SAN ANTONIO, Aug. 11, 2016 (GLOBE NEWSWIRE) -- Payment Data Systems, Inc. (NASDAQ:PYDS), an integrated payment solutions provider, today
announced financial results for the second quarter ended June 30, 2016.
Second Quarter 2016 Financial and Operating Summary
- Revenues were $2.9 million
- Gross margin was $855,621, or 30% of revenues
- Operating loss was $455,220
- Adjusted EBITDA1 was $54,081
- Net loss was $355,301, or $0.05 per share
- Total dollars processed for the second quarter of 2016 exceeded $683 million, compared to $807 million in the second quarter
of 2015
- Second quarter credit card transaction processing volume increased 4% and credit card dollars processed decreased 4% compared
with the same period in 2015
- ACH (Electronic check) transaction volumes decreased 17%; returned check transactions processed decreased 31% compared to the
second quarter of 2015
1See Reconciliation of GAAP Operating Income to Adjusted EBITDA in the accompanying financial tables
Management Commentary
“Despite a second quarter revenue decrease due to lower ACH transaction volumes, our gross margin percentage actually improved
versus the second quarter of last year, underscoring the strength of our business model,” said Louis Hoch, President and CEO,
Payment Data Systems, Inc. “We operate in a highly competitive and dynamic industry. Our revenue decline reflects
market-related headwinds including merger and acquisition activity with some of our partners and some customer attrition.
“We are taking strong actions to increase revenues and drive future growth. We recently expanded our ACH network capacity
with the addition of a new processing bank, which we expect will increase revenue from both existing and new clients. We are
also increasing our investment in sales and marketing for both our ACH and prepaid businesses, including participation in upcoming
industry trade shows. We are confident that our ACH traffic and total revenues will improve as the new processing bank is
fully online during our seasonally strong fourth quarter.”
Financial Results
Three Months Ended June 30, 2016
Revenues of $2.9 million decreased 16% compared to $3.4 million for the second quarter of 2015, due to a decrease in the volume
of ACH transactions and returned checks processed.
Gross margins were $855,621, or 30% of revenues, compared to $998,144, or 29% of revenues, in the corresponding prior-year
period.
Operating loss was $455,220, compared to operating income of $91,833 in the second quarter a year ago, reflecting higher
selling, general and administrative expenses to support the Company’s growth, as well as higher amortization expense related to the
assets acquired from Akimbo in December 2014.
Adjusted EBITDA was $54,081 compared to adjusted EBITDA of $578,306 in the corresponding prior-year period. Please see a
reconciliation of Adjusted EBITDA to operating income in the accompanying financial tables.
Net loss was $355,301, or $0.05 per share, compared to net income of $24,850, or $0.00 per diluted share in the second quarter
of 2015.
Balance Sheet
At June 30, 2016, the Company had $4.4 million of cash and cash equivalents.
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."
Conference Call and Webcast
Payment Data Systems, Inc.’s management will host a conference call with a live webcast today at 5:00 p.m. Eastern Time to
provide a business update.
Individuals interested in dialing in to the conference call may do so by dialing (844) 883-3890 for U.S. participants
or (412) 317-9246 for participants outside of the U.S., referencing “Payment Data Systems” to the operator. The call may
also be accessed via webcast on the Company’s website at www.paymentdata.com/invest. If you would like to submit a question via email in advance
please contact Elizabeth Brossy at ebrossy@finprofiles.com.
A replay of the call will be available through Thursday, August 25, 2016 by dialing (877) 344-7529 (U.S.) or (412) 317-0088
(international), using the passcode 10090554.
About Payment Data Systems, Inc.
Payment Data Systems, Inc. (NASDAQ:PYDS), 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 service 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. Payment Data Systems is headquartered in San Antonio, Texas, and has offices in New York,
New York; and Los Angeles, California.
For additional information please visit www.paymentdata.com. Websites: www.ficentive.com, www.akimbocard.com, www.streamprepaid.com, www.zbill.com. Find us on Facebook®
FORWARD-LOOKING STATEMENTS DISCLAIMER
Except for the historical information contained herein, the matters discussed in this release include certain forward-looking
statements, which are intended to be covered by safe harbors. Those statements include, but may not be limited to, all statements
regarding our management’s intent, belief and expectations, such as statements concerning our future and our operating and growth
strategy. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without
limitation, the factors detailed from time to time in our filings with the Securities and Exchange Commission. One or more of these
factors have affected, and in the future could affect our businesses and financial results in the future and could cause actual
results to differ materially from plans and projections. We believe 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 our objectives and plans will be achieved. All forward-looking statements made in this release are based on information
presently available to our management. We assume no obligation to update any forward-looking statements, except as required by
law.
(Financial Tables Follow)
| |
| |
| PAYMENT DATA SYSTEMS, INC. |
| CONDENSED CONSOLIDATED BALANCE
SHEETS |
| |
| |
June 30, 2016 |
|
December 31, 2015 |
| |
(Unaudited) |
|
|
| Assets |
|
|
|
| Current assets: |
|
|
|
| Cash and cash equivalents |
$ |
4,378,405 |
|
|
$ |
4,059,606 |
|
| Accounts receivable, net |
|
1,070,236 |
|
|
|
1,135,384 |
|
| Settlement processing assets |
|
25,071,987 |
|
|
|
39,797,232 |
|
| Prepaid expenses and other |
|
217,416 |
|
|
|
149,118 |
|
| Current assets before restricted cash |
|
30,738,044 |
|
|
|
45,141,340 |
|
| Restricted cash |
|
18,316,160 |
|
|
|
17,972,065 |
|
| Total current assets |
|
49,054,204 |
|
|
|
63,113,405 |
|
| |
|
|
|
| Property and equipment, net |
|
2,847,699 |
|
|
|
3,077,421 |
|
| |
|
|
|
| Other assets: |
|
|
|
| Intangibles, net |
|
260,247 |
|
|
|
341,816 |
|
| Deferred tax asset |
|
1,621,000 |
|
|
|
1,621,000 |
|
| Note receivable |
|
200,000 |
|
|
|
- |
|
| Other assets |
|
202,298 |
|
|
|
202,849 |
|
| Total other assets |
|
2,283,545 |
|
|
|
2,165,665 |
|
| |
|
|
|
| Total assets |
$ |
54,185,448 |
|
|
$ |
68,356,491 |
|
| |
|
|
|
| Liabilities and stockholders’ equity |
|
|
|
| Current liabilities: |
|
|
|
| Accounts payable |
$ |
203,629 |
|
|
$ |
143,180 |
|
| Accrued expenses |
|
1,226,964 |
|
|
|
1,328,738 |
|
| Deferred revenues |
|
33,000 |
|
|
|
- |
|
| Settlement processing obligations |
|
25,071,987 |
|
|
|
39,797,232 |
|
| Current liabilities before restricted cash |
|
26,535,580 |
|
|
|
41,269,150 |
|
| Restricted cash |
|
18,316,160 |
|
|
|
17,972,065 |
|
| Total current liabilities |
|
44,851,740 |
|
|
|
59,241,215 |
|
| |
|
|
|
| Stockholders’ equity: |
|
|
|
| Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at June
30, 2016 (unaudited) and December 31, 2015 |
|
- |
|
|
|
- |
|
| Common stock, $0.001 par value, 200,000,000 shares authorized; 12,419,816 and 12,379,537
issued, and 12,070,184 and 12,029,905 outstanding at June 30, 2016 (unaudited) and December 31, 2015, respectively |
|
185,580 |
|
|
|
185,533 |
|
| Additional paid-in capital |
|
64,449,901 |
|
|
|
64,302,498 |
|
| Treasury stock, at cost; 349,632 and 349,632 shares |
|
(286,393 |
) |
|
|
(286,394 |
) |
| Deferred compensation |
|
(5,573,078 |
) |
|
|
(6,031,362 |
) |
| Accumulated deficit |
|
(49,442,302 |
) |
|
|
(49,054,999 |
) |
| Total stockholders’ equity |
|
9,333,708 |
|
|
|
9,115,276 |
|
| |
|
|
|
| Total liabilities and stockholders’ equity |
$ |
54,185,448 |
|
|
$ |
68,356,491 |
|
| |
|
|
|
|
|
|
|
| See notes to interim consolidated financial statements. |
| |
| |
| PAYMENT DATA SYSTEMS, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
| (unaudited) |
| |
| |
|
Three Months Ended June
30, |
|
Six Months Ended June 30, |
| |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| |
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
|
2,890,060 |
|
|
|
$ |
3,424,756 |
|
|
$ |
|
6,118,691 |
|
|
|
$ |
7,167,216 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of services |
|
|
|
2,034,439 |
|
|
|
|
2,426,612 |
|
|
|
|
4,189,222 |
|
|
|
|
4,802,006 |
|
| Selling, general and administrative: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stock-based compensation |
|
|
|
283,747 |
|
|
|
|
393,525 |
|
|
|
|
571,436 |
|
|
|
|
627,056 |
|
| Cancellation of stock-based compensation |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
(163,936 |
) |
| Other expenses |
|
|
|
801,540 |
|
|
|
|
419,838 |
|
|
|
|
1,409,889 |
|
|
|
|
937,018 |
|
| Depreciation and amortization |
|
|
|
225,554 |
|
|
|
|
92,948 |
|
|
|
|
449,777 |
|
|
|
|
178,520 |
|
| Total operating expenses |
|
|
|
3,345,280 |
|
|
|
|
3,332,923 |
|
|
|
|
6,620,324 |
|
|
|
|
6,380,664 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income (loss) |
|
|
|
(455,220 |
) |
|
|
|
91,833 |
|
|
|
|
(501,633 |
) |
|
|
|
786,552 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income and (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest income |
|
|
|
24,974 |
|
|
|
|
19,358 |
|
|
|
|
46,985 |
|
|
|
|
38,358 |
|
| Other income (expense) |
|
|
|
98,279 |
|
|
|
|
(32,305 |
) |
|
|
|
97,679 |
|
|
|
|
(32,409 |
) |
| Total other income and (expense), net |
|
|
|
123,253 |
|
|
|
|
(12,947 |
) |
|
|
|
144,664 |
|
|
|
|
5,949 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before income taxes |
|
|
|
(331,967 |
) |
|
|
|
78,886 |
|
|
|
|
(356,969 |
) |
|
|
|
792,501 |
|
| Income taxes |
|
|
|
23,334 |
|
|
|
|
54,036 |
|
|
|
|
30,334 |
|
|
|
|
59,036 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
|
(355,301 |
) |
|
|
$ |
24,850 |
|
|
$ |
|
(387,303 |
) |
|
|
$ |
733,465 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per common share: |
|
$ |
|
(0.05 |
) |
|
|
$ |
0.00 |
|
|
$ |
|
(0.05 |
) |
|
|
$ |
0.10 |
|
| Diluted earnings per common share: |
|
$ |
|
(0.05 |
) |
|
|
$ |
0.00 |
|
|
$ |
|
(0.05 |
) |
|
|
$ |
0.06 |
|
| Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
|
7,738,759 |
|
|
|
|
7,369,329 |
|
|
|
|
7,729,003 |
|
|
|
|
7,369,329 |
|
| Diluted |
|
|
|
7,738,759 |
|
|
|
|
12,081,754 |
|
|
|
|
7,729,003 |
|
|
|
|
12,102,919 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| See notes to interim consolidated financial
statements. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| PAYMENT DATA SYSTEMS, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
| (unaudited) |
| |
| |
|
Six months Ended June 30, |
| |
|
2016 |
|
2015 |
| |
|
|
|
|
| Operating activities: |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(387,303 |
) |
|
$ |
733,465 |
|
| Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
| Depreciation |
|
|
368,208 |
|
|
|
158,679 |
|
| Amortization |
|
|
81,569 |
|
|
|
19,841 |
|
| Non-cash stock based compensation |
|
|
571,436 |
|
|
|
627,056 |
|
| Cancellation of stock based compensation |
|
|
- |
|
|
|
(163,936 |
) |
| Issuance of stock to consultant |
|
|
34,300 |
|
|
|
- |
|
| Changes in current assets and current liabilities: |
|
|
|
|
|
|
|
|
| Accounts receivable |
|
|
65,148 |
|
|
|
132,305 |
|
| Prepaid expenses and other |
|
|
(68,298 |
) |
|
|
(29,437 |
) |
| Other assets |
|
|
551 |
|
|
|
27,564 |
|
| Accounts payable and accrued expenses |
|
|
(41,325 |
) |
|
|
(161,673 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Deferred revenue |
|
|
33,000 |
|
|
|
- |
|
| Settlement processing assets, net |
|
|
- |
|
|
|
- |
|
| Net cash provided by operating activities: |
|
|
657,286 |
|
|
|
1,343,864 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Investing activities: |
|
|
|
|
|
|
|
|
| Purchases of property and equipment |
|
|
(138,487 |
) |
|
|
(555,778 |
) |
| Note receivable |
|
|
(200,000 |
) |
|
|
- |
|
| Net cash (used) by investing activities: |
|
|
(338,487 |
) |
|
|
(555,778 |
) |
| |
|
|
|
|
|
|
|
|
| Financing activities: |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Net cash (used) by financing activities: |
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
| Change in cash and cash equivalents |
|
|
318,799 |
|
|
|
788,086 |
|
| Cash and cash equivalents, beginning of period |
|
|
4,059,606 |
|
|
|
2,803,455 |
|
| |
|
|
|
|
|
|
|
|
| Cash and cash equivalents, end of period |
|
$ |
4,378,405 |
|
|
$ |
3,591,541 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
| Cash paid during the period for: |
|
|
|
|
|
|
|
|
| Interest |
|
|
- |
|
|
|
- |
|
| Income taxes |
|
$ |
62,184 |
|
|
|
77,369 |
|
| |
|
|
|
|
|
|
|
|
| See notes to interim consolidated financial statements. |
| |
|
|
|
|
|
|
|
|
| |
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES |
| (IN THOUSANDS) |
| (UNAUDITED) |
| |
| |
|
Three Months Ended June
30, |
|
Six Months Ended June
30, |
| |
|
|
|
|
|
|
|
|
| In thousands |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
| |
|
|
|
|
|
|
|
|
| Reconciliation from Operating Income to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
| Operating income |
|
$ |
(455,220 |
) |
|
$ |
91,832 |
|
|
$ |
(501,633 |
) |
|
$ |
786,552 |
|
| Depreciation and amortization |
|
|
225,554 |
|
|
$ |
92,948 |
|
|
|
449,777 |
|
|
$ |
178,520 |
|
| EBITDA |
|
|
(229,666 |
) |
|
|
184,781 |
|
|
|
(51,856 |
) |
|
|
965,072 |
|
| |
|
|
|
|
|
|
|
|
| Expenses related to NASDAQ uplisting and reverse stock split |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
182,362 |
|
| Acquisition costs |
|
|
- |
|
|
|
- |
|
|
|
|
|
20,000 |
|
| Non-cash stock compensation expense (net) |
|
|
283,747 |
|
|
|
393,525 |
|
|
|
449,777 |
|
|
|
14,584 |
|
| Adjusted EBITDA |
|
$ |
54,081 |
|
|
$ |
578,306 |
|
|
$ |
397,921 |
|
|
$ |
1,182,017 |
|
| |
|
|
|
|
|
|
|
|
| Calculation of Adjusted EBITDA margins: |
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
2,890,060 |
|
|
$ |
3,424,756 |
|
|
$ |
6,118,691 |
|
|
$ |
7,167,216 |
|
| Adjusted EBITDA |
|
$ |
54,081 |
|
|
$ |
578,306 |
|
|
$ |
397,921 |
|
|
$ |
1,182,017 |
|
| Adjusted EBITDA margins |
|
|
1.9 |
% |
|
|
16.9 |
% |
|
|
6.5 |
% |
|
|
16.5 |
% |
| |
Investor Contacts: Julie MacMedan Elizabeth Brossy Financial Profiles PYDS@finprofiles.com
