MAM Software Reports Fiscal Second Quarter Results
BLUE BELL, Pa., Feb. 11, 2019 /PRNewswire/ -- MAM Software Group, Inc. (NASDAQ Capital Market: MAMS) (the "Company" or "MAM"`), a leading global provider of on-premise and cloud-based business management solutions for the auto parts, tire and vertical distribution industries, announced the following financial results in accordance with U.S. generally accepted accounting principles ("GAAP") for its second fiscal quarter ended December 31, 2018, through the filing on February 11, 2019 of its Quarterly Report on Form 10-Q with the Securities and Exchange Commission:
(In thousands, except per share data) | For the Three Months EndedDecember 31, | For the Six Months EndedDecember 31, | |||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Net revenues | $ | 8,956 | $ | 8,500 | $ | 18,256 | $ | 17,138 | |||
Gross profit | $ | 4,890 | $ | 4,501 | $ | 10,125 | $ | 9,332 | |||
Operating income | $ | 906 | $ | 823 | $ | 2,511 | $ | 2,350 | |||
Income before provision for income taxes | $ | 814 | $ | 714 | $ | 2,328 | $ | 2,137 | |||
Net income (loss) | $ | 704 | $ | (79) | $ | 1,915 | $ | 1,035 | |||
Earnings (loss) per share attributed to common stockholders – basic and diluted | $ | 0.06 | $ | (0.01) | $ | 0.16 | $ | 0.09 | |||
Michael Jamieson, MAM's President and Chief Executive Officer commented, "Our second quarter financial results were in line with our expectations and our business outlook for the full fiscal year 2019. Our team successfully completed the installation of VAST Online at additional locations during the quarter. The feedback from our customers has been encouraging, and we expect deployment to begin accelerating over the next few months in accordance with the project timeline. We are cultivating new business opportunities and advancing discussions with potential customers as a result of the progress we are demonstrating with VAST Online."
Second Quarter Highlights:
- Net revenues of $9.0 million were up 5.4% compared to $8.5 million for the same period last year. On a constant currency basis, revenues were up 7.6% over the same period in the prior fiscal year.
- Recurring revenues were 85.0% of net revenues compared to 85.4% of net revenues for the same period in the prior fiscal year.
- Total Software as a Service (SaaS) revenues increased 12.6% year-over-year and 2.2% sequentially. On a constant currency basis, SaaS revenues increased 15.2% year-over-year.
- Operating income was $906,000, or 10.1% of net revenues, compared to $823,000, or 9.7% of net revenues, for the same period in the prior fiscal year.
- Net income was $704,000 compared to a net loss of $79,000 in the same period in the prior fiscal year.
- Adjusted EBITDA* was $1.2 million, or 13.5% of net revenues, compared to $1.1 million, or 12.9% of net revenues, for the same period in the prior fiscal year.
Second Quarter Financial Results:
Net revenues were $9.0 million for the quarter ended December 31, 2018, as compared to $8.5 million for the same period last year, an increase of $456,000 or 5.4%. On a constant currency basis, revenue increased 7.6% over the same period in the prior fiscal year.
Recurring revenue for the quarter was $7.6 million, or 85.0% of total revenue, an increase of $359,000 or 4.9%, as compared to $7.3 million, or 85.4% of net revenues, for the second quarter last year. Sequentially, recurring revenue decreased $55,000, or 0.7%, as compared to $7.7 million, or 82.5% of net revenues, in the first quarter of fiscal year 2019, primarily due to changes in foreign currency exchange rates. On a constant currency basis, recurring revenue increased 7.2% over the same period in the prior fiscal year.
Total Software as a Service (SaaS) revenue for the quarter was $3.0 million, an increase of $341,000, or 12.6%, year-over-year, and an increase of $67,000, or 2.2%, sequentially when compared to the first quarter of fiscal year 2019. The increase in SaaS revenue over the prior year was primarily attributable to a 5.5% increase in Autowork Online (SaaS) revenue for the quarter to $1.6 million, and a 22.1% increase in Autopart Online (SaaS) revenue for the quarter to $1.4 million. On a constant currency basis, total SaaS revenue for the quarter increased by 15.2% over the same period in the prior fiscal year.
Total Data as a Service (DaaS) revenue for the quarter was $2.4 million, an increase of $61,000, or 2.6%, year over year, and a decrease of $70,000, or 2.8%, sequentially when compared to the first quarter of fiscal year 2019, primarily due to changes in foreign currency exchange rates and seasonality. On a constant currency basis, DaaS revenue increased by 4.8% over the same in the prior fiscal year.
Gross profit for the quarter was $4.9 million, or 54.6% of net revenues, an increase of $389,000, or 8.6%, as compared to $4.5 million, or 53.0% of net revenues, for the same period in the prior fiscal year.
Operating expenses for the quarter increased by $306,000 to $4.0 million, an increase of 8.3% as compared to $3.7 million for the same period last year. The increase was primarily the result of increased R&D expenses due to additional resources focused on new initiatives and lower capitalized costs.
Operating income for the quarter increased by $83,000, or 10.1%, to $906,000 as compared to $823,000 for the same period in the prior fiscal year.
Interest expense for the quarter decreased by $17,000, or 15.6%, to $92,000 as compared to $109,000 for the same period last year primarily due to reductions in the outstanding debt balance.
Provision for income taxes decreased to $110,000, or an effective tax rate of 13.5%, for the quarter as compared to $793,000, or an effective tax rate of 111.1%, for the same period last year. The decrease in the effective tax rate was primarily due to the lower US federal statutory rate effective January 1, 2018 as per the Tax Cuts and Jobs Act, tax benefits from equity compensation, and the revaluation of our net deferred tax assets at the lower US federal statutory rate and the one-time repatriation tax on deemed repatriation of historical earnings on our foreign subsidiaries in the prior year, as per the Tax Cuts and Jobs Act, partially offset by lower R&D tax credits.
Net income for the quarter was $704,000, or $0.06 per basic and diluted share, as compared to a net loss of $79,000, or ($0.01) per basic and diluted share, for the same period in the prior fiscal year.
Year-to-Date Financial Results
Net revenues were $18.3 million for the six months ended December 31, 2018 compared to $17.1 million for the same period last year, an increase of $1.1 million, or 6.5%. On a constant currency basis, revenues were up 7.8% over the same period in the prior fiscal year.
Recurring revenue for the first six months of fiscal year 2019 was $15.3 million, or 83.7% of net revenues, an increase of $0.9 million, or 6.6%, compared to $14.3 million, or 83.7% of net revenues, for the first six months of the prior fiscal year. On a constant currency basis, recurring revenues were up 7.2% over the same period in the prior fiscal year.
Total Software as a Service (SaaS) revenue for the first six months of fiscal year 2019 was $6.0 million, an increase of $0.7 million, or 14.0%, year-over-year. The increase in the SaaS revenue was primarily attributable to a 5.6% increase in Autowork Online (SaaS) revenue for the first six months of fiscal year 2019 to $3.2 million, and a 25.7% increase in Autopart Online (SaaS) revenue for the first six months of fiscal year 2019 to $2.8 million. On a constant currency basis, SaaS revenues were up 15.5% over the same period in the prior fiscal year.
Total Data as a Service (DaaS) revenue for the first six months of fiscal year 2019 was $4.9 million, an increase of $216,000, or 4.6%, when compared to the first six months of the prior fiscal year. On a constant currency basis, DaaS revenues were up 5.9% over the same period in the prior fiscal year.
Gross profit for the first six months of fiscal year 2019 was $10.1 million, or 55.5% of net revenues, an increase of $793,000 compared to $9.3 million, or 54.5% of net revenues, for the same period in the prior fiscal year.
Operating expenses for the first six months of fiscal year 2019 increased by $632,000 to $7.6 million, an increase of 9.1% compared to $7.0 million for the same period in the prior fiscal year. The increase was primarily the result of increased R&D expenses due to additional resources focused on new initiatives and lower capitalized costs, and increased general and administrative expenses primarily due to timing of professional fees.
Operating income for the first six months of fiscal year 2019 increased by $161,000, or 6.9%, to $2.5 million, compared to $2.4 million for the same period in the prior fiscal year.
Interest expense for the first six months of fiscal year 2019 decreased by $30,000, or 14.1%, to $183,000, compared to $213,000 for the same period in the prior fiscal year.
Provision for income taxes decreased to $413,000, or an effective tax rate of 17.7%, for the first six months of fiscal year 2019, as compared to $1.1 million, or an effective tax rate of 51.6%, for the same period in the prior fiscal year. The decrease in the effective tax rate was primarily due to the lower US federal statutory rate effective January 1, 2018 as per the Tax Cuts and Jobs Act, tax benefits from equity compensation, and the revaluation of our net deferred tax assets at the lower US federal statutory rate and the one-time repatriation tax on deemed repatriation of historical earnings on our foreign subsidiaries in the prior year, as per the Tax Cuts and Jobs Act, partially offset by lower R&D tax credits.
Net income for the first six months of fiscal year 2019 was $1.9 million, or $0.16 per basic and diluted share, compared to $1.0 million, or $0.09 per basic and diluted share, for the same period in the prior fiscal year.
Balance Sheet and Other Financial Highlights
- As of December 31, 2018, the Company had $3.9 million in cash after capital expenditures and capitalized software development costs of $617,000.
- As of December 31, 2018, the Company had $5.7 million of debt outstanding under its $11.5 million credit facility.
- Stockholders' equity increased 12.5% from $13.5 million at June 30, 2018 to $15.2 million at December 31, 2018.
- As of December 31, 2018, there were 12.6 million shares of common stock outstanding.
Business Outlook
The Company reiterated its expectations for continued revenue growth during fiscal year 2019 of approximately 10%, on a constant currency basis, and continuing improvement in profitability with 2019 Adjusted EBITDA* in the range of $6.2 million to $6.7 million, on a constant currency basis. The Company also expects to invest approximately $7.0 million in Research and Development, including capitalized software development costs.
Conference Call Information
The Company has scheduled a conference call for Tuesday, February 12, 2019, at 9 a.m. ET to review the results. Investors and interested parties can access the conference call by dialing:
- United States: 1-800-239-9838
- UK/international: 1-323-794-2551
- U.K. toll free: 0 800 358 6377
A replay will be available until March 5, 2019 by calling 1-844-512-2921 (United States) or 1-412-317-6671 (toll/UK/international). Please use pin number 5202807 for the replay.
A live webcast as well as a replay of the call will be accessible at the investor relations section of the Company's website, www.mamsoftware.com. The replay will be active for 60 days following the conference call.
About MAM Software Group, Inc.
MAM Software is a leading global provider of cloud-based business and on-premise management solutions for the auto parts, tire and vertical distribution industries. The company provides a portfolio of innovative software (SaaS and packaged), data (DaaS), and integration (iPaaS) services that enable businesses to intelligently manage core business processes, control costs and generate new profit opportunities. MAM's integrated platforms provide a wealth of rich functionality including: point-of-sale, inventory, purchasing, reporting, data and e-commerce. Wholesale, retail and installer business across North America, the U.K. and Ireland rely on MAM solutions, backed by dedicated teams of experienced service and support professionals. For further information, please visit http://www.mamsoftware.com.
*Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization adjusted to exclude non-cash equity compensation, and other special non-recurring charges. A reconciliation of adjusted EBITDA to net income (loss) can be found at the end of the following tables. Adjusted EBITDA is commonly used by management and investors as an indicator of operating performance and liquidity. Adjusted EBITDA is not considered a measure of financial performance under GAAP and it should not be considered as an alternative to net income (loss), or other financial statement data presented in accordance with GAAP in our consolidated financial statements.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting the Company's business including: increased competition; the ability of the Company to expand its operations through either acquisitions or internal growth, to attract and retain qualified professionals, and to expand commercial relationships; technological obsolescence; general economic conditions; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.
MAM SOFTWARE GROUP, INC. Condensed Consolidated Balance Sheets (In thousands, except share and per share data) | ||||||||
December 31, | June 30, | |||||||
2018 | 2018 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 3,908 | $ | 4,171 | ||||
Accounts receivable, net of allowance of $243 and $224, respectively | 4,786 | 5,010 | ||||||
Inventories | 173 | 170 | ||||||
Prepaid expenses and other current assets | 1,295 | 1,270 | ||||||
Total Current Assets | 10,162 | 10,621 | ||||||
Property and Equipment, Net | 445 | 480 | ||||||
Other Assets | ||||||||
Goodwill | 8,072 | 8,280 | ||||||
Intangible assets, net | 508 | 568 | ||||||
Software development costs, net | 9,685 | 8,889 | ||||||
Deferred income taxes | 1,413 | 1,251 | ||||||
Other long-term assets | 491 | 545 | ||||||
TOTAL ASSETS | $ | 30,776 | $ | 30,634 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 1,163 | $ | 1,318 | ||||
Accrued expenses and other liabilities | 1,097 | 1,201 | ||||||
Accrued payroll and related expenses | 1,244 | 2,146 | ||||||
Current portion of long-term debt | 2,025 | 1,811 | ||||||
Current portion of deferred revenues | 2,210 | 1,885 | ||||||
Sales tax payable | 857 | 910 | ||||||
Income tax payable | 721 | 669 | ||||||
Total Current Liabilities | 9,317 | 9,940 | ||||||
Long-Term Liabilities | ||||||||
Deferred revenues, net of current portion | 1,386 | 1,146 | ||||||
Deferred income taxes | 730 | 789 | ||||||
Income tax payable, net of current portion | 232 | 232 | ||||||
Long-term debt, net of current portion | 3,590 | 4,581 | ||||||
Other long-term liabilities | 305 | 426 | ||||||
Total Liabilities | 15,560 | 17,114 | ||||||
Commitments and Contingencies | ||||||||
Stockholders' Equity | ||||||||
Preferred stock: Par value $0.0001 per share; 2,000 shares authorized, none issued and outstanding | - | - | ||||||
Common stock: Par value $0.0001 per share; 18,000 shares authorized, 12,633 shares issued and 12,588 shares outstanding at December 31, 2018 and 12,593 shares issued and 12,588 shares outstanding at June 30, 2018 | 1 | 1 | ||||||
Additional paid-in capital | 15,123 | 14,768 | ||||||
Accumulated other comprehensive loss | (3,723) | (3,236) | ||||||
Retained earnings | 4,138 | 2,003 | ||||||
Treasury stock at cost, 45 and 5 shares at December 31, 2018 and June 30, 2018, respectively | (323) | (16) | ||||||
Total Stockholders' Equity | 15,216 | 13,520 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 30,776 | $ | 30,634 | ||||
MAM SOFTWARE GROUP, INC. Condensed Consolidated Statements of Comprehensive Income (Unaudited) (In thousands, except share and per share data) | |||||||||||||||||
For the Three Months Ended December 31, | For the Six Months Ended December 31, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Net revenues | $ | 8,956 | $ | 8,500 | $ | 18,256 | $ | 17,138 | |||||||||
Cost of revenues | 4,066 | 3,999 | 8,131 | 7,806 | |||||||||||||
Gross Profit | 4,890 | 4,501 | 10,125 | 9,332 | |||||||||||||
Operating Expenses | |||||||||||||||||
Research and development | 1,431 | 1,192 | 2,646 | 2,195 | |||||||||||||
Sales and marketing | 1,000 | 986 | 1,773 | 1,739 | |||||||||||||
General and administrative | 1,499 | 1,442 | 3,084 | 2,932 | |||||||||||||
Depreciation and amortization | 54 | 58 | 111 | 116 | |||||||||||||
Total Operating Expenses | 3,984 | 3,678 | 7,614 | 6,982 | |||||||||||||
Operating Income | 906 | 823 | 2,511 | 2,350 | |||||||||||||
Other Income (Expense) | |||||||||||||||||
Interest expense, net | (92) | (109) | (183) | (213) | |||||||||||||
Total other expense, net | (92) | (109) | (183) | (213) | |||||||||||||
Income before provision for income taxes | 814 | 714 | 2,328 | 2,137 | |||||||||||||
Provision for income taxes | 110 | 793 | 413 | 1,102 | |||||||||||||
Net Income (Loss) | $ | 704 | $ | (79) | $ | 1,915 | $ | 1,035 | |||||||||
Earnings (loss) per share attributed to common stockholders – basic | $ | 0.06 | $ | (0.01) | $ | 0.16 | $ | 0.09 | |||||||||
Earnings (loss) per share attributed to common stockholders – diluted | $ | 0.06 | $ | (0.01) | $ | 0.16 | $ | 0.09 | |||||||||
Weighted average common shares outstanding – basic | 12,156 | 11,825 | 12,150 | 11,820 | |||||||||||||
Weighted average common shares outstanding – diluted | 12,199 | 11,825 | 12,207 | 12,151 | |||||||||||||
Net Income (Loss) | $ | 704 | $ | (79) | $ | 1,915 | $ | 1,035 | |||||||||
Foreign currency translation gain (loss) | (315) | 95 | (487) | 360 | |||||||||||||
Total Comprehensive Income | $ | 389 | $ | 16 | $ | 1,428 | $ | 1,395 | |||||||||
MAM SOFTWARE GROUP, INC. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) | ||||||||
For the Six Months Ended | ||||||||
December 31, | ||||||||
2018 | 2017 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 1,915 | $ | 1,035 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Bad debt expense | 76 | 5 | ||||||
Depreciation and amortization | 248 | 283 | ||||||
Amortization of debt issuance costs | 17 | 22 | ||||||
Deferred income taxes | (65) | 744 | ||||||
Stock-based compensation expense | 364 | 231 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 110 | 392 | ||||||
Prepaid expenses and other assets | 133 | 140 | ||||||
Income tax receivable | - | 170 | ||||||
Accounts payable | (132) | (395) | ||||||
Accrued expenses and other liabilities | (967) | (297) | ||||||
Income taxes payable | (203) | 358 | ||||||
Deferred revenues | 267 | 422 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 1,763 | 3,110 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (50) | (60) | ||||||
Capitalized software development costs | (567) | (864) | ||||||
NET CASH USED IN INVESTING ACTIVITIES | (617) | (924) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Repayment of long-term debt | (794) | (667) | ||||||
Repayment of contingent consideration | (86) | - | ||||||
Repurchase of common stock for treasury | (307) | - | ||||||
Common stock surrendered to pay for tax withholding | (27) | - | ||||||
NET CASH USED IN FINANCING ACTIVITIES | (1,214) | (667) | ||||||
Effect of exchange rate changes | (195) | 31 | ||||||
Net change in cash and cash equivalents | (263) | 1,550 | ||||||
Cash and cash equivalents at beginning of period | 4,171 | 1,260 | ||||||
Cash and cash equivalents at end of period | $ | 3,908 | $ | 2,810 | ||||
MAM SOFTWARE GROUP, INC. Calculation of Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Non-GAAP) (Unaudited) (In thousands) | |||||||||
For the Three Months Ended December 31, | For the Six Months Ended December 31, | ||||||||
2018 | 2017 | 2018 | 2017 | ||||||
Net income (loss) (GAAP) | $704 | $(79) | $1,915 | $1,035 | |||||
Interest expense, net | 92 | 109 | 183 | 213 | |||||
Provision for income taxes | 110 | 793 | 413 | 1,102 | |||||
Depreciation and amortization | 122 | 141 | 248 | 283 | |||||
Non-cash stock compensation | 183 | 134 | 364 | 231 | |||||
Adjusted EBITDA | $1,211 | $1,098 | $3,123 | $2,864 | |||||
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SOURCE MAM Software Group, Inc.