Asure Software Inc.
Aug 15, 2016

Asure Software Reports Record Second Quarter 2016 Financial Results

Company Raises Guidance for Full Year

AUSTIN, Texas, Aug. 15, 2016 (GLOBE NEWSWIRE) -- Asure Software, Inc. (NASDAQ:ASUR), a leading provider of Human Capital Management (HCM) and workplace management software, reported results for the second quarter ended June 30, 2016. The company also reported pro forma unaudited results, which included results from the acquisition of Mangrove Software as if it was completed on January 1, 2015.

 
Second Quarter 2016 Financial SummaryActual Results Pro Forma Results
(in millions except per share data and percentages)Q2 2016Q2 2015Change (%) Q2 2016Q2 2015Change (%)
Revenue$   9.7  $  7.2  35% $   9.7  $  9.0  8%
        
Gross Margin$   7.5  $  5.3  42% $   7.5  $  6.7  11%
Gross Margin (as a % of revenue) 77.5% 73.8% 5%  77.5% 75.2% 3%
        
EBITDA (excluding one-time expenses)$   2.6  $  1.4  90% $   2.6  $  1.4  87%
        
Net Income (Loss)$   0.1  $  0.1  43% $   0.1  $  (0.5) 128%
Net Income (Loss) per Diluted Share, Excluding one-time expenses$   0.15  $  0.04  275% $   0.15  $  (0.06) 350%
 
Year to Date 2016 Financial SummaryActual Results Pro Forma Results
(in millions except per share data and percentages)YTD 2016YTD 2015Change (%) YTD 2016YTD 2015Change (%)
Revenue$   16.4  $  13.5  21% $   18.5  $  17.4  7%
        
Gross Margin$   12.5  $  10.0  25% $   14.2  $  13.1  9%
Gross Margin (as a % of revenue) 76.2% 73.8% 3%  76.7% 75.3% 2%
        
EBITDA (excluding one-time expenses)$   3.0  $  2.4  28% $   3.5  $  2.7  28%
        
Net Income (Loss)$   (1.4)$  (0.4) -265% $   (0.6)$  (1.2) 46%
Net Income (Loss) per Diluted Share, Excluding one-time expenses$   0.04  $  -   -  $   0.06  $  (0.13) 146%

Second Quarter 2016 Operational Highlights

Second Quarter 2016 Financial Results

Financial Outlook

On a proforma basis, including the company's acquisition of Mangrove on March 21, 2016 and under the condition that Mangrove and Asure had been combined as a single company on January 1, 2016, Asure management increased its guidance for fiscal 2016 ending December 31:

2016 Financial GuidanceFiscal 2016 (vs. Fiscal 2015)
Revenue$37.75 million to $38.75 million (+0.6% to +0.7% vs. previous guidance and +40.3% to +44.0% vs. YTD 2015 actual)
EBITDA, excluding one-time items$7.75 million to $8.25 million (+3.1% to +3.3% vs. previous guidance and +107.6% to +120.9% vs. YTD 2015 actual )
Net income per share, excluding one-time items$0.22 to $0.30 (+50.0% to +83.3% vs. previous guidance and vs. a loss of $0.17 prior YTD actual)

Management Commentary

"We entered Q2 having just completed the acquisition of Mangrove Software, but exited the quarter as a more complete, unified, and stronger organization," said Pat Goepel, CEO of Asure Software. "During the quarter, we not only were able to fully integrate Mangrove into our operations, but also began to realize some of the cost-saving synergies and cross-selling activity we forecasted prior to the acquisition. In fact, our HCM solution has already begun to gain traction with some of our existing customers, demonstrating the immediate benefits of having a more well-rounded solution to address the full spectrum of today's workforce challenges.

"Looking beyond Mangrove, our core workspace and time and labor management solutions continued to drive strong growth during Q2. On a pro-forma basis, revenue was up 8%, gross margin up 11%, and EBITDA excluding one-time expenses up 87%—all over the same year-ago period. We also realized a profit during the quarter, despite a considerable amount of one-time expenses related to the acquisition, which we expect to largely disappear during the third quarter. While our cloud bookings were down year-over-year, due to a significant win we secured in Q2 of last year, our cloud revenue continued to grow appreciably, mainly because of our continued success in migrating our on-premise clients to the cloud.

"To add to that, we experienced a more streamlined backlog conversion process. With the acquisition behind us, we were able to put the right measures in place to more quickly and effectively convert our backlog into realized revenue. In Q2, we experienced some of the fruits of that labor, with backlog decreasing on both a sequential and year-over-year basis. Combining this improved backlog system with a reorganized sales force to focus on larger and more meaningful deals, we believe our sales pipeline is on track to grow at an accelerated rate moving forward.

"Along those lines, we continue to be optimistic about our financial performance for the full year. Because of the strong performance we've had so far, along with the fact that we've experienced faster-than-expected realization of cost synergies and backlog conversion, we believe it is necessary to raise our full year guidance for 2016.

"Overall, Q2 was a great quarter for us, concluding with the full integration of an acquisition that we feel is truly transformational to how we do business. Going forward, we will continue to execute on our key initiatives, including bringing our HCM customers live, continuing to realize the cost synergies from the acquisition, and using our integrated suite of solutions to secure new wins that can build on our progress and position us to scale even further."
                                                                                                                                                                                                                               
Conference Call Details

Asure management will host a conference call today at 11:00 a.m. Eastern time (10:00 a.m. Central time) to discuss these financial results and outlook. Asure CEO Pat Goepel and CFO Brad Wolfe will host the presentation, followed by a question and answer period.

Date: Monday, August 15, 2016
Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)
U.S. dial-in: (877) 853-5636
International dial-in: (631) 291-4544
Conference ID: 48723708

Please call the conference telephone number ten minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.

The conference call will be broadcasted live and available for replay via the investor section of the company's website.

About Asure Software  

Asure Software, Inc., (NASDAQ:ASUR) is headquartered in Austin, Texas with regional headquarters in London, England. Asure helps companies better manage their global, mobile workforces with cloud-based and mobile solutions that bring people, time, space and assets together in a meaningful way. The company serves approximately 7,000 clients worldwide with workplace and workforce management solutions that offer innovative ways to help meet the needs of an agile workforce. For more information, please visit www.asuresoftware.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

Statements in this press release regarding Asure's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. Such risks and uncertainties could cause actual results to differ from those contained in the forward-looking statements.

ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
 
  June 30,
2016
(Unaudited)
  December 31,
2015
 
Assets      
Current assets:      
Cash and cash equivalents $283  $1,158 
Accounts and note receivable, net of allowance for doubtful accounts of $113 and $145 at June 30, 2016 and December 31, 2015, respectively  6,180   4,671 
Inventory  516   784 
Prepaid expenses and other current assets  1,422   1,072 
Total current assets before funds held for clients  8,401   7,685 
Funds held for clients  24,525   - 
Total current assets  32,926   7,685 
Property and equipment, net  2,003   2,212 
Goodwill  26,265   17,436 
Intangible assets, net  13,510   6,026 
Other assets  100   458 
Total assets $74,804  $33,817 
Liabilities and stockholders' equity        
Current liabilities:        
Current portion of notes payable, net of debt issuance cost $4,901  $909 
Accounts payable  2,418   2,670 
Accrued compensation and benefits  1,099   715 
Other accrued liabilities  1,489   1,181 
Deferred revenue  9,341   10,803 
Total current liabilities before client fund obligations  19,248   16,278 
Client fund obligations  24,525   - 
Total current liabilities  43,773   16,278 
Long-term liabilities:        
Deferred revenue  1,545   947 
Notes payable, net of debt issuance cost  26,074   12,384 
Other liabilities  363   490 
Total long-term liabilities  27,982   13,821 
Total liabilities  71,755   30,099 
Stockholders' equity:        
Preferred stock, $.01 par value; 1,500 shares authorized; none issued or outstanding  -   - 
Common stock, $.01 par value; 11,000 shares authorized; 6,901 and 6,674 shares issued, 6,517 and 6,290 shares outstanding at June 30, 2016 and December 31, 2015, respectively  69   67 
Treasury stock at cost, 384 shares at June 30, 2016 and December 31, 2015  (5,017)  (5,017)
Additional paid-in capital  280,280   279,649 
Accumulated deficit  (272,321)  (270,903)
Accumulated other comprehensive income (loss)  38   (78)
Total stockholders' equity  3,049   3,718 
Total liabilities and stockholders' equity $74,804  $33,817 


ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands, except share and per share data)
(Unaudited)
 
  FOR THE
THREE MONTHS ENDED
June 30,
  FOR THE
SIX MONTHS ENDED
June 30,
 
  2016  2015  2016  2015 
Revenues:            
Cloud revenue $5,389  $3,417  $9,251  $6,788 
Hardware revenue  1,275   1,047   1,968   1,632 
Maintenance and support revenue  1,192   1,541   2,431   3,107 
On premise software license revenue  458   321   598   487 
Professional services revenue  1,350   833   2,138   1,477 
Total revenues  9,664   7,159   16,386   13,491 
Cost of sales  2,176   1,879   3,906   3,531 
Gross margin  7,488   5,280   12,480   9,960 
                 
Operating expenses                
Selling, general and administrative  5,480   3,612   9,807   7,061 
Research and development  645   743   1,456   1,481 
Amortization of intangible assets  626   504   1,003   1,009 
Total operating expenses  6,751   4,859   12,266   9,551 
                 
Income from operations  737   421   214   409 
                 
Other income (loss)                
Interest income  -   -   10   - 
Loss on lease termination  -   -   -   (110)
Foreign currency gain (loss)  1   3   2   (8)
Interest expense and other  (560)  (279)  (852)  (561)
Interest expense- amortization of original issue discount (OID)  -   (8)  -   (16)
Acquisition costs  -   -   (706)  - 
Total other loss, net  (559)  (284)  (1,546)  (695)
                 
Income (loss) from operations before income taxes  178   137   (1,332)  (286)
Income tax provision  (42)  (42)  (86)  (102)
Net income (loss) $136  $95  $(1,418) $(388)
Other comprehensive income (loss)                
Foreign currency gain (loss)  81   (41)  116   (35)
Other comprehensive income (loss) $217   54  $(1,302) $(423)
                 
Basic and diluted net income (loss) per share                
Basic $0.02  $0.02  $(0.23) $(0.06)
Diluted $0.02  $0.02  $(0.23) $(0.06)
Weighted average basic and diluted shares                
Basic  6,294,000   6,066,000   6,292,000   6,061,000 
Diluted  6,429,000   6,231,000   6,292,000   6,061,000 


ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
 
  FOR THE
SIX MONTHS ENDED
JUNE 30,
 
  2016  2015 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net loss $(1,418) $(388)
Adjustments to reconcile net loss to net cash (used in) provided by operations:        
Depreciation and amortization  1,706   1,553 
Provision for doubtful accounts  10   40 
Share-based compensation  106   98 
Other  -   26 
Changes in operating assets and liabilities:        
Accounts receivable  (1,059)  96 
Inventory  268   (143)
Prepaid expenses and other assets  86   (922)
Accounts payable  (316)  572 
Accrued expenses and other long-term obligations  397   (196)
Deferred revenue  (864)  126 
Net cash (used in) provided by operating activities  (1,084)  862 
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Acquisitions net of cash acquired  (12,000)  - 
Purchases of property and equipment  (24)  (989)
Disposals of property and equipment  -   18 
Collection of note receivable  64   - 
Net change in funds held for clients  (8,106)  - 
Net cash used in investing activities  (20,066)  (971)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from notes payable  15,335   2,500 
Payments on notes payable  (3,274)  (2,875)
Payments on amendment of senior notes payable  -   (75)
Debt financing fees  (438)  - 
Payments on capital leases  (106)  (97)
Net proceeds from exercise of stock options  528   585 
Net change in client fund obligations  8,106   - 
Net cash provided by financing activities  20,151   38 
         
Effect of foreign exchange rates  124   (36)
         
Net decrease in cash and cash equivalents  (875)  (107)
Cash and cash equivalents at beginning of period  1,158   320 
Cash and cash equivalents at end of period $283  $213 
         
SUPPLEMENTAL INFORMATION:        
Cash paid for:        
Interest $456  $586 
         
Non-cash Investing and Financing Activities:        
Note receivable from customer  -   601 
Subordinated notes payable — Mangrove acquisition  6,000   - 

*Non-GAAP Financial Measures
This press release includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission: EBITDA and GAAP Net Income/(Loss) excluding one-time items. These supplemental financial measures are not required by GAAP, nor is the presentation of this financial information intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with Asure's earnings results as determined in accordance with GAAP. However, for the reasons described below, management uses these non-GAAP measures to evaluate the performance of Asure's business. Asure's management believes that it is important to provide investors with these same tools, together with reconciliation to GAAP, for evaluating the performance of Asure's business, as it may provide additional insight into Asure's financial results. See the "Reconciliation of GAAP Net Income/(Loss) to Earnings Before Interest, Taxes, Depreciation, Amortization and Stock Compensation Expense (EBITDA)" and the "Reconciliation of GAAP Net Income/(Loss) to Net Earnings Excluding One-Time Items" tables included in this press release for further information regarding these non-GAAP financial measures. In addition, these measures are presented because management believes they are frequently used by securities analysts, investors and others in the evaluation of companies. EBITDA is calculated by adding income taxes, interest expense, depreciation and amortization and stock compensation expense to net earnings. EBITDA is not defined under GAAP and should not be considered in isolation or as a substitute for net earnings and other consolidated earnings data prepared in accordance with GAAP or as a measure of Asure's profitability.

Net Earnings Excluding One-Time Items is calculated by combining the company's GAAP Net Earnings, or earnings per share, with items that are one time in nature and are not expected to recur on a dollar or per share basis.

Free Cash Flow is computed by subtracting capital expenditures from cash flow from operations, each as determined in accordance with GAAP and as reflected in the statement of cash flows.

Non-GAAP Revenue is computed by adding back the deferred revenue fair market valuation to GAAP revenue.

Reconciliation of GAAP Net Earnings to Earnings Before Interest, Taxes, Depreciation, Amortization and Stock Compensation Expense (EBITDA) and EBITDA Excluding One-time items.

FOR THE THREE MONTHS ENDED
  
 
$000sJune 30,
2016
June 30,
2015
Net Income (loss)13695
Interest and amortization of OID560287
Tax 4242
Depreciation259158
Amortization732610
Stock Compensation 6712
EBITDA1,7961,253
One-time items 831132
EBITDA excluding one-time items2,6271,385


FOR THE SIX MONTHS ENDED   
     
$000s June 30,
2016
 June 30,
2015
Net Loss (1,418) (388)
Interest and amortization of OID 852  577 
Tax 86  102 
Depreciation 490  332 
Amortization 1,216  1,221 
Stock Compensation 106  98 
EBITDA 1,332  1,942 
One-time items 1,683  415 
EBITDA excluding one-time items 3,015  2,357 


Reconciliation of GAAP Net Earnings to Net Earnings Excluding One-time items

FOR THE THREE MONTHS ENDED  
$000sJune 30,
2016
June 30,
2015
Net Income (loss)13695
Legal & Professional Services17510
Severance, Recruitment & Relocation584-
Other one-time items (net)72122
Sub-total excluding Taxes831132
Sub-total one-time items831132
Net Income (loss) excluding one-time items967227


FOR THE SIX MONTHS ENDED      
       
$000sJune 30,
2016
June 30,
2015
Net Loss (1,418) (388)
Legal & Professional Services 857  18 
Severance, Recruitment & Relocation 722  55 
Other one-time items (net) 104  342 
Sub-total excluding Taxes 1,683  415 
Sub-total one-time items 1,683  415 
Net Income excluding one-time items 265  27 
Company Contact:
Brad Wolfe, CFO
Asure Software, Inc.
888-323-8835
bwolfe@asuresoftware.com

Investor Relations Contact:
Matt Glover and Najim Mostamand
Liolios Group, Inc.
949-574-3860
ASUR@liolios.com