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MAM Software Reports Fiscal Fourth Quarter and Full Year Results
Delivers 13% Annual Revenue Growth; Achieves High End of Guidance; Expects Further Growth and Increasing Profitability in FY 2019 By PR Newswire

BLUE BELL, Pa., Sept. 14, 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 fourth fiscal quarter and year ended June 30, 2018, through the filing on September 14, 2018 of its Annual Report on Form 10-K with the Securities and Exchange Commission:

(In thousands, except per share data)

For the Three Months Ended
June 30,




For the Years Ended
June 30,


2018


2017


2018


2017

Net revenues

$

9,530


$

8,279


$

35,777


$

31,596

Gross profit

$

5,383


$

4,465


$

19,689


$

17,403

Operating income

$

1,321


$

1,588


$

4,894


$

4,217

Income before provision (benefit) for income taxes

$

1,218


$

1,469


$

4,483


$

3,658

Net income

$

958


$

2,436


$

3,210


$

4,578

Earnings per share attributed to common stockholders – basic

$

0.08


$

0.21


$

0.27


$

0.39

Earnings per share attributed to common stockholders – diluted

$

0.08


$

0.21


$

0.27


$

0.39

Weighted average shares outstanding – basic


11,835



11,739



11,849



11,732

Weighted average shares outstanding – diluted


11,949



11,802



11,906



11,786

MAM Software Group, Inc. logo. (PRNewsFoto/MAM Software Group, Inc.)

Michael Jamieson, MAM's President and Chief Executive Officer commented, "Our financial results for fiscal 2018 included revenue growth of 13%, or 9% on a constant currency basis, and Adjusted EBITDA of just over $6 million, which exceeded the high end of our guidance.  We also invested over $6 million in research and development that is being leveraged for the benefit of our existing customers and is helping to drive an increase in our pipeline of new business opportunities, reinforcing our optimism for profitable growth in fiscal 2019 and beyond."

Jamieson concluded, "Our business is generating substantial levels of cash from operations that sufficiently funded our investments in research and development, funded our debt service and increased our cash reserves. Our balance sheet and our business remain healthy, and we are energized by the direction we are taking our business for the long-term. We have a business plan for fiscal 2019 that we believe will deliver both top-line growth and increased profitability."

Fourth Quarter Highlights:

  • Net revenues of $9.5 million were up 15.1% compared to $8.3 million for the same period last year. On a constant currency basis, revenues were up 10.5% over the same period last year.
  • Recurring revenues were 81.0% of total revenues compared to 82.9% of total revenues for the same period last year.
  • Total Software as a Service (SaaS) revenues increased 25.0% year-over-year and 1.8% sequentially.
  • Operating income was $1.3 million, or 13.9% of revenues, compared to $1.6 million, or 19.2% of revenues, for the same period last year.
  • Net income was $958,000 compared to $2.4 million in the same period last year.
  • Adjusted EBITDA* was $1.6 million, or 17.0% of revenues, compared to $1.9 million, or 22.3% of revenues, for the same period last year.

Fourth Quarter Financial Results:

Net revenues were $9.5 million for the quarter ended June 30, 2018 compared to $8.3 million for the same period last year, an increase of $1.3 million or 15.1%. On a constant currency basis, revenue was up 10.5% over the same period last year.

Recurring revenue for the quarter was $7.7 million, or 81.0% of total revenue, an increase of $862,000, or 12.6%, compared to $6.9 million, or 82.9% of total revenue, for the fourth quarter last year. Sequentially, recurring revenue decreased $17,000, or 0.2%, compared to $7.7 million, or 85.0% of total revenue, in the third quarter of fiscal 2018 as a result of fluctuations in foreign currency exchange rates.

Total Software as a Service (SaaS) revenue for the quarter was $3.0 million, an increase of $599,000, or 25.0%, year-over-year, and an increase of $54,000, or 1.8%, sequentially when compared to the third quarter of fiscal 2018. The increase in the SaaS revenue was primarily attributable to a 12.7% increase in Autowork Online (SaaS) revenue for the quarter to $1.7 million, and a 44.6% increase in Autopart Online (SaaS) revenue for the quarter to $1.3 million.

Total Data as a Service (DaaS) revenue for the quarter was $2.6 million, an increase of $311,000, or 13.8%, year over year, and $20,000, or 0.8%, sequentially when compared to the third quarter of fiscal 2018.

Gross profit for the quarter was $5.4 million, or 56.5% of total revenue, an increase of $918,000, or 20.6%, compared to $4.5 million, or 53.9% of total revenue, for the same period last year.

Operating expenses for the quarter increased by $1.2 million to $4.1 million, an increase of 41.2% compared to $2.9 million for the same period last year. The increase was primarily the result of increased R&D expenses as a result of lower capitalization rates and resources to support product enhancements and new client developments, increased general and administrative expenses due to taxes related to the vesting of equity compensation, increased sales and marketing expenses due primarily to increased commissions related to increased sales and unfavorable foreign exchange rate currency movements.

Operating income for the quarter decreased by $267,000, or 16.8%, to $1.3 million compared to $1.6 million for the same period last year.

Interest expense for the quarter decreased by $16,000, or 13.4%, to $103,000 compared to $119,000 for the same period last year.

Net income for the quarter was $958,000, or $0.08 per basic and diluted share, compared to net income of $2.4 million, or $0.21 per basic and diluted share, for the same period last year. Net income for the fourth quarter of fiscal year 2017 included a tax benefit of $968,000 primarily related to a partial release of the valuation allowance and the impact of adopting a new accounting pronouncement.

Fiscal 2018 Full Year Financial Results:

Net revenues were $35.8 million compared to $31.6 million for the same period last year, an increase of $4.2 million, or 13.2%. On a constant currency basis, revenue was up 8.9% over the same period last year.

Recurring revenue for fiscal 2018 was $29.8 million, or 83.3% of total revenue, an increase of $3.8 million, or 14.4%, compared to $26.0 million, or 82.4% of total revenue, for fiscal 2017.

Total Software as a Service (SaaS) revenue for fiscal 2018 was $11.2 million, an increase of $2.5 million, or 29.0%, year-over-year. The increase in the SaaS revenue was primarily attributable to a 20.0% increase in Autowork Online (SaaS) revenue for fiscal 2018 to $6.4 million, and a 43.5% increase in Autopart Online (SaaS) revenue for fiscal 2018 to $4.8 million.

Total Data as a Service (DaaS) revenue for fiscal 2018 was $9.8 million, an increase of $943,000, or 10.7%, compared to fiscal 2017.

Gross profit for fiscal 2018 was $19.7 million, or 55.0% of total revenue, an increase of $2.3 million compared to $17.4 million, or 55.1% of total revenue, for the same period last year.

Operating expenses for fiscal 2018 increased by $1.6 million to $14.8 million, an increase of 12.2% compared to $13.2 million for the same period last year. The increase was primarily the result of increased R&D expenses as a result of lower capitalization rates and resources to support product enhancements and new client developments, increased general and administrative expenses due to taxes on the vesting of equity compensation awards and unfavorable foreign exchange rate currency movements, which were partially offset by lower sales and marketing expenses as a result of lower headcount in the U.K. and lower commission expense from perpetual sales.

Operating income for fiscal 2018 increased by $677,000, or 16.1%, to $4.9 million, compared to $4.2 million for the same period last year.

Interest expense for fiscal 2018 decreased by $148,000, or 26.5%, to $411,000, compared to $559,000 for the same period last year.

Net income for fiscal 2018 was $3.2 million, or $0.27 per basic and diluted share, compared to $4.6 million, or $0.39 per basic and diluted share, for the same period last year. Net income for fiscal year 2017 included a tax benefit of $920,000 primarily related to a partial release of the valuation allowance and the impact of adopting a new accounting pronouncement.

Balance Sheet and Other Financial Highlights

  • As of June 30, 2018, the Company had $4.2 million in cash after capital expenditures and capitalized software development costs of $1.7 million.
  • As of June 30, 2018, the Company had $6.4 of million debt outstanding under its $12 million credit facility.
  • Stockholders' equity increased 39.7% from $9.7 million at June 30, 2017 to $13.5 million at June 30, 2018.
  • As of June 30, 2018, there were 12.6 million shares of common stock outstanding.

Business Outlook

The Company expects continued revenue growth during fiscal 2019 of approximately 10% and continuing improvement in profitability with 2019 Adjusted EBITDA* in the range of $6.2 million to $6.7 million, on a constant currency basis.  The Company also expect to invest approximately $7.0 million in Research and Development, including capitalized software development costs.

Brian Callahan, MAM's Chief Financial Officer commented, "I am very pleased with the operating results and our financial position for fiscal year 2018, and I believe we are well positioned to achieve our plan for fiscal year 2019. We are working to achieve certain key milestones, including launching the deployment of VAST Online for Goodyear and the initial group of their independent dealers, which we expect to continue well into fiscal year 2020. I am also very excited about new opportunities we are seeing for our new and existing products, and we believe executing on our plan for fiscal year 2019 will position us to capitalize on many of these opportunities. We are continuing to invest in R&D, which we believe will help us capture and accelerate these new opportunities. It is important to note that although our overall level of investment will not materially fluctuate from fiscal year 2018, most of this investment reduces Adjusted EBITDA since it will not be capitalized at the same levels as we saw in prior years."

Conference Call Information

The Company has scheduled a conference call for Monday, September 17, 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
  • U.K. toll free: 0800 358 6377

A replay will be available until October 1, 2018 by calling 1-844-512-2921 (United States) or 1-412-317-6671 (toll/UK/international). Please use pin number 9441403 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 per share data)





June 30,


June 30,



2018


2017








ASSETS







Current Assets







Cash and cash equivalents


$

4,171


$

1,260

Accounts receivable, net of allowance of $224 and $332, respectively



5,010



4,873

Inventories



170



154

Prepaid expenses and other current assets



1,270



1,260

Income tax receivable



-



168

Total Current Assets



10,621



7,715








Property and Equipment, Net



480



511








Other Assets







Goodwill



8,280



8,191

Intangible assets, net



568



639

Software development costs, net



8,889



7,634

Deferred income taxes



1,251



1,679

Other long-term assets



545



283

TOTAL ASSETS


$

30,634


$

26,652








LIABILITIES AND STOCKHOLDERS' EQUITY







Current Liabilities







Accounts payable


$

1,318


$

1,334

Accrued expenses and other liabilities



1,201



1,137

Accrued payroll and related expenses



2,146



1,605

Current portion of long-term debt



1,811



1,734

Current portion of deferred revenue



1,885



1,477

Sales tax payable



910



761

Income tax payable



669



506

Total Current Liabilities



9,940



8,554








Long-Term Liabilities







Deferred revenue, net of current portion



1,146



772

Deferred income taxes



789



682

Income tax payable, net of current portion



232



-

Long-term debt, net of current portion



4,581



6,386

Other long-term liabilities



426



583

Total Liabilities



17,114



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, 12,593 shares
issued and 12,588 shares outstanding at June 30, 2018, and 12,313 shares issued and
12,308 shares outstanding at June 30, 2017



1



1

Additional paid-in capital



14,768



14,180

Accumulated other comprehensive loss



(3,236)



(3,283)

Retained earnings (accumulated deficit)



2,003



(1,207)

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



(16)



(16)

Total Stockholders' Equity



13,520



9,675

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

30,634


$

26,652

 

 

MAM SOFTWARE GROUP, INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands, except per share data)





For the Three Months Ended
June 30,


For the Years Ended
June 30,



2018


2017


2018


2017

Net revenues


$

9,530


$

8,279


$

35,777


$

31,596

Cost of revenues



4,147



3,814



16,088



14,193

Gross Profit



5,383



4,465



19,689



17,403














Operating Expenses













Research and development



1,265



937



4,734



3,791

Sales and marketing



891



800



3,458



3,659

General and administrative



1,845



1,082



6,366



5,505

Depreciation and amortization



61



58



237



231

Total Operating Expenses



4,062



2,877



14,795



13,186














Operating Income



1,321



1,588



4,894



4,217














Other Income (Expense)













Interest expense, net



(103)



(119)



(411)



(559)

Total other expense, net



(103)



(119)



(411)



(559)














Income before provision (benefit) for income taxes



1,218



1,469



4,483



3,658














Provision (benefit) for income taxes



260



(968)



1,273



(920)














Net Income


$

958


$

2,436


$

3,210


$

4,578














Earnings per share attributed to common stockholders – basic


$

0.08


$

0.21


$

0.27


$

0.39

Earnings per share attributed to common stockholders - diluted


$

0.08


$

0.21


$

0.27


$

0.39














Weighted average common shares outstanding – basic



11,835



11,739



11,849



11,732

Weighted average common shares outstanding – diluted



11,949



11,802



11,906



11,786














Net Income


$

958


$

2,436


$

3,210


$

4,578

Foreign currency translation gain (loss)



(665)



333



47



(298)

Total Comprehensive Income


$

293


$

2,769


$

3,257


$

4,280

 

 

MAM SOFTWARE GROUP, INC.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)





For the Years Ended



June 30,



2018


2017

CASH FLOWS FROM OPERATING ACTIVITIES:







Net income


$

3,210


$

4,578

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







Bad debt expense



89



283

Depreciation and amortization



554



537

Amortization of debt issuance costs



41



139

Deferred income taxes



526



(1,523)

Stock-based compensation expense



564



375








Changes in assets and liabilities:







Accounts receivable



(188)



(386)

Inventories



(13)



(169)

Prepaid expenses and other assets



(259)



(6)

Income tax receivable



174



352

Accounts payable



(29)



(264)

Accrued expenses and other liabilities



214



514

Income tax payable



316



593

Accrued payroll and related expenses



534



(314)

Deferred revenue



771



816

NET CASH PROVIDED BY OPERATING ACTIVITIES



6,504



5,525








CASH FLOWS FROM INVESTING ACTIVITIES:







Purchase of property and equipment



(110)



(96)

Capitalized software development costs



(1,542)



(2,729)

NET CASH USED IN INVESTING ACTIVITIES



(1,652)



(2,825)








CASH FLOWS FROM FINANCING ACTIVITIES:







Common stock surrendered to pay for tax withholding



(33)



(150)

Repurchase of common stock for treasury



(47)



-

Payment for acquisition of debt



-



(144)

Proceeds from long-term debt



-



9,519

Repayment of long-term debt



(1,776)



(11,081)

Proceeds from exercise of stock options



-



16

NET CASH USED IN FINANCING ACTIVITIES



(1,856)



(1,840)








Effect of exchange rate changes



(85)



(91)

Net change in cash and cash equivalents



2,911



769

Cash and cash equivalents at beginning of year



1,260



491

Cash and cash equivalents at end of year


$

4,171


$

1,260

 

 

MAM SOFTWARE GROUP, INC.

Calculation of Adjusted Earnings before Interest,

Taxes, Depreciation and Amortization (Non-GAAP)

(Unaudited)

(In thousands)




For the Three Months Ended 
June 30,


For the Years Ended 
June 30,


2018


2017


2018


2017













Net income (GAAP)

$

958


$

2,436


$

3,210


$

4,578

Interest expense, net


103



119



411



559

Provision (benefit) for income taxes


260



(968)



1,273



(920)

Depreciation and amortization


133



165



554



537

Non-cash stock compensation


163



97



564



375

Adjusted EBITDA (Non-GAAP)

$

1,617


$

1,849


$

6,012


$

5,129

 

 

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SOURCE MAM Software Group, Inc.

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