MAM Software Reports Fiscal First Quarter Results

BLUE BELL, Pa., Nov. 13, 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 first fiscal quarter ended September 30, 2018, through the filing on November 13, 2018 of its Quarterly Report on Form 10-Q with the Securities and Exchange Commission:


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


                            2018                         2017



     Net
      revenues                     $
            9,300              $
      8,638


     Gross
      profit                       $
            5,235              $
      4,831


     Operating
      income                       $
            1,605              $
      1,527


     Income
      before
      provision
      for income
      taxes                        $
            1,514              $
      1,423


     Net income                    $
            1,211              $
      1,114



     Earnings
      per share
      attributed
      to common
      stockholders
      - basic
      and
      diluted                       $
            0.10               $
      0.09

Michael Jamieson, MAM's President and Chief Executive Officer commented, "Our first quarter financial results were in-line with our expectations and reflect the strength of our business model and the health of our balance sheet. We continue to grow our top line revenue and generate solid profitability and strong cash flow for reinvestment back into our business, while also returning a portion to our stockholders in the form of a share repurchase program. We are encouraged by the solid start to fiscal year 2019 and remain on track to achieve our financial guidance for the full year."

Jamieson added, "We also continued to make significant investments in our products, including VAST Online and our DaaS products, and I am very pleased with the progress that we have made during the first quarter."

First Quarter Highlights:

    --  Net revenues of $9.3 million were up 7.7% compared to $8.6 million for
        the same period last year. On a constant currency basis, revenues were
        up 8.0% over the same period last year.
    --  Recurring revenues were 82.5% of total revenues compared to 82.0% of
        total revenues for the same period last year.
    --  Total Software as a Service (SaaS) revenues increased 15.4%
        year-over-year but decreased 0.7% sequentially. On a constant currency
        basis, SaaS revenue increased 2.5% sequentially.
    --  Operating income was $1.6 million, or 17.2% of revenues, compared to
        $1.5 million, or 17.7% of revenues, for the same period last year.
    --  Net income was $1.2 million compared to $1.1 million in the same period
        last year.
    --  Adjusted EBITDA* was $1.9 million, or 20.5% of revenues, compared to
        $1.8 million, or 20.4% of revenues, for the same period last year.

First Quarter Financial Results:

Net revenues were $9.3 million for the quarter ended September 30, 2018, as compared to $8.6 million for the same period last year, an increase of $662,000 or 7.7%. On a constant currency basis, revenue increased 8.0% over the same period last year.

Recurring revenue for the quarter was $7.7 million, or 82.5% of total revenue, an increase of $586,000 or 8.3%, as compared to $7.1 million, or 82.0% of total revenue, for the first quarter last year. Sequentially, recurring revenue decreased $51,000, or 0.7%, as compared to $7.7 million, or 81.0% of total revenue, in the fourth quarter of fiscal year 2018. On a constant currency basis, recurring revenue increased 2.3% sequentially.

Total Software as a Service (SaaS) revenue for the quarter was $3.0 million, an increase of $398,000 or 15.4%, year-over-year, but a decrease of $22,000, or 0.7%, sequentially when compared to the fourth quarter of fiscal year 2018. On a constant currency basis, total SaaS revenue for the quarter increased by 2.5% sequentially. The increase in the SaaS revenue was primarily attributable to a 5.6% increase in Autowork Online (SaaS) revenue for the quarter to $1.6 million, and a 29.6% increase in Autopart Online (SaaS) revenue for the quarter to $1.4 million.

Total Data as a Service (DaaS) revenue for the quarter was $2.5 million, an increase of $155,000, or 6.7%, year over year, and a decrease of $78,000, or 3.1%, sequentially when compared to the fourth quarter of fiscal year 2018. On a constant currency basis, DaaS revenue was about flat sequentially.

Gross profit for the quarter was $5.2 million, or 56.3% of total revenue, an increase of $404,000, or 8.4%, as compared to $4.8 million, or 55.9% of total revenue, for the same period last year.

Operating expenses for the quarter increased by $326,000 to $3.6 million, an increase of 9.9%, as compared to $3.3 million for the same period last year. The increase was primarily the result of increased R&D expenses in support of new client developments, increased general and administrative expenses primarily due to timing of professional fees, increased sales and marketing expenses due primarily to new employees.

Operating income for the quarter increased by $78,000, or 5.1%, to $1.6 million, as compared to $1.5 million for the same period last year.

Interest expense for the quarter decreased by $13,000, or 12.5%, to $91,000, as compared to $104,000 for the same period last year primarily due to reductions in the outstanding debt balance.

Net income for the quarter was $1.2 million, or $0.10 per basic and diluted share, as compared to net income of $1.1 million, or $0.09 per basic and diluted share, for the same period last year.

Balance Sheet and Other Financial Highlights

    --  As of September 30, 2018, the Company had $4.2 million in cash after
        capital expenditures and capitalized software development costs of
        $446,000 for the quarter.
    --  As of September 30, 2018, the Company had $6.1 million of debt
        outstanding under its credit facility.
    --  Stockholders' equity increased 10.6% from $13.5 million at June 30, 2018
        to $14.9 million at September 30, 2018.
    --  As of September 30, 2018, there were 12.6 million shares of common stock
        outstanding.

Share Repurchase Plan

As of November 13, 2018, the Company repurchased 32,750 shares at an average price of $7.63 per share under its previously announced $2.0 million share repurchase plan.

Business Outlook

The Company reiterated is expectations for continued revenue growth during fiscal 2019 of approximately 10% and continuing improvement in profitability with 2019 Adjusted EBITDA* in the range of $6.2 million to $6.7 million, on a constant currency basis. The Company also expects to invest approximately $7.0 million in Research and Development, including capitalized software development costs.

Conference Call Information

The Company has scheduled a conference call for Wednesday, November 14, 2018, at 9 a.m. ET to review the results. Investors and interested parties can access the conference call by dialing:

    --  United States: 1-877-830-2598
    --  UK/international: 1-785-424-1877
    --  U.K. toll free: 0 808 101 1183

A replay will be available until December 5, 2018 by calling 1-844-512-2921 (United States) or 1-412-317-6671 (UK/international). Please use pin number 132144 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)




                                                                                       September 30,                      June 30,


                                                                                                2018                           2018

                                                                                                                               ---




              
                ASSETS



              
                Current Assets


               Cash and cash equivalents                                                                $
              4,205            $
          4,171


               Accounts receivable, net of allowance of
                $227 and $224, respectively                                                                       5,217                    5,010



              Inventories                                                                                          164                      170


               Prepaid expenses and other current assets                                                          1,445                    1,270



              Income tax receivable                                                                                100



                            Total Current Assets                                                                 11,131                   10,621




                            Property and Equipment, Net                                                             470                      480





              
                Other Assets



              Goodwill                                                                                           8,201                    8,280



              Intangible assets, net                                                                               540                      568



              Software development costs, net                                                                    9,696                    8,889



              Deferred income taxes                                                                              1,396                    1,251



              Other long-term assets                                                                               590                      545



                            TOTAL ASSETS                                                               $
              32,024           $
          30,634

                                                                                                                                              ---



                            LIABILITIES AND STOCKHOLDERS' EQUITY



              
                Current Liabilities



              Accounts payable                                                                         $
              1,460            $
          1,318


               Accrued expenses and other liabilities                                                             1,222                    1,201


               Accrued payroll and related expenses                                                               1,669                    2,146


               Current portion of long-term debt                                                                  2,022                    1,811


               Current portion of deferred revenue                                                                2,712                    1,885



              Sales tax payable                                                                                    876                      910



              Income tax payable                                                                                   878                      669



                            Total Current Liabilities                                                            10,839                    9,940




                            Long-Term Liabilities


               Deferred revenue, net of current portion                                                             879                    1,146



              Deferred income taxes                                                                                756                      789


               Income tax payable, net of current portion                                                           232                      232


               Long-term debt, net of current portion                                                             4,061                    4,581



              Other long-term liabilities                                                                          309                      426




              
                Total Liabilities                                                                    17,076                   17,114





                            Commitments and Contingencies




                            Stockholders' Equity


               Preferred stock: Par value $0.0001 per
                share; 2,000 shares authorized, none
                issued and outstanding


               Common stock: Par value $0.0001 per share;
                18,000 shares authorized, 12,606 shares
                issued and                                                                                            1                        1
    12,596 shares outstanding at September 30,
     2018, and 12,593 shares issued and 12,588
     shares
    outstanding at June 30, 2018



              Additional paid-in capital                                                                        14,976                   14,768


               Accumulated other comprehensive loss                                                             (3,408)                 (3,236)


               Retained earnings (accumulated deficit)                                                            3,434                    2,003


               Treasury stock at cost,10 and  5 shares at
                September 30, 2018 and June 30, 2018,
                respectively                                                                                       (55)                    (16)




              Total Stockholders' Equity                                                                        14,948                   13,520



                            TOTAL LIABILITIES AND
                             STOCKHOLDERS' EQUITY                                                      $
              32,024           $
          30,634

                                                                                                                                              ---


                           
              
                MAM SOFTWARE GROUP, INC.

          
              
                Condensed Consolidated Statements of Comprehensive Income

                                 
              
                (Unaudited)

               
              
                 (In thousands, except share and per share data)




                                                                         For the Three Months Ended


                                                                         September 30,



                                                       2018                                         2017

                                                                                                    ---


     Net revenues                                            $
              9,300                          $
         8,638



     Cost of revenues                                                  4,065                                 3,807




     
                Gross Profit                                         5,235                                 4,831





                   Operating Expenses



     Research and development                                          1,215                                 1,003



     Sales and marketing                                                 773                                   753


      General and administrative                                        1,585                                 1,490


      Depreciation and amortization                                        57                                    58



                   Total Operating Expenses                             3,630                                 3,304





                   Operating Income                                     1,605                                 1,527




                   Other Income (Expense)



     Interest expense, net                                              (91)                                (104)



                   Total other expense, net                              (91)                                (104)




                   Income before provision for income
                    taxes                                               1,514                                 1,423




      Provision for income taxes                                          303                                   309





                   Net Income                                 $
              1,211                          $
         1,114

                                                                                                                 ---



      Earnings per share
       attributed to common
       stockholders - basic                                    $
              0.10                           $
         0.09


      Earnings per share
       attributed to common
       stockholders - diluted                                  $
              0.10                           $
         0.09




      Weighted average common shares
       outstanding - basic                                             12,145                                11,816



      Weighted average common shares
       outstanding - diluted                                           12,202                                11,871





                   Net Income                                 $
              1,211                          $
         1,114


      Foreign currency translation gain /
       (loss)                                                           (172)                                  265



                   Total Comprehensive Income                 $
              1,039                          $
         1,379

                                                                                                                 ---


                                  
              
                MAM SOFTWARE GROUP, INC.

                            
              
                Consolidated Statements of Cash Flows

                                         
              
                (Unaudited)

                                       
              
                 (In thousands)




                                                                             For the Three Months Ended


                                                                             September 30,



                                                          2018                                2017



                   CASH FLOWS FROM OPERATING
                    ACTIVITIES:



     Net income                                                 $
              1,211                             $
     1,114


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



     Bad debt expense                                      15                                              12


      Depreciation and amortization                        126                                             142


      Amortization of debt issuance costs                    9                                              11



     Deferred income taxes                               (46)                                            184


      Stock-based compensation expense                     181                                              97




      Changes in assets and liabilities:



     Accounts receivable                                (198)                                            652


      Prepaid expenses and other assets                   (91)                                            (7)



     Income tax receivable                              (100)                                            169



     Accounts payable                                     152                                           (205)


      Accrued expenses and other
       liabilities                                       (440)                                           (87)



     Income tax payable                                  (55)                                            126



     Deferred revenues                                    233                                              32



                   NET CASH PROVIDED BY OPERATING
                    ACTIVITIES                             997                                           2,240





                   CASH FLOWS FROM INVESTING
                    ACTIVITIES:


      Purchase of property and equipment                  (30)                                           (42)


      Capitalized software development
       costs                                             (416)                                          (630)



                   NET CASH USED IN INVESTING
                    ACTIVITIES                           (446)                                          (672)





                   CASH FLOWS FROM FINANCING
                    ACTIVITIES:


      Repayment of long-term debt                        (317)                                          (400)


      Repayment of contingent
       consideration                                      (86)


      Repurchase of common stock for
       treasury                                           (39)


      Common stock surrendered to pay for
       tax withholding                                     (9)



                   NET CASH USED IN FINANCING
                    ACTIVITIES                           (451)                                          (400)





      Effect of exchange rate changes                     (66)                                             10



      Net change in cash and cash
       equivalents                                          34                                           1,178


      Cash and cash equivalents at
       beginning of period                               4,171                                           1,260



      Cash and cash equivalents
       at end of period                                          $
              4,205                             $
     2,438


       
              
                MAM SOFTWARE GROUP, INC.

                  Calculation of Adjusted Earnings before Interest,

                   Taxes, Depreciation and Amortization (Non-GAAP)

              
              
                (Unaudited)

            
              
                 (In thousands)




                                                         For the Three Months
                                                          Ended

                                                         September 30,


                                                        2018                     2017





     Net income
      (GAAP)                                 $
              1,211                $
      1,114


     Interest expense, net                                91                      104


     Provision (benefit) for
      income taxes                                       303                      309


     Depreciation and
      amortization                                       126                      142


     Non-cash stock
      compensation                                       181                       97



     Adjusted EBITDA
      (Non-GAAP)                             $
              1,912                $
      1,766

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SOURCE MAM Software Group, Inc.