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CST: 10/12/2019 12:31:06   

Usio Announces Third Quarter Results

25 Days ago

Quarterly Volume an All-time Record $915 Million

Card, Prepaid Drive Quarterly Revenue Growth of 10%

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

Louis Hoch, President and Chief Executive Officer of Usio, said, “Usio achieved record transaction processing volume in the third quarter, processing $915 million in electronic payments on our various platforms. Another quarter of record processing volume once again reflects the value that our comprehensive, industry-leading integrated technology offers our merchants, financial institutions, and independent software vendor partners. Revenues grew faster than transaction volumes, up 10% this quarter on the strength of the continued improvement in our card and prepaid businesses. It is encouraging to note volume growth in both PayFac and Prepaid, growth initiatives in which we have been heavily investing. Both business lines are showing nine-month volumes exceeding the volume levels of the prior year. We are optimistic the sequential improvements we have recently experienced in these businesses are the beginning of the strong growth we anticipate in these exciting and rapidly evolving markets. The third quarter represented another milestone in the evolution of Usio, when we changed our name as means to delineate a new beginning to represent the strength of the broad FinTech platform we have built and the wide range of integrated electronic payments solutions we provide. We have built a solid platform in healthy, growing markets where our ability to offer a comprehensive electronic payments solution will resonate strongly.”

Financial Results for the Third Quarter Ended September 30, 2019

Revenues increased 10% in the third quarter to $7.1 million, primarily due to increases in credit card and prepaid portfolios.

Gross profits were $1.5 million, up 6% from $1.5 million in the third quarter a year ago. Gross margins were 21.8% versus margins of 22.5% in the third quarter last year. Profits and the gross margin percentages were primarily due to results of our highly profitable ACH business lines as a mix of total revenues.

The operating loss was $1.2 million, up from the operating loss of $.8 million in the same quarter a year ago, but an improvement sequentially from the $1.3 million loss in the second quarter of this year. The operating loss reflects our continued commitment to investing in our growth initiatives, PayFac and Prepaid.

Adjusted EBITDA was a loss of approximately $420,000, up from the year ago loss of $61,000, and up slightly from the Adjusted EBITDA loss of $400,000 in the second quarter of this year.

Net loss for the quarter was $1.2 million, or ($0.09) per share, compared to a net loss of $800,000, or ($0.07) per share in the third quarter of 2018. The net loss from the third quarter improved sequentially from the loss of $1.3 million, or ($0.10) per share, recorded in the second quarter of this year.

Total dollars processed in the quarter were up 3% to a quarterly record $915 million.

Usio continues to be in solid financial condition. Cash and cash equivalents at September 30, 2019 were $2.6 million and the Company remains debt free.

Financial Results for the First Nine Months of Fiscal 2019

Revenues for the nine months ended September 30, 2019, increased 12% to $20.8 from the same period of 2018. All of the growth in 2019 is organic growth. Gross profits for the first nine months of 2019 were $4.4 million, up 10% from the first three quarters of 2018. The increase in gross profits was primarily attributable to the strong growth of our highly profitable ACH business over the first nine months of the year. The operating loss for the first nine months of 2019 was $3.6 million, compared to $2.9 million for the first nine months of 2018. Adjusted EBITDA for the first nine months of 2019 was a loss of $1.2 million, up from a loss of $0.6 million for the comparable period in 2018. The net loss for the nine months ended September 30, 2019, was $3.6 million or ($0.28) per share compared to a net loss of $2.9 million or ($0.24) per share for the first three quarters of 2018.

Conference Call and Webcast

Usio’s management will host a conference call with a live webcast on Thursday, November 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 November 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 10136461.

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.comwww.singularpayments.comwww.payfacinabox.comwww.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

  September 30, 2019   December 31, 2018
  (Unaudited)    
ASSETS      
Cash and cash equivalents $ 2,636,378     $ 2,159,698  
Accounts receivable, net 1,158,851     1,214,355  
Settlement processing assets 38,494,805     44,139,861  
Prepaid card load assets 725,333     535,479  
Prepaid expenses and other 212,952     101,722  
Note receivable, net 108,750     108,750  
Current assets before merchant reserves 43,337,069     48,259,865  
Merchant reserves 10,201,904     12,645,803  
Total current assets 53,538,973     60,905,668  
       
Property and equipment, net 1,743,771     1,932,660  
       
Other assets:      
Intangibles, net 2,926,427     3,676,427  
Deferred tax asset 1,394,000     1,394,000  
Operating lease right-of-use assets 2,547,803      
Other assets 333,422     306,757  
Total other assets 7,201,652     5,377,184  
       
Total Assets $ 62,484,396     $ 68,215,512  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 240,724     $ 308,178  
Accrued expenses 1,214,888     852,717  
Operating lease liabilities, current portion 248,056      
Settlement processing obligations 38,494,805     44,139,861  
Prepaid card load obligations 725,333     535,479  
Deferred revenues 136,765     20,000  
Current liabilities before merchant reserve obligations 41,060,571     45,856,235  
Merchant reserve obligations 10,201,904     12,645,803  
Total current liabilities 51,262,475     58,502,038  
       
Non-current liabilities:      
Operating lease liabilities, current portion 2,452,686      
Deferred rent     79,748  
Total liabilities 53,715,161     58,581,786  
       
Stockholders' equity:      
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at September 30, 2019 (unaudited) and December 31, 2018, respectively      
Common stock, $0.001 par value, 200,000,000 shares authorized; 18,011,077 and 17,129,680 issued, and 16,901,039 and 16,043,630 outstanding at September 30, 2019 (unaudited) and December 31, 2018, respectively 186,442     185,561  
Additional paid-in capital 76,658,269     74,568,627  
Treasury stock, at cost; 1,110,038 and 1,086,050 shares at September 30, 2019 (unaudited) and December 31, 2018, respectively (1,866,130 )   (1,813,546 )
Deferred compensation (5,585,571 )   (6,270,675 )
Accumulated deficit (60,623,775 )   (57,036,241 )
Total stockholders' equity 8,769,235     9,633,726  
       
Total Liabilities and Stockholders' Equity $ 62,484,396     $ 68,215,512  



USIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2019   2018   2019   2018
Revenues 7,087,732     6,473,743     20,833,143     18,601,283  
Cost of services 5,539,314     5,014,603     16,383,149     14,551,621  
Gross profit 1,548,418     1,459,140     4,449,994     4,049,662  
               
Selling, general and administrative:              
Stock-based compensation 315,259     289,038     954,770     961,893  
Other expenses 1,969,877     1,519,793     5,602,171     4,613,720  
Depreciation and amortization 491,749     473,225     1,475,291     1,389,164  
Total operating expenses 2,776,885     2,282,056     8,032,232     6,964,777  
               
Operating (loss) (1,228,467 )   (822,916 )   (3,582,238 )   (2,915,115 )
               
Other income:              
  Interest income 20,781     23,327     66,475     50,244  
  Other income (expense) 608     1,423     185     (539 )
  Other income and (expense), net 21,389     24,750     66,660     49,705  
               
(Loss) before income taxes (1,207,078 )   (798,166 )   (3,515,578 )   (2,865,410 )
Income taxes 31,956     15,000     71,956     34,000  
               
Net (Loss) $ (1,239,034 )   $ (813,166 )   $ (3,587,534 )   $ (2,899,410 )
               
Earnings (Loss) Per Share              
Basic earnings (loss) per common share: $ (0.09 )   $ (0.07 )   $ (0.28 )   $ (0.24 )
Diluted earnings (loss) per common share: $ (0.09 )   $ (0.07 )   $ (0.28 )   $ (0.24 )
Weighted average common shares outstanding              
Basic 13,054,962     12,145,323     12,906,206     12,098,828  
Diluted 13,054,962     12,145,323     12,906,206     12,098,828  



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

  Nine Months Ended
  September 30,
2019
  September 30,
2018
Operating Activities      
Net (loss) $ (3,587,534 )   $ (2,899,410 )
Adjustments to reconcile net (loss) to net cash (used) by operating activities:      
Depreciation 725,291     639,164  
Amortization 750,000     750,000  
Provision for loss on note receivable     72,500  
Non-cash stock-based compensation 954,770     961,893  
Amortization of warrant costs 26,955      
Issuance of stock to consultant for services     7,911  
Changes in operating assets and liabilities:      
Accounts receivable 55,504     (177,808 )
Prepaid expenses and other (111,230 )   (2,385 )
Operating lease right-of-use assets (2,547,803 )    
Other assets (26,665 )   (146,194 )
Accounts payable and accrued expenses 294,717     (45,444 )
Operating lease liabilities 2,700,742      
Prepaid card load assets 189,854     207,659  
Merchant reserves (2,443,899 )   (1,374,906 )
Deferred revenue 116,765     35,000  
Deferred rent (79,748 )   58,457  
Net cash (used) by operating activities (2,982,281 )   (1,913,563 )
       
Investing Activities      
Purchases of property and equipment (536,405 )   (584,198 )
Notes receivable     5,000  
Net cash (used) by investing activities (536,405 )   (579,198 )
       
Financing Activities      
Proceeds from public offering, net of expenses 1,793,905      
Purchases of treasury stock (52,584 )   (966,383 )
Net cash provided (used) by financing activities 1,741,321     (966,383 )
       
Change in cash, cash equivalents, prepaid card loads and merchant reserves (1,777,365 )   (3,459,144 )
Cash, cash equivalents, prepaid card loads and merchant reserves, beginning of year 15,340,980     19,778,022  
       
Cash, Cash Equivalents, Prepaid Card Loads and Merchant Reserves, End of Period $ 13,563,615     $ 16,318,878  
       
Supplemental disclosures of cash flow information      
Cash paid during the period for:      
Interest $     $  
Income taxes 82,206     49,000  



USIO, INC.
STATEMENT OF CHANGES in STOCKHOLDERS’ EQUITY
(UNAUDITED)
 
          Additional
Paid - In
Capital
  Treasury
Stock
  Deferred
Compensation
  Accumulated
Deficit
  Total
Stockholders’
Equity
  Common Stock          
  Shares   Amount          
                           
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  
                           
Issuance of common stock under equity incentive plan 2,500     3     92,483                 $ 92,486  
Warrant compensation cost         8,985                 $ 8,985  
Deferred compensation amortization                 224,464         $ 224,464  
Reversal of deferred compensation that did not vest         (1,691 )               $ (1,691 )
Purchase of treasury stock             (2,069 )           $ (2,069 )
Net (loss) for the quarter                     (1,239,034 )   (1,239,034 )
                           
Balance at September 30, 2019 18,011,077   $ 186,442     $ 76,658,269     $ (1,866,130 )   $ (5,585,571 )   $ (60,623,775 )   $ 8,769,235  
                           
                           
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  
                           
Issuance of common stock under equity incentive plan 10,500     11     70,021                 $ 70,032  
Deferred compensation amortization                 219,006         $ 219,006  
Reversal of deferred compensation that did not vest (60,000 )   (65 )   (132,530 )       132,595         $  
Purchase of treasury stock             (7,307 )           $ (7,307 )
Net (loss) for the quarter                     (813,166 )   (813,166 )
                           
Balance at September 30, 2018 17,020,180   $ 185,447     $ 74,371,930     $ (1,797,442 )   $ (6,372,735 )   $ (56,159,836 )   $ 10,227,364  
                           


USIO, INC
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
       
  Three Months Ended   Nine Months Ended
  September 30,   September 30,   September 30,   September 30,
2019 2018   2019 2018
               
Reconciliation from Operating (Loss) to Adjusted EBITDA:              
  Operating (Loss) $ (1,228,467 )   $ (822,916 )   $ (3,582,238 )   $ (2,915,115 )
  Depreciation and amortization 491,749     473,225     1,475,291     1,389,164  
  EBITDA (736,718 )   (349,691 )   (2,106,947 )   (1,525,951 )
  Non-cash stock-based compensation expense, net 315,259     289,038     954,770     961,893  
Adjusted EBITDA $ (421,459 )   $ (60,653 )   $ (1,152,177 )   $ (564,058 )
               
               
Calculation of Adjusted EBITDA margins:              
Revenues $ 7,087,732     $ 6,473,743     $ 20,833,143     $ 18,601,283  
Adjusted EBITDA (421,459 )   (60,653 )   (1,152,177 )   (564,058 )
Adjusted EBITDA margins -5.9 %   -0.9 %   -5.5 %   -3.0 %
               

 

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