Business Wire | Nov 6, 2020 07:30AM EST

PAR Technology Corporation Announces 2020 Third Quarter Results

Nov. 06, 2020

NEW HARTFORD, N.Y.--(BUSINESS WIRE)--Nov. 06, 2020--PAR Technology Corporation (NYSE: PAR) ("PAR Technology" or the "Company") today announced its results for its third quarter ended September 30, 2020.

Summary of Fiscal 2020 Third Quarter

* Revenues were reported at $54.8 million for the third quarter of 2020, compared to $45.4 million for the same period in 2019, a 20.7% increase. $7.2 million of the growth was driven by inorganic growth related to our Drive-Thru and Restaurant Magic acquisitions, that was partially offset by our divestiture of SureCheck. * GAAP net loss for the third quarter of 2020 was $3.7 million, or $0.20 loss per share, a decrease from GAAP net loss of $5.9 million, or $0.36 loss per share reported for the same period in 2019. * Non-GAAP net loss for the third quarter of 2020 was $2.7 million, or $0.15 loss per share, compared to non-GAAP net loss of $3.5 million, or $0.21 loss per share, for the same period in 2019.

Summary of Year-to-Date Financial Results

* Revenues were reported at $155.3 million for the first nine months of 2020, compared to $134.3 million for the same period in 2019, a 15.6% increase. $16.3 million of the growth was driven by inorganic growth related to our Drive-Thru and Restaurant Magic acquisitions, that was partially offset by our divestiture of SureCheck. * GAAP net loss for the first nine months of 2020 was $23.6 million, or $1.30 loss per share, an increase from the GAAP net loss of $9.7 million, or $0.61 loss per share reported for the same period in 2019. * Non-GAAP net loss for the first nine months of 2020 was $12.1 million, or $0.67 loss per share, compared to non-GAAP net loss of $7.1 million or $0.44 loss per share, for the same period in 2019.

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 results in Q3 highlight the resiliency of the restaurant industry and importantly the acceleration in cloud adoption. Q3 bookings were the most we've seen in almost three years and highlights how quickly enterprise restaurants are reacting during the Covid-19 pandemic. As the world stabilizes, we expect activations and bookings to continue to grow," commented Savneet Singh, PAR Technology's CEO & President. "Alongside our strong software bookings were solid results in our hardware business. We saw strong demand for our drive thru product line and a recovery in our core terminal business. By design, our Company provides business critical technology to the most resilient sector of the restaurant industry. Our customers rely on PAR to consistently provide the products and services they require to serve their customers and improve their operations."

Mr. Singh continued, "We are confident our Company is navigating current market conditions from a position of strength. Our recent capital raise in September gives us the strength and flexibility to increase market share by both organic and inorganic means. The pandemic continues to highlight the strength of our cloud solutions and further validates the subscription economy within enterprise restaurants. PAR remains well positioned to achieve our strategic goals, even during the most challenging environment for restaurants in history."

Highlights of Brink - Third Quarter 2020: -- Brink ARR at end of Q3 '20 totaled $22.9 million - an increase of $5.0 million, 29% from end of Q3 '19 -- New store activations in Q3 totaled 761 sites -- Brink bookings in Q3 '20 totaled 1,181 sites -- Brink Open Orders (backlog) totaled 1,977 sites at end of Q3 '20 -- Active Brink sites as of September 30th total 10,990 restaurants

Highlights Restaurant Magic - Third Quarter 2020: --Restaurant Magic ARR at end of Q3 '20 totaled $8.7 million --New store activations in Q3 '20 totaled 473 sites --Restaurant Magic bookings in Q3 '20 totaled 506 sites --Active Restaurant Magic sites as of September 30th total 5,723

Conference Call.

There will be a conference call at 9:00 a.m. (Eastern) on November 6, 2020, during which the Company's management will discuss the financial results for the third quarter ended September 30, 2020. 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. 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/news. Alternatively, listeners may access an archived version of the presentation call after 12:30 p.m. on November 6, 2020 through November 13, 2020 by dialing 855-859-2056 and using conference ID 2508219.

About PAR Technology Corporation.

PAR Technology Corporation through its wholly owned subsidiary ParTech, Inc., is a customer success-driven, global restaurant and retail technology company with over 100,000 restaurants in more than 110 countries using its point of sale hardware and software. ParTech's Brink POS(r) integration ecosystem enables quick service, fast casual, table service, and cloud restaurants to improve their operational efficiency by combining its cloud-based POS software with the world's leading restaurant technology platforms. PAR Technology'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 PAR Technology's stock is traded on the New York Stock Exchange under the symbol PAR. For more information, visit www.partech.com or connect with PAR Technology on Facebook or Twitter.

Forward-Looking Statements.

This press release contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, Section 27A of the Securities Act of 1933, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature, but rather are predictive of our future operations, financial condition, business strategies and prospects. Forward-looking statements are generally identified by words such as "anticipate," "believe," "belief," "continue," "could," "expect," "estimate," "intend," "may," "opportunity," "plan," "should," "will," "would," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from those expressed in or implied by forward-looking statements contained in this press release, including forward-looking statements relating to our expectations regarding the impact of the COVID-19 pandemic on our business, operations, financial condition, and financial results. Factors that could cause our actual results to differ materially from those expressed in or implied by forward-looking statements contained in this press release are described in our most recent Annual Report on Form 10-K, as updated by our most recent quarterly report on Form 10-Q, and other filings with the Securities and Exchange Commission.

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited, in thousands, except share and per share amounts)

Assets September December 30, 2020 31, 2019

Current assets:

Cash and cash equivalents $ 55,755 $ 28,036

Accounts receivable - net 40,106 41,774

Inventories - net 27,113 19,326

Other current assets 3,438 4,427

Total current assets 126,412 93,563

Property, plant and equipment - net 13,810 14,351

Goodwill 41,214 41,386

Intangible assets - net 34,247 32,948

Lease right-of-use assets 2,351 3,017

Other assets 3,767 4,347

Total Assets $ 221,801 $ 189,612

Liabilities and Shareholders' Equity

Current liabilities:

Current portion of long-term debt $ 657 $ 630

Accounts payable 16,372 16,385

Accrued salaries and benefits 9,730 7,769

Accrued expenses 2,549 3,176

Lease liabilities - current portion 1,132 2,060

Customer deposits and deferred service revenue 11,067 12,084

Total current liabilities 41,507 42,104

Lease liabilities - net of current portion 1,300 1,021

Deferred revenue - noncurrent 1,646 3,916

Long-term debt 104,867 62,414

Other long-term liabilities 5,706 7,310

Total liabilities 155,026 116,765

Commitments and contingencies

Shareholders' Equity:

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

Common stock, $.02 par value, 58,000,000 and29,000,000 shares authorized, 19,315,272 and18,360,205 shares issued, 18,263,416 and 16,629,177 386 367 outstanding at September 30, 2020 and December 31,2019, respectively

Capital in excess of par value 109,772 94,372

(Accumulated deficit) retained earnings (33,741 ) (10,144 )

Accumulated other comprehensive loss (5,059 ) (5,368 )

Treasury stock, at cost, 1,051,856 shares and1,731,028 shares at September 30, 2020 and December (4,583 ) (6,380 )31, 2019, respectively

Total shareholders' equity 66,775 72,847

Total Liabilities and Shareholders' Equity $ 221,801 $ 189,612

See notes to unaudited interim consolidated financial statements included in the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2020 (the "Quarterly Report").

Note 1 - The balance sheet at December 31, 2019 has been derived from the Company's audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the U.S. Securities and Exchange Commission.

PAR TECHNOLOGY CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited, in thousands, except per share amounts)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Net revenues:

Product $ 20,470 $ 15,904 $ 51,437 $ 46,149

Service 16,877 13,937 50,952 41,514

Contract 17,500 15,539 52,881 46,646

54,847 45,380 155,270 134,309

Costs of sales:

Product 15,995 12,259 40,882 34,912

Service 11,252 9,482 33,810 29,868

Contract 15,929 14,643 48,781 42,679

43,176 36,384 123,473 107,459

Gross margin 11,671 8,996 31,797 26,850

Operating expenses:

Selling, general and 10,512 9,539 31,988 27,162 administrative

Research and development 4,210 3,448 13,613 9,233

Amortization of identifiable 257 - 677 - intangible assets

Adjustment to contingent (2,310 ) - (2,310 ) - consideration liability

12,669 12,987 43,968 36,395

Operating loss (998 ) (3,991 ) (12,171 ) (9,545 )

Other expense, net (486 ) (401 ) (1,250 ) (1,205 )

Interest expense, net (2,235 ) (1,588 ) (6,318 ) (2,978 )

Loss on extinguishment debt - - (8,123 ) -

Loss before benefit from (3,719 ) (5,980 ) (27,862 ) (13,728 )income taxes

Benefit from income taxes 8 78 4,265 3,988

Net loss $ (3,711 ) $ (5,902 ) $ (23,597 ) $ (9,740 )

Basic Earnings per Share:

Net loss $ (0.20 ) $ (0.36 ) $ (1.30 ) $ (0.61 )

Diluted Earnings per Share:

Net loss $ (0.20 ) $ (0.36 ) $ (1.30 ) $ (0.61 )

Weighted average shares outstanding

Basic 18,250 16,300 18,145 16,086

Diluted 18,250 16,300 18,145 16,086

See notes to unaudited interim consolidated financial statements included in the Quarterly Report.

PAR TECHNOLOGY CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS(Unaudited, in thousands, except per share and footnote amounts)

For the three months ended For the three months ended

September 30, 2020 September 30, 2019

Reported Comparable Reported Comparable basis Adjustments basis basis Adjustments basis (GAAP) (Non-GAAP) (GAAP) (Non-GAAP)

Net $ 54,847 - $ 54,847 $ 45,380 - $ 45,380 revenues

Operating (998 ) (268 ) ^1 (1,266 ) (3,991 ) 1,539 (2,452 )loss ^3

Lossbeforebenefitfrom (3,719 ) 1,015 ^1, 2 (2,704 ) (5,980 ) 2,420 (3,560 )(provision ^3, 4for)incometaxes

Net loss (3,711 ) 1,015 ^1, 2 (2,696 ) (5,902 ) 2,420 ^3, 4 (3,482 )

Loss perdiluted $ (0.20 ) $ (0.15 ) $ (0.36 ) $ (0.21 )share

1

Adjustment reflects stock-based compensation expense of $1,005,000; amortization expense of acquired developed technology of $827,000; amortization expense of acquired intangible assets of $210,000; and, a gain on reduction to the fair value of contingent consideration related to the acquisition of AccSys LLC (f/k/a AccSys, Inc., and otherwise known as Restaurant Magic) (the "Restaurant Magic Acquisition") of $2,310,000.

2

Adjustment reflects non-cash accretion of interest expense and amortization of issuance costs related to the Company's 4.5% Convertible Senior Notes due 2024 (the "2024 Notes") and 2.875% Convertible Senior Notes due 2026 (the "2026 Notes") of $1,283,000.

3

Adjustment reflects stock-based compensation expense of $986,000; amortization expense of acquired developed technology of $241,000; expenses related to the SureCheck divestiture of $207,000; and, expenses related to the Company's continued cooperation with the Singapore authorities in connection with the findings of the completed internal investigation undertaken by the Company related to conduct at its China and Singapore offices (the "China/Singapore Investigation") of $105,000.

4

Adjustment reflects accretion of interest expense and amortization of issuance costs related to the 2024 Notes of $881,000.

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 table above, 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 and divestiture related expenditures, expense related to the China/Singapore Investigation, and other non-recurring charges that may not be indicative of the Company's financial performance. Management believes that adjusting its costs of sales, operating expenses, operating loss, net loss and diluted loss per share to remove non-recurring charges, provides a useful perspective with respect to the Company's 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.

Adjustment reflects stock-based compensation expense of $1,005,000; amortization expense of acquired developed technology of $827,000;1 amortization expense of acquired intangible assets of $210,000; and, a gain on reduction to the fair value of contingent consideration related to the acquisition of AccSys LLC (f/k/a AccSys, Inc., and otherwise known as Restaurant Magic) (the "Restaurant Magic Acquisition") of $2,310,000.

Adjustment reflects non-cash accretion of interest expense and amortization2 of issuance costs related to the Company's 4.5% Convertible Senior Notes due 2024 (the "2024 Notes") and 2.875% Convertible Senior Notes due 2026 (the "2026 Notes") of $1,283,000.

Adjustment reflects stock-based compensation expense of $986,000; amortization expense of acquired developed technology of $241,000; expenses related to the SureCheck divestiture of $207,000; and, expenses related to3 the Company's continued cooperation with the Singapore authorities in connection with the findings of the completed internal investigation undertaken by the Company related to conduct at its China and Singapore offices (the "China/Singapore Investigation") of $105,000.

4 Adjustment reflects accretion of interest expense and amortization of issuance costs related to the 2024 Notes of $881,000.

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 table above, 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 and divestiture related expenditures, expense related to the China/Singapore Investigation, and other non-recurring charges that may not be indicative of the Company's financial performance. Management believes that adjusting its costs of sales, operating expenses, operating loss, net loss and diluted loss per share to remove non-recurring charges, provides a useful perspective with respect to the Company's 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 CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS(Unaudited, in thousands, except per share and footnote amounts)

For the nine months ended For the nine months ended

September 30, 2020 September 30, 2019

Reported Comparable Reported Comparable basis Adjustments basis basis Adjustments basis (GAAP) (Non-GAAP) (GAAP) (Non-GAAP)

Net $ 155,270 $ - $ 155,270 $ 134,309 $ - $ 134,309 revenues

Operating (12,171 ) 4,504 (7,667 ) (9,545 ) 5,100 (4,445 )loss ^1 ^4

Lossbeforebenefitfrom (27,862 ) 15,916 ^ (11,946 ) (13,728 ) 6,727 ^4, (7,001 )(provision 1, 5for) 2incometaxes

^ ^4,Net loss (23,597 ) 11,508 1, (12,089 ) (9,740 ) 2,662 5, (7,078 ) 2, 6 3Loss perdiluted $ (1.30 ) $ (0.67 ) $ (0.61 ) $ (0.44 )share

1

Adjustment reflects stock-based compensation expense of $3,217,000; amortization expense of acquired developed technology of $2,482,000; amortization expense of acquired intangible assets of $630,000; severance expense of $359,000; expenses related to the China/Singapore Investigation of $126,000; and, gain on reduction to the fair value of contingent consideration related to the Restaurant Magic Acquisition of $2,310,000.

2

Adjustment reflects loss on extinguishment of debt related to the repurchase of approximately $66.3 million of the 2024 Notes of $8,123,000; and, non-cash accretion of interest expense and amortization of issuance costs related to the 2024 Notes and the 2026 Notes of $3,289,000.

3

Adjustment reflects reduction to benefit from income tax of $4,408,000 to reflect the deferred tax benefit impact of the 2026 Notes issuance.

4

Adjustments reflect stock-based compensation expense of $1,837,000; expenses related to the SureCheck divestiture of $1,577,000; amortization expense of acquired intangible assets of $724,000; severance expense of $567,000; and, expenses related to the China/Singapore Investigation of $395,000.

5

Adjustment reflects accretion of interest expense and amortization of issuance costs related to the 2024 Notes of $1,627,000.

6

Adjustment reflects reduction to benefit from income tax of $4,065,000 to reflect the deferred tax benefit impact of the 2024 Notes issuance.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201106005120/en/

CONTACT: Christopher R. Byrnes (315) 738-0600 ext. 6226 cbyrnes@partech.com, www.partech.com