Cover-All Announces Third Quarter 2013 Results

Cover-All Technologies Inc. (NYSE MKT:COVR), a Delaware corporation (“Cover-All” or the “Company”), today announced financial results for the quarter ended September 30, 2013.

“We are pleased to report significant revenue and EBITDA* growth for the first nine months in 2013 – up 30% and up 1503%, respectively, year-over-year,” said Manish Shah, CEO and President of Cover-All. “We are having significant momentum with eight new contracts this year and increasing demand for professional services. With outstanding financial results for the first nine months in 2013, we are projecting record revenue in 2013. In keeping with the goal of growing the business and enhancing shareholder value, we are actively looking at several options to expand the potential of the Company, including seeking partners and alliances.”

“We also announced a reorganization of the Company, effective as of October 1, 2013, which we believe will help us meet growing demands and generate annualized cost savings in excess of $1.5 million in 2014. These cost savings will improve operating profitability and free up capital for growth strategies at an appropriate time.”

“We believe that core system modernization and data analytics are top 2014 IT initiatives for the P/C insurance industry in the United States. We believe that we provide the most robust and complete policy and analytics solutions for the P/C industry, which is being endorsed by recent wins and successful implementations. We plan to aggressively pursue marketing our unique software and service offerings and expect to play a significant role during this ongoing technology transformation era for P/C insurance.”

FINANCIAL HIGHLIGHTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013

Revenue
  • Total revenues for the nine months ended September 30, 2013 were $16.0 million compared to $12.3 million for the same period in 2012.
  • License revenue for the nine months ended September 30, 2013 was $5.3 million compared to $2.7 million for the same period in 2012.
  • Support Services revenue (which represents contracted continuing revenue) was $6.0 million for nine months ended September 30, 2013 compared to $6.4 million in the same period in 2012.
  • Professional Services revenue for the nine months ended September 30, 2013 was $4.6 million compared to $3.1 million for the same period in 2012.

Profitability
  • Operating income (loss) for the nine months ended September 30, 2013 was $(1.1) million compared to $(3.0) million in the comparable period in 2012.
  • Net income (loss) for the nine months ended September 30, 2013 was $(1.4) million, or $(0.05) per basic and diluted share, compared to $(3.0) million, or $(0.12) per basic and diluted share, in the same period of 2012.

Non-GAAP* Profitability
  • Earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP metric, for the nine months ended September 30, 2013 was $2.7 million, or $0.10 per basic and diluted share, and $3.0 million, or $0.11 per basic and diluted share, excluding non-recurring reorganization-related costs, compared to $(190,000), or $(0.01) per basic and diluted share, in the same period of 2012.
  • Net income (loss) excluding non-recurring reorganization-related costs, a non-GAAP metric, for the nine months ended September 30, 2013 was $(1.0) million, or $(0.04) per basic and diluted share, compared to $(3.0) million, or $(0.12) per basic and diluted share, in the same period of 2012.

Earnings per Share Disclosures
  • All earnings per share results disclosed above for the nine months ended September 30, 2013 and 2012 are based on 26.1 million and 25.9 million basic and diluted weighted average shares issued and outstanding, respectively.

FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2013

Revenue
  • Total revenues for the three months ended September 30, 2013 were $5.1 million compared to $3.3 million for the same period in 2012.
  • License revenue for the three months ended September 30, 2013 was $1.0 million compared to $238,000 for the same period in 2012.
  • Support Services revenue (which represents contracted continuing revenue) was $2.0 million for the quarter ended September 30, 2013 compared to $2.2 million for the same quarter last year.
  • Professional Services revenue for the third quarter of 2013 was $2.0 million compared to $864,000 for the same quarter in 2012.

Profitability
  • Total expenses (cost of revenue and operating expenses) for the three months ended September 30, 2013 were $5.9 million compared to $4.8 million in the comparable period of 2012.
  • Operating income (loss) for the three months ended September 30, 2013 was $(814,000) compared to $(1.5) million in the comparable period in 2012.
  • Net income (loss) for the three months ended September 30, 2013 was $(916,000), or $(0.03) per basic and diluted share, compared to $(1.5) million, or $(0.06) per basic and diluted share, for the same period in 2012.

Non-GAAP* Profitability
  • EBITDA, a non-GAAP metric, for the three months ended September 30, 2013 was $456,000, or $0.02 per basic and diluted share, and $775,000, or $0.03 per basic and diluted share, excluding non-recurring reorganization-related costs, compared to $(393,000), or $(0.02) per basic and diluted share, for the same period in 2012.
  • Net income (loss) excluding non-recurring reorganization-related costs, a non-GAAP metric, for the three months ended September 30, 2013 was $(597,000), or $(0.02) per basic and diluted share, compared to $(1.5) million, or $(0.06) per basic and diluted share, for the same period in 2012.

Balance Sheet
  • As of September 30, 2013, the Company had $1.5 million in cash and cash equivalents and $2.5 million in accounts receivable.

Earnings per Share Disclosures
  • All earnings per share results disclosed above for the three months ended September 30, 2013 and 2012 are based on 26.3 million and 25.9 million basic and diluted weighted average shares issued and outstanding, respectively.

WEBCAST AND CONFERENCE CALL INFORMATION

Management will conduct a live teleconference to discuss its 2013 third quarter financial results at 4:30 p.m. EDT on Thursday, October 31, 2013. Anyone interested in participating should call 1-877-941-1428 if calling from the United States, or 1-480-629-9665 if dialing internationally. A replay will be available until November 14, 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 4647421 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 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, Manhattan, NY 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 Subsidiaries
   

 
   

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)
 
Three months ended

September 30,
Nine months ended

September 30,
  2013         2012     2013         2012  

Revenues:

Licenses
$ 1,028,474 $ 237,995 $ 5,348,322 $ 2,663,993

Support Services
2,002,028 2,167,994 6,006,206 6,449,353
Professional Services   2,028,602     863,734     4,593,917     3,146,817  
Total Revenues   5,059,104     3,269,723     15,948,445     12,260,163  
 

Cost of Revenues:
Licenses 1,203,966 1,028,347 3,527,090 3,203,881
Support Services 1,565,818 1,341,269 5,879,782 4,388,977
Professional Services   883,174     1,115,018     2,325,940     3,681,185  
Total Cost of Revenues   3,652,958     3,484,634     11,732,812     11,274,043  
Direct Margin   1,406,146     (214,911 )   4,215,633     986,120  
 

Operating Expenses:
Sales and Marketing 600,629 703,132 1,774,300 2,051,716
General and Administrative 492,364 391,652 1,558,325 1,262,775
Acquisition Costs –– –– –– 136,957
Reorganization Costs 319,014 –– 319,014 ––
Research and Development   807,856     177,772     1,633,611     537,278  
Total Operating Expenses   2,219,863     1,272,556     5,285,250     3,988,726  
Operating (Loss) Income   (813,717 )   (1,487,467 )   (1,069,617 )   (3,002,606 )
 

Other Expense (Income)
Interest Expense 92,397 27,925 275,820 27,925
Interest Income –– –– –– (37 )
Other Income   ––     ––     (3,821 )   (14,539 )
Total Other Expense (Income)   92,397     27,925     271,999     13,349  
(Loss) Income Before Income Taxes   (906,114 )   (1,515,392 )   (1,341,616 )   (3,015,955 )
Income Taxes   10,295     ––     18,466     ––  
 

Net (Loss) Income
$ (916,409 ) $ (1,515,392 ) $ (1,360,082 ) $ (3,015,955 )
 

Basic (Loss) Earnings Per Common Share
$ (0.03 ) $ (0.06 ) $ (0.05 ) $ (0.12 )
 

Diluted (Loss) Earnings Per Common Share
$ (0.03 ) $ (0.06 ) $ (0.05 ) $ (0.12 )

Weighted Average Number of Common Shares

Outstanding for Basic Earnings Per

Common Share
  26,286,000     25,863,000     26,114,000     25,860,000  

Weighted Average Number of Common Shares

Outstanding for Diluted Earnings Per

Common Share
  26,286,000     25,863,000     26,114,000     25,860,000  
 
       

Cover-All Technologies Inc. and Subsidiaries
 

CONSOLIDATED BALANCE SHEET

(UNAUDITED)
 
September 30,

2013
December 31,

2012

(unaudited)
Assets:
Current Assets:
Cash and Cash Equivalents $ 1,499,869 $ 1,353,892

Accounts Receivable (Less Allowance for Doubtful Accounts

of $25,000)
2,503,354 2,365,750
Prepaid Expenses 635,588 528,398
Deferred Tax Asset   910,998     910,998  
Total Current Assets   5,549,809     5,159,038  
Property and Equipment – Net   760,624     922,881  
Goodwill   1,039,114     1,039,114  

Capitalized Software (Less Accumulated Amortization of

$21,118,531 and $17,658,748 in 2013 and 2012, Respectively)
  8,785,608     10,441,992  

Customer Lists/Relationships (Less Accumulated Amortization of

$326,167 and $260,093 in 2013 and 2012, Respectively)
  75,834     141,907  
Deferred Tax Asset   2,614,430     2,614,430  

Deferred Financing Costs (Net Amortization of $28,716 and $7,870

in 2013 and 2012, Respectively)
  63,567     84,413  
Other Assets   255,110     362,806  
Total Assets $ 19,144,096   $ 20,766,581  
 
Liabilities and Stockholders’ Equity:
Current Liabilities:
Accounts Payable $ 1,128,194 $ 1,681,007
Accrued Expenses 658,152 1,390,533
Accrued Income Taxes 16,159
Deferred Charges 239,513 83,455
Current Portion of Capital Lease 113,430 109,878
Unearned Revenue   2,710,243     2,426,810  
Total Current Liabilities   4,865,691     5,691,683  
Long-Term Liabilities:
Long-Term Debt 1,591,810 1,457,945
Long-Term Portion of Capital Lease   382,257     476,664  
Total Liabilities   6,839,758     7,626,292  
Commitments and Contingencies   ––      

Stockholders’ Equity:

Common Stock, $.01 Par Value, Authorized 75,000,000 Shares;

26,319,707 and 25,936,106 Shares Issued and Outstanding in

2013 and 2012, Respectively
263,197 259,361
Additional Paid-In Capital 32,524,205 32,003,909
Accumulated Deficit   (20,483,064 )   (19,122,981 )
Total Stockholders’ Equity   12,304,338     13,140,289  
Total Liabilities and Stockholders’ Equity $ 19,144,096   $ 20,766,581  
 
 

Cover-All Technologies Inc. and Subsidiaries
   

EBITDA RECONCILIATION TO U.S. GAAP NET INCOME

(UNAUDITED)
   
Three months ended

September 30,
Nine months ended

September 30,
  2013         2012     2013         2012  
 
Net (Loss) Income $ (916,409 ) $ (1,515,392 ) $ (1,360,082 ) $ (3,015,955 )
 
Interest Expense, Net 92,397 27,924 275,820 27,888
Income Tax Expense 10,295 18,466
Depreciation 60,399 40,096 188,635 123,200
Amortization   1,208,979     1,054,735     3,546,704     2,674,627  
 
EBITDA $ 455,661   $ (392,637 ) $ 2,669,543   $ (190,240 )
 
EBITDA per Common Share:
Basic $ 0.02   $ (0.02 ) $ 0.10   $ (0.01 )
Diluted $ 0.02   $ (0.02 ) $ 0.10   $ (0.01 )
 
 

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

(UNAUDITED)
 

Three months ended

September 30,
Nine months ended

September 30,
  2013     2012     2013     2012  
 
Net Income (Loss) (GAAP) $ (916,409 ) $ (1,515,392 ) $ (1,360,082 ) $ (3,015,955 )
 
Reorganization Costs   319,014         319,014      
 

Net Income (Loss)

(Excluding Reorganization Costs) (Non-GAAP)

$

(597,395

)

$

(1,515,392

)

$

(1,041,068

)

$

(3,015,955

)
 

Earnings (Loss) per Common Share (Excluding

Reorganization Costs):
Basic $ (0.02 ) $ (0.06 ) $ (0.04 ) $ (0.12 )
Diluted $ (0.02 ) $ (0.06 ) $ (0.04 ) $ (0.12 )
 
Three months ended

September 30,
Nine months ended

September 30,
  2013     2012     2013     2012  
 
EBITDA $ 455,661 $ (392,637 ) $ 2,669,543 $ (190,240 )
 
Reorganization Costs   319,014         319,014      
 
EBITDA (Excluding Reorganization Costs) $ 774,675   $ (392,637 ) $ 2, 889,557   $ (190,240 )
 

EBITDA per Common Share (Excluding

Reorganization Costs):
Basic $ 0.03   $ (0.02 ) $ 0.11   $ (0.01 )
Diluted $ 0.03   $ (0.02 ) $ 0.11   $ (0.01 )
 

Copyright Business Wire 2010

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