Blueprint
Exhibit 99.1
On November 3, 2017, the Company issued a
correction to its press release reporting the Company's results for
the quarter ended September 30, 2017 initially issued on November
2, 2017 (the "Initial Press Release"). The Initial Press Release is
being amended and restated in its entirety to correct the reported
customer count numbers for Service customers during the second
fiscal quarter of 2017, which was incorrectly reported at 622
rather than the correct number of 550 customers. The second bullet
point of the "Customer Count Metrics" section of the amended and
restated press release set forth below contains the correct
information. Except
for this change, there were no other changes to the Initial Press
Release.
Issuer Direct Reports Third Quarter Financial Results
Total Revenue Increases 2% while Platform and Technology Revenue
Increases 56% Year Over Year
MORRISVILLE, NC / ACCESSWIRE / November
3, 2017 / Issuer Direct
Corporation (NYSE American: ISDR) (the "Company"), an
industry-leading communications and compliance
company, today reported its operating results for the three months
ended September 30, 2017. The Company will host an investor
conference call today at 4:30 PM Eastern Time to discuss its
operating results.
Third Quarter
2017 and Recent Highlights:
●
Total
revenue was $2,931,000, a 2% increase from $2,873,000 in Q3 2016
and a 15% decrease from $3,443,000 in Q2 2017.
●
Platform
and Technology revenue increased 56% from Q3 2016 and decreased 5%
from Q2 2017.
●
Overall
gross margin was 72%, compared to 74% in Q3 2016 and Q2
2017.
●
Platform
and Technology gross margin remained strong at 82%, consistent with
Q3 2016, and compared to 84% in Q2 2017.
●
GAAP
earnings per diluted share was $0.10 compared to $0.07 in Q3 2016
and $0.16 in Q2 2017.
●
The Company generated cash flows from operations
of $638,000 compared to $534,000 in Q3 2016 and $810,000 in Q2
2017.
●
On
October 2, 2017, Issuer Direct acquired Interwest Transfer Company,
Inc. for cash and 25,235 shares of the Company’s common stock
totaling approximately $3,228,000.
●
On
October 10, 2017, the Company's Board of Directors declared a
quarterly cash dividend of $0.05 per share, marking the ninth
straight quarter of paying dividends.
Customer Count Metrics:
●
The
Company had 1,582 Platform and Technology customers during the
third quarter of 2017, compared to 1,530 during Q3 2016 and 1,854
during Q2 2017.
●
The
Company had 493 Services customers during Q3 2017, compared to 554
during Q3 2016 and 550 during Q2
2017.
Brian Balbirnie, CEO of Issuer Direct, commented, “We are
pleased to see our Platform and Technology business performing
well. A strong Platform and Technology revenue increase of 56% over
the same period last year, brings revenue from this business to 55%
of our overall revenues, compared to 36% in the same period last
year and 50% during the second quarter of 2017. As our business
continues to transition into our platform first strategy, we have
been able to continue to outpace our legacy services business
decline, with total revenues increasing 2% and cash flow from
operations increasing 19% year over year. Although there is still
some seasonality in our business due to the nature of annual
meetings, the strong year over year increase in cash flow
illustrates the leverage and earnings power in our model,
especially as more and more of our revenues are derived from our
higher margin Platform and Technology business.”
“We were also very excited to have completed the acquisition
of Interwest Transfer, right after the end of the quarter. This
acquisition adds 300+ customers to our growing install base. With
the integration of their employees, customers and processes well
underway, we hope to provide many of our new customers with
solutions for all of their shareholder communication and compliance
needs,” added Mr. Balbirnie.
Financial Results for the Third Quarter Ended September 30,
2017:
Total revenue for the third quarter of 2017 was $2,931,000 compared
to $2,873,000 for the same period of 2016.
Platform and Technology revenue increased $584,000 or 56%, during
the third quarter of 2017, as compared to the third quarter of
2016. The increase is primarily due to an increase in revenue from
our ACCESSWIRE® platform, as we continue to penetrate the
newswire market. We also achieved increases in revenue from
increased licensing of most of our other Platform id.™ cloud-based
products. As a percentage of overall revenue, Platform &
Technology revenue increased to 55% of total revenue for the three
months ended September 30, 2017 compared to 36% for the same period
of 2016.
Services revenue decreased $526,000 or 29%, during the third
quarter of 2017, as compared to the same period of 2016. A majority
of the decrease is related to the continued customer attrition we
experienced in our legacy ARS business as companies elect to leave
the service or transition to our electronic delivery alternative
(reflected as Platform and Technology revenue). Our print and proxy
distribution services declined compared to the same quarter of the
prior year due to timing of certain projects and the impact of
one-time projects that occurred in the prior year. In addition, we
experienced continued decline in our compliance services business
as the market for these services commoditizes and we experience
continued pricing pressure.
Gross margin for the third quarter of 2017 was $2,110,000, or 72%
of total revenue, compared to $2,134,000, or 74% of revenue, in the
third quarter of 2016. The decrease in gross margin percentage is
primarily due to a decrease in gross margin in our Services
business as a result of lower revenue associated with fixed costs
of delivering the services.
Operating income was $481,000 for the three months ended September
30, 2017, as compared to operating income of $294,000 during the
same period of the prior year. The increase is primarily
attributable to decreases in employee related expenses, bad debt
expense and amortization of intangible assets.
On a GAAP basis, we generated net income of $308,000 or $0.10 per
diluted share, during the three months ended September 30, 2017,
compared to $195,000, or $0.07 per diluted share during the three
months ended September 30, 2016.
Third quarter EBITDA was $663,000, or 23% of revenue, compared to
$550,000, or 19% of revenue during the third quarter of 2016.
Non-GAAP net income was $445,000 or $0.15 per diluted share,
compared to $403,000 or $0.14 per diluted share, during the third
quarter of 2016. The Non-GAAP results exclude amortization of
intangible assets, stock-based compensation, unusual, non-recurring
gains, integration and acquisition costs, the impact of discrete
items impacting income tax expense and tax impact of adjustments.
Please refer to the tables below for the calculation of EBITDA and
the reconciliation of GAAP income and earnings per share to
Non-GAAP income and earnings per share.
Financial Results for the Nine Months Ended September 30,
2017:
Total revenue was $9,229,000 for the nine months ended September
30, 2017, compared to $9,284,000 for the nine months ended
September 30, 2016. It is important to note included in revenue for
the nine months ended September 30, 2016 was $316,000 related to
the reversal of an accrual for unused postage credits related to
ARS customers acquired from PrecisionIR. Absent this one-time
benefit, revenue for the nine months ended September 30, 2017,
would have increased 3% over the same period of the prior
year.
Platform and Technology revenue increased $1,628,000, or 52%,
during the nine months ended September 30, 2017, as compared to the
same period of 2016. As noted earlier, the increase is primarily
due to an increase in revenue from our ACCESSWIRE® platform,
as well as increased licensing of most of our other
Platform id. cloud-based products. In keeping with our
strategy, Platform and Technology revenue represented 51% of our
overall revenue for the nine months ended September 30, 2017,
compared to 33% for the same period of 2016.
Services revenue decreased $1,683,000, or 27%, during the nine
months ended September 30, 2017, as compared to the same period of
2016. Included in revenue for the nine months ended September 30,
2016 is a one-time benefit related to the reversal of an accrual
for unused postage credits, noted above. The decline in Services
revenue can be primarily attributed to continued customer attrition
in the ARS business, pricing pressure in our compliance services
business as well as the timing of certain print and proxy
distribution projects.
Gross margin for the nine months ended September 30, 2017 was
$6,753,000, or 73% of total revenue, compared to $6,951,000, or 75%
gross margin, in the first nine months of 2016. Absent the one-time
benefit noted earlier, gross margin as a percentage of revenue
would have been 74% for the nine months ended September 30,
2016.
Operating income was $1,588,000 for the nine months ended September
30, 2017, as compared to operating income of $1,451,000 during the
same period of the prior year.
On a GAAP basis, we generated net income of $1,126,000 or $0.37 per
diluted share, during the nine months ended September 30, 2017,
compared to $1,045,000, or $0.36 per diluted share, during the nine
months ended September 30, 2016.
EBITDA for the nine months ended September 30, 2017 was $2,093,000,
or 23% of revenue, compared to $2,426,000, or 26%, during the same
period of 2016. Non-GAAP net income was $1,441,000, or $0.48 per
diluted share, compared to $1,485,000, or $0.51 per diluted share,
during the nine months ended September 30, 2016. The Non-GAAP
results exclude amortization of intangible assets, stock-based
compensation, unusual, non-recurring gains, integration and
acquisition costs, the impact of discrete items impacting income
tax expense and tax impact of adjustments. Please refer to the
tables below for the calculation of EBITDA and the reconciliation
of GAAP income and earnings per share to Non-GAAP income and
earnings per share.
Non-GAAP Information
Certain Non-GAAP financial measures are included in this press
release. In the calculation of these measures, the Company
generally excludes certain items, such as amortization and
impairment of acquired intangibles, non-cash stock-based
compensation charges and unusual, non-recurring gains and charges.
The Company believes that excluding such items provides investors
and management with a representation of the Company's core
operating performance and with information useful in assessing its
prospects for the future and underlying trends in the Company's
operating expenditures and continuing operations. Management uses
such Non-GAAP measures to evaluate financial results and manage
operations. The release and the attachments to this release provide
a reconciliation of each of the Non-GAAP measures referred to in
this release to the most directly comparable GAAP measure. The
Non-GAAP financial measures are not meant to be considered a
substitute for the corresponding GAAP financial statements and
investors should evaluate them carefully. These Non-GAAP financial
measures may differ materially from the Non-GAAP financial measures
used by other companies.
CALCULATION OF EBITDA
($ in ‘000’s)
|
|
Three Months
ended
September
30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income:
|
$308
|
$195
|
|
Adjustments:
|
|
|
|
Depreciation and
amortization
|
182
|
263
|
|
Interest
income
|
(1)
|
(1)
|
|
Income tax
expense
|
174
|
93
|
|
EBITDA:
|
$663
|
$550
|
|
|
Nine Months
ended
September
30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income:
|
$1,126
|
$1,045
|
|
Adjustments:
|
|
|
|
Depreciation and
amortization
|
532
|
900
|
|
Interest
income
|
(3)
|
(3)
|
|
Income tax
expense
|
438
|
484
|
|
EBITDA:
|
$2,093
|
$2,426
|
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP
MEASURES
($ in ‘000’s, except per share amounts)
|
|
Three Months
ended
September
30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income:
|
$308
|
$0.10
|
$195
|
$0.07
|
|
Adjustments:
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
83
|
0.03
|
190
|
0.07
|
|
Stock-based
compensation (2)
|
105
|
0.03
|
123
|
0.04
|
|
Unusual,
non-recurring gains (3)
|
-
|
-
|
7
|
-
|
|
Integration and
acquisition costs (4)
|
20
|
0.01
|
-
|
-
|
|
Tax impact of
adjustments (5)
|
(71)
|
(0.02)
|
(109)
|
(0.04)
|
|
Impact of discrete
items impacting income tax expense (6)
|
-
|
-
|
(13)
|
(0.01)
|
|
Non-GAAP net
income:
|
$445
|
$0.15
|
$393
|
$0.13
|
|
|
Nine Months
ended
September
30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income:
|
$1,126
|
$0.37
|
$1,045
|
$0.36
|
|
Adjustments:
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
249
|
0.08
|
706
|
0.24
|
|
Stock-based
compensation (2)
|
365
|
0.12
|
460
|
0.16
|
|
Unusual,
non-recurring gains (3)
|
28
|
0.01
|
(391)
|
(0.14)
|
|
Integration and
acquisition costs (4)
|
20
|
0.01
|
-
|
-
|
|
Tax impact of
adjustments (5)
|
(225)
|
(0.07)
|
(263)
|
(0.09)
|
|
Impact of discrete
items impacting income tax expense (6)
|
(122)
|
(0.04)
|
(72)
|
(0.02)
|
|
Non-GAAP net
income:
|
$1,441
|
$0.48
|
$1,485
|
$0.51
|
(1)
The
adjustments represent the amortization of intangible assets related
to acquired assets and companies.
(2)
The
adjustments represent stock-based compensation expense related to
awards of stock options, restricted stock units or common stock in
exchange for services. Although the Company expects to continue to
award stock to employees or in exchange for services, the amount of
stock-based compensation is excluded as it is subject to change as
a result of one-time or non-recurring projects.
(3)
The
adjustment removes gains or losses during the period that are
unusual, non-recurring or infrequent in nature and don’t
relate to the core business of the Company. For the three and nine
months ended September 30, 2017, these losses include a loss on the
change in fair value of stock received, in lieu of cash, related to
the settlement of a receivable. For the three and nine months ended
September 30, 2016, these gains include a gain on the change in
fair value of stock noted above and the reversal of an accrual
related to unused postage credits related to ARS clients acquired
during the acquisition or PrecisionIR.
(4)
The
adjustments represent legal fees and other non-recurring costs in
connection with the acquisition of Interwest.
(5)
This
adjustment gives effect to the tax impact of all non-GAAP
adjustments at the Federal rate of 34%.
(6)
The
adjustment eliminates the income tax benefit of discrete items
impacting income tax expense. For the three and nine months ended
September 30, 2017, this related to the excess stock-based
compensation tax benefit recognized in income tax expense during
the period, in connection with the Company’s adoption of ASU
2016-09. During the three and nine months ended September 30, 2016,
this related to the reversal of a valuation allowance established
for net operating losses for PrecisionIR Group, Inc. at the date of
acquisition.
Conference Call Information
To
participate in this event dial approximately 5 to 10 minutes before
the beginning of the call.
●
Date, Time:
November 2, 2017, 4:30PM ET
●
Toll free:
888.567.1602
●
International:
404.267.0373
●
Live
Webcast: https://www.investornetwork.com/company/816
Conference Call Replay Information
The
replay will be available beginning approximately 1 hour after the
completion of the live event, ending at midnight eastern on
December 2, 2017.
●
Toll free:
877.481.4010
●
International:
919.882.2331
●
Web replay: http://www.issuerdirect.com/earnings-calls-and-scripts/
About Issuer Direct Corporation
Issuer
Direct® is an industry-leading communications
and compliance company focusing on the
needs of corporate issuers. Issuer Direct's principal platform,
Platform id.,
empowers users by thoughtfully integrating the most relevant tools,
technologies, and services, thus eliminating the complexity
associated with producing and distributing financial and business
communications. Headquartered in RTP, NC, Issuer Direct serves more
than 2,000 public and private companies in more than 18 countries.
For more information, please visit www.issuerdirect.com.
Learn
more about Issuer Direct today: Investor Tear
Sheet.
Forward-Looking Statements
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
(the "Exchange Act") (which Sections were adopted as part of the
Private Securities Litigation Reform Act of 1995). Statements
preceded by, followed by or that otherwise include the words
"believe," "anticipate," "estimate," "expect," "intend," "plan,"
"project," "prospects," "outlook," and similar words or
expressions, or future or conditional verbs, such as "will,"
"should," "would," "may," and "could," are generally
forward-looking in nature and not historical facts. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the Company's
actual results, performance, or achievements to be materially
different from any anticipated results, performance, or
achievements. The Company disclaims any intention to, and
undertakes no obligation to, revise any forward-looking statements,
whether as a result of new information, a future event, or
otherwise. For additional risks and uncertainties that could impact
the Company's forward-looking statements, please see the Company's
Annual Report on Form 10-K and Form 10-K/A for the year ended
December 31, 2016, including but not limited to the discussion
under "Risk Factors" therein, which the Company has filed with the
SEC and which may be viewed at http://www.sec.gov/.
For Further Information:
Issuer
Direct Corporation
Brian
R. Balbirnie
(919)-481-4000
brian.balbirnie@issuerdirect.com
Hayden
IR
Brett
Maas
(646)-536-7331
brett@haydenir.com
Hayden
IR
James
Carbonara
(646)-755-7412
james@haydenir.com
SOURCE: Issuer Direct Corporation
ISSUER DIRECT CORPORATION
CONSOLIDATED
BALANCE SHEETS
(in thousands,
except share and per share amounts)
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$6,407
|
$5,339
|
|
Accounts receivable
(net of allowance for doubtful accounts of $434 and $429,
respectively)
|
1,067
|
1,300
|
|
Other current
assets
|
396
|
189
|
|
Total current
assets
|
7,870
|
6,828
|
|
Capitalized
software (net of accumulated amortization of $436 and $207,
respectively)
|
2,767
|
2,048
|
|
Fixed assets (net
of accumulated amortization of $372 and $318,
respectively)
|
159
|
204
|
|
Deferred income tax
asset
|
137
|
141
|
|
Other long-term
assets
|
18
|
18
|
|
Goodwill
|
2,242
|
2,242
|
|
Intangible assets
(net of accumulated amortization of $3,573 and $3,324,
respectively)
|
1,131
|
1,380
|
|
Total
assets
|
$14,324
|
$12,861
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$481
|
$344
|
|
Accrued
expenses
|
680
|
806
|
|
Income taxes
payable
|
80
|
112
|
|
Deferred
revenue
|
958
|
843
|
|
Total current
liabilities
|
2,199
|
2,105
|
|
Deferred income tax
liability
|
54
|
66
|
|
Other long-term
liabilities
|
86
|
112
|
|
Total
liabilities
|
2,339
|
2,283
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock,
$0.001 par value, 1,000,000 and 30,000,000 shares authorized, no
shares issued and outstanding as of September 30, 2017 and December
31, 2016, respectively.
|
-
|
-
|
|
Common stock $0.001
par value, 20,000,000 and 100,000,000 shares authorized, 2,955,759
and 2,860,944 shares issued and outstanding as of September 30,
2017 and December 31, 2016, respectively.
|
3
|
3
|
|
Additional paid-in
capital
|
9,776
|
9,120
|
|
Other accumulated
comprehensive income (loss)
|
29
|
(36)
|
|
Retained
earnings
|
2,177
|
1,491
|
|
Total
stockholders' equity
|
11,985
|
10,578
|
|
Total
liabilities and stockholders’ equity
|
$14,324
|
$12,861
|
ISSUER DIRECT CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands,
except per share amounts)
|
|
For the Three
Months Ended
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$2,931
|
$2,873
|
$9,229
|
$9,284
|
|
Cost of
revenues
|
821
|
739
|
2,476
|
2,333
|
|
Gross
profit
|
2,110
|
2,134
|
6,753
|
6,951
|
|
Operating costs and
expenses:
|
|
|
|
|
|
General and
administrative
|
758
|
839
|
2,525
|
2,482
|
|
Sales and marketing
expenses
|
613
|
652
|
1,920
|
1,947
|
|
Product
development
|
156
|
133
|
410
|
291
|
|
Depreciation and
amortization
|
102
|
216
|
310
|
780
|
|
Total operating
costs and expenses
|
1,629
|
1,840
|
5,165
|
5,500
|
|
Operating
income
|
481
|
294
|
1,588
|
1,451
|
|
Other income
(expense)
|
1
|
(6)
|
(24)
|
78
|
|
Income before
taxes
|
482
|
288
|
1,564
|
1,529
|
|
Income tax
expense
|
174
|
93
|
438
|
484
|
|
Net
income
|
$308
|
$195
|
$1,126
|
$1,045
|
|
Income per share
– basic
|
$0.10
|
$0.07
|
$0.38
|
$0.37
|
|
Income per share
– fully diluted
|
$0.10
|
$0.07
|
$0.37
|
$0.36
|
|
Weighted average
number of common shares outstanding – basic
|
2,955
|
2,836
|
2,931
|
2,807
|
|
Weighted average
number of common shares outstanding – fully
diluted
|
3,036
|
2,936
|
3,013
|
2,899
|
ISSUER DIRECT CORPORATION
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in
thousands)
|
|
For the Three
Months Ended
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
$308
|
$195
|
$1,126
|
$1,045
|
|
Foreign
currency translation adjustment
|
31
|
(2)
|
65
|
10
|
|
Comprehensive
income
|
$339
|
$193
|
$1,191
|
$1,055
|
ISSUER DIRECT CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in
thousands)
|
|
For the Nine Months Ended
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
Net
income
|
$1,126
|
$1,045
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
and amortization
|
532
|
900
|
|
Bad
debt expense
|
119
|
191
|
|
Deferred
income taxes
|
-
|
73
|
|
Stock-based
compensation expense
|
365
|
460
|
|
Changes
in operating assets and liabilities:
|
|
|
|
Decrease
(increase) in accounts receivable
|
122
|
(274)
|
|
Decrease
(increase) in deposits and prepaid assets
|
(207)
|
(135)
|
|
Increase
(decrease) in accounts payable
|
127
|
(95)
|
|
Increase
(decrease) in accrued expenses
|
(193)
|
(281)
|
|
Increase
(decrease) in deferred revenue
|
104
|
136
|
|
Net
cash provided by operating activities
|
2,095
|
2,020
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
Capitalized
software
|
(891)
|
(751)
|
|
Purchase
of fixed assets
|
(9)
|
(59)
|
|
Net
cash used in investing activities
|
(900)
|
(810)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
Proceeds
from exercise of stock options, net of income taxes
|
235
|
33
|
|
Payment
of dividend
|
(440)
|
(309)
|
|
Net
cash used in financing activities
|
(205)
|
(276)
|
|
|
|
|
|
Net
change in cash
|
990
|
934
|
|
Cash
– beginning
|
5,339
|
4,215
|
|
Currency
translation adjustment
|
78
|
(14)
|
|
Cash
– ending
|
$6,407
|
$5,135
|
|
|
|
|
|
Supplemental disclosures:
|
|
|
|
Cash
paid for income taxes
|
$659
|
$435
|
|
Non-cash
activities:
|
|
|
|
Stock-based
compensation - capitalized software
|
$57
|
$352
|