Usio Announces Third Quarter Results

| Source: Usio, Inc. Usio, Inc.

Quarterly Volume an All-time Record $915 Million

Card, Prepaid Drive Quarterly Revenue Growth of 10%

SAN ANTONIO, Nov. 14, 2019 (GLOBE NEWSWIRE) -- Usio, Inc. (Nasdaq: USIO), an integrated electronic payment solutions provider, today announced financial results for the third quarter of 2019, which ended September 30, 2019.

Louis Hoch, President and Chief Executive Officer of Usio, said, “Usio achieved record transaction processing volume in the third quarter, processing $915 million in electronic payments on our various platforms. Another quarter of record processing volume once again reflects the value that our comprehensive, industry-leading integrated technology offers our merchants, financial institutions, and independent software vendor partners. Revenues grew faster than transaction volumes, up 10% this quarter on the strength of the continued improvement in our card and prepaid businesses. It is encouraging to note volume growth in both PayFac and Prepaid, growth initiatives in which we have been heavily investing. Both business lines are showing nine-month volumes exceeding the volume levels of the prior year. We are optimistic the sequential improvements we have recently experienced in these businesses are the beginning of the strong growth we anticipate in these exciting and rapidly evolving markets. The third quarter represented another milestone in the evolution of Usio, when we changed our name as means to delineate a new beginning to represent the strength of the broad FinTech platform we have built and the wide range of integrated electronic payments solutions we provide. We have built a solid platform in healthy, growing markets where our ability to offer a comprehensive electronic payments solution will resonate strongly.”

Financial Results for the Third Quarter Ended September 30, 2019

Revenues increased 10% in the third quarter to $7.1 million, primarily due to increases in credit card and prepaid portfolios.

Gross profits were $1.5 million, up 6% from $1.5 million in the third quarter a year ago. Gross margins were 21.8% versus margins of 22.5% in the third quarter last year. Profits and the gross margin percentages were primarily due to results of our highly profitable ACH business lines as a mix of total revenues.

The operating loss was $1.2 million, up from the operating loss of $.8 million in the same quarter a year ago, but an improvement sequentially from the $1.3 million loss in the second quarter of this year. The operating loss reflects our continued commitment to investing in our growth initiatives, PayFac and Prepaid.

Adjusted EBITDA was a loss of approximately $420,000, up from the year ago loss of $61,000, and up slightly from the Adjusted EBITDA loss of $400,000 in the second quarter of this year.

Net loss for the quarter was $1.2 million, or ($0.09) per share, compared to a net loss of $800,000, or ($0.07) per share in the third quarter of 2018. The net loss from the third quarter improved sequentially from the loss of $1.3 million, or ($0.10) per share, recorded in the second quarter of this year.

Total dollars processed in the quarter were up 3% to a quarterly record $915 million.

Usio continues to be in solid financial condition. Cash and cash equivalents at September 30, 2019 were $2.6 million and the Company remains debt free.

Financial Results for the First Nine Months of Fiscal 2019

Revenues for the nine months ended September 30, 2019, increased 12% to $20.8 from the same period of 2018. All of the growth in 2019 is organic growth. Gross profits for the first nine months of 2019 were $4.4 million, up 10% from the first three quarters of 2018. The increase in gross profits was primarily attributable to the strong growth of our highly profitable ACH business over the first nine months of the year. The operating loss for the first nine months of 2019 was $3.6 million, compared to $2.9 million for the first nine months of 2018. Adjusted EBITDA for the first nine months of 2019 was a loss of $1.2 million, up from a loss of $0.6 million for the comparable period in 2018. The net loss for the nine months ended September 30, 2019, was $3.6 million or ($0.28) per share compared to a net loss of $2.9 million or ($0.24) per share for the first three quarters of 2018.

Conference Call and Webcast

Usio’s management will host a conference call with a live webcast on Thursday, November 14, 2019 at 5:00 p.m. Eastern time to provide a business update. To listen to the conference call, interested parties within the U.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 company’s websites: www.usio.com/invest.

A replay of the call will be available approximately one hour after the end of the call through November 28, 2019. The replay can be accessed via the Company’s website or by dialing 1-877-344-7529 (U.S.) or +1-412-317-0088 (international). The replay conference playback code is 10136461.

About Usio, Inc.

Usio, Inc. (Nasdaq: USIO), a leading integrated payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus, 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. 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, and www.ficentive.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 the realization of the anticipated opportunities from the Singular 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 tax 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, 2018. One or more of these factors have affected, and in the future, could affect the Company’s 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 Relations
joeh@gregoryfca.com
610-228-2110



USIO, INC.
CONSOLIDATED BALANCE SHEETS

 September 30, 2019 December 31, 2018
 (Unaudited)  
ASSETS   
Cash and cash equivalents$2,636,378  $2,159,698 
Accounts receivable, net1,158,851  1,214,355 
Settlement processing assets38,494,805  44,139,861 
Prepaid card load assets725,333  535,479 
Prepaid expenses and other212,952  101,722 
Note receivable, net108,750  108,750 
Current assets before merchant reserves43,337,069  48,259,865 
Merchant reserves10,201,904  12,645,803 
Total current assets53,538,973  60,905,668 
    
Property and equipment, net1,743,771  1,932,660 
    
Other assets:   
Intangibles, net2,926,427  3,676,427 
Deferred tax asset1,394,000  1,394,000 
Operating lease right-of-use assets2,547,803  — 
Other assets333,422  306,757 
Total other assets7,201,652  5,377,184 
    
Total Assets$62,484,396  $68,215,512 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$240,724  $308,178 
Accrued expenses1,214,888  852,717 
Operating lease liabilities, current portion248,056  — 
Settlement processing obligations38,494,805  44,139,861 
Prepaid card load obligations725,333  535,479 
Deferred revenues136,765  20,000 
Current liabilities before merchant reserve obligations41,060,571  45,856,235 
Merchant reserve obligations10,201,904  12,645,803 
Total current liabilities51,262,475  58,502,038 
    
Non-current liabilities:   
Operating lease liabilities, current portion2,452,686  — 
Deferred rent—  79,748 
Total liabilities53,715,161  58,581,786 
    
Stockholders' equity:   
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at September 30, 2019 (unaudited) and December 31, 2018, respectively—  — 
Common stock, $0.001 par value, 200,000,000 shares authorized; 18,011,077 and 17,129,680 issued, and 16,901,039 and 16,043,630 outstanding at September 30, 2019 (unaudited) and December 31, 2018, respectively186,442  185,561 
Additional paid-in capital76,658,269  74,568,627 
Treasury stock, at cost; 1,110,038 and 1,086,050 shares at September 30, 2019 (unaudited) and December 31, 2018, respectively(1,866,130) (1,813,546)
Deferred compensation(5,585,571) (6,270,675)
Accumulated deficit(60,623,775) (57,036,241)
Total stockholders' equity8,769,235  9,633,726 
    
Total Liabilities and Stockholders' Equity$62,484,396  $68,215,512 



USIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2019 2018 2019 2018
Revenues7,087,732  6,473,743  20,833,143  18,601,283 
Cost of services5,539,314  5,014,603  16,383,149  14,551,621 
Gross profit1,548,418  1,459,140  4,449,994  4,049,662 
        
Selling, general and administrative:       
Stock-based compensation315,259  289,038  954,770  961,893 
Other expenses1,969,877  1,519,793  5,602,171  4,613,720 
Depreciation and amortization491,749  473,225  1,475,291  1,389,164 
Total operating expenses2,776,885  2,282,056  8,032,232  6,964,777 
        
Operating (loss)(1,228,467) (822,916) (3,582,238) (2,915,115)
        
Other income:       
  Interest income20,781  23,327  66,475  50,244 
  Other income (expense)608  1,423  185  (539)
  Other income and (expense), net21,389  24,750  66,660  49,705 
        
(Loss) before income taxes(1,207,078) (798,166) (3,515,578) (2,865,410)
Income taxes31,956  15,000  71,956  34,000 
        
Net (Loss)$(1,239,034) $(813,166) $(3,587,534) $(2,899,410)
        
Earnings (Loss) Per Share       
Basic earnings (loss) per common share:$(0.09) $(0.07) $(0.28) $(0.24)
Diluted earnings (loss) per common share:$(0.09) $(0.07) $(0.28) $(0.24)
Weighted average common shares outstanding       
Basic13,054,962  12,145,323  12,906,206  12,098,828 
Diluted13,054,962  12,145,323  12,906,206  12,098,828 



USIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 Nine Months Ended
 September 30,
2019		 September 30,
2018
Operating Activities   
Net (loss)$(3,587,534) $(2,899,410)
Adjustments to reconcile net (loss) to net cash (used) by operating activities:   
Depreciation725,291  639,164 
Amortization750,000  750,000 
Provision for loss on note receivable—  72,500 
Non-cash stock-based compensation954,770  961,893 
Amortization of warrant costs26,955  — 
Issuance of stock to consultant for services—  7,911 
Changes in operating assets and liabilities:   
Accounts receivable55,504  (177,808)
Prepaid expenses and other(111,230) (2,385)
Operating lease right-of-use assets(2,547,803) — 
Other assets(26,665) (146,194)
Accounts payable and accrued expenses294,717  (45,444)
Operating lease liabilities2,700,742  — 
Prepaid card load assets189,854  207,659 
Merchant reserves(2,443,899) (1,374,906)
Deferred revenue116,765  35,000 
Deferred rent(79,748) 58,457 
Net cash (used) by operating activities(2,982,281) (1,913,563)
    
Investing Activities   
Purchases of property and equipment(536,405) (584,198)
Notes receivable—  5,000 
Net cash (used) by investing activities(536,405) (579,198)
    
Financing Activities   
Proceeds from public offering, net of expenses1,793,905  — 
Purchases of treasury stock(52,584) (966,383)
Net cash provided (used) by financing activities1,741,321  (966,383)
    
Change in cash, cash equivalents, prepaid card loads and merchant reserves(1,777,365) (3,459,144)
Cash, cash equivalents, prepaid card loads and merchant reserves, beginning of year15,340,980  19,778,022 
    
Cash, Cash Equivalents, Prepaid Card Loads and Merchant Reserves, End of Period$13,563,615  $16,318,878 
    
Supplemental disclosures of cash flow information   
Cash paid during the period for:   
Interest$—  $— 
Income taxes82,206  49,000 



USIO, INC.
STATEMENT OF CHANGES in STOCKHOLDERS’ EQUITY
(UNAUDITED)
 
     Additional
Paid - In
Capital		 Treasury
Stock		 Deferred
Compensation		 Accumulated
Deficit		 Total
Stockholders’
Equity
 Common Stock     
 Shares Amount     
              
Balance at December 31, 201817,129,680  $185,561  $74,568,627  $(1,813,546) $(6,270,675) $(57,036,241) $9,633,726 
              
Issuance of common stock, public offering769,230  769  1,793,136  —  —  —  1,793,905 
Issuance of common stock under equity incentive plan62,222  62  58,551  —  —  —  58,613 
Warrant compensation costs—  —  8,985  —  —  —  8,985 
Deferred compensation amortization—  —  —  —  224,795  —  224,795 
Purchase of treasury stock—  —  —  (21,822) —  —  (21,822)
Net (loss) for the period—  —  —  —  —  (1,072,889) (1,072,889)
              
Balance at March 31, 201917,961,132 $186,392  $76,429,299  $(1,835,368) $(6,045,880) $(58,109,130) $10,625,313 
              
Issuance of common stock under equity incentive plan53,445  53  133,462  —  —  —  133,515 
Warrant compensation cost—  —  8,985  —  —  —  8,985 
Deferred compensation amortization—  —  —  —  222,585  —  222,585 
Reversal of deferred compensation that did not vest(6,000) (6) (13,254) —  13,260  —  — 
Purchase of treasury stock—  —  —  (28,693) —  —  (28,693)
Net (loss) for the quarter—  —  —  —  —  (1,275,611) (1,275,611)
              
Balance at June 30, 201918,008,577 $186,439  $76,558,492  $(1,864,061) $(5,810,035) $(59,384,741) $9,686,094 
              
Issuance of common stock under equity incentive plan2,500  3  92,483  —  —  —  $92,486 
Warrant compensation cost—  —  8,985  —  —  —  $8,985 
Deferred compensation amortization—  —  —  —  224,464  —  $224,464 
Reversal of deferred compensation that did not vest—  —  (1,691) —  —  —  $(1,691)
Purchase of treasury stock—  —  —  (2,069) —  —  $(2,069)
Net (loss) for the quarter—  —  —  —  —  (1,239,034) (1,239,034)
              
Balance at September 30, 201918,011,077 $186,442  $76,658,269  $(1,866,130) $(5,585,571) $(60,623,775) $8,769,235 
              
              
Balance at December 31, 201716,874,235  $186,299  $74,041,083  $(831,059) $(7,012,544) $(53,260,426) $13,123,353 
              
Issuance of common stock under equity incentive plan68,889  69  147,231  —  —  —  147,300 
Deferred compensation amortization—  —  —  —  227,078  —  227,078 
Purchase of treasury stock—  —  —  (956,134) —  —  (956,134)
Net (loss) for the period—  —  —  —  —  (1,050,806) (1,050,806)
              
Balance at March 31, 201816,943,124  $186,368  $74,188,314  $(1,787,193) $(6,785,466) $(54,311,232) $11,490,791 
              
Issuance of common stock under equity incentive plan28,223  28  74,319  —  —  —  74,347 
Issuance of common stock, employees, restricted100,000  100  179,900  —  (180,000) —  — 
Issuance of common stock, restricted5,000  5  7,906  —  —  —  7,911 
Deferred compensation amortization—  —  —  —  229,655  —  229,655 
Reversal of deferred compensation that did not vest(6,667) (1,000) (16,000) —  11,475  —  (5,525)
Purchase of treasury stock—  —  —  (2,942) —  —  (2,942)
Net (loss) for the quarter—  —  —  —  —  (1,035,438) (1,035,438)
              
Balance at June 30, 201817,069,680 $185,501  $74,434,439  $(1,790,135) $(6,724,336) $(55,346,670) $10,758,799 
              
Issuance of common stock under equity incentive plan10,500  11  70,021  —  —  —  $70,032 
Deferred compensation amortization—  —  —  —  219,006  —  $219,006 
Reversal of deferred compensation that did not vest(60,000) (65) (132,530) —  132,595  —  $— 
Purchase of treasury stock—  —  —  (7,307) —  —  $(7,307)
Net (loss) for the quarter—  —  —  —  —  (813,166) (813,166)
              
Balance at September 30, 201817,020,180 $185,447  $74,371,930  $(1,797,442) $(6,372,735) $(56,159,836) $10,227,364 
              


USIO, INC
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
    
 Three Months Ended Nine Months Ended
 September 30, September 30, September 30, September 30,
20192018 20192018
        
Reconciliation from Operating (Loss) to Adjusted EBITDA:       
  Operating (Loss)$(1,228,467) $(822,916) $(3,582,238) $(2,915,115)
  Depreciation and amortization491,749  473,225  1,475,291  1,389,164 
  EBITDA(736,718) (349,691) (2,106,947) (1,525,951)
  Non-cash stock-based compensation expense, net315,259  289,038  954,770  961,893 
Adjusted EBITDA$(421,459) $(60,653) $(1,152,177) $(564,058)
        
        
Calculation of Adjusted EBITDA margins:       
Revenues$7,087,732  $6,473,743  $20,833,143  $18,601,283 
Adjusted EBITDA(421,459) (60,653) (1,152,177) (564,058)
Adjusted EBITDA margins-5.9% -0.9% -5.5% -3.0%