Performance improvements include sequential sales
growth of 12% and decline in base operating costs
SANTA ANA, Calif. and ISMANING, Germany, August 7, 2012 -
Identive Group, Inc. (NASDAQ: INVE; Frankfurt: INV), a
provider of products, services and solutions for the
identification, security and RFID industries, today
announced results for the fiscal second quarter (Q2), ended
June 30, 2012.
Q2 2012 Highlights:
• Revenues of $23.9 million, up 12% from the first quarter
(Q1) of 2012
• Continued improvement in U.S. government business
• Launched innovative product and service offerings for
emerging NFC and payment markets
• Impairment of goodwill and intangibles; reduced impact of
depreciation and amortization charges on earnings in future
periods
"Our Q2 results were in line with expectations, despite
ongoing weakness in the global economic environment.
Continued recovery in sales of both ID products and
identity management systems in the U.S. government sector
helped offset slowdown of citizen ID programs in Europe and
continued customer project delays in our transponder
sales," stated Ayman S. Ashour, CEO and Chairman of
Identive. "Our ongoing focus on reducing expenses, together
with our restructuring program put in place in June, helped
drive a sequential decline in base operating expenses, and
we expect further savings as we realize the full effect of
our restructuring actions later this year. We also
reinforced our position in both existing and emerging
markets with the launch of several important new products
that represent the fruits of our investments in new
technology. These industry-first offerings included tomPAY™
cashless payment cards that can be converted into NFC tags
for mobile devices; desktop readers for integrated physical
and cyber security; and our secure cloud-based, NFC tag
management platform."
Q2 Results
As reported in accordance with U.S. generally accepted
accounting principles (GAAP), revenues were $23.9 million
in Q2 2012, up 12% from $21.2 million in Q1 2012 and down
7% from $25.6 million in Q2 2011. By segment, Identity
Management Services and Solutions (Identity Management)
revenues were $14.2 million and ID Products revenues were
$9.7 million in Q2 2012.
GAAP gross profit margin was 40% in Q2 2012, compared with
41% in Q1 2012 and 40% in Q2 2011. Total research and
development, sales and marketing and general and
administrative expenses (referred to in this release as
base operating expenses) were $13.3 million in Q2 2012,
down 11% from $15.0 million in Q1 2012 and unchanged from
$13.3 million in Q2 2011. Total base operating expenses in
Q2 2012 reflect a significant increase in technology
investment compared with the same quarter a year ago,
partially offset by lower general and administrative
spending.
During the quarter we experienced a sharp and sustained
decline in our market capitalization, triggering a required
impairment analysis of our goodwill, intangible and
long-lived assets. Based on this review, we concluded that
some assets are impaired and recognized preliminary
non-cash charges totaling $45.4 million in the quarter.
These charges have no impact on our day-today operations or
liquidity and will not result in any future cash
expenditures. However, the amount of amortization and
depreciation will be significantly reduced and consequently
there will be lower non-cash charges to net earnings in
future quarters.
The non-cash impairment charges contributed to a net loss
of $(41.9) million, or $(0.70) per share in Q2 2012,
compared with a net loss of $(1.6) million, or $(0.03) per
share in Q2 2011 and a net loss of $(6.2) million, or
$(0.11) per share in Q1 2012. The impairment charges and
other non-cash adjustments related to the above referenced
review accounted for $(0.66) per share of the net loss per
share recorded in Q2 2012.
Non-GAAP gross profit margin was 45% in Q2 2012, up from
44% in Q1 2012, reflecting a higher contribution of
systems, software and services sales. Non-GAAP base
operating expenses were $11.9 million in Q2 2012, compared
with $12.8 million in Q1 2012. Adjusted EBITDA was $(1.2)
million in Q2 2012, compared with $(3.5) million in Q1
2012.
Non-GAAP gross profit margin, non-GAAP operating expenses
and adjusted EBITDA 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."
Cash and cash equivalents at June 30, 2012 were $6.3
million, in line with management guidance and compared with
$13.3 million at March 31, 2012, reflecting funding of
operational losses, reductions in accounts payable
associated with seasonal commitments to stadium
concessions, and funding of financial liabilities.
David Wear, CFO of Identive added, "We remain on target to
achieve cost reductions of $4.0 million to $5.0 million by
the end of 2012, which annualized, are expected to be close
to $7.0 million. At the same time we continue to commit to
investment in the future growth of the Company. With the
reduction in our EBITDA loss in the current quarter and the
stabilization of our cash position after the first four
months of the year, we believe we can continue to support
our operational cash flow requirements through internal
means. However, we will also seek to strengthen the balance
sheet by a moderate amount to allow us to withstand
unexpected or unforeseen market changes."
Q2 2012 Business Highlights
Sales and product highlights from the 2012 second quarter
include:
• The announcement of an innovative cloud-based, NFC (near
field communication) tag management platform that allows
advertisers, retailers and organizations in the education,
hospitality and other markets to securely manage the
delivery of dynamic, targeted content and services to
consumers' NFC-enabled mobile devices.
• Continued expansion of the user base for Identive's
cashless payment products and solutions globally, with new
customer wins in India and significant growth in
Europe.
• Expanded penetration of transponders into the Japanese
market with more than 300,000 inlays supplied for payment
and loyalty applications.
• The introduction of tomPay™, an innovative convertible
contactless payment card / NFC tag that enables consumers
to add NFC cashless payment capabilities to their existing
mobile phones.
• The introduction of a new line of NFC magnets and
dual-sided window stickers that provide retailers with new
ways to advertise to and communicate with their customers
using NFC technology.
• The launch of a new NFC tag online customization service
that allows customers to order NFC tags, stickers and smart
posters personalized with their own designs, photos or
logos, as well as a URL destination, phone number or other
data.
Mr. Ashour concluded, "Identive's true strength in Secure
ID is our core vision of identity as a fundamental industry
serving multiple verticals. Our global presence and our
strong position across the many identity markets provide
resilience to weather fluctuations in any single sector.
These strengths also put us at the head of the pack as the
industry prepares to capitalize on emerging opportunities
for mass deployments of consumer ID, citizen ID and
employee ID solutions. We remain convinced that NFC,
cashless payment and cloud-based identity management are
emerging mega trends and that Identive is uniquely
positioned in these markets. This propels our strategy to
provide new ID products, software and services that these
potential hyper-growth areas will require. Our cost
reduction program and the changes we made in our balance
sheet should help improve our financial position as we
continue to work to lower our breakeven point."
Outlook for Q3 2012
Based on its current expectations, management expects
revenues of $24.0 million to $27.0 million, non-GAAP,
adjusted EBITDA of $(0.7) million to $0.7 million, and
non-GAAP EPS of $(0.03) to $(0.02) in the third quarter of
2012.
Conference Call and Webcast Information
Identive Group will host a conference call and webcast
today at 10:00 AM Eastern Time, which can be accessed by
dialing 800.638.4930 (toll free within the U.S.) or +1
617.614.3944 (for international callers) and using pass
code 37733064. A webcast of the call that includes
presentation slides 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 888.286.8010 (toll free within
the U.S.) or +1 617.801.6888 (for international callers)
and using pass code 92565832.
About Identive Group
Identive Group, Inc. (NASDAQ: INVE; Frankfurt: INV) is
focused on building the world's signature company in Secure
ID. The company's products, software, systems and services
address the markets for identity management, physical and
logical access control, cashless payment, NFC solutions and
a host of RFID-enabled applications for customers in the
government, enterprise, consumer, education and healthcare
sectors. Identive's mission is to build a lasting business
of scale and technology based on a combination of strong
technology-driven organic growth and disciplined
acquisitive expansion. The company delivers up-to-date
information on its activity as well as industry trends
through its industry-leading social media initiatives and
educational resource, AskIdentive.com. For additional
information, please visit www.identive-group.com or follow
on Twitter at @IdentiveGroup.
Non-GAAP Financial Measures
Identive has provided in this release financial information
that has not been prepared in accordance with GAAP,
including non-GAAP operating expenses, non-GAAP gross
profit margin and adjusted EBITDA. 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
various items which are 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.
Note Regarding Forward Looking Information:
This press release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking
statements can be identified by words such as
"anticipates," "believes," "plans," "will," "intends,"
"expects," and similar references to the future. Examples
of such statements include, without limitation, statements
we make regarding our expectations regarding continued
demand for our products, solutions and services, our
expectations regarding market acceptance of our NFC,
cashless payment and cloud-based solutions, our ability to
realize savings from our cost savings and restructuring
plans, our ability to capitalize on our technology
portfolio, our expectations regarding future results,
including Q3 2012 results, our preliminary estimate of
impairment charges, and our expectations for future growth
and profitability. Readers should not unduly rely on these
forward-looking statements, which are not a guarantee of
future performance and are subject to a number of risks and
uncertainties, many of which are outside our control, which
could cause our actual business and operating results to
differ. Factors that could cause actual results to differ
materially from those in the forward-looking statements
include our ability to grow our company based on a strategy
of providing products, components and services for the
secure identification market; to successfully develop and
commercialize new products and solutions that satisfy the
evolving and increasingly complex requirements of
customers; whether the markets in which we participate or
target may grow, converge or standardize at anticipated
rates or at all, including the markets that we are
targeting; our ability to successfully integrate acquired
businesses; our ability to successfully compete in the
markets in which we participate or target; our ability to
meet our sales forecasts and general global political and
economic factors which are beyond our control but may
unduly impact our markets and our business. For a
discussion of further risks and uncertainties related to
our business, please refer to our public company reports,
including our Annual Report on Form 10-K for the year ended
December 31, 2011 and subsequent reports filed with the
U.S. Securities and Exchange Commission. All
forward-looking statements are based on information
available to us on the date hereof, and we assume no
obligation to update such statements.
All trade names are trademarks or registered trademarks of
their respective holders.
Contacts:
Darby Dye +1 949 553-4251, This e-mail address is being
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Lennart Streibel +49 89 9595 5195, This e-mail address is
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