Added Record 64,000 Connections in Q4:17, up
129% Year-Over-Year
USA Technologies, Inc. (NASDAQ:USAT) (“USAT”), a premier
payment technology service provider of integrated cashless and
mobile transactions in the self-service retail market, today
reported results for its fourth quarter and fiscal year
ended June 30, 2017.
Fourth Quarter Financial Highlights:
- Achieved record quarterly revenue
of $34.3 million, a year-over-year increase of 56% marking the
31st consecutive quarter of growth
- Record net connections of 64,000, a
year-over-year increase of 129%
- Quarterly record license and
transaction fee revenue of $18.7 million, a year-over-year
increase of 22%
- Operating income of $432,000, compared
to an operating loss of $1.6 million in the prior year period
- Ended the quarter with $12.7 million in
cash, which excludes $11.0 million of short-term finance
receivables
- Quarterly GAAP net income of $0.2
million, or $0.01 per share, compared to a net loss of $(872,000),
or $(0.02) per share for the prior year period
- Quarterly Non-GAAP net income of $0.2
million, or $0.01 per share, compared to Non-GAAP net loss of
$(1.4) million, or $(0.04) per share for the prior year period
- Quarterly Adjusted EBITDA of $2.8
million, a year-over-year increase of 344%
Fiscal Year Financial Highlights:
- Record total revenue of $104.1
million, a year-over-year increase of 35%
- Record 568,000 net connections to ePort
service as of June 30, 2017, representing a year-over-year increase
of 32%
- Record net connections of 139,000, a
year-over-year increase of 45%
- Achieved a record 12,700 total
customers, a year-over-year increase of 15%
- Net loss was $(1.9) million, or
$(0.06) per share, compared to a net loss of $(6.8)
million, or $(0.21) per share for the fiscal year of 2016. The
net loss for the fiscal year reflected a $1.5
million non-cash charge for the change in the fair value of
warrant liabilities
- Non-GAAP net loss was $(0.2)
million, or $(0.02) per share, compared to non-GAAP net loss
of $(0.7) million, of $(0.04) per share for the prior year
period
- Adjusted EBITDA of $7.1 million, a
year-over-year increase of 18%
Fourth Quarter and Fiscal Year Financial Highlights,
Connections & Transaction Data:
As of and for the three months ended
June 30,
($'s in thousands, transactions in
millions)
2017 2016 Change % Change
Revenues: License and transaction fees $ 18,679 $ 15,263 $ 3,416
22.4% Equipment sales 15,610 6,681 8,929
133.6% Total revenues $ 34,289 $ 21,944 $ 12,345 56.3%
License and transaction fee margin 32.8% 30.5% 2.3%
Equipment sales gross margin 8.9% 17.0% -8.1% Overall Gross
Margin 21.9% 26.4% (4.5%) Operating income/(loss) $ 432 $
(1,578) $ 2,010 127.4% Net income/(loss) $ 243 $ (872) $
1,115 127.9% Net loss per common shares - basic and diluted
$ 0.01 $ (0.02) $ 0.03 150.0% Net cash provided by (used in)
operating activities $ (2,476) $ 1,273 $ (3,749) (294.5%)
Net New Connections 64,000 28,000 36,000 128.6% Total
Connections (at period end) 568,000 429,000 139,000 32.4%
Total Number of Transactions (millions) 114.8 89.3 25.5 28.6%
Transaction Volume (millions) $ 225.6 $ 169.0 $ 56.6 33.5%
Adjusted EBITDA $ 2,781 $ 626 $ 2,155 344.2% Non-GAAP
net income (loss) $ 203 $ (1,373) $ 1,576 114.8% Basic
weighted average number of common shares outstanding 40,331,993
37,325,681 3,006,312 8.1% Diluted weighted average number of
common shares outstanding 40,772,482 37,325,681 3,446,801 9.2%
Non-GAAP net earnings (loss) per common share - basic and
diluted 0.01 (0.04) 0.04 (113.7%)
As of and for
the year ended June 30,
($'s in thousands, transactions in
millions)
2017 2016 Change % Change Revenues:
License and transaction fees $ 69,142 $ 56,589 $ 12,553 22.2%
Equipment sales 34,951 20,819 14,132 67.9%
Total revenues $ 104,093 $ 77,408 $ 26,685 34.5% License and
transaction fee margin 31.9% 32.7% (0.7%) Equipment sales
gross margin 13.0% 16.7% (3.7%) Overall Gross Margin 25.6%
28.4% (2.8%) Operating (loss)/income $ 135 $ (1,467) $ 1,602
(109.2%) Net loss $ (1,852) $ (6,806) $ 4,954 72.8%
Net loss per common shares - basic and diluted $ (0.06) $ (0.21) $
0.15 71.4% Net cash provided by (used in) operating
activities $ (6,771) $ 6,468 $ (13,239) (204.7%) Net New
Connections 139,000 96,000 43,000 44.8% Total Connections
(at period end) 568,000 429,000 139,000 32.4% Total Number
of Transactions (millions) 414.9 315.8 99.1 31.4%
Transaction Volume (millions) $ 803.0 $ 584.4 $ 218.6 37.4%
Adjusted EBITDA $ 7,077 $
5,983
$ 7,790 (1092.6%) Non-GAAP net income (loss) $ (166) $ (713)
$ 547 (76.7%) Cumulative preferred dividends (668) (668) —
0.0% Net (loss) income applicable to common shares (834)
(1,381) 547 (39.6%) Basic weighted average number of common
shares outstanding
39,860,335
36,309,047
3,551,288
9.8%
Diluted weighted average number of common shares outstanding
39,860,335
36,309,047
3,551,288
9.8%
Non-GAAP net earnings (loss) per common share - basic and
diluted (0.02) (0.04) 0.02
(45.0%)
“Our fiscal fourth quarter performance capped a strong year for
USA Technologies. We achieved record revenue, and added the highest
number of connections to our ePort service in the company’s
history. We are executing well in an accelerating market and have
exceeded our long-term goals of attaining $100 million in annual
revenue and 500,000 connections this fiscal year,” said Stephen P.
Herbert, USA Technologies’ chairman and chief executive officer.
“Moreover, we strengthened our balance sheet by completing a
follow-on offering at the end of July, raising $43.1 million in
gross proceeds, to extend our leadership in the unattended retail
payments industry with the flexibility to continue our organic
growth and pursue potential inorganic growth opportunities that are
accretive and strategically complementary. We are excited about the
opportunity ahead of us and believe that we can continue to deliver
returns for shareholders through increased growth and
profitability.”
Fiscal Year 2018 Outlook
For the full fiscal year 2018, USA Technologies expects to add
between 170,000 and 175,000 net new connections for the year,
bringing total connections to a range of 738,000 to 743,000. The
company expects total revenue to be between $122 million and $127
million and adjusted EBITDA to grow 35% to 50% to a range of $9.6
million to $10.6 million.
We have not reconciled our adjusted EBITDA outlook to GAAP net
income (loss) due to the uncertainty and potential variability of
the provision for (benefit from) income taxes, which is a
reconciling item between adjusted EBITDA and GAAP net income
(loss). Because this item cannot be reasonably predicted and could
have a significant impact on the calculation of GAAP net income
(loss), we have not provided guidance for GAAP net income (loss) or
a reconciliation of our adjusted EBITDA outlook to GAAP net income
(loss). Accordingly, a GAAP net income (loss) outlook and a
reconciliation of adjusted EBITDA outlook to GAAP net income (loss)
is not available without unreasonable effort. For information
regarding the reconciliation of historical non-GAAP financial
measures to the nearest comparable GAAP measures, see "Non-GAAP
Financial Measures" and the reconciliation tables included in this
press release under “Financial Schedules”.
Webcast and Conference Call
USA Technologies will host a conference call and webcast the
event beginning at 8:30 a.m. Eastern Time today, August 22,
2017.
To participate in the conference call, please dial (866)
393-1608 approximately 10 minutes prior to the call.
International callers should dial (224) 357-2194. Please reference
conference ID # 67222406.
A live webcast of the conference call will be available at
http://usat.client.shareholder.com/events.cfm. Please access the
website 15 minutes prior to the start of the call to download and
install any necessary audio software. A telephone replay of the
conference call will be available from 11:30 a.m. Eastern Time on
August 22, 2017 until 11:30 a.m. Eastern Time on August 25, 2017
and may be accessed by calling (855) 859-2056 (domestic dial-in) or
(404) 537-3406 (international dial-in) and reference conference ID
# 67222406. An archived replay of the conference call will also be
available in the investor relations section of the company's
website.
About USA Technologies
USA Technologies, Inc. is a premier payment technology
service provider of integrated cashless and mobile transactions in
the self-service retail market. The company also provides a broad
line of cashless acceptance technologies including its NFC-ready
ePort® G-series, ePort® Connect, ePort® Interactive,
QuickConnect, an API Web service for developers, and MORE., a
customizable loyalty program. USA Technologies has 73
United States and foreign patents in force; and has agreements with
Verizon, Visa, Chase Paymentech and customers such as Compass,
AMI Entertainment and others. For more information, please
visit the website at www.usatech.com.
Discussion of Non-GAAP Financial Measures:
This press release contains certain non-GAAP financial measures.
Generally, a non-GAAP financial measure is a numerical measure of a
company's performance, financial position or cash flows that either
excludes or includes amounts that are not normally excluded or
included in the most directly comparable measure calculated and
presented in accordance with GAAP (Generally Accepted Accounting
Principles). Reconciliations between non-GAAP and GAAP measures are
set forth above in Financial Schedules (D) and (H).
The following non-GAAP financial measures are discussed herein:
adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net
earnings (loss) per common share – basic and diluted. The
presentation of these additional financial measures is not intended
to be considered in isolation from, or superior to, or as a
substitute for the financial measures prepared and presented in
accordance with GAAP, including the net income or net loss of USAT
or net cash provided/used by operating activities. Management
recognizes that non-GAAP financial measures have limitations in
that they do not reflect all of the items associated with USAT's
net income or net loss as determined in accordance with GAAP. These
non-GAAP financial measures are not required by or defined under
GAAP and may be materially different from the non-GAAP financial
measures used by other companies. USAT has provided above in
Financial Schedules (D) and (H) the reconciliations of the non-GAAP
financial measures to the most directly comparable GAAP financial
measures.
As used herein, non-GAAP net income (loss) represents GAAP net
income (loss) excluding costs or benefits relating to any
adjustment for fair value of warrant liabilities and non-cash
portions of the Company’s income tax benefit (provision),
non-recurring fees and charges that were incurred in connection
with the acquisition and integration of the VendScreen business,
and professional fees incurred in connection with the class action
litigation and the special litigation committee investigation.
Non-GAAP net earnings (loss) per common share is calculated by
dividing non-GAAP net income (loss) by the number of weighted
average shares outstanding. Management believes that non-GAAP net
income (loss) is an important measure of USAT’s business. Non-GAAP
net income (loss) is a non-GAAP financial measure which is not
required by or defined under GAAP. The presentation of this
financial measure is not intended to be considered in isolation or
as a substitute for the financial measures prepared and presented
in accordance with GAAP, including the net income or net loss of
the Company or net cash used in operating activities. Management
recognizes that non-GAAP financial measures have limitations in
that they do not reflect all of the items associated with the
Company’s net income or net loss as determined in accordance with
GAAP, and are not a substitute for or a measure of the Company’s
profitability or net earnings. Management believes that non-GAAP
net income (loss) and non-GAAP net earnings (loss) per share are
important measures of the Company's business. Management uses the
aforementioned non-GAAP measures to monitor and evaluate ongoing
operating results and trends and to gain an understanding of our
comparative operating performance. We believe that this non-GAAP
financial measure serves as a useful metric for our management and
investors because they enable a better understanding of the
long-term performance of our core business and facilitate
comparisons of our operating results over multiple periods, and
when taken together with the corresponding GAAP financial measures
and our reconciliations, enhance investors’ overall understanding
of our current and future financial performance. Additionally, the
Company utilizes non-GAAP net income (loss) as a metric in its
executive officer and management incentive compensation plans.
As used herein, Adjusted EBITDA represents net loss before
interest income, interest expense, income taxes, depreciation,
amortization, non-recurring fees and charges that were incurred in
connection with the acquisition and integration of the VendScreen
business, professional fees incurred in connection with the class
action litigation incurred during the fiscal year, impairment
charges related to our EnergyMiser asset trademarks, change in fair
value of warrant liabilities, and stock-based compensation expense.
We have excluded the non-operating item, change in fair value of
warrant liabilities, because it represents a non-cash gain or
charge that is not related to the Company’s operations. We have
excluded the non-cash expense, stock-based compensation, as it does
not reflect the cash-based operations of the Company. We have
excluded the non-recurring costs and expenses incurred in
connection with the VendScreen transaction in order to allow more
accurate comparison of the financial results to historical
operations. We have excluded the professional fees incurred in
connection with the class action litigation as well as the
trademark impairment charges because we believe that they represent
a charge that is not related to the Company's operations. Adjusted
EBITDA is a non-GAAP financial measure which is not required by or
defined under GAAP. We use these non-GAAP financial measures for
financial and operational decision-making purposes and as a means
to evaluate period-to-period comparisons. We believe that these
non-GAAP financial measures provide useful information about our
operating results, enhance the overall understanding of past
financial performance and future prospects and allow for greater
transparency with respect to metrics used by our management in its
financial and operational decision making. The presentation of this
financial measure is not intended to be considered in isolation or
as a substitute for the financial measures prepared and presented
in accordance with GAAP, including the net income or net loss of
the Company or net cash used in operating activities. Management
recognizes that non-GAAP financial measures have limitations in
that they do not reflect all of the items associated with the
Company’s net income or net loss as determined in accordance with
GAAP, and are not a substitute for or a measure of the Company’s
profitability or net earnings. Adjusted EBITDA is presented because
we believe it is useful to investors as a measure of comparative
operating performance. Additionally, the Company utilizes Adjusted
EBITDA as a metric in its executive officer and management
incentive compensation plans.
Forward-looking Statements:
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: All statements other than statements of
historical fact included in this release, including without
limitation the business strategy and the plans and objectives of
USAT's management for future operations, are forward-looking
statements. When used in this release, words such as "anticipate",
"believe", "estimate", "expect", "intend", and similar expressions,
as they relate to USAT or its management, identify forward looking
statements. Such forward-looking statements are based on the
beliefs of USAT's management, as well as assumptions made by and
information currently available to USAT's management. Actual
results could differ materially from those contemplated by the
forward-looking statements as a result of certain factors,
including but not limited to, the ability of management to
accurately predict or forecast future financial results, including
earnings or taxable income of USAT; the incurrence by USAT of any
unanticipated or unusual non-operational expenses which would
require us to divert our cash resources from achieving our business
plan; the ability of USAT to retain key customers from whom a
significant portion of its revenues is derived; the ability of USAT
to compete with its competitors to obtain market share; whether
USAT's customers continue to utilize USAT's transaction processing
and related services, as our customer agreements are generally
cancelable by the customer on thirty to sixty days' notice; the
ability of USAT to raise funds in the future through the sales of
securities or debt financings in order to sustain its operations if
an unexpected or unusual non-operational event would occur; the
ability of USAT to use available data to predict future market
conditions, consumer behavior and any level of cashless usage; the
ability to prevent a security breach of our systems or services or
third party services or systems utilized by us; whether any patents
issued to USAT will provide USAT with any competitive advantages or
adequate protection for its products, or would be challenged,
invalidated or circumvented by others; the ability of USAT to
operate without infringing or violating the intellectual property
rights of others; the ability of the Company to sell to third party
lenders all or a portion of our finance receivables; the ability of
a sufficient number of our customers to utilize third party
financing companies under our QuickStart program which would
improve our net cash used by operating activities; whether USAT
experiences material weaknesses in its internal controls over
financial reporting in future periods, which would result in USAT
not being able to accurately or timely report its financial
condition or results of operations; and whether USAT's existing or
anticipated customers purchase, rent or utilize ePort devices or
our other products or services in the future at levels currently
anticipated by USAT. Readers are cautioned not to place undue
reliance on these forward-looking statements. Any forward-looking
statement made by us in this release speaks only as of the date of
this release. Unless required by law, USAT does not undertake to
release publicly any revisions to these forward-looking statements
to reflect future events or circumstances or to reflect the
occurrence of unanticipated events.
F-USAT
Financial Schedules:
A. Statements of Operations for the 3 Months and Fiscal Years
Ended June 30, 2017 and June 30, 2016
B. Five Quarter Select Key Performance Indicators
C. Comparative Balance Sheets at June 30, 2017 and
at June 30, 2016
D. Five Quarter Statements of Operations and Adjusted EBITDA
E. Five Quarter and YTD Selling, General, & Administrative
Expenses
F. Five Quarter Condensed Balance Sheets
G. Five Quarter Statements of Cash Flows
H. Five Quarter Reconciliation of Net Income/(Loss) to Non-GAAP
Net Income (Loss) and Net Earnings/(Loss) Per Common Share - Basic
and Diluted to Non-GAAP Net Earnings/(Loss) Per Common Share -
Basic and Diluted
I. Annual Reconciliation of Net Loss to Non-GAAP Net Loss and
Net Loss Per Common Share - Basic and Diluted to Non-GAAP Net Loss
Per Common Share - Basic and Diluted
(A) Statement of Operations for the 3 Months and Fiscal Years
Ended June 30, 2017 and June 30, 2016
For the three months ended June 30, ($
in thousands, except shares and per share data)
2017
% of Sales 2016 % of Sales
Change % Change Revenues: License and
transaction fees $ 18,679 54.5% $ 15,263 69.6% $ 3,416 22.4%
Equipment sales 15,610 45.5% 6,681 30.4% 8,929
133.6% Total revenues 34,289 100.0% 21,944 100.0% 12,345 56.3%
Costs of sales/revenues: Cost of services 12,545 67.2%
10,613 69.5% 1,932 18.2% Cost of equipment 14,224 91.1%
5,548 83.0% 8,676 156.4% Total costs of
sales/revenues 26,769 158.3% 16,161 152.6%
10,608 65.6% Gross profit 7,520 21.9% 5,783 26.4% 1,737
30.0% Operating expenses: Selling, general and
administrative 6,844 20.0% 6,721 30.6% 123 1.8% Depreciation and
amortization 244 0.7% 208 0.9% 36 17.3% Impairment of intangible
asset — 0.0% 432 2.0% (432) (100.0%) Total
operating expenses 7,088 20.7% 7,361 33.5% (273) (3.7%)
Operating income (loss) 432 1.3% (1,578) (7.2%) 2,010 (127.4%)
Other income (expense): Interest income 95 0.3% 182 0.8%
(87) (47.8%) Interest expense (291) (0.8%) (197) (0.9%) (94)
(47.7%) Change in fair value of warrant liabilities — 0.0%
18 0.1% (18) 100.0% Total other expense, net (196)
(0.6%) 3 0.0% (199) (6633.3%) Loss before (provision)
benefit for income taxes 236 0.7% (1,575) (7.2%) 1,811 115.0%
Benefit (provision) for income taxes 7 0.0% 703 3.2%
(696) 99.0% Net income (loss) 243 0.7% (872) (4.0%)
1,115 127.9% Cumulative preferred dividends — 0.0% —
0.0% — 0.0% Net income (loss) applicable to common shares $
243 0.7% $ (872) (4.0%) $ 1,115 127.9% Net income (loss) per
common share - basic $ 0.01 $ (0.02) $ 0.03 150.0% Net income
(loss) per common share - diluted $ 0.01 $ (0.02) $ 0.03 150.0%
Basic weighted average number of common shares outstanding
40,331,993 37,325,681 3,006,312 8.1% Diluted weighted average
number of common shares outstanding 40,772,482 37,325,681 3,446,801
9.2%
For the year ended June 30, ($ in thousands,
except shares and per share data)
2017 % of Sales
2016 % of Sales Change % Change
Revenues: License and transaction fees $ 69,142 66.4% $ 56,589
73.1% $ 12,553 22.2% Equipment sales 34,951 33.6%
20,819 26.9% 14,132 67.9% Total revenues 104,093 100.0%
77,408 100.0% 26,685 34.5% Costs of sales/revenues: Cost of
services $ 47,053 68.1% $ 38,089 67.3% 8,964 23.5% Cost of
equipment 30,394 87.0% 17,334 83.3% 13,060
75.3% Total costs of sales/revenues 77,447 74.4%
55,423 71.6% 22,024 39.7% Gross profit 26,646 25.6%
21,985 28.4% 4,661 21.2% Operating expenses: Selling,
general and administrative 25,493 24.5% 22,373 28.9% 3,120 13.9%
Depreciation and amortization 1,018 1.0% 647 0.8% 371 57.3%
Impairment of intangible asset — 0.0% 432 0.6%
(432) (100.0%) Total operating expenses 26,511 25.5% 23,452 30.3%
3,059 13.0% Operating (loss) income 135 0.1% (1,467) (1.9%)
1,602 (109.2%) Other income (expense): Interest income 482
0.5% 320 0.4% 162 50.6% Interest expense (892) (0.9%) (600) (0.8%)
(292) (48.7%) Change in fair value of warrant liabilities
(1,490) (1.4%) (5,674) (7.3%) 4,184 73.7% Total other
expense, net (1,900) (1.8%) (5,954) (7.7%) 4,054 68.1% Loss
before (provision) benefit for income taxes (1,765) (1.7%) (7,421)
(9.6%) 5,656 76.2% (Provision) benefit for income taxes (87)
(0.1%) 615 0.8% (702) 114.1% Net loss (1,852)
(1.8%) (6,806) (8.8%) 4,954 72.8% Cumulative preferred dividends
(668) (0.6%) (668) (0.9%) — 0.0% Net loss
applicable to common shares (2,520) (2.4%) (7,474)
(9.7%) $ 4,954 66.3% Net loss per common share - basic and
diluted (0.06) (0.21) $ 0.15 71.4% Weighted
average number of common shares outstanding - basic and diluted
39,860,335 36,309,047 3,551,288 9.8%
(B) Five Quarter Select Key Performance Indicators
As of and for the three months ended June 30,
March 31, December 31,
September 30, June 30, 2017 2017
2016 2016 2016 Connections: Gross New
Connections 70,000 40,000 25,000 22,000 33,000 % from Existing
Customer Base 93% 88% 80% 86% 83% Net New Connections 64,000 35,000
21,000 19,000 28,000 Total Connections 568,000 504,000 469,000
448,000 429,000
Customers: New Customers Added 300
500 500 350 300 Total Customers 12,700 12,400 11,900 11,400 11,050
Volumes: Total Number of Transactions (millions)
114.8 104.9 100.1 95.1 89.3 Transaction Volume (millions) $ 225.6 $
202.5 $ 191.5 $ 183.4 $ 169.0
Financing Structure of
Connections: JumpStart 6.7% 8.6% 6.8% 7.7% 6.5% QuickStart
& All Others * 93.3% 91.4% 93.2%
92.3% 93.5% Total 100.0% 100.0% 100.0%
100.0% 0.0%
(C) Comparative Balance Sheets at June 30,
2017 and June 30, 2016
June 30, June 30, ($
in thousands) 2017 2016 Change %
Change Assets Current assets: Cash and Cash Equivalents $
12,745 $ 19,272 $ (6,527) (33.9%) Accounts receivable, less
allowance for doubtful accounts of $3,149 and $2,814, respectively
7,193 4,899 2,294 46.8% Finance receivables, less allowance for
doubtful accounts of $19 and $0, respectively 11,010 3,588 7,422
206.9% Inventory 4,586 2,031 2,555 125.8% Prepaid expenses and
other current assets 968 987 (19) (0) Total
current assets 36,502 30,777 5,725 18.6% Finance
receivables, less current portion 8,607 3,718 4,889 131.5% Other
assets 687 348 339 97.4% Property and equipment, net 12,111 9,765
2,346 24.0% Deferred income taxes 27,670 27,724 (54) (0.2%)
Intangibles, net 622 798 (176) (22.1%) Goodwill 11,492
11,703 (211) (1.8%) Total assets $ 97,691 $ 84,833 $
12,858 15.2% Liabilities and shareholders’ equity Current
liabilities: Accounts payable $ 16,054 $ 12,354 $ 3,700 29.9%
Accrued expenses 4,130 3,458 672 19.4% Line of credit, net 7,036
7,119 (83) (1.2%) Capital lease obligations and current obligations
under long term debt 3,230 629 2,601 413.5% Income taxes payable 10
18 (8) (44.4%) Warrant liabilities — 3,739 (3,739) (100.0%)
Deferred gain from sale-leaseback transactions 239
860 (621) (72.2%) Total current liabilities 30,699 28,177
2,522 9.0% Long-term liabilities Capital lease obligations
and long term debt, less current portion 1,061 1,576 (515) (32.7%)
Accrued expenses, less current portion 53 15 38 253.3% Deferred
gain from sale-leaseback transactions, less current portion
100 40 60 150.0% Total long-term liabilities
1,214 1,631 (417) (25.6%) Total liabilities
31,913 29,808 2,105 7.1% Shareholders' equity:
Preferred stock, no par value — — — 0.0% Series A convertible
preferred stock 3,138 3,138 3,138 100.0% Common stock, no par value
245,999 233,394 12,605 5.4% Accumulated deficit (183,359)
(181,507) (1,852) (1.0%) Total shareholders' equity
65,778 55,025 13,891 25.2% Total liabilities
and shareholders' equity $ 97,691 $ 84,833 $ 15,996 18.9%
Net working capital $ 5,803 $ 2,600 $ 3,203 123.2%
(D) Five Quarter Statements of Operations and Adjusted
EBITDA
For the three months ended ($ in thousands)
June 30, March 31,
December 31, September 30,
June 30, (unaudited) 2017 %
of Sales 2017 % of Sales 2016 % of
Sales 2016 % of Sales 2016 % of
Sales Revenues: License and transaction fees $ 18,679 54.5% $
17,459 76.5% $ 16,639 75.8% $ 16,365 69.6% $ 15,263 72.3% Equipment
Sales 15,610 45.5% 9,001 23.5% 5,117 24.2%
5,223 30.4% 6,681 27.7% Total revenue 34,289 100.0%
26,460 100.0% 21,756 100.0% 21,588 100.0% 21,944 100.0%
Costs of sales/revenues: License and transaction fees 12,545 67.2%
11,876 68.4% 11,389 68.7% 11,243 69.5% 10,614 65.9% Equipment sales
14,224 91.1% 7,959 78.8% 4,033 80.0%
4,178 83.0% 5,547 88.5% Total costs of sales/revenues 26,769
78.1% 19,835 70.9% 15,422 71.4% 15,421 73.6% 16,161 72.1%
Gross Profit: License and transaction fees 6,134 32.8% 5,583 31.6%
5,250 31.3% 5,122 30.5% 4,649 34.1% Equipment sales 1,386
8.9% 1,042 21.2% 1,084 20.0% 1,045 17.0%
1,134 11.5% Total gross profit 7,520 21.9% 6,625 29.1% 6,334
28.6% 6,167 26.4% 5,783 27.9% Operating expenses: Selling,
general and administrative 6,844 20.0% 5,947 26.6% 5,793 32.0%
6,909 30.6% 6,721 29.9% Depreciation 244 0.7% 259 1.4% 307 1.0% 208
0.9% 208 0.8% Impairment of intangible asset — 0.0% —
0.0% — 0.0%
— 2.0% 432 0.0% Total operating expenses 7,088 20.7%
6,206 28.0% 6,100 33.0% 7,117 33.5% 7,361 30.8%
Operating
income (loss) 432 1.3% 419 1.1% 234 -4.4%
(950) -7.2% (1,578) -2.9% Other income
(expense): Interest income 95 0.3% 114 0.9% 200 0.3% 73 0.8% 182
0.3% Interest expense (291) -0.8% (188) -0.9% (201) -1.0% (212)
-0.9% (197) -0.9% Change in fair value of warrant liabilities
— 0.0% — 0.0% — -6.9% (1,490) 0.1%
18 -23.6% Total other (expense) income , net (196) -0.6%
(74) 0.0% (1) -7.5% (1,629) 0.0% 3 -24.2% Income (loss)
before provision for income taxes 236 0.7% 345 1.1% 233 -11.9%
(2,579) -7.2% (1,575) -27.1% (Provision) benefit for income taxes 7
0.0% (209) 0.0% — 0.5% 115 3.2% 703 0.5%
Net income (loss)
243 0.7% 136 1.1% 233 -11.4% (2,464)
-4.0% (872) -26.6% Less interest income (95) -0.3%
(114) -0.9% (200) -0.3% (73) -0.8% (182) -0.3% Plus interest
expenses 291 0.8% 188 0.9% 201 1.0% 212 0.9% 197 0.9% Plus income
tax expense (7) 0.0% 209 0.0% — -0.5% (115) -3.2% (703) -0.5% Plus
depreciation expense 1,768 5.2% 1,165 5.6% 1,220 5.8% 1,257 5.8%
1,272 5.8% Plus amortization expense 43 0.1% 45 0.2% 43 0.2% 44
0.2% 44 0.2% Plus (less) change in fair value of warrant
liabilities — 0.0% — 0.0% — 6.9% 1,490 -0.1% (18) 23.6% Plus
stock-based compensation 538 1.6% 233 1.1% 233 1.0% 211 0.9% 198
0.7% Plus intangible asset impairment — 0.0% — 0.0% — 0.0% — 2.0%
432 0.0% Plus VendScreen non-recurring charges — 0.0% — 0.0% 8 0.5%
101 1.2% 258 2.3% Plus litigation related professional fees
— 0.0% — 0.0% — 0.2% 33 0.0% — 0.5%
Adjusted EBITDA $ 2,781 8.1% $ 1,862 8.0% $ 1,738 3.2% $ 696 2.9% $
626 6.6%
(E) Five Quarter and YTD Selling, General, &
Administrative Expenses
Three months ended June 30, % of
March 31, % of December
31, % of September 30, %
of June 30, % of ($ in thousands)
2017 SG&A 2017 SG&A
2016 SG&A 2016 SG&A 2016
SG&A Salaries and benefit costs $ 3,027 44.2% $ 3,060
49.2% $ 2,849 49.2% $ 3,129 45.3% $ 3,050 45.4% Marketing related
expenses 731 10.7% 569 10.0% 578 10.0% 329 4.8% 635 9.4%
Professional services 2,092 30.6% 1,472 20.9% 1,213 20.9% 2,520
36.5% 1,533 22.8% Bad debt expense 187 2.7% 127 6.1% 352 6.1% 97
1.4% 470 7.0% Premises, equipment and insurance costs 630 9.2% 482
8.6% 498 8.6% 499 7.2% 555 8.3% Research and development expenses
53 0.8% 95 3.0% 173 3.0% 124 1.8% 123 1.8% VendScreen non-recurring
charges — 0.0% — 0.1% 8 0.1% 101 1.5% 258 3.8% Litigation related
professional fees — 0.0% — 0.0% — 0.0% 33 0.5% 51 0.8% Other
expenses 123 1.8% 142 2.1% 122 2.1%
77 1.1% 46 0.7% Total SG&A expenses $ 6,843
100% $ 5,947 100% $ 5,793 100% $ 6,909 100% $ 6,721 100%
Total Revenue $ 34,289 $ 26,460 $ 21,756 $ 21,588 $ 21,944
SG&A expenses as a percentage of revenue 20.0% 22.5% 26.6%
32.0% 30.6%
For the year ended June 30,
% of June 30, % of ($ in
thousands)
2017 SG&A 2016 SG&A
Salaries and benefit costs $ 12,065 47.3% $ 11,282 50.4%
Marketing related expenses 2,207 8.7% 1,665 7.4% Professional
services 7,297 28.6% 4,410 19.7% Bad debt expense 764 3.0% 1,450
6.5% Premises, equipment and insurance costs 2,109 8.3% 1,761 7.9%
Research and development expenses 445 1.7% 482 2.2% VendScreen
non-recurring charges 109 0.4% 842 3.8% Litigation related
professional fees 33 0.1% 156 0.7% Other expenses 464 1.8%
325 1.5% Total SG&A expenses $ 25,493 100.0% $ 22,373
100.0% Total Revenue $ 104,093 $ 77,408 SG&A expenses as
a percentage of revenue 24.5% 28.9%
(F) Five Quarter Condensed Balance Sheets
($ in thousands)
June 30, March 31,
December 31, September 30
June 30, (unaudited)
2017 2017 2016
2016 2016 Assets Current assets: Cash and Cash
Equivalents $ 12,745 $ 17,780 $ 18,034 $ 18,198 $ 19,272 Accounts
receivable, less allowance for doubtful accounts 7,193 6,734 6,796
5,840 4,899 Finance receivables, less allowance for credit losses
11,010 2,057 1,442 3,349 3,588 Inventory, net 4,586 4,147 4,786
4,264 2,031 Other current assets 968 1,628
1,764 1,439 987 Total current assets 36,502 32,346
32,822 33,090 30,777 Finance receivables, less current
portion 8,607 7,548 3,956 3,962 3,718 Other assets 687 137 145 163
348 Property and equipment, net 12,111 9,173 9,433 9,570 9,765
Deferred income taxes 27,670 27,630 27,839 27,839 27,724
Intangibles, Net 622 666 711 754 798 Goodwill 11,492
11,492 11,492 11,703 11,703 Total assets $
97,691 $ 88,992 $ 86,398 $ 87,081 $ 84,833 Liabilities and
shareholders' equity Current liabilities: Accounts payable and
accrued expenses $ 20,184 $ 14,640 $ 12,002 $ 12,605 $ 15,812 Line
of credit, net 7,036 7,021 7,078 7,258 7,119 Warrant Liabilities -
- - - 3,739 Other current liabilities 3,479 1,041
1,242 1,527 1,507 Total current liabilities
30,699 22,702 20,322 21,390 28,177 Long-term liabilities
Total long-term liabilities
1,214 1,291 1,446 1,528 1,631 Total
liabilities 31,913 23,993 21,768 22,918
29,808 Shareholders' equity:
Total shareholders' equity 65,778
64,999 64,630 64,163 55,025 Total liabilities
and shareholders' equity $ 97,691 $ 88,992 $ 86,398 $ 87,081 $
84,833 Total current assets $ 36,502 $ 32,346 $ 32,822 $
33,090 $ 30,777 Total current liabilities 30,699
22,702 20,322 21,390 28,177 Net working
capital $ 5,803 $ 9,644 $ 12,500 $ 11,700 $ 2,600
(G) Five Quarter Statements of Cash Flows
Three months ended June 30, March
31, December 31, September 30,
June 30, ($ in thousands) 2017
2017 2016 2016 2016 OPERATING
ACTIVITIES: Net (loss) income $ 243 $ 136 $ 233 $ (2,464) $ (872)
Adjustments to reconcile net (loss) income to net cash provided by
(used in) operating activities: Non-cash stock-based compensation
536 233 233 211 198 Gain on disposal of property and equipment
(118) (28) (31) — (110) Non-cash interest and amortization of debt
discount 15 72 (79) 105 13 Bad debt expense 187 127 352 97 470
Depreciation and amortization 1,817 1,210 1,263 1,301 1,315
Impairment of intangible asset — — — — 432 Change in fair value of
warrant liabilities — — — 1,490 (18) Deferred income taxes, net
(40) 209 — (115) (748) Recognition of deferred gain from
sale-leaseback transactions 86 (216) (215) (215) (215) Changes in
operating assets and liabilities: Accounts receivable (600) (41)
(1,309) (1,038) 2,977 Finance receivables (10,006) (4,232) 2,125
(5) (2,587) Inventory (357) 647 (467) (2,223) (82) Prepaid expenses
and other assets 102 136 (318) (224) (397) Accounts payable and
accrued expenses 5,649 2,601 (664) (3,175) 444 Income taxes payable
10 (6) (1) (10) 453 Net change
in operating assets and liabilities (5,202) (895)
(634) (6,675) 808 Net cash provided (used) by
operating activities (2,476) 848 1,122 (6,265) 1,273
INVESTING ACTIVITIES: Purchase and additions of property and
equipment, including rentals (1,223) (874) (1,134) (810) (207)
Proceeds from sale of property and equipment 243 44 61 — 265 Cash
paid for assets acquired from VendScreen — — —
— — Net cash provided by (used in) investing
activities (980) (830) (1,073) (810) 58 FINANCING
ACTIVITIES: Cash used for the retirement of common stock — — — (31)
(173) Proceeds from exercise of common stock warrants — — — 6,193
138 Deferred financing costs — (90) — — 3,237 Proceeds (payments)
from line of credit, net (106) — — — — Repayment of long-term debt
(1,473) (182) (213) (161) (162)
Net cash (used in) provided by financing activities (1,579)
(272) (213) 6,001 3,040 Net
(decrease) increase in cash (5,035) (254) (164) (1,074) 4,371 Cash
at beginning of period 17,780 18,034 18,198
19,272 14,901 Cash at end of period $ 12,745 $ 17,780
$ 18,034 $ 18,198 $ 19,272 Supplemental disclosures of cash
flow information: Interest paid in cash $ 207 $ 59 $ 382 $ 87 $ 147
Income taxes paid in cash (refund), net $ (305) $ — $ — $ — $ 501
Reclass of rental program property to inventory, net $ 82 $ 8 $
(55) $ (11) $ 415 Prepaid items financed with debt $ — $ — $ — $ 54
$ — Equipment and property acquired under capital lease $ 3,573 $
54 $ 18 $ 254 $ —
(H) Five Quarter Reconciliation of Net Income/(Loss) to
Non-GAAP Net Income (Loss) and Net Income/(Loss) Per Common Share –
Basic and Diluted to Non-GAAP Net Income/(Loss) Per Common Share –
Basic and Diluted
Three months ended ($ in thousands) June 30, March
31, December 31, September 30, June 30,
(unaudited) 2017 2017 2016 2016 2016 Net income (loss) $ 243
$ 136 $ 233 $ (2,464 ) $ (872 ) Non-GAAP adjustments: Non-cash
portion of income tax provision (40 ) 209 - (115 ) (792 ) Change in
fair value of warrant adjustment - - - 1,490 (18 ) VendScreen
non-recurring charges - - 8 101 258 Litigation related professional
fees - - - 33
51 Non-GAAP net income (loss) $ 203 $ 345
$ 241 $ (955 ) $ (1,373 ) Net income (loss) $ 243 $
136 $ 233 $ (2,464 ) $ (872 ) Cumulative preferred dividends
- (334 ) - (334 ) - Net
(loss) income applicable to common shares $ 243 $ (198 ) $
233 $ (2,798 ) $ (872 ) Non-GAAP net income (loss) $ 203 $
345 $ 241 $ (955 ) $ (1,373 ) Cumulative preferred dividends
- (334 ) - (334 ) -
Non-GAAP net income (loss) applicable to common shares $ 203
$ 11 $ 241 $ (1,289 ) $ (1,373 ) Net earnings (loss)
per common share - basic and diluted $ 0.01 $ (0.00 ) $ 0.01
$ (0.07 ) $ (0.02 ) Non-GAAP net earnings (loss) per common share -
basic and diluted $ 0.01 $ (0.00 ) $ 0.01 $ (0.03 ) $ (0.04
) Basic weighted average number of common shares outstanding
40,331,993 40,327,697 40,308,934
38,488,005 37,325,681 Diluted weighted average
number of common shares outstanding 40,772,482 40,327,697
40,730,712 38,488,005 37,325,681
(I) Annual Reconciliation of Net Loss to Non-GAAP Net Loss
and Net Loss Per Common Share - Basic and Diluted to Non-GAAP Net
Loss Per Common Share - Basic and Diluted
Year ended ($ in thousands) June 30, June 30,
(unaudited) 2017 2016 Net Loss $ (1,852 ) $ (6,806 )
Non-GAAP adjustments: Non-cash portion of income tax provision 54
(579 ) Change in fair value of warrant adjustment 1,490 5,674
VendScreen non-recurring charges 109 842 Litigation related
professional fees 33 156 Non-GAAP net
income (loss) $ (166 ) $ (713 ) Net income (loss) $ (1,852 )
$ (6,806 ) Cumulative preferred dividends (668 ) (668
) Net (loss) income applicable to common shares $ (2,520 ) $ (7,474
) Non-GAAP net income (loss) $ (166 ) $ (713 ) Cumulative
preferred dividends (668 ) (668 ) Non-GAAP net income
(loss) applicable to common shares $ (834 ) $ (1,381 ) Net
earnings (loss) per common share - basic and diluted $ (0.06 ) $
(0.21
) Non-GAAP net earnings (loss) per common share - basic and diluted
$ (0.02 ) $ (0.04 ) Basic weighted average number of common shares
outstanding
39,860,335
36,309,047
Diluted weighted average number of common shares outstanding
39,860,335
36,309,047
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version on businesswire.com: http://www.businesswire.com/news/home/20170822005597/en/
USA Technologies, Inc.Investors:The Blueshirt GroupMonica Gould,
+1 212-871-3927monica@blueshirtgroup.comorLindsay Savarese, +1
212-331-8417lindsay@blueshirtgroup.com
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