PAR Technology Corporation (NYSE:PAR) ("PAR Technology" or the
"Company") today announced its results for its third quarter ended
September 30, 2019.
Summary of Fiscal 2019 Third Quarter and Year-to-Date
Financial Results
- Revenues were reported at $45.4 million for the third quarter
of 2019, compared to $46.4 million for the same period in 2018, a
2.2% decrease.
- GAAP net loss for the third quarter of 2019 was $5.9 million,
or $0.36 loss per share, a decrease from the GAAP net loss of $16.7
million, or $1.04 loss per share reported for the same period in
2018.
- Non-GAAP net loss for the third quarter of 2019 was $4.2
million, or $0.26 loss per share, compared to non-GAAP net loss of
$1.0 million, or $0.06 loss per share, for the same period in
2018.
- Revenues were reported at $134.3 million for the first nine
months of 2019, compared to $154.6 million for the same period in
2018, a 13.1% decrease.
- GAAP net loss for the first nine months of 2019 was $9.7
million, or $0.61 loss per share, a decrease from the GAAP net loss
of $18.0 million, or $1.12 loss per share reported for the same
period in 2018.
- Non-GAAP net loss for the first nine months of 2019 was $5.9
million, or $0.37 loss per share, compared to non-GAAP net loss of
$1.1 million or $0.07 loss per share, for the same period in
2018.
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 also announced that its wholly owned subsidiary,
ParTech, Inc., has entered into an interest purchase agreement to
acquire AccSys, LLC (f/k/a AccSys, Inc. and otherwise known as
Restaurant Magic ("Restaurant Magic")), a restaurant software
company located in Tampa, FL and the developers of Data Central.
Data Central is a suite of cloud backoffice applications to help
restaurants achieve operational and financial goals. The purchase
price of $42 million for Restaurant Magic will be financed
primarily through cash and equity. The acquisition is expected to
close during the fourth quarter of 2019.
Savneet Singh, PAR Technology CEO & President commented, "I
am very pleased to announce that PAR has signed a definitive
agreement to acquire Restaurant Magic, a leader in backoffice
subscription software for enterprise restaurants. Restaurant
Magic’s software leverages business intelligence and automation
technologies to decrease food costs, manage labor and improve
overall customer service. This announcement today marks another
significant milestone in the rapid evolution of PAR Technology. Our
Company continues to transform itself as we build out our
restaurant technology solutions, led by our Brink POS software, to
be the leading cloud technology provider for enterprise
restaurants. I’m extremely excited to announce the merging of two
powerful entities to create the premier restaurant technology
company delivering the required and critical services that are
fundamentally changing how restaurants operate around the world.
Combining Restaurant Management with our leading Brink POS software
will alter how enterprise restaurants communicate, access data,
conduct commerce and manage their businesses across rapidly
converging tech platforms."
“We are thrilled to be joining forces with PAR Technology. Our
decision to become a part of PAR was based upon our belief that by
combining our companies we will provide new and stronger
opportunities to our clients and employees," said Drew Peloubet,
CEO of Restaurant Magic. "The goal of our company has always been
to maintain continual growth for our company to better meet the
needs of our customers, while fiercely protecting the investment
our end users have made in deploying our backoffice software
applications. Restaurant Magic’s suite of enterprise applications
and services are an excellent fit with PAR Technology’s popular
restaurant technology offerings, and together will provide
customers throughout the restaurant industry with the most robust
set of solutions in the marketplace. The combination of PAR and
Restaurant Magic will immediately create an industry leading front
to backend cloud technology solution for restaurants."
Mr. Singh continued, “To report on the quarter, we continued to
execute our business strategies for growth through investments in
product development and acquisitions. Importantly, we’ve begun to
see acceleration in Brink bookings and believe this trend will
continue. This increase in bookings is primarily related to the
dramatic set of changes we made earlier in the year and we expect a
stronger pace of bookings in 2020. Our purchase of 3M Company's
Drive-Thru Communications Systems business has also been exceeding
our expectations since we closed on the deal September 30th,
leading to additional Brink POS prospects and a number of ancillary
software opportunities. In regards to our Government segment, we
again reported lower comparative revenues from the same period in
2018, as we navigate funding gaps with specific ISR contract
vehicles. Although we are confident this is a timing issue that
will be corrected in the coming quarters, we will manage this
aggressively in the near-term.”
Highlights of the Third Quarter 2019: -- Brink ARR* at end of Q3
'19 now totals $17.9 million - an increase of 30% and $4.1 million
from end of Q3 '18 -- New store activations in Q3 totaled 630 sites
-- Brink bookings in Q3 '19 - 961 restaurants - a 41% increase from
Q2 ‘19 -- Active Brink sites as of October 14th - now total 9,300
restaurants (net of churn) -- Brink Open Orders (backlog) totaled
682 stores at end of Q3 -- Brink bookings in Q3' 19 ASP** = over
$200 per month *ARR - Run rate of annual recurring revenues - SaaS
and support revenues **ASP - Average selling price SaaS and support
revenues
Conference Call. There will be a conference call at 4:30
p.m. (Eastern) on November 7, 2019, during which the Company’s
management will discuss the financial results for the third quarter
ended September 30, 2019. 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/news. Alternatively, listeners may access an
archived version of the presentation call after 7:30 p.m. on
November 7, 2019 through November 14, 2019 by dialing 855-859-2056
and using conference ID 9384228.
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
reporting segment has been a leading provider of restaurant and
retail technology for more than 40 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 reporting 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 or
connect with us on Facebook and Twitter.
Forward-Looking Statements.
This press release contains “forward-looking statements” within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended, and the Private Securities Litigation Reform Act of
1995. Forward-looking statements are not historical in nature, but
rather are predictive of the Company's future operations, financial
condition, business strategies and prospects. Forward-looking
statements are generally identified by words such as “anticipate”,
“believe,” “belief,” “continue,” “could,” “expect,” “estimate,”
“intend,” “may,” “opportunity,” “plan,” “should,” “will,” “would,”
“will likely result,” and similar expressions. Forward-looking
statements are based on current expectations and assumptions as to
future occurrences and trends, including statements expressing
optimism or pessimism about future operating results or events and
projected sales, earnings, capital expenditures and business
strategies, that are subject to risks and uncertainties, which
could cause actual results to differ materially from those
expressed in, or implied by, the forward-looking statements,
including the risk that the transaction among the Company and
Restaurant Magic, with others, does not close; uncertainties as to
the timing of the closing of the transaction; potential business
uncertainties relating to the transaction, including potential
disruptions to the Company’s business and operational
relationships; the Company’s ability to achieve anticipated
synergies, and the anticipated costs, timing and complexity of
integration; delays in new product development and/or product
introduction; changes in customer base and product, and services
demands; and prevailing economic conditions, including fluctuations
in supply of, demand for, and pricing of, the Company’s products
and services. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2018 and the Company’s other filings with the Securities and
Exchange Commission. 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.
PAR TECHNOLOGY CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share and
per share amounts)
Assets
(unaudited) September 30,
2019
(Note 1) December 31, 2018
Current assets:
Cash and cash equivalents
$
46,947
$
3,485
Accounts receivable – net
28,563
26,219
Inventories – net
19,081
22,737
Asset held for sale
3,350
—
Other current assets
5,185
3,251
Total current assets
103,126
55,692
Property, plant and equipment – net
14,736
12,575
Goodwill
13,418
11,051
Intangible assets – net
13,895
10,859
Operating lease right-of-use assets
2,999
—
Other assets
4,395
4,504
Total Assets
$
152,569
$
94,681
Liabilities and Shareholders’ Equity
Current liabilities:
Borrowings of line of credit
$
—
$
7,819
Accounts payable
8,929
12,644
Accrued salaries and benefits
7,419
5,940
Accrued expenses
3,095
2,113
Operating lease liabilities - current
portion
1,182
—
Customer deposits and deferred service
revenue
10,823
9,851
Liability held for sale
511
—
Other current liabilities
—
2,550
Total current liabilities
31,959
40,917
Operating lease liabilities - net of
current portion
1,866
—
Deferred revenue – noncurrent
4,148
4,407
Long-term debt
60,137
—
Other long-term liabilities
3,903
3,411
Total liabilities
102,013
48,735
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; 18,053,477 and 17,879,761 shares issued,
16,345,368 and 16,171,652 outstanding at September 30, 2019 and
December 31, 2018, respectively
362
357
Capital in excess of par value
64,832
50,251
(Accumulated deficit) retained
earnings
(4,313
)
5,427
Accumulated other comprehensive loss
(4,489
)
(4,253
)
Treasury stock, at cost, 1,708,109
shares
(5,836
)
(5,836
)
Total shareholders’ equity
50,556
45,946
Total Liabilities and Shareholders’
Equity
$
152,569
$
94,681
See notes to unaudited interim
consolidated financial statements included in the Quarterly Report
on Form 10-Q.
Note 1 - The balance sheet at December 31,
2018 has been derived from the Company’s audited consolidated
financial statements at that date but does not include all of the
information and footnotes required by U.S. GAAP for complete
financial statements. For further information, please refer to the
consolidated financial statements and notes thereto included in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, as filed with the U.S. Securities and Exchange
Commission (“SEC”).
PAR TECHNOLOGY
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net revenues:
Product
$
15,904
$
15,451
$
46,149
$
62,658
Service
13,937
13,475
41,514
40,615
Contract
15,539
17,436
46,646
51,321
45,380
46,362
134,309
154,594
Costs of sales:
Product
12,259
12,065
34,912
46,844
Service
9,241
10,248
29,144
30,000
Contract
14,643
15,511
42,679
46,005
36,143
37,824
106,735
122,849
Gross margin
9,237
8,538
27,574
31,745
Operating expenses:
Selling, general and administrative
9,539
7,967
27,162
25,587
Research and development
3,448
2,992
9,233
9,082
Amortization of identifiable intangible
assets
241
241
724
724
13,228
11,200
37,119
35,393
Operating loss
(3,991
)
(2,662
)
(9,545
)
(3,648
)
Other (expense) income, net
(401
)
455
(1,205
)
120
Interest expense, net
(1,588
)
(142
)
(2,978
)
(261
)
Loss before benefit from (provision for)
income taxes
(5,980
)
(2,349
)
(13,728
)
(3,789
)
Benefit from (provision for) income
taxes
78
(14,355
)
3,988
(14,170
)
Net loss
$
(5,902
)
$
(16,704
)
$
(9,740
)
$
(17,959
)
Basic Earnings per Share:
Net loss
$
(0.36
)
$
(1.04
)
$
(0.61
)
$
(1.12
)
Diluted Earnings per Share:
Net loss
$
(0.36
)
$
(1.04
)
$
(0.61
)
$
(1.12
)
Weighted average shares outstanding
Basic
16,300
16,071
16,086
16,033
Diluted
16,300
16,071
16,086
16,033
See notes to unaudited interim
consolidated financial statements included in the Quarterly Report
on Form 10-Q
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
September 30, 2019
For the three months ended
September 30, 2018
Reported basis (GAAP)
Adjustments
Comparable basis (Non- GAAP)
Reported basis (GAAP)
Adjustments
Comparable basis (Non- GAAP)
Net revenues
$
45,380
$
—
$
45,380
$
46,362
$
—
$
46,362
Costs of sales
36,143
207
35,936
37,824
—
37,824
Gross margin
9,237
207
9,444
8,538
—
8,538
Operating Expenses:
Selling, general and administrative
9,539
1,091
8,448
7,967
785
7,182
Research and development
3,448
—
3,448
2,992
—
2,992
Acquisition amortization
241
241
—
241
241
—
Total operating expenses
13,228
1,332
11,896
11,200
1,026
10,174
Operating (loss) income
(3,991
)
1,539
(2,452
)
(2,662
)
1,026
(1,636
)
Other (expense) income, net
(401
)
—
(401
)
455
—
455
Interest (expense) income, net
(1,588
)
706
(882
)
(142
)
—
(142
)
(Loss) income before benefit from
(provision for) income taxes
(5,980
)
2,245
(3,735
)
(2,349
)
1,026
(1,323
)
Benefit from (provision for) income
taxes
78
(539
)
(461
)
(14,355
)
14,648
293
Net loss
$
(5,902
)
$
(4,196
)
$
(16,704
)
$
(1,030
)
Loss per diluted share
$
(0.36
)
$
(0.26
)
$
(1.04
)
$
(0.06
)
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 table above, 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 and divestiture related expenditures, expense related
to the internal investigation into conduct in China and Singapore
(the "China/Singapore internal investigation"), and other
non-recurring charges that may not be indicative of the Company’s
financial performance. Management believes that adjusting its
operating expenses, operating loss, net loss and diluted loss per
share to remove non-recurring charges provides a useful perspective
with respect to the Company's 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.
During the third quarter of 2019, the Company recorded
approximately $207,000 of expenses related to the expected sale of
its SureCheck product group within the Company's Restaurant/Retail
reporting segment. This represents approximately $217,000 included
in costs of sales related to a reserve for inventory and an
approximately $10,000 decrease in costs of service related to the
impairment of intangible assets for the SureCheck product group.
The Company recorded approximately $105,000 of expenses related to
the Company's continued cooperation with the Singapore authorities
in connection with the findings of the completed China/Singapore
internal investigation. Additionally, approximately $986,000 of
equity based compensation charges were recorded during the third
quarter of 2019. The Company recognized amortization of acquired
intangible assets of approximately $241,000 related to the
Company’s 2014 acquisition of Brink Software, Inc. (the "Brink
Acquisition"). The provision for income tax was netted down by a
24%, or approximately $539,000, tax impact from non-GAAP
adjustments. Further, the Company recognized approximately $706,000
accretion of interest related to the Company's 4.5% Convertible
Senior Notes due 2024 (the "Notes").
During the third quarter of 2018, the Company recorded $305,000
of selling, general and administrative expenses related to the
internal investigation into conduct at the Company's China and
Singapore offices and the SEC subpoena. Additionally, $323,000 of
equity based compensation charges were recorded during the third
quarter of 2018. There were $157,000 of severance expenses recorded
in the third quarter. The Company recognized amortization of
acquired intangible assets of $241,000 related to the Brink
Acquisition and recorded a one-time $14,894,000 valuation allowance
to reduce the carrying value of its deferred tax assets pursuant to
FASB ASC 740. The valuation allowance was offset by $0.3 million or
24% representing the tax impact of 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 nine months ended
September 30, 2019
For the nine months ended
September 30, 2018
Reported basis (GAAP)
Adjustments
Comparable basis (Non- GAAP)
Reported basis (GAAP)
Adjustments
Comparable basis (Non- GAAP)
Net revenues
$
134,309
$
—
$
134,309
$
154,594
$
—
$
154,594
Costs of sales
106,735
1,719
105,016
122,849
—
122,849
Gross margin
27,574
1,719
29,293
31,745
—
31,745
Operating Expenses:
Selling, general and administrative
27,162
2,549
24,613
25,587
1,904
23,683
Research and development
9,233
108
9,125
9,082
—
9,082
Acquisition amortization
724
724
—
724
724
—
Total operating expenses
37,119
3,381
33,738
35,393
2,628
32,765
Operating (loss) income
(9,545
)
5,100
(4,445
)
(3,648
)
2,628
(1,020
)
Other (expense) income, net
(1,205
)
—
(1,205
)
120
—
120
Interest (expense) income, net
(2,978
)
1,279
(1,699
)
(261
)
—
(261
)
(Loss) income before benefit from
(provision for) income taxes
(13,728
)
6,379
(7,349
)
(3,789
)
2,628
(1,161
)
Benefit from (provision for) income
taxes
3,988
(2,534
)
1,454
(14,170
)
14,264
94
Net loss
$
(9,740
)
$
(5,895
)
$
(17,959
)
$
(1,067
)
Loss per diluted share
$
(0.61
)
$
(0.37
)
$
(1.12
)
$
(0.07
)
During the nine months ended September 30, 2019, the Company
recorded $1,576,000 of expenses related to the expected sale of its
SureCheck product group within the Company's Restaurant/Retail
reporting segment, this represents $798,000 related to reserve for
inventory and $778,000 in costs of service related to impairment of
intangible assets for the SureCheck product group. The Company
recorded $395,000 of expenses related to the China/Singapore
internal investigation and severance expenses of $143,000 in cost
of sales and $316,000 in selling, general and administrative
expenses and $108,000 in research and development expenses.
Additionally, $1,838,000 of equity based compensation charges were
recorded during the nine months ended September 30, 2019. The
Company recognized amortization of acquired intangible assets of
$724,000 related to the Brink Acquisition. The provision for income
tax was netted down by a 24%, or $1,531,000, tax impact from
non-GAAP adjustments as well as a $4,065,000 tax benefit relating
to the sale of the Notes. Further, the Company recognized
$1,279,000 accretion of interest related to the Notes.
During the nine months ended September 30, 2018, the Company
recorded $916,000 of selling, general and administrative expenses
related to the internal investigation into conduct at the Company's
China and Singapore offices and the SEC subpoena. Additionally,
$754,000 of equity based compensation charges were recorded during
the first nine months of 2018. There were $234,000 of severance
expenses recorded in the first nine months of 2018. The Company
recognized amortization of acquired intangible assets of $724,000
related to the Brink Acquisition and recorded a one-time
$14,894,000 valuation allowance to reduce the carrying value of its
deferred tax assets pursuant to FASB ASC 740. The valuation
allowance was offset by $0.6 million or 24% representing the tax
impact of non-GAAP adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191107006000/en/
Christopher R. Byrnes (315) 738-0600 ext. 6226
cbyrnes@partech.com, www.partech.com
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