MAM Software Reports Fiscal Second Quarter Results
BLUE BELL, Pa., Feb. 8, 2018 /PRNewswire/ -- MAM Software Group, Inc. (NASDAQ Capital Market: MAMS) (the "Company" or "MAM"), a leading global provider of on-premise and cloud-based business management solutions for the auto parts, tire and vertical distribution industries, announced the following financial results in accordance with U.S. generally accepted accounting principles ("GAAP") for its second fiscal quarter and six months ended December 31, 2017, through the filing on February 8, 2018 of its Quarterly Report on Form 10-Q with the Securities and Exchange Commission:
(In thousands, except per share data) For the Three Months Ended For the Six Months Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
Net revenues $8,500 $7,382 $17,138 $15,444
Gross profit $4,501 $3,888 $9,332 $8,632
------ ------ ------ ------
Operating income $823 $402 $2,350 $1,769
Income before provision for income taxes $714 $280 $2,137 $1,527
Net income (loss) $(79) $250 $1,035 $1,463
---- ---- ------ ------
Earnings (loss) per share attributed to common stockholders - basic $(0.01) $0.02 $0.09 $0.12
------ ----- ----- -----
Earnings (loss) per share attributed to common stockholders - diluted
$(0.01) $0.02 $0.09 $0.12
------ ----- ----- -----
Weighted average shares outstanding - basic 11,825 11,716 11,820 11,709
Weighted average shares outstanding - diluted 11,825 11,813 12,151 11,805
Michael Jamieson, MAM's President and Chief Executive Officer commented, "The second quarter was another quarter of continued progress with our large, complex development projects highlighted by the first 'go live' of VAST Online at a Goodyear dealer location, which was followed by two additional locations in early January. We are incorporating feedback from these initial locations and making adjustments as we select and prepare for implementation at subsequent locations. We continue to be encouraged by the growing number of identified, new business opportunities, yet remain focused on successfully delivering on current business under contract to ensure customer satisfaction and protect the investments we have made in product development."
"Our financial results for the quarter, and year-to-date, were in-line with our expectations and reflect the positive impact that reshaping our business to a service model has had both on our earnings and cash generation," continued Jamieson. "Our balance sheet remains strong with an increasing cash balance and lower debt outstanding driven by nearly $3.1 million in cash generated from operations during the first six months of fiscal year 2018, an increase of more than 9% compared to the first six months of fiscal year 2017."
Second Quarter Highlights:
-- Net revenues of $8.5 million were up 15.1% compared to $7.4 million for
the same period last year. On a constant currency basis, revenues were
up 10.3% over the same period last year.
-- Recurring revenues were 85.4% of total revenues compared to 85.3% of
total revenues for the same period in the prior fiscal year.
-- Total Software as a Service (SaaS) revenues increased 29.7%
year-over-year and 4.8% sequentially from the prior quarter.
-- Operating income was $823,000, or 9.7% of revenues, compared to
$402,000, or 5.4% of revenues, for the same period last year.
-- Net loss was $79,000 compared to net income of $250,000 in the same
period last year. The net loss included $729,000 of nonrecurring income
tax expense from the implementation of U.S. Tax Cuts and Jobs Act (the
"Tax Act").
-- Adjusted EBITDA* was $1.1 million, or 12.9% of revenues, compared to
$642,000, or 8.7% of revenues, for the same period last year.
Second Quarter Financial Results:
Net revenues were $8.5 million for the quarter ended December 31, 2017, compared to $7.4 million for the same period last year, an increase of $1.1 million or 15.1%.
-- On a constant currency basis, revenues were up 10.3% over the same
period in the prior fiscal year.
-- Recurring revenue for the quarter was $7.3 million, or 85.4% of total
revenue, an increase of $963,000 or 15.3%, over $6.3 million, or 85.3%
of total revenue, for the second quarter last year. Sequentially,
recurring revenue increased $172,000, or 2.4%, compared to $7.1 million,
or 82% of total revenue, in the first quarter of fiscal year 2018.
-- Total Software as a Service (SaaS) revenue for the quarter was $2.7
million, an increase of $619,000, or 29.7%, year-over-year and an
increase of $124,000, or 4.8%, sequentially when compared to the first
quarter of fiscal 2018. The increase in the SaaS revenue was primarily
attributable to a 21.4% increase in Autowork Online (SaaS) revenue for
the quarter to $1.6 million, and a 42.8% increase in Autopart Online
(SaaS) revenue for the quarter to $1.2 million.
-- Total Data as a Service (DaaS) revenue for the quarter was $2.4 million,
an increase of $222,000, or 10.4%, year over year, and $24,000, or 1%,
sequentially when compared to the fiscal first quarter of 2018.
Gross profit for the quarter was $4.5 million, or 53.0% of total revenue, an increase of $613,000 compared to $3.9 million, or 52.7% of total revenue, for the same period last year.
Operating expenses for the quarter increased by $192,000 to $3.7 million, an increase of 5.5% compared to $3.5 million for the same period last year. An increase in Research and Development expenses to support growth was partially offset by lower Sales and Marketing expenses.
Operating income for the quarter increased by $421,000, or 104.7%, to $823,000 compared to $402,000 for the same period last year.
Other expense for the quarter decreased by $13,000, or 10.7%, to $109,000 compared to $122,000 for the same period last year.
Provision for income taxes increased to $0.8 million, or an effective tax rate of 111%, for the quarter, as compared to $30,000, or an effective tax rate of 11%, for the same period last year. The increase in the effective tax rate was primarily due to the nonrecurring impact from the implementation of the Tax Act that resulted in a write-down of our net US federal deferred tax assets to the lower statutory tax rate and one-time repatriation tax on deemed repatriation of historical earnings of foreign subsidiaries in the current quarter, and a partial release of our valuation allowance last year.
Net loss for the quarter was $79,000, or $(0.01) per basic and diluted share, compared to net income of $250,000, or $0.02 per basic and diluted share, for the same period last year. The net loss for the quarter included $729,000, or $(0.06) per basic and diluted share, of additional income tax expense from the impact of the Tax Act.
Year-to-Date Financial Results:
Net revenues were $17.1 million for the six months ended December 31, 2017 compared to $15.4 million for the same period last year, an increase of $1.7 million, or 11.0%.
-- On a constant currency basis, revenues were up 8.8% over the same period
in the prior fiscal year.
-- Recurring revenue for the first six months of fiscal 2018 was $14.3
million, or 83.7% of total revenue, an increase of $1.6 million, or
12.9%, compared to $12.7 million, or 82.3% of total revenue, for the
first six months of the prior fiscal year.
-- Total Software as a Service (SaaS) revenue for the first six months of
fiscal 2018 was $5.3 million, an increase of $1.2 million, or 29.3%,
year-over-year. The increase in the SaaS revenue was primarily
attributable to a 22.8% increase in Autowork Online (SaaS) revenue for
the first six months of fiscal 2018 to $3.1 million, and a 39.7%
increase in Autopart Online (SaaS) revenue for the first six months of
fiscal 2018 to $2.2 million.
-- Total Data as a Service (DaaS) revenue for the first six months of
fiscal 2018 was $4.7 million, an increase of $294,000, or 6.7%, when
compared to the first six months of fiscal 2017.
Gross profit for the first six months of fiscal 2018 was $9.3 million, or 54.5% of total revenue, an increase of $700,000 compared to $8.6 million, or 55.9% of total revenue, for the same period in the prior fiscal year.
Operating expenses for the first six months of fiscal 2018 increased by $119,000 to $7.0 million, an increase of 1.7% compared to $6.9 million for the same period last year. An increase in Research and Development expenses to support growth was partially offset by lower Sales and Marketing expenses.
Operating income for the first six months of fiscal 2018 increased by $581,000, or 32.8%, to $2.4 million, compared to $1.8 million for the same period in the prior fiscal year.
Other expense for the first six months of fiscal 2018 decreased by $29,000, or 12.0%, to $213,000, compared to $242,000 for the same period in the prior fiscal year.
Provision for income taxes increased to $1.1 million, or an effective tax rate of 52%, for the first six months of fiscal 2018, as compared to $64,000, or an effective tax rate of 4%, for the same period last year. The increase in the effective tax rate was primarily due to the implementation of the Tax Act that resulted in a write-down of our net US federal deferred tax assets to the lower statutory tax rate and one-time repatriation tax on deemed repatriation of historical earnings of foreign subsidiaries in the current fiscal year, and a partial release of our valuation allowance last fiscal year.
Net income for the first six months of fiscal year 2018 was $1 million, or $0.09 per basic and diluted share, compared to net income of $1.5 million, or $0.12 per basic and diluted share, for the same period last year. The net income for the first six months of fiscal year 2018 included $729,000, or $(0.06) per basic and diluted share, of additional income tax expense from the impact of the Tax Act.
Balance Sheet and Other Financial Highlights
-- As of December 31, 2017, the Company had $2.8 million in cash after
capital expenditures and capitalized software development costs of $8.5
million.
-- As of December 31, 2017, the Company had $7.6 million of debt
outstanding under its $11.5 million credit facility.
-- Stockholders' equity increased 17.2% from $9.7 million at June 30, 2017
to $11.3 million at December 31, 2017.
-- As of December 31, 2017, there were 12.6 million shares of common stock
outstanding.
U.S. Tax Cuts and Jobs Act
On December 22, 2017, the U.S. government enacted comprehensive tax legislation referred to as the Tax Cuts and Jobs Act (the "Tax Act"). The Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other things, lowering U. S. corporate income tax rates and the imposition of a territorial tax system with a one-time repatriation tax on deemed repatriated earnings of foreign subsidiaries. As the Company has a June 30 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a lower U.S. statutory federal rate, from the previously 34%, to a blended rate of approximately 28% for our fiscal year ending June 30, 2018, and 21% for subsequent fiscal years. During the quarter ended December 31, 2017, we were required to revalue our U.S. federal deferred tax assets and liabilities at the new federal corporate income tax rate in the period of enactment; accordingly, we recorded additional income tax expense of $0.7 million, which consisted of $0.5 million related to the write-down our net U.S. federal deferred tax asset to the lower statutory tax rate and $0.2 million for the one-time repatriation tax on deemed repatriation of historical earnings of foreign subsidiaries.
Business Outlook
The Company reaffirmed its expectations for fiscal year 2018 Adjusted EBITDA* 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, February 9, 2018, at 9 a.m. ET to review the results. Investors and interested parties can access the conference call by dialing:
-- Toll-Free: 1-800-239-9838
-- Toll/International: 1-323-794-2551
-- UK Toll-Free: 0800 358 6377
A replay will be available until February 23, 2018 by calling 1-844-512-2921 (United States) or 1-412-317-6671 (toll/UK/international). Please use pin number 3160019 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.
Statement regarding use of non-GAAP financial measures
In this press release, the Company's financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. Management believes that presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the Company's core operating results and comparison of operating results across reporting periods. Management also uses non-GAAP financial measures to establish budgets and to manage the Company's business. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached schedules.
*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)
December 31, June 30,
2017 2017
---- ----
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $2,810 $1,260
Accounts receivable, net of allowance of
$272 and $332, respectively 4,576 4,873
Inventories 222 154
Prepaid expenses and other current
assets 905 1,260
Income tax receivable - 168
--- ---
Total Current Assets 8,513 7,715
Property and Equipment, Net 510 511
Other Assets
Goodwill 8,407 8,191
Intangible assets, net 621 639
Software development costs, net 8,459 7,634
Deferred income taxes 1,495 1,679
Other long-term assets 460 283
--- ---
TOTAL ASSETS $28,465 $26,652
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $958 $1,334
Accrued expenses and other liabilities 1,220 1,137
Accrued payroll and related expenses 1,189 1,605
Current portion of long-term debt 1,864 1,734
Current portion of deferred revenues 1,724 1,477
Sales tax payable 832 761
Income tax payable 864 506
--- ---
Total Current Liabilities 8,651 8,554
Long-Term Liabilities
Deferred revenues, net of current
portion 988 772
Deferred income taxes 1,272 682
Long-term debt, net of current portion 5,611 6,386
Other long-term liabilities 606 583
--- ---
Total Liabilities 17,128 16,977
------ ------
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, 12,575
shares issued and 12,570 shares
outstanding at December 31, 2017 and
12,313 shares issued and 12,308 shares
outstanding at June 30, 2017 1 1
Additional paid-in capital 14,447 14,180
Accumulated other comprehensive loss (2,923) (3,283)
Accumulated deficit (172) (1,207)
Treasury stock at cost, 5 shares at
December 31, 2017 and June 30, 2017 (16) (16)
--- ---
Total Stockholders' Equity 11,337 9,675
------ -----
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $28,465 $26,652
------- -------
MAM SOFTWARE GROUP, INC.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands, except share and per share data)
For the Six Months
Ended
December 31,
For the Three Months
Ended
December 31,
------------
2017 2016 2017 2016
---- ---- ---- ----
Net revenues $8,500 $7,382 $17,138 $15,444
Cost of revenues 3,999 3,494 7,806 6,812
----- ----- ----- -----
Gross Profit 4,501 3,888 9,332 8,632
----- ----- ----- -----
Operating Expenses
Research and development 1,192 956 2,195 1,851
Sales and marketing 986 1,032 1,739 1,942
General and administrative 1,442 1,442 2,932 2,952
Depreciation and amortization 58 56 116 118
--- --- --- ---
Total Operating Expenses 3,678 3,486 6,982 6,863
----- ----- ----- -----
Operating Income 823 402 2,350 1,769
--- --- ----- -----
Other Income (Expense)
Interest expense, net (109) (122) (213) (242)
---- ---- ---- ----
Total other income (expense), net (109) (122) (213) (242)
---- ---- ---- ----
Income before provision for income
taxes 714 280 2,137 1,527
Provision for income taxes 793 30 1,102 64
--- --- ----- ---
Net Income (Loss) $(79) $250 $1,035 $1,463
---- ---- ------ ------
Earnings (loss) per share
attributed to common stockholders
- basic $(0.01) $0.02 $0.09 $0.12
Earnings (loss) per share
attributed to common stockholders
-diluted $(0.01) $0.02 $0.09 $0.12
Weighted average common shares
outstanding - basic 11,825 11,716 11,820 11,709
------ ------ ------ ------
Weighted average common shares
outstanding - diluted 11,825 11,813 12,151 11,805
------ ------ ------ ------
Net Income (Loss) $(79) $250 $1,035 $1,463
Foreign currency translation income
(loss) 95 (196) 360 (672)
--- ---- --- ----
Total Comprehensive Income $16 $54 $1,395 $791
--- --- ------ ----
MAM SOFTWARE GROUP, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
For the Six Months Ended
December 31,
------------
2017 2016
---- ----
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net income $1,035 $1,463
Adjustments to
reconcile net
income to net
cash provided by
operating
activities:
Bad debt expense 5 237
Depreciation and
amortization 283 252
Amortization of
debt issuance
costs 22 24
Deferred income
taxes 744 5
Stock-based
compensation
expense 231 200
Changes in assets
and liabilities:
Accounts
receivable 392 111
Prepaid expenses
and other assets 140 304
Income tax
receivable 170 343
Accounts payable (395) 20
Accrued expenses
and other
liabilities (297) (349)
Income taxes
payable 358 -
Deferred revenues 422 240
--- ---
NET CASH PROVIDED
BY OPERATING
ACTIVITIES 3,110 2,850
----- -----
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Purchase of
property and
equipment (60) (47)
Capitalized
software
development
costs (864) (1,519)
---- ------
NET CASH USED IN
INVESTING
ACTIVITIES (924) (1,566)
---- ------
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Proceeds from
long-term debt - 400
Repayment of
long-term debt (667) (1,264)
Common stock
surrendered to
pay for tax
withholding - (149)
Payment of fees
for acquisition
of debt - (25)
--- ---
NET CASH USED IN
FINANCING
ACTIVITIES (667) (1,038)
---- ------
Effect of
exchange rate
changes 31 (105)
--- ----
Net change in
cash and cash
equivalents 1,550 141
Cash and cash
equivalents at
beginning of
period 1,260 491
----- ---
Cash and cash
equivalents at
end of period $2,810 $632
------ ----
MAM SOFTWARE GROUP, INC.
Calculation of Adjusted Earnings before Interest,
Taxes, Depreciation and Amortization (Non-GAAP)
(Unaudited)
(In thousands)
For the Three For the Six
Months Ended Months Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
Net
income
(loss)
(GAAP) $(79) $250 $1,035 $1,463
Interest expense,
net 109 122 213 242
Provision for
income taxes 793 30 1,102 64
Depreciation and
amortization 141 124 283 252
Non-cash stock
compensation 134 116 231 200
---
Adjusted
EBITDA
(Non-
GAAP) $1,098 $642 $2,864 $2,221
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SOURCE MAM Software Group, Inc.
