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PAR Technology Corporation Announces 2015 Second Quarter Results

August 6, 2015 4:00 PM

Revenues Grow 10.3% in the Quarter – 7.9% in the First Six Months of 2015

NEW HARTFORD, N.Y.--(BUSINESS WIRE)-- PAR Technology Corporation (NYSE: PAR) today announced results for the second quarter ended June 30, 2015.

Summary of Fiscal 2015 Second Quarter and Year-to-Date Financial Results

Commenting on the second quarter results, Ronald J. Casciano, Chief Executive Officer & President, stated, “We are pleased with the quarterly performance and the progress being made in both of our business segments as they delivered revenue and income growth in the quarter. We are seeing strong interest in our new hospitality technology products, specifically our Brink POS™ software, and are encouraged by the recent new customer wins in this segment. Our Government segment also had a strong second quarter and delivered double digit revenue growth and improved profits for the quarter when compared to the same period in 2015. Going forward we fully expect to build upon our recent progress by focusing on alignment, innovation and execution to compete and succeed in the markets we serve.”

The Company previously stated its intention to make strategic and operational improvements involving its hospitality segment, primarily in its international operations to focus on global delivery of its software solutions. This restructuring realigns sales and support functions with US-based operations, increases efficiencies and reduces operating costs. In connection with this restructuring, the Company’s GAAP results include a one-time pre-tax charge in the second quarter of $416,000.

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

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 and 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 30 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. PAR’s Hospitality business also provides hotel management systems with a complete suite of powerful tools for guest management, recreation management, and timeshare/condo management. In addition, PAR offers the spa industry a leading management application specifically designed to support the unique needs of the resort spa and day spa markets, a rapidly growing hospitality segment. 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. Visit www.partech.com for more information.

There will be a conference call at 4:45 p.m. (Eastern) on August 6, 2015, during which the Company’s management will discuss the financial results for the second quarter of 2015. 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 through August 13, 2015 by dialing 855-859-2056.

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

June 30, December 31,

Assets

2015 2014
Current assets:
Cash and cash equivalents $ 5,136 $ 10,167
Accounts receivable-net 34,467 31,445
Inventories-net 24,936 25,922
Deferred income taxes 5,583 4,512
Other current assets 4,352 4,597
Total current assets 74,474 76,643
Property, plant and equipment - net 6,353 6,135
Deferred income taxes 10,948 11,357
Goodwill 17,167 17,167
Intangible assets - net 22,863 22,952
Other assets 3,676 3,043

Total Assets

$ 135,481 $ 137,297

Liabilities and Shareholders’ Equity

Current liabilities:
Current portion of long-term debt $ 3,176 $ 3,173
Borrowings under line of credit 3,276 5,000
Accounts payable 15,422 19,676
Accrued salaries and benefits 6,376 6,429
Accrued expenses 6,150 6,578
Customer deposits 4,078 2,345
Deferred service revenue 16,175 12,695
Income taxes payable 373 475
Total current liabilities 55,026 56,371
Long-term debt 2,528 2,566
Other long-term liabilities 8,765 8,847
Total liabilities 66,319 67,784
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; 17,250,209 and 17,274,708 sharesissued; 15,542,100 and 15,566,599 outstanding

345 346
Capital in excess of par value 45,066 44,854
Retained earnings 31,181 31,465
Accumulated other comprehensive loss (1,594 ) (1,316 )
Treasury stock, at cost, 1,708,109 shares (5,836 ) (5,836 )
Total shareholders’ equity 69,162 69,513
Total Liabilities and Shareholders’ Equity $ 135,481 $ 137,297

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

For the threemonths endedJune 30,

For the threemonths endedJune 30,

For the sixmonths endedJune 30,

For the sixmonths endedJune 30,

2015 2014 2015 2014
Net revenues:
Product $ 25,802 $ 22,953 $ 47,488 $ 41,545
Service 15,929 14,920 30,031 29,170
Contract 21,561 19,529 45,397 43,228
63,292 57,402 122,916 113,943
Costs of sales:
Product 18,172 15,815 33,013 28,718
Service 10,404 10,831 19,724 20,384
Contract 20,189 18,495 42,663 40,567
48,765 45,141 95,400 89,669
Gross margin 14,527 12,261 27,516 24,274
Operating expenses:
Selling, general and administrative 9,253 9,513 18,317 18,776
Research and development 4,420 3,761 8,765 7,625
Acquisition amortization 249 - 498 -
13,922 13,274 27,580 26,401
Operating income (loss): 605 (1,013 ) (64 ) (2,127 )
Other (expense) income, net (10 ) 406 (239 ) 328
Interest expense (85 ) (25 ) (171 ) (42 )
Income (loss) before (provision for) benefit from income taxes 510 (632 ) (474 ) (1,841 )
(Provision for) benefit from income taxes (409 ) 113 190 333
Net income (loss) $ 101 $ (519 ) $ (284 ) $ (1,508 )
Earnings (loss) per Share:
Basic $ 0.01 $ (0.03 ) $ (0.02 ) $ (0.10 )
Diluted $ 0.01 $ (0.03 ) $ (0.02 ) $ (0.10 )
Weighted average shares outstanding
Basic 15,584 15,612 15,541 15,473
Diluted 15,671 15,612 15,541 15,473

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

For the three months ended June 30, 2015 For the three months ended June 30, 2014

Reportedbasis (GAAP)

Adjustments

Comparablebasis (Non-GAAP)

Reported basis(GAAP)

Adjustments

Comparablebasis (Non-GAAP)

Net revenues $ 63,292 - 63,292 $ 57,402 - 57,402
Costs of sales 48,765 85 48,680 45,141 - 45,141
Gross Margin 14,527 85 14,612 12,261 - 12,261
Operating Expenses
Selling, general and administrative 9,253 346 8,907 9,513 278 9,235
Research and development 4,420 13 4,407 3,761 - 3,761
Acquisition amortization 249 249 - - -
Total operating expenses 13,922 608 13,314 13,274 278 12,996
Operating income (loss) 605 693 1,298 (1,013 ) 278 (735 )
Other (expense) income, net (10 ) - (10 ) 406 - 406
Interest expense (85 ) 25 (60 ) (25 ) - (25 )
Income (loss) before (provision for) benefit from income taxes 510 718 1,228 (632 ) 278 (354 )
(Provision for) benefit from income taxes (409 ) (266 ) (675 ) 113 (95 ) 18
Net income (loss) $ 101 $ 452 $ 553 $ (519 ) $ 183 $ (336 )
Earnings (loss) per diluted share $ 0.01 $ 0.04 $ (0.03 ) $ (0.02 )

The Company reports its financial results in accordance with GAAP, which refers 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 operations of the Company and believes this information provides investors better 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.

During the second quarter of 2015, the Company recorded severance and other related charges of $416,000, of which $85,000 is included in cost of sales, $13,000 is included in research and development and $318,000 is included in selling, general and administrative. Also included within selling, general and administrative is equity based compensation charges of $28,000. Lastly, related to the acquisition of Brink, the Company recognized amortization of acquired intangible assets of $249,000 and accreted interest of $25,000. During the second quarter of 2014, the Company recorded a charge of $278,000 for equity based compensation expense. 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 CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS(in thousands, except per share data)(Unaudited)

For the six months ended June 30, 2015 For the six months ended June 30, 2014

Reportedbasis (GAAP)

Adjustments

Comparablebasis (Non-GAAP)

Reported basis(GAAP)

Adjustments

Comparablebasis (Non-GAAP)

Net revenues $ 122,916 - $ 122,916 $ 113,943 - $ 113,943
Costs of sales 95,400 151 95,249 89,669 - 89,669
Gross Margin 27,516 151 27,667 24,274 - 24,274
Operating Expenses

Selling, general and administrative

18,317 706 17,611 18,776 802 17,974
Research and development 8,765 13 8,752 7,625 7,625
Acquisition amortization 498 498 - - -
Total operating expenses 27,580 1,217 26,363 26,401 802 25,599
Operating income (loss) (64 ) 1,368 1,304 (2,127 ) 802 (1,325 )
Other (expense) income, net (239 ) - (239 ) 328 - 328
Interest expense (171 ) 51 (120 ) (42 ) - (42 )
Income (loss) before (provision for) benefit from income taxes (474 ) 1,419 945 (1,841 ) 802 (1,039 )
(Provision for) benefit from income taxes 190 (525 ) (335 ) 333 (273 ) 60
Net income (loss) $ (284 ) $ 894 $ 610 $ (1,508 ) $ 529 $ (979 )
Earnings (loss) per diluted share $ (0.02 ) $ 0.04 $ (0.10 ) $ (0.06 )

During the six months ended June 30, 2015, the Company recorded severance and other related charges of $597,000, of which $151,000 is included in cost of sales, $13,000 is included in research and development and $433,000 is included in selling, general and administrative. Also included within selling, general and administrative is equity based compensation charges of $273,000. Lastly, related to the acquisition of Brink, the Company recognized amortization of acquired intangible assets of $498,000 and accreted interest of $51,000. During the six months ended June 30, 2014, the Company recorded a charge of $802,000 for equity based compensation expense. 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

Christopher R. Byrnes, 315-738-0600 ext. 6226

[email protected]

www.partech.com

Source: PAR Technology Corporation

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