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The royalty drops to 5% at the 1 year anniversary. So, the last half of the year or so will have the lower rate. I don't have the exact date with me. The 5% drop in royalty rate corresponds to an annual pre-tax improvement of approximately $0.011 per share. The royalty drops to 0% at the 2 year anniversary. From there on we will have a $0.022 per share cumulative improvement in earnings.
SSK- have you picked up any yet? Looks pretty good to me- improving margins, improving revs, and a nice Q just reported, good YOY growth, looks like decent integration of acquisition (SI customers). I am a little curious why the prelim revs #s were highly accurate but the EPS #s were off (in a good way). I bought a little yesterday adding to an old position.
Trades thin so would be a bit cautious on going gungho but looks attractive and seems there are a few shares available here around low-mid $0.3s area. Actually debating adding just a bit more here.
They did get rid of that royalty payment language tied to market cap that bugged me in the past and replaced it with this-
"During the fourth quarter of 2011, the Company and BDC have agreed to a final bonus payment amount of
$398,243 based on a market capitalization of $4,978,043. The final bonus amount has been converted to a
four-year loan bearing interest at 13.5% repayable by monthly payments of $5,100 for 47 months and one
final payment of $158,543 at the end of the term. The loan is subject to a cash flow sweep based on excess
available funds up to a maximum of $50,000 per year. The Company made a final adjustment to the bonus
interest amount in the fourth quarter and recorded a loss on extinguishment of long-term debt of $147,748
along with a loss on fair value for 2011 totalling $104,128 ($97,109 – 2010)"
Not great at 13.5% but hoping they can pay it down fairly quickly with cash generation and/or LOC.
Good luck
Any idea if the 10% royalty payments (for first year of gross revs from SI customers) are based on the August 2011 period as beginning of 'first year' or if it might be calendar year (i.e. 2011 1st year and 2012 2nd year)? Wondering when the royalty % drops to 5%. Guessing it would be August but not sure.
Looked like the deferred cash payments with that deal go away after first half 2012 too and allow INXSF to capture potentially higher margins as they sign on the former SI customers onto In-Touch and as royalty payments drop to 5% of gross revs. Makes sense they're guiding for higher margins although we're not talking real big dollar amounts with the payments (cumulatively they do make up a chunk of change though).
Glad they got rid of that royalty structure with the funky % of market cap payments. Never liked that.
This company looks pretty interesting.
Good luck.
There are a lot of moving parts on INX / INXSF so estimating any quarter is difficult. Having said that, I'm going to guess diluted EPS of $0.02/share for Q1. I agree that $0.10-$0.11 for the year is my minimum expectation and I also agree that the second half will look better than the first half.
Hey Mike, I figure since INX is your biggest holding now you might have a good guess on Q1 income/EPS numbers? I figure they should be able to do at least 10-11 cents in 2012 conservatively especially with the renewed margin increase towards the second half of the year.
Volume on INX.V / INXSF is now up to 63,500. The price moved up $0.01 to $0.33. The spread is $0.33 X $0.335.
Volume so far is 38,500 shares. The price moved up $0.01 to $0.33. The spread is $0.33 X $0.335.
Mike (On INX.V)
Because it was bugging me, I spent hours upon hours last night trying to figure this out. I came to the Conclusion that yes it was reclassified. Most of it Was reclassified in COGS Check B of the MD&A for more details. and Check D of the MD&A for more details on the rest in G&A so technically it was reclassified. And yes the numbers are correct for q4, so the quarter was even better then I thought. All is just my opinion, and I could always be wrong though.
Volume for the day was 188,288 shares.
Volume so far is huge at 162,688 shares. That is 22 times the average daily volume! The last trade was at $0.32 which is up $0.06 for the day.
I suspect that amortization was reclassified into other expenses. There were a number of changes in the way the quarterly numbers are presented so using the annual numbers and subtracting out the Q3 numbers is using apples and oranges. I think the best way to analyze the quarters is to look at their quarterly breakout on page 7 of the annual MD&A on SEDAR.
Ah ok, didn't look at the changes yet.
That analysis would be in the ballpark if they didn't make some changes to the P&L for the first nine months. If you read page 7 of the MD&A on SEDAR you will see that. I still think my analysis holds.
I'm trying to figure out what happened to amortization expense. look at the financial statements in q3, then look at the annuals. The expense disappeared. Because If you add up the difference of OE in q4. You are left with about 298k approximately in OI, take out IE about 280k. All is just my opinion, and I could always be wrong though.
I just picked up another 10K to try and get me to look into it more Busy today (this week) though with daughter school stuff.
As mentioned, I thought the #s looked pretty good off a glance. Will try and review it when I get some time.
The $10 mill in bookings seems pretty impressive given we're just entering the 5th month but not sure how their cycles typically work for that sort of stuff. Coupled with the verbiage of margins hopefully heading back north in Q3 and could make for a strong year.
PS- thanx traderfan for the #s breakdown.
Here is my take
They did 347k in net earnings after 9 months.
Now for the full year they did 1.11 million.
Then they had 420k gains from deferred tax recovery.
It looks like they actually had a 70k gain in change of value from derivatives
They had a loss of 147k from the extinguishment of debt
And they had a loss of 29k from the change in fair value of the contingent payment
1.11-347k=763k-420k=343k-70k= 273k+147k=420k+29k=449k
449k divided by about 14.8 million shares is about 3 cents.
I might have missed something but that's my math for Q4.
Here is what I have looking at the MD&A. There is a table in the MD&A that breaks out the quarterly numbers. Note that the quarters are a little different than initially reported.
I'm using the annual diluted share count of 14,273,258 as reported in their filing for the per share calculations below.
Q4 Diluted EPS before tax = $363K ($0.025/share)
Q4 Diluted EPS before tax (ignoring one-time items) = $490K ($0.034/share)
Q4 Operating income per diluted share = $508K ($0.036/share)
More like $.02+. But still pretty decent and the $10 mill in bookings is bookings not revenue so as you mention they'll likely do better.
The $11.25 mill revs estimate for 2012 sounds somewhat conservative IMO.
I am not going to count revs from acquisitions that have yet to occur when looking at them but they are showing some decent results with continued higher guidance. I picked up a small amount (5K) today but have been sitting on a bit more for a long time.
I have not looked at this very closely so will defer to others for more detail. Seemed like fairly solid #s to me.
Good luck, all IMO only.
I just saw the numbers and did a quick math. It looks like they did a bit less than 3 cents in EPS in Q4. I have to prove the numbers again but it looks like this.
INXSF / INX.V is a rapidly growing marketing data collection company and is my second largest holding. I think it has excellent odds to be a multi-bagger over the next year and a 10+ bagger over the next 2.5 years. It trades in Canada as INX.V and in the US at INXSF. Here are some reasons why I am very bullish:
1. Revenue has been growing rapidly over many years:
2005 $1,684,290
2006 $3,632,304
2007 $5,060,576
2008 $5,914,814
2009 $5,479,081
2010 $5,893,125
2011 $8,930,735
2012 $13,300,000 (Estimate based upon company guidance)
2. I predict that 2012 will be a breakout year. I'm guessing earnings of $0.10-$0.20/share.
3. They are expanding into mobile apps which is a big part of their growth initiative.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=63379561
4. They have a history of successful acquisitions which provides significant upside potential.
5. Insiders have been buying:
Dec 2/11 Dec 2/11 Pretli, George Direct Ownership Common Shares 10 - Acquisition in the public market 6,000 $0.305
Nov 10/11 Nov 8/11 Watt, Cameron James Direct Ownership Common Shares 10 - Acquisition in the public market 3,000 $0.340
Nov 10/11 Nov 8/11 Watt, Cameron James Direct Ownership Common Shares 10 - Acquisition in the public market 36,000 $0.340
Nov 10/11 Nov 8/11 Watt, Cameron James Direct Ownership Common Shares 10 - Acquisition in the public market 10,000 $0.335
Nov 10/11 Nov 8/11 Watt, Cameron James Direct Ownership Common Shares 10 - Acquisition in the public market 8,000 $0.330
6. Their customers include a large number of blue chip companies some of which include the following:
Sprint, Best Buy, Victoria's Secret, Toyota, GM, Mazda, Ford, Pizza Hut, Staples, and BJ's
http://www.intouchsurvey.com/Customers/
In-Touch provides integrated solutions for custom data capture and mobile marketing solutions for global enterprise customers. You can learn more about In-Touch Survey Systems here:
http://www.intouchsurvey.com/Company/
I calculated that $0.034 by looking at the quarterly breakout in the MD&A. Look at that again and tell me what you get. I'm pretty sure I'm right.
The $10M run rate is exciting because that is booked revenue already. I am expecting actual revenue to be much better than that.
INX.V
It was a good quarter, but It was no .034. That is a bad calculation. Plus a 10 Million run rate (I pretty sure they will do much better then that.), how exciting is that last quarter we were at a 12 million run rate if you annualize q4.
The gross margin news though was pretty exciting I have to say, if It pullback into the 20's I may have to buy some. But I want to clarify it was no .034. All is just my opinion, and I could always be wrong though.
This is one of the key parts of the report: "The Company had a very successful year and is poised for significant compounded growth in future years. 2012 sales bookings have already reached $10,000,000."
The balance sheet really improved. They have BV of $0.16/share, TBV of $0.15, and cash of $0.01/share.
That was a great quarter for INX.V / INXSF. Ignoring one-time items they made $0.034/share pre-tax in Q4! They already have $10M in revenue for 2012!!!
In-Touch Survey Systems Ltd. announces FY 2011 results: a 52% increase in revenues and a 47% increase in net earnings
OTTAWA , April 30, 2012 /CNW/ - In-Touch Survey Systems Ltd. ("In-Touch" TSX-Venture: INX) announces that revenues increased 52% to $8,930,735 in FY 2011 compared to $5,893,125 in FY 2010. Net earnings for 2011 increased 47% to $1,114,904 compared to $758,101 in 2010, and net earnings per share for 2011 was $0.08 compared to $0.06 for 2010. Earnings from operating activities were $1,068,000 in 2011 compared to $995,412 in 2010. The Company-defined adjusted EBITDA, as described in the Company's Management Discussion and Analysis was $1,387,000 in FY 2011, compared to $1,221,000 in FY 2010.
"The Company had a very successful year and is poised for significant compounded growth in future years. 2012 sales bookings have already reached $10,000,000 . The addition of Service Intelligence in August 2011 gave us a complete working entity in the USA for Audit, Mystery Shopping and Customer Insight services. Overall, the company is striving for 50% growth in 2012 with 25% growth from organic sales and 25% growth from acquisitions", said Michael Gaffney , Chief Executive Officer.
Gross margins decreased to 51% in 2011 compared to 60% in 2010 due to the assumed overheads associated with the Service Intelligence business combination. The company expects gross margins to increase and return to historical levels in Q3 2012 as Service Intelligence customers switch onto In-Touch systems.
"The IMS division, which completed its first full year of operations, exceeded its targets with sales of $1.3M . We expect this division, which is focused on enterprise edge applications for governments, to grow by 150% in 2012 and reach $3M in revenues. Our mobile technology and capabilities from the Electronic Data Capture division are providing an invaluable aid in winning this government business", said Gaffney.
Over the past several years the company's managed mobile software technology for marketing and operations has evolved into an enterprise edge solution. The edge of the enterprise, whether the enterprise is a government department, an automobile company or a retail chain, is where that enterprise engages its customers and suppliers via websites and mobile devices. In-Touch provides service, software tools, logistics and SaaS applications that enable its customers to manage complex, multiplatform, mobile, web and social media applications and networks that are at the 'edge' of their enterprise - in both online and offline modes. Moreover, In-Touch also provides a data integration layer and services to link the information from edge transactions to corporate information systems. In-Touch is ideally positioned to take advantage of the mobile-web service transformations that are occurring in large enterprises because of global mobile driving forces.
Consolidated Statements of Comprehensive Earnings 2011 2010
Revenue $ 8,930,735 $ 5,893,125
Cost of services and goods sold 4,366,655 2,355,983
Gross profit 4,564,080 3,537,142
Total operating expenses 3,496,080 2,541,730
Earnings before undernoted items 1,068,000 995,412
Interest expense on short term debt (68,555) (94,967)
Loss on extinguishment of long-term debt (147,748)
Change in fair value of derivative (104,128) (97,109)
Change in fair value of contingent payment (29,610) -
Loss on foreign exchange (8,259) (45,235)
Deferred tax recovery 419,104 -
Current income tax (13,900) -
Net earnings and other comprehensive earnings $ 1,114,904 $ 758,101
I would bet that we will get updated guidance between now and the third quarter results. They periodically update their guidance and it usually is significantly higher than it was previously.
As to first half vs. second half I'm not sure how much seasonality we will see. In 2009 the first half was stronger than the second half. In 2010 the second half revenue was 25% higher than the first half. I think that was more a factor of new business vs. seasonality. In 2011 the second half revenue was much higher than the first half but that was due largely to new business. So, reading seasonality for INX.V is difficult and is often dwarfed by growth.
Although that sounds fantatsic, having said that q1 and q2 are generally weaker quarters then q3 and q4. Hence with increased costs (y/y) (and Lower margins (y/y), I think it could be difficult to do much more the break even in q1 and q2. Q3 you may be right if the economy holds up. Having said that that quarter ain't reported until late 2012. INX.V time may be coming, but why own it now? You could wait 6-7 months and probably get at least the same price if not better prices. I think low 20's are a distinct possibility at some point. And maybe upper teens at some point, but I wouldn't be holding my breadth for that. INX.V might be a good play in 2012, but after further review I came to this conclusion before q4 preliminary results were annouced, I think this story might come to frutiion as a end of 2012 story, so I may be back at that time, but I don't see any upside in it right now, we will see who is right. In fairness I made this statement though around $.32, so so far I've been right. All is just my opinion, and I could always be wrong though.
Yes I remember that. That sure will help some. Thanks for pointing out that other stuff.
The royalty rate also will drop in August of this year and will be completely eliminated in July of 2013
I do expect the bottom line to improve but probably more in the back half of the year. The bottom line in the last two quarters was impacted by much lower GM on the acquired business. The GM on that business will be back to historic levels (minus temporary royalty) by the second half of the year and will see some improvement in the first half. The royalty rate also will drop in August of this year and will be completely eliminated in July of 2013. So, for the existing business it is a matter of some operational work to improve GM significantly.
Mike, do you think they will get their bottom line under control? The last few quarters the bottom line was a disapppointment.
That's a forward PE of like nothing. We should be .50+ right now.
Fundamental Research increased their 2012 forecast to revenue of $11.6M (was $9.34M) and EPS of $0.10 (was $0.06)!. They also introduced a 2013 estimate for revenue of $12.68M and EPS of $0.12.
It is really cheap based upon those estimates!
Who are the competing companies here?
PRESS RELEASE: In-Touch Survey Systems Ltd. announces 91% growth in revenues in
Q4 2011
OTTAWA, Feb. 14, 2012 /CNW/ - In-Touch Survey Systems Ltd. ("In-Touch")
(TSXV: INX) announces unaudited financial results for Q4 2011. The Company
expects to release its consolidated FY 2011 audited financial results by
April 26 2012. These results are preliminary in nature, prepared by the
Company without audit and could differ from our final audited results.
Q4 2011 revenue increased 91% to $3,016,534 compared to $1,578,627 in Q4
2010. The Company had net earnings of $184,200, an increase of 29% compared
to net earnings of $143,139 in Q4 2010. The Company-defined adjusted EBITDA
increased 18% to approximately $370,000 in Q4 2011, compared to an EBITDA of
$315,000 in Q4 2010.
"We are extremely pleased with our superb revenue growth in Q4 and our 8(th)
consecutive profitable quarter. We achieved growth in all our business
segments while continuing to invest more resources in product development
and marketing. Growth in 2012 will be dependent on a number of internal and
external factors. We are targeting to grow revenues again by at least 25%
from organic growth and we are searching for another 25% growth from
acquisitions or joint ventures. In-Touch is forecasting revenues in 2012 in
the $11,250,000 to $13,500,000 range", said Michael Gaffney, Chief Executive
Officer.
The Company believes that there are substantial opportunities for continued
revenue growth that it can seize if it continues to invest in both marketing
and its proprietary In-Touch Apps software technology. While maintaining
profitability, the Company intends to invest much of the contribution margin
generated by current sales on product development and marketing on an
on-going basis. Net earnings will be reduced accordingly by this continued
investment in our potential to grow. The IMS division, in its first full
year of operation, exceeded revenue targets of $1.25M and we are predicting
100% revenue growth for this division in 2012. The Service Intelligence
("SI") outsourcing agreement and subsequent acquisition of their customers
has been a great success and the Company will complete full integration of
the former customers of SI onto In-Touch technology by mid-year, which will
result in significant gross margin improvement. In addition, the royalty
that we are paying to SI of 10% of revenue from SI's former customers will
reduce to 5% in August 2012 and disappear entirely in July 2013; this too
will enhance our margins substantially.
In-Touch designs, develops and deploys data capture software technology and
data capture services - especially for mobile or offsite applications. It
was one of the first companies in the world to develop HTML 5 applications
to solve the non-persistent nature of wireless networks to enable customers
to continue working without connectivity. The Company's vision of "Perfect
Information. Instantly." resonates powerfully with our customers' needs.
In-Touch's customers range from United States and Canadian governments to
some of the worlds largest auto and insurance brands to numerous Fortune
1,000 retail companies. The Company's overall strategy is to continue to
invest in and search for market verticals needing onsite mobile data capture
and real time business intelligence.
Certain statements included in this news release contain forward looking
statements, which by their nature are necessarily subject to risks and
uncertainties and other factors that may cause actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such statements reflect the Company's current
views with respect to future events, and are based on information currently
available to the Company and on hypotheses which it considers to be
reasonable; however, management warns the reader that hypotheses relative to
future events which are beyond the control of management could prove to be
false, given that they are subject to certain risks and uncertainties.
The TSX Venture Exchange has not reviewed the foregoing and has neither
approved or disapproved the contents of this press release.
/CONTACT: George Pretli gpretli@intouchsurvey.com Controller and
Corporate Secretary 613-270-7916
Copyright CNW Group 2012
In-Touch Survey Systems Ltd. retains Venture Liquidity Providers as Market Maker
http://finance.yahoo.com/news/In-Touch-Survey-Systems-Ltd-cnw-5867852.html?x=0
Here is a link to an updated report on In-Touch.
http://www.researchfrc.com/research/pdf/inx/INX%20Update%20-%20Dec%202011.pdf
Well I was the buyer who stepped in yesterday, so hopefully your right.
Looks like INX.V / INXSF has bottomed. I expect fresh 52 week highs will be coming sooner than some think and fresh all time highs after that.
Does anyone have their INXSF trades done on the American market? We are in dire need of a tape painter.
Thanks very much Mike. I overlooked the refinancing part. Cheers
a. The company has $309,645 available on it's bank line. The bank line plus cashflow will be enough to pay off the loan when it comes due. Also, they probably will get a larger bank line.
b. The bonus has been fixed and was refinanced as announced in the Q3 filings. Here is the relevant text from their filing: "During the fourth quarter of 2011, the Company has negotiated with one of its Lenders terms for fixing and paying out the bonus component of its term loan (this loan, for an initial principal of $550,000 bears interest at 11.7% and was subject to a bonus payment at term). The Company and the Lender have agreed to fix the final bonus payment amount now at $398,243 based on a market capitalization of the common shares of the Company of $4,978,043, and to convert this bonus amount to a four-year term loan bearing interest at 13.5% repayable by monthly payments of $5,100 for 47 months and one final payment of $158,543 at the end of the term. This loan will be subject to a cash flow sweep based on excess available funds up to a maximum of $50,000 per year. Terms for the principal component of the loan, which was initially $550,000 and which has subsequently been paid down through cash flow sweeps to $387,080, have not changed (Note 18)."
c. The cash flow sweeps are covered by a. above as it is paydown of that debt.
The only impact the above items have to earnings is in the areas of derivative charges and interest. There will be one final derivative charge in Q4'11 that is the same as that in Q3'11. Going into 2012 we will have lower combined derivative/interest charges due to the lower combined interest rate. The fixing of the bonus payment this quarter was a big plus as it removed a big uncertainty!
Mike,
I noticed the company still had $387,080 owing at 11% interest wich is due soon.
How are you factoring in:
a) the loan due March of next year together with
b)the bonus payment calculated according to market capitalization and
c)and the cash flow sweeps
into your earnings estimates?
I know that you are. I am just confused as to how to do it.
I would appreciate any help understanding the significance (or lack thereof) of these.
Ah that works, I was forgetting the hyphen.
I don't think you can link to SEDAR filings. Also, you need to enter a code each time you start up SEDAR so that they can check for bots.
Go to this URL and enter "in-touch":
http://www.sedar.com/search/search_form_pc_en.htm
Hey Mike do you have a link to the SEDAR filings for INX. They are hard to find searching the database, I had it bookmarked on my old laptop but that didnt last too long.
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