Globalscape® Announces Financial Results for the Fourth Quarter 2013 and Fiscal 2013
Reports Record Annual Revenue for 2013 of $24.3 Million
SAN ANTONIO, Texas — February 13, 2014 — GlobalSCAPE, Inc. (NYSE MKT: GSB), a leading developer of secure information exchange solutions, today announced its financial results for fiscal year 2013 and the three-month period ended December 31, 2013.
Revenue for fiscal year 2013 was $24.3 million, a 4 percent increase over fiscal year 2012 revenue of $23.4 million. Revenue for the three months ended December 31, 2013, was $6.2 million, which equaled revenue for the three months ended December 31, 2012.
Deferred revenue, which the Company believes can be an indicator of future revenue trends, grew to $10.8 million at December 31, 2013, compared to $9.8 million at December 31, 2012, a 10% increase.
For fiscal year 2013, the Company had a net income of $3.8 million, or $0.21 per share basic and $0.20 per share diluted. These results compare to a net loss for fiscal year 2012 of $1.8 million, or ($0.10) per share basic and diluted.
For the three months ended December 31, 2013 the Company had net income of $655,000, or $0.03 per share basic and diluted. For the three months ended December 31, 2012, the Company had a net income of $1.3 million, or $0.07 per share basic and diluted, which included $1.3 million of income resulting from the elimination of a TappIn earnout liability not earned.
Adjusted EBITDA Excluding Infrequent Items was $5.2 million for fiscal year 2013 compared to $2.6 million for fiscal year 2012. Adjusted EBITDA Excluding Infrequent Items was $1.2 million for the three months ended December 31, 2013, compared to $887,000 for the three months ended December 31, 2012.
Amounts reported on a non-GAAP basis and Adjusted EBITDA Excluding Infrequent Items are not measures of financial performance under GAAP. Non-GAAP financial measurements and Adjusted EBITDA Excluding Infrequent Items have limitations as analytical tools and when assessing the Company’s operating performance. Non-GAAP financial measurements and Adjusted EBITDA Excluding Infrequent Items should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with GAAP.
Net cash provided by operating activities was $4.5 million for fiscal year 2013 compared to $3.8 million for fiscal year 2012. This cash flow performance allowed the Company to pay a special cash dividend of $0.05 per share in December 2013 and end the year with $9.5 million of cash and $3.1 million of long term investments at December 31, 2013.
“Our continued revenue growth and strong cash flow performance demonstrates the strength of our solution portfolio, particularly our Enhanced File Transfer platform, and also reflects increased maintenance and support contract revenue across the majority of our product lines.” said James Bindseil, president and chief executive officer of Globalscape. “I look forward to continued growth for fiscal year 2014.”
Conference Call February 13, 2014 at 4:30 p.m. EST
Globalscape management will hold a conference call Thursday, February 13, 2014, 4:30 p.m. EST/3:30 p.m. CST to discuss financial results for the fourth quarter of 2013, the fiscal year as a whole, and other corporate matters. A live webcast of the conference call will be available via the investor relations page of the Company's website at www.globalscape.com. A webcast replay of the conference call will be available via that website through March 13, 2014. Those wishing to join the call by telephone may call 1-877-941-4774 and use Conference ID # 4668384.
About Globalscape
San Antonio, Texas-based GlobalSCAPE, Inc. (NYSE MKT: GSB) ensures the reliability of mission-critical operations by securing sensitive data and intellectual property. Globalscape’s suite of solutions features EFT, the industry-leading enterprise file transfer solution that delivers military-grade security and a customizable platform for achieving best in class control and visibility of data in motion or at rest, across multiple locations. Founded in 1996, Globalscape is a leading enterprise solution provider of secure information exchange software and services to thousands of customers, including global enterprises, governments and small businesses. For more information, visit www.globalscape.com or follow the blog and Twitter updates.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "would," "exceed," "should," "anticipates," "believe," "steady," "dramatic," and variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. These forward-looking statements are based upon the Company’s current expectations and are subject to a number of risks, uncertainties and assumptions. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ significantly from those expressed or implied by such forward-looking statements are risks that are detailed in the Company’s Annual Report on Form 10-K for the 2012 calendar year, filed with the Securities and Exchange Commission on March 28, 2013.
Summary Financial Data
GlobalSCAPE, Inc.
Statements of Operations
(Unaudited)
(in thousands, except per share amounts)
| | | Three months ended December 31, | | | For the Year Ended December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | | | | | | | | | | | |
| Operating Revenues: | | | | | | | | | | | | |
| Software license | | $ | 2,120 | | | $ | 2,231 | | | $ | 8,086 | | | $ | 9,447 | |
| Maintenance and support | | | 3,522 | | | | 3,108 | | | | 13,650 | | | | 11,298 | |
| Professional services | | | 242 | | | | 534 | | | | 1,479 | | | | 1,547 | |
| Others | | | 313 | | | | 326 | | | | 1,124 | | | | 1,080 | |
| Total Revenues | | | 6,197 | | | | 6,199 | | | | 24,339 | | | | 23,372 | |
| Operating Expenses: | | | | | | | | | | | | | | | | |
| Cost of revenues | | | 229 | | | | 334 | | | | 1,011 | | | | 1,296 | |
| Selling, general and administrative expenses | | | 3,744 | | | | 4,270 | | | | 14,881 | | | | 16,761 | |
| Research and development expenses | | | 1,113 | | | | 870 | | | | 3,766 | | | | 3,531 | |
| Affiliated entity asset impairment | | | 0 | | | | 0 | | | | 0 | | | | 3,264 | |
TappIn intangible asset impairment and earnout liability elimination | | | 0 | | | | (1,343 | ) | | | (128 | ) | | | (1,303 | ) |
| Depreciation and amortization | | | 121 | | | | 266 | | | | 908 | | | | 1,217 | |
| Total operating expenses | | | 5,207 | | | | 4,397 | | | | 20,438 | | | | 24,766 | |
| Income (loss) from operations | | | 990 | | | | 1,802 | | | | 3,901 | | | | (1,394 | ) |
| Other income (expense) | | | (35 | ) | | | (51 | ) | | | (165 | ) | | | (189 | ) |
| Income (loss) before income taxes | | | 955 | | | | 1,751 | | | | 3,736 | | | | (1,583 | ) |
| Provision (benefit) for income taxes | | | 300 | | | | 444 | | | | (104 | ) | | | 217 | |
| Net income (loss) | | $ | 655 | | | $ | 1,307 | | | $ | 3,840 | | | $ | (1,800 | ) |
| | | | | | | | | | | | | | | | | |
| Net income (loss) per common share - basic | | $ | 0.03 | | | $ | 0.07 | | | $ | 0.21 | | | $ | (0.10 | ) |
| Net income (loss) per common share - diluted | | $ | 0.03 | | | $ | 0.07 | | | $ | 0.20 | | | $ | (0.10 | ) |
| Average shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 18,873 | | | | 18,421 | | | | 18,626 | | | | 18,358 | |
| Diluted | | | 19,461 | | | | 18,959 | | | | 19,082 | | | | 18,358 | |
GlobalSCAPE, Inc.
Balance Sheets
(Unaudited)
In thousands except per share amounts.
| | | December 31, | | | December 31, | |
| | | 2013 | | | 2012 | |
| | | | | | | |
| Assets | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 9,455 | | | $ | 8,079 | |
Accounts receivable (net of allowance for doubtful accounts of $154 and $171 on December 31, 2013 and December 31, 2012 respectively) | | | 3,765 | | | | 3,350 | |
| Federal income tax receivable | | | 113 | | | | - | |
| Current deferred tax assets | | | 184 | | | | 177 | |
| Prepaid expenses | | | 349 | | | | 426 | |
| Total current assets | | | 13,866 | | | | 12,032 | |
| | | | | | | | | |
| Fixed assets, net | | | 744 | | | | 900 | |
| Long-term investments | | | 3,122 | | | | 3,060 | |
| Intangible assets, net | | | 1,028 | | | | 4,308 | |
| Goodwill | | | 12,712 | | | | 12,712 | |
| Deferred tax asset | | | 1,476 | | | | 535 | |
| Other assets | | | 144 | | | | 41 | |
| Total assets | | $ | 33,092 | | | $ | 33,588 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 655 | | | $ | 432 | |
| Accrued expenses | | | 898 | | | | 1,353 | |
| Deferred revenue | | | 9,092 | | | | 8,293 | |
| Income taxes payable | | | - | | | | 46 | |
| TappIn earn out, current portion | | | - | | | | 500 | |
| Long term debt, current portion | | | 1,397 | | | | 1,335 | |
| Total current liabilities | | | 12,042 | | | | 11,959 | |
| | | | | | | | | |
| Deferred revenue, non-current portion | | | 1,708 | | | | 1,480 | |
| TappIn earn out, non-current portion | | | - | | | | 3,694 | |
| Long-term debt. non-current portion | | | 2,989 | | | | 4,389 | |
| Other long term liabilities | | | 60 | | | | 62 | |
| | | | | | | | | |
| Stockholders’ equity: | | | | | | | | |
Preferred stock, par value $0.001 per share, 10,000,000 authorized, no shares issued or outstanding | | | - | | | | - | |
Common stock, par value $0.001 per share, 40,000,000 authorized, 19,590,797 and 18,846,547 issued December 31, 2013 and December 31, 2012 | | | 20 | | | | 19 | |
| Additional paid-in capital | | | 15,834 | | | | 14,435 | |
Treasury stock, 403,581 shares, at cost, at December 31, 2013 and December 31, 2012. | | | (1,452 | ) | | | (1,452 | ) |
| Retained earnings | | | 1,891 | | | | (998 | ) |
| Total stockholders’ equity | | | 16,293 | | | | 12,004 | |
| Total liabilities and stockholders’ equity | | $ | 33,092 | | | $ | 33,588 | |
GlobalSCAPE, Inc.
Statements of Cash Flows
(Unaudited)
| | | For the year ended December 31, | |
| | | 2013 | | | 2012 | |
| Operating Activities: | | | | | | |
| Net income (loss) | | $ | 3,840 | | | $ | (1,800 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | |
| Bad debt expense (recoveries) | | | 29 | | | | 68 | |
| Depreciation and amortization | | | 908 | | | | 1,217 | |
| Stock-based compensation | | | 666 | | | | 915 | |
| Deferred taxes | | | (948 | ) | | | (377 | ) |
Excess tax deficiency (benefit) from exercise of share based compensation | | | 156 | | | | 28 | |
| Affiliated entity asset impairment | | | - | | | | 3,264 | |
TappIn intangible asset impairment and earnout liability elimination | | | (128 | ) | | | (1,343 | ) |
| Other | | | - | | | | 40 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (444 | ) | | | (60 | ) |
| CoreTrace receivable | | | - | | | | (150 | ) |
| Prepaid expenses | | | 77 | | | | (187 | ) |
| Federal income tax | | | (315 | ) | | | 292 | |
| Other assets | | | (103 | ) | | | (11 | ) |
| Accounts payable | | | 223 | | | | (159 | ) |
| Accrued expenses | | | (455 | ) | | | (43 | ) |
| Deferred revenues | | | 1,027 | | | | 2,141 | |
| Other long-term liabilities | | | (2 | ) | | | 9 | |
| Net cash provided by operating activities | | | 4,531 | | | | 3,844 | |
| Investing Activities: | | | | | | | | |
| Software development costs | | | (899 | ) | | | (330 | ) |
| Purchase of property and equipment | | | (139 | ) | | | (213 | ) |
| Purchase of TappIn, Inc. | | | - | | | | (1,500 | ) |
| TappIn, Inc. earnout liability paid | | | (500 | ) | | | - | |
| Interest on long-term investments | | | (62 | ) | | | - | |
| Purchase of long-term investments | | | - | | | | (60 | ) |
| Net cash provided by (used in) investing activities | | | (1,600 | ) | | | (2,103 | ) |
| Financing Activities: | | | | | | | | |
| Proceeds from exercise of stock options | | | 890 | | | | 70 | |
| Tax deficiency (benefit) from stock-based compensation | | | (156 | ) | | | (28 | ) |
| Notes payable principle payments | | | (1,338 | ) | | | (1,276 | ) |
| Proceeds from note payable | | | - | | | | - | |
| Dividends paid out | | | (951 | ) | | | (1,289 | ) |
| Net cash provided by (used in) financing activities | | | (1,555 | ) | | | (2,523 | ) |
| Net (decrease) increase in cash | | | 1,376 | | | | (782 | ) |
| Cash at beginning of period | | | 8,079 | | | | 8,861 | |
| Cash at end of period | | $ | 9,455 | | | $ | 8,079 | |
| | | | | | | | | |
| Supplemental disclosure of cash flow information: | | | | | | | | |
| Cash paid during the period for: | | | | | | | | |
| Interest | | $ | 234 | | | $ | 294 | |
| Income taxes | | $ | 1,161 | | | $ | 271 | |
GlobalSCAPE, Inc.
Adjusted EBITDA Excluding Infrequent Items
(Unaudited)
(In thousands)
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| Net income (loss) | | | 655 | | | | 1,307 | | | | 3,840 | | | | (1,800 | ) |
| Add (subtract) items to determine adjusted EBITDA excluding infrequent items: | | | | | | | | | |
| Income tax expense | | | 300 | | | | 444 | | | | (104 | ) | | | 217 | |
| Other expense | | | 35 | | | | 51 | | | | 165 | | | | 189 | |
| Depreciation and amortization (excluding amortization of capitalized software development costs) | | | 71 | | | | 224 | | | | 734 | | | | 1,130 | |
| Affiliated entity asset impairment | | | - | | | | - | | | | - | | | | 3,264 | |
TappIn intangible asset impairment and earnout liability elimination | | | - | | | | (1,343 | ) | | | (128 | ) | | | (1,303 | ) |
| Stock-based compensation expense | | | 144 | | | | 204 | | | | 666 | | | | 915 | |
| Adjusted EBITDA excluding infrequent items | | $ | 1,205 | | | $ | 887 | | | $ | 5,173 | | | $ | 2,612 | |
Adjusted EBITDA [Earnings before Interest, Taxes, Total Other Income (Expense), Depreciation, and Amortization (including amortized stock-based compensation expense)] Excluding Infrequent Items is not a measure of financial performance under generally accepted accounting principles and should not be considered a substitute for net income. Adjusted EBITDA Excluding Infrequent Items has limitations as an analytical tool and when assessing our operating performance. Adjusted EBITDA Excluding Infrequent Items should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with generally accepted accounting principles.
