Business Wire | Aug 7, 2020 07:30AM EDT

PAR Technology Corporation Announces 2020 Second Quarter Results

Aug. 07, 2020

NEW HARTFORD, N.Y.--(BUSINESS WIRE)--Aug. 07, 2020--PAR Technology Corporation (NYSE:PAR) ("PAR Technology" or the "Company") today announced its financial results for its second quarter ended June 30, 2020.

Summary of Fiscal 2020 Second Quarter

* Revenues were reported at $45.7 million for the second quarter of 2020, an increase of 3.4%, compared to $44.2 million for the same period in 2019. * GAAP net loss for the second quarter of 2020 was $9.0 million, or $0.49 loss per share, an increase from the GAAP net loss of $1.1 million, or $0.07 loss per share reported for the same period in 2019. * Non-GAAP net loss for the second quarter of 2020 was $4.2 million, or $0.24 loss per share, compared to non-GAAP net loss of $2.3 million, or $0.14 loss per share, for the same period in 2019.

Summary of Year-to-Date Financial Results

* Revenues were reported at $100.4 million for the six months ended June 30, 2020, an increase of 12.9%, compared to $88.9 million for the same period in 2019. * GAAP net loss for the six months ended June 30, 2020 was $19.9 million, or $1.10 loss per share, an increase from the GAAP net loss of $3.8 million, or $0.24 loss per share reported for the same period in 2019. * Non-GAAP net loss for the six months ended June 30, 2020 was $9.3 million, or $0.51 loss per share, compared to non-GAAP net loss of $3.8 million, or $0.23 loss per share, for the same period in 2019.

Included in the tables at the end of this press release is a reconciliation and description of non-GAAP financial measures to corresponding GAAP financial measures.

PAR Technology CEO, Savneet Singh commented, "In my short time at PAR, this is without question the most proud I've been of our results, team and industry. While the restaurant industry continues to learn to live with COVID-19, we believe our Q2 results are evidence of the long-term secular demand for our software offerings. Despite the pandemic, we remain on track to continue to grow our software assets and deliver strong results in 2020. We are encouraged that in the late June/July timeframe we saw a significant number of our COVID impacted restaurant customers come back online and a number of new customer wins."

Mr. Singh continued, "While these remain challenging and unprecedented times, we are at the beginning of one of the most transformative periods in restaurant history. The need for more restaurants to develop new remote/contactless ways to service customers with digital transformation strategies has never been greater, and PAR is in a strong position to help our customers remain resilient, productive, and innovative during these times. Our Q2 results demonstrate the progress that we've made and our ability to likely pull years of demand forward."

Highlights of Brink - Second Quarter 2020: -- Brink ARR at end of Q2 '20 totaled $21.4 million (net of COVID associated churn) - an increase of $5.1 million and more than 30% from end of Q2 '19 -- New store activations in Q2 totaled 465 sites -- Brink bookings in Q2 '20 totaled 814 sites -- Brink Open Orders (backlog) totaled 1,524 sites at end of Q2 '20 -- Active Brink sites as of June 30th now total 10,280 restaurants

Highlights Restaurant Magic - Second Quarter 2020: --Restaurant Magic ARR at end of Q2 '20 totaled $7.4 million (net of COVID associated churn) --New store activations in Q2 '20 totaled 180 sites --Restaurant Magic bookings in Q2 '20 totaled 207 sites --Active Restaurant Magic sites as of June 30th now total 5,064

Conference Call. There will be a conference call at 9:00 a.m. (Eastern) on August 7, 2020, during which the Company's management will discuss the financial results for the second quarter ended June 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/investors. Alternatively, listeners may access an archived version of the presentation after 7:30 p.m. on August 7, 2020 through August 14, 2020 by dialing 855-859-2056 and using conference ID 9025358.

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 SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share and per share amounts)

Assets June 30, December 2020 31, 2019

Current assets:

Cash and cash equivalents $ 58,775 $ 28,036

Accounts receivable - net 38,236 41,774

Inventories - net 25,992 19,326

Other current assets 4,167 4,427

Total current assets 127,170 93,563

Property, plant and equipment - net 13,503 14,351

Goodwill 41,214 41,386

Intangible assets - net 34,305 32,948

Lease right-of-use assets 2,445 3,017

Other assets 4,249 4,347

Total Assets $ 222,886 $ 189,612

Liabilities and Shareholders' Equity

Current liabilities:

Current portion of long-term debt $ 647 $ 630

Accounts payable 15,699 16,385

Accrued salaries and benefits 7,538 7,769

Accrued expenses 2,523 3,176

Lease liabilities - current portion 1,295 2,060

Customer deposits and deferred service revenue 9,625 12,084

Total current liabilities 37,327 42,104

Lease liabilities - net of current portion 1,235 1,021

Deferred service revenue - non current 3,937 3,916

Long-term debt 103,849 62,414

Other long-term liabilities 7,928 7,310

Total liabilities 154,276 116,765

Commitments and contingencies

Shareholders' Equity:

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

Common stock, $.02 par value, 58,000,000 sharesauthorized; 19,295,313 and 18,360,205 shares 386 367 issued, 18,245,225 and 16,629,177 outstanding at June 30, 2020 and December 31, 2019, respectively

Additional paid in capital 107,540 94,372

Accumulated deficit (30,030 ) (10,144 )

Accumulated other comprehensive loss (5,009 ) (5,368 )

Treasury stock, at cost, 1,050,088 shares and1,731,028 shares at June 30, 2020 and December 31, (4,277 ) (6,380 )2019, respectively

Total shareholders' equity 68,610 72,847

Total Liabilities and Shareholders' Equity $ 222,886 $ 189,612

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

The condensed consolidated balance sheet at December 31, 2019 has been derived from the Company's audited consolidated financial statements at that date and 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 Company's audited 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 CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share amounts)

Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

Net revenues:

Product $ 12,333 $ 14,728 $ 30,967 $ 30,245

Service 15,300 13,534 34,075 27,577

Contract 18,058 15,985 35,381 31,107

45,691 44,247 100,423 88,929

Costs of sales:

Product 9,982 11,412 24,887 22,653

Service 9,912 10,118 22,558 20,385

Contract 16,718 14,386 32,852 28,036

36,612 35,916 80,297 71,074

Gross margin 9,079 8,331 20,126 17,855

Operating expenses:

Selling, general and 10,049 9,059 21,476 17,623 administrative

Research and development 4,538 2,725 9,403 5,786

Amortization ofidentifiable intangible 210 - 420 - assets

14,797 11,784 31,299 23,409

Operating loss (5,718 ) (3,453 ) (11,173 ) (5,554 )

Other expense, net (139 ) (374 ) (764 ) (804 )

Interest expense, net (2,111 ) (1,244 ) (4,083 ) (1,390 )

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

Loss before benefit from(provision for) income (7,968 ) (5,071 ) (24,143 ) (7,748 )taxes

(Provision for) benefit (1,008 ) 3,962 4,257 3,910 from income taxes

Net loss $ (8,976 ) $ (1,109 ) $ (19,886 ) $ (3,838 )

Basic Earnings per Share:

Net loss $ (0.49 ) $ (0.07 ) $ (1.10 ) $ (0.24 )

Diluted Earnings per Share:

Net loss $ (0.49 ) $ (0.07 ) $ (1.10 ) $ (0.24 )

Weighted average shares outstanding:

Basic 18,244 16,290 18,092 16,085

Diluted 18,244 16,290 18,092 16,085

See notes to unaudited interim condensed consolidated financial statements included in the Quarterly Report on Form 10-Q.

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(Unaudited, in thousands, except per share and per share data)

For the three months ended For the three months ended

June 30, 2020 June 30, 2019

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

Net revenues $ 45,691 $ - $ 45,691 $ 44,247 $ - $ 44,247

Costs of sales 36,612 930 35,682 35,916 1,611 34,305

Gross margin 9,079 930 10,009 8,331 1,611 9,942

Operating Expenses:

Selling,general and 10,049 1,410 8,639 9,059 702 8,357 administrative

Research and 4,538 58 4,480 2,725 - 2,725 development

Acquisition 210 210 - - - - amortization

Totaloperating 14,797 1,678 13,119 11,784 702 11,082 expenses

Operating (5,718 ) 2,608 (3,110 ) (3,453 ) 2,313 (1,140 )(loss) income

Other(expense) (139 ) - (139 ) (374 ) - (374 )income, net

Interest(expense) (2,111 ) 1,205 (906 ) (1,244 ) 573 (671 )income, net

Loss on - - - - - - extinguishment

(Loss) incomebefore benefitfrom (7,968 ) 3,813 (4,155 ) (5,071 ) 2,886 (2,185 )(provisionfor) incometaxes

Benefit from(provision (1,008 ) 978 (30 ) 3,962 4,065 (103 )for) incometaxes

Net loss $ (8,976 ) $ (4,185 ) $ (1,109 ) $ (2,288 )

Loss per $ (0.49 ) $ (0.23 ) $ (0.07 ) $ (0.14 )diluted share

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 stock-based based compensation, acquisition and divestiture related expenditures, expense related to the Company's continued efforts to determine and resolve with the China and/or Singapore authorities the consequences of conduct in our China and Singapore offices (the subject of the Company's Audit Committee internal investigation in 2016, the "China/Singapore matter"), 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.

During the second quarter of 2020, the Company recognized amortization expense of acquired developed technology within costs of sales of $815,000. Additionally, $115,000 of severance expenses were recognized in costs of sales. Within selling, general and administrative costs, the Company recorded approximately $1,103,000 of stock-based compensation charges and $121,000 of expenses related to the China/Singapore matter and $186,000 of severance expenses. The company recognized $58,000 of severance expenses in research and development expenses. The Company recognized amortization expense of acquired intangible assets of approximately $210,000. The Company recognized approximately $1,205,000 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 the 2.875% Convertible Senior Notes due 2026 (the "2026 Notes"). The provision for income tax is reduced by $978,000 to reflect the deferred tax benefit impact of the 2026 Notes issuance. The above adjustments are not tax-effected for income tax effect due to the full valuation allowance on all of our net deferred tax assets.

During the second quarter of 2019, the Company recorded $1,369,000 of expenses related to the sale of the SureCheck product group within the Restaurant/Retail reporting segment, this represents $581,000 included in costs of sales related to a reserve for inventory and $788,000 in costs of sales related to impairment of intangible assets for the SureCheck product group. The Company recognized amortization expense of acquired developed technology within costs of sales of $242,000. The Company recorded $100,000 of expenses related to the China/Singapore internal investigation and the SEC document subpoena. Additionally, $602,000 of stock-based compensation charges were recorded during the second quarter of 2019. Further, the Company recognized $573,000 accretion of non-cash interest related to the 2024 Notes. The benefit from income tax was reduced by a $4,065,000 tax adjustment relating to the sale of the 2024 Notes.

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(Unaudited, in thousands, except per share and per share data)

For the six months ended For the six months ended

June 30, 2020 June 30, 2019

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

Net revenues $ 100,423 $ - $ 100,423 $ 88,929 $ - $ 88,929

Costs of sales 80,297 1,770 78,527 71,074 1,995 69,079

Gross margin 20,126 1,770 21,896 17,855 1,995 19,850

Operating Expenses:

Selling,general and 21,476 2,504 18,972 17,623 1,457 16,166 administrative

Research and 9,403 58 9,345 5,786 108 5,678 development

Acquisition 420 420 - - - - amortization

Totaloperating 31,299 2,982 28,317 23,409 1,565 21,844 expenses

Operating (11,173 ) 4,752 (6,421 ) (5,554 ) 3,560 (1,994 )(loss) income

Other(expense) (764 ) - (764 ) (804 ) - (804 )income, net

Interest(expense) (4,083 ) 2,163 (1,920 ) (1,390 ) 573 (817 )income, net

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

(Loss) incomebefore benefitfrom (24,143 ) 15,038 (9,105 ) (7,748 ) 4,133 (3,615 )(provisionfor) incometaxes

Benefit from(provision 4,257 4,408 (151 ) 3,910 4,065 155 for) incometaxes

Net loss $ (19,886 ) $ (9,256 ) $ (3,838 ) $ (3,460 )

Loss per $ (1.10 ) $ (0.51 ) $ (0.24 ) $ (0.22 )diluted share

During the first six months of June 30, 2020, the Company recognized amortization expense of acquired developed technology within costs of sales of $1,655,000. Additionally, $115,000 of severance expenses were recognized in costs of sales. Within selling, general and administrative costs, the Company recorded approximately $2,192,000 of stock-based compensation charges, $126,000 of expenses related to the China/Singapore matter and $186,000 of severance expenses. The Company recognized amortization expense of acquired intangible assets of approximately $420,000. The Company recognized approximately $2,163,000 accretion of non-cash interest expense and amortization of issuance costs related to the Company's 2024 Notes and the 2026 Notes. Further, approximately $8,123,000 was recognized on the loss on extinguishment related to the repurchase of approximately $66.3 million of the 2024 Notes. The benefit from income tax is reduced by $4,408,000, to reflect the deferred tax benefit impact of the 2026 Notes issuance. The above adjustments are not tax-effected for income tax effect due to the full valuation allowance on all of our net deferred tax assets.

During the first six months of 2019, the Company recorded $1,369,000 of expenses related to the sale of the SureCheck product group within the Restaurant/Retail reporting segment; this represents $581,000 included in costs of sales related to a reserve for inventory and $788,000 in costs of sales related to impairment of intangible assets for the SureCheck product group. Further, the Company recognized amortization expense of acquired developed technology within costs of sales of $483,000 and severance expenses of $143,000.

Within selling, general and administrative costs, the Company recorded $290,000 of expenses related to the China/Singapore internal investigation and the SEC document subpoena, $850,000 of stock-based compensation and $317,000 of severance expenses. The Company recognized $108,000 of severance expenses in research and development expenses. The Company also recognized $573,000 accretion of non-cash interest related to the 2024 Notes. The benefit from income tax is reduced by $4,065,000, to reflect the deferred tax benefit impact of the 2024 Notes issuance.

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