GlobeNewswire Inc | May 13, 2021 04:00PM EDT

May 13, 2021

RevenueGrows 73% in the Quarter as Compared to the Same Period in 2020, the Fastest Growth Rate in the Company's History,a Significant Acceleration in Revenue Growth Rate from 27% last Quarter

ResultsDriven by Strong Transaction Growth across the Company's Payment Processing Channels

SAN ANTONIO, May 13, 2021 (GLOBE NEWSWIRE) -- Usio, Inc: (Nasdaq:USIO), a leading FinTech integrated payment solutions provider, today announced financial results for the first quarter of2021, which ended March 31, 2021.

Louis Hoch, President and Chief Executive Officer of Usio, said, The new year is off to a terrific start, with first quarter revenues growing at the fastest rate in the Company's history, leading to all-time record quarterly revenues and a significant improvement in profitability. Once again, results illustratethat our multi-channel distribution strategy is successfully capitalizing on the vast opportunities in the fast-growing electronic payments and related industries with over 100% growth in the Company's operatingperformance metrics (Key Performance Indicators orKPIs)in our ACH, Card and Prepaid Businesses. Given the significant increase in the sequential rate of revenue growth compared to the fourth quarter of 2020, we are extremely confident our business is gaining momentum. We remain on pace to achieve, or exceed, our 50% revenue growth goal for this year.

Revenue growth in the quarter accelerated to 73%, with strong year-over-year performance in our ACH, Credit Card Processing and Prepaid lines of business and the addition of a full quarter of Usio Output Solutions (fka IMS) results. After battling headwinds in the wake of the onset of COVID, our ACH business is strongly rebounding, with revenues up 38%in the quarter versus the same period in the prior year, as our relationships with leading organizations in fast-growing industries like cryptocurrency and Fintech lending drive growth in our most profitable line of business. This led to a better than $400,000 improvement in Adjusted EBITDA. Though we continue to invest in our growth initiatives and strengthen our infrastructure, operating leverage is expected to improve over the year. We have now reported two consecutive quarters of positive Adjusted EBITDA, and, as previously articulated,we expect to maintain our strong financial condition throughout the year.

Coming on the heels of four consecutive years of revenue growth, we are extremely excited with the prospects created for this year by a first quarter that was the best revenue quarter in the Company's history. Our focus is on sustaining our momentum by flawless execution of our strategy and investing in our innovative technology and unparalleled service to build value for our shareholders."

First Quarter2021 Financial Summary

Revenues for the quarter ended March 31, 2021 increased 73%to$13.5million, reflecting growth in each of our ACH, Credit Card and Prepaid lines of business as well as a full quarter of Usio Output Solutions revenues, which was acquired in December 2020. Excluding the results of Usio Output Solutions revenues, organic growth was 24.6% versus the same period last year.

Three Months Ended March 31, 2021 2020 $ Change % Change ACH and complementary $ 3,078,456 $ 2,237,746 $ 840,710 37.6 %service revenueCredit card revenue 5,723,709 4,982,658 741,051 14.9 %Prepaid card services 886,576 551,275 335,301 60.8 %revenueOutput solutions revenue 3,772,809 ? 3,772,809 100.0 %Total Revenue $ 13,461,550 $ 7,771,679 $ 5,689,871 73.2 %

Gross profits increased51%to$2.9 million on gross margins of 21.6%, incrementally lower due to product mix.

Other selling, general and administrative expenses were$2.7million for the quarter ended March 31, 2021, increasing from the same period in the prior year. The increase isprimarily due to a full quarter of Output Solutions operating costs. Expense increases were also due to incremental investments in our Prepaid and PayFac integrated payments growth initiatives.

The operating loss for the quarter improved $0.2million to $0.7million versus the $0.9million in the prior year period.

The Company has been increasingly moving towards positive Adjusted EBITDA results and ultimately cash flow breakeven. As stated previously, the Company reported positive Adjusted EBITDA for the two most recent two quarters.Adjusted EBITDA was a positive$0.2million in the quarter, an improvement of$0.4million compared to an adjusted EBITDA loss of$0.2million in the same period a year ago.

The Company reported a net loss of $0.7million for the quarter ended March 31, 2021 ($0.04per share) compared to a net loss of $0.8million ($0.06per share) for the same period in the prior year.

Usio continues to be in solid financial condition with $4.3million in cash and cash equivalents at March 31, 2021, a slight decrease from year end due to cash used for certain capital expenditures and a large increase in accounts receivable.The Company's only debt is a term loan used in the first quarter to fund a large Output Solutions capital investment.

Conference Call and Webcast

Usio, Inc.'s management will host a conference call Friday, May 14, 2021, at 11:00 am Eastern timeto review financial results and provide a business update. To listen to the conference call, interested parties within theU.S.should call +1-844-883-3890. International callers should call+1-412-317-9246. All callers should ask for the Usio conference call. The conference call will also be available through a live webcast, which can be accessed via the companys website atwww.usio.com/investors.

A replay of the call will be available approximately one hour after the end of the call through May 28, 2021. The replay can be accessed via the Companys website or by dialing+1-877-344-7529 (U.S.) or1-412-317-0088(international). The replay conference playback code is 10156027.

About Usio, Inc.

Usio, Inc. (Nasdaq:USIO), a leading FinTech integrated payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus, crypto exchanges and card issuers. The Company operates credit, debit/prepaid, and ACH payment processing platforms to deliver convenient, world-class payment solutions and services to their clients. With the acquisition of the assets of IMS in December 2020, the Company now offers additional services relatingto electronic bill presentment, document composition, document decomposition and printing and mailing services.The strength of the Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its unique technology in the prepaid sector. Usio is headquartered in San Antonio, Texas, and has offices in Austin, Texas and Franklin, Tennessee, just outside of Nashville.Websites:www.usio.com,www.singularpayments.com,www.payfacinabox.com,www.akimbocard.com andwww.usiooutput.com. Find us on Facebook and Twitter.

About Non-GAAP Financial Measures

This press release includes non-GAAP financial measures, EBITDA and adjusted EBITDA, as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. The Company reports its financial results in compliance with GAAP, but believes that also discussing non-GAAP measures provides investors with financial measures it uses in the management of its business. The Company defines EBITDA as operating income (loss), before interest, taxes, depreciation and amortization of intangibles. The Company defines adjusted EBITDA as EBITDA, as defined above, plus non-cash stock option costs and certain non-recurring items, such as acquisitions. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA and adjusted EBITDA as indicators of the Company's operating performance and ability to fund acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations.

Management believes EBITDA and adjusted EBITDA are helpful to investors in evaluating the Company's operating performance because non-cash costs and other items that management believes are not indicative of its results of operations are excluded. EBITDA and adjusted EBITDA are supplemental non-GAAP measures, which have limitations as an analytical tool. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. For a description of our use of EBITDA and adjusted EBITDA, and a reconciliation of EBITDA and adjusted EBITDA to operating income (loss), see the section of this press release titled "Non-GAAP Reconciliation."

FORWARD-LOOKING STATEMENTS DISCLAIMER

Except for the historical information contained herein, the matters discussed in this release include forward-looking statements which are covered by safe harbors. Those statements include, but may not be limited to, all statements regarding management's intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. These forward-looking statements are identified by the use of words such as "believe," "intend," "look forward," "anticipate," "schedule, and "expect" among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the Company's business that could cause actual results to vary, including such risks related to an economic downturn as a result of the COVID-19 pandemic, the realization of opportunities from the IMS acquisition, the management of the Company's growth, the loss of key resellers, the relationships with the Automated Clearinghouse network, bank sponsors, third-party card processing providers and merchants, the security of our software, hardware and information, the volatility of the stock price, the need to obtain additional financing, risks associated with new legislation, and compliance with complex federal, state and local laws and regulations, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission including its annual report on Form 10-K for the fiscal year ended December 31, 2020.One or more of these factors have affected, and in the future, could affect the Companys businesses and financial results in the future and could cause actual results to differ materially from plans and projections. The Company believes that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to management. The Company assumes no obligation to update any forward-looking statements, except as required by law.

Contact:

Joe Hassett, Investor Relationsjoeh@gregoryfca.com484-686-6600

USIO, INC.CONSOLIDATED BALANCE SHEETS

March 31, December 31, 2021 2020 (Unaudited) ASSETS Cash and cash equivalents $ 4,284,360 $ 5,011,132 Accounts receivable, net 3,597,928 2,863,638 Settlement processing assets 36,792,386 43,558,442 Prepaid card load assets 18,555,474 7,610,242 Customer deposits 1,357,242 1,305,296 Inventory 180,927 176,466 Prepaid expenses and other 524,665 301,755 Current assets before merchant reserves 65,292,982 60,826,971 Merchant reserves 8,317,462 8,265,555 Total current assets 73,610,444 69,092,526 Property and equipment, net 3,226,152 3,105,926 Other assets: Intangibles, net 5,567,794 6,035,761 Deferred tax asset 1,394,000 1,394,000 Operating lease right-of-use assets 2,750,346 2,671,266 Other assets 353,815 368,078 Total other assets 10,065,955 10,469,105 Total Assets $ 86,902,551 $ 82,667,557 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 493,348 $ 851,349 Accrued expenses 1,971,192 1,463,944 Operating lease liabilities, current 427,609 346,913 portionEquipment loan, current portion 53,135 - Settlement processing obligations 36,792,386 43,558,442 Prepaid card load obligations 18,555,474 7,610,242 Customer deposits 1,357,242 1,305,296 Deferred revenues 57,353 66,572 Current liabilities before merchant reserve 59,707,739 55,202,758 obligationsMerchant reserve obligations 8,317,462 8,265,555 Total current liabilities 68,025,201 63,468,313 Non-current liabilities: Equipment loan, non-current portion 112,861 ? Operating lease liabilities, non-current 2,494,135 2,495,883 portionTotal liabilities 70,632,197 65,964,196 Stockholders' equity: Preferred stock, $0.01 par value,10,000,000 shares authorized; -0- shares ? ? outstanding at March 31, 2021 (unaudited)and December 31, 2020, respectivelyCommon stock, $0.001 par value, 200,000,000shares authorized; 26,314,460 and26,260,776 issued, and 25,013,557 and 194,745 194,692 24,974,995 outstanding at March 31, 2021(unaudited) and December 31, 2020,respectivelyAdditional paid-in capital 89,740,284 89,659,433 Treasury stock, at cost; 1,300,903 and1,285,781 shares at March 31, 2021 (2,215,175 ) (2,165,721 )(unaudited) and December 31, 2020,respectivelyDeferred compensation (5,671,077 ) (5,926,872 )Accumulated deficit (65,778,423 ) (65,058,171 )Total stockholders' equity 16,270,354 16,703,361 Total Liabilities and Stockholders' Equity $ 86,902,551 $ 82,667,557

USIO, INC.CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31, 2021 2020 Revenues $ 13,461,550 $ 7,771,679 Cost of services 10,554,313 5,843,395 Gross profit 2,907,237 1,928,284 Selling, general and administrative: Stock-based compensation 327,715 287,710 Other expenses 2,660,034 2,122,106 Depreciation and amortization 622,207 387,795 Total operating expenses 3,609,956 2,797,611 Operating (loss) (702,719 ) (869,327 ) Other income: Interest income 2,467 11,156 Other income (expense) ? 688 Other income and (expense), net 2,467 11,844 (Loss) before income taxes (700,252 ) (857,483 )Income tax expense (benefit) 20,000 (22,474 ) Net (Loss) $ (720,252 ) $ (835,009 ) Earnings (Loss) Per Share Basic earnings (loss) per common share: $ (0.04 ) $ (0.06 )Diluted earnings (loss) per common share: $ (0.04 ) $ (0.06 )Weighted average common shares outstanding Basic 19,931,935 13,127,229 Diluted 19,931,935 13,127,229

USIO, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31, March 31, 2021 2020Operating Activities Net (loss) $ (720,252 ) $ (835,009 )Adjustments to reconcile net (loss) to net cash provided (used) by operating activities:Depreciation 154,240 137,795 Amortization 467,967 250,000 Bad debt 15,046 ? Non-cash stock-based compensation 327,715 287,710 Amortization of warrant costs 8,985 8,985 Changes in operating assets and liabilities: Accounts receivable (749,336 ) 191,693 Prepaid expenses and other (222,910 ) (58,844 )Operating lease right-of-use assets (79,080 ) 56,727 Other assets (4,461 ) ? Inventory 14,263 (20,694 )Accounts payable and accrued expenses 149,247 (165,975 )Operating lease liabilities 78,948 (54,767 )Prepaid card load obligations 10,945,232 53,141 Merchant reserves 51,907 (1,492,000 )Customer deposits 51,946 ? Deferred revenue (9,219 ) (13,235 )Net cash provided (used) by operating 10,480,238 (1,654,473 )activities Investing Activities Purchases of property and equipment (274,467 ) (152,654 )Net cash (used) by investing activities (274,467 ) (152,654 ) Financing Activities Proceeds from equipment loan 165,996 ? Purchases of treasury stock (49,454 ) (26,629 )Net cash provided by financing activities 116,542 (26,629 ) Change in cash, cash equivalents, prepaidcard loads, customer deposits and merchant 10,322,313 (1,833,756 )reservesCash, cash equivalents, prepaid card loads,customer deposits and merchant reserves, 22,192,225 12,682,918 beginning of year Cash, Cash Equivalents, Prepaid Card Loads,Customer Deposits and Merchant Reserves, End $ 32,514,538 $ 10,849,162 of Period Supplemental disclosures of cash flow informationCash paid during the period for: Interest $ ? $ ? Income taxes ? ? Non-cash transactions: Issuance of deferred stock compensation ? ?

USIO, INC.STATEMENT OF CHANGES in STOCKHOLDERS' EQUITY

Common Stock Additional Treasury Deferred Accumulated Total Paid- In Stockholders' Shares Amount Capital Stock Compensation Deficit Equity Balance atDecember 31, 26,260,776 $ 194,692 $ 89,659,433 $ (2,165,721 ) $ (5,926,872 ) $ (65,058,171 ) $ 16,703,361 2020 Issuance ofcommon stockunder equity 51,000 51 120,484 ? ? ? 120,535 incentiveplanWarrantcompensation ? ? 8,985 ? ? ? 8,985 costsCashlesswarrant 19,795 19 (19 ) ? ? ? ? exerciseReversal ofdeferredcompensation (17,111 ) (17 ) (48,599 ) ? 5,994 ? (42,622 )amortizationthat did notvestDeferredcompensation ? ? ? ? 249,801 ? 249,801 amortizationPurchase oftreasury ? ? ? (49,454 ) ? ? (49,454 )stock costsNet (loss)for the ? ? ? ? ? (720,252 ) (720,252 )period Balance atMarch 31, 26,314,460 $ 194,745 $ 89,740,284 $ (2,215,175 ) $ (5,671,077 ) $ (65,778,423 ) $ 16,270,354 2021 Balance atDecember 31, 18,224,577 $ 186,656 $ 77,055,273 $ (1,885,452 ) $ (5,636,154 ) $ (62,151,988 ) $ 7,568,335 2019 Issuance ofcommon stockunder equity 51,000 51 59,440 ? ? ? 59,491 incentiveplanWarrantcompensation ? ? 8,985 ? ? ? 8,985 costsDeferredcompensation ? ? ? ? 228,219 ? 228,219 amortizationPurchase oftreasury ? ? ? (26,629 ) ? ? (26,629 )stock costsNet (loss)for the ? ? ? ? ? (835,009 ) (835,009 )period Balance atMarch 31, 18,275,577 $ 186,707 $ 77,123,698 $ (1,912,081 ) $ (5,407,935 ) $ (62,986,997 ) $ 7,003,392 2020

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

Three Months Ended March 31, 2021 2020 Reconciliation from Operating (Loss) to Adjusted EBITDA:Operating (Loss) $ (702,719 ) $ (869,327 )Depreciation and amortization 622,207 387,795 EBITDA (80,512 ) (481,532 )Non-cash stock-based compensation 327,715 287,710 expense, netAdjusted EBITDA $ 247,203 $ (193,822 ) Calculation of Adjusted EBITDA margins: Revenues $ 13,461,550 $ 7,771,679 Adjusted EBITDA 247,203 (193,822 )Adjusted EBITDA margins 1.8 % (2.5 )%