Market Overview

PAR Technology Corporation Announces 2018 Second Quarter Results

Share:

PAR Technology Corporation (NYSE:PAR) today announced its results for
its second quarter ended June 30, 2018.

Summary of Fiscal 2018 Second Quarter and Year-to-Date Financial
Results

  • Revenues were reported at $52.6 million for the second quarter of
    2018, compared to $62.3 million for the same period in 2017, a 15.6%
    decrease.
  • GAAP net loss for the second quarter of 2018 was $1.3 million, or
    $0.08 loss per diluted share, a decrease from the GAAP net income of
    $2.0 million, or $0.12 earnings per diluted share reported for the
    same period in 2017.
  • Non-GAAP net loss for the second quarter of 2018 was $0.7 million, or
    $0.04 loss per diluted share, compared to non-GAAP net income of $2.6
    million, or $0.16 earnings per diluted share, for the same period in
    2017.
  • Revenues were reported at $108.2 million for the first six months of
    2018, compared to $128.1 million for the same period in 2017, a 15.5%
    decrease.
  • GAAP net loss for the first six months of 2018 was $1.3 million, or
    $0.08 loss per diluted share, a decrease from the GAAP net income of
    $3.4 million, or $0.21 earnings per diluted share reported for the
    same period in 2017.
  • Non-GAAP net income for the first six months of 2018 was $0.0 million,
    or $0.00 per diluted share, compared to non-GAAP net income of $4.9
    million, or $0.30 earnings per diluted share, for the same period in
    2017.

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

PAR Technology's CEO & President, Dr. Donald H. Foley commented, "Over
the past several quarters, we have made substantial investments in our
Brink development, as well as our Brink sales and marketing teams, as we
continue the transition to a software led solutions company. This
quarter is no different. As evidence, our SaaS revenues increased 66%
over the same quarter last year. Our Government segment had another
strong quarter as revenues increased 22% over the same period in 2017
and we reported contract margins of 11.7% in the quarter."

Conference Call.

There will be a conference call at 4:30 p.m. (Eastern) on August 8,
2018, during which the Company's management will discuss the financial
results for the second quarter ended June 30, 2018. 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/about-us/investors.
Alternatively, listeners may access an archived version of the
presentation call after 7:30 p.m. on August 8, 2018 through August 15,
2018 by dialing 855-859-2056 and using conference ID 9787478.

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. PAR
products 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/about-us/investors
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 and product, and
service demands, including changes in product or service demands by the
two customers from whom a significant portion of our revenue is derived;
risks associated with the internal investigation into conduct at our
China and Singapore offices, including sanctions and fines that may be
imposed by the U.S. Department of Justice, the Securities and Exchange
Commission ("SEC"), and other governmental authorities; and the other
risk factors discussed in our most recent Annual Report on Form 10-K and
other filings with the 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.

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 tables below, 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 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 income, net earnings and diluted earnings 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.

 

PAR TECHNOLOGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(Unaudited)

     
Assets June 30, 2018 December 31, 2017
Current assets:
Cash and cash equivalents $ 8,678 $ 6,600
Accounts receivable-net 33,418 30,077
Inventories-net 26,748 21,746
Other current assets 4,179   4,209  
Total current assets 73,023 62,632
Property, plant and equipment – net 11,877 10,755
Deferred income taxes 14,170 13,809
Goodwill 11,051 11,051
Intangible assets – net 12,504 12,070
Other assets 4,590   4,307  
Total Assets $ 127,215   $ 114,624  
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 183 $ 195
Borrowings of line of credit 5,841 950
Accounts payable 21,072 14,332
Accrued salaries and benefits 6,153 6,275
Accrued expenses 2,775 3,926
Customer deposits and deferred service revenue 11,236 10,241
Other current liabilities 3,000    
Total current liabilities 50,260 35,919
Long-term debt 101 185
Deferred revenue 4,783 2,668
Other long-term liabilities 3,380   6,866  
Total liabilities 58,524   45,638  
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;
17,885,159 and
17,677,161 shares issued, 16,177,050 and
15,969,052 outstanding at June 30,
2018 and December 31,
2017, respectively

357 354
Capital in excess of par value 49,508 48,349
Retained earnings 28,294 29,549
Accumulated other comprehensive loss (3,632 ) (3,430 )
Treasury stock, at cost, 1,708,109 shares (5,836 ) (5,836 )
Total shareholders' equity 68,691   68,986  
Total Liabilities and Shareholders' Equity $ 127,215   $ 114,624  
 
 

PAR TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

     
Three Months Ended
June 30,
  Six Months Ended
June 30,
2018   2017   2018   2017
Net revenues:
Product $ 20,883 $ 32,682 $ 47,207 $ 69,888
Service 13,944 15,034 27,140 29,377
Contract 17,744   14,545     33,885   28,861  
52,571   62,261     108,232   128,126  
Costs of sales:
Product 15,339 24,389 34,779 51,961
Service 10,205 10,397 19,752 20,872
Contract 15,667   12,909     30,494   25,656  
41,211   47,695     85,025   98,489  
Gross margin 11,360 14,566 23,207 29,637
Operating expenses:
Selling, general and administrative 9,020 8,917 17,620 18,527
Research and development 3,222 2,653 6,090 5,632
Amortization of identifiable intangible assets 242   242     483   483  
12,484   11,812     24,193   24,642  
Operating (loss) income from continuing operations (1,124 ) 2,754 (986 ) 4,995
Other (expense) / income, net (384 ) 54 (335 ) (194 )
Interest expense, net (78 ) (13 )   (119 ) (45 )
(Loss) income from continuing operations before provision for income
taxes
(1,586 ) 2,795 (1,440 ) 4,756
Benefit from / (provision for) income taxes 263   (818 )   185   (1,515 )
(Loss) income from continuing operations (1,323 ) 1,977 (1,255 ) 3,241
Discontinued operations
Income from discontinued operations (net of tax)         183  
Net (loss) income $ (1,323 ) $ 1,977     $ (1,255 ) $ 3,424  
Basic Earnings per Share:
(Loss) income from continuing operations (0.08 ) 0.12 (0.08 ) 0.20
Income from discontinued operations         0.01  
Net (loss) income $ (0.08 ) $ 0.12     $ (0.08 ) $ 0.21  
Diluted Earnings per Share:
(Loss) income from continuing operations (0.08 ) 0.12 (0.08 ) 0.20
Income from discontinued operations         0.01  
Net (loss) income $ (0.08 ) $ 0.12     $ (0.08 ) $ 0.21  
Weighted average shares outstanding
Basic 16,330   15,919     15,993   15,893  
Diluted 16,330   16,179     15,993   16,146  
 
       

PAR TECHNOLOGY CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(in thousands, except per share and per share data)

(Unaudited)

 
For the three months ended June 30, 2018   For the three months ended June 30, 2017
Reported basis (GAAP)     Adjustments   Comparable basis (Non-GAAP)   Reported basis (GAAP)   Adjustments   Comparable basis (Non-GAAP)
Net revenues $ 52,571 $   $ 52,571 $ 62,261 $   $ 62,261
Costs of sales 41,211       41,211   47,695     47,695
Gross margin 11,360 11,360 14,566 14,566
Operating Expenses:
Selling, general and administrative 9,020 641 8,379 8,917 671 8,246
Research and development 3,222 3,222 2,653 2,653
Acquisition amortization 242   242       242 242    
Total operating expenses 12,484 883 11,601 11,812 913 10,899
Operating (loss) income from continuing operations (1,124 ) 883 (241) 2,754 913 3,667
Other (expense) income, net (384 ) (384) 54 54
Interest expense, net (78 )     (78)   (13)     (13)
(Loss) income from continuing operations before provision for income
taxes
(1,586 ) 883 (703) 2,795 913 3,708
Benefit from / (provision for) income taxes 263   (212 )   51   (818) (338 )   (1,156)
(Loss) income from continuing operations (1,323 ) 671     (652)   1,977 575     2,552
Income from discontinued operations, (net of tax)        
Net (loss) income (1,323 ) (652)   1,977 2,552
(Loss) income per diluted share from continuing operations (0.08 ) (0.04)   0.12 0.16
Income per diluted share from discontinuing operations 0.00   0.00   0.00 0.00
(Loss) income per diluted share $ (0.08 ) $ (0.04)   $ 0.12 $ 0.16
 

During the second quarter of 2018, the Company recorded $314,000 of
expenses related to the Company's internal investigation into conduct at
its China and Singapore offices and the SEC subpoena. Additionally,
$250,000 of equity based compensation charges were recorded during the
second quarter of 2018. There were $77,000 of severance expenses
recorded in the second quarter related to the closing of the Company's
facility in France. The Company recognized amortization of acquired
intangible assets of $242,000 related to the Company's 2014 acquisition
of Brink Software, Inc. ("Brink"). The benefit from income tax was
decreased by 24%, or $212,000, to reflect the tax impact from non-GAAP
adjustments.

During the second quarter of 2017, the Company recorded charges within
selling, general and administrative of $605,000 related to the Company's
internal investigation into conduct at its China and Singapore offices
and the SEC subpoena. In addition, $5,000 of expenses related to the
implementation of a new ERP system, and $61,000 of equity based
compensation charges were recorded during the second quarter of 2017.
The Company recognized amortization of acquired intangible assets of
$242,000 related to the Company's acquisition of Brink. The provision
for income tax was increased by 37%, or $338,000, to reflect the tax
impact from non-GAAP adjustments.

     

PAR TECHNOLOGY CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(in thousands, except per share and per share data)

(Unaudited)

 
For the six months ended June 30, 2018 For the six months ended June 30, 2017
Reported basis (GAAP)   Adjustments   Comparable basis (Non-GAAP)   Reported basis (GAAP)   Adjustments   Comparable basis (Non-GAAP)
Net revenues $ 108,232 $   $ 108,232 $ 128,126 $   $ 128,126
Costs of sales 85,025     85,025   98,489     98,489
Gross margin 23,207 23,207 29,637 29,637
Operating Expenses:
Selling, general and administrative 17,620 1,119 16,501 18,527 1,855 16,672
Research and development 6,090 6,090 5,632 5,632
Acquisition amortization 483 483       483 483    
Total operating expenses 24,193 1,602 22,591 24,642 2,338 22,304
Operating (loss) income from continuing operations (986) 1,602 616 4,995 2,338 7,333
Other expense, net (335) (335) (194) (194)
Interest expense, net (119)     (119)   (45)     (45)
(Loss) income from continuing operations before provision for income
taxes
(1,440) 1,602 162 4,756 2,338 7,094
Benefit from / (provision for) income taxes 185 (384 )   (199)   (1,515) (865 )   (2,380)
(Loss) income from continuing operations (1,255) 1,218     (37)   3,241 1,473     4,714
Income from discontinued operations, (net of tax)     183   183
Net (loss) income (1,255) (37)   3,424 4,897
(Loss) income per diluted share from continuing operations (0.08) 0.00   0.20 0.29
Income per diluted share from discontinuing operations 0.00 0.00   0.01 0.01
(Loss) income per diluted share $ (0.08) $ 0.00   $ 0.21 $ 0.30
       

During the six months ended June 30, 2018, the Company recorded $611,000
of expenses related to the Company's internal investigation into conduct
at its China and Singapore offices and the SEC subpoena. Additionally,
$431,000 of equity based compensation charges were recorded during the
first six months of 2018. There were $77,000 of severance expenses
recorded in the first six months of 2018 related to the closing of the
Company's facility in France. The Company recognized amortization of
acquired intangible assets of $483,000 related to the Company's 2014
acquisition of Brink. The benefit from income tax was decreased by 24%,
or $384,000, to reflect the tax impact from non-GAAP adjustments.

During the six months ended June 30, 2017, the Company recorded charges
within selling, general and administrative of $1,567,000 related to the
Company's internal investigation into conduct at its China and Singapore
offices and the SEC subpoena, and $21,000 of legacy charges related to
the Company's former chief financial officer's unauthorized transfers of
Company funds. In addition, $29,000 of expenses related to the
implementation of a new ERP system, and $238,000 of equity based
compensation charges were recorded during the six months ended June 30,
2017. The Company recognized amortization of acquired intangible assets
of $483,000 related to the Company's acquisition of Brink. The benefit
from income tax was increased by 37%, or $865,000, to reflect the tax
impact from non-GAAP adjustments.

View Comments and Join the Discussion!