MAM Software Reports Fiscal Fourth Quarter and Full Year Results

BLUE BELL, Pa., Sept. 28, 2017 /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 fourth fiscal quarter and year ended June 30, 2017, through the filing on September 28, 2017 of its Annual Report on Form 10-K with the Securities and Exchange Commission:


    (In thousands, except per share data)                          For the Three Months Ended       For the Years Ended
                                                                            June 30,                     June 30,

                                                                     2017                   2016    2017                2016
                                                                     ----                   ----    ----                ----

    Net revenues                                                              $8,279             $8,400                      $31,596 $32,212

    Gross profit                                                              $4,465             $4,764                      $17,403 $17,614
                                                                              ------             ------                      ------- -------

    Operating income                                                          $1,582             $1,163                       $4,217  $3,800

    Income before income taxes                                                $1,469             $1,045                       $3,658  $3,741

    Net income                                                                $2,436             $1,388                       $4,578  $3,552
                                                                              ------             ------                       ------  ------

    Earnings per share attributed to common stockholders - basic               $0.21              $0.12                        $0.39   $0.29
                                                                               -----              -----                        -----   -----

    Earnings per share attributed to common stockholders - diluted             $0.21              $0.12                        $0.39   $0.28
                                                                               -----              -----                        -----   -----

    Weighted average shares outstanding - basic                               11,739             11,769                       11,732  12,314

    Weighted average shares outstanding - diluted                             11,802             11,929                       11,786  12,490

Michael Jamieson, MAM Software Group President and Chief Executive Officer commented, "Fiscal 2017 was extremely productive in terms of product development, pipeline growth and overall business momentum. We successfully implemented several large new customers and closed multiple perpetual licenses transactions in the fourth quarter to help deliver strong quarterly results that included revenue growth of 6.6% on a constant currency basis and fiscal 2017 full-year Adjusted EBITDA* of $5.1 million, well ahead of our guidance of $4.1 million to $4.6 million."

"We are particularly pleased with the work our team has completed to bring our large, complex development projects to their current state, including the scheduled go-live of our first VAST Online customer in October 2017," continued Jamieson. "As a result, the interest in our VAST Online cloud solution and our engagement in active discussions with potential customers has increased. The investments we are making in products are laying a solid foundation for growth that is beginning to produce tangible results."

Fourth Quarter Highlights:

    --  Net revenues of $8.3 million were down 1.4% compared to $8.4 million for
        the same period last year. On a constant currency basis, revenues were
        up 6.6% over the same period last year.
    --  Recurring revenues were 82.9% of total revenues compared to 79.3% of
        total revenues for the same period last year. On a constant currency
        basis, recurring revenue increased $781,000, or 11.7%, as compared to
        the fourth quarter last year.
    --  Total Software as a Service (SaaS) revenues increased 15.4%
        year-over-year and 8.3% sequentially. On a constant currency basis, SaaS
        revenues were up 25.9% year-over-year.
    --  Operating income was $1.6 million, or 19.1% of revenues, versus $1.2
        million, or 13.9% of revenues, for the same period last year. Changes in
        foreign currency exchange rates negatively impacted operating income by
        $197,000, as compared to the same period last year.
    --  Adjusted EBITDA* was $1.8 million, or 22.2% of revenues, versus $1.5
        million, or 17.3% of revenues, for the same period last year. Changes in
        foreign currency exchange rates negatively impacted Adjusted EBITDA* by
        $206,000, as compared to the same period last year.
    --  Net income was $2.4 million as compared to $1.4 million in the same
        period last year. Changes in foreign currency exchange rates negatively
        impacted net income by $156,000, or $0.01 per basic and diluted share,
        as compared to the same period last year.

Fourth Quarter Financial Results:

Net revenues were $8.3 million for the quarter ended June 30, 2017, versus $8.4 million for the same period last year, a decrease of $121,000 or 1.4%.

    --  On a constant currency basis, revenue was up 6.6% over the same period
        last year.
    --  Recurring revenue for the quarter was $6.9 million, or 82.9% of total
        revenue, an increase of $199,000 or 3.0%, over $6.7 million, or 79.3% of
        total revenue, for the fourth quarter last year. Sequentially, recurring
        revenue increased $384,000, or 5.9%, compared to $6.5 million in the
        fiscal third quarter of 2017. On a constant currency basis, recurring
        revenue increased $781,000, or 11.7%, as compared to the fourth quarter
        last year, and increased by $259,000, or 3.6%, sequentially.
    --  Total Software as a Service (SaaS) revenue for the quarter was $2.4
        million, an increase of $320,000, or 15.4%, year-over-year, and an
        increase of $184,000, or 8.3%, sequentially when compared to the third
        quarter of fiscal 2017. On a constant currency basis, SaaS revenue
        increased $540,000, or 25.9%, as compared to the fourth quarter last
        year, and increased by $141,000, or 5.7%, sequentially. The increase in
        the SaaS revenue was primarily attributable to a 11.0% increase in
        Autowork Online (SaaS) revenue for the quarter to $1.5 million, and a
        23.2% increase in Autopart Online (SaaS) revenue for the quarter to
        $925,000.
    --  Total Data as a Service (DaaS) revenue for the quarter was $2.2 million,
        a decrease of $209,000, or 8.6%, year over year, and an increase of
        $10,000, or 0.5%, sequentially when compared to the fiscal third quarter
        of 2017. On a constant currency basis, DaaS revenue slightly decreased
        $12,000, or 0.5%, as compared to the same period last year, and
        decreased $43,000, or 1.8% sequentially, due to the timing of holidays.

Gross profit for the quarter was $4.5 million, or 53.9% of total revenue, a decrease of $299,000 compared to $4.8 million, or 56.7% of total revenue, for the same period last year.

Operating expenses for the quarter decreased by $716,000 to $2.9 million, a decrease of 19.9% as compared to the $3.6 million for the same period last year. The decrease was primarily the result of the impact from foreign currency movements, adjustments to annual incentive compensation plans, the timing of commissions, and lower bad debt expense, partially offset by increased R&D expenses primarily to support new client growth.

Operating income for the quarter increased by $418,000 or 35.9%, to $1.6 million, as compared to $1.2 million for the same period last year.

Other expense for the quarter was $112,000 and compares to $118,000 for the same period last year.

Net income for the quarter increased by $1.0 million, or 75.6%, to $2.4 million, or $0.21 per basic and diluted share, compared to net income of $1.4 million, or $0.12 per basic and diluted share, for the same period last year. Net income for the fourth quarter of fiscal year 2017 included a tax benefit of $968,000 primarily related to a partial release of the valuation allowance and the impact of adopting a new accounting pronouncement.

Fiscal 2017 Full Year Highlights

    --  Net revenues were $31.6 million, a decrease of 1.9% compared to $32.2
        million in the same period last year. On a constant currency basis,
        revenues would have been $35.0 million.
    --  Recurring revenues increased 1.7% to $26.0 million compared to $25.6
        million in the same period last year. Recurring revenues were 82.4% of
        total revenues compared to 79.5% in the same period last year.
    --  Total Software as a Service (SaaS) revenue increased 22.5% to $8.7
        million compared to $7.1 million in the same period last year.
    --  Operating income was $4.2 million, or 13.3% of revenues, versus $3.8
        million, or 11.8% of revenues, for the same period last year. Changes in
        foreign currency exchange rates negatively impacted operating income by
        $853,000, as compared to the same period last year.
    --  Adjusted EBITDA* was $5.1 million, or 16.2% of revenues, versus $5.0
        million, or 15.7% of revenues, for the same period last year. Changes in
        foreign currency exchange rates negatively impacted Adjusted EBITDA* by
        $903,000, as compared to the same period last year.
    --  Net income was $4.6 million as compared to $3.6 million in the same
        period last year. Changes in foreign currency exchange rates negatively
        impacted net income by $814,000, or $0.07 per basic and diluted share,
        as compared to the same period last year.

Fiscal 2017 Full Year Financial Results:

Net revenues were $31.6 million for the 12 months ended June 30, 2017 versus $32.2 million for the same period last year, a decrease of $616,000 or 1.9%.

    --  On a constant currency basis, revenues were up 8.8% over the same period
        last year.
    --  Recurring revenues for the 12 months were $26.0 million, or 82.4% of
        total revenues, an increase of $444,000 or 1.7%, over $25.6 million, or
        79.5% of total revenues for the same period last year. On a constant
        currency basis, recurring revenue increased $781,000, or 11.7%, as
        compared to the same period last year.
    --  Total Software as a Service (SaaS) revenues for the 12 months were $8.7
        million, an increase of $1.6 million, or 22.5%, year-over-year. On a
        constant currency basis, SaaS revenue increased $2.7 million, or 38.2%,
        as compared to the same period last year. The increase in the SaaS
        revenues was primarily attributable to a 19.8% increase in Autowork
        Online (SaaS) revenues for the 12 months to $5.3 million, and a 27.2%
        increase in Autopart Online (SaaS) revenues for the 12 months to $3.4
        million.
    --  Total Data as a Service (DaaS) revenues for the 12 months were $8.8
        million, a decrease of $953,000, or 9.8%, year over year. On a constant
        currency basis, DaaS revenue increased $107,000, or 1.1%, as compared to
        the same period last year.

Gross profit for the twelve months ended June 30, 2017 was $17.4 million, or 55.1% of total revenue, a decrease of $211,000 compared to $17.6 million, or 54.7% of total revenue, for the same period last year. Changes in foreign currency exchange rates negatively impacted gross profit by $1.9 million, as compared to the same period last year. At constant currency, the increase in gross profit margins was primarily the result of higher margin nonrecurring revenues primarily related to Autopart software license deals, and increased ALLDATA user counts, pricing, and customization, partially offset by increases in professional services headcount and infrastructure to support growth.

Operating expenses for the twelve months ended June 30, 2017 decreased by $628,000 to $13.2 million, a decrease of 4.5% as compared to the $13.8 million for the same period last year. The decrease was primarily the result of favorable foreign exchange rates, partially offset by increased R&D expenses primarily to support new client growth and increases to the annual incentive plans.

Operating income for the twelve months ended June 30, 2017 increased by $417,000, or 11.0%, to $4.2 million as compared to $3.8 million for the same period last year.

Other expense for the twelve months ended June 30, 2017 of $559,000 was the result of net interest expense on outstanding debt and compares to $59,000 for the same period last year. Other expense for the twelve months ended June 30, 2016 included a $217,000 gain from the settlement of liabilities with certain vendors.

Net income for the twelve months ended June 30, 2017 increased by $1.0 million, or 28.9%, to $4.6 million, or $0.39 per basic and diluted share, compared to net income of $3.6 million, or $0.29 per basic and $0.28 per diluted share, for the same period last year. Changes in foreign currency exchange rates negatively impacted net income by $814,000, or $0.07 per basic and diluted share, as compared to the same period last year. Net income for fiscal year 2017 includes a tax benefit of $920,000 primarily related to a partial release of the valuation allowance and the impact of adopting a new accounting pronouncement.

Balance Sheet and Other Financial Highlights

    --  The Company ended the fiscal year with $1.3 million in cash after
        capital expenditures and capitalized software development costs of $2.8
        million.
    --  As of June 30, 2017, the Company had $8.1 million of debt outstanding
        under its $12 million credit facility.
    --  Stockholders' equity increased from $5.0 million at June 30, 2016, or
        92.8%, to $9.7 million at June 30, 2017.
    --  As of June 30, 2017, there were 12.3 million shares of common stock
        outstanding.

Business Outlook

The Company's expectations for fiscal year 2018 Adjusted EBITDA* is in the range of $5.5 million to $6.0 million, on a constant currency basis.

Conference Call Information

The Company has scheduled a conference call for Friday, September 29, 2017, at 9 a.m. ET to review the results. Investors and interested parties can access the conference call by dialing:

    --  Toll-Free: 888-802-2239
    --  Toll/International: 719-325-2428
    --  UK Toll-Free: 0 808 101 7162

A replay will be available until October 13, 2017 by calling 1-844-512-2921 (United States) or 1-412-317-6671 (toll/UK/international). Please use pin number 1226077 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 27A 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)



                                                                                                                                      June 30,          June 30,

                                                                                                                                           2017               2016
                                                                                                                                           ----               ----


    ASSETS

    Current Assets

    Cash and cash equivalents                                                                                                                    $1,260                $491

    Accounts receivable, net of allowance of $332 and $359, respectively                                                                          4,644               4,627

    Inventories                                                                                                                                     384                 221

    Prepaid expenses and other current assets                                                                                                     1,433               1,495

    Income tax receivable                                                                                                                           168                 535
                                                                                                                                                    ---                 ---

    Total Current Assets                                                                                                                          7,889               7,369


    Property and Equipment, Net                                                                                                                     511                 581


    Other Assets

    Goodwill                                                                                                                                      8,191               8,363

    Intangible assets, net                                                                                                                          639                 739

    Software development costs, net                                                                                                               7,634               5,234

    Deferred income taxes                                                                                                                         1,679                   -

    Other long-term assets                                                                                                                          109                  68
                                                                                                                                                    ---                 ---

    TOTAL ASSETS                                                                                                                                $26,652             $22,354
                                                                                                                                                =======             =======


    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities

    Accounts payable                                                                                                                             $1,334              $1,618

    Accrued expenses and other liabilities                                                                                                        2,165               1,811

    Payroll and other taxes                                                                                                                         815               1,188

    Current portion of long-term debt                                                                                                             1,734               1,879

    Current portion of deferred revenue                                                                                                           1,477                 939

    Sales tax payable                                                                                                                               761                 750

    Income tax payable                                                                                                                              506                   1
                                                                                                                                                    ---                 ---

    Total Current Liabilities                                                                                                                     8,792               8,186


    Long-Term Liabilities

    Deferred revenue, net of current portion                                                                                                        534                 273

    Deferred income taxes                                                                                                                           682                 535

    Long-term debt, net of current portion                                                                                                        6,386               7,808

    Other long-term liabilities                                                                                                                     583                 533
                                                                                                                                                    ---                 ---

    Total Liabilities                                                                                                                            16,977              17,335
                                                                                                                                                 ------              ------

    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, 12,313                                                                       1                   1
         shares issued and 12,308 shares outstanding at June 30, 2017, and 13,199
         shares issued and 12,410 shares outstanding at June 30, 2016

    Additional paid-in capital                                                                                                                   14,180              16,162

    Accumulated other comprehensive loss                                                                                                        (3,283)            (2,985)

    Accumulated deficit                                                                                                                         (1,207)            (5,785)

    Treasury stock at cost, 5 shares at June 30, 2017 and 790 shares at June 30, 2016                                                              (16)            (2,374)
                                                                                                                                                    ---              ------

    Total Stockholders' Equity                                                                                                                    9,675               5,019
                                                                                                                                                  -----               -----

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                  $26,652             $22,354
                                                                                                                                                =======             =======


                                                                                    MAM SOFTWARE GROUP, INC.

                                                                   Condensed Consolidated Statements of Comprehensive Income

                                                                                          (Unaudited)

                                                                             (In thousands, except per share data)



                                                                                              For the Three Months Ended          For the Years Ended

                                                                                                        June 30,                       June 30,
                                                                                                        --------                       --------

                                                                                                   2017                      2016                  2017     2016
                                                                                                   ----                      ----                  ----     ----

    Net revenues                                                                                            $8,279                  $8,400              $31,596    $32,212

    Cost of revenues                                                                                         3,814                   3,636               14,193     14,598
                                                                                                             -----                   -----               ------     ------

    Gross Profit                                                                                             4,465                   4,764               17,403     17,614
                                                                                                             -----                   -----               ------     ------


    Operating Expenses

    Research and development                                                                                   937                     959                3,791      3,777

    Sales and marketing                                                                                        799                     992                3,659      4,009

    General and administrative                                                                               1,089                   1,587                5,505      5,658

    Depreciation and amortization                                                                               58                      63                  231        370
                                                                                                               ---                     ---                  ---        ---

    Total Operating Expenses                                                                                 2,883                   3,601               13,186     13,814
                                                                                                             -----                   -----               ------     ------


    Operating Income                                                                                         1,582                   1,163                4,217      3,800


    Other Income (Expense)

    Interest expense, net                                                                                    (112)                  (118)               (559)     (276)

    Gain on settlement of liabilities                                                                            -                      -                   -       217
                                                                                                               ---                    ---                 ---       ---

    Total other income (expense), net                                                                        (112)                  (118)               (559)      (59)


    Income before provision (benefit) for income taxes                                                       1,469                   1,045                3,658      3,741


    Income tax expense (benefit)                                                                             (968)                  (343)               (920)       189
                                                                                                              ----                    ----                 ----        ---


    Net Income                                                                                              $2,436                  $1,388               $4,578     $3,552
                                                                                                            ======                  ======               ======     ======


    Earnings per share attributed to common stockholders - basic                                             $0.21                   $0.12                $0.39      $0.29
                                                                                                             =====                   =====                =====      =====

    Earnings per share attributed to common stockholders - diluted                                           $0.21                   $0.12                $0.39      $0.28
                                                                                                             =====                   =====                =====      =====


    Weighted average common shares outstanding - basic                                                      11,739                  11,769               11,732     12,314
                                                                                                            ======                  ======               ======     ======

    Weighted average common shares outstanding - diluted                                                    11,802                  11,929               11,786     12,490
                                                                                                            ======                  ======               ======     ======


    Net Income                                                                                              $2,436                  $1,388               $4,578     $3,552

    Foreign currency translation income (loss)                                                                 333                   (676)               (298)   (1,744)
                                                                                                               ---                    ----                 ----     ------

    Total Comprehensive Income                                                                              $2,769                    $712               $4,280     $1,808
                                                                                                            ======                    ====               ======     ======


                                                                                             MAM SOFTWARE GROUP, INC.

                                                                                      Consolidated Statements of Cash Flows

                                                                                                  (In thousands)



                                                                                                                               For the Years Ended

                                                                                                                                   June 30,
                                                                                                                                   --------

                                                                                                                            2017                           2016
                                                                                                                            ----                           ----

    CASH FLOWS FROM OPERATING ACTIVITIES:

    Net income                                                                                                                                      $4,578         $3,552

    Adjustments to reconcile net income to net cash provided by operating activities:

     Bad debt expense                                                                                                                                  283            257

     Depreciation and amortization                                                                                                                     537            648

     Amortization of debt discount and debt issuance costs                                                                                             139             32

     Deferred income taxes                                                                                                                         (1,523)           359

     Stock-based compensation expense                                                                                                                  375            383


    Changes in assets and liabilities:

     Accounts receivable                                                                                                                             (386)         (881)

     Inventories                                                                                                                                     (169)          (70)

     Prepaid expenses and other assets                                                                                                                 (6)            42

     Income tax receivable                                                                                                                             352          (535)

     Accounts payable                                                                                                                                (264)         (215)

     Accrued expenses and other liabilities                                                                                                            514          (988)

     Income tax payable                                                                                                                                593              -

     Payroll and other taxes                                                                                                                         (314)           183

     Deferred revenue                                                                                                                                  816            478
                                                                                                                                                       ---            ---

    NET CASH PROVIDED BY OPERATING ACTIVITIES                                                                                                        5,525          3,245
                                                                                                                                                     -----          -----


    CASH FLOWS FROM INVESTING ACTIVITIES:

    Purchase of property and equipment                                                                                                                (96)         (207)

    Capitalized software development costs                                                                                                         (2,729)       (2,759)

    Business acquisition, net of cash acquired                                                                                                           -         (453)
                                                                                                                                                       ---          ----

    NET CASH USED IN INVESTING ACTIVITIES                                                                                                          (2,825)       (3,419)
                                                                                                                                                    ------         ------


    CASH FLOWS FROM FINANCING ACTIVITIES:

    Repurchase of common stock for treasury                                                                                                              -         (161)

    Repurchase of common stock                                                                                                                           -      (15,000)

    Common stock surrendered to pay for tax withholding                                                                                              (150)             -

    Payment for acquisition of debt                                                                                                                  (144)         (123)

    Payment of fees for repurchase of common stock                                                                                                       -         (118)

    Proceeds from long-term debt                                                                                                                     9,519         10,729

    Repayment of long-term debt                                                                                                                   (11,081)         (950)

    Proceeds from exercise of stock options                                                                                                             16              -
                                                                                                                                                       ---            ---

    NET CASH USED IN FINANCING ACTIVITIES                                                                                                          (1,840)       (5,623)
                                                                                                                                                    ------         ------


    Effect of exchange rate changes                                                                                                                   (91)         (505)
                                                                                                                                                       ---           ----

    Net change in cash and cash equivalents                                                                                                            769        (6,302)

    Cash and cash equivalents at beginning of year                                                                                                     491          6,793
                                                                                                                                                       ---          -----

    Cash and cash equivalents at end of year                                                                                                        $1,260           $491
                                                                                                                                                    ======           ====


                               MAM SOFTWARE GROUP, INC.

                  Calculation of Adjusted Earnings before Interest,

                   Taxes, Depreciation, and Amortization (Non-GAAP)

                                     (Unaudited)

                                    (In thousands)


                       For the Three          For the Years
                        Months Ended            Ended
                          June 30,             June 30,
                          --------             --------


                                   2017                    2016        2017     2016
                                   ----                    ----        ----     ----


     Net
     income
     (GAAP)                        $2,436                  $1,388      $4,578   $3,552

    Interest
     expense,
     net                            112                     118         559      276

    Income tax
     expense
     (benefit)                    (968)                  (343)      (920)     189

    Depreciation
     and
     amortization                   163                     134         537      648

    Non-cash
     stock-
     based
     compensation                    97                     158         375      383
                                    ---                     ---         ---      ---

     Adjusted
     EBITDA
     (Non-
     GAAP)                         $1,840                  $1,455      $5,129   $5,048

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SOURCE MAM Software Group, Inc.