USA Technologies, Inc. (NASDAQ:USAT), a premier payment
technology service provider of integrated cashless and mobile
transactions in the self-service retail market, today reported
results for its second quarter ended December 31, 2016.
Second Quarter Financial Highlights:
- Total quarterly revenue of $21.8
million, a year-over-year increase of 18%
- 469,000 connections to ePort service,
representing a year-over-year increase of 27%
- Added 500 customers to achieve record
11,900 total customers compared to 10,625 as of a year ago, a
year-over-year increase of 12%
- Quarterly record license and
transaction fee revenue of $16.6 million, a year-over-year
increase of 22%
- Ended the quarter with $18.0 million in
cash
- Quarterly GAAP net income of $233,000
resulting in earnings of $0.01 per share
- Quarterly Non-GAAP net income of
$241,000
- Quarterly Adjusted EBITDA of $1.7
million
Second Quarter and YTD Financial
Highlights, Connections & Transaction Data:
As of and for the three months
ended December 31, (Connections and $'s in thousands,
transactions in millions, eps is not rounded)
2016
2015
$ Change
% Change Revenues: License and transaction fees $
16,639 $ 13,674 $ 2,965 22 % Equipment Sales 5,117
4,829 288 6 % Total revenues $ 21,756
$ 18,503 $ 3,253 18 % License and
transaction fee margin 31.6 % 33.7 % -2.1 % -6 % Equipment
sales gross margin 21.2 % 18.1 % 3.1 % 17 % Overall Gross
Margin 29.1 % 29.6 % -0.5 % -2 % Operating income $ 234 $
594 $ (360 ) -61 % Net income/(loss) $ 233 $ (874 ) $ 1,107
127 % Net earnings (loss) per common shares - basic $ 0.01 $
(0.02 ) $ 0.03 150 % Net earnings (loss) per common shares -
diluted $ 0.01 $ (0.02 ) $ 0.03 150 % Net cash provided by
operating activities $ 1,122 $ 507 $ 615 121 % Net New
Connections 21 20 1 5 % Total Connections (at period end)
469 369 100 27 % Total Number of Transactions (millions) 100
76 24 32 % Transaction Volume (millions) $ 192 $ 138 $ 54 39
% Adjusted EBITDA $ 1,738 $ 2,260 $ (522 ) -23 %
Non-GAAP net income $ 241 $ 686 $ (445 ) -65 %
As
of and for the six months ended December 31,
(Connections and $'s in thousands, transactions in millions, eps is
not rounded)
2016 2015
$ Change
% Change Revenues: License and transaction fees $
33,004 $ 26,599 $ 6,405 24 % Equipment Sales 10,340
8,504 1,836 22 % Total revenues $
43,344 $ 35,103 $ 8,241 23 % License
and transaction fee margin 31.4 % 33.2 % -1.8 % -5 %
Equipment sales gross margin 20.6 % 20.0 % 0.6 % 3 % Overall
Gross Margin 28.8 % 30.0 % -1.2 % -4 % Operating
income/(loss) $ (716 ) $ 706 $ (1,422 ) -201 % Net loss $
(2,231 ) $ (514 ) $ (1,717 ) 334 % Net loss per common
shares - basic $ (0.07 ) $ (0.02 ) $ (0.05 ) 250 % Net loss
per common shares - diluted $ (0.07 ) $ (0.02 ) $ (0.05 ) 250 %
Net cash provided by (used in) operating activities $ (5,143
) $ 869 $ (6,012 ) -692 % Net New Connections 40 36 4 11 %
Total Connections (at period end) 469 369 100 27 %
Total Number of Transactions (millions) 195 145 50 35 %
Transaction Volume (millions) $ 375 $ 264 $ 111 42 %
Adjusted EBITDA $ 2,435 $ 4,011 $ (1,576 ) -39 % Non-GAAP
net income (loss) $ (714 ) $ 747 $ (1,461 ) -196 %
“With a focus on driving growth through penetration into our
existing customer base and by acquiring new customers, we are
seeing more adoption of our ePort connect devices and subsequent
traction in cashless payment options,” said Stephen P. Herbert, USA
Technologies’ chairman and chief executive officer. “USA
Technologies is at the forefront of the industry with our payment
solutions, and with our customer loyalty programs and interactive
point-of-sale devices we are adding increasing value to each
connection sold. Our ePort Interactive platform creates new
possibilities at the point of sale and we believe increases
cashless payment acceptance.”
Fiscal 2017 Outlook
For full fiscal year 2017, management expects to add between
115,000 and 125,000 net new connections for the year, bringing
total connections to our service to a range of 544,000 to 554,000
and expects total revenue to be between $95 million and $100
million. We also expect to have year-over-year increases of
adjusted EBITDA and non-GAAP net income.
Webcast and Conference Call
Management will host a conference call and webcast the event
beginning at 5:00 p.m. Eastern Time today, February 8, 2017.
To participate in the conference call, please dial (866)
393-1608 approximately 10 minutes prior to the call.
International callers should dial (224) 357-2194. Please reference
conference ID # 59727592.
A live webcast of the conference call will be available at
http://usat.client.shareholder.com/releases.cfm. Please access the
website 15 minutes prior to the start of the call to download and
install any necessary audio software. A telephone replay of the
conference call will be available from 8:00 p.m. Eastern Time on
February 8, 2017 until 8:00 p.m. Eastern Time on February 11, 2017
and may be accessed by calling (855) 859-2056 (domestic dial-in) or
(404) 537-3406 (international dial-in) and reference conference ID
# 59727592. An archived replay of the conference call will also be
available in the investor relations section of the company's
website.
About USA Technologies
USA Technologies, Inc. is a premier payment technology service
provider of integrated cashless and mobile transactions in the
self-service retail market. The company also provides a broad line
of cashless acceptance technologies including its NFC-ready ePort®
G-series, ePort Mobile™ for customers on the go, ePort®
Interactive, and QuickConnect, an API Web service for developers.
USA Technologies has 77 United States and foreign patents in force;
and has agreements with Verizon, Visa, Chase Paymentech and
customers such as Compass, AMI Entertainment and others. For more
information, please visit the website at www.usatech.com.
Forward-looking Statements:
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: All statements other than statements of
historical fact included in this release, including without
limitation the business strategy and the plans and objectives of
USAT's management for future operations, are forward-looking
statements. When used in this release, words such as "anticipate",
"believe", "estimate", "expect", "intend", and similar expressions,
as they relate to USAT or its management, identify forward looking
statements. Such forward-looking statements are based on the
beliefs of USAT's management, as well as assumptions made by and
information currently available to USAT's management. Actual
results could differ materially from those contemplated by the
forward-looking statements as a result of certain factors,
including but not limited to, the ability of management to
accurately predict or forecast future financial results, including
earnings or taxable income of USAT, or increased revenues at a
customer location; the incurrence by USAT of any unanticipated or
unusual non-operational expenses which would require us to divert
our cash resources from achieving our business plan; the ability of
USAT to retain key customers from whom a significant portion of its
revenues is derived; the ability of USAT to compete with its
competitors to obtain market share; whether USAT's customers
continue to utilize USAT's transaction processing and related
services, as our customer agreements are generally cancelable by
the customer on thirty to sixty days' notice; the ability of USAT
to raise funds in the future through the sales of securities or
debt financings in order to sustain its operations if an unexpected
or unusual non-operational event would occur; the ability of USAT
to use available data to predict future market conditions, consumer
behavior and any level of cashless usage; the ability to prevent a
security breach of our systems or services or third party services
or systems utilized by us; whether any patents issued to USAT will
provide USAT with any competitive advantages or adequate protection
for its products, or would be challenged, invalidated or
circumvented by others; the ability of USAT to operate without
infringing or violating the intellectual property rights of others;
whether USAT would be able to sell sufficient ePort hardware to
third party leasing companies as part of the QuickStart program in
order to improve cash flows from operations; whether USAT’s
remediation efforts in connection with the control deficiencies
that resulted in a material weakness in USAT’s internal controls
over financial reporting as of June 30, 2016 would be effective or
successful; whether USAT experiences additional material weaknesses
in its internal controls over financial reporting in future
periods, and USAT is not able to accurately or timely report its
financial condition or results of operations; and whether USAT's
existing or anticipated customers purchase, rent or utilize ePort
devices or our other products or services in the future at levels
currently anticipated by USAT. Readers are cautioned not to place
undue reliance on these forward-looking statements. Any
forward-looking statement made by us in this release speaks only as
of the date of this release. Unless required by law, USAT does not
undertake to release publicly any revisions to these
forward-looking statements to reflect future events or
circumstances or to reflect the occurrence of unanticipated
events.
Financial Schedules:
A. Statements of Operations for the 3 Months and 6 Months Ended
December 31, 2016 and 2015 B. Five Quarter Select Key Performance
Indicators
C.
Comparative Balance Sheets as of December 31, 2016 and June 30,
2016 D. Five Quarter Statements of Operations and Adjusted EBITDA
E. Five Quarter and YTD Selling, General, & Administrative
Expenses F. Five Quarter Condensed Balance Sheets G. Five Quarter
Statements of Cash Flows H. Five Quarter Reconciliation of Net
Income/(Loss) to Non-GAAP Net Income (Loss) and Net Earnings/(Loss)
Per Common Share – Basic and Diluted to Non-GAAP Net
Earnings/(Loss) Per Common Share – Basic and Diluted
(A) Statement of Operations for the 3
Months and 6 Months Ended December 31, 2016 and 2015
For the three
months ended December 31, ($ in thousands, except shares and
per share data)
2016
% of Sales
2015
% of Sales
Change % Change Revenues: License and
transaction fees $ 16,639 76.5 % $ 13,674 73.9 % $ 2,965 21.7 %
Equipment sales 5,117 23.5 % 4,829 26.1
% 288 6.0 % Total revenues 21,756 100.0 % 18,503
100.0 % 3,253 17.6 % Costs of sales/revenues: Cost of
services 11,389 68.4 % 9,067 66.3 % 2,322 25.6 % Cost of equipment
4,033 78.8 % 3,953 81.9 % 80
2.0 % Total costs of sales/revenues 15,422
70.9 % 13,020 70.4 % 2,402 18.4 %
Gross profit 6,334 29.1 % 5,483 29.6 % 851 15.5 %
Operating expenses: Selling, general and administrative 5,793 26.6
% 4,762 25.7 % 1,031 21.7 % Depreciation and amortization
307 1.4 % 127 0.7 % 180 141.7 %
Total operating expenses 6,100 28.0 % 4,889 26.4 % 1,211 24.8 %
Operating income (loss) 234 1.1 % 594 3.2 % (360 ) -60.6 %
Other income (expense): Interest income 200 0.9 % 20 0.1 %
180 900.0 % Interest expense (201 ) -0.9 % (104 ) -0.6 % (97 ) 93.3
% Change in fair value of warrant liabilities — 0.0 %
(1,230 ) -6.6 % 1,230 -100.0 % Total other
income (expense), net (1 ) 0.0 % (1,314 ) -7.1 % 1,313 -99.9 %
Income (loss) before income taxes 233 1.1 % (720 ) -3.9 %
953 132.4 % Benefit (provision) for income taxes —
0.0 % (154 ) -0.8 % 154 -100.0 % Net
income (loss) 233 1.1 % (874 ) -4.7 % 1,107 126.7 % Cumulative
preferred dividends — 0.0 % — 0.0 %
— 0.0 % Net income (loss) applicable to common shares
$ 233 1.1 % $ (874 ) -4.7 % $ 1,107 127.7 %
Net earnings (loss) per common share - basic $ 0.01 $ (0.02
) $ 0.03 150 % Net earnings (loss) per common share -
diluted $ 0.01 $ (0.02 ) $ 0.03 150 % Basic
weighted average number of common shares outstanding 40,308,934
35,909,933 4,399,001 12.3 % Diluted weighted average number of
common shares outstanding 40,730,712 35,909,933 4,820,779 13.4 %
For the six months ended December 31, ($ in
thousands, except shares and per share data)
2016
% of Sales
2015
% of Sales
Change % Change Revenues: License and
transaction fees $ 33,004 76.1 % $ 26,599 75.8 % $ 6,405 24.1 %
Equipment sales 10,340 23.9 % 8,504
24.2 % 1,836 21.6 % Total revenues 43,344 100.0 %
35,103 100.0 % 8,241 23.5 % Costs of sales/revenues: Cost of
services 22,632 68.6 % 17,772 66.8 % 4,860 27.3 % Cost of equipment
8,211 79.4 % 6,801 80.0 % 1,410
20.7 % Total costs of sales/revenues 30,843
71.2 % 24,573 70.0 % 6,270 25.5 %
Gross profit 12,501 28.8 % 10,530 30.0 % 1,971 18.7 %
Operating expenses: Selling, general and administrative 12,702 29.3
% 9,558 27.2 % 3,144 32.9 % Depreciation and amortization
515 1.2 % 266 0.8 % 249 93.6 %
Total operating expenses 13,217 30.5 % 9,824 28.0 % 3,393 34.5 %
Operating income (loss) (716 ) -1.7 % 706 2.0 % (1,422 )
-201.4 % Other income (expense): Interest income 273 0.6 %
71 0.2 % 202 284.5 % Interest expense (413 ) -1.0 % (223 ) -0.6 %
(190 ) 85.2 % Change in fair value of warrant liabilities
(1,490 ) -3.4 % (887 ) -2.5 % (603 ) 68.0 % Total
other income (expense), net (1,630 ) -3.8 % (1,039 )
-3.0 % (591 ) 56.9 % Income (loss) before provision
for income taxes (2,346 ) -5.4 % (333 ) -0.9 % (2,013 ) 604.5 %
Benefit (provision) for income taxes 115 0.3 %
(181 ) -0.5 % 296 -163.5 % Net income (loss)
(2,231 ) -5.1 % (514 ) -1.5 % (1,717 ) 334.0 % Cumulative preferred
dividends (334 ) -0.8 % (334 ) -1.0 % —
0.0 % Net income (loss) applicable to common shares $ (2,565 ) -5.9
% $ (848 ) -2.4 % $ (1,717 ) 202.5 % Net earnings (loss) per
common share - basic $ (0.07 ) $ (0.02 ) $ (0.05 ) 250.0 % Net
earnings (loss) per common share - diluted $ (0.07 ) $ (0.02 ) $
(0.05 ) 250.0 % Basic weighted average number of common
shares outstanding 39,398,469 35,879,164 3,519,305 9.8 % Diluted
weighted average number of common shares outstanding 39,398,469
35,879,164 3,519,305 9.8 %
(B) Five Quarter Select Key
Performance Indicators
As of and for the three
months ended
December 31,
September 30, June 30, March 31, December
31, 2016 2016 2016 2016 2015
Connections: Gross New Connections 25,000 22,000 33,000
34,000 23,000 % from Existing Customer Base 80 % 86 % 83 % 91 % 89
% Net New Connections 21,000 19,000 28,000 32,000 20,000 Total
Connections 469,000 448,000 429,000 401,000 369,000
Customers: New Customers Added 500 350 300 125 350 Total
Customers 11,900 11,400 11,050 10,750 10,625
Volumes:
Total Number of Transactions (millions) 100 95 89 82 76 Transaction
Volume (millions) $ 192 $ 183 $ 169 $ 151 $ 138
Financing
Structure of Connections: JumpStart 6.8 % 7.7 % 6.5 % 7.4 %
10.1 % QuickStart & All Others * 93.2 % 92.3 %
93.5 % 92.6 % 89.9 % Total 100.0 %
100.0 % 100.0 %
100.0
%
100.0
%
*Includes credit sales with standard trade receivable terms
(C) Comparative Balance Sheets December
31, 2016 and June 30, 2016
December 31, June 30,
($ in thousands) 2016 2016 Change %
Change Assets Current assets: Cash $ 18,034 $ 19,272 $
(1,238 ) -6 % Accounts receivable, less allowance 6,796 4,899 1,897
39 % Finance receivables, less allowance for credit losses of $29
and $0, respectively 1,442 3,588 (2,146 ) -60 % Inventory, net
4,786 2,031 2,755 136 % Prepaid expenses and other current assets
1,764 987 777 79 % Deferred income taxes 2,271
2,271 — 0 % Total current assets 35,093 33,048
2,045 6 % Finance receivables, less current portion 3,956
3,718 238 6 % Other assets 145 348 (203 ) -58 % Property and
equipment, net 9,433 9,765 (332 ) -3 % Deferred income taxes 25,568
25,453 115 0 % Intangibles, net 711 798 (87 ) -11 % Goodwill
11,492 11,703 (211 ) -2 % Total assets
$ 86,398 $ 84,833 $ 1,565 2 %
Liabilities and shareholders' equity Current liabilities: Accounts
payable $ 9,090 $ 12,354 $ (3,264 ) -26 % Accrued expenses 2,912
3,458 (546 ) -16 % Line of credit, net 7,078 7,119 (41 ) -1 %
Current obligations under long-term debt 766 629 137 22 % Income
taxes payable 6 18 (12 ) -67 % Warrant liabilities — 3,739 (3,739 )
100 % Deferred gain from sale-leaseback transactions 470
860 (390 ) -45 % Total current
liabilities 20,322 28,177 (7,855 ) -28 % Long-term liabilities
Long-term debt, less current portion 1,394 1,576 (182 ) -12 %
Accrued expenses, less current portion 52 15 37 247 % Deferred gain
from sale-leaseback transactions, less current portion —
40 (40 ) 100 % Total long-term
liabilities 1,446 1,631 (185 )
-11 % Total liabilities 21,768 29,808
(8,040 ) -27 % Shareholders' equity: Preferred stock,
no par value 3,138 3,138 — 0 % Common stock, no par value 245,230
233,394 11,836 5 % Accumulated deficit (183,738 )
(181,507 ) (2,231 ) 1 % Total shareholders' equity
64,630 55,025 9,605 17 % Total
liabilities and shareholders' equity $ 86,398 $ 84,833
$ 1,565 2 % Net working capital $ 14,771 $
4,871 $ 9,900 203 %
(D) Five Quarter Statement of
Operations and Adjusted EBITDA
For the three months ended ($ in thousands)
December 31, September 30, June 30, March
31, December 31, (unaudited) 2016 % of
Sales 2016 % of Sales 2016 % of
Sales 2016 % of Sales 2015 % of
Sales Revenues: License and transaction fees $ 16,639 76.5% $
16,365 75.8% $ 15,263 69.6% $ 14,727 72.3% $ 13,674 73.9% Equipment
Sales 5,117 23.5% 5,223 24.2% 6,681 30.4%
5,634 27.7% 4,829 26.1% Total revenue 21,756 100.0%
21,588 100.0% 21,944 100.0% 20,361 100.0% 18,503 100.0%
Costs of sales/revenues: License and transaction fees 11,389 68.4%
11,243 68.7% 10,614 69.5% 9,703 65.9% 9,067 66.3% Equipment sales
4,033 78.8% 4,178 80.0% 5,547 83.0%
4,986 88.5% 3,953 81.9% Total costs of sales/revenues 15,422
70.9% 15,421 71.4% 16,161 73.6% 14,689 72.1% 13,020 70.4%
Gross Profit: License and transaction fees 5,250 31.6% 5,122 31.3%
4,649 30.5% 5,024 34.1% 4,607 33.7% Equipment sales 1,084
21.2% 1,045 20.0% 1,134 17.0% 648 11.5%
876 18.1% Total gross profit 6,334 29.1% 6,167 28.6% 5,783 26.4%
5,672 27.9% 5,483 29.6% Operating expenses: Selling, general
and administrative 5,793 26.6% 6,909 32.0% 6,721 30.6% 6,094 29.9%
4,762 25.7% Depreciation 307 1.4% 208 1.0% 208 0.9% 173 0.8% 127
0.7% Impairment of intangible asset — 0.0% — 0.0%
432 2.0% — 0.0% — 0.0% Total operating
expenses 6,100 28.0% 7,117 33.0% 7,361 33.5% 6,267 30.8% 4,889
26.4%
Operating income (loss) 234 1.1% (950)
-4.4% (1,578) -7.2% (595) -2.9% 594 3.2%
Other income (expense): Interest income 200 0.9% 73 0.3% 182
0.8% 67 0.3% 20 0.1% Other income — 0.0% — 0.0% — 0.0% — 0.0% —
0.0% Interest expense (201) -0.9% (212) -1.0% (197) -0.9% (180)
-0.9% (104) -0.6% Change in fair value of warrant liabilities —
0.0% (1,490) -6.9% 18 0.1% (4,805) -23.6%
(1,230) -6.6% Total other income (expense), net (1) 0.0%
(1,629) -7.5% 3 0.0% (4,918) -24.2% (1,314) -7.1% Loss
before provision for income taxes 233 1.1% (2,579) -11.9% (1,575)
-7.2% (5,513) -27.1% (720) -3.9% Benefit (provision) for income
taxes — 0.0% 115 0.5% 703 3.2% 93 0.5% (154) -0.8%
Net income
(loss) 233 1.1% (2,464) -11.4% (872) -4.0%
(5,420) -26.6% (874) -4.7% Less interest
income (200) -0.9% (73) -0.3% (182) -0.8% (67) -0.3% (20) -0.1%
Plus interest expenses 201 0.9% 212 1.0% 197 0.9% 180 0.9% 104 0.6%
Plus income tax expense — 0.0% (115) -0.5% (703) -3.2% (93) -0.5%
154 0.8% Plus depreciation expense 1,220 5.6% 1,257 5.8% 1,272 5.8%
1,190 5.8% 1,323 7.2% Plus amortization expense 43 0.2% 44 0.2% 44
0.2% 44 0.2% — 0.0% Plus (less) change in fair value of warrant
liabilities — 0.0% 1,490 6.9% (18) -0.1% 4,805 23.6% 1,230 6.6%
Plus stock-based compensation 233 1.1% 211 1.0% 198 0.9% 142 0.7%
237 1.3% Plus intangible asset impairment — 0.0% — 0.0% 432 2.0% —
0.0% — 0.0% Plus VendScreen non-recurring charges 8 0.0% 101 0.5%
258 1.2% 461 2.3% 106 0.6% Plus litigation related professional
fees — 0.0% 33 0.2% 0.0% 105
0.5% — 0.0% Adjusted EBITDA $ 1,738 8.0% $ 696 3.2% $ 626
2.9% $ 1,347 6.6% $ 2,260 12.2% See discussion of Non-GAAP
financial measures later in this document
(E) Five Quarter and YTD Selling,
General, & Administrative Expenses
Three months ended December 31, %
of September 30, % of June 30, % of
March 31, % of December 31, % of ($ in
thousands)
2016 SG&A 2016
SG&A 2016 SG&A 2016
SG&A 2015 SG&A Salaries and benefit
costs $ 2,849 49.2 % $ 3,129 45.3 % $ 3,050 45.4 % $ 2,760 45.4 % $
2,786 58.6 % Marketing related expenses 578 10.0 % 329 4.8 % 635
9.4 % 362 5.9 % 335 7.0 % Professional services 1,213 20.9 % 2,520
36.5 % 1,533 22.8 % 1,152 18.9 % 839 17.6 % Bad debt expense 352
6.1 % 97 1.4 % 470 7.0 % 505 8.3 % 239 5.0 % Premises, equipment
and insurance costs 498 8.6 % 499 7.2 % 555 8.3 % 460 7.5 % 347 7.3
% Research and development expenses 173 3.0 % 124 1.8 % 123 1.8 %
131 2.1 % 37 0.8 % VendScreen non-recurring charges 8 0.1 % 101 1.5
% 258 3.8 % 461 7.6 % 106 2.2 % Litigation related professional
fees — 0.0 % 33 0.5 % 51 0.8 % 105 1.7 % — 0.0 % Other expenses
122 2.1 % 77 1.1 % 46
0.7 % 158 2.6 % 73 1.5 % Total
SG&A expenses $ 5,793 100 % $ 6,909 100 %
$ 6,721 100 % $ 6,094 100 % $ 4,762 100 %
Total Revenue $
21,756
$
21,588
$
21,944
$
20,361
$
18,503
SG&A expenses as a percentage of revenue
26.6
%
32.0
%
30.6
%
29.9
%
25.7
%
Six months ended December 31, %
of December 31, % of ($ in thousands)
2016 SG&A 2015
SG&A Salaries and benefit costs $ 5,978 47.1 % $
5,471 57.2 % Marketing related expenses 907 7.1 % 668 7.0 %
Professional services 3,733 29.4 % 1,621 17.0 % Bad debt expense
449 3.5 % 475 5.0 % Premises, equipment and insurance costs 997 7.8
% 746 7.8 % Research and development expenses 297 2.3 % 228 2.4 %
VendScreen non-recurring charges 109 0.9 % 123 1.3 % Class action
professional fees 33 0.3 % — 0.0 % Other expenses 199
1.6 % 226 2.4 %
Total SG&A expenses $ 12,702 100.0 % $ 9,558
100.0 % Total Revenue $ 43,344 $ 35,103 SG&A expenses as
a percentage of revenue 29.3 % 27.2 %
(F) Five Quarter Condensed Balance
Sheets
($ in thousands)
December 31, September 30 June 30, March
31, December 31, (unaudited)
2016 2016
2016 2016 2015 Assets Current assets:
Cash $ 18,034 $ 18,198 $ 19,272 $ 14,901 $ 14,809 Accounts
receivable, less allowance 6,796 5,840 4,899 8,345 6,976 Finance
receivables, less allowance for credit losses 1,442 3,349 3,588
1,677 1,503 Inventory, net 4,786 4,264 2,031 2,341 2,849 Other
current assets 1,764 1,439 987 1,060 902 Deferred Income Taxes
2,271 2,271 2,271 1,276
1,258 Total current assets 35,093 35,361 33,048 29,600 28,297
Finance receivables, less current portion 3,956 3,962 3,718
3,042 2,435 Other assets 145 163 348 337 326 Property and
equipment, net 9,433 9,570 9,765 10,584 10,856 Deferred income
taxes 25,568 25,568 25,453 25,701 25,607 Intangibles, Net 711 754
798 1,273 432 Goodwill 11,492 11,703 11,703
11,703 7,663 Total assets $ 86,398 $ 87,081 $
84,833 $ 82,240 $ 75,616 Liabilities and
shareholders' equity Current liabilities: Accounts payable and
accrued expenses $ 12,002 $ 12,605 $ 15,812 $ 15,368 $ 9,992 Line
of credit, net 7,078 7,258 7,119 6,980 7,000 Warrant Liabilities -
- 3,739 5,964 - Other current liabilities 1,242 1,527
1,507 1,485 1,384 Total current
liabilities 20,322 21,390 28,177 29,797 18,376 Long-term
liabilities Total long-term
liabilities 1,446 1,528 1,631 2,016
3,945 Total liabilities 21,768 22,918
29,808 31,813 22,321
Shareholders' equity: Total
shareholders' equity 64,630 64,163 55,025
50,427 53,295 Total liabilities and
shareholders' equity $ 86,398 $ 87,081 $ 84,833 $ 82,240 $
75,616 Total current assets $ 35,093 $ 35,361 $ 33,048 $
29,600 $ 28,297 Total current liabilities 20,322
21,390 28,177 29,797 18,376 Net working
capital $ 14,771 $ 13,971 $ 4,871 $ (197 ) $ 9,921
(G) Five Quarter Statements of Cash
Flows
Three months ended December 31,
September 30, June 30, March 31,
December 31, ($ in thousands) 2016 2016
2016 2016 2015 OPERATING ACTIVITIES: Net
(loss) income $ 233 $ (2,464 ) $ (872 ) $ (5,420 ) $ (874 )
Adjustments to reconcile net (loss) income to net cash provided by
(used in) operating activities: Charges incurred in
connection with the vesting and issuance of common stock for
employee and director compensation 233 211 198 142 237 Gain on
disposal of property and equipment (31 ) — (110 ) (15 ) (41 )
Non-cash interest and amortization of debt discount (79 ) 33 13 — —
Bad debt expense 352 97 470 506 238 Depreciation 1,220 1,257 1,272
1,190 1,323 Amortization of intangible assets 43 44 43 44 —
Impairment of intangible asset — 432 — — Change in fair value of
warrant liabilities — 1,490 (18 ) 4,805 1,230 Deferred income
taxes, net — (115 ) (748 ) (93 ) 154
Recognition of deferred gain from
sale-leaseback transactions
(215
)
(215
)
(215
)
(215
)
(215
)
Changes in operating assets and
liabilities:
Accounts receivable
(1,309 ) (1,038 ) 2,977 (1,872 ) (448 )
Finance receivables
2,125 (5 ) (2,587 ) (154 ) 214
Inventory
(467 ) (2,223 ) (82 ) 250 649
Prepaid expenses and other assets
(318 ) (224 ) (397 ) (160 ) (254 )
Accounts payable
397 (3,661 ) 329 4,154 (1,623 )
Accrued expenses
(1,061 ) 486 115 1,166 (13 )
Income taxes payable
(1 ) (10 ) 453 —
(70 )
Net change in operating assets and
liabilities
(634 ) (6,675 ) 808 3,384
(1,545 )
Net cash provided (used) by operating
activities
1,122 (6,337 ) 1,273 4,328 507
INVESTING ACTIVITIES:
Purchase and additions of property and
equipment
(441 ) (168 ) (207 ) (164 ) (118 )
Purchase of property for rental
program
(693 ) (642 ) — — —
Proceeds from sale of property and
equipment
61 — 265 19 101
Cash paid for assets acquired from
VendScreen
— — — (5,625 )
— Net cash provided by (used in) investing activities
(1,073 ) (810 ) 58 (5,770 ) (17 ) FINANCING ACTIVITIES: Cash
used for the retirement of common stock — (31 ) (173 ) — (40 )
Proceeds from exercise of common stock warrants — 6,193 3,237 1,652
— Proceeds (payments) from line of credit, net — 72 138 33 3,000
Repayment of long-term debt (213 ) (161 ) (162
) (151 ) (233 ) Net cash provided by (used in)
financing activities
(213 ) 6,073 3,040 1,534
2,727 Net increase (decrease) in cash (164 )
(1,074 ) 4,371 92 3,217 Cash at beginning of period 18,198
19,272 14,901 14,809
11,592 Cash at end of period $ 18,034 $
18,198 $ 19,272 $ 14,901 $ 14,809
Supplemental disclosures of cash flow information: Interest
paid in cash $ 382 $ 87 $ 147 $ 191 $
107 Income taxes paid by cash $ — $ — $ 501
$ — $ — Depreciation expense allocated to cost
of services $ 967 $ 1,083 $ 1,139 $ 1,051
$ 1,186 Reclass of rental program property to
inventory, net $ (55 ) $ (11 ) $ 415 $ 347 $ 777
Prepaid items financed with debt $ — $ 54 $ —
$ — $ — Warrant issuance for debt discount $ —
$ — $ — $ 52 $ — Debt financing
cost financed with debt $ — $ — $ — $ 79
$ — Equipment and property acquired under capital
lease $ 18 $ 254 $ — $ 409 $ —
Disposal of property and equipment $ 570 $ — $ 555
$ 189 $ 238 Disposal of property and
equipment under sale-leaseback transactions $ — $ — $
(52 ) $ 52 $ —
(H) Five Quarter Reconciliation of Net
Income/(Loss) to Non-GAAP Net Income (Loss) and Net Earnings/(Loss)
Per Common Share – Basic and Diluted to Non-GAAP Net
Earnings/(Loss) Per Common Share – Basic and Diluted
Three months ended ($ in thousands) December 31, September
30, June 30, March 31, December 31, (unaudited) 2016
2016 2016 2016 2015 Net income (loss) $
233 $ (2,464 ) $ (872 ) $ (5,420 ) $ (874 ) Non-GAAP adjustments:
Non-cash portion of income tax provision - (115 ) (792 ) (38 ) 224
Change in fair value of warrant adjustment - 1,490 (18 ) 4,805
1,230 VendScreen non-recurring charges 8 101 258 461 106 Litigation
related professional fees - 33 51
105 - Non-GAAP net income (loss)
$ 241 $ (955 ) $ (1,373 ) $ (87 ) $ 686 Net income
(loss) $ 233 $ (2,464 ) $ (872 ) $ (5,420 ) $ (874 ) Cumulative
preferred dividends - (334 ) -
(334 ) - Net income (loss) applicable to common
shares $ 233 $ (2,798 ) $ (872 ) $ (5,754 ) $ (874 )
Non-GAAP net income (loss) $ 241 $ (955 ) $ (1,373 ) $ (87 ) $ 686
Cumulative preferred dividends - (334 ) -
(334 ) - Non-GAAP net income (loss)
applicable to common shares $ 241 $ (1,289 ) $ (1,373 ) $ (421 ) $
686 Net earnings (loss) per common share - basic $
0.01 $ (0.07 ) $ (0.02 ) $ (0.16 ) $ (0.02 ) Non-GAAP net earnings
(loss) per common share - basic $ 0.01 $ (0.03 ) $ (0.04 ) $ (0.01
) $ 0.02 Net earnings (loss) per common share - diluted $
0.01 $ (0.07 ) $ (0.02 ) $ (0.16 ) $ (0.02 ) Non-GAAP net earnings
(loss) per common share - diluted $ 0.01 $ (0.03 ) $ (0.04 ) $
(0.01 ) $ 0.02 Basic weighted average number of
common shares outstanding 40,308,934 38,488,005
37,325,681 36,161,626
35,909,933 Diluted weighted average number of common
shares outstanding 40,730,712 38,488,005 37,325,681 36,161,626
35,909,933
See discussion of Non-GAAP financial
measures later in this document
Discussion of Non-GAAP Financial Measures:
This press release contains certain non-GAAP financial measures.
Generally, a non-GAAP financial measure is a numerical measure of a
company's performance, financial position or cash flows that either
excludes or includes amounts that are not normally excluded or
included in the most directly comparable measure calculated and
presented in accordance with GAAP. Reconciliations between non-GAAP
and GAAP measures are set forth above in Financial Schedules (D)
and (H).
The following non-GAAP financial measures are discussed herein:
adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net
earnings (loss) per common share – basic and diluted. The
presentation of these additional financial measures is not intended
to be considered in isolation from, or superior to, or as a
substitute for the financial measures prepared and presented in
accordance with GAAP (Generally Accepted Accounting Principles),
including the net income or net loss of USAT or net cash
provided/used by operating activities. Management recognizes that
non-GAAP financial measures have limitations in that they do not
reflect all of the items associated with USAT's net income or net
loss as determined in accordance with GAAP. These non-GAAP
financial measures are not required by or defined under GAAP and
may be materially different from the non-GAAP financial measures
used by other companies. USAT has provided above in Financial
Schedules (D) and (H) the reconciliations of the non-GAAP financial
measures to the most directly comparable GAAP financial
measures.
As used herein, non-GAAP net income (loss) represents GAAP net
income (loss) excluding costs or benefits relating to any
adjustment for fair value of warrant liabilities and non-cash
portions of the Company’s income tax benefit (provision),
non-recurring fees and charges that were incurred in connection
with the acquisition and integration of the VendScreen business,
and professional fees incurred in connection with the class action
litigation and the SLC investigation. Non-GAAP net earnings (loss)
per common share - diluted is calculated by dividing non-GAAP net
income (loss) applicable to common shares by the number of diluted
weighted average shares outstanding. Management believes that
non-GAAP net income (loss) is an important measure of USAT’s
business. Non-GAAP net income (loss) is a non-GAAP financial
measure which is not required by or defined under GAAP (Generally
Accepted Accounting Principles). The presentation of this financial
measure is not intended to be considered in isolation or as a
substitute for the financial measures prepared and presented in
accordance with GAAP, including the net income or net loss of the
Company or net cash used in operating activities. Management
recognizes that non-GAAP financial measures have limitations in
that they do not reflect all of the items associated with the
Company’s net income or net loss as determined in accordance with
GAAP, and are not a substitute for or a measure of the Company’s
profitability or net earnings. Management believes that non-GAAP
net income (loss) and non-GAAP net earnings (loss) per share are
important measures of the Company's business. Management uses the
aforementioned non-GAAP measures to monitor and evaluate ongoing
operating results and trends and to gain an understanding of our
comparative operating performance. We believe that this non-GAAP
financial measure serves as a useful metric for our management and
investors because they enable a better understanding of the
long-term performance of our core business and facilitate
comparisons of our operating results over multiple periods, and
when taken together with the corresponding GAAP (United States’
Generally Accepted Accounting Principles) financial measures and
our reconciliations, enhance investors’ overall understanding of
our current and future financial performance. Additionally, the
Company utilizes non-GAAP net income (loss) as a metric in its
executive officer and management incentive compensation plans.
As used herein, Adjusted EBITDA represents net income (loss)
before interest income, interest expense, income taxes,
depreciation, amortization, non-recurring fees and charges that
were incurred in connection with the acquisition and integration of
the VendScreen business, professional fees incurred in connection
with the class action litigation incurred during the third quarter
of the prior fiscal year, impairment charges related to our
EnergyMiser asset trademarks, and change in fair value of warrant
liabilities and stock-based compensation expense. We have excluded
the non-operating item, change in fair value of warrant
liabilities, because it represents a non-cash gain or charge that
is not related to the Company’s operations. We have excluded the
non-cash expense, stock-based compensation, as it does not reflect
the cash-based operations of the Company. We have excluded the
non-recurring costs and expenses incurred in connection with the
VendScreen transaction in order to allow more accurate comparison
of the financial results to historical operations. We have excluded
the professional fees incurred in connection with the class action
litigation as well as the trademark impairment charges because we
believe that they represent a charge that is not related to the
Company's operations. Adjusted EBITDA is a non-GAAP financial
measure which is not required by or defined under GAAP (Generally
Accepted Accounting Principles). The presentation of this financial
measure is not intended to be considered in isolation or as a
substitute for the financial measures prepared and presented in
accordance with GAAP, including the net income or net loss of the
Company or net cash provided/used by operating activities.
Management recognizes that non-GAAP financial measures have
limitations in that they do not reflect all of the items associated
with the Company’s net income or net loss as determined in
accordance with GAAP, and are not a substitute for or a measure of
the Company’s profitability or net earnings. Adjusted EBITDA is
presented because we believe it is useful to investors as a measure
of comparative operating performance. Additionally, the Company
utilizes Adjusted EBTIDA as a metric in its executive officer and
management incentive compensation plans.
F-USAT
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170208006183/en/
Investor Contact:The Blueshirt GroupMike Bishop, +1
415-217-4968mike@blueshirtgroup.com
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