company’s policies and procedures, $508,000 related to the initial
phase of the planned implementation of a new enterprise resource
system, $789,000 write off relating to the Company’s previous human
capital management system that is being replaced in connection with
the ERP system implementation and equity based compensation charges
of $397,000. Lastly, related to the acquisition of Brink, the
Company recognized amortization of acquired intangible assets of
$724,000 and accreted interest of $78,000. During the nine months
ended September 30, 2015, the Company recorded severance and other
related charges of $797,000, of which $151,000 is included in cost
of sales, $13,000 is included in research and development and
$633,000 is included in selling, general and administrative. Also
included within selling, general and administrative is equity based
compensation charges of $487,000. Lastly, related to the
acquisition of Brink, the Company recognized amortization of
acquired intangible assets of $746,000 and accreted interest of
$77,000. The aforementioned charges, along with an associated
adjustment to the Company’s provision for income taxes have been
excluded in the Company’s non-GAAP measures because they are
considered non-recurring in nature and/or are quantitatively and
qualitatively different from the Company’s core operations during
any particular period.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161114005438/en/
PAR Technology CorporationChristopher R. Byrnes, 315-738-0600
ext. 6226cbyrnes@partech.comwww.partech.com
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