USIO - Usio Announces Record Second Quarter Results

August, 14 2019 04:00 PM Usio Inc.

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
%

Company Name:	Usio Inc.
Stock Symbol:	USIO
Market:	NASDAQ
Website:	usio.com