MAM Software Reports Fiscal Third Quarter Results

BLUE BELL, Pa., May 10, 2018 /PRNewswire/ — MAM Software Group, Inc. (NASDAQ Capital Market: MAMS) (the “Company” or “MAM”`), a leading global provider of on-premise and cloud-based business management solutions for the auto parts, tire and vertical distribution industries, announced the following financial results in accordance with U.S. generally accepted accounting principles (“GAAP”) for its third fiscal quarter and nine months ended March 31, 2018, through the filing on May 10, 2018 of its Quarterly Report on Form 10-Q with the Securities and Exchange Commission:

(In thousands, except per share data)

For the Three Months Ended
March 31,

For the Nine Months Ended
March 31,

2018

2017

2018

2017

Net revenues

$

9,109

$

7,873

$

26,247

$

23,317

Gross profit

$

4,974

$

4,306

$

14,306

$

12,938

Operating income

$

1,223

$

860

$

3,573

$

2,629

Income before provision (benefit) for income taxes

$

1,128

$

662

$

3,265

$

2,189

Net income

$

1,217

$

678

$

2,252

$

2,141

Earnings per share attributed to common stockholders – basic

$

0.10

$

$0.06

$

0.19

$

0.18

Earnings per share attributed to common stockholders – diluted

$

0.10

$

$0.06

$

0.19

$

0.18

Weighted average shares outstanding – basic

11,835

11,739

11,825

11,719

Weighted average shares outstanding – diluted

12,166

11,830

12,156

11,810

Michael Jamieson, MAM’s President and Chief Executive Officer commented, “I am very pleased that we delivered financial results in line with our expectations while continuing to make progress on our key growth initiatives. We are working closely with the the VAST Online beta sites to ensure we have a product that will meet the needs of Goodyear and other potential customers.”

Third Quarter Highlights:

  • Net revenues of $9.1 million were up 15.7% compared to $7.9 million for the same period last year. On a constant currency basis, revenues were up 7.3% over the same period last year.
  • Recurring revenues were 85.0% of total revenues compared to 82.3% of total revenues for the same period last year.
  • Total Software as a Service (SaaS) revenues increased 32.9% year-over-year and 9.0% sequentially.
  • Operating income was $1.2 million, or 13.4% of revenues, compared to $860,000, or 10.9% of revenues, for the same period last year.
  • Net income was $1.2 million compared to $678,000 in the same period last year.
  • Adjusted EBITDA* was $1.5 million, or 16.8% of revenues, compared to $1.1 million, or 13.4% of revenues, for the same period last year.

Third Quarter Financial Results:

Net revenues were $9.1 million for the quarter ended March 31, 2018 compared to $7.9 million for the same period last year, an increase of $1.2 million or 15.7%. On a constant currency basis, revenue was up 7.3% over the same period last year.

Recurring revenue for the quarter was $7.7 million, or 85.0% of total revenue, an increase of $1.2 million or 19.5%, compared to $6.5 million, or 82.3% of total revenue, for the third quarter last year. Sequentially, recurring revenue increased $482,000, or 6.2%, compared to $7.3 million, or 82.0% of total revenue, in the second quarter of fiscal 2018.

Total Software as a Service (SaaS) revenue for the quarter was $2.9 million, an increase of $729,000, or 32.9%, year-over-year and an increase of $242,000, or 9.0%, sequentially when compared to the second quarter of fiscal 2018. The increase in the SaaS revenue was primarily attributable to a 22.8% increase in Autowork Online (SaaS) revenue for the quarter to $1.7 million, and a 49.3% increase in Autopart Online (SaaS) revenue for the quarter to $1.3 million.

Total Data as a Service (DaaS) revenue for the quarter was $2.5 million, an increase of $338,000, or 15.3%, year over year, and $189,000, or 8.0%, sequentially when compared to the second quarter of fiscal year 2018.

Gross profit for the quarter was $5.0 million, or 54.6% of total revenues, an increase of $668,000, or 15.5%, compared to $4.3 million, or 54.7% of total revenue, for the same period last year.

Operating expenses for the quarter increased by $305,000 to $3.8 million, an increase of 8.9% compared to $3.4 million for the same period last year. An increase in Research and Development expenses to support growth was partially offset by lower Sales and Marketing expenses.

Operating income for the quarter increased by $363,000, or 42.2%, to $1.2 million compared to $860,000 for the same period last year.

Other expense for the quarter decreased by $103,000, or 52.0%, to $95,000 compared to $198,000 for the same period last year. The decrease was primarily the result of the accelerated amortization of deferred financing fees in the third quarter of last year due to refinancing the debt.

Net income for the quarter was $1.2 million, or $0.10 per basic and diluted share, compared to net income of $678,000, or $0.06 per basic and diluted share, for the same period last year.

Year-to-Date Financial Results:

Net revenues were $26.2 million for the nine months ended March 31, 2018 compared to $23.3 million for the same period last year, an increase of $2.9 million, or 12.6%. On a constant currency basis, revenue was up 8.3% over the same period last year.

Recurring revenue for the first nine months of fiscal 2018 was $22.1 million, or 84.1% of total revenue, an increase of $2.9 million, or 15.1%, compared to $19.2 million, or 82.3% of total revenue, for the first nine months of last fiscal year.

Total Software as a Service (SaaS) revenue for the first nine months of fiscal 2018 was $8.2 million, an increase of $1.9 million, or 30.6%, year-over-year. The increase in the SaaS revenue was primarily attributable to a 22.8% increase in Autowork Online (SaaS) revenue for the first nine months of fiscal 2018 to $4.8 million, and a 43.0% increase in Autopart Online (SaaS) revenue for the first nine months of fiscal 2018 to $3.5 million.

Total Data as a Service (DaaS) revenue for the first nine months of fiscal 2018 was $7.2 million, an increase of $632,000, or 9.6%, when compared to the first nine months of fiscal 2017.

Gross profit for the first nine months of fiscal 2018 was $14.3 million, or 54.5% of total revenue, an increase of $1.4 million compared to $12.9 million, or 55.5% of total revenue, for the same period last year.

Operating expenses for the first nine months of fiscal 2018 increased by $424,000 to $10.7 million, an increase of 4.1% compared to $10.3 million for the same period last year. An increase in Research and Development expenses to support growth was partially offset by lower Sales and Marketing expenses.

Operating income for the first nine months of fiscal 2018 increased by $944,000, or 35.9%, to $3.6 million, compared to $2.6 million for the same period last year.

Other expense for the quarter decreased by $132,000, or 30.0%, to $308,000, compared to $440,000 for the same period last year. The decrease was primarily the result of the accelerated amortization of deferred financing fees last year due to refinancing the debt.

Net income for the first nine months of fiscal 2018 was $2.3 million, or $0.19 per basic and diluted share, compared to net income of $2.1 million, or $0.18 per basic and diluted share, for the same period last year.  The net income for the first nine months of fiscal year 2018 included $667,000, or $(0.06) per basic and diluted share, of additional income tax expense from the impact of the Tax Act.

Balance Sheet and Other Financial Highlights

  • As of March 31, 2018, the Company had $3.8 million in cash and cash equivalents.
  • The Company had capital expenditures and capitalized software development costs of $1.4 million for the nine months ended March 31, 2018.
  • As of March 31, 2018, the Company had $6.9 million of debt outstanding under its term loan and no borrowings outstanding under its $2.75 million revolving credit facility. 
  • Stockholders’ equity increased 35.6% from $9.7 million at June 30, 2017 to $13.1 million at March 31, 2018.
  • As of March 31, 2018, there were 12.6 million shares of common stock outstanding.

Business Outlook

The Company reaffirmed its expectations for fiscal year 2018 Adjusted EBITDA* in the range of $5.5 million to $6.0 million, on a constant currency basis.

Conference Call Information

The Company has scheduled a conference call for Friday, May 11, 2018, at 9 a.m. ET to review the results. Investors and interested parties can access the conference call by dialing:

  • United States:      1-888-394-8218
  • UK/international:  1-323-701-0225
  • UK toll free:          0800 358 6377

A replay will be available until May 25, 2018 by calling 1-844-512-2921 (United States) or 1-412-317-6671 (toll/UK/international). Please use pin number 1779219 for the replay.

A live webcast as well as a replay of the call will be accessible at the investor relations section of the Company’s website, www.mamsoftware.com. The replay will be active for 60 days following the conference call.

About MAM Software Group, Inc.

MAM Software is a leading global provider of cloud-based business and on-premise management solutions for the auto parts, tire and vertical distribution industries. The company provides a portfolio of innovative software (SaaS and packaged), data (DaaS), and integration (iPaaS) services that enable businesses to intelligently manage core business processes, control costs and generate new profit opportunities. MAM’s integrated platforms provide a wealth of rich functionality including: point-of-sale, inventory, purchasing, reporting, data and e-commerce. Wholesale, retail and installer business across North America, the U.K. and Ireland rely on MAM solutions, backed by dedicated teams of experienced service and support professionals. For further information, please visit http://www.mamsoftware.com.   

*Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization adjusted to exclude non-cash equity compensation, and other special non-recurring charges. A reconciliation of adjusted EBITDA to net income (loss) can be found at the end of the following tables. Adjusted EBITDA is commonly used by management and investors as an indicator of operating performance and liquidity. Adjusted EBITDA is not considered a measure of financial performance under GAAP and it should not be considered as an alternative to net income (loss), or other financial statement data presented in accordance with GAAP in our consolidated financial statements.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting the Company’s business including, increased competition; the ability of the Company to expand its operations through either acquisitions or internal growth, to attract and retain qualified professionals, and to expand commercial relationships; technological obsolescence; general economic conditions; and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.

MAM SOFTWARE GROUP, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

March 31,

June 30,

2018

2017

(Unaudited)

ASSETS

Current Assets

Cash and cash equivalents

$

3,792

$

1,260

Accounts receivable, net of allowance of $323 and $332, respectively

4,947

4,873

Inventories

213

154

Prepaid expenses and other current assets

1,247

1,260

Income tax receivable

168

Total Current Assets

10,199

7,715

Property and Equipment, Net

512

511

Other Assets

Goodwill

8,630

8,191

Intangible assets, net

623

639

Software development costs, net

8,960

7,634

Deferred income taxes

1,738

1,679

Other long-term assets

515

283

TOTAL ASSETS

$

31,177

$

26,652

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

Accounts payable

$

1,922

$

1,334

Accrued expenses and other liabilities

1,115

1,137

Accrued payroll and related expenses

1,467

1,605

Current portion of long-term debt

1,758

1,734

Current portion of deferred revenues

2,065

1,477

Sales tax payable

892

761

Income tax payable

349

506

Total Current Liabilities

9,568

8,554

Long-Term Liabilities

Deferred revenues, net of current portion

1,027

772

Deferred income taxes

1,488

682

Long-term debt, net of current portion

5,100

6,386

Other long-term liabilities

877

583

Total Liabilities

18,060

16,977

Commitments and Contingencies

Stockholders’ Equity

Preferred stock: Par value $0.0001 per share; 2,000 shares authorized, none issued and outstanding

Common stock: Par value $0.0001 per share; 18,000 shares authorized, 12,591 shares issued and 12,586 shares outstanding at March 31, 2018 and 12,313 shares issued and 12,308 shares outstanding at June 30, 2017

1

1

Additional paid-in capital

14,658

14,180

Accumulated other comprehensive loss

(2,571)

(3,283)

Retained earnings (accumulated deficit)

1,045

(1,207)

Treasury stock at cost, 5 shares at March 31, 2018 and June 30, 2017

(16)

(16)

Total Stockholders’ Equity

13,117

9,675

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

31,177

$

26,652

MAM SOFTWARE GROUP, INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands, except per share data)

For the Three Months Ended
March 31,

For the Nine Months Ended

March 31,

2018

2017

2018

2017

Net revenues

$

9,109

$

7,873

$

26,247

$

23,317

Cost of revenues

4,135

3,567

11,941

10,379

Gross Profit

4,974

4,306

14,306

12,938

Operating Expenses

Research and development

1,274

1,003

3,469

2,854

Sales and marketing

828

917

2,567

2,859

General and administrative

1,589

1,471

4,521

4,423

Depreciation and amortization

60

55

176

173

Total Operating Expenses

3,751

3,446

10,733

10,309

Operating Income

1,223

860

3,573

2,629

Other Income (Expense)

Interest expense, net

(95)

(198)

(308)

(440)

Total other income (expense), net

(95)

(198)

(308)

(440)

Income before provision (benefit) for income taxes

1,128

662

3,265

2,189

Provision (benefit) for income taxes

(89)

(16)

1,013

48

Net Income

$

1,217

$

678

$

2,252

$

2,141

Earnings per share attributed to common stockholders – basic

$

0.10

$

0.06

$

0.19

$

0.18

Earnings per share attributed to common stockholders – diluted

$

0.10

$

0.06

$

0.19

$

0.18

Weighted average common shares outstanding – basic

11,835

11,739

11,825

11,719

Weighted average common shares outstanding – diluted

12,166

11,830

12,156

11,810

Net Income

$

1,217

$

678

$

2,252

$

2,141

Foreign currency translation gain (loss)

352

41

712

(631)

Total Comprehensive Income

$

1,569

$

719

$

2,964

$

1,510

MAM SOFTWARE GROUP, INC.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

For the Nine Months Ended

March 31,

2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

2,252

$

2,141

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

   Bad debt expense

77

331

   Depreciation and amortization

421

372

   Amortization of debt issuance costs

32

120

   Deferred income taxes

743

5

   Stock-based compensation expense

401

278

Changes in assets and liabilities:

   Accounts receivable

66

(390)

   Prepaid expenses and other assets

(203)

141

   Income tax receivable

173

338

   Accounts payable

506

(121)

   Accrued expenses and other liabilities

(98)

151

   Income taxes payable

90

   Deferred revenues

748

699

NET CASH PROVIDED BY OPERATING ACTIVITIES

5,208

4,065

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

(79)

(88)

Capitalized software development costs

(1,298)

(2,136)

NET CASH USED IN INVESTING ACTIVITIES

(1,377)

(2,224)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from long-term debt

9,519

Repayment of long-term debt

(1,301)

(10,681)

Common stock surrendered to pay for tax withholding

(24)

(149)

Payment of fees for acquisition of debt

(138)

NET CASH USED IN FINANCING ACTIVITIES

(1,325)

(1,449)

Effect of exchange rate changes

26

(64)

Net change in cash and cash equivalents

2,532

328

Cash and cash equivalents at beginning of period

1,260

491

Cash and cash equivalents at end of period

$

3,792

$

819

MAM SOFTWARE GROUP, INC.

Calculation of Adjusted Earnings before Interest,

Taxes, Depreciation and Amortization (Non-GAAP)

(Unaudited)

(In thousands)

For the Three

Months Ended

 March 31,

For the Nine

Months Ended

 March 31,

2018

2017

2018

2017

Net income (GAAP)

$

1,217

$

678

$

2,252

$

2,141

Interest expense, net

95

198

308

440

Provision (benefit) for income taxes

(89)

(16)

1,013

48

Depreciation and amortization

138

120

421

372

Non-cash stock compensation

170

78

401

278

Adjusted EBITDA (Non-GAAP)

$

1,531

$

1,058

$

4,395

$

3,279

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SOURCE MAM Software Group, Inc.

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