EXHIBIT 99.1
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L-1 IDENTITY SOLUTIONS REPORTS THIRD QUARTER 2007 FINANCIAL RESULTS; ORGANIC
GROWTH OF 32 PERCENT
THIRD QUARTER REVENUES INCREASED BY 190 PERCENT AND ADJUSTED EBITDA INCREASED 20
FOLD OVER SAME PERIOD IN PRIOR YEAR
STAMFORD, Conn., Oct 31, 2007 (BUSINESS WIRE) -- L-1 Identity Solutions, Inc.,
(NYSE:ID), a leading supplier of identity solutions and services, today
announced financial results for the Company's third quarter ended September 30,
2007.
Revenue for the third quarter of 2007 was $115.5 million compared to $39.8
million in the third quarter of 2006, an increase of $75.7 million or 190
percent. The Company had impressive organic growth of 32 percent for the
quarter. The growth was attributable to the strong demand for multi-modal
products and solutions, passports and credentialing, and strength in the
Company's intelligence services.
Gross margin in the third quarter of 2007, was approximately 33 percent compared
to approximately 24 percent for the third quarter of 2006. The margin increase
is primarily due to sales of higher margin multi-modal products and solutions,
including HIIDE(TM) (Handheld Interagency Identity Detection Equipment) devices
and licensing. On a pro forma basis, gross margin for the third quarter of 2007
was approximately 33 percent which compared favorably to 23 percent in the same
period in 2006.
Third quarter operating expenses as a percentage of revenue declined to 27
percent compared to 40 percent in the third quarter of 2006 after excluding the
impact of $22.8 million of asset impairments and merger-related charges recorded
in 2006. On a pro forma basis, operating expenses as a percentage of revenues
declined to 27 percent in the third quarter of 2007 compared to 35 percent of
revenues in the third quarter of 2006. As a result of the Company's strong
organic growth, improved profit margins and increased operating leverage,
Adjusted EBITDA for the third quarter grew to $19.1 million from a negative $1.0
million in the same period in the prior year, an increase of $20.1 million. On a
pro forma basis, Adjusted EBITDA was $20.0 million as compared to $7.1 million
in the same period in 2006.
The Company's net income in the third quarter amounted to $1.5 million, or $0.02
per diluted share, compared to a net loss of $29.3 million, or $0.66 per diluted
share, in the third quarter of 2006, which included asset impairments and
merger-related charges of $22.8 million. Weighted average diluted shares
outstanding increased to 71.3 million from 44.4 million in the prior year
primarily as a result of the issuance of shares in connection with acquisitions
of Identix Incorporated and McClendon Corporation, offset by 3.5 million shares
repurchased in connection with the Company's convertible debt offering in the
second quarter of 2007.
"L-1 experienced strong growth across all of our operating units in the third
quarter," said Robert V. LaPenta, Chairman, President and CEO of L-1 Identity
Solutions. "Our strategy of providing complete end-to-end multi-modal solutions
combined with our highly-valued intelligence services are gaining increased
acceptance across our customer base as evidenced by the number of new contract
awards in the quarter and the robust pipeline of opportunities in both the U.S.
and international markets. We also are beginning to realize the leverage we have
in our business model, as our operating expenses decreased as a percentage of
revenue. This will enable us to increase profitability while we continue to
invest in the business to develop new products, recruit the best talent and
build brand awareness. Overall, I am very pleased with the quarter and our
momentum for the future."
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Year to Date Results
Revenue for the first nine months of 2007 was $275.6 million compared with $88.1
million for the same period in the prior year, representing an increase of
$187.5 million or 213 percent. The Company's organic growth was 24 percent for
the first nine months of 2007 driven by the demand for multi-modal solutions and
intelligence services.
Gross margin for the first nine months of 2007 was 30 percent, an increase from
26 percent in the same period in 2006. On a pro forma basis, gross margin for
the first nine months of 2007 was 31 percent compared to 22 percent in the same
period in 2006.
Operating expenses as a percentage of revenue decreased to 29 percent in the
first nine months of 2007 from 38 percent in the first nine months of 2006,
after excluding the impact of asset impairments and merger-related charges of
$22.8 million in 2006. On a pro forma basis, operating expenses as a percentage
of revenue declined to 28 percent in the first nine months of 2007 from 34
percent in the first nine months of 2006. As a result, Adjusted EBITDA for the
first nine months of 2007 was $38.9 million compared to $5.4 million for the
same period in 2006. On a pro forma basis, Adjusted EBITDA for the first nine
months of 2007 was $47.3 million compared to $17.6 million for the first nine
months of 2006, driven by the Company's organic sales growth and cost
efficiencies realized during the third quarter of 2006.
For the first nine months ended September 30, 2007, the Company reported a net
loss of $8.6 million, or $0.12 per diluted share compared to a net loss of $33.0
million, or $0.97 per diluted share for the same period in 2006, which includes
asset impairments and merger related charges of $22.8 million. Basic and diluted
weighted average shares outstanding increased to 71.2 million from 34.2 million
in the prior year primarily as a result of the issuance of shares in connection
with acquisitions of Identix and McClendon offset by the impact of shares
repurchased in connection with the Company's convertible debt offering in the
second quarter of 2007.
Backlog at September 30, 2007 increased to in excess of $650 million from $530
million as of June 2007, reflecting the addition of acquired businesses and
robust bookings during the quarter. As a result of recent awards, our backlog is
expected to increase by the end of the year.
Third Quarter Highlights and Recent Awards
Biometric Solutions
- -- SecuriMetrics, Inc., a wholly owned subsidiary of L-1, received orders
totaling more than $17.0 million during and subsequent to the third
quarter consisting of:
-- PIER portable iris recognition and enrollment device orders from the
U.S. Military for $3.4 million, of which $2.5 million has been
previously announced.
-- Two additional contracts from the U.S. government to fund
modifications to the HIIDE biometric recognition device and develop
advanced database software with an aggregate value of more than $3.3
million.
-- Orders in excess of $1.0 million from the U.S. Marine Corps for new
software and from the Australian Department of Defense for L- 1
hardware and software.
-- Additional HIIDE devices from the Department of Defense (DoD)
totaling $9.4 million, as previously announced.
- -- L-1 shipped more than 1,300 TP 4100 Live Scan devices to customers in
Europe, the Middle East and Latin America for national government
programs. In addition, L-1 received $3.6 million in awards from the
Department of Homeland Security for Live Scan devices.
- -- L-1 booked $1.9 million in revenue from the Department of Defense Military
Enrollment Process Command (MEPCOM) for fingerprint capture, search and
face capture solutions.
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- -- As recently announced, L-1 teamed with Ultra-Scan Corporation to jointly
pursue the development of a revolutionary new Live Scan device.
Secure Credentialing Solutions
- -- L-1's secure credentialing solutions division received an identity source
document authentication / imaging and storage contract from the New York
Department of Motor Vehicles for $1.9 million. Additional new orders in
the quarter for document authentication and credentialing solutions
totaled $1.3 million from South Carolina, Slovakia and Finland.
- -- Previously announced Drivers License contract awards in excess of $30.0
million were obtained from Montana, Illinois and North Carolina.
- -- The AutoTest business unit provides a suite of Web-based applications that
assist driver service agencies in scheduling and performing driving skill
tests. In the third quarter, the business unit received contract awards in
excess of $2.7 million across five states and a Canadian province.
- -- After the close of the quarter, L-1 was notified that it was selected to
provide AutoTest Solutions for the California Department of Motor Vehicles
- a potential opportunity of up to $5.0 million.
Intelligence Services
- -- Our intelligence divisions have been awarded and are pursuing several
important programs with significant potential.
- -- The acquisitions of Advanced Concepts, Inc. (ACI) and McClendon
Corporation both closed in the quarter, as previously announced. L-1 is
already seeing encouraging opportunities to leverage the expertise of the
companies across their respective customer bases.
Fingerprinting and Enrollment Services
- -- L-1 received a seven-year contract estimated at $30.0 million from the
State of South Carolina Law Enforcement Division to provide digital
fingerprinting services for civil applicants state-wide through the South
Carolina EasyPath network.
- -- L-1 also was awarded a contract totaling $3.8 million for fingerprinting
and background check services from the Baltimore County Public Schools
Department of Human Resources and Office of Investigations and Records
Management.
- -- L-1 began deployment of its enrollment network in Canada in anticipation
of the implementation of electronic fingerprinting beginning in the second
quarter of 2008.
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Forward Looking Financial Expectations
L-1 expects revenue for the fourth quarter ending December 31, 2007 of between
$120.0 million and $130.0 million, gross margin of approximately 35 percent with
Adjusted EBITDA of $21.0 to $25.0 million and EPS in the range of $0.04 to
$0.10. For the full-year ending December 31, 2007, L-1 expects revenue of
between $395.0 and $405.0 million (representing approximately 23 percent organic
growth on a pro forma basis), gross margin of approximately 35 percent with
Adjusted EBITDA of between $60.0 million to $64.0 million, and EPS to be
approximately $(0.08) to $(0.02). Unlevered free cash flow for the year ending
December 31, 2007 is estimated to be approximately $45.0 million.
Preliminary Financial Expectations for 2008
The Company expects revenue for the full year ending December 31, 2008 of
between $540.0 million and $560.0 million, representing organic growth of over
20 percent with Adjusted EBITDA of $80.0 to $85.0 million and unlevered free
cash flow of between $65 million and $70 million excluding any further
acquisitions.
Conference Call Information
The Company will host a conference call with the investment community to discuss
its operating results and outlook beginning at 11:00 a.m. (ET) today. The
conference call will be available live over the Internet at the investor
relations section of the L-1 website at WWW.L1ID.COM. To listen to the
conference call, please dial 888-694-4641 using the passcode 9298258. For
callers outside the U.S., please dial 973-582-2734 with the passcode 9298258. A
recording of the conference call will be available starting one hour after the
completion of the call. To access the replay, please dial 877-519-4471 and use
passcode 9298258. To access the replay from outside the U.S., dial 973-341-3080
and use passcode 9298258.
Pro Forma Information
Pro Forma information presented in this press release reflects results described
after giving effect to the acquisitions completed after January 1, 2006 as if
they had occurred as of January 1, 2006. The Pro Forma results for 2006 exclude
asset impairments and merger related charges as well as non- recurring charges
directly related to the acquisitions and certain other non-recurring and one
time charges, as well as pre-acquisition expenses not expected to be incurred by
L-1 after the referenced acquisitions.
Organic Growth
Organic growth described in this press release has been calculated on a pro
forma basis giving effect to the acquisitions completed after January 1, 2006 as
if they had been consummated on January 1, 2006. We calculated organic growth as
the increase in revenue as a percent from period to period as if the
acquisitions had occurred on January 1, 2006.
Adjusted EBITDA
L-1 Identity Solutions uses Adjusted EBITDA as a non-GAAP financial performance
measurement. Adjusted EBITDA is calculated by adding back to net income (loss)
interest, income taxes, depreciation, amortization, and stock-based compensation
expense. Adjusted EBITDA is provided to investors to supplement the results of
operations reported in accordance with GAAP. Management believes Adjusted EBITDA
is useful to help investors analyze the operating trends of the business before
and after the adoption of SFAS 123(R) and to assess the relative underlying
performance of businesses with different capital and tax structures. Management
believes that Adjusted EBITDA provides an additional tool for investors to use
in comparing L-1 Identity Solutions financial results with other companies in
the industry, many of which also use Adjusted EBITDA in their communications to
investors. By excluding non-cash charges such as amortization, depreciation and
stock-based compensation, as well as non-operating charges for interest and
income taxes, investors can evaluate the Company's operations and can compare
its results on a more consistent basis to the results of other companies in the
industry. Management also uses Adjusted EBITDA to evaluate potential
acquisitions, establish internal budgets and goals, and evaluate performance of
its business units and management.
L-1 Identity Solutions considers Adjusted EBITDA to be an important indicator of
the Company's operational strength and performance of its business and a useful
measure of the Company's historical and prospective operating trends. However,
there are significant limitations to the use of Adjusted EBITDA since it
excludes interest income and expense and income taxes, all of which impact the
Company's profitability, as well as depreciation and amortization related to the
use of long term assets which benefit multiple periods. L-1 Identity Solutions
believes that these limitations are compensated by providing Adjusted EBITDA
only with GAAP net income (loss) and clearly identifying the difference between
the two measures. Consequently, Adjusted EBITDA should not be considered in
isolation or as a substitute for net income (loss) presented in accordance with
GAAP. Adjusted EBITDA as defined by the Company may not be comparable with
similarly named measures provided by other entities. A reconciliation of GAAP
net income (loss) to Adjusted EBITDA is included in the enclosed schedule.
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Unlevered Free Cash Flow
L-1 defines Unlevered Free Cash Flow as Adjusted EBITDA, plus or minus changes
in operating assets and liabilities less capital expenditures, and for 2007 is
reconciled to cash flows from operating activities of $50 million by adding cash
interest and income tax payments of $10 million and deducting capital
expenditures of $15 million. L-1 believes unlevered free cash flow is a useful
measure for assessing the company's liquidity, meeting its debt service
requirements and making acquisitions. Unlevered free cash flow is not
necessarily comparable to similar measures used by other entities and is not a
substitute for GAAP measures of liquidity such as cash flows from operating
activities.
About L-1 Identity Solutions
L-1 Identity Solutions, Inc. (NYSE: ID), together with its portfolio of
companies, offers a comprehensive set of products and solutions for protecting
and securing personal identities and assets. Leveraging the industry's most
advanced multi-modal biometric platform for finger, face and iris recognition,
our solutions provide a circle of trust around all aspects of an identity and
the credentials assigned to it -- including proofing, enrollment, issuance and
usage. With the trust and confidence in individual identities provided by L-1
Identity Solutions, government entities, law enforcement and border management
agencies, and commercial enterprises can better guard the public against global
terrorism, crime and identity theft fostered by fraudulent identity. L-1
Identity Solutions is headquartered in Stamford, CT. For more information, visit
WWW.L1ID.COM.
ID-L
Forward Looking Statements
This news release contains forward-looking statements that involve risks and
uncertainties. Forward-looking statements in this press release and those made
from time to time by L-1 Identity Solutions through its senior management are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements reflect the Company's
current views based on management's beliefs and assumptions and information
currently available. Forward-looking statements concerning future plans or
results are necessarily only estimates, and actual results could differ
materially from expectations. Certain factors that could cause or contribute to
such differences include, among other things, the availability of government
funding for the Company's products and solutions, the size and timing of federal
contract awards, performance on existing and future contracts, general economic
and political conditions and other factors affecting spending by customers, and
the unpredictable nature of working with government agencies. Additional risks
and uncertainties are described in the Securities and Exchange Commission
filings of the L-1 Identity Solutions, including the Company's 10-Q for the
quarter ended June 30, 2007. L-1 Identity Solutions expressly disclaims any
intention or obligation to update any forward-looking statements.
Reconciliation of Adjusted EBITDA to Net Income (Loss) (in millions)
(Unaudited)
Quarters Ended
Historical Pro Forma
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
----------- ----------- ----------- -----------
Net Income
(Loss) $ 1.5 $ (29.3) $ 1.5 $ (45.6)
Reconciling
Items:
Provision for
Income Taxes 1.5 0.7 1.6 1.9
Interest, net 3.5 (0.3) 4.0 3.9
Stock-
Based
Compensation 2.7 1.5 2.7 1.5
Depreciation
and
Amortization 9.9 5.9 10.2 10.8
Asset
Impairments -- 20.5 -- 20.5
Non-recurring
charges and
Other -- -- -- 14.1
----------- ----------- ----------- -----------
Adjusted EBITDA $ 19.1 $ (1.0) $ 20.0 $ 7.1
=========== =========== =========== ===========
5
Nine Months Ended
Historical Pro Forma
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
----------- ----------- ----------- -----------
Net Income
(Loss) $ (8.6) $ (33.0) $ (8.6) $ (74.0)
Reconciling
Items:
Provision for
Income Taxes 3.8 2.0 4.5 4.7
Interest, net 7.4 (1.4) 11.9 11.4
Stock-Based
Compensation 7.9 2.9 7.9 4.0
Depreciation
and
Amortization 28.4 14.4 30.7 33.2
Asset
Impairments -- 20.5 -- 20.5
Non-recurring
charges and
Other -- -- 0.9 17.8
----------- ----------- ----------- -----------
Adjusted EBITDA $ 38.9 $ 5.4 $ 47.3 $ 17.6
=========== =========== =========== ===========
Quarter
Prospective Ending Year Ending
Periods Dec. 31, 2007 Dec. 31, 2007
- ------------ ---------------- -----------------
Net Income
(Loss) $3.0 - $7.0 $(5.5) - $(1.5)
Reconciling
Items:
Provision for
Income Taxes 1.5 5.5
Interest, net 3.5 11.0
Stock-Based
Compensation 3.0 10.0
Depreciation
and
Amortization 10.0 39.0
---------------- -----------------
Adjusted EBITDA $21.0 - $25.0 $60.0 - $64.0
================ =================
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L-1 Identity Solutions, Inc.
Condensed Consolidated Statements of Operations
(in millions, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues $ 115.5 $ 39.8 $ 275.6 $ 88.1
========= ========= ========= =========
Cost of Revenues:
Cost of Revenues 71.1 26.7 172.3 57.5
Amortization of Purchased
Intangible Assets 6.8 3.4 19.8 7.3
--------- --------- --------- ---------
Total Cost of Revenues 77.9 30.8 192.1 64.8
--------- --------- --------- ---------
Gross Profit 37.6 9.7 83.5 23.3
--------- --------- --------- ---------
Operating Expenses:
Sales and Marketing 7.4 3.4 20.4 8.7
Research and Development 5.3 3.3 14.4 6.9
General and Administrative 17.5 9.0 44.3 17.1
Asset Impairments and Merger
Related -- 22.8 -- 22.8
Amortization of Purchase
Intangible Assets 0.7 0.1 1.6 0.3
--------- --------- --------- ---------
Total Operating Expenses 30.9 38.6 80.7 55.8
--------- --------- --------- ---------
Operating income (loss): 6.7 (28.9) 2.8 (32.5)
Interest income 0.1 0.4 0.3 1.6
Interest expense (3.6) (0.1) (7.7) (0.1)
Other (expense) income, net (0.2) -- (0.2) --
--------- --------- --------- ---------
Income (loss) before income taxes 3.0 (28.6) (4.8) (31.0)
Provision for Income Taxes (1.5) (0.7) (3.8) (2.0)
--------- --------- --------- ---------
Net Income (Loss) $ 1.5 $ (29.3) $ (8.6) $ (33.0)
========= ========= ========= =========
Basic and diluted net income
(loss) per share $ 0.02 $ (0.66) $ (0.12) $ (0.97)
========= ========= ========= =========
Weighted Average Basic and
Diluted Shares 71.3 44.5 71.2 34.2
========= ========= ========= =========
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L-1 Identity Solutions, Inc.
Condensed Consolidated Balance Sheets (in millions)
(Unaudited)
September 30, 2007 December 31, 2006
------------------ -----------------
Assets
Current Assets:
Cash and cash equivalents $ 11.9 $ 5.0
Accounts receivable, net 97.6 61.5
Inventory 16.0 11.0
Other current assets 4.8 4.5
------------------ -----------------
Total Current Assets 130.3 82.0
Property and equipment, net 21.6 19.9
Goodwill 1,074.4 951.4
Intangible assets, net 200.3 170.1
Other assets, net 9.3 3.8
------------------ -----------------
Total Assets $ 1,435.9 $ 1,227.2
================== =================
Liabilities & Shareholders'
Equity
Current Liabilities:
Accounts payable and accrued
expenses $ 78.7 $ 54.8
Current portion of deferred
revenue 12.8 10.3
Other current liabilities 3.3 5.2
------------------ -----------------
Total current liabilities 94.8 70.3
Deferred tax liability 7.7 4.4
Deferred revenue, net of current
portion 4.2 3.7
Long-term debt 277.0 80.0
Other long-term liabilities 1.0 1.7
------------------ -----------------
Total liabilities 384.7 160.1
Shareholders' equity 1,051.2 1,067.1
------------------ -----------------
Total liabilities and
shareholders' equity $ 1,435.9 $ 1,227.2
================== =================
SOURCE: L-1 Identity Solutions, Inc.
L-1 Identity Solutions
Doni Fordyce, 203-504-1109
DFORDYCE@L1ID.COM
Copyright Business Wire 2007
News Provided by COMTEX
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