Integrated Alarm Services (NASDAQ:IASGE)
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Integrated Alarm Services Group, Inc. (NASDAQ: IASGE), a
total solution provider to independent security alarm dealers located
throughout the United States, announced results for the first quarter
ended March 31, 2005. A management conference call and simultaneous
webcast to discuss first quarter results will be held on Wednesday,
June 29, 2005 at 4:30 p.m. EDT.
Revenue for the first quarter of fiscal 2005 was $24.5 million up
34.3 percent over the fiscal 2004 first quarter revenue of $18.2
million and up 17.9 percent sequentially over the fourth quarter of
2004. The net loss for the first quarter ended March 31, 2005 was $2.6
million, or $0.10 per share, compared to a net loss of $1.1 million,
or $0.04 per share in the first quarter of 2004.
The aggregate owned portfolio annualized attrition rate for the
first quarter of 2005 was 10.9 percent down from 13.4 percent in the
same period in 2004 and 11.3 percent in the fourth quarter of 2004.
During the first quarter of 2005 the Company added 16,600 contract
equivalents to its owned portfolio. Approximately 14,400 contracts
were acquired during the quarter at a gross purchase price multiple of
28.7 and 2,200 contract equivalents were added through internal sales
and marketing activities.
In announcing the results, Timothy M. McGinn, Chairman and CEO,
said, "These results show substantial progress. First quarter EBITDA
increased to $8.1 million from $3.1 million in the fourth quarter and
first quarter annualized attrition at 10.9 percent is below our
full-year 2005 target of 11 percent. During this difficult time, I am
pleased that our operating management has been able to stay focused on
serving the customer and improving financial performance. Clearly the
past few months have been distracting relative to our acquisition
activities and this is reflected in our first quarter account
additions. We have several acquisition opportunities in our pipeline
and I remain confident in our ability to add 80,000 contract
equivalents in 2005."
McGinn closed by saying, "The filing of our Form 10-Q fulfills our
filing obligations with the SEC and NASDAQ. I expect the fifth letter
to be removed from our stock symbol shortly."
At March 31, 2005, IASG had $26.9 million in cash, $27.6 million
of collateralized notes receivable from dealers and stockholders'
equity of $140.5 million. The Company had $130.9 million of debt and
capital leases at March 31, 2005 and ended the first quarter of fiscal
2005 with a net debt (debt less cash) to equity ratio of 0.74 to 1. In
the first quarter IASG used approximately $9.9 million of cash to
acquire accounts. The Company had no outstanding balance on the $30
million senior credit facility at the end of the first quarter 2005.
IASG Portfolio Data:
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----------------------------------------------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr
2004 2004 2004 2004 2005
----------------------------------------------------------------------
Annualized Attrition Rate
----------------------------------------------------------------------
IASG Owned Portfolio
----------------------------------------------------------------------
Legacy Portfolio 17.7% 10.8% 15.2% 14.6% 13.7%
----------------------------------------------------------------------
New Residential 13.5% 9.9% 12.5% 11.3% 11.7%
----------------------------------------------------------------------
New Commercial 9.1% 13.4% 10.4% 8.6% 5.2%
----------------------------------------------------------------------
Aggregate Owned Portfolio 13.4% 11.2% 12.6% 11.3% 10.9%
----------------------------------------------------------------------
----------------------------------------------------------------------
Annualized Growth Rate -
excluding acquisitions
----------------------------------------------------------------------
Wholesale Monitoring Accounts 4.0% (17.9%) (9.1%) 0.5% 2.3%
----------------------------------------------------------------------
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IASG ended the first quarter 2005 with an owned portfolio of
approximately 162,000 contract equivalents generating RMR of
approximately $4.9 million and wholesale monitoring of approximately
720,000 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.
Investors may participate in the conference call to discuss first
quarter results by dialing 800 599-9829 and entering the access code
of 96829488 or by logging onto the investor relations section of the
IASG website at www.iasg.us. The international dial in number is 617
847-8703 with the same access code. A replay of the conference call
will be available through July 20, 2005 by dialing 888 286-8010
(international dial in - 617 801-6888) and entering the access code of
96607367 or by visiting the investor relations section of the IASG
website.
See the attached financial highlights for the first quarter ended
2005.
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 5,600 independent dealer
relationships, is also the largest wholesale provider of alarm
contract monitoring and servicing. For more information about IASG
please visit our website at http://www.iasg.us.
This press release may contain statements, which are not
historical facts and are considered forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements contain projections of IASG's future
results of operations, financial position or state other
forward-looking 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 report for the period ending December 31, 2004 as filed with
the Securities and Exchange Commission on June 13, 2005, 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.
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INTEGRATED ALARM SERVICES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of
---------------------------
December 31, March 31,
2004 2005
------------- -------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $31,554,609 $26,853,950
Current portion of notes receivable 5,186,965 19,510,397
Accounts receivable, net 6,289,787 6,737,464
Inventories 1,233,785 1,078,899
Prepaid expenses 1,127,581 1,536,522
Due from related parties 70,655 136,448
------------- -------------
Total current assets 45,463,382 55,853,680
Property and equipment, net 7,926,324 7,774,069
Notes receivable, net 22,211,283 5,068,331
Dealer relationships, net 34,529,962 33,381,747
Customer contracts, net 85,169,085 93,280,544
Deferred installation costs, net 5,946,059 7,069,169
Goodwill 91,434,524 91,194,427
Debt issuance costs, net 5,322,089 5,334,144
Other identifiable intangibles, net 3,054,247 2,909,259
Restricted cash 757,104 1,399,714
Other assets 270,122 236,663
------------- -------------
Total assets $302,084,181 $303,501,747
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $5,225,000 $4,970,000
Current portion of capital lease
obligations 459,987 374,645
Accounts payable 3,720,197 1,933,887
Accrued expenses 9,185,263 13,904,706
Current portion of deferred revenue 9,756,134 10,311,003
Other liabilities 160,809 106,509
------------- -------------
Total current liabilities 28,507,390 31,600,750
Long-term debt, net of current
portion 125,000,000 125,000,000
Capital lease obligations, net of
current portion 575,502 506,937
Deferred revenue, net of current
portion 4,034,675 4,636,130
Deferred income taxes 1,112,778 1,222,158
Other liabilities - 45,190
Due to related parties 4,009 8,065
------------- -------------
Total liabilities 159,234,354 163,019,230
------------- -------------
Commitments and Contingencies
Stockholders' equity:
Preferred stock, $0.001 par value;
authorized 3,000,000 shares and none
issued and outstanding - -
Common stock, $0.001 par value;
authorized 100,000,000 shares; issued
and outstanding 24,681,462 at
December 31, 2004 and March 31, 2005 24,682 24,682
Paid-in capital 206,566,067 206,785,008
Accumulated deficit (63,740,922) (66,327,173)
------------- -------------
Total stockholders' equity 142,849,827 140,482,517
------------- -------------
Total liabilities and stockholders'
equity $302,084,181 $303,501,747
============= =============
INTEGRATED ALARM SERVICES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months Ended March 31,
------------------------------------
2004 2005
------------------ -----------------
Revenue:
Monitoring fees $5,787,406 $7,822,068
Revenue from customer accounts 11,178,804 14,281,782
Related party monitoring fees 25,480 32,736
Service, installation and other
revenue 1,216,060 2,321,349
------------------ -----------------
Total revenue 18,207,750 24,457,935
Cost of revenue (excluding
depreciation and amortization) 7,067,994 10,285,449
------------------ -----------------
11,139,756 14,172,486
------------------ -----------------
Operating expenses:
Selling and marketing 1,115,962 1,159,358
Depreciation and amortization 5,012,521 6,113,608
Loss (gain) on sale of assets 402 187
General and administrative 5,058,998 6,140,157
------------------ -----------------
Total operating expenses 11,187,883 13,413,310
------------------ -----------------
Income (loss) from operations (48,127) 759,176
Other income (expense):
Other income, net (3,080) -
Amortization of debt issuance
costs (259,850) (274,200)
Interest expense (1,705,172) (4,185,515)
Interest income 324,671 1,254,669
------------------ -----------------
Income (loss) before income taxes (1,691,558) (2,445,870)
Income tax expense (benefit) (620,542) 140,381
------------------ -----------------
Net income (loss) $(1,071,016) $(2,586,251)
================== =================
Basic and diluted income (loss)
per share $(0.04) $(0.10)
================== =================
Weighted average number of common
shares outstanding 24,639,949 24,681,462
================== =================
INTEGRATED ALARM SERVICES GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(unaudited)
Three Months Ended March 31,
2004 2005
-------------- -------------
Net income (loss) $(1,071,016) $(2,586,251)
Adjust for:
Income tax expense (benefit) (620,542) 140,381
Interest expense 1,705,172 4,185,515
Amortization of debt issuance costs 259,850 274,200
Depreciation and amortization 5,012,521 6,113,608
-------------- -------------
EBITDA $5,285,985 $8,127,453
============== =============
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