SOURCE: Issuer Direct

Issuer Direct

August 07, 2014 16:01 ET

Issuer Direct Reports Second Quarter 2014 Financial Results

Q2 2014 Revenue Increases 111% and Company Maintains Gross Margins in Excess of 70% as Company Continues to Leverage Its Cloud-Based Disclosure Management System and Recurring Revenue Model

MORRISVILLE, NC--(Marketwired - Aug 7, 2014) - Issuer Direct Corporation (NYSE MKT: ISDR), a market leader and innovator of disclosure management solutions and cloud-based compliance technologies, today reported its operating results for the three and six months ended June 30, 2014. The results for the first six months of 2014 included the contribution from PrecisionIR, which was acquired by Issuer Direct on August 22, 2013. The Company will host an investor conference call at 4:30 EDT today, to discuss operating results and relevant topics of interest.

Second Quarter 2014 Financial Highlights Include:

  • Revenues increased 111% year-over-year reaching $3.6 million;
  • Gross profit increased 112% year-over-year reaching $2.6 million;
  • Non-GAAP earnings per share increased to $0.24 compared to $0.21 in the same period of 2013;
  • Cash increased to $2.2 million at June 30, 2014 compared to $1.7 million at the end of 2013; the ninth consecutive quarter of positive cash flows from operations.

Six Months ended June 30, 2014 Financial Highlights Include:

  • Revenues increased 128% year-over-year, reaching $7.1 million;
  • Gross profit increased 126% year-over-year reaching $5.0 million;
  • Non-GAAP earnings per share increased to $0.43 compared to $0.34 in the same period of 2013.

Please refer to the tables below for the calculation of EBITDA and the reconciliation of GAAP income and earnings per share to Non-GAAP income and earnings per share.

Brian Balbirnie, CEO of Issuer Direct, commented, "Overall we are pleased with the results for the quarter. Our continued year-over-year revenue increases, positive cash flow from operations and balance sheet management are trends we have worked hard to preserve. This is the ninth consecutive quarter of positive cash flows from operations going back to 2012."

Mr. Balbirnie continued, "For most of the last year we have focused on the integration of the combined entities of PrecisionIR and Issuer Direct. That phase is now behind us, and we are focused on expanding our newly integrated business through organic growth. We have reorganized our sales organization to take maximum advantage of the talents of our two organizations and we intend to invest and expand our internal sales force and our channel partner network."

Financial Results for the Second Quarter ended June 30, 2014:

Second quarter 2014 revenue was $3.6 million, an increase of 111%, compared to $1.7 million for the second quarter of 2013, reflecting the impact of the PIR acquisition.

Gross profit was $2.6 million, or gross profit margin of 71%, for the second quarter of 2014, compared to $1.2 million, or 70% gross profit margin, for the second quarter of 2013. Net operating income was $379,068 compared to operating income of $613,136 in the second quarter of last year. However, operating expenses for the second quarter of 2014 include amortization of intangible assets, primarily related to the acquisition of PrecisionIR of $230,018, in addition to $45,225 of integration costs resulting from the acquisition.

Second quarter EBITDA was $659,835 compared to $645,724 in the same quarter last year. Non-GAAP net income, excluding amortization of intangible assets, stock based compensation, integration of acquisition costs, non cash interest expense, and tax impact of adjustments, was $500,966 or $0.24 per diluted share, an increase of 15% compared to $435,459 or $0.21 per diluted share in the second quarter of 2013. On a GAAP basis, the Company reported net income of $68,023 or $0.03 per diluted share compared to $364,681 or $0.18 per diluted share in the same period of fiscal 2013. Net income during the second quarter of 2014 includes $230,018 of non-cash amortization expense and $312,500 of non-cash interest expense associated with the acquisition of PrecisionIR. The Company also incurred $45,225 of costs related to the integration of PrecisionIR in the second quarter of 2014. Non-GAAP results backing out these non-cash expenses and other expenses have been computed below.

Financial Results for the Six Months ended June 30, 2014:

Revenue for the six months ended June 30, 2014 revenue was $7.1 million, an increase of 128%, as compared to $3.1 million for the same period of 2013, again reflecting the impact of the PIR acquisition.

Gross profit was $5.0 million, or gross profit margin of 71%, for the six-month period ended June 30, 2014, compared to $2.2 million, or 71% gross profit margin, for the same period of 2013. Net operating income was $754,191 compared to operating income of $980,920 in the same period of last year. However, operating expenses for the first six months of 2014 include amortization of intangible assets, primarily related to the acquisition of PrecisionIR of $460,126, in addition to $111,797 of integration costs resulting from the acquisition.

EBITDA for the six-month period ended June 30, 2014 was $1,316,824 compared to $1,048,443 in the same period of last year. Non-GAAP net income, excluding amortization of intangible assets, stock based compensation, integration of acquisition costs, non cash interest expense, and tax impact of adjustments, was $903,487 or $0.43 per diluted share, an increase of 27% as compared to $708,720 or $0.34 per diluted share in the same period of 2013. On a GAAP basis, the Company reported net income of $31,081, or $0.02 per diluted share compared to $580,219 or $0.28 per diluted share in the same period of fiscal 2013. Net income during the six months ended 2014 includes $460,126 of non-cash amortization expense and $625,000 of non-cash interest expense associated with the acquisition of PrecisionIR. The Company also incurred $111,797 of costs related to the integration of PrecisionIR in the six months ended June 30, 2014. Non-GAAP results backing out these non-cash expenses and other expenses have been computed below.

Non-GAAP Information

Certain non-GAAP financial measures are included in this press release. In the calculation of these measures, the Company generally excludes certain items such as amortization and impairment of acquired intangibles, non-cash stock-based compensation charges, unusual, non-recurring gains and charges and non-cash interest expense. The Company believes that excluding such items provides investors and management with a representation of the Company's core operating performance and with information useful in assessing its prospects for the future and underlying trends in the Company's operating expenditures and continuing operations. Management uses such non-GAAP measures to evaluate financial results and manage operations. The release and the attachments to this release provide a reconciliation of each of the non-GAAP measures referred to in this release to the most directly comparable GAAP measure. The non-GAAP financial measures are not meant to be considered a substitute for the corresponding GAAP financial statements and investors should evaluate them carefully. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the Calculation of EBITDA table below.

   
   
   
CALCULATION OF EBITDA  
   
    Three Months ended June 30,  
    2014     2013  
    Amount     Amount  
             
Net income:   $ 68,023     $ 364,681  
Adjustments:                
Depreciation and amortization     280,767       32,588  
Interest expense (income)     360,676       (2,545 )
Income tax expense (benefit)     (49,631 )     251,000  
EBITDA:   $ 659,835     $ 645,724  
                 
    Six Months ended June 30,  
    2014     2013  
    Amount     Amount  
                 
Net income:   $ 31,081     $ 580,219  
Adjustments:                
Depreciation and amortization     562,633       67,523  
Interest expense (income)     722,731       (2,299 )
Income tax expense     379       403,000  
EBITDA:   $ 1,316,824     $ 1,048,443  
                 
                 
   
RECONCILATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES  
       
       
    Three Months ended June 30,  
    2014     2013  
    Amount     Per diluted share     Amount     Per diluted share  
                         
Net income (loss):   $ 68,023     $ 0.03     $ 364,681     $ 0.18  
Adjustments:                                
Amortization of intangible assets (1)     230,018       0.11       24,333       0.01  
Stock based compensation (2)     110,552       0.05       89,824       0.04  
Integration and acquisition costs (3)     45,225       0.02       -       -  
Non-cash interest expense (4)     312,500       0.15       -       -  
Tax impact of adjustments (5)     (265,352 )     (0.12 )     (43,379 )     (0.02 )
Non-GAAP net income:   $ 500,966     $ 0.24     $ 435,459     $ 0.21  
       
    Six Months ended June 30,  
    2014     2013  
    Amount     Per diluted share     Amount     Per diluted share  
                                 
Net income (loss):   $ 31,081     $ 0.02     $ 580,219     $ 0.28  
Adjustments:                                
Amortization of intangible assets (1)     460,126       0.22       51,167       0.03  
Stock based compensation (2)     210,183       0.10       156,093       0.08  
Integration and acquisition costs (3)     111,797       0.05       -       -  
Non-cash interest expense (4)     625,000       0.30       -       -  
Tax impact of adjustments (5)     (534,700 )     (0.26 )     (78,759 )     (0.05 )
Non-GAAP net income:   $ 903,487     $ 0.43     $ 708,720     $ 0.34  
                                 
(1) The adjustments represent the amortization of intangible assets related to acquired assets and companies.
 
(2) The adjustments represent stock-based compensation expense recognized related to awards of stock options or common stock in exchange for services.
 
(3) The adjustments represent legal fees, consulting fees, integration costs, and other non-recurring cost incurred in connection with the acquisition of PrecisionIR Group, Inc. 
 
(4) The adjustment represents the amortization of debt-discount that was created as a result of a beneficial conversion feature that was embedded in a note payable that the Company issued in order to finance the acquisition of PrecisionIR Group, Inc. The amortization of the debt discount is recorded as non-cash interest expense and has no impact on the cash flows or operations of the Company.
 
(5) This adjustment gives effect to the tax impact of all non-GAAP adjustments at a rate of 38%, which approximates the Company's state and federal tax rates.
 

Conference Call Information

To participate in the conference call, please dial 877.407.8133 (international callers dial 201.689.8040) approximately five minutes prior to 4:30 Eastern Time (EDT). Additionally, you can listen to the event online at: http://www.investorcalendar.com/IC/CEPage.asp?ID=173043.

A replay of the conference call will be available two hours after completion of the call until Thursday, August 14, 2014 at 11:59 p.m. EDT. To access the replay, dial 201.612.7415 and enter the conference I.D. # 13587938.

About Issuer Direct Corporation:
Issuer Direct is a disclosure management and targeted communications company. Our integrated platform provides tools, technologies and services that enable our clients to disclose and disseminate information through our network. With a focus on corporate issuers, the Company alleviates the complexity of maintaining compliance with its integrated portfolio of products and services that enhance companies' ability to efficiently produce and distribute their financial and business communications both online and in print.

Learn more about Issuer Direct today: http://ir.issuerdirect.com/tearsheet/html/isdr

Forward-Looking Statements. This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "prospects," "outlook," and similar words or expressions, or future or conditional verbs such as "will," "should," "would," "may," and "could" are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any anticipated results, performance or achievements. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2013, including but not limited to the discussion under "Risk Factors" therein, which the Company has filed with the SEC and which may be viewed at http://www.sec.gov.

   
ISSUER DIRECT CORPORATION  
CONSOLIDATED BALANCE SHEETS  
   
    June 30,     December 31,  
    2014     2013  
    (unaudited)        
ASSETS            
Current assets:                
                 
Cash and cash equivalents   $ 2,160,993     $ 1,713,479  
Accounts receivable, (net of allowance for doubtful accounts of $477,088 and $429,509, respectively)     2,627,879       1,970,531  
Deferred income tax asset - current     25,843       25,843  
Other current assets     243,185       160,756  
  Total current assets     5,057,900       3,870,609  
Furniture, equipment and improvements, net     242,098       297,577  
Goodwill     1,056,873       1,056,873  
Intangible assets (net of accumulated amortization of $1,043,400 and $582,871, respectively)     3,552,601       4,013,129  
Other noncurrent assets     46,022       22,351  
    Total assets   $ 9,955,494     $ 9,260,539  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
                 
Accounts payable   $ 409,371     $ 267,637  
Accrued expenses     694,393       1,553,334  
Deferred revenue     1,332,289       1,053,401  
Total current liabilities     2,436,053       2,874,372  
Note payable (net of debt discount of $1,428,092 and $2,053,091, respectively)     1,071,908       446,909  
Deferred tax liability     1,649,692       1,650,460  
Other long term liabilities     132,493       83,063  
    Total liabilities     5,290,146       5,054,804  
                 
Stockholders' equity:                
                 
Preferred stock, $0.001 par value, 30,000,000 shares authorized, no shares issued and outstanding as of June 30, 2014 and December 31, 2013.     -       -  
Common stock $0.001 par value, 100,000,000 shares authorized, 2,056,939 and 2,006,689 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively.     2,056       2,007  
Additional paid-in capital     4,416,564       3,977,661  
Other accumulated comprehensive loss     (69,485 )     (59,065 )
Retained earnings     316,213       285,132  
    Total stockholders' equity     4,665,348       4,205,735  
    Total liabilities and stockholders' equity   $ 9,955,494     $ 9,260,539  
                 
   
ISSUER DIRECT CORPORATION  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(UNAUDITED)  
   
    For the Three Months Ended     For the Six Months Ended  
    June 30,
2014
    June 30,
2013
    June 30,
2014
    June 30,
2013
 
Revenues   $ 3,638,269     $ 1,723,785     $ 7,132,625     $ 3,135,013  
Cost of services     1,069,405       512,822       2,096,996       911,712  
Gross profit     2,568,864       1,210,963       5,035,629       2,223,301  
Operating costs and expenses:                                
  General and administrative     1,003,611       386,666       2,289,864       795,268  
  Sales and marketing     905,418       178,573       1,428,941       379,590  
  Depreciation and amortization     280,767       32,588       562,633       67,523  
Total operating costs and expenses     2,189,796       597,827       4,281,438       1,242,381  
Net operating income     379,068       613,136       754,191       980,920  
Other income (expense):                                
  Interest income (expense), net     (360,676 )     2,545       (722,731 )     2,299  
Total other income (expense)     (360,676 )     2,545       (722,731 )     2,299  
Net income before taxes     18,392       615,681       31,460       983,219  
Income tax benefit (expense)     49,631       (251,000 )     (379 )     (403,000 )
Net income   $ 68,023     $ 364,681     $ 31,081     $ 580,219  
Income per share - basic   $ 0.03     $ 0.19     $ 0.02     $ 0.30  
Income per share - fully diluted   $ 0.03     $ 0.18     $ 0.02     $ 0.28  
Weighted average number of common shares outstanding - basic     2,042,494       1,950,092       2,039,771       1,946,367  
Weighted average number of common shares outstanding - fully diluted     2,106,837       2,061,718       2,111,699       2,043,926  
                                 
 
ISSUER DIRECT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
 
    For the Three Months Ended   For the Six Months Ended
    June 30,
2014
    June 30,
2013
  June 30,
2014
    June 30,
2013
Net income   $ 68,023     $ 364,681   $ 31,081     $ 580,219
Foreign currency translation adjustment     (3,886 )     -     (10,420 )     -
Comprehensive income   $ 64,137     $ 364,681   $ 20,661     $ 580,219
                             
   
ISSUER DIRECT CORPORATION  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(UNAUDITED)  
   
    Six months ended
June 30,
 
    2014     2013  
Cash flows from operating activities:                
Net income   $ 31,081     $ 580,219  
Adjustments to reconcile net income to net cash                
provided by operating activities:                
Depreciation and amortization     563,036     $ 67,523  
Bad debt expense     104,929       81,755  
Deferred income taxes     (768 )     -  
Stock-based compensation expense     210,183       156,093  
Non-cash interest expense     625,000       -  
Changes in operating assets and liabilities:                
Decrease (increase) in accounts receivable     (752,861     (370,806 )
Decrease (increase) in deposits and other current assets     (106,158 )     (24,594 )
Increase (decrease) in accounts payable     137,505       33,088  
Increase (decrease) in accrued expenses     (817,067 )     13,022  
Increase (decrease) in deferred revenue     272,192       (48,506 )
Net cash provided by operating activities     267,072       487,794  
                 
Cash flows from investing activities:                
Purchase of property and equipment     (47,029 )     (29,928 )
Net cash used in investing activities     (47,029 )     (29,928 )
                 
Cash flows from financing activities:                
Proceeds from exercise of stock options     119,015       64  
Payment of dividend     -       (58,418 )
Tax benefit on stock-based compensation awards     109,755       -  
Repayment of line of credit     -       (150,000 )
Net cash provided by (used in) financing activities     228,770       (208,354 )
                 
Net change in cash     448,813       249,512  
Cash - beginning     1,713,479       1,250,643  
Currency translation adjustment     (1,299 )     -  
Cash - ending   $ 2,160,993     $ 1,500,155  
                 
Supplemental disclosure for non-cash investing and financing activities   $ 100,000     $ 2,364  
Cash paid for interest   $ 556,600     $ 382,314  
Cash paid for income taxes                
                 

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