COVER-ALL TECHNOLOGIES INC Cover-All Technologies Inc. (NYSE MKT: COVR) today announced financial results for the quarter and year ended December 31, 2014.
“While total revenues were flat compared to last year’s record revenues, profitability improved significantly to $0.4 million for 2014 from a net loss of $2.9 million last year,” said Manish Shah, CEO and President of Cover-All. “Profitability would have been even higher had it not been for $0.4 million of expenses we incurred during the 2014 fourth quarter as a result of the proposed merger with Majesco we announced on December 14, 2014. Improvements to profitability and prudent cash management meaningfully improved our liquidity and balance sheet, and at December 31, 2014 the Company’s cash position increased nearly 150% to $4.6 million.
“We reported record professional services revenue in 2014 driven by implementations of last year’s licensing sales. Throughout 2014, we successfully completed several implementation phases and helped five customers go live with their Cover-All products. Successful and rapid implementations are critically important as we work on achieving the next cycle of licensing sales. Strong demand for professional services continues to increase as a result of ongoing implementation projects, as well as the next rounds of recently completed implementations at existing customers. We expect demand for professional services to remain strong throughout 2015. Cover-All’s ability to implement our software quickly and cost effectively increases our value proposition to potential customers and enhances our credibility within the industry.
“The other significant milestone of 2014 was the December 14 merger announcement with Majesco. This is a transformative opportunity for Cover-All’s shareholders, employees and customers. The merger should improve our competitiveness as there are a limited amount of vendors in the marketplace today that will compare to the combined company’s proven and comprehensive solutions. We are excited about this opportunity, which accelerates the creation of shareholder value through what we expect to be faster and more consistent growth. Majesco is expected to file a registration statement on Form S-4 on February 19, 2015 and we look forward to providing more details on the proposed merger in our conference call and webcast today.”
FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2014
Revenue
- Total revenues for the year ended December 31, 2014 were $20.5 million, compared to $20.5 million in 2013.
- License revenue was $1.1 million in 2014, down 81% compared to $5.9 million in 2013.
- Support Services revenue (which represents contracted continuing revenue) was $8.4 million in 2014, compared to $8.1 million in 2013, an increase of 3%.
- Professional Services revenue was $11.0 million in 2014, up 71% compared to $6.4 million in 2013.
GAAP Profitability
- Operating income for the year ended December 31, 2014 was $0.8 million compared to a loss of $2.4 million in 2013.
- Net income for the year ended December 31, 2014 was $0.4 million, or $0.01 per basic and diluted share, compared to a net loss of $(2.9) million, or $(0.11) per basic and diluted share, in the same period of 2013.
Non-GAAP* Profitability
- Earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP metric, for the year ended December 31, 2014 was $2.6 million, or $0.10 per basic and diluted share, compared to $2.6 million, or $0.10 per basic and diluted share, in the same period of 2013. Excluding merger costs in 2014 and restructuring costs in 2013, EBITDA for 2014 would have been $3.0 million or $0.11 per basic and diluted share, compared to $2.9 million, or $0.11 per diluted share in 2013.
- Net income, excluding non-recurring acquisition and restructuring related costs, a non-GAAP metric, for the year ended December 31, 2014 was $0.8 million, or $0.03 per basic and diluted share, compared to a net loss of $(2.6) million, or $(0.10) per basic and diluted share, in the same period of 2013.
Balance Sheet
- As of December 31, 2014, the Company had $4.6 million in cash and cash equivalents and $2.5 million in accounts receivable.
FINANCIAL HIGHLIGHTS FOR THE FOURTH QUARTER ENDED DECEMBER 31, 2014
Revenue
- Total revenues for the three months ended December 31, 2014 were $5.3 million, compared to $4.5 million for the same period in 2013, an increase of 16%.
- License revenue for the fourth quarter of 2014 was $34,000 compared to $599,000 for the same period in 2013.
- Support Services revenue (which represents contracted continuing revenue) was $2.0 million for the fourth quarter of 2014, down 5% compared to $2.1 million for the same quarter last year.
- Professional Services revenue for the fourth quarter of 2014 was $3.2 million, compared to $1.8 million for the same quarter in 2013, an increase of 78%.
GAAP Profitability
- Operating loss for the three months ended December 31, 2014 was $(0.5) million, compared to an operating loss of $(1.3) million in the comparable period in 2013.
- Net loss for the three months ended December 31, 2014 was $(0.6) million, or $(0.02) per basic and diluted share, compared to a net loss of $(1.5) million, or $(0.06) per basic and diluted share, in the same quarter of 2013.
Non-GAAP* Profitability
- EBITDA, a non-GAAP metric, was a loss of $(32,000), or $0.00 per basic and diluted share, for the fourth quarter of 2014, compared to a loss of $(65,720), or $0.00 per basic and diluted share, for the fourth quarter of 2013.
- Net loss excluding non-recurring acquisition and restructuring related costs, a non-GAAP metric, for the three months ended December 31, 2014 was $(0.2) million, or $(0.01) per basic and diluted share, compared to a net loss of $(1.5) million, or $(0.06) per basic and diluted share, for the same period in 2013.
WEBCAST, CONFERENCE CALL AND PRESENTATION INFORMATION
Management of Cover-All and Majesco will conduct a live teleconference to discuss Cover-All’s 2014 financial results and provide investors an update on the proposed merger at 4:30 p.m. EST on Thursday, February 19, 2015. Anyone interested in participating should call 888-397-5352 if calling from the U.S., or 719-457-2645 if dialing internationally. A replay will be available until March 5, 2015, which can be accessed by dialing 877-870-5176 within the U.S. and 858-384-5517 if dialing internationally. Please use passcode 9018125 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 or by visiting http://public.viavid.com/index.php?id=113019. During the webcast, management will be using a presentation which is accessible using the webcast link above. The presentation will also be available on Cover-All’s website.
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, 2013, filed with the SEC on March 28, 2014, 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 (“GAAP”) and is not a measure of operating income, operating performance or liquidity presented in accordance with 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 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 GAAP results and using EBITDA only supplementally.
ABOUT COVER-ALL TECHNOLOGIES INC.
Cover-All provides property and casualty insurance professionals a robust state-of-the-art, browser-based family of Policy, Business Intelligence, and Claims solutions designed to deliver products to market faster, enhance quality, ensure compliance, and reduce costs. With offices in Morristown, NJ and Honolulu, HI, Cover-All continues its tradition of developing technology solutions designed to revolutionize the way property and casualty insurance business is conducted.
Additional information is available online at www.cover-all.com.
| Cover-All Technologies Inc. and Subsidiaries | |||||||||||||||
| CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||
| (UNAUDITED) | |||||||||||||||
| Three months ended December 31, | Year ended December 31, | ||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Revenues: | |||||||||||||||
Licenses | $ | 33,517 | $ | 598,903 | $ | 1,101,231 | $ | 5,947,225 | |||||||
| Support Services | 2,033,963 | 2,140,902 | 8,427,649 | 8,147,108 | |||||||||||
| Professional Services | 3,198,415 | 1,794,486 | 10,949,550 | 6,388,403 | |||||||||||
| Total Revenues | 5,265,895 | 4,534,291 | 20,478,430 | 20,482,736 | |||||||||||
| Cost of Revenues: | |||||||||||||||
| Licenses | — | 80,363 | — | 147,670 | |||||||||||
| Support Services | 1,420,814 | 1,209,675 | 6,049,385 | 7,089,456 | |||||||||||
| Professional Services | 1,396,319 | 1,173,160 | 5,015,313 | 3,499,100 | |||||||||||
| Total Cost of Revenues | 2,817,133 | 2,463,198 | 11,064,698 | 10,736,226 | |||||||||||
| Direct Margin | 2,448,762 | 2,071,093 | 9,413,732 | 9,746,510 | |||||||||||
| Operating Expenses: | |||||||||||||||
| Sales and Marketing | 442,911 | 480,759 | 2,002,036 | 2,255,059 | |||||||||||
| General and Administrative | 1,376,891 | 1,060,218 | 3,603,553 | 2,618,543 | |||||||||||
| Amortization of Capital Software | 372,638 | 1,186,659 | 1,490,552 | 4,646,443 | |||||||||||
| Acquisition Costs | 406,298 | — | 406,298 | — | |||||||||||
| Restructuring Cost | — | — | — | 319,014 | |||||||||||
| Research and Development | 327,844 | 681,587 | 1,130,070 | 2,315,198 | |||||||||||
| Total Operating Expenses | 2,926,582 | 3,409,223 | 8,632,509 | 12,154,257 | |||||||||||
| Operating (Loss) Income | (477,820 | ) | (1,338,130 | ) | 781,223 | (2,407,747 | ) | ||||||||
| Other (Income) Expense: | |||||||||||||||
| Interest Expense | 76,407 | 188,251 | 362,256 | 464,071 | |||||||||||
| Interest Income | — | — | — | — | |||||||||||
| Other Income | — | — | — | (3,821 | ) | ||||||||||
| Total Other (Income) Expense | 76,407 | 188,251 | 362,256 | 460,250 | |||||||||||
| (Loss) Income Before Income Taxes | (554,227 | ) | (1,526,381 | ) | 418,967 | (2,867,997 | ) | ||||||||
| Income Taxes | 6,001 | 11,914 | 52,479 | 30,380 | |||||||||||
| Net (Loss) Income | $ | (560,228 | ) | $ | (1,538,295 | ) | $ | 366,488 | $ | (2,898,377 | ) | ||||
| Basic Earnings (Loss) Per Common Share | $ | (0.02 | ) | $ | (0.06 | ) | $ | 0.01 | $ | (0.11 | ) | ||||
| Diluted Earnings (Loss) Per Common Share | $ | (0.02 | ) | $ | (0.06 | ) | $ | 0.01 | $ | (0.11 | ) | ||||
| Weighted Average Number of Common Shares Outstanding for Basic Earnings (Loss) Per Common Share | 26,628,000 | 26,348,000 | 26,628,000 | 26,173,000 | |||||||||||
| Weighted Average Number of Common Shares Outstanding for Diluted Earnings (Loss) Per Common Share | 26,628,000 | 26,348,000 | 26,628,000 | 26,173,000 | |||||||||||
| Cover-All Technologies Inc. and Subsidiaries | ||||||||
| CONSOLIDATED BALANCE SHEET | ||||||||
| (UNAUDITED) | ||||||||
| December 31, 2014 | December 31, 2013 | |||||||
| Assets: | ||||||||
| Current Assets: | ||||||||
| Cash and Cash Equivalents | $ | 4,564,595 | $ | 1,848,571 | ||||
Accounts Receivable (Less Allowance for Doubtful Accounts of $25,000) | 2,532,853 | 2,604,489 | ||||||
| Prepaid Expenses | 361,930 | 491,905 | ||||||
| Deferred Tax Asset | 864,037 | 850,500 | ||||||
| Total Current Assets | 8,323,415 | 5,795,465 | ||||||
| Property and Equipment – Net | 499,639 | 708,590 | ||||||
| Goodwill | 1,039,114 | 1,039,114 | ||||||
| Capitalized Software (Less Accumulated Amortization of $23,795,743 and $22,305,191, Respectively) | 6,474,031 | 7,964,583 | ||||||
Customer Lists/Relationships (Less Accumulated Amortization of $402,000 and $341,333, Respectively) | — | 60,667 | ||||||
| Deferred Tax Asset | 2,661,391 | 2,674,928 | ||||||
Deferred Financing Costs (Net of Amortization of $67,000 and $36,082, Respectively) | 24,483 | 56,201 | ||||||
| Other Assets | 148,290 | 424,522 | ||||||
| Total Assets | $ | 19,170,363 | $ | 18,724,070 | ||||
| Liabilities and Stockholders’ Equity: | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | 1,413,353 | $ | 1,059,238 | ||||
| Accrued Expenses Payable | 1,253,298 | 1,412,400 | ||||||
| Deferred Charges | 183,219 | 231,051 | ||||||
| Short-Term Debt | 1,842,780 | — | ||||||
| Current Portion of Capital Lease | 119,608 | 114,640 | ||||||
| Deferred Revenue | 2,454,435 | 2,997,455 | ||||||
| Total Current Liabilities | 7,266,693 | 5,814,784 | ||||||
| Long-Term Liabilities: | ||||||||
| Long-Term Debt | — | 1,639,109 | ||||||
| Long-Term Portion of Capital Lease | 233,531 | 353,139 | ||||||
| Total Long Term Liabilities | 233,531 | 1,992,248 | ||||||
| Total Liabilities | 7,500,224 | 7,807,032 | ||||||
| Commitments and Contingencies | — | — | ||||||
| Stockholders’ Equity: | ||||||||
|
Common Stock, $.01 Par Value, Authorized 75,000,000 Shares; 26,786,693 and 26,402,227 Shares Issued and Outstanding in 2014 and 2013, Respectively | 267,867 | 264,022 | ||||||
| Paid-In Capital | 33,057,142 | 32,674,374 | ||||||
| Accumulated Deficit | (21,654,870 | ) | (22,021,358 | ) | ||||
| Total Stockholders’ Equity | 11,670,139 | 10,917,038 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 19,170,363 | $ | 18,724,070 | ||||
| Cover-All Technologies Inc. and Subsidiaries | |||||||||||||||
| RECONCILIATION OF U.S. GAAP NET (LOSS) INCOME TO EBITDA | |||||||||||||||
| (UNAUDITED) | |||||||||||||||
| Three months ended December 31, | Year ended December 31, | ||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Net (Loss) Income | $ | (560,228 | ) | $ | (1,538,295 | ) | $ | 366,488 | $ | (2,898,377 | ) | ||||
| Interest Expense, Net | 76,406 | 188,252 | 362,256 | 464,072 | |||||||||||
| Income Tax Expense | 6,001 | 11,913 | 52,479 | 30,379 | |||||||||||
| Depreciation | 49,317 | 63,218 | 229,540 | 251,853 | |||||||||||
| Amortization | 396,086 | 1,209,192 | 1,582,938 | 4,755,896 | |||||||||||
| EBITDA | $ | (32,418 | ) | $ | (65,720 | ) | $ | 2,593,701 | $ | 2,603,823 | |||||
| EBITDA per Common Share: | |||||||||||||||
| Basic | $ | (0.00 | $ | (0.00 | ) | $ | 0.10 | $ | 0.10 | ||||||
| Diluted | $ | (0.00 | $ | (0.00 | ) | $ | 0.10 | $ | 0.10 | ||||||
| RECONCILIATION OF SELECTED U.S. GAAP MEASURES TO NON U.S. GAAP MEASURES | |||||||||||||||
| (UNAUDITED) | |||||||||||||||
| Three months ended December 31, | Year ended December 31, | ||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Net Income (Loss) (U.S. GAAP) | $ | (560,228 | ) | $ | (1,538,295 | ) | $ | 366,488 | $ | (2,898,377 | ) | ||||
| Acquisition Costs | 406,298 | — | 406,298 | — | |||||||||||
| Restructuring Costs | — | — | — | 319,014 | |||||||||||
| Net Income (Loss) (Excluding Acquisition and Restructuring Costs) (Non U.S. GAAP) | $ | (153,930 | ) | $ | (1,538,295 | ) | $ | 772,786 | $ | (2,579,363 | ) | ||||
| Earnings (Loss) per Common Share (Excluding Acquisition and Restructuring Costs): | |||||||||||||||
| Basic | $ | (0.01 | ) | $ | (0.06 | ) | $ | 0.03 | $ | (0.10 | ) | ||||
| Diluted | $ | (0.01 | ) | $ | (0.06 | ) | $ | 0.03 | $ | (0.10 | ) | ||||
| Three months ended December 31, | Year ended December 31, | |||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
| EBITDA | $ | (32,418 | ) | $ | (65,720 | ) | $ | 2,593,701 | $ | 2,603,823 | ||||||||||||
| Acquisition Costs | 406,298 | — | 406,298 | — | ||||||||||||||||||
| Restructuring Costs | — | — | — | 319,014 | ||||||||||||||||||
| EBITDA (Excluding Acquisition and Restructuring Costs) | $ | 373,880 | $ | (65,720 | ) | $ | 2,999,999 | $ | 2,922,837 | |||||||||||||
| EBITDA per Common Share (Excluding Acquisition and Restructuring Costs): | ||||||||||||||||||||||
| Basic | $ | 0.01 | $ | (0.00 | ) | $ | 0.11 | $ | 0.11 | |||||||||||||
| Diluted | $ | 0.01 | $ | (0.00 | ) | $ | 0.11 | $ | 0.11 | |||||||||||||
