USA Technologies Announces Preliminary Estimated Results for Fourth Quarter and Fiscal Year 2017

MALVERN, Pa.–(BUSINESS WIRE)–USA Technologies, Inc. (NASDAQ:USAT), a premier payment technology
service provider of integrated cashless and mobile transactions in the
self-service retail market, today announced preliminary estimated
financial results for the fourth quarter and fiscal year ended June 30,
2017.

The company’s financial closing procedures for the quarter and fiscal
year ended June 30, 2017 are not yet complete. Its consolidated
financial statements for the fiscal year ended June 30, 2017 are not yet
available and the company’s independent registered public accounting
firm has not completed its audit of the consolidated financial
statements for such period. Set forth below are certain estimates that
the company expects to report for the quarter and fiscal year ended June
30, 2017. The company’s actual results may differ materially from these
estimates.

The following are estimates for the quarter ended June 30, 2017:

  • Revenues of between $32 million to $34 million, representing an
    increase of between 46% to 55% over revenues for the fourth quarter
    ended June 30, 2016;
  • Net income (loss) of between $(400,000) to $400,000, representing an
    improvement of between 54% to 146% over net loss for the fourth
    quarter ended June 30, 2016;
  • Adjusted EBITDA of between $2.3 million to $3.1 million, representing
    an increase of between 267% and 395% over Adjusted EBITDA for the
    fourth quarter ended June 30, 2016; and
  • Net new connections of 64,000, representing an increase of 129% over
    net new connections during the company’s fiscal quarter ended June 30,
    2016. The number of net new connections added to the company’s service
    during the fiscal fourth quarter ended June 30, 2017 reflected a
    significant order received from an existing customer related to the
    customer’s efforts to attain a 100% cashless presence in the
    marketplace.

The following are estimates for the fiscal year ended June 30, 2017:

  • Revenues of between $102 million to $104 million, representing an
    increase of between 32% to 34% over revenues during the company’s
    fiscal year ended June 30, 2016;
  • Net loss of between $(2.5) million to $(1.7) million representing an
    improvement of between 63% to 75% over net loss for the company’s
    fiscal year ended June 30, 2016;
  • Adjusted EBITDA of between $6.5 million to $7.3 million, representing
    an increase of between 9% and 22% over Adjusted EBITDA for the fiscal
    year ended June 30, 2016; and
  • Net new connections of 139,000, representing an increase of 45% over
    net new connections during the company’s fiscal year ended June 30,
    2016, reflecting the significant order referred to above.

During the fiscal year ended June 30, 2017, the company estimates that
approximately 66% of its revenues consisted of license and transaction
fees and approximately 34% of its revenues consisted of equipment sales.

During the fiscal year ended June 30, 2017, the dollar transaction
volume was approximately $800 million which is an increase of
approximately 37% over the dollar transaction volume during the fiscal
year ended June 30, 2016. Based upon the company’s dollar transaction
volume during the fourth fiscal quarter ended June 30, 2017, the
annualized dollar transaction volume would be approximately $900
million, which is an increase of approximately 32% over the company’s
dollar transaction volume during the fourth quarter ended June 30, 2016.

Adjusted EBITDA Description and Reconciliation

The company considers Adjusted EBITDA as net income (loss) before
interest income, interest expense, income taxes, depreciation,
amortization, non-recurring fees and charges that were incurred in
connection with the integration of the VendScreen business, change in
fair value of warrant liabilities and stock-based compensation expense.
The company has excluded the non-operating item, change in fair value of
warrant liabilities, because it represents a non-cash gain or charge
that is not related to our operations. The company excluded the non-cash
expense, stock-based compensation, as it does not reflect the company’s
cash-based operations. The company has excluded the non-recurring costs
and expenses incurred in connection with the VendScreen transaction in
order to allow more accurate comparison of the financial results to
historical operations.

Adjusted EBITDA is a non-GAAP financial measure which is not required by
or defined under GAAP (Generally Accepted Accounting Principles). The
company uses these non-GAAP financial measures for financial and
operational decision-making purposes and as a means to evaluate
period-to-period comparisons. The company believes that these non-GAAP
financial measures provide useful information about its operating
results, enhance the overall understanding of past financial performance
and future prospects and allow for greater transparency with respect to
metrics used by management in its financial and operational decision
making. Adjusted EBITDA is presented because the company believes it is
useful to investors as a measure of comparative operating performance.
Additionally, the company utilizes Adjusted EBITDA as a metric in its
executive officer and management incentive compensation plans.

The presentation of this financial measure is not intended to be
considered in isolation or as a substitute for the financial measures
prepared and presented in accordance with GAAP, including the company’s
net income or net loss or net cash used in operating activities.
Management recognizes that non-GAAP financial measures have limitations
in that they do not reflect all of the items associated with the
company’s net income or net loss as determined in accordance with GAAP,
and are not a substitute for or a measure of the company’s profitability
or net earnings.

The following table reconciles estimated preliminary Adjusted EBITDA to
estimated preliminary net income (loss) for the three months and fiscal
year ended June 30, 2017, and actual Adjusted EBITDA to net income
(loss) for the three months and fiscal year ended June 30, 2016:

   
Three months ended

Twelve months ended

($ in thousands) 6/30/2017   6/30/2016 6/30/2017   6/30/2016
(Preliminary) (Actual) (Preliminary) (Actual)
Net income (loss) $

(400) – 400

 

$ (872 ) $

(2,500) – (1,700)

 

$ (6,806 )
Less interest income (100 ) (182 ) (500 ) (320 )
Plus interest expenses 300 197 900 600
Plus income tax provision / (Less income tax benefit) 50 (703 ) 150 (615 )
Plus depreciation expense 1,850 1,272 5,400 5,135
Plus amortization expense   50     44     200     88  
EBITDA   1,750 – 2,550     (244 )   3,650 – 4,450     (1,918 )
 
Plus loss on fair value of warrant liabilities / (Less gain on fair
value of warrant liabilities)
(18 ) 1,500 5,674
Plus stock-based compensation 550 198 1,200 849
Plus intangible asset impairment 432 432
Plus VendScreen non-recurring charges 258 100 842
Plus Litigation related professional fees           50     105  
Adjustments to EBITDA   550     870     2,850     7,902  
Adjusted EBITDA $ 2,300 – 3,100   $ 626   $ 6,500 – 7,300   $ 5,984  
 

About USA Technologies

USA Technologies, Inc. is a premier payment technology service provider
of integrated cashless and mobile transactions in the self-service
retail market. The company also provides a broad line of cashless
acceptance technologies including its NFC-ready ePort® G-series, ePort®
Connect, ePort® Interactive, QuickConnect, an API Web service for
developers, and MORE., a customizable loyalty program. USA Technologies
has 73 United States and foreign patents in force; and has agreements
with Verizon, Visa, Chase Paymentech and customers such as Compass, AMI
Entertainment and others. For more information, please visit the website
at www.usatech.com.

Forward-Looking Statements

USAT cautions you that statements in this press release that are not a
description of historical facts are forward-looking statements. These
statements are based on the company’s current beliefs and expectations.
The inclusion of forward-looking statements should not be regarded as a
representation by USAT that any of our plans will be achieved. Actual
results may differ from those set forth in this press release due to
conditions affecting the capital markets, general economic, industry, or
political conditions, and other risks described in our prior press
releases and in our filings with the Securities and Exchange Commission,
including under the heading “Risk Factors” in our Annual Report on Form
10-K. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof, and
we undertake no obligation to revise or update this press release to
reflect events or circumstances after the date hereof. All
forward-looking statements are qualified in their entirety by this
cautionary statement, which is made under the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995.

F-USAT

Contacts

Investor Contact:
The Blueshirt Group
Mike Bishop, +1
415-217-4968
[email protected]