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EANS-News: Identive Group Inc.
Identive Group announces third Quarter 2010
75% Sales Growth and Cost Reductions Yield Positive Adjusted EBITDA of $1.2 million
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Subtitle: 75% Sales Growth and Cost Reductions Yield Positive Adjusted EBITDA of $1.2 million
Santa Ana, Calif. and Ismaning, November 10, 2010 (euro adhoc) - Identive Group, Inc. (NASDAQ: INVE; Frankfurt Stock Exchange: INV), a provider of products, services and solutions for the security, identification and RFID industries, today announced results for the third quarter (Q3) of fiscal 2010, ended September 30, 2010.
"Our sales momentum in Q3 and further cost reductions drove up adjusted EBITDA to $1.2 million, validating the financial model we put in place at the beginning of the year," commented Ayman S. Ashour, chairman and chief executive officer of Identive Group. "Identive´s ability to provide secure ID solutions at all levels of the value chain enabled us to capitalize on significant demand trends within the global identity management market in Q3. We also benefitted from growing synergies within the Group, as individual businesses leveraged each other´s technologies, geographic presence and market expertise to expand sales. Our cost structure is still higher than we want it to be. We are pleased with the progress we have made but are continuing to work to improve efficiency across the board."
Q3 2010 Results
Identive´s Q3 2010 results include the operating results of acquired companies since the dates of their respective acquisition. These include Hirsch Electronics Corporation, acquired April 30, 2009; Bluehill ID AG, acquired January 4, 2010; and Multicard U.S. (formerly RockWest Technology Group, Inc.), acquired April 14, 2010. All figures are reported in U.S. GAAP, except as noted. A discussion of non-GAAP measures and reconciliation to the applicable GAAP measures is included below. Revenue in Q3 2010 was $23.3 million, up 75% from $13.3 million in Q3 2009 and up 10% from $21.2 million in the second quarter (Q2) of 2010. The year over year increase primarily was due to the inclusion of additional revenue from the acquired Bluehill ID and Multicard U.S. businesses, while sequential growth primarily was driven by strong sales of ID security solutions for government applications in the U.S. and Germany.
Sales in the Americas accounted for 55%, sales in EMEA accounted for 36% and sales in the Asia/Pacific region accounted for 9% of total Q3 2010 revenue.
Highlights in Q3 2010 included continued strong orders from U.S. government agencies for Hirsch security systems, which reflect the high activity in the sector around compliance with security mandates under programs such as Homeland Security Presidential Directive 12. In the Company´s SCM business, the shipment of 165,000 secure IT kits to fulfill the first of four large orders related to the German government´s implementation of a new electronic citizen ID card contributed $2.5 million of revenue in the quarter. Sales from the Multicard businesses were relatively stable in the quarter, with strong demand in the U.S. and Netherlands offsetting project delays and uneven order flow elsewhere. During Q3, Multicard U.S. was selected to provide equipment and systems for state and county programs to identify and coordinate first responders, patients and assets in case of emergency or pandemic events. Multicard Netherlands provided personalization and fulfillment services including RFID labels for a cashless payment program for Rabobank`s 45,000 employees. Record sales in the TagStar business were driven by new applications, including the RFID labels used in the Rabobank program, limited use tickets for transit programs in the U.S. and Europe, secure tracking of pharmaceutical consumables, and electronic authentication and tracking for the rental car market in Europe.
Non-GAAP gross profit margin, excluding overhead allocation, amortization and equity-based compensation expense, was 47% in Q3 2010, compared with 54% in Q3 2009 and 51% in Q2 2010. Strong and stable margins at Hirsch and improved margins at Multicard were offset by unfavorable product mix in the SCM business and production ramp issues at TagStar during the quarter.
Non-GAAP overhead costs (operating expenses before amortization, depreciation, overhead allocation, equity-based compensation, acquisition, transition and integration costs), were $9.8 million in Q3 2010, up 22% from $8.1 million in Q3 2009 and down 3% with $10.1 million in Q2 2010. The increase in overhead costs in Q3 2010 compared with the previous year is due to the inclusion of the incremental expenses from the acquired businesses, offset by cost reductions initiated at the beginning of 2010, which included facility consolidations; reductions in headcount, executive salaries and Board of Director fees; as well as consolidation of administrative services and programs.
Non-GAAP adjusted EBITDA (EBITDA before equity-based compensation, acquisition, transition and integration costs) was $1.2 million in Q3 2010, compared with adjusted EBITDA loss of $(0.9) million in Q3 2009 and positive adjusted EBITDA of $0.7 million in Q2 2010.
Non-GAAP earnings per share (earnings per share before amortization of intangibles of acquired companies) in Q3 2010 was $0.00, compared with non-GAAP loss per share of $(0.08) in Q3 2009 and a positive non-GAAP EPS of $0.01 in Q2 2010.
On a GAAP basis, gross profit margin in Q3 2010 was 43%, compared with 50% in Q3 2009 and 46% in Q2 2010. Total GAAP operating expenses in Q3 2010 were $11.2 million, compared with $8.3 million in Q3 2009 and $11.5 million in Q2 2010. GAAP operating loss was $(1.1) million in Q3 2010, compared with $(1.6) million in Q3 2009 and $(1.7) million in Q2 2010.
GAAP net loss from continuing operations attributable to Identive Group, Inc. in Q3 2010 was $(0.9) million, or $(0.02) per share, compared with $(2.2) million, or $(0.09) per share in Q3 2009 and $(0.7) million, or $(0.02) per share in Q2 2010. Cash and cash equivalents at the end of Q3 2010 were $6.2 million, up from $4.6 million at the end of the previous quarter, reflecting funding of working capital and acquisition, transition and integration costs, offset by early payments received for the German eID program.
"Governments around the world are implementing secure ID projects at all levels, from regional programs to credentialize and track emergency workers, to national schemes to deploy citizen ID cards. Enterprises are also embracing the economic and security benefits of identity management and RFID solutions to protect their IT infrastructure and physical assets," continued Mr. Ashour. "Identive is focused on addressing the diverse needs of customers across the range of RFID applications and technologies. Our planned acquisition of Smartag will further support our market strategy, as it strengthens our core technology base with a strong IP portfolio, additional manufacturing capacity and enhances our presence in the Asia-Pacific."
Conference Call and Webcast Information Identive Group will host a conference call and webcast today at 8:00 AM Eastern Time, which can be accessed by dialing 866.788.0542 (toll free within the U.S.) or +1 857.350.1680 (outside the U.S.) and using pass code 22371207. A webcast of the call that includes presentation slides can be accessed by visiting the investor page of the Company´s website at www.identive-group.com, 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 888.286.8010 (toll free within the U.S.) or +1 617.801.6888 (for international callers) and using pass code 73164924.
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