EX-99.1 2 ex99_118q4.htm EXHIBIT 99.1 Exhibit


________________________________________________________________________________________________________________________________
Exhibit 99.1


 
FOR RELEASE:
CONTACT:
New Hartford, NY, March 14, 2019
Christopher R. Byrnes (315) 738-0600  ext. 6226
cbyrnes@partech.com,  www.partech.com

PAR TECHNOLOGY CORPORATION ANNOUNCES 2018 FOURTH QUARTER AND FULL YEAR RESULTS


New Hartford, NY- March 14, 2019 -- PAR Technology Corporation (NYSE: PAR) ("Company" or "PAR") today announced the Company's results for its fourth quarter and full year ended December 31, 2018.

Summary of Fiscal 2018 Fourth Quarter and Full Year Financial Results

•
Revenues were reported at $46.7 million for the fourth quarter of 2018, compared to $55.5 million for the same period in 2017, a 16.0% decrease.
•
GAAP net loss for the fourth quarter of 2018 was $6.2 million, or $0.38 loss per diluted share, compared to the GAAP net loss of $5.3 million, or $0.33 loss per diluted share reported for the same period in 2017.
•
Non-GAAP net loss for the fourth quarter of 2018 was $3.7 million, or $0.23 loss per diluted share, compared to non-GAAP net loss of $18,000, or $0.00 per diluted share, for the same period in 2017.

•
Revenues were reported at $201.2 million for full year 2018, compared to $232.6 million for the same period in 2017, a 13.5% decrease.
•
GAAP net loss for the full year 2018 was $24.1 million, or $1.50 loss per diluted share, compared to a loss of $3.4 million, or $0.22 per diluted share reported for the same period in 2017. GAAP net loss for 2018 was impacted by a one-time $14.9 million valuation allowance recorded to reduce the carrying value of deferred tax assets recorded to income tax expense.1 
•
Non-GAAP net loss for the full year 2018 was $5.0 million, or $0.31 loss per diluted share, compared to non-GAAP net income of $4.4 million, or $0.27 earnings per diluted share, for the same period in 2017.

A reconciliation and description of non-GAAP financial measures to corresponding GAAP financial measures are included in the tables at the end of this press release.

“Our fourth quarter results reflect both the strategic and operational challenges faced by the Company during this past year as we continue our transition from a cyclical business to our goal of being the industry leader in enterprise cloud solutions for the restaurant industry.  We are taking the necessary steps to right size the Company during this transition and we initiated business, organizational and cost restructurings earlier this year”, commented Savneet Singh, PAR Technology Interim CEO & President. “In my brief tenure at PAR, I’ve spent considerable time with our customers who continue to highlight the value they find in our Brink SaaS solution. The heightened focus of our customers on Brink demonstrates the potential of this business for shareholder value creation. As a result, we plan to drive our capital allocation decisions through the lens of the Brink solution.  In addition, we are working hard to deliver transparency to our shareholders, customers and employees and I look forward to updating you on our progress.”




1 See the within GAAP to Non-GAAP Reconciliations included in this press release for further detail on the valuation allowance.






Conference Call.

There will be a conference call at 4:30 p.m. (Eastern) on March 14, 2019, during which the Company’s management will discuss the financial results for the fourth quarter and year ended December 31, 2018.  To participate in the call, please call 844-419-5412, approximately 10 minutes in advance.  No passcode is required to participate in the live call or to listen to the replay version.  Individual & Institutional Investors will have the opportunity to listen to the conference call/event over the internet by visiting the Company’s website at www.partech.com/about-us/investors.  Alternatively, listeners may access an archived version of the presentation call after 7:30 p.m. on March 14, 2019 through March 21, 2019 by dialing 855-859-2056 and using conference ID 5893815.


About PAR Technology Corporation.

PAR Technology Corporation's stock is traded on the New York Stock Exchange under the symbol “PAR”. PAR’s Restaurant/Retail segment has been a leading provider of restaurant and retail technology for more than 35 years. PAR offers management technology solutions for the full spectrum of restaurant operations, from large chain and independent table service restaurants to international quick service chains. PAR products can be found in retailers, cinemas, cruise lines, stadiums, and food service companies. PAR’s Government segment is a leader in providing computer-based system design, engineering and technical services to the Department of Defense and various federal agencies. For more information visit http://www.partech.com/about-us/investors or connect with us on  Facebook and Twitter.

Forward-Looking Statements.

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements appear throughout this press release, including express or implied forward-looking statements relating to our expectations regarding anticipated financial performance, customer and product opportunities, and assumptions as to future events. Forward-looking statements are subject to a variety of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those contemplated in these statements. Risks and uncertainties that could cause the Company's actual results to differ materially include: delays in new product development and/or product introduction; changes in customer base and product, and service demands, including changes in product or service demands by the two restaurant chain customers and the U.S. Department of Defense from each of whom a significant portion of our revenue is derived; risks associated with the internal investigation into conduct at our China and Singapore offices, including sanctions and fines that may be imposed by the U.S. Department of Justice, the Securities and Exchange Commission (“SEC”), and other governmental authorities; our ability to continue to fund current operations under the terms of our credit agreement, which provides for revolving loans in an amount equal to the lesser of $25 million and the borrowing base amount and not being able to obtain additional waivers or modifications to our credit agreement, if necessary; our need to secure alternative or additional sources of capital, which may be unavailable on acceptable terms, or at all; our ability to execute our business plan and grow our Brink business; significant changes in U.S. and international trade policies that restrict imports or increase tariffs on goods imported to the United States from China; and the other risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2018 and our other filings with the SEC. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.

About Non-GAAP Financial Measures

The Company reports its financial results in accordance with GAAP.  However, non-GAAP adjusted financial measures, as set forth in the reconciliation tables below, are provided because management uses these non-GAAP financial measures in evaluating the results of the Company's continuing operations and believes this information provides investors supplemental insight into underlying business trends and operating results. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in




accordance with GAAP. In addition, these non-GAAP financial measures should be read in conjunction with the Company’s financial statements prepared in accordance with GAAP.

The Company's results of operations are impacted by certain non-recurring charges, including equity based compensation, acquisition related expenditures, expense relating to the internal investigation into conduct in China and Singapore and the SEC document subpoena, and other non-recurring charges that may not be indicative of the Company’s financial performance. Management believes that adjusting its operating expenses, operating loss, net loss and diluted loss per share to remove non-recurring charges provides a useful perspective with respect to our operating results and provides supplemental information to both management and investors by removing items that are difficult to predict and are often unanticipated.  While the Company believes the adjustments provide a useful comparison, the reconciliations of non-GAAP financial measures to corresponding GAAP measures should be carefully evaluated.




































###







PAR TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(Unaudited)    
Assets
December 31, 2018
 
December 31, 2017
Current assets:
 
 
 
Cash and cash equivalents
$
3,485

 
$
6,600

Accounts receivable-net
26,219

 
30,077

Inventories-net
22,737

 
21,746

Other current assets
3,251

 
4,209

Total current assets
55,692

 
62,632

Property, plant and equipment – net
12,575

 
10,755

Deferred income taxes
—

 
13,809

Goodwill
11,051

 
11,051

Intangible assets – net
10,859

 
12,070

Other assets
4,504

 
4,307

Total Assets
$
94,681

 
$
114,624

Liabilities and Shareholders’ Equity
 

 
 

Current liabilities:
 

 
 

Current portion of long-term debt
$
—

 
$
195

Borrowings of line of credit
7,819

 
950

Accounts payable
12,644

 
14,332

Accrued salaries and benefits
5,940

 
6,275

Accrued expenses
2,113

 
3,926

Customer deposits and deferred service revenue
9,851

 
10,241

Other current liabilities
2,550

 
—

Total current liabilities
40,917

 
35,919

Long-term debt
—

 
185

Deferred revenue
4,407

 
2,668

Other long-term liabilities
3,411

 
6,866

Total liabilities
48,735

 
45,638

Commitments and contingencies
 
 
 
Shareholders’ Equity:
 

 
 

Preferred stock, $.02 par value, 1,000,000 shares authorized
—

 
—

Common stock, $.02 par value, 29,000,000 shares authorized; 17,879,761 and 17,677,161 shares issued, 16,171,652 and 15,969,052 outstanding at December 31, 2018 and December 31, 2017, respectively
357

 
354

Capital in excess of par value
50,251

 
48,349

Retained earnings
5,427

 
29,549

Accumulated other comprehensive loss
(4,253
)
 
(3,430
)
Treasury stock, at cost, 1,708,109 shares
(5,836
)
 
(5,836
)
Total shareholders’ equity
45,946

 
68,986

Total Liabilities and Shareholders’ Equity
$
94,681

 
$
114,624











PAR TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
 
Three Months Ended
December 31,
 
Year Ended
December 31,
 
2018
 
2017
 
2018
 
2017
Net revenues:
 
 
 
 
 
 
 
Product
$
16,129

 
$
24,532

 
$
78,787

 
$
115,126

Service
14,667

 
13,773

 
55,282

 
56,467

Contract
15,856

 
17,236

 
67,177

 
61,012

 
46,652

 
55,541

 
201,246

 
232,605

Costs of sales:
 

 
 

 
 

 
 

Product
13,850

 
18,028

 
60,694

 
85,850

Service
12,107

 
10,333

 
42,107

 
41,445

Contract
13,977

 
15,035

 
59,982

 
54,299

 
39,934

 
43,396

 
162,783

 
181,594

Gross margin
6,718

 
12,145

 
38,463

 
51,011

Operating expenses:
 

 
 

 
 

 
 

 Selling, general and administrative
9,396

 
10,590

 
34,983

 
38,171

 Research and development
3,330

 
3,833

 
12,412

 
11,995

 Amortization of identifiable intangible assets
242

 
242

 
966

 
966

 
12,968

 
14,665

 
48,361

 
51,132

Operating loss from continuing operations
(6,250
)
 
(2,520
)
 
(9,898
)
 
(121
)
Other income, net
186

 
893

 
306

 
629

Interest expense, net
(126
)
 
(37
)
 
(387
)
 
(121
)
(Loss) income from continuing operations before benefit from (provision for) income taxes
(6,190
)
 
(1,664
)
 
(9,979
)
 
387

Benefit from / (provision for) income taxes
27

 
(3,670
)
 
(14,143
)
 
(3,997
)
Loss from continuing operations
(6,163
)
 
(5,334
)
 
(24,122
)
 
(3,610
)
Discontinued operations
 

 
 

 
 

 
 

Income from discontinued operations (net of tax)
—

 
41

 
—

 
224

Net loss
$
(6,163
)
 
$
(5,293
)
 
$
(24,122
)
 
$
(3,386
)
Basic (Loss) Earnings per Share:
 

 
 

 
 

 
 

Loss from continuing operations
(0.38
)
 
(0.33
)
 
(1.50
)
 
(0.23
)
 Income from discontinued operations
—

 
—

 
—

 
0.01

Net loss
$
(0.38
)
 
$
(0.33
)
 
$
(1.50
)
 
$
(0.22
)
Diluted Loss per Share:
 

 
 

 
 

 
 

Loss from continuing operations
(0.38
)
 
(0.33
)
 
(1.50
)
 
(0.23
)
 Income from discontinued operations
—

 
—

 
—

 
0.01

Net loss per share
$
(0.38
)
 
$
(0.33
)
 
$
(1.50
)
 
$
(0.22
)
Weighted average shares outstanding
 

 
 

 
 

 
 

Basic
16,079

 
16,056

 
16,041

 
15,949

Diluted
16,079

 
16,056

 
16,041

 
15,949







PAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share data)
(Unaudited)
 
 
For the three months ended December 31, 2018
For the three months ended December 31, 2017
 
 
Reported basis (GAAP)
 
Adjustments
 
Comparable basis (Non-GAAP)
 
Reported basis (GAAP)
 
Adjustments
 
Comparable basis (Non-GAAP)
Net revenues
 
$
46,652

 
$
—

 
$
46,652

 
$
55,541

 
$
—

 
$
55,541

Costs of sales
 
39,934

 
2,606

 
37,328

 
43,396

 
165

 
43,231

Gross margin
 
6,718

 
2,606

 
9,324

 
12,145

 
165

 
12,310

Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative
 
9,396

 
503

 
8,893

 
10,590

 
1,513

 
9,077

Research and development
 
3,330

 
—

 
3,330

 
3,833

 
113

 
3,720

Acquisition amortization
 
242

 
242

 
—

 
242

 
242

 
—

Total operating expenses
 
12,968

 
745

 
12,223

 
14,665

 
1,868

 
12,797

Operating (loss) income from continuing operations
 
(6,250
)
 
3,351

 
(2,899
)
 
(2,520
)
 
2,033

 
(487
)
Other income (expense), net
 
186

 
(50
)
 
136

 
893

 
(1,000
)
 
(107
)
Interest expense, net
 
(126
)
 
—

 
(126
)
 
(37
)
 
—

 
(37
)
(Loss) income from continuing operations before benefit from / (provision for) income taxes
 
(6,190
)
 
3,301

 
(2,889
)
 
(1,664
)
 
1,033

 
(631
)
Benefit from / (provision for) income taxes
 
27

 
(792
)
 
(765
)
 
(3,670
)
 
4,242

 
572

Loss from continuing operations
 
(6,163
)
 
2,509

 
(3,654
)
 
(5,334
)
 
5,275

 
(59
)
Income from discontinued operations, (net of tax)
 
—

 
 
 
—

 
41

 
 
 
41

Net loss
 
(6,163
)
 
 
 
(3,654
)
 
(5,293
)
 
 
 
(18
)
Loss per diluted share from continuing operations
 
$
(0.38
)
 
 
 
$
(0.23
)
 
$
(0.33
)
 
 
 
$
—

Income per diluted share from discontinuing operations
 
$
—

 
 
 
$
—

 
$
—

 
 
 
$
—

Loss per diluted share
 
$
(0.38
)
 
 
 
$
(0.23
)
 
$
(0.33
)
 
 
 
$
—


During the fourth quarter of 2018, the Company recorded a one-time reserve of $1,020,000 on hardware inventory as well as a one-time impairment charge of $1,586,000 related to its food safety solution. The Company also recorded $218,000 of selling, general and administrative expenses related to the Company’s internal investigation into conduct at its China and Singapore offices and the SEC document subpoena. Additionally, $285,000 of equity based compensation charges were recorded during the fourth quarter of 2018. The Company recognized amortization of acquired intangible assets of $242,000 related to the Company’s 2014 acquisition of Brink Software, Inc (the "Brink Acquisition") and recorded a reduction to the contingent consideration payable related to the acquisition of $50,000. The benefit from income tax was decreased by 24%, or $0.8 million, to reflect the tax impact from non-GAAP adjustments.
During the fourth quarter of 2017, the Company recorded $652,000 of expenses related to the Company’s internal investigation and the SEC document subpoena. Additionally, $349,000 of equity based compensation charges were recorded during the fourth quarter of 2017. One-time severance costs of $512,000, $165,000, and $113,000 are included in selling, general and administrative, costs of sales and research & development expense, respectively. The Company recognized amortization of acquired intangible assets of $242,000 related to the Company’s 2014 Brink Acquisition. Offsetting these charges, the Company recorded a $1,000,000 decrease to a contingent consideration liability related to the Brink Software acquisition. Lastly, the Company incurred a one-time




decrease to the carrying value of its deferred tax assets of $4,490,000 as a result of the future tax rate changes from the Tax Cuts and Jobs Act. This decrease is reflected in the provision for/benefit from income tax line above netted down by a 24% or $248,000 tax impact from the non-GAAP adjustments.
PAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share data)
(Unaudited)
 
 
For the year ended December 31, 2018
For the year ended December 31, 2017
 
 
Reported basis (GAAP)
 
Adjustments
 
Comparable basis (Non-GAAP)
 
Reported basis (GAAP)
 
Adjustments
 
Comparable basis (Non-GAAP)
Net revenues
 
$
201,246

 
$
—

 
$
201,246

 
$
232,605

 
$
—

 
$
232,605

Costs of sales
 
162,783

 
2,606

 
160,177

 
181,594

 
165

 
181,429

Gross margin
 
38,463

 
2,606

 
41,069

 
51,011

 
165

 
51,176

Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative
 
34,983

 
2,407

 
32,576

 
38,171

 
4,107

 
34,064

Research and development
 
12,412

 
—

 
12,412

 
11,995

 
113

 
11,882

Acquisition amortization
 
966

 
966

 
—

 
966

 
966

 
—

Total operating expenses
 
48,361

 
3,373

 
44,988

 
51,132

 
5,186

 
45,946

Operating (loss) income from continuing operations
 
(9,898
)
 
5,979

 
(3,919
)
 
(121
)
 
5,351

 
5,230

Other income (expense), net
 
306

 
(450
)
 
(144
)
 
629

 
(1,000
)
 
(371
)
Interest expense, net
 
(387
)
 
—

 
(387
)
 
(121
)
 
—

 
(121
)
(Loss) income from continuing operations before (provision for) / benefit from income taxes
 
(9,979
)
 
5,529

 
(4,450
)
 
387

 
4,351

 
4,738

(Provision for) / benefit from income taxes
 
(14,143
)
 
13,567

 
(576
)
 
(3,997
)
 
3,446

 
(551
)
 (Loss) income from continuing operations
 
(24,122
)
 
19,096

 
(5,026
)
 
(3,610
)
 
7,797

 
4,187

Income from discontinued operations, (net of tax)
 
—

 
—

 
—

 
224

 
—

 
224

Net (loss) income
 
(24,122
)
 
 
 
(5,026
)
 
(3,386
)
 
 
 
4,411

(Loss) income per diluted share from continuing operations
 
$
(1.50
)
 
 
 
$
(0.31
)
 
$
(0.23
)
 
 
 
$
0.26

Income per diluted share from discontinued operations
 
$
—

 
 
 
$
—

 
$
0.01

 
 
 
$
0.01

(Loss) income per diluted share
 
$
(1.50
)
 
 
 
$
(0.31
)
 
$
(0.22
)
 
 
 
$
0.27


During the year ended December 31, 2018, the Company recorded a one-time reserve of $1,020,000 on hardware inventory as well as a one-time impairment charge of $1,586,000 related to its food safety solution. The Company also recorded $1,134,000 of selling, general and administrative expenses related to the Company’s internal investigation and the SEC document subpoena. Additionally, $1,039,000 of equity based compensation charges were recorded during the year ended December 31, 2018. There were $234,000 of severance expenses recorded in the year ended December 31, 2018. The Company recognized amortization of acquired intangible assets of $966,000 related to the Company’s Brink Acquisition as well as a $450,000 reduction in the amount payable under contingent consideration related to that acquisition. The Company recorded a one-time $14,894,000 valuation allowance to reduce the carrying value of its deferred tax assets pursuant to FASB ASC 740-10-30-21. The valuation allowance was offset by $1.3 million or 24% representing the tax impact of non-GAAP adjustments.
During the year ended December 31, 2017, the Company recorded professional services charges of $2,924,000 related to the Company’s internal investigation and the SEC document subpoena. Additionally, the Company recorded charges of $650,000




related to equity based compensation charges included in selling, general and administrative. One-time severance costs of $512,000, $165,000, and $113,000 are included in selling, general and administrative, costs of sales and research & development expense, respectively. The Company recognized amortization of acquired intangible assets of $966,000 related to the Brink Acquisition. Offsetting these charges, the Company recorded a $1,000,000 decrease to a contingent consideration liability related to that acquisition. Lastly, the Company incurred a one-time decrease to the carrying value of its deferred tax assets of $4,490,000 as a result of the future tax rate changes resulting from the Tax Cuts and Jobs Act of 2017. This decrease is reflected in the provision for/benefit from income tax line above netted down by a 24% or $1,044,000 tax impact from the non-GAAP adjustments.