Improved Support & Services Margins, Growth in Services
Revenue and Three New Customers
Cover-All Technologies Inc. (NYSE MKT:COVR) today announced
financial results for the quarter ended March 31, 2015.
“I am very pleased with how 2015 has begun, driven by strong
growth in services revenue with improved gross margin during the
2015 first quarter and the recent signing of three new customer
contracts. The new contracts for license, maintenance and
professional services of Cover-All Policy, Bureau products and
Business Intelligence products to three insurance carriers are not
reflected in our financials of the 2015 first quarter because they
each signed in May,” said Manish Shah, CEO and President of
Cover-All. “We are thrilled to have several customers launch our
products into their operations recently. We continue to work with
our customers to help them with their implementation needs and have
started additional projects, which have resulted in strengthening
demand for our professional services.”
“Revenue from professional and support services represented
96.5% of total 2015 first quarter revenues compared to 84.5% last
year, and the gross margin from professional and support services
increased to 41.4% in the 2015 first quarter from 36.5% last year.
This helped us maintain our overall gross margin and profitability
during the quarter, even without the meaningful license revenues
that we had in the 2014 first quarter.”
Mr. Shah concluded, “Going forward, momentum in our business is
building as a result of our innovative and modern P/C insurance
technology solutions, 100% success rate of implementations,
improving financial results, and our proposed merger with Majesco.
Closing new customer contracts is important and helps us generate
license revenues, improve profitability and sustain the next wave
of strong support and professional services revenue. These
developments give us even more cause for excitement for our
proposed merger with Majesco and combining these two growing
organizations.”
FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS ENDED MARCH 31,
2015
Revenue
- Total revenues for the three months
ended March 31, 2015 were approximately $5.3 million compared to
approximately $5.2 million for the same period in 2014.
- License revenue for the three months
ended March 31, 2015 was approximately $180,000 compared to
approximately $808,000 for the same period in 2014.
- Support Services revenue (which
represents contracted continuing revenue) was approximately $2.1
million for the three months ended March 31, 2015 compared to
approximately $2.1 million in the same period in 2014.
- Professional Services revenue for the
three months ended March 31, 2015 was approximately $3.0 million
compared to approximately $2.3 million for the same period in
2014.
Profitability
- Operating income for the three months
ended March 31, 2015 was approximately $360,000 compared to
approximately $531,000 in the comparable period in 2014.
- Net income for the three months ended
March 31, 2015 was approximately $199,000, or $0.01 per basic and
diluted share, compared to approximately $434,000, or $0.02 per
basic and diluted share, in the same period of 2014.
Non-GAAP* Profitability
- Earnings before interest, taxes,
depreciation and amortization (“EBITDA”), a non-GAAP metric, for
the three months ended March 31, 2015 was approximately $788,000,
or $0.03 per basic and diluted share, compared to approximately
$1.0 million, or $0.04 per basic and diluted share, in the same
period of 2014.
Balance Sheet
- As of March 31, 2015, the Company had
approximately $4.3 million in cash and cash equivalents and
approximately $2.5 million in accounts receivable.
- Stockholders’ equity was approximately
$12.2 million as of March 31, 2014 compared to approximately $11.7
million as of December 31, 2014.
WEBCAST AND CONFERENCE CALL INFORMATION
Management will conduct a live teleconference to discuss its
2015 first quarter financial results at 4:30 p.m. EDT on Thursday,
May 14, 2015. Anyone interested in participating should call
888-299-7209 if calling from the United States, or 719-325-2464 if
dialing internationally. A replay will be available until May 28,
2015, which can be accessed by dialing 877-870-5176 within the
United States and 858-384-5517 if dialing internationally. Please
use passcode 3618880 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=114562.
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, 2014, filed with the SEC on March 31, 2015,
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 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®, 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
SubsidiariesCONSOLIDATED STATEMENT OF
OPERATIONS(UNAUDITED)
Three months ended March 31,
2015 2014 Revenues: Licenses $ 179,587
$ 807,599 Support Services 2,116,966 2,129,663 Professional
Services 2,992,816 2,270,288
Total Revenues
5,289,369 5,207,550
Cost of Revenues: Licenses
(exclusive of Amortization of Capitalized Software) — — Support
Services 1,413,263 1,685,454 Professional Services 1,582,221
1,110,657
Total Cost of Revenues 2,995,484
2,796,111
Direct Margin 2,293,885
2,411,439
Operating Expenses: Sales and Marketing 339,855
478,358 General and Administrative 828,928 733,797 Amortization of
Capitalized Software 372,638 372,638 Acquisition Costs 152,546 —
Research and Development 239,770 295,437
Total Operating
Expenses 1,933,737 1,880,230
Operating Income 360,148
531,209
Other (Income) Expense: Interest Expense
98,501 93,672
Total Other (Income) Expense 98,501
93,672
Income Before Income Taxes 261,648 437,537
Income
Taxes Expense 62,836 3,688
Net Income $
198,812 $ 433,849
Basic Earnings Per Common Share $ 0.01 $
0.02
Diluted Earnings Per Common Share $ 0.01 $ 0.02
Weighted Average Number of Common
Shares Outstanding for Basic Earnings Per Common
Share
26,909,000 26,543,000
Weighted Average Number of Common
Shares Outstanding for Diluted Earnings Per Common
Share
26,909,000 26,555,000
Cover-All Technologies Inc. and
SubsidiariesCONSOLIDATED BALANCE
SHEET(UNAUDITED)
March 31, 2015
December 31, 2014
(unaudited) Assets: Current Assets: Cash and Cash
Equivalents $ 4,303,405 $ 4,564,595 Accounts Receivable (Less
Allowance for Doubtful Accounts of $25,000) 2,477,745 2,532,853
Prepaid Expenses 614,125 361,930 Deferred Tax Asset 864,037
864,037 Total Current Assets 8,259,312 8,323,415 Property
and Equipment – Net 454,302 499,639 Goodwill 1,039,114 1,039,114
Capitalized Software (Less Accumulated
Amortization of $24,168,382 and$23,795,743 in 2015 and 2014,
respectively)
6,101,392 6,474,031 Deferred Tax Asset 2,661,391 2,661,391
Deferred Financing Costs (Net Amortization
of $76,327 and $67,800 in 2015 and2014, respectively)
15,956 24,483 Other Assets 148,290 148,290 Total Assets $
18,679,757 $ 19,170,363
Liabilities and Stockholders’
Equity: Current Liabilities: Accounts Payable $ 1,415,327 $
1,413,353 Accrued Expenses 453,911 1,253,298 Deferred Charges
168,510 183,219 Short Term Debt 1,897,535 1,842,780 Current Portion
of Capital Lease 120,883 119,608 Unearned Revenue 2,254,674
2,454,435 Total Current Liabilities 6,310,841
7,266,693 Long-Term Liabilities: Long-Term Portion of
Capital Lease 202,828 233,531 Total Liabilities
6,513,669 7,500,224 Commitments and Contingencies — —
Stockholders’ Equity:
Common Stock ($0.01 Par Value, Authorized
75,000,000 Shares; 27,003,241 and 26,786,693 Shares Issued and
Outstanding in 2015 and 2014, respectively)
270,032 267,867 Additional Paid-In Capital 33,352,114 33,057,142
Accumulated Deficit (21,456,059 ) (21,654,870 ) Total
Stockholders’ Equity 12,166,088 11,670,139 Total
Liabilities and Stockholders’ Equity $ 18,679,757 $ 19,170,363
Cover-All Technologies Inc. and
SubsidiariesRECONCILIATION of U.S. GAAP NET INCOME to
EBITDA(UNAUDITED)
Three months ended March 31,
2015 2014 Net Income $ 198,812 $
433,849 Interest (Income) Expense, Net 98,501 93,672 Income
Tax Expense 62,836 3,688 Depreciation 46,338 81,829 Amortization:
Amortization of Capitalized Software 372,638 372,638 Amortization
of Customer Lists/Relationships — 15,167 Amortization of Deferred
Financing Costs 8,527 7,585 Total Amortization $
381,165 $ 395,390 EBITDA $ 787,651 $ 1,008,428
EBITDA per Common Share: Basic $ 0.03 $ 0.04 Diluted $ 0.03 $ 0.04
Cover-All Technologies Inc. and
SubsidiariesRECONCILIATION OF SELECTED U.S. GAAP MEASURES TO
NON U.S. GAAP MEASURES(UNAUDITED)
Three months ended March 31, 2015
2014 Net Income (U.S. GAAP) $ 198,812 $
433,849 Acquisition Costs
152,546
—
Net Income (Excluding Acquisition Costs )
(Non U.S. GAAP)
351,358
433,849
Earnings per Common Share (Excluding Acquisition Costs): Basic
$
0.01
$
0.02
Diluted
$
0.01
$
0.02
Three months ended March 31,
2015 2014 EBITDA
$
787,651
$ 1,008,428 Acquisition Costs
152,546 —
EBITDA (Excluding Acquisition Costs)
940,197
1,008,428
EBITDA per Common Share (Excluding Acquisition Costs): Basic
$
0.03
$
0.04
Diluted
$
0.03
$
0.04
Cover-All Technologies Inc.CorporateAnn Massey,
973-461-5190Chief Financial
Officeramassey@cover-all.comorInvestor & MediaSM Berger
& CoAndrew Berger, 216-464-6400andrew@smberger.com
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