ISCO International Reports Record Revenue, Net Operating Income and Positive Cash Flow in Its Financial Results for the Third Quarter 2006
Thursday October 26, 4:10 pm ET
ELK GROVE VILLAGE, IL--(MARKET WIRE)--Oct 26, 2006 -- The third quarter of 2006 continued the trend of significant improvement in business results for ISCO International, Inc. (AMEX:ISO - News), a leading global supplier of radio-frequency management and interference-control systems for the wireless telecommunications industry, Chief Executive Officer John Thode announced. ISCO posted higher revenue through September 2006 than had been achieved during all of 2005.
Thode added that 2005 had seen the best four revenue quarters in company history, now exceeded twice in 2006 and on a cumulative basis with a quarter remaining in the year. Third quarter performance included a positive net income from operations and a positive contribution to overall cash flow of $0.5 million (see non-GAAP measure discussion below). He also announced progress in several areas that should further strengthen ISCO's competitive position in 2007.
Third Quarter
ISCO International's revenue for the third quarter of 2006 more than tripled to $6.4 million from $2.0 million in third quarter of 2005. ISCO entered the fourth quarter with approximately $1 million in order backlog, as compared to negligible backlog at the same point last year. Net loss for the third quarter 2006 improved by approximately 70 percent to $0.2 million from the $0.6 million loss of the third quarter 2005.
Excluding non-cash items, third quarter 2006 showed a profit of $0.5 million. Of the $0.2 million in third quarter net loss, non-cash items (including certain equity related compensation charges, depreciation and amortization, and accrued interest) accounted for $0.7 million, or $0.5 million more than the entire net loss (see non-GAAP discussion measure below).
Product gross margins remained consistent at 40% for the third quarter and first nine months of 2006. While still far higher than industry standards, margins were below the 62% achieved during the third quarter 2005 and 50% for the first nine months of 2005.
For the nine months ended September 30, 2006, revenue was $11.2 million, up from $7.8 million for the same period of 2005, with a net loss of $3.1 million and $1.9 million, respectively. The combination of non-cash items including certain equity-related compensation charges, patent-related expenses, depreciation and amortization and accrued interest was approximately $1.8 million for each nine month period.
"We have previously shared the expectation that the first half of 2006 would be similar to prior performance, with the second half accelerating to a higher level," Thode said. "With the Company's strong Q3 revenue growth we covered all of our operating and development costs, plus a portion of our financing costs, and generate a positive cash flow -- all during a time of significant challenge for many in the industry."
Looking beyond the end of 2006, Thode said that the Company is continuing to execute the strategic plan it put in place 18 months ago. The plan called for significantly expanding the Company's customer touch points to identify and target specific growth opportunities in its core 'customized' RF after-markets products segment while simultaneously developing a highly differentiated and defensible portfolio of software-controlled, digital adaptive interference management products.
Thode added, "We have shared our expectations that this strategy would enable us to significantly grow the Company's top and bottom line over the next several years and it is exciting to begin to see the results. While it will continue to be an ongoing balance, through the end of 2007, to achieve our sequential growth objective while simultaneously investing to complete the transformation of our business, we believe we have demonstrated in Q3 that we are up to the challenge."
