USIO - Usio Announces Third Quarter Results

November, 14 2019 04:00 PM Usio Inc.

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.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


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
%

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