Par Technology Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

par-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2020

☐ TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From __________ to __________

Commission File Number: 1-09720

PAR TECHNOLOGY CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			16-1434688
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

PAR Technology Park, 8383 Seneca Turnpike, New Hartford, New York 13413-4991
(Address of principal executive offices, including zip code)

(315) 738-0600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock	PAR	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ☐			Accelerated Filer þ
Non-Accelerated Filer ☐			Smaller Reporting Company ☐
			Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of August 1, 2020, 18,250,625 shares of the registrant’s common stock, $0.02 par value, were outstanding.

PAR TECHNOLOGY CORPORATION

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Item

Number

Page

Item 1.

Financial Statement s (unaudited)

Condensed Consolidated Balance Sheets at June 30 . 2020 and December 31, 2019 (unaudited)

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30 , 2020 and June 30 , 2019 (unaudited)

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30 , 2020 and June 30 , 2019 (unaudited)

Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three and Six Months Ended June 30 , 2020 and June 30 , 2019 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30 , 2020 and June 30 , 2019 (unaudited)

Notes to Unaudited Interim Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use Of Proceeds

Item 6.

Exhibits

Signatures

"PAR," "Brink POS®," "PixelPoint®," "PAR EverServ®," "Restaurant Magic®", and "Data Central®" are trademarks of PAR Technology Corporation. This report may also contain trade names and trademarks of other companies. Our use or reference to such other companies' trade names or trademarks is not intended to imply any endorsement or sponsorship by these companies of PAR Technology Corporation or its products or services.

PART I – FINANCIAL INFORMATION

Item 1.
Financial Statements (unaudited)

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share and per share amounts)



Assets	June 30, 2020		December 31, 2019
Current assets:
Cash and cash equivalents	$	58,775	$	28,036
Accounts receivable – net	38,236		41,774
Inventories – net	25,992		19,326

Other current assets	4,167		4,427
Total current assets	127,170		93,563
Property, plant and equipment – net	13,503		14,351
Goodwill	41,214		41,386
Intangible assets – net	34,305		32,948
Lease right-of-use assets	2,445		3,017
Other assets	4,249		4,347
Total Assets	$	222,886	$	189,612
Liabilities and Shareholders’ Equity
Current liabilities:

Current portion of long-term debt	$	647	$	630
Accounts payable	15,699		16,385
Accrued salaries and benefits	7,538		7,769
Accrued expenses	2,523		3,176
Lease liabilities - current portion	1,295		2,060
Customer deposits and deferred service revenue	9,625		12,084


Total current liabilities	37,327		42,104
Lease liabilities - net of current portion	1,235		1,021
Deferred service revenue – non current	3,937		3,916
Long-term debt	103,849		62,414
Other long-term liabilities	7,928		7,310
Total liabilities	154,276		116,765
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, $.02 par value, 1,000,000 shares authorized	—		—
Common stock, $.02 par value, 58,000,000 shares authorized; 19,295,313 and 18,360,205 shares issued, 18,245,225 and 16,629,177 outstanding at June 30, 2020 and December 31, 2019, respectively	386		367
Additional paid in capital	107,540		94,372
Accumulated deficit	(30,030)		(10,144)
Accumulated other comprehensive loss	(5,009)		(5,368)
Treasury stock, at cost, 1,050,088 shares and 1,731,028 shares at June 30, 2020 and December 31, 2019, respectively	(4,277)		(6,380)
Total shareholders’ equity	68,610		72,847
Total Liabilities and Shareholders’ Equity	$	222,886	$	189,612

See accompanying notes to unaudited interim condensed consolidated financial statements

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net revenues:
Product	$	12,333	$	14,728	$	30,967	$	30,245
Service	15,300		13,534		34,075		27,577
Contract	18,058		15,985		35,381		31,107
	45,691		44,247		100,423		88,929
Costs of sales:
Product	9,982		11,412		24,887		22,653
Service	9,912		10,118		22,558		20,385
Contract	16,718		14,386		32,852		28,036
	36,612		35,916		80,297		71,074
Gross margin	9,079		8,331		20,126		17,855
Operating expenses:
Selling, general and administrative	10,049		9,059		21,476		17,623
Research and development	4,538		2,725		9,403		5,786
Amortization of identifiable intangible assets	210		—		420		—
	14,797		11,784		31,299		23,409
Operating loss	(5,718)		(3,453)		(11,173)		(5,554)
Other expense, net	(139)		(374)		(764)		(804)
Interest expense, net	(2,111)		(1,244)		(4,083)		(1,390)
Loss on extinguishment of debt	—		—		(8,123)		—
Loss before benefit from (provision for) income taxes	(7,968)		(5,071)		(24,143)		(7,748)
(Provision for) benefit from income taxes	(1,008)		3,962		4,257		3,910



Net loss	$	(8,976)	$	(1,109)	$	(19,886)	$	(3,838)
Basic Earnings per Share:
Net loss	$	(0.49)	$	(0.07)	$	(1.10)	$	(0.24)
Diluted Earnings per Share:
Net loss	$	(0.49)	$	(0.07)	$	(1.10)	$	(0.24)
Weighted average shares outstanding:
Basic	18,244		16,290		18,092		16,085
Diluted	18,244		16,290		18,092		16,085

See accompanying notes to unaudited interim condensed consolidated financial statements

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, in thousands, except share and per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net loss	$	(8,976)	$	(1,109)	$	(19,886)	$	(3,838)
Other comprehensive income, net of applicable tax:
Foreign currency translation adjustments	158		131		359		121
Comprehensive loss	$	(8,818)	$	(978)	$	(19,527)	$	(3,717)

See accompanying notes to unaudited interim condensed consolidated financial statements

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited, in thousands, except share and per share amounts)


	Common Stock					Additional Paid in Capital		Accumulated deficit		Accumulated Other Comprehensive Loss	Treasury Stock				Total Shareholders’ Equity
		Shares		Amount												Shares	Amount

Balances at December 31, 2019	18,360	$	367	$	94,372	$	(10,144)	$	(5,368)	1,731	$	(6,380)	$	72,847
Net loss	—	—		—		(10,910)		—		—	—		(10,910)
Issuance of common stock upon the exercise of stock options	2	—		30		—		—			—		30
Net issuance of restricted stock awards	21	—		—		—		—			—		—
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock	—	—		—		—		—		38	(524)		(524)
Issuance of restricted stock for acquisition	908	19		—		—		—		—	—		19
Equity component of redeemed 2024 convertible notes, net of deferred taxes and issuance costs	—	—		(7,988)		—		—		(722)	2,435		(5,553)
Equity component of issued 2026 convertible notes, net of deferred taxes and issuance costs	—	—		19,097		—		—		—	—		19,097
Stock-based compensation	—	—		1,089		—		—		—	—		1,089
Foreign currency translation adjustments	—	—		—		—		201		—	—		201
Balances at March 31, 2020	19,291	$	386	$	106,600	$	(21,054)	$	(5,167)	1,047	$	(4,469)	$	76,296
Net loss	—	—		—		(8,976)		—		—	—		(8,976)
Issuance of common stock upon the exercise of stock options	4	—		12		—		—		—	—		12
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock	—	—		(195)		—		—		3	192		(3)
Stock-based compensation	—	—		1,123		—		—		—	—		1,123
Foreign currency translation adjustments	—	—		—		—		158		—	—		158
Balances at June 30, 2020	19,295	386		107,540		(30,030)		(5,009)		1,050	(4,277)		68,610

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited, in thousands, except share and per share amounts)


	Common Stock					Additional paid in capital		Retained Earnings (accumulated deficit)		Accumulated Other Comprehensive Loss	Treasury Stock				Total Shareholders’ Equity
		Shares		Amount												Shares	Amount

Balances at December 31, 2018	17,878	$	357	$	50,251	$	5,427	$	(4,253)	1,708	$	(5,836)	$	45,946

Net loss	—	—		—		(2,729)		—		—	—		(2,729)
Issuance of common stock upon the exercise of stock options	78	—		30		—		—		—	—		30
Stock-based compensation	—	—		248		—		—		—	—		248
Foreign currency translation adjustments	—	—		—		—		(10)		—	—		(10)
Balances at March 31, 2019	17,956	$	357	$	50,529	$	2,698	$	(4,263)	1,708	$	(5,836)	$	43,485
Net loss						(1,109)							(1,109)
Issuance of common stock upon the exercise of stock options	79	3		210									$	213
Stock-based compensation				602									602
Foreign currency translation adjustments								131					$	131
Convertible notes conversion discount (net of taxes $4.1 million and issuance costs of $1.1 million)				12,465									12,465
Balances at June 30, 2019	18,035	360		63,806		1,589		(4,132)		1,708	(5,836)		55,787

See accompanying notes to unaudited interim condensed consolidated financial statements

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands, except share and per share amounts)


	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities:
Net loss	$	(19,886)	$	(3,838)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and accretion	6,700		3,121
Current expected credit losses	978		397
Provision for obsolete inventory	1,439		(522)
Stock-based compensation	2,212		850
Loss on debt extinguishment	8,123		—
Deferred income tax	(4,408)		(4,065)
Changes in operating assets and liabilities:
Accounts receivable	2,560		(284)
Inventories	(8,105)		1,876
Other current assets	260		(3,406)
Other assets	119		150
Accounts payable	(931)		(2,208)
Accrued salaries and benefits	(231)		(240)
Accrued expenses	(652)		2,840
Customer deposits and deferred service revenue	(2,438)		1,548
Other long-term liabilities	618		(2,760)
Net cash used in operating activities	(13,642)		(6,541)
Cash flows from investing activities:
Settlement of working capital for acquisitions	172		—
Capital expenditures	(188)		(1,693)
Capitalization of software costs	(4,613)		(1,624)
Net cash used in investing activities	(4,629)		(3,317)
Cash flows from financing activities:
Payments of long-term debt	(313)		—
Payment of contingent consideration	—		(2,550)
Payments of bank borrowings	—		(17,459)
Proceeds from bank borrowings	—		9,640
Payments for the extinguishment of notes payable	(66,250)		—
Proceeds from notes payable, net of issuance costs	115,916		75,039
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock	(332)		—
Proceeds from exercise of stock options	42		243
Net cash provided by financing activities	49,063		64,913
Effect of exchange rate changes on cash and cash equivalents	(53)		121
Net increase in cash and cash equivalents	30,739		55,176
Cash and cash equivalents at beginning of period	28,036		3,485
Cash and equivalents at end of period	$	58,775	$	58,661
Supplemental disclosures of cash flow information:
Cash paid for interest	$

Price	23.60	EPS	-1
Shares	16	P/E	-40
MCap	386	P/FCF	-40
Net Debt	13	EBIT	-10
TEV	399	TEV/EBIT	-42
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-07
10-Q	2020-03-31	Filed 2020-05-11
10-K	2019-12-31	Filed 2020-03-16
10-Q	2019-09-30	Filed 2019-11-08
10-Q	2019-06-30	Filed 2019-08-07
10-Q	2019-03-31	Filed 2019-05-07
10-K	2018-12-31	Filed 2019-03-18
10-Q	2018-09-30	Filed 2018-11-09
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-10
10-Q	2017-09-30	Filed 2017-11-13
10-Q	2017-06-30	Filed 2017-08-14
10-Q	2017-03-31	Filed 2017-05-15
10-K	2016-12-31	Filed 2017-04-17
10-Q	2016-09-30	Filed 2016-11-14
10-Q	2016-06-30	Filed 2016-08-08
10-Q	2016-03-31	Filed 2016-05-11
10-K	2015-12-31	Filed 2016-03-30
10-Q	2015-09-30	Filed 2015-11-16
10-Q	2015-06-30	Filed 2015-08-14
10-Q	2015-03-31	Filed 2015-05-08
10-K	2014-12-31	Filed 2015-03-31
10-Q	2014-09-30	Filed 2014-11-14
10-Q	2014-06-30	Filed 2014-08-08
10-Q	2014-03-31	Filed 2014-05-07
10-K	2013-12-31	Filed 2014-03-14
10-Q	2013-09-30	Filed 2013-11-08
10-Q	2013-06-30	Filed 2013-08-08
10-Q	2013-03-31	Filed 2013-05-09
10-K	2012-12-31	Filed 2013-03-14
10-Q	2012-09-30	Filed 2012-11-13
10-Q	2012-06-30	Filed 2012-08-14
10-Q	2012-03-31	Filed 2012-05-15
10-K	2011-12-31	Filed 2012-04-04
10-Q	2011-09-30	Filed 2011-11-10
10-Q	2011-06-30	Filed 2011-08-22
10-Q	2011-03-31	Filed 2011-05-16
10-K	2010-12-31	Filed 2011-03-16
10-Q	2010-09-30	Filed 2010-11-10
10-Q	2010-06-30	Filed 2010-08-09
10-Q	2010-03-31	Filed 2010-05-10
10-K	2009-12-31	Filed 2010-03-16

8-K	2020-08-07	Earnings, Regulation FD
8-K	2020-07-06
8-K	2020-06-04
8-K	2020-05-07
8-K	2020-03-29
8-K	2020-03-19
8-K	2020-03-12
8-K	2020-03-06
8-K	2020-02-27
8-K	2020-02-10
8-K	2020-02-05
8-K	2020-02-04
8-K	2019-12-18
8-K	2019-11-07
8-K	2019-09-30
8-K	2019-09-04
8-K	2019-08-06
8-K	2019-06-13
8-K	2019-05-06
8-K	2019-04-15
8-K	2019-04-09
8-K	2019-03-22
8-K	2019-03-14
8-K	2019-03-11
8-K	2019-03-04
8-K	2019-01-14
8-K	2018-12-06
8-K	2018-11-07
8-K	2018-08-08
8-K	2018-06-13
8-K	2018-06-05
8-K	2018-05-09
8-K	2018-04-12
8-K	2018-03-15
8-K	2018-03-08
8-K	2018-01-25

EX-10.2	employmentagreementmci.htm
EX-10.3	mcicchinelliamendmentt.htm
EX-31.1	exhibit3112020q2.htm
EX-31.2	exhibit3122020q2.htm
EX-32.1	exhibit3212020q2.htm
EX-32.2	exhibit3222020q2.htm

PAR 10Q Quarterly Report

Par Technology Earnings 2020-06-30