Park City Group Revenue Increases 9%, Net Income Increases 45%, EPS Up 62% for Fiscal Second Quarter of 2023

Park City Group, Inc. (NASDAQ: PCYG), the parent company of ReposiTrak, Inc., which operates a B2B ecommerce, compliance, and supply chain platform that largely partners with grocery retailers, wholesalers, and their suppliers, to accelerate sales, control risk, improve supply chain efficiencies, and source hard-to-find items, today announced financial results for the second quarter of fiscal 2023 and year-to-date for the period ended December 31, 2022.

Second Quarter Financial Highlights:

  • Second quarter total revenue increased 9% to $4.75 million from $4.35 million.
  • Recurring revenue increased 10% for the quarter.
  • Total quarterly operating expense increased 5% to $3.57 million from $3.40 million.
  • Quarterly operating income increased 23% to $1.18 million from $0.96 million last year.
  • Quarterly GAAP net income increased 45% to $1.27 million from $0.87 million last year.
  • Quarterly net income to common shareholders was $1.12 million, up 54% from $0.72 million last year.
  • Quarterly EPS of $0.06, up 62% from $0.04 last year.
  • During the quarter, the Company repurchased 88,741 shares at an average price of $5.05 for a total of $448,266 during the quarter.
  • Declared a quarterly cash dividend of $0.015 per share ($0.06 per year), payable to shareholders of record on February 15, 2023, which dividend will be paid on or about February 21, 2023.

Fiscal Year-to-Date Financial Highlights:

  • Fiscal year-to-date revenue increased 6% to $9.47 million from $8.91 million.
  • Recurring revenue increased 8% year-to-date.
  • Total year-to-date operating expense increased 4% to $7.07 million from $6.80 million.
  • Year-to-date operating income increased 13% to $2.40 million from $2.12 million last year.
  • Year-to-date GAAP net income increased 40% to $2.55 million from $1.82 million last year
  • Year-to-date net income to common shareholders was $2.26 million, up 48% from $1.53 million last year.
  • Year-to-date EPS of $0.12, up 56% from $0.08 last year.
  • Year-to-date cash from operations of $3.30 million, up 8% from $3.06 million last year.
  • Cash at December 31, 2022 was $21.4 million.
  • Year-to-date, the Company repurchased 109,600 shares at an average price of $5.03 for a total $551,922.

Randall K. Fields, Chairman and CEO of Park City Group commented, “Our recurring revenue continues to accelerate without any contribution from the traceability catalyst that will begin benefiting Park City later in calendar 2023. As you can see, the continued growth in organic revenue disproportionally drove operating leverage, as 9% revenue growth translated to 23% operating income growth and 45% net income growth. Our strategy has and will continually to be squarely focused on operating leverage and earnings power. We therefore believe incremental top line growth will continue to drive profitability and cash generation faster than revenue. This will continue to fortify our already strong balance sheet and further continue to fund our capital allocation strategy.”

“The traceability opportunity is unfolding ahead of our expectations, as several new and existing customers have already signed up with ReposiTrak Traceability Network, or RTN. We now expect to be onboarding thousands of suppliers during the next several years, starting later in 2023,” added Mr. Fields. “This initiative, already representing our largest opportunity to date, continues to grow, and our position as the ideal company to address the track-and-trace requirements for retailers is reinforced by our partnerships with industry leaders and trade associations. Simultaneously, we are actively preparing for the task of onboarding thousands of suppliers into our ReposiTrak Traceability Network (RTN).

We will be ready; lots more customers is not a bad problem to have.”

Second Fiscal Quarter Financial Results (three months ended December 31, 2022, vs. three months ended December 31, 2021):

Total revenue was up 9% to $4.75 million as compared to $4.35 million in the prior-year second quarter as 10% growth in recurring revenue offset the planned elimination of non-recurring revenue and sunsetting for non-core services. Total operating expense of $3.57 million was up 5% compared to $3.40 million last year, reflecting investments in traceability and other growth initiatives and continued rigor in expense management. GAAP net income was $1.27 million compared to $872,000. Net income to common shareholders was $1.12 million, or $0.06 per diluted share, compared to $725,000, or $0.04 per diluted share.

Fiscal Year-to-Date Financial Results (six months ended December 31, 2022, vs. six months ended December 31, 2021):

Total revenue was $9.47 million, up 6% as compared to $8.91 million in the prior-year period. Total operating expense of $7.07 million was up 4% compared to $6.80 million last year. GAAP net income was $2.55 million compared to $1.82 million. Net income to common shareholders was $2.26 million, or $0.12 per diluted share, compared to $1.53 million, or $0.08 per diluted share.

Return of Capital:

In the second quarter, the Company repurchased 88,741 shares at an average price of $5.05 for a total of $448,266. The Company has approximately $10.3 million remaining on the $21 million total buyback authorization since inception.

In September 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.015 per share ($0.06 per year). Quarterly cash dividends will be paid to shareholders on or about 45 days following each quarterly period.

Balance Sheet:

The Company had $21.4 million in cash and cash equivalents at December 31, 2022, compared to $21.5 million at June 30, 2022. The Company had $0.450 million drawn on its working line of credit as of December 31, 2022 compared to $2.6 million at June 30, 2022. Funds were utilized to buy back additional shares of stock.

Conference Call:

The Company will host a conference call at 4:15 p.m. Eastern today to discuss the Company’s results. The conference call will also be webcast and will be available via the investor relations section of the Company’s website, www.parkcitygroup.com.

Participant Dial-In Numbers:
Date: Tuesday, February 14, 2023
Time: 4:15 p.m. ET (1:15 p.m. PT)
Toll-Free: 1-877-407-9716
Toll/International 1-201-493-6779
Conference ID: 13736176

Replay Dial-In Numbers:
Toll Free: 1-844-512-2921
Toll/International: 1-412-317-6671
Replay Start: Tuesday, February 14, 2023, 7:15 p.m. ET
Replay Expiry: Tuesday, March 14, 2023, 11:59 p.m. ET
Replay Pin Number: 13736176

About Park City Group:

Park City Group, Inc. (NASDAQ:PCYG), the parent company of ReposiTrak, Inc., a compliance, supply chain, and e-commerce platform that enables retailers, wholesalers, and their suppliers, to accelerate sales, control risk, and improve supply chain efficiencies. More information is available at www.parkcitygroup.com and www.repositrak.com.

Specific disclosure relating to Park City Group, including management's analysis of results from operations and financial condition, are contained in the Company's annual report on Form 10-K for the fiscal year ended June 30, 2020 and other reports filed with the Securities and Exchange Commission. Investors are encouraged to read and consider such disclosure and analysis contained in the Company's Form 10-K and other reports, including the risk factors contained in the Form 10-K.

Forward-Looking Statement

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “if”, “should” and “will” and similar expressions as they relate to Park City Group, Inc. (“Park City Group”) are intended to identify such forward-looking statements. Park City Group may from time-to-time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see “Risk Factors” in Park City’s annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

PARK CITY GROUP, INC.

Consolidated Condensed Balance Sheets (Unaudited)

 

 

 

December 31,
2022

 

 

June 30,
2022

 

Assets

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash

 

$

21,400,255

 

 

$

21,460,948

 

Receivables, net of allowance for doubtful accounts of $184,847 and $206,093 at December 31, 2022 and June 30, 2022, respectively

 

 

2,827,039

 

 

 

3,165,200

 

Contract asset – unbilled current portion

 

 

440,087

 

 

 

649,433

 

Prepaid expense and other current assets

 

 

1,197,120

 

 

 

1,307,128

 

Total Current Assets

 

 

25,864,501

 

 

 

26,582,709

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

1,154,534

 

 

 

764,517

 

 

 

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

 

 

Deposits and other assets

 

 

22,414

 

 

 

22,414

 

Prepaid expense – less current portion

 

 

60,130

 

 

 

82,934

 

Contract asset – unbilled long-term portion

 

 

108,052

 

 

 

108,052

 

Operating lease – right-of-use asset

 

 

340,062

 

 

 

368,512

 

Customer relationships

 

 

328,500

 

 

 

394,200

 

Goodwill

 

 

20,883,886

 

 

 

20,883,886

 

Capitalized software costs, net

 

 

85,866

 

 

 

114,488

 

Total Other Assets

 

 

21,828,910

 

 

 

21,974,486

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

48,847,945

 

 

$

49,321,712

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

389,708

 

 

$

690,638

 

Accrued liabilities

 

 

1,332,720

 

 

 

1,206,284

 

Contract liability – deferred revenue

 

 

1,566,383

 

 

 

1,555,143

 

Lines of credit

 

 

448,742

 

 

 

2,590,907

 

Operating lease liability – current

 

 

56,306

 

 

 

53,862

 

Notes payable and financing leases – current

 

 

220,915

 

 

 

-

 

Total current liabilities

 

 

4,014,774

 

 

 

6,096,834

 

 

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

 

 

Operating lease liability – less current portion

 

 

293,202

 

 

 

321,818

 

Notes payable and financing leases – less current portion

 

 

283,576

 

 

 

-

 

Total liabilities

 

 

4,591,552

 

 

 

6,418,652

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders equity:

 

 

 

 

 

 

 

 

Preferred Stock; $0.01 par value, 30,000,000 shares authorized;

 

 

 

 

 

 

 

 

Series B Preferred, 700,000 shares authorized; 625,375 shares issued and outstanding at December 31, 2022 and June 30, 2022;

 

 

6,254

 

 

 

6,254

 

Series B-1 Preferred, 550,000 shares authorized; 212,402 shares issued and outstanding at December 31, 2022 and June 30, 2022, respectively

 

 

2,124

 

 

 

2,124

 

Common Stock, $0.01 par value, 50,000,000 shares authorized; 18,394,296 and 18,460,538 issued and outstanding at December 31, 2022 and June 30, 2022, respectively

 

 

183,945

 

 

 

184,608

 

Additional paid-in capital

 

 

68,303,199

 

 

 

68,653,361

 

Accumulated deficit

 

 

(24,239,129

)

 

 

(25,943,287

)

Total stockholders equity

 

 

44,256,393

 

 

 

42,903,060

 

Total liabilities and stockholders equity

 

$

48,847,945

 

 

$

49,321,712

 

PARK CITY GROUP, INC.

Consolidated Condensed Statements of Operations (Unaudited)

 

 

 

Three Months Ended
December 31,

 

 

Six Months Ended
December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

4,750,513

 

 

$

4,353,587

 

 

$

9,470,990

 

 

$

8,913,264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services and product support

 

 

866,642

 

 

 

817,213

 

 

 

1,699,346

 

 

 

1,663,700

 

Sales and marketing

 

 

1,226,812

 

 

 

1,152,036

 

 

 

2,427,071

 

 

 

2,340,929

 

General and administrative

 

 

1,252,357

 

 

 

1,209,002

 

 

 

2,475,819

 

 

 

2,305,658

 

Depreciation and amortization

 

 

229,160

 

 

 

217,767

 

 

 

465,166

 

 

 

478,931

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expense

 

 

3,574,971

 

 

 

3,396,018

 

 

 

7,067,402

 

 

 

6,789,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

1,175,542

 

 

 

957,569

 

 

 

2,403,588

 

 

 

2,124,046

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

199,266

 

 

 

86,884

 

 

 

278,358

 

 

 

142,040

 

Interest expense

 

 

(18,058

)

 

 

(3,303

)

 

 

(42,710

)

 

 

(6,201

)

Unrealized gain (loss) on short term investments

 

 

(31,406

)

 

 

(113,807

)

 

 

(38,821

)

 

 

(263,098

)

Other gain (loss)

 

 

-

 

 

 

-

 

 

 

70,047

 

 

 

(83,081

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

1,325,344

 

 

 

927,343

 

 

 

2,670,462

 

 

 

1,913,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Provision) for income taxes:

 

 

(60,000

)

 

 

(55,275

)

 

 

(120,006

)

 

 

(94,821

)

Net income

 

 

1,265,344

 

 

 

872,068

 

 

 

2,550,456

 

 

 

1,818,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends on preferred stock

 

 

(146,611

)

 

 

(146,611

)

 

 

(293,222

)

 

 

(293,222

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to common shareholders

 

$

1,118,733

 

 

$

725,457

 

 

$

2,257,234

 

 

$

1,525,663

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares, basic

 

 

18,402,000

 

 

 

19,357,000

 

 

 

18,419,000

 

 

 

19,370,000

 

Weighted average shares, diluted

 

 

18,630,000

 

 

 

19,682,000

 

 

 

18,678,000

 

 

 

19,658,000

 

Basic income per share

 

$

0.06

 

 

$

0.04

 

 

$

0.12

 

 

$

0.08

 

Diluted income per share

 

$

0.06

 

 

$

0.04

 

 

$

0.12

 

 

$

0.08

 

PARK CITY GROUP, INC.

Consolidated Condensed Statements of Cash Flows (Unaudited)

 

 

 

Six Months
Ended December 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

2,550,456

 

 

$

1,818,885

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

465,166

 

 

 

478,931

 

Amortization of operating right of use asset

 

 

28,450

 

 

 

44,382

 

Stock compensation expense

 

 

209,869

 

 

 

234,396

 

Bad debt expense

 

 

300,000

 

 

 

250,000

 

Gain on disposal of assets

 

 

-

 

 

 

(24,737

)

Loss on sale of property and equipment

 

 

-

 

 

 

107,820

 

(Increase) decrease in:

 

 

 

 

 

 

 

 

Accounts receivables

 

 

247,507

 

 

 

285,141

 

Long-term receivables, prepaids and other assets

 

 

21,431

 

 

 

(97,532

)

(Decrease) increase in:

 

 

 

 

 

 

 

 

Accounts payable

 

 

(300,930

)

 

 

15,721

 

Operating lease liability

 

 

(26,172

)

 

 

(44,382

)

Accrued liabilities

 

 

(207,025

)

 

 

87,811

 

Deferred revenue

 

 

11,240

 

 

 

(97,482

)

Net cash provided by operating activities

 

 

3,299,992

 

 

 

3,058,954

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Sale of property and equipment

 

 

-

 

 

 

1,374,085

 

Purchase of property and equipment

 

 

(270,854

)

 

 

(17,049

)

Net cash provided by (used in) investing activities

 

 

(270,854

)

 

 

1,357,036

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net (decrease) increase in lines of credit

 

 

(2,142,165

)

 

 

(5,070,000

)

Common Stock buyback/retirement

 

 

(551,923

)

 

 

(1,470,974

)

Proceeds from employee stock plan

 

 

48,903

 

 

 

56,577

 

Dividends paid

 

 

(570,511

)

 

 

(293,222

)

Payments on notes payable

 

 

125,865

 

 

 

-

 

Net cash used in financing activities

 

 

(3,089,831

)

 

 

(6,777,619

)

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(60,693

)

 

 

(2,361,629

)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

21,460,948

 

 

 

24,070,322

 

Cash and cash equivalents at end of period

 

$

21,400,255

 

 

$

21,708,693