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CST: 15/11/2019 05:20:00   

Usio Announces Record Second Quarter Results

92 Days ago

Revenues up 14% year-over-year to a Quarterly Record $7.2 Million

Growth of ACH, PayFac and Prepaid driven by continued technological innovation

SAN ANTONIO, Aug. 14, 2019 (GLOBE NEWSWIRE) -- Usio, Inc. (Nasdaq: USIO), an integrated electronic payment solutions provider, today announced financial results for the second quarter of 2019, which ended June 30, 2019.

Louis Hoch, President and Chief Executive Officer of Usio, said, “Results for the second quarter reflect the strength of the broad FinTech platform we have built and the wide range of payment solutions we offer.  Revenue growth accelerated modestly from the previous quarter, reflecting entirely organic growth and full integration of our previous acquisitions.  Total dollars processed in the second quarter were $876 million.  We experienced growth in all of our business segments, including nearly triple digit year-over-year growth within our prepaid card business line.  ACH revenues were up as transaction volume continues to run at nearly double the rate of overall industry growth.  This quarter we also recorded initial revenue from certain new products and incremental revenues from some of our other promising growth initiatives. Usio has a long history of technological innovation, and it is encouraging to see the investment in our growth initiatives taking root.  We have maintained our financial strength, although the bottom line was impacted by continued investment in our growth initiatives.  The new branding introduced at the July 1 Nasdaq Closing Bell ceremony represents the start of a new era at Usio, and we are confident that we will mark this historic occasion with a strong year of building shareholder value.”

Financial Results for Second Quarter Ended June 30, 2019

Revenues were $7.2 million for the second quarter, up 14% compared to the same period last year.  Revenues were up in all of our business segments, ACH, card and prepaid.

Gross profits were $1.6 million, up 19% from $1.3 million in the same period last year and gross margins expanded to 21.9% in the second quarter, nearly a full point better than 21.0% in the same period last year. 

Operating loss was $1.3 million for the quarter compared to a $1.0 million operating loss in the second quarter of last year.

Adjusted EBITDA was a loss of approximately $400,000, up marginally from a year ago.

Net loss for the quarter was $1.3 million, or ($0.10) per share, compared to a net loss of $1.0 million or ($0.09) per share in the same year ago period. 

Total dollars processed in the quarter were up 7% to a quarterly record $876 million.

Usio continues to be in solid financial condition.  Cash and cash equivalents at June 30, 2019 were $3.3 million and the Company remains debt free. 

Financial Results for the First Six Months of Fiscal 2019

Revenues for the six months ended June 30, 2019 were $13.7 million, up 13.3% from the same period of fiscal 2018.  All of the growth in fiscal 2019 is organic growth.  Gross profits in the first six months of 2019 were $3.0 million, up 14% from the first half of fiscal 2018.  Gross margins over the first half of this fiscal year were 21.5%, an improvement over gross margins for the first half of 2018 and driven by product mix.  The operating loss for the first six months of 2019 was $2.3 million, compared to $2.1 million for the first six months of 2018.  Adjusted EBITDA for the first six months of 2019 was a loss of $0.7 million, up just slightly from $0.5 million for the comparable period in 2018.   The net loss for the six months ended June 30, 2019 was $2.3 million or ($0.18) per share compared to a net loss of $2.1 million or ($0.17) per share compared for the first half of 2018.

Conference Call and Webcast

Usio’s management will host a conference call with a live webcast on Wednesday, August 14, 2019 at 5:00 p.m. Eastern time to provide a business update.  To listen to the conference call, interested parties within the U.S. should call 1-844-883-3890. International callers should call +1-412-317-9246. All callers should ask for the Usio conference call. The conference call will also be available through a live webcast, which can be accessed via the company’s websites: www.usio.com/invest.

A replay of the call will be available approximately one hour after the end of the call through August 28, 2019. The replay can be accessed via the Company’s website or by dialing 1-877-344-7529 (U.S.) or +1-412-317-0088 (international). The replay conference playback code is 10133679.

About Usio, Inc.

Usio, Inc. (Nasdaq: USIO), a leading integrated payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus, and card issuers. The Company operates credit, debit/prepaid, and ACH payment processing platforms to deliver convenient, world-class payment solutions and services to their clients. The strength of the Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its unique technology in the prepaid sector. Usio is headquartered in San Antonio, Texas, and has offices in Austin, Texas and Franklin, Tennessee, just outside of Nashville.

Websites: www.usio.com, www.singularpayments.com, www.payfacinabox.com, www.akimbocard.com, and www.ficentive.com. Find us on Facebook® and Twitter.

About Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, EBITDA and adjusted EBITDA, as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. The Company reports its financial results in compliance with GAAP, but believes that also discussing non-GAAP measures provides investors with financial measures it uses in the management of its business. The Company defines EBITDA as operating income (loss), before interest, taxes, depreciation and amortization of intangibles. The Company defines adjusted EBITDA as EBITDA, as defined above, plus non-cash stock option costs and certain non-recurring items, such as acquisitions. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA and adjusted EBITDA as indicators of the Company's operating performance and ability to fund acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations.

Management believes EBITDA and adjusted EBITDA are helpful to investors in evaluating the Company's operating performance because non-cash costs and other items that management believes are not indicative of its results of operations are excluded. EBITDA and adjusted EBITDA are supplemental non-GAAP measures, which have limitations as an analytical tool. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. For a description of our use of EBITDA and adjusted EBITDA, and a reconciliation of EBITDA and adjusted EBITDA to operating income (loss), see the section of this press release titled "Non-GAAP Reconciliation."

FORWARD-LOOKING STATEMENTS DISCLAIMER
Except for the historical information contained herein, the matters discussed in this release include forward-looking statements which are covered by safe harbors. Those statements include, but may not be limited to, all statements regarding management's intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. These forward-looking statements are identified by the use of words such as "believe," "intend," "look forward," "anticipate," "schedule,” and "expect" among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the Company's business that could cause actual results to vary, including such risks related to the realization of the anticipated opportunities from the Singular acquisition, the management of the Company's growth, the loss of key resellers, the relationships with the Automated Clearinghouse network, bank sponsors, third-party card processing providers and merchants, the security of our software, hardware and information, the volatility of the stock price, the need to obtain additional financing, risks associated with new tax legislation, and compliance with complex federal, state and local laws and regulations, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission including its annual report on Form 10-K for the fiscal year ended December 31, 2018. One or more of these factors have affected, and in the future, could affect the Company’s businesses and financial results in the future and could cause actual results to differ materially from plans and projections. The Company believes that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to management. The Company assumes no obligation to update any forward-looking statements, except as required by law.

Contact:
Joe Hassett, Investor Relations
joeh@gregoryfca.com
610-228-2110

USIO, INC.
CONSOLIDATED BALANCE SHEETS

  June 30, 2019   December 31, 2018
  (Unaudited)    
ASSETS      
Cash and cash equivalents $ 3,276,511     $ 2,695,177  
Accounts receivable, net 1,568,905     1,214,355  
Settlement processing assets 35,640,174     44,139,861  
Prepaid expenses and other 201,575     101,722  
Note receivable, net 108,750     108,750  
Current assets before merchant reserves 40,795,915     48,259,865  
Merchant reserves 11,074,891     12,645,803  
Total current assets 51,870,806     60,905,668  
       
Property and equipment, net 1,782,323     1,932,660  
       
Other assets:      
Intangibles, net 3,176,427     3,676,427  
Deferred tax asset 1,394,000     1,394,000  
Operating lease right-of-use assets 2,614,006      
Other assets 312,780     306,757  
Total other assets 7,497,213     5,377,184  
       
Total Assets $ 61,150,342     $ 68,215,512  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 239,325     $ 308,178  
Accrued expenses 1,593,824     1,388,196  
Operating lease liabilities, current portion 246,758      
Settlement processing obligations 35,640,174     44,139,861  
Deferred revenues 150,000     20,000  
Current liabilities before merchant reserve obligations 37,870,081     45,856,235  
Merchant reserve obligations 11,074,891     12,645,803  
Total current liabilities 48,944,972     58,502,038  
       
Non-current liabilities:      
Operating lease liabilities, current portion 2,519,276      
Deferred rent     79,748  
Total liabilities 51,464,248     58,581,786  
       
Stockholders' equity:      
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at June 30, 2019 (unaudited) and December 31, 2018, respectively      
Common stock, $0.001 par value, 200,000,000 shares authorized; 18,008,577 and 17,129,680 issued, and 16,899,281 and 16,043,630 outstanding at June 30, 2019 (unaudited) and December 31, 2018, respectively 186,439     185,561  
Additional paid-in capital 76,558,492     74,568,627  
Treasury stock, at cost; 1,109,296 and 1,086,050 shares at June 30, 2019 (unaudited) and December 31, 2018, respectively (1,864,061 )   (1,813,546 )
Deferred compensation (5,810,035 )   (6,270,675 )
Accumulated deficit (59,384,741 )   (57,036,241 )
Total stockholders' equity 9,686,094     9,633,726  
       
Total Liabilities and Stockholders' Equity $ 61,150,342     $ 68,215,512  
               

USIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)

  Three Months Ended   Six Months Ended
  June 30, 2019   June 30, 2018   June 30, 2019   June 30, 2018
Revenues $ 7,157,379     $ 6,283,875     $ 13,745,411     $ 12,127,540  
Cost of services   5,591,534       4,964,260       10,843,835       9,537,018  
Gross profit   1,565,845       1,319,615       2,901,576       2,590,522  
               
Selling, general and administrative:              
Stock-based compensation   356,103       298,477       639,511       672,855  
Other expenses   1,970,555       1,595,276       3,632,294       3,093,927  
Depreciation and amortization   496,994       457,276       983,542       915,939  
Total operating expenses   2,823,652       2,351,029       5,255,347       4,682,721  
               
Operating (loss)   (1,257,807 )     (1,031,414 )     (2,353,771 )     (2,092,199 )
               
Other income:              
Interest income   22,620       15,396       45,694       26,917  
Other income (expense)   (424 )     (420 )     (423 )     (1,962 )
Other income and (expense), net   22,196       14,976       45,271       24,955  
               
(Loss) before income taxes   (1,235,611 )     (1,016,438 )     (2,308,500 )     (2,067,244 )
Income taxes   40,000       19,000       40,000       19,000  
               
Net (Loss) $ (1,275,611 )   $ (1,035,438 )   $ (2,348,500 )   $ (2,086,244 )
               
Earnings (Loss) Per Share              
Basic earnings (loss) per common share: $ (0.10 )   $ (0.09 )   $ (0.18 )   $ (0.17 )
Diluted earnings (loss) per common share: $ (0.10 )   $ (0.09 )   $ (0.18 )   $ (0.17 )
Weighted average common shares outstanding              
Basic   13,041,799       12,075,580       12,831,828       12,124,538  
Diluted   13,041,799       12,075,580       12,831,828       12,124,538  
                               

USIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

  Six Months Ended
  June 30, 2019   June 30, 2018
Operating Activities      
Net (loss) $ (2,348,500 )   $ (2,086,244 )
Adjustments to reconcile net (loss) to net cash (used) by operating activities:      
Depreciation   483,542       415,939  
Amortization   500,000       500,001  
Provision for loss on note receivable         72,500  
Non-cash stock-based compensation   639,511       672,855  
Amortization of warrant costs   17,970        
Issuance of stock to consultant for services         7,911  
Changes in operating assets and liabilities:      
Accounts receivable   (354,550 )     30,280  
Prepaid expenses and other   (99,853 )     (65,661 )
Operating lease right-of-use assets   (2,614,006 )      
Other assets   (6,023 )     (144,722 )
Accounts payable and accrued expenses   136,772       (167,581 )
Operating lease liabilities   2,766,034        
Merchant reserves   (1,570,912 )     (195,163 )
Deferred revenue   130,000       50,000  
Deferred rent   (79,748 )     27,416  
Net cash (used) by operating activities   (2,399,763 )     (882,469 )
       
Investing Activities      
Purchases of property and equipment   (333,205 )     (431,815 )
Net cash (used) by investing activities   (333,205 )     (431,815 )
       
Financing Activities      
Proceeds from public offering, net of expenses   1,793,905        
Purchases of treasury stock   (50,515 )     (959,076 )
Net cash provided (used) by financing activities   1,743,390       (959,076 )
       
Change in cash, cash equivalents and merchant reserves   (989,578 )     (2,273,360 )
Cash, cash equivalents and merchant reserves, beginning of year   15,340,980       19,778,022  
       
Cash, Cash Equivalents and Merchant Reserves, End of Period $ 14,351,402     $ 17,504,662  
       
Supplemental disclosures of cash flow information      
Cash paid during the period for:      
Interest $     $  
Income taxes   72,081       49,000  
               

USIO, INC.
STATEMENT OF CHANGES in STOCKHOLDERS' EQUITY
(UNAUDITED)

    Common Stock                    
    Shares   Amount   Additional Paid-In Capital   Treasury Stock   Deferred Compensation   Accumulated Deficit   Total Stockholder's Equity
                             
Balance at December 31, 2018   17,129,680     $ 185,561     $ 74,568,627     $ (1,813,546 )   $ (6,270,675 )   $ (57,036,241 )   $ 9,633,726  
                             
Issuance of common stock, public offering   769,230     769     1,793,136                 1,793,905  
Issuance of common stock under equity incentive plan   62,222     62     58,551                 58,613  
Warrant compensation costs             8,985                       8,985  
Deferred compensation amortization                   224,795         224,795  
Purchase of treasury stock               (21,822 )           (21,822 )
Net (loss) for the period                       (1,072,889 )   (1,072,889 )
                             
Balance at March 31, 2019   17,961,132     $ 186,392     $ 76,429,299     $ (1,835,368 )   $ (6,045,880 )   $ (58,109,130 )   $ 10,625,313  
                             
Issuance of common stock under equity incentive plan   53,445     53     133,462                 133,515  
Warrant compensation cost           8,985                 8,985  
Deferred compensation amortization                   222,585         222,585  
Reversal of deferred compensation that did not vest   (6,000 )   (6 )   (13,254 )       13,260          
Purchase of treasury stock               (28,693 )           (28,693 )
Net (loss) for the quarter                       (1,275,611 )   (1,275,611 )
                             
Balance at June 30, 2019   18,008,577     $ 186,439     $ 76,558,492     $ (1,864,061 )   $ (5,810,035 )   $ (59,384,741 )   $ 9,686,094  
                             
                             
Balance at December 31, 2017   16,874,235     $ 186,299     $ 74,041,083     $ (831,059 )   $ (7,012,544 )   $ (53,260,426 )   $ 13,123,353  
                             
Issuance of common stock under equity incentive plan   68,889     69     147,231                 147,300  
Deferred compensation amortization                   227,078         227,078  
Purchase of treasury stock               (956,134 )           (956,134 )
Net (loss) for the period                       (1,050,806 )   (1,050,806 )
                             
Balance at March 31, 2018   16,943,124     $ 186,368     $ 74,188,314     $ (1,787,193 )   $ (6,785,466 )   $ (54,311,232 )   $ 11,490,791  
                             
Issuance of common stock under equity incentive plan   28,223     28     74,319                 74,347  
Issuance of common stock, employees, restricted   100,000     100     179,900         (180,000 )        
Issuance of common stock, restricted   5,000     5     7,906                 7,911  
Deferred compensation amortization                   229,655         229,655  
Reversal of deferred compensation that did not vest   (6,667 )   (1,000 )   (16,000 )       11,475         (5,525 )
Purchase of treasury stock               (2,942 )           (2,942 )
Net (loss) for the quarter                       (1,035,438 )   (1,035,438 )
                             
Balance at June 30, 2018   17,069,680     $ 185,501     $ 74,434,439     $ (1,790,135 )   $ (6,724,336 )   $ (55,346,670 )   $ 10,758,799  
                             


USIO, INC
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
       
  Three Months Ended   Six Months Ended
  June 30,   June 30,   June 30,   June 30,
2019 2018   2019 2018
               
Reconciliation from Operating (Loss) to Adjusted EBITDA:              
Operating (Loss) $ (1,257,807 )   $ (1,031,414 )   $ (2,353,771 )   $ (2,058,855 )
Depreciation and amortization   496,994       457,276       983,542       915,939  
EBITDA   (760,813 )     (574,138 )     (1,370,229 )     (1,142,916 )
Non-cash stock-based compensation expense, net   356,103       298,477       639,511       639,511  
Adjusted EBITDA $ (404,710 )   $ (275,661 )   $ (730,718 )   $ (503,405 )
               
               
Calculation of Adjusted EBITDA margins:              
Revenues $ 7,157,379     $ 6,283,875     $ 13,745,411     $ 12,127,540  
Adjusted EBITDA   (404,710 )     (275,661 )     (730,718 )     (503,405 )
Adjusted EBITDA margins   -5.7 %     -4.4 %     -5.3 %     -4.2 %
               

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