IASG Announces First Quarter 2006 Financial Results.ALBANY Albany, town, Australia Albany (ăl`bənē), town (1996 pop. 14,590), Western Australia, SW Australia. It is a port on Princess Royal Harbour of King George Sound. The town has woolen mills and fish canneries. , N.Y. -- Integrated Alarm Services Group, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : IASG IASG Intelligent Autonomous Systems Group (University of Amsterdam) IASG Internet Address Subgroup ) a total solution provider to independent security alarm dealers located throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. announced results for the first quarter of fiscal 2006 ending March 31, 2006. Revenue for the first quarter of 2006 was $24.1 million down 1 percent over the same period in 2005 and down 6 percent from the fourth the quarter of 2005. The net loss for the first quarter ending March 31, 2006 was $3.4 million, or $0.14 per share, compared to a net loss of $2.6 million, or $0.10 per share, in the first quarter of 2005, and a net loss of $8.0 million, or $0.32 per share, in the fourth quarter of 2005. First quarter achievements and activities included: --Annualized first quarter attrition Attrition The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. Notes: of 10.6 percent, a 30 percent reduction from the 15.3 percent for fourth quarter of 2005. --Margin of 60.9 percent in the first quarter, a 13 percent improvement over the 53.7 percent recorded in the fourth quarter of 2005. --A 24 percent or $2.2 million reduction in first quarter general and administrative expenses from the fourth quarter of 2005. --A 17 percent or $1.3 million reduction in first quarter depreciation and amortization from the fourth quarter of 2005. --First quarter EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $7.5 million, a 72 percent increase over fourth quarter 2005. --A first quarter increase of the dealer loan portfolio of 15 percent to $18.7 million from the fourth quarter of 2005. In announcing the year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. results, Timothy Timothy, epistles in the New Testament Timothy, two letters of the New Testament. With Titus they comprise the Pastoral Epistles, in which St. Paul addresses his coworkers as the guardians and transmitters of his teaching. M. McGinn McGinn (Mcginn) is a surname, and may refer to
This page or section lists people with the surname McGinn. , Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , said, "IASG made significant operational progress in the first quarter 2006 versus the fourth quarter of 2005. Our operational performance, particularly on the expense management side was consistent with the guidance we offered in the 2005 year-end conference call. Attrition results also showed excellent progress in the first quarter. However, as I commented in the past one should not put too much emphasis on any single period. The trend is important and the trend is clearly in the correct direction. The principle disappointment in the quarter was revenue growth." At March 31, 2006, IASG had $19.6 million in cash, $18.7 million of secured notes receivable from dealers and stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. of $116.7 million. The Company had $125.7 million of debt and capital leases at March 31, 2006 and ended the first quarter of 2006 with a net debt (debt less cash) to equity ratio of .91 to 1. IASG had no outstanding balance on the $30 million senior credit facility at March 31, 2006.
IASG Portfolio Data:
Annualized Attrition Rate
1st 2nd 3rd 4th 1st Annualized
Qtr Qtr Qtr Qtr Qtr 4 Quarters
2005 2005 2005 2005 2006 to 3/31/06
----- ----- ----- ----- ----- -----------
IASG Owned Portfolio
Legacy Portfolio 13.7% 17.8% 20.0% 18.3% 12.1% 16.0%
New Residential 11.7% 12.9% 22.4% 17.5% 12.1% 15.3%
New Commercial 5.2% 12.3% 2.6% 6.2% 5.3% 6.4%
Aggregate Owned Portfolio 10.9% 13.8% 17.8% 15.3% 10.6% 13.6%
Annualized Growth Rate - excluding acquisitions
1st 2nd 3rd 4th 1st Annualized
Qtr Qtr Qtr Qtr Qtr 4 Quarters
2005 2005 2005 2005 2006 to 3/31/06
---- ------ ------- ------ ------ -----------
Wholesale Monitoring
Accounts 2.3% (4.9%) (16.6%) (9.6%) (4.8%) (8.7%)
IASG ended the first quarter of fiscal 2006 with an owned portfolio of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 154,000 contract equivalents generating RMR RMR Resting Metabolic Rate RMR Registered Merit Reporter RMR Reliability Must-Run (electric generation plant's status to maintain grid voltage/reliability) RMR Recurring Monthly Revenue (finance) of approximately $4.6 million and wholesale monitoring of over 700,000 alarms (including IASG's owned portfolio accounts) generating approximately $3.0 million in RMR. Revenue from the owned portfolio is split 80 percent residential and 20 percent commercial. The Company employed 817 employees at March 31, 2006 down from 837 at December December: see month. 31, 2005 and 902 at March 31, 2005. See the attached financial highlights for the first quarter of 2006 and comparative periods. About IASG Integrated Alarm Services Group provides total integrated solutions to independent security alarm dealers located throughout the United States to assist them in serving the residential and commercial security alarm market. IASG's services include alarm contract financing including the purchase of dealer alarm contracts for its own portfolio and providing loans to dealers collateralized by alarm contracts. IASG, with approximately 5,000 independent dealer relationships, is also the largest wholesale provider of alarm contract monitoring and servicing. For more information about IASG please visit our web site at http://www.iasg.us. This press release may contain statements, which are not historical facts and are considered forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements contain projections of IASG's future results of operations, financial position or state other forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information. In some cases you can identify these statements by forward looking words such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "should", "will", and "would" or similar words. You should not rely on forward-looking statements because IASG's actual results may differ materially from those indicated by these forward looking statements as a result of a number of important factors. These factors include, but are not limited to: general economic and business conditions; our business strategy for expanding our presence in our industry; anticipated trends in our financial condition and results of operation; the impact of competition and technology change; existing and regulations effecting our company and business, and other risks and uncertainties discussed under the heading "Risks Related to our Business" in IASG's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. report for the period ending December 31, 2005 as filed with the Securities and Exchange Commission on March 16, 2006, and other reports IASG files from time to time with the Securities and Exchange Commission. IASG does not intend to and undertakes no duty to update the information contained in this press release.
INTEGRATED ALARM SERVICES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
As of
------------------------
December 31, March 31,
2005 2006
------------ -----------
(UNAUDITED)
(in thousands, except
for share data)
Assets
Current assets:
Cash and cash equivalents $ 16,239 $ 19,559
Current portion of notes receivable 6,108 7,364
Accounts receivable less allowance for
doubtful accounts 5,158 4,306
Inventories 1,477 1,653
Prepaid expenses 1,084 1,248
Due from related parties 87 65
------------ -----------
Total current assets 30,153 34,195
Property and equipment, net 7,843 7,961
Notes receivable net of current portion and
allowance for doubtful accounts 10,085 11,300
Dealer relationships, net 33,000 31,869
Customer contracts, net 80,532 77,815
Deferred customer acquisition costs, net 7,874 8,204
Goodwill 94,919 94,025
Debt issuance costs, net 4,596 4,355
Other identifiable intangibles, net 2,790 2,631
Restricted cash 758 758
Other assets 524 321
------------ -----------
Total assets $ 273,074 $ 273,434
============ ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of capital lease obligations $350 $313
Accounts payable 2,306 1,752
Accrued expenses 9,256 13,427
Current portion of deferred revenue 8,724 8,541
Other liabilities 390 415
------------ -----------
Total current liabilities 21,026 24,448
Long-term debt, net of current portion 125,000 125,000
Capital lease obligations, net of current
portion 461 421
Deferred revenue, net of current portion 4,830 5,077
Deferred income taxes 1,582 1,690
Due to related parties 61 69
------------ -----------
Total liabilities 152,960 156,705
------------ -----------
Stockholders' equity:
Preferred stock, $0.001 par value,
authorized 3,000,000 shares, none issued
and outstanding - -
Common stock, $0.001 par value, authorized
100,000,000 shares, 24,681,462 shares issued 25 25
Paid-in capital 207,162 207,191
Accumulated deficit (86,073) (89,487)
Treasury stock - common, at cost, 312,626
shares (1,000) (1,000)
------------ -----------
Total stockholders' equity 120,114 116,729
------------ -----------
Total liabilities and stockholders'
equity $ 273,074 $ 273,434
============ ===========
INTEGRATED ALARM SERVICES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months
Ended March 31,
-----------------------
2005 2006
----------- -----------
(in thousands, except
share and per share
data)
Revenue:
Monitoring fees $ 7,822 $ 7,833
Revenue from customer accounts 14,282 13,676
Related party monitoring fees 33 26
Service, installation and other revenue 2,321 2,613
----------- -----------
Total revenue 24,458 24,148
----------- -----------
Expenses:
Cost of revenue (excluding depreciation and
amortization) 10,319 9,451
Selling and marketing 1,159 1,273
Depreciation and amortization 6,114 6,378
(Gain) loss on sale or disposal of assets - (10)
General and administrative 6,107 6,954
----------- -----------
Total expenses 23,699 24,046
----------- -----------
Income (loss) from operations 759 102
Other income (expense):
Amortization of debt issuance costs (274) (242)
Interest expense (4,186) (4,117)
Interest income 1,255 1,035
----------- -----------
Income (loss) before income taxes (2,446) (3,222)
Income tax expense 140 192
----------- -----------
Net income (loss) $ (2,586) $ (3,414)
=========== ===========
Basic and diluted income (loss) per share $ (0.10) $ (0.14)
=========== ===========
Weighted average number of common shares
outstanding 24,681,462 24,368,836
=========== ===========
INTEGRATED ALARM SERVICES GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(UNAUDITED)
Three Months Ended:
March 31, December 31, March 31,
2005 2005 2006
---------- ------------ ---------
(in thousands)
Net income (loss) $ (2,586) $ (7,978) $ (3,414)
Adjust for:
Income tax expense (benefit) 140 187 192
Interest expense 4,186 4,208 4,117
Amortization of debt issuance costs 274 242 242
Depreciation and amortization 6,114 7,702 6,378
---------- ------------ ---------
EBITDA $ 8,128 $ 4,361 $ 7,515
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