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Park City Group Reports 41% Increase in Net Income for the Third Quarter of Fiscal 2022

Income from Operations increases 64% as recurring revenue increases 7%; Continues preparation toward traceability solution to meet FDA mandates

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 third quarter of fiscal 2022, the period ended March 31, 2022.

Third Fiscal Quarter Financial Highlights:

  • Recurring revenue increased 7.3% to $4.6 million. Year-to-date, recurring revenue increased 8.1% to $13.3 million.
  • Recurring SaaS revenue increased from 70% of total revenue to 99% of revenue.
  • Total revenue decreased to $4.6 million from $6.0 million, down 24% due to the elimination of essentially all non-recurring revenue, including MarketPlace.
  • Total operating expense decreased 36% to $3.4 million from $5.3 million.
  • Operating income increased 64% to $1.2 million from $718,000 in the third quarter last year.
  • GAAP net income increased 41% to $1.1 million vs. net income of $773,000.
  • Net income to common shareholders increased 50% to $941,000, vs. $627,000.
  • EPS of $0.05, up 55% vs. $0.03 in the prior year third quarter.
  • Cash from operations of $4.0 million year-to-date.
  • The Company repurchased 538,376 shares at an average price of $6.95 for a total of $3.74 million in the quarter.

Randall K. Fields, Chairman and CEO of Park City Group commented, “Park City continues to benefit from our all-SaaS model, with 7% growth in recurring revenue in the quarter, 8% year-to-date. This continued bottom-line growth is accelerating both our profitability and cash generation. Each part of our business is growing and our customers are expanding our role in their businesses as we continue to demonstrate significant value.”

“During the quarter, an existing customer which is one of the largest wholesalers in the world, signed an agreement to be a ReposiTrak reseller,” continued Mr. Fields. “With this, we will now have one of our largest customers, promoting our compliance and traceability solutions to their thousands of customers. This agreement is a strong validation of our traceability solution, demonstrating our desirable place in the industry. This underscores how critical industry leaders view traceability even before final FDA regulations are announced.”

“Our recurring revenue in the quarter represented 157% of our cash operating costs, ensuring systemic profitability,” added Mr. Fields. “This resulted in a 64% increase in operating income and a 41% increase in net income. On an annualized run rate basis, our revenue per employee is $268,000. This is almost double the revenue per employee for SaaS companies of similar revenue. As we continue to grow our recurring revenue, we expect approximately 80-85 cents of each incremental dollar to fall to the bottom line, even as we invest in our next major catalyst, traceability. This is already evident in our 83% gross margin in the quarter.”

Mr. Fields continued, “We continue to work closely with key customers, and have productive conversations with the FDA, to advance our solution to the coming FDA traceability mandates. The focus on food safety and traceability is driving systemic changes, both through industry initiatives and through FDA mandates, and Park City Group represents the proven partner to help the industry navigate these changes. We have solutions today, and we are well positioned to address the specific requirements of FDA mandates which we expect to be released in November of this year.”

Third Quarter Financial Results (three months ended March 31, 2022, vs. three months ended March 31, 2021):

Total revenue decreased 24% to $4.6 million as compared to $6.0 million due to sunsetting approximately $1.8 million in non-recurring revenue. Total operating expense decreased 36% to $3.4 million due to lower corresponding MarketPlace revenue and lower overall SG&A expense. GAAP net income was $1.1 million, up 41% compared to $773,000. Net income to common shareholders increased 41% to $941,000, or $0.05 per diluted share, compared to $627,000, or $0.03 per diluted share.

Year-To-Date Financial Results (nine months ended March 31, 2022, vs. nine months ended March 31, 2021):

Total revenue decreased 18% to $13.5 million as compared to $16.4 million due to a nearly $4.2 million planned elimination of all non-recurring revenue. Total operating expense decreased 31% to $10.2 million due to elimination of MarketPlace costs and lower overall SG&A. GAAP net income was $2.9 million versus $3.0 million. The prior-year period included a $1.1 million gain related to the forgiveness of the Company’s PPP loan. Absent the one-time gain, net income increased 58%. GAAP net income to common shareholders was $2.5 million, or $0.13 per diluted share, compared to $2.5 million (inclusive of the $1.1 million non-recurring gain), or $0.13 per diluted share.

Share Repurchases:

In the third quarter, the Company repurchased 538,376 shares at an average price of $6.95 for a total of $3.74 million. To date, the Company has repurchased 1.52 million shares at an average price of $ 6.09 for a total of $9.26 million. The Board has authorized an additional $9.0 million repurchase. The Company has approximately $11.7 million remaining on the $23 million total buyback authorization since inception.

Balance Sheet:

The Company had $21.3 million in cash and cash equivalents at March 31, 2022, compared to $24.1 million at June 30, 2021. The Company had $3.4 million drawn on its working line of credit as of March 31, 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: Monday, May 16th

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: 13729802

Replay Dial-In Numbers:

Toll Free: 1-844-512-2921

Toll/International: 1-412-317-6671

Replay Start: Monday May 16, 2022, 7:15 p.m. ET

Replay Expiry: Thursday, June 16, 2022, 11:59 p.m. ET

Replay Pin Number: 13729802

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)

 

 

March 31,

2022

 

 

June 30,

2021

 

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash

 

$

21,269,307

 

 

$

24,070,322

 

Receivables, net of allowance for doubtful accounts of $192,315 and $234,693 at March 31, 2022 and June 30, 2021, respectively

 

 

3,593,383

 

 

 

3,891,699

 

Contract asset – unbilled current portion

 

 

665,322

 

 

 

1,248,936

 

Prepaid expense and other current assets

 

 

1,163,489

 

 

 

490,817

 

Total Current Assets

 

 

26,691,501

 

 

 

29,701,774

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

865,931

 

 

 

2,589,194

 

 

 

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

 

 

Deposits and other assets

 

 

22,414

 

 

 

22,414

 

Prepaid expense – less current portion

 

 

67,098

 

 

 

47,987

 

Contract asset – unbilled long-term portion

 

 

206,052

 

 

 

408,925

 

Operating lease – right-of-use asset

 

 

382,544

 

 

 

695,371

 

Customer relationships

 

 

427,050

 

 

 

525,600

 

Goodwill

 

 

20,883,886

 

 

 

20,883,886

 

Capitalized software costs, net

 

 

128,799

 

 

 

171,732

 

Total Other Assets

 

 

22,117,843

 

 

 

22,755,915

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

49,675,275

 

 

$

55,046,883

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

493,405

 

 

$

467,194

 

Accrued liabilities

 

 

1,065,034

 

 

 

988,092

 

Contract liability - deferred revenue

 

 

1,542,020

 

 

 

1,755,341

 

Lines of credit

 

 

3,385,867

 

 

 

6,000,000

 

Operating lease liability - current

 

 

52,669

 

 

 

90,156

 

Total current liabilities

 

 

6,538,995

 

 

 

9,300,783

 

 

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Operating lease liability – less current portion

 

 

335,903

 

 

 

605,214

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

6,874,898

 

 

 

9,905,997

 

 

 

 

 

 

 

 

 

 

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 March 31, 2022 and June 30, 2021

 

 

6,254

 

 

 

6,254

 

Series B-1 Preferred, 550,000 shares authorized; 212,402 shares issued and outstanding at March 31, 2022 and June 30, 2021

 

 

2,124

 

 

 

2,124

 

Common Stock, $0.01 par value, 50,000,000 shares authorized; 18,637,929 and 19,351,935 issued and outstanding at March 31, 2022 and June 30, 2021, respectively

 

 

186,382

 

 

 

193,522

 

Additional paid-in capital

 

 

69,498,487

 

 

 

74,298,924

 

Accumulated deficit

 

 

(26,892,870

)

 

 

(29,359,938

)

Total stockholders equity

 

 

42,800,377

 

 

 

45,140,886

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders equity

 

$

49,675,275

 

 

$

55,046,883

 

PARK CITY GROUP, INC.

Consolidated Condensed Statements of
Operations (Unaudited)

 

 

Three Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

4,555,906

 

 

$

6,022,540

 

 

$

13,469,170

 

 

$

16,422,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services and product support

 

 

773,651

 

 

 

2,634,224

 

 

 

2,437,351

 

 

 

6,706,769

 

Sales and marketing

 

 

1,229,677

 

 

 

1,155,266

 

 

 

3,570,606

 

 

 

3,643,602

 

General and administrative

 

 

1,178,649

 

 

 

1,255,410

 

 

 

3,484,307

 

 

 

3,568,474

 

Depreciation and amortization

 

 

197,393

 

 

 

259,343

 

 

 

676,324

 

 

 

769,440

 

Total operating expense

 

 

3,379,370

 

 

 

5,304,243

 

 

 

10,168,588

 

 

 

14,688,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

1,176,536

 

 

 

718,297

 

 

 

3,300,582

 

 

 

1,733,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

24,975

 

 

 

60,234

 

 

 

167,015

 

 

 

176,078

 

Interest expense

 

 

(13,919

)

 

 

(4,248

)

 

 

(20,120

)

 

 

(76,700

)

Unrealized gain (loss) on short term investments

 

 

(65,889

)

 

 

(1,131

)

 

 

(328,987

)

 

 

54,434

 

Other gain (loss)

 

 

(5,649

)

 

 

10,000

 

 

 

(88,730

)

 

 

1,109,350

 

Income before income taxes

 

 

1,116,054

 

 

 

783,152

 

 

 

3,029,760

 

 

 

2,997,023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Provision) for income taxes:

 

 

(28,038

)

 

 

(9,955

)

 

 

(122,859

)

 

 

(46,141

)

Net income

 

 

1,088,016

 

 

 

773,197

 

 

 

2,906,901

 

 

 

2,950,882

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends on preferred stock

 

 

(146,611

)

 

 

(146,611

)

 

 

(439,833

)

 

 

(439,833

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to common shareholders

 

$

941,405

 

 

$

626,586

 

 

$

2,467,068

 

 

$

2,511,049

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares, basic

 

 

19,019,000

 

 

 

19,555,000

 

 

 

19,255,000

 

 

 

19,511,000

 

Weighted average shares, diluted

 

 

19,422,000

 

 

 

19,942,000

 

 

 

19,579,000

 

 

 

19,744,000

 

Basic income per share

 

$

0.05

 

 

$

0.03

 

 

$

0.13

 

 

$

0.13

 

Diluted income per share

 

$

0.05

 

 

$

0.03

 

 

$

0.13

 

 

$

0.13

 

PARK CITY GROUP, INC.

Consolidated Condensed Statements of
Cash Flows (Unaudited)

 

 

Nine Months Ended

March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

2,906,901

 

 

$

2,950,882

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

676,324

 

 

 

769,440

 

Amortization of operating right of use asset

 

 

312,826

 

 

 

63,896

 

Stock compensation expense

 

 

320,199

 

 

 

249,733

 

Bad debt expense

 

 

391,667

 

 

 

516,694

 

Gain on disposal of assets

 

 

(24,737

)

 

 

-

 

Gain on debt extinguishment

 

 

-

 

 

 

(1,109,350

)

Loss on sale of property and equipment

 

 

107,820

 

 

 

-

 

(Increase) decrease in:

 

 

 

 

 

 

 

 

Accounts receivables

 

 

198,430

 

 

 

(1,508,097

)

Long-term receivables, prepaids and other assets

 

 

(414,998

)

 

 

293,042

 

(Decrease) increase in:

 

 

 

 

 

 

 

 

Accounts payable

 

 

26,210

 

 

 

1,091,304

 

Operating lease liability

 

 

(306,798

)

 

 

(63,895

)

Accrued liabilities

 

 

52,441

 

 

 

549,537

 

Deferred revenue

 

 

(213,321

)

 

 

(452,633

)

Net cash provided by operating activities

 

 

4,032,964

 

 

 

3,350,553

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Sale of property and equipment

 

 

1,374,085

 

 

 

-

 

Purchase of property and equipment

 

 

(50,823

)

 

 

(105,391

)

Net cash provided by (used in) investing activities

 

 

1,323,262

 

 

 

(105,391

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net (decrease) increase in lines of credit

 

 

(2,614,133

)

 

 

1,340,000

 

Common Stock buyback/retirement

 

 

(5,212,452

)

 

 

(508,243

)

Proceeds from employee stock plan

 

 

109,177

 

 

 

114,430

 

Dividends paid

 

 

(439,833

)

 

 

(439,833

)

Payments on notes payable

 

 

-

 

 

 

(920,754

)

Net cash used in financing activities

 

 

(8,157,241

)

 

 

(414,400

)

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

 

(2,801,015

)

 

 

2,830,762

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

24,070,322

 

 

 

20,345,330

 

Cash and cash equivalents at end of period

 

$

21,269,307

 

 

$

23,176,092

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

172,342

 

 

$

55,772

 

Cash paid for interest

 

$

21,607

 

 

$

76,700

 

Cash paid for operating leases

 

$

66,871

 

 

$

71,200

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Common stock to pay accrued liabilities

 

$

234,447

 

 

$

214,550

 

Dividends accrued on preferred stock

 

$

439,833

 

$

439,833

 

PARK CITY GROUP, INC.

Reconciliation of Non-GAAP Items – Recurring Revenue

Three Months Ended, March 31 Nine Months Ended, March 31

2022

2021

2022

2021

Recurring - Subscription, Support and Services

$

4,553,844

$

4,245,247

$

13,259,456

$

12,263,945

Non-Recurring - Services

 

-

 

326,535

 

81,618

 

584,394

Transaction Based - Marketplace

 

2,062

 

1,450,758

 

128,096

 

3,573,807

$

4,555,906

$

6,022,540

$

13,469,170

$

16,422,146

 
Recurring Revenue as % of Total Revenue

 

99.95%

 

70.49%

 

98.44%

 

74.68%

Increase (Decrease) in Recurring Revenue ($)

$

308,597

$

995,511

Growth (Decline) in Recurring Revenue (%)

 

7.3%

 

8.1%

 

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