Payment Data Systems, Inc. (NASDAQ:PYDS), an integrated electronic
payment solutions provider, today announced financial results for
the first quarter ended March 31, 2017.
First Quarter 2017 Financial and Operating
Summary
- Revenues were $2.8 million
- Gross margin was $0.9 million, or 33.5% of revenues
- Operating loss was $321,938
- Adjusted EBITDA1 was $114,527, or 4.1% of revenues
- Net loss was $286,583, or $0.03 per basic and diluted
share
- Total dollars processed for the first quarter of 2017 were $695
million, down 5.8% from $738 million in the first quarter of
2016
- First quarter transactions processed at 2.8 million were down
13.7% from a year ago
1See Reconciliation of GAAP Operating Income to Adjusted EBITDA
in the accompanying financial tables
“While our first quarter revenues were impacted by lower ACH
volumes, credit card and return check processing fees, prepaid
revenues increased as the result of our product enhancements and
momentum in our PINless debit services continues to accelerate,”
said President and CEO Louis Hoch. “We are pleased to report
that our operating expenses were down year-over-year on an absolute
basis. Additionally, we continued to generate cash from
operations, and our balance sheet remains strong with cash of $3.6
million and no debt as of March 31, 2017. We remain
enthusiastic about our key revenue generating initiatives and
resources as we proceed toward a return to top-line growth.”
Financial Results
Three Months Ended March 31, 2017
Revenues of $2.8 million decreased 12.9% compared to $3.2
million for the first quarter of 2016. The decline was due to
lower ACH and credit card processing fees, as well as a net loss of
some customers. This was offset somewhat by the new PINless
debit product which was launched in October 2016, as well as an
increase in debit card processing fees.
Gross margin dollars were $942,799, or 33.5% of revenues,
compared to $1.1 million, or 33.3% of revenues, in the
corresponding prior-year period. The decline in gross margin
dollars were due to the lower revenue but was offset somewhat
by a 13% decline in cost of service expenses.
Operating loss was $321,938, compared to an operating loss of
$46,413 in the first quarter of 2016, reflecting lower gross margin
as well as higher selling, general and administrative
expenses.
Adjusted EBITDA (earnings before interest, taxes, depreciation
and amortization adjusted for non-recurring and non-cash items) was
$114,527, or 4.1% of revenue, compared with $465,499, or 14.4% of
revenue, in the first quarter of 2016.
Net loss was $286,583, or $0.03 per basic and diluted share,
compared to a net loss of $32,002, or $0.00 per basic and diluted
share in the first quarter of 2016, reflecting lower revenue base
and higher expenses in the first quarter of 2017.
Balance Sheet
At March 31, 2017, the Company had $3.6 million of cash and cash
equivalents and no debt.
Conference Call and Webcast
Payment Data Systems, Inc.’s management will host a conference
call with a live webcast today at 5:00 p.m. Eastern Time to provide
a business update.
Individuals interested in dialing in to the conference call may
do so by dialing (844) 883-3890 for U.S. participants and (412)
317-9246 for participants outside the U.S., referencing “Payment
Data Systems”. The call may also be accessed via webcast on the
Company’s website at www.paymentdata.com/invest. If you would
like to submit a question via email in advance please contact
Allyson Pooley at apooley@finprofiles.com.
A replay of the call will be available through Monday, May 29,
2017 by dialing (877) 344-7529 (U.S.) or (412) 317-0088
(international), using the passcode 10105760.
About Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, EBITDA
and adjusted EBITDA, as defined in Regulation G of the Securities
and Exchange Act of 1934, as amended. The Company reports its
financial results in compliance with GAAP, but believes that also
discussing non-GAAP measures provides investors with financial
measures it uses in the management of its business. The Company
defines EBITDA as operating income (loss), before interest, taxes,
depreciation and amortization of intangibles. The Company defines
adjusted EBITDA as EBITDA, as defined above, plus non-cash stock
option costs and certain non-recurring items, such as acquisitions.
These measures may not be comparable to similarly titled measures
reported by other companies. Management uses EBITDA and adjusted
EBITDA as indicators of the Company's operating performance and
ability to fund acquisitions, capital expenditures and other
investments and, in the absence of refinancing options, to repay
debt obligations.
Management believes EBITDA and adjusted EBITDA are helpful to
investors in evaluating the Company's operating performance because
non-cash costs and other items that management believes are not
indicative of its results of operations are excluded. EBITDA and
adjusted EBITDA are supplemental non-GAAP measures, which have
limitations as an analytical tool. Non-GAAP financial measures
should not be considered as a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP.
Non-GAAP financial measures do not reflect a comprehensive system
of accounting, may differ from GAAP measures with the same names,
and may differ from non-GAAP financial measures with the same or
similar names that are used by other companies. For a description
of our use of EBITDA and adjusted EBITDA, and a reconciliation of
EBITDA and adjusted EBITDA to operating income (loss), see the
section of this press release titled "Non-GAAP Reconciliation."
About Payment Data Systems, Inc.
Payment Data Systems (NASDAQ:PYDS), a leading integrated payment
solutions provider, offers a wide range of payment solutions to
merchants, billers, banks, service bureaus, and card issuers. The
Company operates credit, debit/prepaid and ACH payment processing
platforms to deliver convenient, world-class payment solutions and
service to their clients. The strength of the Company lies in its
ability to provide tailored solutions for card issuance, payment
acceptance, and bill payments as well as its unique technology in
the prepaid sector. Payment Data is headquartered in San
Antonio, Texas, and has offices in New York, New York; and Long
Beach, California. For additional information please
visit www.paymentdata.com. Websites:
www.akimbocard.com and www.ficentive.com. Find us
on Facebook®.
FORWARD-LOOKING STATEMENTS DISCLAIMER
Except for the historical information contained herein, the
matters discussed in this release include certain forward-looking
statements, which are intended to be covered by safe harbors. Those
statements include, but may not be limited to, all statements
regarding management’s intent, belief and expectations, such as
statements concerning the Company’s future and operating and growth
strategy. These forward-looking statements are identified by the
use of words such as “believe,” “proceed,” “continue” and “expect”
among others. Forward-looking statements in this press release are
subject to certain risks and uncertainties inherent in the
Company’s business that could cause actual results to vary,
including the management of the Company’s growth, the loss of key
resellers, the relationships with the Automated Clearinghouse
network, bank sponsors, third-party card processing providers and
merchants, the loss of key personnel, growing competition in the
electronic commerce market, the security of the Company’s software,
hardware and information, and compliance with complex federal,
state and local laws and regulations, and other risks detailed from
time to time in its filings with the Securities and Exchange
Commission, including its annual report on Form 10-K for the fiscal
year ended December 31, 2016. One or more of these factors have
affected, and in the future, could affect the Company’s businesses
and financial results in the future and could cause actual results
to differ materially from plans and projections. Management
believes that the assumptions underlying the forward-looking
statements included in this release will prove to be accurate. In
light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such
information should not be regarded as a representation by the
Company or any other person that the Company’s objectives and plans
will be achieved. All forward-looking statements made in this
release are based on information presently available to management.
Management assumes no obligation to update any forward-looking
statements, except as required by law.
(Financial Tables Follow)
|
|
|
|
|
PAYMENT DATA SYSTEMS, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
March 31, |
|
December 31, |
|
2017 |
|
|
2016 |
|
|
|
(UNAUDITED) |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
Cash and cash
equivalents |
|
$ |
3,618,305 |
|
|
$ |
4,120,738 |
|
Accounts receivable,
net |
|
|
850,832 |
|
|
|
907,750 |
|
Settlement processing
assets |
|
|
34,138,949 |
|
|
|
43,851,311 |
|
Prepaid expenses and
other |
|
|
272,586 |
|
|
|
142,029 |
|
Note receivable |
|
|
700,000 |
|
|
|
200,000 |
|
Current assets before
restricted cash |
|
|
39,580,672 |
|
|
|
49,221,828 |
|
Restricted cash |
|
|
14,725,430 |
|
|
|
15,803,641 |
|
Total
current assets |
|
|
54,306,102 |
|
|
|
65,025,469 |
|
|
|
|
|
|
Property and equipment,
net |
|
|
2,516,801 |
|
|
|
2,494,510 |
|
|
|
|
|
|
Other assets: |
|
|
|
|
Intangibles, net |
|
|
132,114 |
|
|
|
172,899 |
|
Deferred
tax asset |
|
|
1,621,000 |
|
|
|
1,621,000 |
|
Other
assets |
|
|
229,571 |
|
|
|
200,808 |
|
Total
other assets |
|
|
1,982,685 |
|
|
|
1,994,707 |
|
|
|
|
|
|
Total
Assets |
|
$ |
58,805,588 |
|
|
$ |
69,514,686 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
Current
Liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
231,648 |
|
|
$ |
145,044 |
|
Accrued
expenses |
|
|
807,821 |
|
|
|
703,322 |
|
Settlement processing obligations |
|
|
34,138,949 |
|
|
|
43,851,311 |
|
Current
liabilities before restricted cash |
|
|
35,178,418 |
|
|
|
44,699,677 |
|
Restricted cash |
|
|
14,725,430 |
|
|
|
15,803,641 |
|
Total
current liabilities |
|
|
49,903,848 |
|
|
|
60,503,318 |
|
|
|
|
|
|
Stockholders'
Equity: |
|
|
|
|
Preferred
stock, $0.01 par value, 10,000,000 shares authorized; -0- shares
issued and outstanding at March 31, 2017 (unaudited) and December
31, 2016 |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Common
stock, $0.001 par value, 200,000,000 shares authorized; 12,449,249
and 12,392,288 issued and 11,829,645 and 11,795,939 outstanding at
March 31, 2017 (unaudited) and December 31, 2016 |
|
|
181,874 |
|
|
|
181,818 |
|
Additional paid-in capital |
|
|
63,913,124 |
|
|
|
63,881,365 |
|
Treasury
stock, at cost; 619,604 and 596,349 shares at March 31, 2017
(unaudited) and December 31, 2016 |
|
|
(749,113 |
) |
|
|
(718,149 |
) |
Deferred
compensation |
|
|
(3,905,921 |
) |
|
|
(4,082,025 |
) |
Accumulated deficit |
|
|
(50,538,224 |
) |
|
|
(50,251,641 |
) |
Total
stockholders' equity |
|
|
8,901,740 |
|
|
|
9,011,368 |
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity |
|
$ |
58,805,588 |
|
|
$ |
69,514,686 |
|
|
|
|
|
|
|
|
|
|
|
|
|
PAYMENT DATA SYSTEMS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
$ |
2,810,744 |
|
|
$ |
3,228,631 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Cost of
services |
|
|
|
|
|
|
1,867,945 |
|
|
|
2,154,783 |
|
|
Selling,
general and administrative: |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
|
|
|
|
207,920 |
|
|
|
287,689 |
|
|
Other
expenses |
|
|
|
|
|
|
828,272 |
|
|
|
608,349 |
|
|
Depreciation and amortization |
|
|
|
|
|
|
228,545 |
|
|
|
224,223 |
|
|
Total
operating expenses |
|
|
|
|
|
|
3,132,682 |
|
|
|
3,275,044 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss) |
|
|
|
|
|
|
(321,938 |
) |
|
|
(46,413 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other
income: |
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
33,816 |
|
|
|
22,011 |
|
|
Other income (expense) |
|
|
|
|
|
|
1,539 |
|
|
|
(600 |
) |
|
Other
income (expense), net |
|
|
|
|
|
|
35,355 |
|
|
|
21,411 |
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes |
|
|
|
|
|
|
(286,583 |
) |
|
|
(25,002 |
) |
|
Income
taxes (benefit) expense |
|
|
|
|
|
|
- |
|
|
|
7,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
|
|
|
|
$ |
(286,583 |
) |
|
$ |
(32,002 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) Per Share |
|
|
|
|
|
|
|
|
|
Basic
earnings (loss) per common share: |
|
|
|
|
|
$ |
(0.03 |
) |
|
$ |
(0.00 |
) |
|
Diluted
earnings (loss) per common share: |
|
|
|
|
|
$ |
(0.03 |
) |
|
$ |
(0.00 |
) |
|
Weighted
average common shares outstanding |
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
8,485,183 |
|
|
|
7,719,248 |
|
|
Diluted |
|
|
|
|
|
|
8,485,183 |
|
|
|
7,719,248 |
|
|
PAYMENT DATA SYSTEMS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(UNAUDITED) |
|
|
|
Three Months Ended March 31, |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
Operating
Activities |
|
|
|
|
Net income (loss) |
|
$ |
(286,583 |
) |
|
$ |
(32,002 |
) |
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
Depreciation |
|
|
187,760 |
|
|
|
183,437 |
|
Amortization |
|
|
40,785 |
|
|
|
40,784 |
|
Non-cash stock based
compensation |
|
|
207,920 |
|
|
|
287,689 |
|
Issuance of stock to
consultant |
|
|
- |
|
|
|
19,000 |
|
Changes in operating
assets and liabilities: |
|
|
|
|
Accounts
receivable |
|
|
56,918 |
|
|
|
122,858 |
|
Prepaid
expenses and other |
|
|
(130,557 |
) |
|
|
(177,806 |
) |
Other
assets |
|
|
(28,763 |
) |
|
|
599 |
|
Accounts
payable and accrued expenses |
|
|
191,103 |
|
|
|
15,180 |
|
Deferred
revenues |
|
|
- |
|
|
|
12,500 |
|
|
|
|
|
|
Net cash provided by
operating activities |
|
|
238,583 |
|
|
|
472,239 |
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
Purchases of property
and equipment |
|
|
(210,052 |
) |
|
|
(107,954 |
) |
Note receivable |
|
|
(500,000 |
) |
|
|
(200,000 |
) |
Net cash (used) by
investing activities |
|
|
(710,052 |
) |
|
|
(307,954 |
) |
|
|
|
|
|
Financing
Activities |
|
|
|
|
Purchases of treasury
stock |
|
|
(30,964 |
) |
|
|
- |
|
Net cash (used) by
financing activities |
|
|
(30,964 |
) |
|
|
- |
|
|
|
|
|
|
Change in cash and cash
equivalents |
|
|
(502,433 |
) |
|
|
164,285 |
|
Cash and cash
equivalents, beginning of year |
|
|
4,120,738 |
|
|
|
4,059,606 |
|
|
|
|
|
|
Cash and Cash
Equivalents, End of Year |
|
$ |
3,618,305 |
|
|
$ |
4,223,891 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures |
|
|
|
|
Cash paid
for interest |
|
|
- |
|
|
|
- |
|
Cash paid
for income taxes |
|
$ |
- |
|
|
$ |
7,000 |
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES |
(UNAUDITED) |
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
March 31, |
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
Reconciliation from Operating Income (Loss) to Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
Operating Income (Loss) |
|
|
|
|
|
$ |
(321,938 |
) |
|
$ |
(46,413 |
) |
Depreciation and amortization |
|
|
|
|
|
|
228,545 |
|
|
|
224,223 |
|
EBITDA |
|
|
|
|
|
|
(93,393 |
) |
|
|
177,810 |
|
Non-cash
stock-based compensation expense, net |
|
|
|
|
|
|
207,920 |
|
|
|
287,689 |
|
Adjusted
EBITDA |
|
|
|
|
|
$ |
114,527 |
|
|
$ |
465,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Adjusted EBITDA margins: |
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
$ |
2,810,744 |
|
|
$ |
3,228,631 |
|
Adjusted
EBITDA |
|
|
|
|
|
|
114,527 |
|
|
|
465,499 |
|
Adjusted EBITDA margins |
|
|
|
|
|
|
4.1 |
% |
|
|
14.4 |
% |
|
Investor Contact:
Allyson Pooley
Financial Profiles
PYDS@finprofiles.com
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