INVE,
Identive Reports 2013 Third Quarter Results
Performance Highlights Include 14% Sales Growth, Positive Adjusted EBITDA and Proceeds From Capital Raise of $7.1 Million
SANTA ANA, Calif. and ISMANING, Germany, Nov 07, 2013 (GLOBE NEWSWIRE via COMTEX) -- Identive (Nasdaq:INVE) (Frankfurt:INV) reported its financial results for the third quarter (Q3) ended September 30, 2013.
Highlights of the quarter included:
-- New management team begins simplification and focus of business
-- 14% revenue growth year over year
-- Achievement of $0.6 million adjusted EBITDA
-- Gross proceeds from private placement of $7.1 million
-- Strong demand for our cloud-based SaaS and NFC consumer products.
-- Goodwill impairment related to non-strategic assets and U.S. Federal Government physical access business
Jason Hart, the newly appointed chief executive officer of Identive, said, "In the last two months we have been focused on simplifying Identive Group's business at all levels. Philosophically and practically we are converting from a group of individual businesses into a single, unified company focused on our high growth product lines. These changes are not complete but are resulting in operational costs savings and lower compliance costs, and are expected to improve our revenue with focused investment in a single global product and sales organization. Our improved performance in Q3 is a positive backdrop to our transition and we are encouraged by the strong demand for our consumer and cloud security products.
"During the third quarter we received new orders for our cloud-based services, including a three-year contract to issue and manage trusted credentials for an international government's healthcare program and the expansion of activities with a U.S. based Fortune 100 company. Our trusted NFC consumer products enjoyed increasing demand with the popularity of NFC enabled toys for video games. We expect that this trend will continue into Q4 and throughout 2014. Our overall sales backlog has continued to increase and we entered Q4 with committed orders and accounts receivables that represent nearly 40% of our annual revenues, which speaks to the fundamental strength of our sales offerings and pipeline for our trusted solutions."
Commenting on management's near-term goals for the company, Hart stated, "While our pipeline remains strong and orders for our products continue to grow, our overall operating costs and access to working capital have challenged the business. We have taken steps to substantially reduce costs by simplifying our organizational architecture and consolidating or discontinuing under-performing assets. This will result in the divestiture of non-core activities and greater focus on our growing global markets. This activity will continue throughout Q4 and is already resulting in a fundamentally stronger and more focused business. The management team remains very focused on this restructuring in Q4 and will provide further guidance on our growth plans and market alignment in Q1."
Financial Results for Q3 2013 Compared with Q3 2012
-- Total revenues were $26.3 million, up 14% from $22.9 million.
-- Revenues from the Identity Management Services & Solutions segment were $12.3 million, down 11% from $13.8 million. Sales of access control and security solutions decreased 12% year over year as a result of the U.S. Government federal budget sequester, but reflected significant improvement from the prior quarter as federal agencies adapted to lower budget levels and prioritized spending on security programs.
-- Revenues from the ID Products segment grew 53% to $13.9 million, compared with $9.1 million. This growth was driven by a 131% increase in sales of RFID and NFC products for consumer electronics toys.
-- GAAP gross profit margin improved to 43%, compared with 42%, primarily due to improving margins in RFID and NFC products arising from higher sales volumes and increased capacity utilization.
-- Base operating expenses, which include research and development, sales and marketing, and general and administrative costs, were unchanged at $12.1 million.
-- Impairment charges to goodwill and long-lived assets were $22.9 million, compared with $5.9 million. In addition, restructuring costs of $1.3 million were recorded in Q3 2013.
-- Including impairment charges and restructuring costs, GAAP net loss was $(24.2) million, or $(0.35) per share, compared with GAAP net loss of $(7.9) million, or $(0.13) per share.
-- Excluding impairment charges and restructuring costs, non-GAAP net loss was $(1.0) million, or $(0.01) per share, compared with non-GAAP net loss of $(1.6) million, or $(0.03) per share.
-- Adjusted EBITDA was $0.6 million, compared with $(0.2) million.
-- Backlog at the end of Q3 was $20.0 million, reflecting orders over the next 12 months for NFC and reader products as well as payment and cloud-based systems; also on the order book is an additional $7.0 million from longer-term contracts. Of the total amounts, $7.0 million in current backlog and $3.0 million in longer-term contracts relates to businesses under review for possible divestiture.
-- A common stock offering under a private placement was completed in August 2013, with gross proceeds of $7.1 million to be used to fund operations.
-- Cash and cash equivalents were $9.5 million at September 30, 2013, compared with $3.7 million at June 30, 2013. Cash at the end of Q3 included gross proceeds of $7.1 million from the company's private placement and $2.0 million of football match day concession receipts which were remitted to caterers at the beginning of October.
Commenting on the financial results for Q3 2013, David Wear, chief financial officer of Identive stated, "With the review of our non-performing business areas for potential divestiture and sustained decline in our stock price, we performed an impairment analysis of our goodwill and long-lived assets. Based on this analysis, we concluded that some assets are impaired and recognized preliminary non-cash charges totaling $22.9 million in the quarter, which accounted for $(0.34) per share of the net loss per share recorded in Q3. These charges have no impact on our day-to-day operations or liquidity and will not result in any future cash expenditures. Looking ahead, our current restructuring activities are expected to result in further charges in the fourth quarter and to result in lower operating expenses in future periods."
Outlook for Q4 2013
Based on its current expectations and the continued uncertainty associated with the U.S. Government business, management expects revenues of $25.0 million to $27.0 million for the fourth quarter of 2013, and further expects adjusted EBITDA of $(0.0) million to $1.0 million. In addition, and as referenced above, management is in the process of discontinuing underperforming assets which is expected to lead to divestment of certain businesses in the current quarter. Current guidance includes the expected results of these businesses of revenue of $5.0 million to $6.0 million and adjusted EBITDA loss of $(0.5) million to $0.0 million. The timing of such divestment is uncertain.
Conference Call and Webcast Information
Identive will host a conference call and audio webcast today at 5:00 PM Eastern Time, which can be accessed by dialing 888.771.4371 (toll free within the U.S.) or +1 847.585.4405 (for international callers) and using passcode 36033941. A webcast of the call can be accessed by visiting the investor relations section of the Company's website at www.identive-group.com, and by clicking on "Presentations, Reports & Webcasts," where it also will be archived for those unable to listen to the live webcast. An audio replay of the call also will be available for one week and can be accessed by dialing 888.843.7419 (toll free within the U.S.) or +1 630.652.3042 (for international callers) and using passcode 36033941.
Non-GAAP Measures
Non-GAAP gross profit margin, adjusted EBITDA and non-GAAP net loss and net loss per share all exclude various items that are detailed in the financial table and accompanying footnotes reconciling GAAP to non-GAAP results contained in this release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."
About Identive
Identive Group, Inc. (Nasdaq:INVE); (Frankfurt:INV) provides trusted products and solutions that address the markets for identity management, physical and logical access control, and NFC- and RFID-enabled applications for customers in the government, enterprise, consumer, education and healthcare sectors.
Non-GAAP Financial Measures (Unaudited)
Identive has provided in this release financial information that has not been prepared in accordance with GAAP, including non-GAAP gross profit margin, adjusted EBITDA and non-GAAP net income (loss) and net income (loss) per share. Identive uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Identive's ongoing operational performance. Identive believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. As noted, the non-GAAP financial results discussed above exclude items detailed in the reconciliation table and accompanying footnotes contained within this release. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures as detailed in this release.
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