Cover-All Announces Second Quarter 2013 Results
Cover-All Announces Second Quarter 2013 Results
Revenue growth of 21% in first six months of 2013; Poised for record revenue year
MORRISTOWN, N.J.--(BUSINESS WIRE)-- Cover-All Technologies Inc. (NYSE MKT: COVR), a Delaware corporation ("Cover-All" or the "Company"), today announced financial results for the quarter ended June 30, 2013.
"We are pleased to report significant revenue and EBITDA* growth for first six months in 2013 - up 21% and up 994%, respectively, year-over-year," said Manish Shah, CEO and President of Cover-All. "Five new contracts this year, including license revenue from four contracts recognized in first six months of 2013, and increasing demand for professional services drove record revenue for first six months in 2013. We continue to see increasing demand for Cover-All Policy and BI solutions and professional services. With outstanding financial results for first six months in 2013, Cover-All is poised for a record revenue year."
"We believe that technology transformation initiatives in the P/C insurance industry are in its early stages. We are focused on taking advantage of these opportunities by offering compelling solutions for the P/C insurance industry. During the past few years we have invested strategically to become a significant solution provider in the insurance technology marketplace by offering innovative solutions which are differentiated by providing significant business benefits such as speed-to-market, ease-of-use and adaptability for changing business needs."
FINANCIAL HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2013
Revenue
Total revenues for the six months ended June 30, 2013 were $10.9 million compared to $9.0 million for the same period in 2012.
License revenue for the six months ended June 30, 2013 was $4.3 million compared to $2.4 million for the same period in 2012.
Support Services revenue (which represents contracted continuing revenue) was $4.0 million for the six months ended June 30, 2013 compared to $4.3 million in the same period in 2012.
Professional Services revenue for the six months ended June 30, 2013 was $2.6 million compared to $2.3 million for the same period in 2012.
GAAP Profitability
Operating income (loss) for the six months ended June 30, 2013 was $(256,000) compared to $(1.5) million in the comparable period in 2012.
Net income (loss) for the six months ended June 30, 2012 was $(444,000), or $(0.02) per basic and diluted share (based on 26.0 million basic and diluted weighted average shares), compared to $(1.5) million, or $(0.06) per basic and diluted share (based on 25.9 million basic and diluted weighted average shares), in the same period of 2012.
Non-GAAP Profitability
Earnings before interest, taxes, depreciation and amortization ("EBITDA"), a non-GAAP metric, was $2.2 million, or $0.09 per basic diluted share (based on 26.0 million basic and diluted weighted average shares), for the six months ended June 30, 2013 compared to $202,000, or $0.01 per basic and diluted share (based on 25.9 million basic and diluted weighted average shares), for the six months ended June 30, 2012.
FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS ENDED JUNE 30, 2013
Revenue
Total revenues for the three months ended June 30, 2013 were $4.0 million compared to $5.4 million for the same period in 2012.
License revenue for the three months ended June 30, 2013 was $697,000 compared to $2.3 million for the same period in 2012.
Support Services revenue (which represents contracted continuing revenue) was $2.0 million for the quarter ended June 30, 2013 compared to $2.1 million for the same quarter last year.
Professional Services revenue for the second quarter of 2013 was $1.3 million, compared to $1.0 million for the same quarter in 2012.
GAAP Profitability
Total expenses (cost of revenue and operating expenses) for the three months ended June 30, 2013 were $5.1 million compared to $5.5 million in the comparable period of 2012.
Operating income (loss) for the three months ended June 30, 2013 was $(1.1) million compared to $(54,000) in the comparable period in 2012.
Net income (loss) for the three months ended June 30, 2013 was $(1.1) million, or $(0.04) per basic and diluted share (based on 26.1 million basic and diluted weighted average shares), compared to $(39,000), or $(0.00) per basic and diluted share (based on 25.9 million basic and diluted weighted average shares), in the same quarter of 2012.
Non-GAAP Profitability
EBITDA, a non-GAAP metric, was $217,000, or $0.01 per basic and diluted share (based on 26.1 million basic and diluted weighted average shares), for the three months ended June 30, 2013 compared to $831,000, or $0.03 per basic and diluted share (based on 25.9 million basic and diluted weighted average shares), for the three months ended June 30, 2012.
Balance Sheet
As of June 30, 2013, the Company had $2.3 million in cash and cash equivalents and $1.3 million in accounts receivable.
WEBCAST AND CONFERENCE CALL INFORMATION
Management will conduct a live teleconference to discuss its 2013 second quarter financial results at 4:30 p.m. EDT on Monday, August 12, 2013. Anyone interested in participating should call 1-877-941-2068 if calling from the United States, or 1-480-629-9712 if dialing internationally. A replay will be available until August 26, 2013, which can be accessed by dialing 1-877-870-5176 within the United States and 1-858-384-5517 if dialing internationally. Please use passcode 4634232 to access the replay.
In addition, the call will be webcast and will be available on the Company's website at www.cover-all.com.
FORWARD-LOOKING STATEMENTS
Statements in this press release, other than statements of historical information, are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks which may cause the Company's actual results in future periods to differ materially from expected results. Those risks include, among others, risks associated with increased competition, customer decisions, the successful completion of continuing development of new products, the successful negotiations, execution and implementation of anticipated new software contracts, the successful implementation of our acquisition strategies and our ability to complete or integrate acquisitions, the successful addition of personnel in the marketing and technical areas, our ability to complete development and sell and license our products at prices which result in sufficient revenues to realize profits and other business factors beyond the Company's control. Those and other risks are described in the Company's filings with the Securities and Exchange Commission ("SEC") over the last 12 months, including but not limited to the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on March 29, 2013, copies of which are available from the SEC or may be obtained upon request from the Company.
ABOUT NON-GAAP FINANCIAL MEASURES
In evaluating its business, Cover-All considers and uses EBITDA as a supplemental measure of its operating performance. The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. The Company presents EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.
The term EBITDA is not defined under U.S. generally accepted accounting principles ("U.S. GAAP") and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. EBITDA has limitations as an analytical tool, and when assessing the Company's operating performance, investors should not consider EBITDA in isolation or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Among other things, EBITDA does not reflect the Company's actual cash expenditures. Other companies may calculate similar measures differently than Cover-All, limiting their usefulness as comparative tools. Cover-All compensates for these limitations by relying on its U.S. GAAP results and using EBITDA only supplementally.
ABOUT COVER-ALL TECHNOLOGIES INC.
Cover-All Technologies Inc., since 1981, has been a leader in developing sophisticated software solutions for the property and casualty insurance industry - the first to deliver PC-based commercial insurance rating and policy issuance software. Currently, Cover-All is building on its reputation for quality insurance solutions, knowledgeable people and outstanding customer service by creating new and innovative insurance solutions that leverage the latest technologies and bring its customers outstanding capabilities and value. With its extensive insurance knowledge, experience and commitment to quality, Cover-All continues its tradition of developing technology solutions designed to revolutionize the way the property and casualty insurance business is conducted. Additional information is available online at www.cover-all.com.
Cover-All®, My Insurance Center™ (MIC) NexGen, Insurance Policy Database™ (IPD) and PipelineClaims™ are trademarks or registered trademarks of Cover-All Technologies Inc. All other company and product names mentioned are trademarks or registered trademarks of their respective holders.
Cover-All Technologies Inc. and Subsidiaries | ||||||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues: | ||||||||||||||||
Licenses | $ | 696,599 | $ | 2,296,000 | $ | 4,319,848 | $ | 2,425,998 | ||||||||
Support Services | 1,981,215 | 2,141,182 | 4,004,178 | 4,281,359 | ||||||||||||
Professional Services | 1,325,694 | 1,001,164 | 2,565,315 | 2,283,083 | ||||||||||||
Total Revenues | 4,003,508 | 5,438,346 | 10,889,341 | 8,990,440 | ||||||||||||
Cost of Revenues: | ||||||||||||||||
Licenses | $ | 871,017 | 1,187,770 | 2,323,124 | 2,175,540 | |||||||||||
Support Services | 1,636,114 | 1,549,203 | 4,313,964 | 3,047,702 | ||||||||||||
Professional Services | 765,485 | 1,287,877 | 1,442,766 | 2,566,167 | ||||||||||||
Total Cost of Revenues | 3,272,616 | 4,024,850 | 8,079,854 | 7,789,409 | ||||||||||||
Direct Margin | 730,892 | 1,413,496 | 2,809,487 | 1,201,031 | ||||||||||||
Operating Expenses: | ||||||||||||||||
Sales and Marketing | 525,618 | 812,137 | 1,173,671 | 1,348,584 | ||||||||||||
General and Administrative | 488,932 | 449,642 | 1,065,961 | 871,123 | ||||||||||||
Acquisition Costs | — | — | — | 136,957 | ||||||||||||
Research and Development | 774,745 | 205,331 | 825,755 | 359,506 | ||||||||||||
Total Operating Expenses | 1,789,295 | 1,467,110 | 3,065,387 | 2,716,170 | ||||||||||||
Operating Income (Loss) | (1,058,403 | ) | (53,614 | ) | (255,900 | ) | (1,515,139 | ) | ||||||||
Other Expense (Income) | ||||||||||||||||
Interest Expense | 90,912 | — | 183,423 | — | ||||||||||||
Interest Income | — | (5 | ) | — | (37 | ) | ||||||||||
Other Income | (3,821 | ) | (14,441 | ) | (3,821 | ) | (14,539 | ) | ||||||||
Total Other (Income) Expense | 87,091 | (14,446 | ) | 179,602 | (14,576 | ) | ||||||||||
Income (Loss) Before Income Taxes | (1,145,494 | ) | (39,168 | ) | (435,502 | ) | (1,500,563 | ) | ||||||||
Income Taxes | 3,505 | — | 8,171 | — | ||||||||||||
Net Income (Loss) | $ | (1,148,999 | ) | $ | (39,168 | ) | $ | (443,673 | ) | $ | (1,500,563 | ) | ||||
Basic Earnings (Loss) Per Common Share | $ | (0.04 | ) | $ | (0.00 | ) | $ | (0.02 | ) | $ | (0.06 | ) | ||||
Diluted Earnings (Loss) Per Common Share | $ | (0.04 | ) | $ | (0.00 | ) | $ | (0.02 | ) | $ | (0.06 | ) | ||||
Weighted Average Number of Common Shares Outstanding for Basic Earnings Per Common Share | 26,082,000 | 25,858,000 | 26,026,000 | 25,858,000 | ||||||||||||
Weighted Average Number of CommonShares Outstanding for Diluted Earnings Per Common Share | 26,082,000 | 25,858,000 | 26,026,000 | 25,858,000 | ||||||||||||
Cover-All Technologies Inc. and Subsidiaries | ||||||||
CONSOLIDATED BALANCE SHEET (UNAUDITED) | ||||||||
June 30, 2013 | December 31, 2012 | |||||||
(Unaudited) | ||||||||
Assets: | ||||||||
Current Assets: | ||||||||
Cash and Cash Equivalents | $ | 2,287,982 | $ | 1,353,892 | ||||
Accounts Receivable (Less Allowance for Doubtful Accounts of $25,000) | 1,342,327 | 2,365,750 | ||||||
Prepaid Expenses | 780,166 | 528,398 | ||||||
Deferred Tax Asset | 910,998 | 910,998 | ||||||
Total Current Assets | 5,321,473 | 5,159,038 | ||||||
Property and Equipment - Net | 812,959 | 922,881 | ||||||
Goodwill | 1,039,114 | 1,039,114 | ||||||
Capitalized Software (Less Accumulated Amortization of $19,931,872 and $17,658,748 in 2013 and 2012, Respectively) | 9,599,157 | 10,441,992 | ||||||
Customer Lists/Relationships (Less Accumulated Amortization of $311,000 and $260,093 in 2013 and 2012, Respectively) | 91,000 | 141,907 | ||||||
Deferred Tax Asset | 2,614,430 | 2,614,430 | ||||||
Deferred Financing Costs (Net Amortization of $21,563 and $7,870 in 2013 and 2012, Respectively) | 70,720 | 84,413 | ||||||
Other Assets | 255,206 | 362,806 | ||||||
Total Assets | $ | 19,804,059 | $ | 20,766,581 | ||||
Liabilities and Stockholders' Equity: | ||||||||
Current Liabilities: | ||||||||
Accounts Payable | $ | 1,499,386 | $ | 1,681,007 | ||||
Accrued Expenses | 602,425 | 1,390,533 | ||||||
Accrued Income Taxes | 16,159 | — | ||||||
Deferred Charges | 246,023 | 83,455 | ||||||
Current Portion of Capital Lease | 112,233 | 109,878 | ||||||
Unearned Revenue | 2,376,966 | 2,426,810 | ||||||
Total Current Liabilities | 4,853,192 | 5,691,683 | ||||||
Long-Term Liabilities: | ||||||||
Long-Term Debt | 1,545,876 | 1,457,945 | ||||||
Long-Term Portion of Capital Lease | 411,067 | 476,664 | ||||||
Total Liabilities | 6,810,135 | 7,626,292 | ||||||
Commitments and Contingencies | — | — | ||||||
Stockholders' Equity: | ||||||||
Common Stock, $.01 Par Value, Authorized 75,000,000 Shares; 26,196,106 and 25,936,106 Shares Issued and Outstanding in 2013 and 2012, Respectively | 261,961 | 259,361 | ||||||
Additional Paid-In Capital | 32,298,617 | 32,003,909 | ||||||
Accumulated Deficit | (19,566,654 | ) | (19,122,981 | ) | ||||
Total Stockholders' Equity | 12,993,924 | 13,140,289 | ||||||
Total Liabilities and Stockholders' Equity | $ | 19,804,059 | $ | 20,766,581 | ||||
Cover-All Technologies Inc. and Subsidiaries | ||||||||||||||||
EBITDA RECONCILIATION TO U.S. GAAP NET INCOME (UNAUDITED) | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net Income (Loss) | $ | (1,148,999 | ) | $ | (39,168 | ) | $ | (443,673 | ) | $ | (1,500,563 | ) | ||||
Interest Expense (Income), Net | 90,912 | (5 | ) | 183,423 | (37 | ) | ||||||||||
