Reports Highest Quarterly Revenues in Company’s History
Results Driven by Strong Card Processing Volume Growth, with PayFac Processing Volumes up 52% Sequentially from the Fourth Quarter of 2019
SAN ANTONIO, May 14, 2020 (GLOBE NEWSWIRE) -- Usio, Inc (NASDAQ: USIO), an integrated electronic payment solutions provider, today announced financial results for the first quarter of 2020, which ended March 31, 2020.
“2020 is off to a tremendous start, with all-time record quarterly revenues and a significant improvement in profitability,” commented Louis Hoch, President and Chief Executive Officer of Usio. “Revenue growth accelerated for the first quarter, rising 18% in the first quarter versus the same period of last year. This followed 15% growth in the fourth quarter of 2019 versus the same period in the prior year. Both Credit Card Processing and Prepaid rose sharply in the first quarter compared to the same period last year. Credit Card Processing growth was led by PayFac, where volumes were up 52% sequentially from the fourth quarter of fiscal 2019. Adjusted EBITDA improved, reflecting strong top line growth, expanding margins, and a flattening out of expenses. Beyond our financial results, our business is continuing to add new accounts, introduce innovative new technologies, and improve our productivity. This is a strategy for long term success.
“Coronavirus is changing the way we all live and work, and we have had to manage around the social distancing, shelter-in-place, and other restrictions this has placed on us as individuals, our business, and our customers. First and foremost, we are vigilant in ensuring the health and safety of our employees and those around us. And, Usio continues to adhere to all of the regulations governing our operations. For the most part, the many weeks of work-from-home had little impact on our productivity. While our quarterly results do not fully reflect the impact of the COVID-19 pandemic closures, we experienced a decline in ACH and other transactions in the last two weeks of March, 2020 and in April, 2020. In April, 2020, ACH transactions were down 7% versus April, 2019 and returned check transactions were down 42% versus April, 2019. We also experienced an April decline of nearly $10 million of credit card processing volume in the Singular portfolio primarily attributable to mandated closures to dental practices in the portfolio. We also experienced gains in the remote check capture (RCC), PDS legacy credit card and prepaid portfolios in April versus March. While we remain hopeful we could achieve our growth objectives for the full year, it is likely results will be down in the second quarter.
“Had it not been for coronavirus, we believe this would have been a year of steady, quarter after quarter sequential improvement in our financial performance. As it is, we remain hopeful to still have a great year as we manage through the substantial levels of economic disruption created by coronavirus and continue to expand our presence in the rapidly expanding electronic transaction processing market.”
First Quarter 2020 Financial Summary
Revenues for the quarter ended March 31, 2020 increased 18% to $7.8 million, primarily from increases in our two growth initiatives, PayFac and prepaid. Gross profits increased 44% to $1.9 million and gross margins expanded 450 basis points to 24.8% for the quarter ended March 31, 2020, primarily driven by an improvement in the profitability of our credit card and prepaid segments.
Selling, general and administrative other expenses increased 27.7% to $2.1 million for the quarter ended March 31, 2020 compared to the year ago quarter but were relatively flat on a sequential basis compared to the fourth quarter of 2019. Compared to a year ago, the increase in expenses was primarily attributable to incremental investments in our Prepaid and PayFac integrated payments growth initiatives plus one-time expenses for the quarter. For the first quarter of 2020, the operating loss was reduced by $226,637 compared to a year ago.
The Company has been increasingly moving towards breakeven cash flow and made good progress reducing the quarterly Adjusted EBITDA loss. Adjusted EBITDA improved by $402,058 from the fourth quarter of 2019 to a loss of just $193,822, which was also an almost $132,186 improvement from the first quarter of last year.
We reported a net loss of $835,009 ($0.06 per share) for the quarter ended March 31, 2020, as compared to a net loss of $1,072,889 ($0.09) for the same period in the prior year.
Usio continues to be in solid financial condition with $1.7 million in cash and cash equivalents and no debt at March 31, 2020. Subsequent to the end of the quarter the Company received $813,500 of cash from a PPP loan. The Company has not determined how much of the loan, if any, may be subject to forgiveness.
Conference Call and Webcast
Usio, Inc.'s management will host a conference call with a live webcast today at 5:00 pm 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 website at www.usio.com/invest.
A replay of the call will be available approximately one hour after the end of the call through May 28, 2020. 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 10144029.
About Usio, Inc.
Usio, Inc. (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 risks related to the COVID-19 pandemic and its effect on the economy, 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, 2019. 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
| March 31, 2020 | December 31, 2019 | ||||||||
| (Unaudited) | |||||||||
| ASSETS | |||||||||
| Cash and cash equivalents | $ | 1,742,683 | $ | 2,137,580 | |||||
| Accounts receivable, net | 1,082,308 | 1,274,001 | |||||||
| Settlement processing assets | 29,884,128 | 38,906,780 | |||||||
| Prepaid card load assets | 581,575 | 528,434 | |||||||
| Prepaid expenses and other | 242,419 | 183,575 | |||||||
| Current assets before merchant reserves | 33,533,113 | 43,030,370 | |||||||
| Merchant reserves | 8,524,904 | 10,016,904 | |||||||
| Total current assets | 42,058,017 | 53,047,274 | |||||||
| Property and equipment, net | 1,572,381 | 1,557,521 | |||||||
| Other assets: | |||||||||
| Intangibles, net | 2,426,426 | 2,676,427 | |||||||
| Deferred tax asset | 1,394,000 | 1,394,000 | |||||||
| Operating lease right-of-use assets | 2,424,175 | 2,480,902 | |||||||
| Other assets | 424,749 | 404,055 | |||||||
| Total other assets | 6,669,350 | 6,955,384 | |||||||
| Total Assets | $ | 50,299,748 | $ | 61,560,179 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 244,844 | $ | 419,849 | |||||
| Accrued expenses | 1,369,581 | 1,360,551 | |||||||
| Operating lease liabilities, current portion | 234,553 | 356,184 | |||||||
| Settlement processing obligations | 29,884,128 | 38,906,780 | |||||||
| Prepaid card load obligations | 581,575 | 528,434 | |||||||
| Deferred revenues | 110,294 | 123,529 | |||||||
| Current liabilities before merchant reserve obligations | 32,424,975 | 41,695,327 | |||||||
| Merchant reserve obligations | 8,524,904 | 10,016,904 | |||||||
| Total current liabilities | 40,949,879 | 51,712,231 | |||||||
| Non-current liabilities: | |||||||||
| Operating lease liabilities, current portion | 2,346,477 | 2,279,613 | |||||||
| Total liabilities | 43,296,356 | 53,991,844 | |||||||
| Stockholders' equity: | |||||||||
| Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at March 31, 2020 (unaudited) and December 31, 2019, respectively | — | — | |||||||
| Common stock, $0.001 par value, 200,000,000 shares authorized; 18,275,577 and 18,224,577 issued, and 17,137,653 and 17,104,998 outstanding at March 31, 2020 (unaudited) and December 31, 2019, respectively | 186,707 | 186,656 | |||||||
| Additional paid-in capital | 77,123,698 | 77,055,273 | |||||||
| Treasury stock, at cost; 1,137,924 and 1,119,579 shares at March 31, 2020 (unaudited) and December 31, 2019, respectively | (1,912,081 | ) | (1,885,452 | ) | |||||
| Deferred compensation | (5,407,935 | ) | (5,636,154 | ) | |||||
| Accumulated deficit | (62,986,997 | ) | (62,151,988 | ) | |||||
| Total stockholders' equity | 7,003,392 | 7,568,335 | |||||||
| Total Liabilities and Stockholders' Equity | $ | 50,299,748 | $ | 61,560,179 | |||||
USIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended March 31, | |||||||||
| 2020 | 2019 | ||||||||
| Revenues | $ | 7,771,679 | $ | 6,588,032 | |||||
| Cost of services | 5,843,395 | 5,252,301 | |||||||
| Gross profit | 1,928,284 | 1,335,731 | |||||||
| Selling, general and administrative: | |||||||||
| Stock-based compensation | 287,710 | 283,408 | |||||||
| Other expenses | 2,122,106 | 1,661,739 | |||||||
| Depreciation and amortization | 387,795 | 486,548 | |||||||
| Total operating expenses | 2,797,611 | 2,431,695 | |||||||
| Operating (loss) | (869,327 | ) | (1,095,964 | ) | |||||
| Other income: | |||||||||
| Interest income | 11,156 | 23,074 | |||||||
| Other income (expense) | 688 | 1 | |||||||
| Other income and (expense), net | 11,844 | 23,075 | |||||||
| (Loss) before income taxes | (857,483 | ) | (1,072,889 | ) | |||||
| Income tax expense (benefit) | (22,474 | ) | — | ||||||
| Net (Loss) | $ | (835,009 | ) | $ | (1,072,889 | ) | |||
| Earnings (Loss) Per Share | |||||||||
| Basic earnings (loss) per common share: | $ | (0.06 | ) | $ | (0.09 | ) | |||
| Diluted earnings (loss) per common share: | $ | (0.06 | ) | $ | (0.09 | ) | |||
| Weighted average common shares outstanding | |||||||||
| Basic | 13,127,229 | 12,621,857 | |||||||
| Diluted | 13,127,229 | 12,621,857 | |||||||
USIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended | ||||||||
| March 31, 2020 | March 31, 2019 | |||||||
| Operating Activities | ||||||||
| Net (loss) | $ | (835,009 | ) | $ | (1,072,889 | ) | ||
| Adjustments to reconcile net (loss) to net cash (used) by operating activities: | ||||||||
| Depreciation | 137,795 | 236,548 | ||||||
| Amortization | 250,000 | 250,000 | ||||||
| Non-cash stock-based compensation | 287,710 | 283,408 | ||||||
| Amortization of warrant costs | 8,985 | 8,985 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 191,693 | 79,588 | ||||||
| Prepaid expenses and other | (58,844 | ) | (139,847 | ) | ||||
| Operating lease right-of-use assets | 56,727 | (2,616,128 | ) | |||||
| Other assets | (20,694 | ) | (14,074 | ) | ||||
| Accounts payable and accrued expenses | (165,975 | ) | 43,398 | |||||
| Operating lease liabilities | (54,767 | ) | 2,749,493 | |||||
| Prepaid card load assets | 53,141 | 437,647 | ||||||
| Merchant reserves | (1,492,000 | ) | (1,347,909 | ) | ||||
| Deferred revenue | (13,235 | ) | (15,000 | ) | ||||
| Deferred rent | — | (79,748 | ) | |||||
| Net cash (used) by operating activities | (1,654,473 | ) | (1,196,528 | ) | ||||
| Investing Activities | ||||||||
| Purchases of property and equipment | (152,654 | ) | (152,923 | ) | ||||
| Net cash (used) by investing activities | (152,654 | ) | (152,923 | ) | ||||
| Financing Activities | ||||||||
| Proceeds from public offering, net of expenses | — | 1,793,905 | ||||||
| Purchases of treasury stock | (26,629 | ) | (21,822 | ) | ||||
| Net cash provided (used) by financing activities | (26,629 | ) | 1,772,083 | |||||
| Change in cash, cash equivalents, prepaid card loads and merchant reserves | (1,833,756 | ) | 422,632 | |||||
| Cash, cash equivalents, prepaid card loads and merchant reserves, beginning of year | 12,682,918 | 15,340,980 | ||||||
| Cash, Cash Equivalents, Prepaid Card Loads and Merchant Reserves, End of Period | $ | 10,849,162 | $ | 15,763,612 | ||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | — | $ | — | ||||
| Income taxes | — | — | ||||||
| USIO, INC. STATEMENT OF CHANGES in STOCKHOLERS' EQUITY (UNAUDITED) | |||||||||||||||||||||||||||
| Additional Paid - In Capital | Treasury Stock | Deferred Compensation | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||||||||||
| Common Stock | |||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||
| Balance at December 31, 2019 | 18,224,577 | $ | 186,656 | $ | 77,055,273 | $ | (1,885,452 | ) | $ | (5,636,154 | ) | $ | (62,151,988 | ) | $ | 7,568,335 | |||||||||||
| Issuance of common stock under equity incentive plan | 51,000 | 51 | 59,440 | — | — | — | $ | 59,491 | |||||||||||||||||||
| Warrant compensation costs | — | — | 8,985 | — | — | — | 8,985 | ||||||||||||||||||||
| Deferred compensation amortization | — | — | — | — | 228,219 | — | 228,219 | ||||||||||||||||||||
| Purchase of treasury stock | — | — | — | (26,629 | ) | — | — | (26,629 | ) | ||||||||||||||||||
| Net (loss) for the period | — | — | — | — | — | (835,009 | ) | (835,009 | ) | ||||||||||||||||||
| Balance at March 31, 2020 | 18,275,577 | $ | 186,707 | $ | 77,123,698 | $ | (1,912,081 | ) | $ | (5,407,935 | ) | $ | (62,986,997 | ) | $ | 7,003,392 | |||||||||||
| 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 | |||||||||||
| USIO, INC | |||||||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | |||||||||
| (UNAUDITED) | |||||||||
| Three Months Ended | |||||||||
| March 31, | March 31, | ||||||||
| 2020 | 2019 | ||||||||
| Reconciliation from Operating (Loss) to Adjusted EBITDA: | |||||||||
| Operating (Loss) | $ | (869,327 | ) | $ | (1,095,964 | ) | |||
| Depreciation and amortization | 387,795 | 486,548 | |||||||
| EBITDA | (481,532 | ) | (609,416 | ) | |||||
| Non-cash stock-based compensation expense, net | 287,710 | 283,408 | |||||||
| Adjusted EBITDA | $ | (193,822 | ) | $ | (326,008 | ) | |||
| Calculation of Adjusted EBITDA margins: | |||||||||
| Revenues | $ | 7,771,679 | $ | 6,588,032 | |||||
| Adjusted EBITDA | (193,822 | ) | (326,008 | ) | |||||
| Adjusted EBITDA margins | -2.5 | % | -4.9 | % | |||||