TMCnet News
Asure Software Acquires iSystems and Compass HRM; Announces Public Offering of Common StockAUSTIN, Texas, May 26, 2017 (GLOBE NEWSWIRE) -- Asure Software, Inc. (NASDAQ:ASUR), a leading provider of Human Capital Management (HCM) and workplace management software, has consummated the acquisitions of iSystems Intermediate Holdco, Inc. (iSystems) and Compass HRM (Compass). In connection with the acquisitions, the company increased the total principal amount of commitments under its credit facility from approximately $32 million to $75 million, as well as announced its intention to offer and sell shares of its common stock in an underwritten public offering. Acquisitions Summary and Other Key Developments:
iSystems Acquisition With iSystems products providing core processing capabilities, the company’s service bureau customers then resell HCM and payroll processing services into the end market, typically consisting of small and medium businesses with less than 1,000 employees. Today, iSystems has more than 100 service bureau customers nationwide, who collectively process payroll for approximately 75,000 small and mid-sized businesses. As a standalone company, iSystems is projected to generate approximately $14 million in revenue and approximately $1.7 million in EBITDA in 2017, before realizing potential revenue and cost synergies with Asure. The aggregate consideration of the iSystems acquisition is $55 million, which includes $32 million in cash, $18 million of Asure Software unregistered common stock (approximately 1.5 million shares), and a $5 million seller note at 3.5% interest. “Much like our transformational acquisition of Mangrove last year, the decision to acquire iSystems is consistent with our strategy of purchasing businesses with proven technology and a robust service bureau organization customer base, which present significant financial opportunities to upsell and cross-sell our solutions,” said Asure CEO Pat Goepel. “In fact, iSystems’ customer base of more than 100 service bureaus represents an attractive consolidation opportunity for us to potentially acquire approximately $130 million in additional payroll revenue.” “This ‘tuck-in’ acquisition strategy of service bureaus not only maintains technology continuity with the end customer and improves support, but also provides Asure with an opportunity to capitalize on significant cost synergies and EBITDA margin expansion by eliminating duplicative back office functions and resources. These types of ‘tuck-in’ acquisitions can be accretive and also relatively seamless and quick from a potential integration perspective.” Additional financial information relating to iSystems is included in an 8-K filing with the SEC. Compass HRM Acquisition Compass HRM clients will continue to receive the local expertise they have come to expect and value. However, they will now also benefit from Asure's ability to provide workforce and workplace management services with the support of a larger organization with more resources and capabilities. The aggregate consideration for the Compass HRM acquisition consists of $4.5 million in cash and a $1.5 million seller note. “As a regional service bureau and longstanding reseller of our leading HCM solutions, we are confident that Compass HRM will integrate quickly and effectively into our business, providing us with the opportunity for meaningful revenue and EBITDA improvements,” added Goepel. “Our successful track record of acquiring and integrating service bureaus, like PSNW and CPI earlier this year, has served as a viable blueprint in our pursuit of iSystems, Compass, as well as other service bureaus who are already using our technology.” “This strategy allows us to have the opportunity to supplement our existing organic growth with attractive and accretive acquisition growth that should enable us to capture significant sales, product, and financial synergies to methodically scale our business. In fact, in the first quarter since we completed the PSNW and CPI acquisitions, we were able to increase the service bureaus combined topline by more than 10%, as well as expand their aggregate EBITDA margin from 10% to more than 50%. These significant improvements are consistent with our plan and demonstrate the financial attractiveness of the service bureau consolidation opportunity presented to us. Simply put, our acquisition of iSystems, a company with more than 100 service bureau customers, which is nearly six times the amount of service bureaus that Mangrove supported when we acquired them, provides us with considerable consolidation opportunities to profitably scale our business further.” Financial Outlook
For 2017, Asure expects to achieve between $53.0 and $56.0 million in revenue, with EBITDA, excluding one-time items, of between $11.9 and $13.2 million, net income (loss) per share, excluding one-time items, of between $(0.02) and $0.02 and non-GAAP net income per share of between $0.50 and $0.59. On a pro forma basis for 2017 (as if iSystems, Compass HRM and Asure had been combined as a single company as of January 1, 2017), Asure expects to achieve between $62.0 and $65.0 million in revenue, with EBITDA, excluding one-time items, of between $15.2 and $17.4 million, net income per share, excluding one-time items, of between $0.31 and $0.37 and non-GAAP net income per share of between $1.10 and $1.27. For 2018, Asure’s objectives are to reach double-digit organic revenue growth with multiple “tuck-in” acquisitions each of approximately $2.0 million of revenue and a purchase price of about two times revenue. In addition, Asure seeks to reach between $70.0 and $80.0 million of revenue for 2018, with EBITDA, excluding one-time items, of between $16.0 and $20.0 million, and net income per share, excluding one-time items, of between $0.25 and $0.44 and non-GAAP net income per share of between $0.74 and $0.96. Goepel continued: “We believe our operating leverage coupled with our growth and profitability profile makes us a truly unique SaaS company. We are continuing to make solid progress toward achieving our mid-term goal of surpassing $100 million in revenue with double-digit EBITDA margins.” Public Equity Offering The shares of common stock are being offered by Asure pursuant to a shelf registration statement on Form S-3 previously filed with and subsequently declared effective by the Securities and Exchange Commission. Before you invest, you should read the prospectus in that registration statement and other documents Asure has filed with the SEC for more complete information about Asure and this offering. An electronic preliminary prospectus supplement and the accompanying prospectus relating to the offering has also been filed with the SEC and is available for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, copies of the preliminary prospectus supplement and the accompanying prospectus relating to the offering may also be obtained from Roth Capital Partners, LLC, 888 San Clemente, Newport Beach, California 92660, Attn: Equity Capital Markets, via telephone at (800) 678-9147 or via email at [email protected]. Amended Credit Agreement with Wells Fargo Bank and Goldman Sachs Specialty Lending Daniel Gill Appointment to Asure Board of Directors Gill also currently serves on the board of directors of the Pediatric Dental Practice Management platform, PLA, PRN and VASA Fitness. Gill previously served on the board of Advantage Payroll Services, Aurum Technology, CompuPay, Convergent Resources, Direct Travel, Dynamic Hospitals, Education Corporation of America, GKIC, Interlink Communications Partners, Merit Health Systems, and Physicians Endoscopy. “I am excited to welcome Dan to the board of directors, especially during a time of such rapid growth for our company," added Goepel. “Dan not only has a wealth of corporate governance and financial experience, but also brings to our organization a deep insight into the payroll and HR industry. We look forward to his guidance and contributions as we continue to expand our market share and global footprint in the HCM space.” Gill received an M.B.A. from the University of Chicago, Graduate School of Business and a B.A. degree in Economics from Bucknell University. Conference Call Asure CEO Pat Goepel and CFO Brad Wolfe will host the presentation, followed by a question and answer period. Date: Friday, May 26, 2017 The conference call will be broadcast simultaneously and available for replay via the investor section of the company’s website here. Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 949-574-3860. U.S. replay dial-in: 855-859-2056 Forward-Looking Statements The offering is subject to market and other conditions and there can be no assurance as to whether or when the offering may be completed or as to the actual size or terms of the offering. About iSystems About Compass HRM About Asure Software *Non-GAAP Financial Measures EBITDA is calculated by adding income taxes, interest expense, depreciation and amortization and stock compensation expense to net earnings. EBITDA is not defined under GAAP and should not be considered in isolation or as a substitute for net earnings and other consolidated earnings data prepared in accordance with GAAP or as a measure of Asure’s profitability. Net Income (Loss) Excluding One-Time Expenses is calculated by combining the company’s GAAP Net Income (Loss), or earnings per share, with expenses that are one time in nature and are not expected to recur on a dollar or per share basis. Non-GAAP Net Income (Loss) is calculated by combining the company’s GAAP Net Income (Loss), or earnings per share, with items that are one time in nature and are not expected to recur on a dollar or per share basis. It excludes the impact of purchase accounting adjustments, amortization expense on acquisition-related intangible assets, stock-based compensation expense, and acquisition-related expenses. We have revised our non-GAAP Net Income (Loss) to include acquisition-related amortization, as we believe this will more accurately reflect how we analyze our operations and provide information needed by investors to gain additional insight into our financial results. These expenses have been included in the non-GAAP Net Income (Loss) for all periods presented. Reconciliation of GAAP Net Income (Loss) to EBITDA Excluding One-time Expenses:
Reconciliation of GAAP Net Income (Loss) to Net Income (Loss) Excluding One-Time Expenses and non-GAAP Net Income per share
Company Contact: Brad Wolfe, CFO Asure Software, Inc. 888-323-8835 [email protected] Investor Relations Contact: Matt Glover and Najim Mostamand Liolios Group, Inc. 949-574-3860 [email protected] |