Park City Group Reports Record Third Quarter Fiscal 2013 Results

Posts Record Quarterly and Year-To-Date Revenue and Earnings Third Quarter Revenue Increased 21%, Adjusted EBITDA Increased 195%

Salt Lake City, Utah – May 9, 2013 — Park City Group (NYSE MKT: PCYG), a cloud-based software company that uses big data management to help retailers and their suppliers sell more, stock less and see everything, today announced record results across numerous financial metrics for its fiscal third quarter ended March 31, 2013. In addition, the Company made significant progress with several key strategic initiatives.

Strategic and Financial highlights included:

  • Record quarterly and year-to-date revenue – Total revenue growth accelerated to 21% for the third quarter, and 10% for the nine month period. “We continued to deliver record results during the quarter and our growth rate is accelerating. Subscription revenue growth is beginning to see the effect of some of our larger customers, as they move through the phases of implementation. The scale of these retailers, all of which are among the largest in the world, is an order of magnitude greater than most of our existing customers,” said Randall K. Fields, Park City Group’s Chairman and CEO.
  • Record quarterly and year-to-date profitability – Net income was a record for both the third quarter and the nine month periods ended March 31, 2013. During the third quarter, EBITDA nearly tripled to $799,000 from $271,000 during the same period last year. “Profitability accelerated at a faster pace than revenue growth, as each dollar of incremental sales produced substantially greater than our targeted 75%+ incremental profit contribution,” said Mr. Fields.
  • Progress with large retailers. – The implementation of Park City Group’s first drug store chain is progressing and contributed to revenue growth during the third quarter. The Company is currently in discussions to provide services to several other large retail chains.
  • Expanding opportunity with large retailer – The previously announced program to provide services to one of the largest retailers in the world is progressing. Park City Group and the retailer are exploring additional opportunities.
  • Established new industry solutions team – The Company established a “Customer First” Industry Solutions team to work collaboratively with retailers and their suppliers to drive measureable improvements in sales and inventory management objectives.
  • Redeemed Series A Preferred Stock – The Company recently completed the redemption of its Series A preferred stock, reducing preferred dividend payments by approximately $650,000 annually, or $0.04 per share.
  • Simplified and strengthened capital structure – Total cash at the end of March 31, 2013 increased 597% to $4.4 million, as compared to $631,000 at March 31, 2012, and debt levels decreased by 20% to $2.3 million, versus $2.8 million at the same time last year. As of March 31, the current ratio improved by 375% to 1.5 and stockholders’ equity increased to $10.3 million versus $5.3 million at March 31, 2012.
  • ReposiTrakTM gaining significant industry momentum – The Company’s food and drug safety collaboration with Leavitt Partners is receiving increased attention from large food wholesalers, retailers, and manufacturers. “Our food and drug safety initiative, ReposiTrak, has enormous economic consequences for Park City Group. ReposiTrak continues to gain traction and is well positioned to become the industry standard platform for tracking and tracing food and drugs throughout the supply chain. In addition to the direct benefits from subscription revenue and ultimate equity ownership, we expect ReposiTrak to provide access to a global base of food and drug retailers and suppliers. This greatly expands the size of our “hub and spoke” network and provides the opportunity to expose new connections to our other services,” said Mr. Fields.

During the third fiscal quarter, subscription revenue increased 19% year over year to a record $2.0 million, reflecting growth in sales to new and existing customers. Combined with growth in other revenue, total revenue increased 21% to a record $3.0 million.

Total operating expenses during the quarter ended March 31, 2013 were $2.8 million, a decrease of 67,000 from the same quarter a year ago, and an increase of $117,000 sequentially from the second fiscal quarter. Net income for the third fiscal quarter ended March 31, 2013 was $209,000, or $0.02 per share, as compared to a net loss of ($353,000), or ($0.03) per share, during the prior year period. Net loss applicable to common shareholders for the third fiscal quarter was ($79,000), or ($0.01) per share, as compared to ($561,000), or ($0.05) per share during the prior year period. Non-GAAP earnings per common shareholder for the third quarter was $0.02, versus a loss per share of ($0.02) during the same period last year.


Total cash at the end of March 31, 2013 was $4.4 million as compared to $631,000 at March 31, 2012 and debt levels decreased by 20% to $2.3 million, versus $2.8 million at the same time last year. “We took actions to simplify and strengthen our balance sheet this past quarter, and as a result, we moved from a net debt position to a net cash position of $2.2 million. By redeeming our Series A preferred, we also reduced our preferred dividend payments by $650,000, or $0.04 per share, annually. That dividend has been a primary determinant of our historical GAAP loss, and will result in substantially improved GAAP performance,” said Mr. Fields.

“We are gaining critical mass in the grocery store vertical by putting “customers first” and helping them to achieve our brand promise to sell more, stock less and see everything. This value proposition is clearly resonating with existing, as well as a rapidly growing list of new, large retailer and supplier customers. We are also leveraging our success with grocers, to enter into an additional retail vertical. As a result of this progress, our top and bottom lines are achieving record levels and our growth rate is accelerating. With the strong value proposition of our solutions combined with the recurring nature of subscription revenue, our business should deliver predictable and sustainable growth in revenue and earnings for the next several years,” Mr. Fields concluded.

The Company will host a conference call at 4:15 P.M. Eastern today, May 9, 2013, to discuss the results. Investors and interested parties may participate in the call by dialing (877) 675-3568 and referring to Conference ID: 92438902. The conference call is also being webcast and is available via the investor relations section.

About Park City Group

Park City Group (NYSE MKT: PCYG) is a Software-as-a-Service (“SaaS”) provider that brings unique visibility to the consumer goods supply chain, delivering actionable information that ensures product is on the shelf when the consumer expects it as well as providing food safety tracking information. The Company’s services increase customers’ sales and profitability while enabling lower inventory levels and ensuring regulatory compliance for both retailers and their suppliers.

Through a process known as Consumer Driven Sales OptimizationTM, Park City Group helps its customers turn information into cash and increased sales, using the largest scan based platform in the world. Scan based trading provides retail trading partners with a distinct competitive advantage through scan sales that provides store level visibility and sets the supply chain in motion. And since it is scan based, it can be used in a Direct Store Delivery (DSD) or warehouse setting.

In 2012 Park City Group worked with Leavitt Partners, an internationally-known health care and food safety consulting firm to create ReposiTrak, Inc., which provides food retailers and suppliers with a robust solution that helps them protect their brands and remain in compliance with rapidly evolving regulations in the recently passed Food Safety Modernization Act. Powered by Park City Group, this solution, also called ReposiTrakTM, is an internet-based technology, , which enables all participants in the farm-to-table supply chain to easily manage tracking and traceability requirements as products move between trading partners.

Non-GAAP Financial Measures

This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission: non-GAAP EBITDA, non-GAAP earnings per share, net debt and free cash flow. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures will be provided upon the completion of the Company’s annual audit.

Non-GAAP EBITDA excludes items such as impairment charges, allowance for doubtful accounts, charges to consolidate and integrate recently acquired businesses, costs of closing corporate facilities, non-cash stock based compensation and other one-time cash and non-cash charges. Non-GAAP EPS excludes items such as non-cash stock based compensation, charges to consolidate and integrate recently acquired businesses, costs for closing corporate facilities, amortization of acquired intangible assets and other one-time cash and non-cash charges. Net debt is the total debt balance less the cash balance. Free cash flow includes net cash provided (used) by operating activities less replacement purchases of property and equipment. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses or net purchases of property and equipment, as the case may be, which may not be indicative of its core operation results and business outlook. In addition, because Park City Group has historically reported certain non-GAAP results to investors, the Company believes that the inclusion of non-GAAP measures provides consistency in the Company’s financial reporting.

Forward-Looking Statement

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “if”, “should” and “will” and similar expressions as they relate to Park City Group, Inc. (”Park City Group”) are intended to identify such forward-looking statements. Park City Group may from time to time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see “Risk Factors” in Park City’s annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

Investor Relations Contact:

Dave Mossberg
Three Part Advisors, LLC
P.O. Box 92698
Southlake, TX 76092
Phone: (817) 310-0051

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