JetPay 2017 Q1 Results
Center Valley, PA – May 15, 2017 – JetPay Corporation (“JetPay” or the “Company”) (NASDAQ: “JTPY”) announced financial results for the first quarter ended March 31, 2017.
- Revenues increased 62.7%, or $7.3 million, to $18.9 million for the three months ended March 31, 2017 as compared to $11.6 million for the same period in 2016. Organic growth was 18.2%, with solid growth in the Payment Services Segment and in the HR and Payroll Segment.
- Revenues within our Payment Services Segment increased 95.1%, or $7.0 million, to $14.3 million for the three months ended March 31, 2017 as compared to $7.3 million for the same period in 2016. Organic growth in the segment was 24.5%, as changes made in sales, marketing, and operations in 2016 gained traction.
- Revenues within our HR and Payroll Segment increased $343,000, or 8.0%, to $4.6 million for the three months ended March 31, 2017, as compared to $4.3 million for the same period in 2016. This increase included strong growth in JetPay’s Workforce Today® product targeted at medium to large employers.
- Consolidated gross profit increased 49.8% to $6.4 million, or 33.6% of revenues, for the three months ended March 31, 2017, up from $4.2 million for the same period in 2016.
- Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) increased 221.3% in the first quarter of 2017 as compared to the same period in 2016 with EBITDA of $1.4 million and $436,000 for the three month periods ended March 31, 2017 and 2016, 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 $1.7 million, or 8.8% of revenues, for the three months ended March 31, 2017, as compared to $1.1 million, or 9.3% of revenues, for the same period in 2016. The increase in adjusted EBITDA was directly related to the Company’s acquisition of JetPay Payment Services, FL on June 2, 2016 and continued organic growth in the Company’s JetPay Payment Services, TX and JetPay Payment Services, PA operations. Net loss before accretion of convertible preferred stock of $(167,000) improved from a net loss before accretion of convertible preferred stock of $(1.0) million in the same period in 2016.
- The ratio of our total debt to total capitalization, which consists of total debt of $16.2 million and common stock subject to possible redemptions, convertible preferred stock and stockholders’ equity totaling $62.6 million, was 20.6% at March 31, 2017, a substantial decrease from 24.6% at December 31, 2016. As of March 31, 2017 we had positive working capital of $1.1 million.
- Diane (Vogt) Faro, Chief Executive Officer of JetPay, has earned one of the highest honors in the payments technology industry, winning the prestigious Distinguished Payments Professional award from the Electronic Transactions Association (“ETA”). ETA, the international trade association for the payments technology field, announced the winner this week in Las Vegas at TRANSACT, the group’s annual conference. Distinguished Payments Professional, selected by the ETA Awards and Recognition Committee, is awarded for outstanding service to the association and contributions to the industry.
- John Crouch was appointed Chief Information Officer. Mr. Crouch is an accomplished leader with more than thirty years of experience in information technology, data security and business operations. In his role, Mr. Crouch will have oversight of all technology, and will be responsible for leading the direction for ongoing technical development, driving the long-term technology and digital road map, including implementing ongoing product and service enhancements. Mr. Crouch started his career with Electronic Data Systems (now Hewlett Packard Enterprise Co.) where he spent seventeen years in a variety of software development, systems infrastructure, and leadership roles. Additionally, he has held senior level positions with Certified Merchant Services, and was a founding partner of Encore Payment Systems, which merged with EVO Payments International (“EVO”) in 2013. Most recently at EVO, Mr. Crouch held the position of U.S. Chief Information Officer.
- Completed the sale of 2,835 shares of Series A-1 Preferred Stock to Ithan Creek Master Investors (Cayman) L.P. (Wellington) on April 13, 2017 for total proceeds of $850,500.
“We believe our results this quarter are the start of what investors should come to expect from JetPay”by Diane (Vogt) Faro, CEO of JetPay Corporation.
“We believe our results this quarter are the start of what investors should come to expect from JetPay,” stated Diane Faro, CEO of JetPay Corporation. “The investments we have made in management, infrastructure, and acquisitions are starting to take hold, and we are excited about what they will deliver to shareholders in the future. We believe the 24.5% organic growth in our Payment Services Segment should accelerate, and the improvements in product and sales management in the HR and Payroll Segment are showing promise. We feel confident that we are positioned to deliver solid double-digit revenue growth over the next several quarters with improving margins, as we leverage our technological strengths in both Payment Services and HR and Payroll.”
Financial Results, First Quarter 2017 Compared to First Quarter 2016
Revenues were $18.9 million for the three months ended March 31, 2017, as compared to $11.6 million for the same period in 2016. Revenues for our Payment Services Segment increased $7.0 million, or 95.1%, for the three months ended March 31, 2017, compared to the same period in 2016. The increase was partially related to the acquisition of JetPay Payment Services, FL, on June 2, 2016, contributing an incremental $5.2 million of revenues in the first quarter of 2017. Revenues for our HR and Payroll Segment increased $343,000, or 8.0%, for the three months ended March 31, 2017, as compared to the same period in 2016. This increase was attributable to increasing demand for our full-suite, human capital management services.
Operating income for the three months ended March 31, 2017 was $222,000, as compared to a loss of $(522,000) for the same period in 2016. Operating income is after subtracting depreciation and amortization expense of $1.1 million and $912,000 for the three months ended March 31, 2017 and 2016, respectively. The increase in operating income was partially related to the acquisition of JetPay Payment Services, FL on June 2, 2016 as well as a $491,000 reduction in legal and professional fees for non-repetitive matters.
Net loss for the three months ended March 31, 2017 was $(167,000), or a net loss applicable to common stockholders of $(2.3) million after accretion of convertible preferred stock of $2.1 million, compared to a net loss of approximately $(1.0) million, or a net loss applicable to common stockholders of $(2.4) million after accretion of convertible preferred stock of $1.4 million in the same period in 2016. The decrease in net loss was primarily related to the increase in revenues and operating income described above.
JetPay will conduct a conference call on Thursday, May 18, 2017 at 9:00 AM EDT (6:00 AM PDT) to discuss these results and conduct a question and answer session. The participant conference call number is (855) 446-8217 (International Dial-In 509-960-9039), conference ID: 22646480. There will also be access to a digital recording of the teleconference by calling (855) 859-2056 and entering the conference ID: 22646480. This recording will be available beginning two hours after the teleconference until Thursday, May 25, 2017.
For full financial please download the "JetPay 1st Quarter Results" in PDF format.
About JetPay Corporation
JetPay Corporation, based in Center Valley, 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.
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, 2015, the Company’s Quarterly Reports on Forms 10-Q and the Company’s Current Reports on Form 8-K.
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.