Identiv Reports Q1 2014 Earnings
15 May 2014 - 8:12AM
Quarterly Revenue of $17.2 Million up 8
Percent Year Over Year
$20 Million Facility With Opus Bank
Enhances Liquidity and Refinances Debt
Identiv (Nasdaq:INVE) reports its financial results for the first
quarter (Q1) of 2014.
"In Q1 2014, we continued cost reductions and focused on growth,
seeing early success with increased revenue of 8 percent, compared
to Q1 2013," said Jason Hart, chief executive officer of Identiv.
"Our credentials products, used in our trust solutions for everyday
items, grew 36 percent compared to Q1 2013, with strong demand from
electronic gaming and other Internet of Things applications."
"We significantly enhanced liquidity with a $20 million term
loan and line-of-credit agreement on favorable commercial terms
with Opus Bank, allowing retirement of previous expensive debt,
increased liquidity and reduced debt service in future quarters,"
Hart added.
Q1 Financial Summary
In reviewing the results for the first quarter of fiscal year
2014, compared to the first quarter of fiscal year 2013:
- Total revenues for continuing operations were $17.2 million,
compared to $16.0 million, reflecting growth of 8% with significant
contribution from sales of credentials products increasing 36% to
meet demand for electronic game toys and other Internet of Things
applications.
- GAAP gross profit margin was 39%, compared to 42%, primarily
due to product mix.
- Base operating expenses, which include research and
development, sales and marketing, and general and administrative
costs, were $9.6 million, compared to $10.3 million. At the same
time, the company was able to increase investment in sales and
marketing by 7%, offset by a reduction in general and
administrative expenses of 21%.
- Adjusted EBITDA for the quarter was $(2.0) million, compared to
$(2.1) million.
- GAAP net loss from continuing operations was $(5.6) million in
Q1 2014, which included restructuring costs totaling $0.4 million,
or $(0.07) per share, compared with GAAP loss from continuing
operations of $(4.0) million, or $(0.07) per share in the
comparable prior year period. There were no restructuring costs in
Q1 2013.
- Cash and cash equivalents were $12.0 million at March 31, 2014,
compared with $5.1 million at December 31, 2013.
- In March 2014, Identiv entered into term loan and
line-of-credit agreement with Opus Bank, of which $6.0 million was
used to refinance the debt with Hercules.
Note: Financial results contained in this release reflect the
continuing operations of Identiv only and exclude discontinued
operations of non-core businesses sold in December 2013 and
February 2014.
"Our investment in growth is producing results as reflected by
our Q1 2014 total revenues. In addition, we continue executing on
additional opportunities to streamline the business and improve
margins, including consolidation of our factories, which, when
complete, will yield a margin improvement in our rapidly growing
trust solutions for everyday items," Hart added.
Guidance
The company reaffirms guidance for fiscal year 2014 of revenue
between $80 million and $90 million and adjusted EBITDA positive on
an annual basis.
Webcast and Conference Call Information
Identiv will hold an audio webcast and conference call to
discuss the results of its 2014 first quarter today, May 14, 2014,
at 5:00 PM (ET). The audio webcast can be accessed by visiting the
Investor Relations section of identiv.com and clicking on
Presentations & Webcasts. The conference call can be accessed
by dialing 888-771-4371 (toll-free within the U.S.) or +1
847-585-4405 (for international callers) using passcode 37284195.
For those unable to attend the live webcast, it will be archived
following the event for 30 days in the Investor Relations section
of identiv.com. A replay of the call will also 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) using
passcode 37284195.
VOTE YOUR SHARES
The Identiv 2014 Annual General Meeting is on Thursday, May 22,
2014. Have your say on important issues that affect the future of
the company by voting your eligible shares. Further information is
available at 2014agm.identiv.com. Your vote counts!
About Identiv
Identiv is a global security technology company that establishes
trust in the connected world, including premises, information and
everyday items. CIOs, CSOs and product departments rely upon
Identiv's trust solutions to reduce risk, achieve compliance and
protect brand identity. Identiv's trust solutions are implemented
using standards-driven products and technology, such as digital
certificates, mobility and cloud services. For more information,
visit identiv.com. To learn more about the Identiv 2014 Annual
General Meeting, visit 2014agm.identiv.com.
Non-GAAP Financial Measures (Unaudited)
This release includes financial information that has not been
prepared in accordance with GAAP, including non-GAAP gross profit
margin, non-GAAP operating expenses and adjusted EBITDA,. [A1]
Identiv 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 our
ongoing operational performance. We believe that the use of these
non-GAAP financial measures provides an additional tool for
investors to use in evaluating ongoing operating results and
trends. 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.
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 regarding our
expectations for additional revenue from new sales partnerships;
our ability to establish a stable financial platform on which to
execute our strategy to deliver trust solutions; our expectations
from increased investments in sales, marketing and engineering; and
our ability to achieve the level of revenues and adjusted EBITDA
results in 2014 for which we have provided guidance. 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 realize cost savings from the restructuring of our
operations; our ability to increase revenues through new sales and
marketing programs and sales partnerships; our ability to
successfully develop and commercialize new products and solutions
that satisfy the evolving and increasingly complex requirements of
customers; our ability to finance continued investments in
technology, products and manufacturing capacity to develop products
and solutions for the market; 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 compete in the markets in
which we participate or target; our ability to meet our sales
forecasts; our ability to meet financial covenants of our loan
agreement; our ability to meet growing demand for our products; 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, 2013 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.
| Identive Group,
Inc. |
| Consolidated Statements
of Operations |
| (in thousands, except per share
data) |
| (unaudited) |
| |
|
|
|
| |
Three Months
Ended |
| |
March, 31 |
December, 31 |
March, 31 |
| |
2014 |
2013 |
2013 |
| Net revenue |
$17,160 |
$19,912 |
$15,955 |
| Cost of revenue |
10,520 |
11,162 |
9,202 |
| Gross profit |
6,640 |
8,750 |
6,753 |
| Operating expenses: |
|
|
|
| Research and development |
1,502 |
1,071 |
1,693 |
| Selling and marketing |
5,049 |
4,951 |
4,697 |
| General and administrative |
3,054 |
3,154 |
3,887 |
| Impairment of goodwill |
— |
4,637 |
— |
| Restructuring and
severance |
437 |
518 |
— |
| Total operating expenses |
10,042 |
14,331 |
10,277 |
| Loss from operations |
(3,402) |
(5,581) |
(3,524) |
| Interest expense, net |
(2,084) |
(566) |
(592) |
| Foreign currency (loss) gain, net |
(93) |
249 |
(178) |
| |
|
|
|
| Loss from continuing operations
before income taxes and noncontrolling interest |
(5,579) |
(5,898) |
(4,294) |
| Income tax (provision) benefit |
(64) |
209 |
114 |
| |
|
|
|
| Loss from continuing operations
before noncontrolling interest |
(5,643) |
(5,689) |
(4,180) |
| Income (loss) from discontinued
operations, net of income taxes |
474 |
3,488 |
(776) |
| Consolidated net loss |
(5,169) |
(2,201) |
(4,956) |
| Less: Loss attributable to
noncontrolling interest |
41 |
(775) |
175 |
| |
|
|
|
| Net loss attributable to Identive Group, Inc.
stockholders' equity |
$ (5,128) |
$ (2,976) |
$ (4,781) |
| |
|
|
|
| Basic and diluted net loss per share
attributable to Identive Group, Inc. stockholders' equity: |
|
|
|
| Loss from continuing
operations |
$ (0.07) |
$ (0.09) |
$ (0.07) |
| Income (loss) from discontinued
operations |
0.01 |
0.05 |
(0.01) |
| Net loss |
$ (0.06) |
$ (0.04) |
$ (0.08) |
| Weighted average shares used to compute basic
and diluted loss per share |
75,688 |
74,132 |
60,233 |
| |
| Identive Group,
Inc. |
| Consolidated Balance
Sheets |
| (in thousands) |
| |
|
|
| |
March 31, |
December 31, |
| |
2014 |
2013 |
| |
(unaudited) |
|
| ASSETS |
|
|
| Current assets: |
|
|
| Cash |
$12,030 |
$5,095 |
| Accounts receivable, net of allowances |
12,940 |
13,289 |
| Inventories |
10,347 |
9,098 |
| Prepaid expenses |
1,031 |
957 |
| Other current assets |
1,672 |
1,766 |
| Current assets of discontinued
operations |
-- |
2,624 |
| Total current assets |
38,020 |
32,829 |
| Property and equipment, net |
5,696 |
5,888 |
| Goodwill |
8,994 |
8,991 |
| Intangible assets, net |
9,821 |
10,184 |
| Other assets |
1,305 |
867 |
| Total assets |
$63,836 |
$58,759 |
| |
|
|
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
| |
|
|
| Current liabilities: Accounts
payable |
$11,173 |
$9,353 |
| Liability to related party |
1,056 |
1,073 |
| Financial liabilities |
-- |
2,971 |
| Deferred revenue |
504 |
729 |
| Accrued compensation and related
benefits |
3,054 |
3,383 |
| Other accrued expenses and liabilities |
4,724 |
5,239 |
| Current liabilities of discontinued
operations |
-- |
1,630 |
| Total current liabilities |
20,511 |
24,378 |
| Long-term liability to related party |
5,537 |
5,648 |
| Long-term financial liabilities |
13,503 |
3,051 |
| Other long-term liabilities |
885 |
938 |
| Total liabilities |
40,436 |
34,015 |
| Total stockholders' equity |
23,400 |
24,744 |
| Total liabilities and stockholders'
equity |
$63,836 |
$58,759 |
| |
| Identiv (Identive
Group, Inc.) |
| Reconciliation of GAAP
and Non-GAAP Financial Information |
| (in thousands) |
| |
|
|
|
| |
Three months ended |
| |
March 31, |
December 31, |
March 31, |
| |
2014 |
2013 |
2013 |
| Reconciliation of GAAP gross profit
margin and non-GAAP gross profit margin |
|
|
|
| GAAP cost of revenue |
$10,520 |
$11,162 |
$9,202 |
| Reconciling items included in GAAP cost of
revenue: |
|
|
|
| Stock-based compensation |
(5) |
(12) |
(19) |
| Amortization and depreciation |
(362) |
(359) |
(325) |
| Total reconciling items included in GAAP cost
of revenue |
(367) |
(371) |
(344) |
| Non-GAAP cost of revenue |
10,153 |
10,791 |
8,858 |
| Non-GAAP gross profit margin |
41% |
46% |
44% |
| |
|
|
|
| Reconciliation of GAAP operating
expenses and overhead costs |
|
|
|
| |
|
|
|
| GAAP operating expenses |
$ 10,042 |
$ 14,331 |
$ 10,277 |
| Impairment of goodwill |
-- |
(4,637) |
-- |
| Stock-based compensation |
(195) |
(313) |
(441) |
| Pension expenses |
-- |
143 |
(25) |
| Gain (Loss) of disposal of fixed assets |
1 |
(28) |
(1) |
| Amortization and depreciation |
(390) |
(365) |
(432) |
| Transition and integration costs |
-- |
77 |
(162) |
| Restructuring and severance |
(437) |
(518) |
-- |
| Total reconciling items included in GAAP
operating expenses |
(1,021) |
(5,641) |
(1,061) |
| Overhead costs |
9,021 |
8,690 |
9,216 |
| Reconciliation of GAAP net loss to
adjusted EBITDA loss |
|
|
|
| Net loss attributable to Identive Group,
Inc. |
(5,128) |
(2,976) |
(4,781) |
| Reconciling items included in GAAP net
loss: |
|
|
|
| Provision (Benefit) for income taxes |
64 |
(209) |
(114) |
| Net (loss) gain attributable to
noncontrolling interest |
(41) |
775 |
(175) |
| (Income) loss from discontinued operations,
net of income taxes |
(474) |
(3,488) |
776 |
| Interest expense, net |
2,084 |
566 |
592 |
| Foreign currency losses (gains), net |
93 |
(249) |
178 |
| Impairment of goodwill |
-- |
4,637 |
-- |
| Stock-based compensation |
200 |
325 |
460 |
| Pension expenses |
-- |
(143) |
25 |
| Amortization and depreciation |
752 |
724 |
757 |
| Transition and integration costs |
-- |
(77) |
162 |
| (Gain) loss of disposal of fixed assets |
(1) |
28 |
1 |
| Restructuring and severance |
437 |
518 |
-- |
| Total reconciling items included in GAAP net
loss |
3,114 |
3,407 |
2,662 |
| Adjusted EBITDA loss |
(2,014) |
431 |
(2,119) |
CONTACT: Identiv Media Contacts:
Lesley Sullivan / Joann Wardrip
MSLGROUP
781-684-0770 / 415-512-0770
identivgroup@mslgroup.com
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