Exhibit 99.1
[I A S G
Integrated Alarm Services Group[SM], Inc. LOGO]
99 Pine Street, 3rd Floor
Albany, NY 12207
(518) 426-1515
(518) 426-0953 fax
IASG Announces Second Quarter 2004 Results
Albany, N.Y. - August 12, 2004 - Integrated Alarm Services Group, Inc. (NASDAQ:
IASG) a total solution provider to independent security alarm dealers located
throughout the United States today reported a loss of $0.01 per share for the
second quarter ending June 30, 2004.
In announcing the results, Timothy M. McGinn, Chairman and CEO, said, "The
second quarter results show continued progress relative to achieving our plan.
In the second quarter, gross margin improved and earnings before interest, taxes
depreciation and amortization (EBITDA) increased 38 percent over the first
quarter to $6.8 million. The Company performed well in the quarter from a
customer service point of view with an annualized owned portfolio attrition rate
of 11.2 percent down from an annualized rate of 13.4 percent in the first
quarter of 2004. We also achieved our second quarter account acquisition plan
with 28,500 new contract equivalents added in the quarter at consideration below
plan".
Revenue for the second quarter of 2004 was $19.5 million compared with $18.2
million in the first quarter. Net loss for the second quarter ending June 30,
2004 was $370,000 or $0.01 per share compared to a net loss of $1.1 million or
$0.04 per share in the first quarter.
Second quarter 2004 accomplishments:
o The acquisition of Alliant Protection Services, Inc. alarm portfolio of
17,400 contract equivalents and certain other assets for $14.5 million.
o The generation of approximately 1,900 contract equivalents internally, an
increase of 19 percent over the first quarter.
o The acquisition of a total of 28,500 new contract equivalents in the
quarter at a multiple of 27.5 times recurring monthly revenue (RMR).
o The Company increased EBITDA to $6.8 million from $5.0 million in the
first quarter.
At June 30, 2004 the Company had $5.5 million in cash and stockholders' equity
of $152.7 million. During the second quarter the Company retired $3.6 million in
debt and ended the quarter with $61.8 million in debt and capital leases
yielding a debt to equity ratio of 0.4 to 1.
IASG Portfolio Data:
Annualized Attrition Rate
4th Quarter 1st Quarter 2nd Quarter
2003 2004 2004
---- ---- ----
IASG Owned Portfolio
Legacy Portfolio 18.4% 17.7% 10.8%
New Residential 12.0% 13.5% 9.9%
New Commercial 6.8% 9.1% 13.4%
Aggregate Owned Portfolio 12.5% 13.4% 11.2%
Annualized Growth Rate
Wholesale Monitoring Accounts (5.1%) 4.0% (17.9%)
IASG ended the second quarter of 2004 with an owned portfolio of approximately
146,000 contract equivalents generating RMR of approximately $4.4 million and
wholesale monitoring of approximately 500,000 accounts generating approximately
$2.0 million in RMR. The annualized attrition rate for the second quarter of
2004 for the aggregate IASG owned alarm portfolio was 11.2 percent. The
wholesale monitoring portfolio experienced a 17.9% annualized decline in
accounts. This decline is a result of one alarm company bringing in-house to
their call center some of their owned portfolio that IASG managed on a month to
month basis. Given that this company has greatly reduced its acquisition
activities we anticipated this retrenchment but its timing was uncertain. This
business was lower margin than our typical wholesale relationship and we have no
further wholesale business with this company.
See the attached second quarter fiscal year 2004 financial highlights. The
Company will be discussing these operating results and revenue and expense
guidance in a conference call today at 4:45 p.m. EDT. This call can be heard via
the IASG website at www.iasg.us and is also available in telephonic replay
format.
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 5,000 independent dealer
relationships, is also the largest wholesale provider of alarm contract
monitoring and servicing. For more information about IASG please visit our web
site 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 future regulations effecting our 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, 2003 as
filed with the Securities and Exchange Commission on March 30, 2004, 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.
INTEGRATED ALARM SERVICES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF
-----------------------------------
DECEMBER 31, JUNE 30,
2003 2004
------------- -------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 35,435,817 $ 5,487,124
Current portion of notes receivable 735,149 1,389,994
Accounts receivable, net 4,312,990 6,308,571
Inventories 1,107,899 1,096,517
Prepaid expenses 1,548,105 1,266,760
Due from related parties 232,300 85,844
------------- -------------
Total current assets 43,372,260 15,634,810
Property and equipment, net 5,762,586 6,027,811
Notes receivable net of current portion and allowance 4,525,973 3,192,619
Dealer relationships, net 23,113,617 21,619,136
Customer contracts, net 73,571,131 89,807,707
Goodwill, net 85,515,985 90,161,798
Debt issuance costs, net 1,768,281 1,273,141
Other identifiable intangibles, net 2,187,464 1,994,765
Restricted cash and cash equivalents 1,100,000 1,855,395
Other assets 119,033 3,440,638
------------- -------------
Total assets $ 241,036,330 $ 235,007,820
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 18,765,000 $ 16,319,000
Current portion of capital lease obligations 431,555 434,335
Accounts payable 2,873,707 1,460,905
Accrued expenses 8,816,766 7,152,666
Current portion of deferred revenue 7,576,993 9,461,296
Other liabilities 139,066 --
------------- -------------
Total current liabilities 38,603,087 34,828,202
Long-term debt, net of current portion 46,977,612 44,829,112
Capital lease obligations, net of current portion 453,811 236,524
Deferred revenue, net of current portion 312,343 2,132,355
Deferred income taxes 759,425 234,328
Other liabilities 374,119 17,819
Due to related parties 153,203 3,284
------------- -------------
Total liabilities 87,633,600 82,281,624
------------- -------------
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
24,607,731 shares at December 31, 2003 and
24,681,462 at June 30, 2004 24,608 24,682
Common stock subscribed 315,342 --
Paid-in capital 205,086,659 206,164,145
Accumulated deficit (52,023,879) (53,462,631)
------------- -------------
Total stockholders' equity 153,402,730 152,726,196
------------- -------------
Total liabilities and stockholders' equity $ 241,036,330 $ 235,007,820
============= =============
INTEGRATED ALARM SERVICES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003 AND 2004
(UNAUDITED)
Three months ended June 30, Six months ended June 30,
2003 2004 2003 2004
------------ ------------ ------------ ------------
Revenue:
Monitoring fees $ 5,852,761 $ 6,049,930 $ 11,942,551 $ 11,837,336
Revenue from customer accounts 3,661,950 12,101,339 6,067,135 23,679,341
Billing fees 21,514 -- 42,497 --
Related party monitoring fees 130,144 76,331 282,250 101,811
Related party placement fees 4,864 -- 90,437 --
Service and subcontractor fees 91,455 1,291,170 91,455 2,108,032
------------ ------------ ------------ ------------
Total revenue 9,762,688 19,518,770 18,516,325 37,726,520
Cost of revenue (excluding depreciation
and amortization) 3,887,954 7,041,508 7,753,560 14,109,502
------------ ------------ ------------ ------------
5,874,734 12,477,262 10,762,765 23,617,018
------------ ------------ ------------ ------------
Operating expenses:
Selling and marketing 190,428 1,128,964 455,494 2,244,926
Depreciation and amortization 3,549,904 5,431,052 6,420,425 10,443,573
General and administrative 2,394,397 4,505,667 4,597,279 9,565,067
General and administrative - related party 250,000 -- 3,525,000 --
------------ ------------ ------------ ------------
Total operating expenses 6,384,729 11,065,683 14,998,198 22,253,566
------------ ------------ ------------ ------------
Income (loss) from operations (509,995) 1,411,579 (4,235,433) 1,363,452
Other income (expense):
Other expense, net (120,742) -- (262,750) (3,080)
Amortization of debt issuance costs (529,738) (247,184) (907,413) (507,034)
Related party interest expense (27,483) -- (451,848) --
Interest expense (4,533,014) (1,944,870) (7,668,723) (3,650,042)
Interest income 417,344 205,877 777,227 530,548
------------ ------------ ------------ ------------
Income (loss) before income taxes (5,303,628) (574,598) (12,748,940) (2,266,156)
Income tax expense (benefit) (50,115) (206,862) 3,367,173 (827,404)
------------ ------------ ------------ ------------
Net income (loss) $ (5,253,513) $ (367,736) $(16,116,113) $ (1,438,752)
============ ============ ============ ============
Basic and diluted income (loss) per share $ (3.30) $ (0.01) $ (11.19) $ (0.06)
============ ============ ============ ============
Weighted average number of common
shares outstanding 1,590,911 24,668,671 1,439,989 24,654,309
============ ============ ============ ============
Unaudited:
ProForma income tax to give effect to
the conversion from S to C Corporation
status:
Income (loss) before benefit from income taxes $ (5,303,628) $ (574,598) $(12,748,940) $ (2,266,156)
Income tax expense (benefit) (50,115) (206,862) (249,315) (827,404)
------------ ------------ ------------ ------------
Net income (loss) $ (5,253,513) $ (367,736) $(12,499,625) $ (1,438,752)
============ ============ ============ ============
Basic and diluted income (loss) per share $ (3.30) $ (0.01) $ (8.68) $ (0.06)
============ ============ ============ ============
INTEGRATED ALARM SERVICES GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(UNAUDITED)
Three Months Ended
March 31, 2004 June 30, 2004
-------------- -------------
Net income (loss) $(1,071,016) $ (367,736)
Adjust for:
Income taxes (benefit) (620,542) (206,862)
Interest expense 1,705,172 1,944,870
Interest (income) (324,671) (205,877)
Amortization of debt issuance costs 259,850 247,184
Depreciation and amortization 5,012,521 5,431,052
----------- -----------
EBITDA $ 4,961,314 $ 6,842,631
=========== ===========
Increase this quarter $ 965,275 $ 1,881,317
----------- -----------
Percent increase 24.2% 37.9%
----------- -----------
The Company believes EBITDA is an appropriate metric of operating performance as
it presents results that management has direct control over period to period.
CONTACT:
Integrated Alarm Services Group
Investor Relations:
Joseph L. Reinhart
518 426-1515