Exhibit 99.1

 

 

JetPay® Corporation Reports Third Quarter Results

Reports Third Quarter Revenue Growth of 14.0%

 

Allentown, PA – November 9, 2018 – JetPay® Corporation (“JetPay” or the “Company”) (NASDAQ: “JTPY”) announced financial results for the third quarter and nine months ended September 30, 2018.

 

Financial Highlights

 

·Revenues increased 14.0%, or $1.9 million, to $15.5 million for the three months ended September 30, 2018 as compared to $13.6 million for the same period in 2017, and increased 12.0% to $46.6 million for the nine months ended September 30, 2018, an increase of $5.0 million from $41.6 million in the same period in 2017.

 

·Revenues within our Payment Services Segment increased 16.0%, or $1.6 million, to $11.3 million for the three months ended September 30, 2018 as compared to $9.7 million for the same period in 2017, and increased 14.4% to $32.7 million for the nine months ended September 30, 2018, an increase of $4.1 million from $28.6 million for the same period in 2017.

 

·Revenues within our HR & Payroll Services Segment increased $347,000, or 9.0%, to $4.2 million in the three months ended September 30, 2018, as compared to $3.9 million for the same period in 2017, and increased 6.6% to $13.9 million for the nine months ended September 30, 2018, an increase of $861,000 from $13.0 million for the same period in 2017. Under former ASC Topic 605, revenues in the HR & Payroll Services Segment would have increased 11.2%. This organic growth is primarily the result of increased revenues from our Workforce Today® product, a full-suite human capital management solution, highly desirable by mid-size and larger employers.

 

·Consolidated gross profit increased 16.0% to $6.5 million, or 41.9% of revenues, for the three months ended September 30, 2018, up from $5.6 million, or 41.2% of revenues, for the same period in 2017, and up 14.3% or $2.6 million to $21.0 million, or 45.0% of revenues, for the nine months ended September 30, 2018, up from $18.4 million, or 44.1% of revenues, for the same period in 2017.

 

·Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) were $737,000 and $936,000 for the third quarter of 2018 and 2017, respectively, and $5.2 million and $3.3 million for the nine month periods ended September 30, 2018 and 2017, respectively. EBITDA, adjusted for non-recurring and non-cash items (“adjusted EBITDA”- see Non-GAAP financial measures definition and reconciliation of operating income (loss) to EBITDA and adjusted EBITDA below) was $1.2 million and $1.1 million for the third quarter of 2018 and 2017, respectively, and $5.2 million for the nine months ended September 30, 2018, as compared to $4.9 million for the same period in 2017. The increase in EBITDA of $2.0 million, or 60.5%, for the first nine months of 2018 vs. 2017 was directly related to the Company’s April 30, 2018 settlement of litigation with Valley National Bank, which contributed an incremental $2.2 million of EBITDA, in addition to organic growth in both the Company’s Payment Services and HR & Payroll Services operations.

 

·The ratio of our total debt to total capitalization, which consists of total debt of $14.7 million and common stock subject to possible redemptions, convertible preferred stock and stockholders’ equity totaling $63.5 million, was 18.8% at September 30, 2018, an improvement from 20.5% at December 31, 2017 when our total debt was $16.1 million. As of September 30, 2018, we had positive working capital of $736,000.

 

 

 

 

“JetPay has seen a sustained growth of 14% for our third quarter with continued improvements in our gross profit margin and adjusted EBITDA, reflecting our investments in people, products, and infrastructure,” added Diane Faro, the CEO of JetPay.

 

Agreement to Be Acquired by NCR Corporation

 

On October 22, 2018, the Company announced that it entered into a definitive agreement on October 19, 2018 to be acquired by NCR Corporation (“NCR”). Pursuant to the agreement, Orwell Acquisition Corporation (“NCR Merger Sub”), a subsidiary of NCR, will seek to acquire all of the outstanding shares of the Company's common stock and preferred stock in an all-cash tender offer and follow-on merger. Additional details of the agreement were set forth in a Form 8-K filed with the Securities and Exchange Commission on October 22, 2018. NCR Merger Sub and NCR launched the tender offer for all outstanding shares of the Company’s common stock and preferred stock on November 2, 2018 and, in connection with the offer, NCR Merger Sub and NCR filed a tender offer statement on Schedule TO with the SEC and the Company filed a solicitation/recommendation statement on Schedule 14D-9 with the SEC.

 

“The JetPay team is excited about our recently announced agreement to become part of the NCR family. We have always focused on bringing value to our Payments and HR & Payroll clients through innovative solutions and the highest level of customer service, and we will continue to search for strategic alternatives to expand our market reach. We share similar values and beliefs with NCR, and we are confident that this partnership will dramatically accelerate our ability to make the complex simple for businesses of all sizes. We are proud to have been chosen to be part of NCR’s strategic initiative to integrate a cloud-based payments platform into their enterprise point-of-sale system and adding payroll services to create even greater value for our combined customer base,” stated Diane Faro, CEO of JetPay about the transactions contemplated by the merger agreement.

 

In light of the agreement with NCR, JetPay will not host a conference call to discuss third quarter results or provide a business outlook.

 

Third Quarter 2018 Compared to Third Quarter 2017 (As Adjusted)

 

Revenues were $15.5 million for the three months ended September 30, 2018, compared to $13.6 million for the same period in 2017. Revenues for the Payment Services Segment increased $1.6 million, or 16.0%, for the three months ended September 30, 2018, compared to the same period in 2017. This increase related to organic growth in our Government and Utilities, e-Commerce, and ISO/ISV sectors, including an increase in revenues in our JetX discount for cash product. Revenues for the HR & Payroll Services Segment increased $347,000, or 9.0%, for the three months ended September 30, 2018, as compared to the same period in 2017. This increase was attributable to increased demand for our full-suite, human capital management services.

 

Gross profit for the three months ended September 30, 2018 was $6.5 million, compared to $5.6 million for the same period in 2017. The $897,000, or 16.0%, increase was related to revenue growth within both the Payment Services Segment and the HR & Payroll Services Segment. Operating loss for the three months ended September 30, 2018 was $(492,000), compared to a loss of $(45,000) for the same period in 2017. Operating loss includes depreciation and amortization expense of $1.2 million and $1.1 million for the three months ended September 30, 2018 and 2017, respectively. The decrease in operating income was impacted by an increase in fees for non-recurring professional matters related to the October 22, 2018 announcement of the Company’s definitive agreement to be acquired by NCR Corporation.

 

Net loss for the three months ended September 30, 2018 was $(1.15) million or a net loss applicable to common stockholders of $(3.5) million after accretion of convertible preferred stock of $2.4 million, compared to a net loss of approximately $(414,000), or a net loss applicable to common stockholders of $(3.2) million after accretion of convertible preferred stock of $2.8 million for the same period in 2017. The decrease in net income was primarily related to the decrease in operating income described above, as well as an increase in income tax expenses.

 

 

 

 

First Nine Months of 2018 Compared to First Nine Months of 2017 (As Adjusted)

 

Revenues were $46.6 million for the nine months ended September 30, 2018, compared to $41.6 million for the same period in 2017. Revenues for the Payment Services Segment increased $4.1 million, or 14.4%, for the nine months ended September 30, 2018, compared to the same period in 2017. This increase related to organic growth in our Government and Utilities, e-Commerce, and ISO/ISV sectors, including an increase in revenues in our JetX discount for cash product. Revenues for the HR & Payroll Services Segment increased $861,000, or 6.6%, for the nine months ended September 30, 2018, as compared to the same period in 2017. This increase was attributable to increased demand for our full-suite, human capital management services. The growth within the HR & Payroll Services Segment was negatively impacted by the adoption of ASC Topic 606. Under former ASC Topic 605, revenues in the HR & Payroll Services Segment would have increased 11.2%.

 

Gross profit for the nine months ended September 30, 2018 was $21.0 million, compared to $18.4 million for the same period in 2017. The $2.6 million, or 14.3%, increase was related to revenue growth within both segments. Operating income for the nine months ended September 30, 2018 was $2.0 million, compared to $229,000 for the same period in 2017. Operating income includes depreciation and amortization expense of $3.6 million and $3.4 million for the nine months ended September 30, 2018 and 2017, respectively. The increase in operating income was partially related to organic growth in the Payment Services and HR & Payroll Services Segments, as well as the Company’s favorable settlement of litigation involving Valley National Bank on April 30, 2018 which contributed an incremental $2.2 million of operating income in the second quarter of 2018, partially offset by a $450,000 legal settlement, and an increase in professional fees for non-repetitive matters of $925,000, including costs related to the recent merger agreement signing with NCR Corporation.

 

Net loss for the nine months ended September 30, 2018 was $(10,000), or a net loss applicable to common stockholders of $(8.4) million, after accretion of convertible preferred stock of $8.4 million, compared to a net loss of approximately $(914,000), or a net loss applicable to common stockholders of $(8.4) million after accretion of convertible preferred stock of $7.5 million. The decrease in net loss was primarily related to the increase in operating income described above.

 

About JetPay Corporation

 

JetPay Corporation, based in Allentown, PA, is a leading provider of vertically integrated solutions for businesses including card acceptance, processing, payroll, payroll tax filing, human capital management services, and other financial transactions. JetPay provides a single vendor solution for payment services, debit and credit card processing, ACH services, and payroll and human capital management needs for businesses throughout the United States. The Company also offers low-cost payment choices for the employees of these businesses to replace costly alternatives. The Company's vertically aligned services provide customers with convenience and increased revenues by lowering payments-related costs and by designing innovative, customized solutions for internet, mobile, and cloud-based payments. Please visit www.jetpay.com for more information on what JetPay has to offer or call 866-4JetPay (866-453-8729).

 

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, amortization of intangibles, and non-cash changes in the fair value of contingent consideration liability. The Company defines adjusted EBITDA as EBITDA, as defined above, plus certain non-recurring items, including certain legal and professional costs for non-repetitive matters, legal settlements, non-cash stock option costs, and non-cash losses on the disposal of fixed assets. 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 “EBITDA and adjusted EBITDA Reconciliation.”

 

 

 

 

EBITDA and adjusted EBITDA Reconciliation (Unaudited)

 

(000’s omitted) 

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2018   2017   2018   2017 
       (As Adjusted)       (As Adjusted) 
                 
Operating income (loss)  $(492)  $(45)  $1,970   $229 
Change in fair value of contingent
consideration liability
   (17)   (160)   (374)   (343)
Amortization of intangibles   849    874    2,545    2,623 
Depreciation   397    267    1,084    746 
                     
EBITDA  $737   $936   $5,225   $3,255 
                     
Professional fees for non-repetitive matters   273    23    1,164    239 
Legal settlements   -    -    (1,725)   747 
Non-cash stock based compensation   136    181    499    565 
Non-cash loss on disposal of fixed asset   27    -    35    110 
                     
Adjusted EBITDA  $1,173   $1,140   $5,198   $4,916 

 

Forward-Looking Statements

 

This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. JetPay’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside JetPay’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to, those described under the heading “Risk Factors” in the Company’s Annual Report filed with the Securities and Exchange Commission (“SEC”) on Form 10-K for the fiscal year ended December 31, 2017, the Company’s Quarterly Reports on Form 10-Q the Company’s Current Reports on Form 8-K, the tender offer documents filed and to be filed by NCR Merger Sub, NCR and our other filings made with the SEC. These risks include risks and uncertainties related to the pending acquisition of the JetPay by NCR, including the timing of completion of the associated tender offer and follow-on merger; how many of our stockholders will tender their shares in the offer; the possibility that various closing conditions for the offer or the merger may not be satisfied or waived; the possibility that competing offers will be made; possible litigation related to the offer and the merger; and the impact of the offer and the merger on our operations and business and on our relationships with our employees, clients and suppliers.

 

JetPay cautions that the foregoing list of factors is not exclusive. Additional information concerning these and other risk factors is contained in JetPay’s most recent filings with the SEC. All subsequent written and oral forward-looking statements concerning JetPay or other matters and attributable to JetPay or any person acting on its behalf, are expressly qualified in their entirety by the cautionary statements above. JetPay cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. JetPay does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

 

Additional Information and Where to Find It

 

NCR Merger Sub’s tender offer for shares of the Company’s stock and preferred stock commenced on November 2, 2018 and, in connection with the offer, on November 2, 2018, NCR Merger Sub and NCR filed a tender offer statement on Schedule TO with the SEC and the Company filed a solicitation/recommendation statement on Schedule 14D-9 with the SEC. The Company’s stockholders are strongly advised to read the tender offer statement (including the offer to purchase, letter of transmittal and related tender offer documents) and the related solicitation/recommendation statement on Schedule 14D-9 filed by the Company with the SEC because they contain important information about the proposed transaction. These documents are available at no charge on the SEC’s website at www.sec.gov. In addition, copies of the offer to purchase, letter of transmittal and other related materials are available free of charge by contacting Innisfree M&A Incorporated, the information agent for the tender offer, toll-free at (888) 750-5834.

 

 

 

 

Contacts

 

JetPay Corporation JetPay Corporation
Peter B. Davidson Gregory M. Krzemien
Vice Chairman and Corporate Secretary Chief Financial Officer
(610) 797-9500 (610) 797-9500
Peter.Davidson@jetpaycorp.com gkrzemien@jetpaycorp.com

 

###

 

 

 

 

JetPay Corporation

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share information)

 

  

For the Three Months Ended

September 30,

  

For the Nine Months Ended

September 30,

 
   2018   2017   2018   2017 
       (As Adjusted)       (As Adjusted) 
                 
Revenues  $15,471   $13,575   $46,581   $41,601 
Cost of revenues   8,983    7,984    25,602    23,240 
                     
Gross profit   6,488    5,591    20,979    18,361 
                     
Selling, general and administrative expenses   5,751    4,655    17,479    14,359 
Settlement of legal matters   -    -    (1,725)   747 
Change in fair value of contingent consideration liability   (17)   (160)   (374)   (343)
Amortization of intangibles   849    874    2,545    2,623 
Depreciation   397    267    1,084    746 
                     
Operating (loss) income   (492)   (45)   1,970    229 
                     
Other expenses (income)                    
Interest expenses   266    281    802    852 
Non-cash interest costs   29    39    95    106 
Other income   (8)   (7)   (23)   (14)
                     
(Loss) income before income taxes   (779)   (358)   1,096    (715)
                     
Income tax expense   372    56    1,106    199 
                     
Net Loss   (1,151)   (414)   (10)   (914)
Accretion of convertible preferred stock   (2,376)   (2,758)   (8,346)   (7,533)
                     
Net loss applicable to common stockholders  $(3,527)  $(3,172)  $(8,356)  $(8,447)
                     
Basic and diluted loss per share applicable to common stockholders  $(0.23)  $(0.20)  $(0.54)  $(0.53)
                     
Weighted average shares outstanding:                    
Basic and diluted   15,434,331    15,660,540    15,479,211    15,974,981 

 

 

 

 

JetPay Corporation

Condensed Consolidated Balance Sheets

(In thousands)

 

  

September 30,

2018

  

December 31,

2017

 
ASSETS  (Unaudited)   (As Adjusted) 
Current assets:          
Cash  $8,292   $6,824 
Restricted cash   1,908    1,905 
Accounts receivable, less allowance for doubtful accounts   4,046    5,269 
Settlement processing assets and funds   35,751    52,116 
Prepaid expenses and other current assets   1,640    1,725 
           
Current assets before funds held for clients   51,637    67,839 
Funds held for clients   43,438    49,288 
Total current assets   95,075    117,127 
Property and equipment, net   5,595    3,970 
Goodwill   48,978    48,978 
Identifiable intangible assets, net   20,053    22,598 
Other assets   1,715    1,448 
           
Total assets  $171,416   $194,121 
           
LIABILITIES          
Current liabilities:          
Current portion of long-term debt and capital lease obligation  $3,396   $3,364 
Accounts payable and accrued expenses   12,290    11,569 
Settlement processing liabilities   35,141    51,407 
Deferred revenue and other current liabilities   74    1,083 
Current liabilities before client fund obligations   50,901    67,423 
Client fund obligations   43,438    49,288 
Total current liabilities   94,339    116,711 
Long-term debt and capital lease obligation, net of current portion   11,275    12,700 
Deferred income taxes   1,724    845 
Other liabilities   583    1,452 
Total liabilities   107,921    131,708 
           
Commitments and Contingencies          
           
Redeemable Convertible Preferred Stock   69,493    59,684 
           
Common Stock, subject to possible redemption   4,086    3,520 
           
Stockholders’ Deficit   (10,084)   (791)
           
Total Liabilities and Stockholders’ Deficit  $171,416   $194,121 

 

 

 

 

JetPay Corporation

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

  

For the Nine Months Ended

September 30,

 
   2018   2017 
       (As Adjusted) 
Operating Activities          
Net loss  $(10)  $(914)
Adjustments to reconcile net loss to net cash provided by operating activities:          
Depreciation   1,084    746 
Stock-based compensation   471    531 
Employee stock purchase plan expense   28    34 
Common Stock issued as compensation   -    97 
Amortization of intangibles   2,545    2,623 
Non-cash interest costs   95    106 
Change in fair value of contingent consideration liability   (374)   (343)
Loss on disposal of fixed assets   35    110 
Deferred income taxes   879    - 
Change in operating assets and liabilities   844    (847)
Net cash provided by operating activities   5,597    2,143 
           
Investing Activities          
Net decrease in funds held to satisfy client fund obligations   5,850    4,186 
Purchase of property and equipment   (2,208)   (1,591)
Net cash provided by investing activities   3,642    2,595 
           
Financing Activities          
Payments on long-term debt and capital lease obligations   (2,538)   (7,447)
Proceeds from issuance of common stock pursuant to employee stock purchase   105    181 
Proceeds from notes payable   515    677 
Proceeds from the sale of preferred stock, net of issuance costs   -    825 
Deferred financing fees associated with new borrowings   -    (76)
Payment of deferred and contingent acquisition consideration   -    (314)
Net decrease in client funds obligations   (5,850)   (4,186)
Net cash used in financing activities   (7,768)   (10,340)
           
Net increase (decrease) in cash and restricted cash   1,471    (5,602)
           
Cash and restricted cash, beginning   8,729    14,713 
Cash and restricted cash, ending  $10,200   $9,111 

 

 

View differences made from one to another to evaluate Jetpay Corp's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Jetpay Corp.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account