PAR PAR Technology Corp

PAR Technology Corporation (NYSE: PAR) today announced its results of operations for its first quarter ended March 31, 2019.

Summary of Fiscal 2019 First Quarter Financial Results

• Revenues were reported at $44.7 million in the first quarter of 2019, compared to $55.7 million in the same period in 2018, a 19.7% decrease.
• GAAP net loss in the first quarter of 2019 was $2.7 million, or $0.17 loss per diluted share, a decrease from the GAAP net income of $0.1 million, or $0.00 earnings per diluted share reported in the same period in 2018.
• Non-GAAP net loss in the first quarter of 2019 was $1.8 million, or $0.11 loss per diluted share, compared to non-GAAP net income of $0.6 million, or $0.04 earnings per diluted share, in the same period in 2018.

A reconciliation and description of non-GAAP financial measures to their comparable GAAP financial measures are included in the tables at the end of this press release.

"In the first quarter we continued the ongoing transition of our business. I am pleased with our progress in the quarter. I am also particularly proud of our employees' continued efforts to focus on growing our business by serving our customers, delivering excellent products and adding new Brink bookings and recurring revenue streams on a consistent basis," said Savneet Singh, CEO & President PAR Technology Corporation. "We continue to invest in product development and focus our business development efforts on identifying new opportunities for our cloud solutions. Our strategy remains to rapidly accelerate our recurring revenue growth through providing a comprehensive portfolio of products and services to our restaurant customer base. We are also seeking out opportunities to increase monthly fees and subscription prices through strategic partnerships."

Highlights of the First Quarter 2019:

-- Brink ARR* at end of Q1 '19 now totals $15.8 million - an increase of $5.5 million from end of Q1 '18

-- Active Brink sites at end of Q1 '19 - now total 8,000 restaurants

-- Brink bookings in Q1 '19 719 restaurants

-- Brink bookings in Q1 '19 ASP** = $200 per month

*ARR - Run rate of annual recurring revenues - SaaS and support revenues**ASP - Average selling price SaaS and support revenues

Mr. Singh added, "During the past three months, PAR has undergone a significant transition. Our Company has new leadership, we've released new versions of our products, reduced costs and improved our cash position. We are now poised to actually take advantage of the large and fast growing market in front of us. We have made the tough choices in the Company; those are now behind us, so we can focus our energies on building a great business. Our passionate focus on return on capital has led us to discovering new revenue streams and sharpened our awareness on customer satisfaction."

Conference Call.

There will be a conference call at 4:30 p.m. (Eastern) on May 6, 2019, during which the Company’s management will discuss the financial results for the first quarter ended March 31, 2019. To participate in the call, please call 844-419-5412, 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 the Company’s website at www.partech.com. Alternatively, listeners may access an archived version of the presentation call after 7:30 p.m. on May 6, 2019 through May 13, 2019 by dialing 855-859-2056 and using conference ID 1338389.

About PAR Technology Corporation.

PAR Technology Corporation's stock is traded on the New York Stock Exchange under the symbol “PAR”. PAR’s Restaurant / Retail segment has been a leading provider of restaurant and retail technology for more than 35 years. PAR offers management 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 segment 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 .

Forward-Looking Statements.

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements appear throughout this press release, including express or implied forward-looking statements relating to our expectations regarding anticipated financial performance, customer and product opportunities, and assumptions as to future events. Forward-looking statements are subject to a variety of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those contemplated in these statements. Factors that could cause actual results to differ materially, include: delays in new product development and/or product introduction; changes in customer base, or in product and service demands from our customers, particularly as to the two restaurant chain customers and the U.S. Department of Defense, each of which represent a significant portion of our revenue; risks associated with the internal investigation into conduct at our China and Singapore offices, including sanctions and fines that may be imposed by governmental authorities; and the other factors discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission (SEC). The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.

       

PAR TECHNOLOGY CORPORATIONCONSOLIDATED BALANCE SHEETS(in thousands, except share and per share amounts)(Unaudited)

  Assets March 31, 2019 December 31, 2018 Current assets: Cash and cash equivalents $ 4,142 $ 3,485 Accounts receivable-net 29,311 26,219 Inventories-net 22,639 22,737 Other current assets 5,099   3,251   Total current assets 61,191 55,692 Property, plant and equipment – net 13,169 12,575 Goodwill 11,051 11,051 Intangible assets – net 11,176 10,859 Operating leases right-of-use assets 3,697 — Other assets 4,764   4,504   Total Assets $ 105,048   $ 94,681   Liabilities and Shareholders’ Equity Current liabilities: Borrowings of line of credit $ 16,139 $ 7,819 Accounts payable 14,794 12,644 Accrued salaries and benefits 5,145 5,940 Accrued expenses 2,223 2,113 Customer deposits and deferred service revenue 11,540 9,851 Operating lease liabilities - current portion 1,540 — Other current liabilities —   2,550   Total current liabilities 51,381 40,917 Deferred revenue 4,807 4,407 Operating lease liabilities - net of current portion 2,177 — Other long-term liabilities 3,198   3,411   Total liabilities 61,563   48,735   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; 17,956,318 and17,879,761 shares issued, 16,248,209 and 16,171,652 outstanding at March 31,2019 and December 31, 2018, respectively

357 357 Capital in excess of par value 50,529 50,251 Retained earnings 2,698 5,427 Accumulated other comprehensive loss (4,263 ) (4,253 ) Treasury stock, at cost, 1,708,109 shares (5,836 ) (5,836 ) Total shareholders’ equity 43,485   45,946   Total Liabilities and Shareholders’ Equity $ 105,048   $ 94,681        

PAR TECHNOLOGY CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)(Unaudited)

 

Three Months EndedMarch 31,

2019     2018 Net revenues: Product $ 15,517 $ 26,324 Service 14,043 13,196 Contract 15,122   16,141   44,682   55,661   Costs of sales: Product 11,241 19,440 Service 10,027 9,547 Contract 13,650   14,827   34,918   43,814   Gross margin 9,764   11,847   Operating expenses: Selling, general and administrative 8,564 8,600 Research and development 3,060 2,868 Amortization of identifiable intangible assets 241   241   11,865   11,709   Operating (loss) income (2,101 ) 138 Other (expense) income, net (430 ) 49 Interest expense, net (146 ) (41 ) (Loss) income before provision for income taxes (2,677 ) 146 Provision for income taxes (52 ) (78 ) Net (loss) income $ (2,729 ) $ 68   Basic Earnings per Share: Net (loss) income $ (0.17 ) $ —   Diluted Earnings per Share:   Net (loss) income $ (0.17 ) $ —   Weighted average shares outstanding Basic 16,044   15,948   Diluted 16,044   16,286              

PAR TECHNOLOGY CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS(in thousands, except per share and per share data)(Unaudited)

 

For the three months ended March 31,2019

   

For the three months ended March 31,2018

Reportedbasis(GAAP)

 

 

Adjustments

 

 

Comparablebasis (Non-GAAP)

 

     

Reportedbasis(GAAP)

 

 

Adjustments

 

 

Comparablebasis (Non-GAAP)

 

Net revenues $ 44,682 $ —   $ 44,682 $

55,661

$ —   $ 55,661 Costs of sales 34,918   143     34,775         43,814   —     43,814   Gross margin 9,764 143 9,907 11,847 — 11,847 Operating Expenses:

Selling, general and administrative

8,564 755 7,809 8,600 478 8,122 Research and development 3,060 108 2,952 2,868 — 2,868 Acquisition amortization 241   241     —         241   241     —   Total operating expenses 11,865 1,104 10,761 11,709 719 10,990 Operating (loss) income (2,101 ) 1,247 (854 ) 138 719 857 Other (expense) income, net (430 ) — (430 ) 49 — 49 Interest expense, net (146 ) —     (146 )       (41 ) —     (41 )

(Loss) income before provisionfor income taxes

(2,677 ) 1,247 (1,430 ) 146 719 865 Provision for income taxes (52 ) (299 )   (351 )       (78 ) (173 )   (251 ) Net (loss) income (2,729 ) (1,781 )       68   614     (Loss) income per diluted share (0.17 ) (0.11 )       0.00   0.04    

About Non-GAAP Financial Measures

The Company reports its financial results in accordance with GAAP. However, non-GAAP adjusted financial measures, as set forth in the reconciliation table above, are provided because management uses these non-GAAP financial measures in evaluating the results of the Company's continuing operations and believes this information provides investors supplemental insight into underlying business trends and operating results. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, these non-GAAP financial measures should be read in conjunction with the Company’s financial statements prepared in accordance with GAAP.

The Company's results of operations are impacted by certain non-recurring charges, including equity based compensation, acquisition related expenditures, expense relating to the internal investigation into conduct in China and Singapore and the SEC document subpoena, and other non-recurring charges that may not be indicative of the Company’s financial performance. Management believes that adjusting its operating expenses, operating loss, net loss and diluted loss per share to remove non-recurring charges provides a useful perspective with respect to our operating results and provides supplemental information to both management and investors by removing items that are difficult to predict and are often unanticipated. While the Company believes the adjustments provide a useful comparison, the reconciliations of non-GAAP financial measures to corresponding GAAP measures should be carefully evaluated.

During the first quarter of 2019, the Company recorded $568,000 of severance expenses, of which $143,000 are included in costs of sales, $317,000 are included in selling, general and administrative expenses and $108,000 are included in research and development expenses. The Company recorded $190,000 of expenses related to the Company’s internal investigation into conduct at its China and Singapore offices and the SEC document subpoena. Additionally, $248,000 of equity based compensation charges were recorded during the first quarter of 2019. The Company recognized amortization of acquired intangible assets of $241,000 related to the Company’s 2014 acquisition of Brink Software, Inc. (the "Brink Acquisition"). The provision for income tax line above is netted down by a 24%, or $299,000 tax impact from non-GAAP adjustments.

During the first quarter of 2018, the Company recorded $297,000 of expenses related to the Company’s internal investigation and the SEC document subpoena. Additionally, $181,000 of equity based compensation charges were recorded during the first quarter of 2018. The Company recognized amortization of acquired intangible assets of $241,000 related to the Company’s 2014 Brink Acquisition. The provision for income tax line above is netted down by a 24% or $173,000 tax impact from non-GAAP adjustments.

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Christopher R. Byrnes (315) 738-0600 ext. 6226cbyrnes@partech.com, www.partech.com