IASG Announces Second 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 second quarter of fiscal 2006 ending June June: see month. 30, 2006. Revenue for the second quarter of 2006 was $23.0 million down 7 percent over the same period in 2005 and down 5 percent from the first quarter of 2006. The net loss for the second quarter ending June 30, 2006 was $6.4 million, or $0.26 per share, compared to a net loss of $6.3 million, or $0.26 per share, in the second quarter of 2005, and a net loss of $3.4 million, or $0.14 per share, in the first quarter of 2006. Revenue for the first half of fiscal 2006 ending June 30, 2006 was $47.2 million down 4 percent from the same period in 2005. The net loss for the first half of 2006 was $9.9 million, or $0.40 per share, compared to a loss of $8.9 million, also $0.36 per share, for the first half of fiscal 2005. In announcing the financial results, Charles May For the Michigan politician, see Charles S. May. Charles May (born June 30, 1858; died 1932) was a politician in Alberta, Canada and a mayor of Edmonton Biography May was born in Wellington County, Ontario on June 30, 1858. , acting President and Chief Executive Officer, said, "The second quarter of 2006 witnessed a major transition for our Company. During the quarter new executive leadership was put in place and significant change occurred at the Board of Director level. John Mabry This article is about the professional baseball player. For the Texas state representative, see John P. Mabry. John Steven Mabry (born October 17 1970 in Wilmington, Delaware) is a Major League Baseball player. was elected e·lect v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. Chairman of the Board of Directors, Jason Mudrick, portfolio manager of Contrarian Contrarian An investment style that goes against prevailing market trends by buys assets that are performing poorly and selling when they perform well. Notes: A contrarian investor believes that the people who say the market is going up do so only when they are fully Capital; joined our Board and two founders of IASG resigned from the Board. It is the objective of the Board and the management team to effectively serve our customers, efficiently manage our business activities and build shareholder value." May continued, "We made operating progress in the second quarter, however results continue to be unacceptable. Second quarter 2006 aggregate 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: was 12 percent, up from the first quarter but down significantly from second half of 2005. Second quarter 2006 operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. declined five percent, or $1.4 million, from the year earlier period. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. monthly revenue, 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $210,000 in the mountain states The Mountain States (also known as the Mountain West) form one of the nine geographic divisions of the United States that are officially recognized by the United States Census Bureau. of Colorado Colorado, state, United States Colorado (kŏlərăd`ə, –răd`ō, –rä`dō), state, W central United States, one of the Rocky Mt. states. , Idaho Idaho (ī`dəhō), one of the Rocky Mt. states in the NW United States. It is bordered by Montana and Wyoming (E), Utah and Nevada (S), Oregon and Washington (W), and the Canadian province of British Columbia (N). and Utah. The sale of these non-strategic assets generated consideration of $7.3 million." At June 30, 2006, IASG had $17.6 million in cash, $16.3 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 $110.4 million. The Company had $125.5 million of debt and capital leases at June 30, 2006 and ended the second quarter of 2006 with a net debt (debt less cash) to equity ratio of 0.97 to 1. IASG had no outstanding balance on the $30 million senior credit facility at June 30, 2006.
IASG Portfolio Data:
Annualized Attrition Rate
Annualized
2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 4 Quarters
2005 2005 2005 2006 2006 to 6/30/06
---- ---- ---- ---- ---- ----------
IASG Owned Portfolio
Legacy Portfolio 17.8% 20.0% 18.3% 12.1% 11.8% 14.7%
New Residential 12.9% 22.4% 17.5% 12.1% 11.9% 15.1%
New Commercial 12.3% 2.6% 6.2% 5.3% 12.5% 6.5%
Aggregate Owned
Portfolio 13.8% 17.8% 15.3% 10.6% 12.0% 13.2%
Annualized Growth Rate - excluding acquisitions
Annualized
2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 4 Quarters
2005 2005 2005 2006 2006 to 6/30/06
---- ---- ---- ---- ---- ----------
Wholesale Monitoring
Accounts (4.9%) (16.6%) (9.6%) (4.8%) 14.7% (4.4%)
IASG ended the second quarter of fiscal 2006 with an owned portfolio of approximately 142,000 contract equivalents generating RMR of approximately $4.3 million and wholesale monitoring of over 745,000 alarms generating approximately $3.0 million in RMR (including IASG's owned portfolio accounts). Revenue from the owned portfolio is split 76 percent residential and 24 percent commercial. The Company had 762 employees at June 30, 2006 down from 837 at December December: see month. 31, 2005. See the attached financial highlights for the second quarter of 2006 and comparative periods. Conference Call IASG will hold a conference call at 8:30 AM EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Thursday Thursday: see week. August, 10 2006 to discuss second quarter financial results. Investors may participate in the conference call by dialing 800-291-9234 and entering the access code of 75011864 or by logging onto the investor relations Investor relations The process by which the corporation communicates with its investors. section of the IASG website at www.iasg.us. The international dial in number is 617-614-3923 with the same access code. A replay of the conference call will be available through August 31, 2006 by dialing 888-286-8010 (international dial in - 617 801-6888) and entering the access code of 56201403 or by visiting the investor relations section of the IASG website. 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 SHEETS
As of
---------------------
December 31, June 30,
2005 2006
--------- --------
(UNAUDITED)
(in thousands, except
for share data)
Assets
Current assets:
Cash and cash equivalents $ 16,239 $ 17,627
Current portion of notes receivable 6,108 6,207
Accounts receivable less allowance for doubtful
accounts 5,158 4,133
Inventories 1,477 1,331
Prepaid expenses 1,084 1,492
Due from related parties 87 73
---------- ---------
Total current assets 30,153 30,863
Property and equipment, net 7,843 7,643
Notes receivable net of current portion and
allowance for doubtful accounts 10,085 10,140
Dealer relationships, net 33,000 30,737
Customer contracts, net 80,532 68,584
Deferred customer acquisition costs, net 7,874 8,396
Goodwill 94,919 91,265
Debt issuance costs, net 4,596 4,161
Assets of business transferred - 8,178
Other identifiable intangibles, net 2,790 2,472
Restricted cash 758 287
Other assets 524 326
---------- ---------
Total assets $ 273,074 $263,052
========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of capital lease obligations $ 350 $ 216
Accounts payable 2,306 1,423
Accrued expenses 9,256 8,601
Current portion of deferred revenue 8,724 7,701
Other liabilities 390 418
---------- ---------
Total current liabilities 21,026 18,359
Long-term debt, net of current portion 125,000 125,000
Capital lease obligations, net of current
portion 461 274
Deferred revenue, net of current portion 4,830 5,274
Liabilities of business transferred - 1,050
Advance payment 827
Deferred income taxes 1,582 1,776
Other liabilities -
Due to related parties 61 76
---------- ---------
Total liabilities 152,960 152,636
---------- ---------
Committments and Contingencies - -
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 207,162 207,325
Accumulated deficit (86,073) (95,934)
Treasury stock - common, at cost, 312,626
shares (1,000) (1,000)
---------- ---------
Total stockholders' equity 120,114 110,416
---------- ---------
Total liabilities and stockholders' equity $ 273,074 $263,052
========== =========
INTEGRATED ALARM SERVICES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
----------------------- --------------------------
2005 2006 2005 2006
----------- ----------- ----------- -----------
(in thousands, except share and per share data)
Revenue:
Monitoring fees $ 7,750 $ 7,574 $ 15,572 $ 15,407
Revenue from
customer accounts 15,419 12,952 29,701 26,628
Related party
monitoring fees 34 24 67 50
Service,
installation and
other revenue 1,485 2,520 3,806 5,133
------------ ------------ ------------ ------------
Total revenue 24,688 23,070 49,146 47,218
------------ ------------ ------------ ------------
Expenses:
Cost of revenue
(excluding
depreciation and
amortization) 10,429 9,751 20,748 19,202
Selling and
marketing 1,360 1,404 2,519 2,677
Depreciation and
amortization 7,142 7,416 13,256 13,794
(Gain) loss on
sale or disposal
of assets 442 (19) 442 (29)
Loss on business
transferred - 500 - 500
General and
administrative 8,054 6,953 14,161 13,907
------------ ------------ ------------ ------------
Total expenses 27,427 26,005 51,126 50,051
------------ ------------ ------------ ------------
Income (loss) from
operations (2,739) (2,935) (1,980) (2,833)
Other income
(expense):
Amortization of debt
issuance costs (282) (242) (556) (484)
Interest expense (4,301) (4,160) (8,487) (8,277)
Interest income 1,123 1,035 2,378 2,070
------------ ------------ ------------ ------------
Income (loss) before
income taxes (6,199) (6,302) (8,645) (9,524)
Income tax expense 141 145 281 337
------------ ------------ ------------ ------------
Net income (loss) $ (6,340) $ (6,447) $ (8,926) $ (9,861)
============ ============ ============ ============
Basic and diluted
income (loss) per
share $ (0.26) $ (0.26) $ (0.36) $ (0.40)
============ ============ ============ ============
Weighted average
number of common
shares outstanding 24,681,462 24,368,836 24,681,462 24,368,836
============ ============ ============ ============
INTEGRATED ALARM SERVICES GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(UNAUDITED)
Three Months Ended
June 30, 2005 June 30, 2006
------------- -------------
Net income (loss) $(6,340) $(6,447)
Adjust for:
Income tax expense 141 145
Interest expense 4,301 4,160
Amortization of debt issuance costs 282 242
Depreciation and amortization 7,142 7,416
-------- --------
EBITDA $ 5,526 $ 5,516
======== ========
Six Months Ended
June 30, 2005 June 30, 2006
------------- -------------
Net income (loss) $(8,926) $(9,861)
Adjust for:
Income tax expense 281 337
Interest expense 8,487 8,277
Amortization of debt issuance costs 556 484
Depreciation and amortization 13,256 13,794
-------- --------
EBITDA $13,654 $13,031
======== ========
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