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PAR Technology Corporation Announces 2015 Third Quarter Results from Continuing Operations Company Also Announces Sale of Its Hotel Technology Business

November 5, 2015 7:30 AM

Revenues Grow 10.3% in the Quarter – Adjusted Net-Income Rises 63%

YTD Revenues Rise 8.6% from previous year – Adjusted YTD Net-Income increases by 100% to $4.1 million

NEW HARTFORD, N.Y.--(BUSINESS WIRE)-- PAR Technology Corporation (NYSE: PAR) a leading provider of hospitality/retail management systems and Government contract services today announced results from continuing operations for the third quarter and year to date ended September 30, 2015. The Company also announced that it has closed a transaction selling substantially all the assets of its hotel technology business operated under PAR Springer-Miller Systems, Inc. to affiliates of Constellation Software Inc. for a gross purchase price of $16.6 million cash. There is also an opportunity for additional payment of $1.5 million if certain sales targets are achieved. The transaction closed on November 4, 2015.

Summary of Fiscal 2015 Third Quarter and Year-to-Date Financial Results from Continuing Operations

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

Ronald J. Casciano, Chief Executive Officer and President, commented “We are pleased to have delivered another quarter of improved performance, demonstrating the strength of our technology solutions in our Hospitality and Government segments. We are successfully executing our plan to grow revenue with new customers and also achieve our cost reduction objectives. These measurable improvements in results reflect the continued enhancements we have made to deliver cutting edge solutions to the markets we serve that continue to consistently exceed the customer’s requirements.”

Concerning the divestiture of the hotel/spa business, Casciano stated, “We believe selling the Springer-Miller business is the best way to focus on our core businesses to accelerate performance and growth. This sale provides the Company with the financial flexibility to explore future opportunities to enhance our strategic position and immediately strengthens our balance sheet."

Casciano concluded, “Heading into 2016, I am confident that our strategy will enable PAR to become a consistent performer in delivering solid financial results. Our leadership is strong, we are focused on execution and ultimately understand what is required to deliver successful results. We have significant work ahead of us, but I am proud of the progress we have made to date to drive long-term growth and shareholder value.”

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. 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 10:00 a.m. eastern time on November 5th, 2015, during which the Company’s management will discuss the financial results for the third 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 after 1:00 p.m. ET on November 5, 2015 through November 12, 2015 by dialing 855-859-2056.

PAR TECHNOLOGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

(Unaudited)

September 30, December 31,
Assets 2015 2014
Current assets:
Cash and cash equivalents $ 2,057 $ 9,867
Accounts receivable-net 29,344 29,674
Inventories-net 25,090 25,928
Deferred income taxes 5,014 4,512
Other current assets 2,660 4,018
Total current assets 64,165 73,999
Property, plant and equipment - net 5,788 5,148
Deferred income taxes 12,009 11,357
Goodwill 11,051 11,051
Intangible assets - net 10,720 10,580
Other assets 3,641 3,043
Assets classified as held for sale 20,697 22,119
Total Assets $ 128,071 $ 137,297
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt $ 2,075 $ 3,173
Borrowings under line of credit 3,438 5,000
Accounts payable 16,656 19,258
Accrued salaries and benefits 5,830 5,726
Accrued expenses 5,615 6,492
Customer deposits 300 1,242
Deferred service revenue 11,089 10,388
Income taxes payable 323 475
Total current liabilities 45,326 51,754
Long-term debt 612 2,566
Other long-term liabilities 8,711 8,847
Liabilities directly associated with assets held for sale 6,256 4,617
Total liabilities 60,905 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; 17,258,747 and 17,274,708 shares issued; 15,550,638 and 15,566,599 outstanding 345 346
Capital in excess of par value 45,276 44,854
Retained earnings 29,692 31,465
Accumulated other comprehensive loss (2,311) (1,316)
Treasury stock, at cost, 1,708,109 shares (5,836) (5,836)
Total shareholders’ equity 67,166 69,513
Total Liabilities and Shareholders’ Equity $ 128,071 $ 137,297

PAR TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

For the threemonths endedSeptember 30,

For the threemonths endedSeptember 30,

For the ninemonths endedSeptember 30,

For the ninemonths ended

September 30,

2015 2014 2015 2014
Net revenues:
Product $ 24,408 $ 21,483 $ 70,081 $ 61,681
Service 11,611 11,007 34,687 33,539
Contract 22,041 20,132 67,438 63,360
58,060 52,622 172,206 158,580
Costs of sales:
Product 17,420 14,070 50,135 42,562
Service 8,300 8,608 24,926 25,860
Contract 20,395 18,791 63,058 59,358
46,115 41,469 138,119 127,780
Gross margin 11,945 11,153 34,087 30,800
Operating expenses:
Selling, general and administrative 7,033 7,599 20,989 22,496
Research and development 2,744 2,156 7,840 6,349
Acquisition amortization 248 31 746 31
10,025 9,786 29,575 28,876
Operating income from continuing operations 1,920 1,367 4,512 1,924
Other income (expense), net 128 (65) (58) 225
Interest expense (81) (21) (252) (63)
Income from continuing operations before provision for income taxes 1,967 1,281 4,202 2,086
Provision for income taxes (670) (613) (1,470) (974)
Income from continuing operations 1,297 668 2,732 1,112
Discontinued operations
Loss on discontinued operations (net of tax) (2,786) (777) (4,505) (2,729)
Net Loss $ (1,489) $ (109) $ (1,773) $ (1,617)
Basic Earnings per Share:
Income from continuing operations 0.08 0.04 0.18 0.07
Loss from discontinued operations (0.18) (0.05) (0.29) (0.18)
Net Loss $ (0.10) $ (0.01) $ (0.11) $ (0.10)
Diluted Earnings per Share:
Income from continuing operations 0.08 0.04 0.17 0.07
Loss from discontinued operations (0.18) (0.05) (0.29) (0.18)
Net loss $ (0.10) $ (0.01) $ (0.11) $ (0.10)
Weighted average shares outstanding
Basic 15,589 15,577 15,549 15,498
Diluted 15,659 15,635 15,650 15,576
PAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share data)
(Unaudited)
For the three months ended September 30, 2015 For the three months ended September 30, 2014

Reportedbasis (GAAP)

Adjustments

Comparablebasis (Non-GAAP)

Reported basis(GAAP)

Adjustments

Comparablebasis (Non-GAAP)

Net revenues $ 58,060 - 58,060 $ 52,622 - 52,622
Costs of sales 46,115 - 46,115 41,469 - 41,469
Gross Margin 11,945 - 11,945 11,153 - 11,153
Operating Expenses
Selling, general and administrative 7,033 414 6,619 7,599 549 7,050
Research and development 2,744 2,744 2,156 - 2,156
Acquisition amortization 248 248 - 31 31 -
Total operating expenses 10,025 662 9,363 9,786 580 9,206
Operating income from continuing operations 1,920 662 2,582 1,367 580 1,947
Other income, net 128 - 128 (65 ) - (65 )
Interest expense (81 ) 26 (55 ) (21 ) - (21 )
Income from continuing operations before provision for income taxes 1,967 688 2,655 1,281 580 1,861
Provision for income taxes (670 ) (255 ) (925 ) (613 ) (187 ) (800 )
Income from continuing operations $ 1,297 $ 433 $ 1,730 $ 668 $ 393 $ 1,061
Loss from discontinued operations, (net of tax) $ (2,786 ) $ (2,786 ) $ (777 ) $ (777 )
Net loss $ (1,489 ) $ (1,056 ) $ (109 ) $ 284
Income per diluted share from continuing operations $ 0.08 $ 0.11 $ 0.04 $ 0.07
Loss per diluted share from discontinuing operations $ (0.18 ) $ (0.18 ) $ (0.05 ) $ (0.05 )
Loss per diluted share $ (0.10 ) $ (0.07 ) $ (0.01 ) $ 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 third quarter of 2015, the Company recorded severance and other related charges of $200,000 and equity based compensation charges of $214,000, included in selling, general and administrative. The Company also recognized amortization of acquired intangible assets of $248,000 and accreted interest of $26,000 related to the acquisition of Brink. During the third quarter of 2014, the Company recorded severance and other related charges of $364,000 and equity based compensation charges of $185,000, included in selling, general and administrative. The Company also recognized amortization of acquired intangible assets of $31,000 related to the acquisition of Brink. 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
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share data)
(Unaudited)
For the nine months ended September 30, 2015 For the nine months ended September 30, 2014

Reportedbasis (GAAP)

Adjustments

Comparablebasis (Non-GAAP)

Reported basis (GAAP) Adjustments

Comparablebasis (Non-GAAP)

Net revenues $ 172,206 - $ 172,206 $ 158,580 - $ 158,580
Costs of sales 138,119 151 137,968 127,780 - 127,780
Gross Margin 34,087 151 34,238 30,800 - 30,800
Operating Expenses
Selling, general and administrative 20,989 1,120 19,869 22,496 1,351 21,145
Research and development 7,840 13 7,827 6,349 6,349
Acquisition amortization 746 746 - 31 31 -
Total operating expenses 29,575 1,879 27,696 28,876 1,382 27,494
Operating income from continuing operations 4,512 2,030 6,542 1,924 1,382 3,306
Other income (expense), net (58 ) - (58 ) 225 - 225
Interest expense (252 ) 77 (175 ) (63 ) - (63 )
Income from continuing operations before provision for income taxes 4,202 2,107 6,309 2,086 1,382 3,468
Provision for income taxes (1,470 ) (780 ) (2,250 ) (974 ) (459 ) (1,433 )
Income from continuing operations $ 2,732 $ 1,327 $ 4,059 $ 1,112 $ 923 $ 2,035
Loss from discontinued operations, (net of tax) $ (4,505 ) $ (4,505 ) $ (2,729 ) $ (2,729 )
Net loss $ (1,773 ) $ (446 ) $ (1,617 ) $ (694 )
Income per diluted share from continuing operations $ 0.17 $ 0.26 $ 0.07 $ 0.13
Loss per diluted share from discontinuing operations $ (0.29 ) $ (0.29 ) $ (0.17 ) $ (0.18 )
Loss per diluted share $ (0.11 ) $ (0.03 ) $ (0.10 ) $ (0.04 )

During the nine months ended September 30, 2015, the Company recorded severance and other related charges of $797,000, of which $151,000 is included in cost of sales, $13,000 is included in research and development and $633,000 is included in selling, general and administrative. Also included within selling, general and administrative is equity based compensation charges of $487,000. Lastly, related to the acquisition of Brink, the Company recognized amortization of acquired intangible assets of $746,000 and accreted interest of $77,000. During the nine months ended September 30, 2014, the Company recorded severance and other related charges of $364,000 and equity based compensation charges of $987,000, included in selling, general and administrative. The Company also recognized amortization of acquired intangible assets of $31,000 related to the acquisition of Brink. 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

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

[email protected]

www.partech.com

Source: PAR Technology Corporation

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