$17M of contracts for delivery in 2011
Sub-$100k
customers increase by 70% to over 1100
$52.8M asset
impairment charge in 2010
DENVER — (BUSINESS WIRE) — March 3, 2011 — Intermap Technologies Corporation (TSX: IMP) (“Intermap” or the “Company”) today reported financial results for the fourth quarter and year ended December 31, 2010. A conference call will be held today, March 3rd, at 4:30 p.m. Eastern Standard Time to discuss the results.
All amounts in this news release are in United States dollars unless otherwise noted.
New management has refocused sales and marketing functions, with products repositioned in certain markets. Intermap experienced a difficult year with four quarters of lower-than-expected revenues, resulting in management changes and a corporate reorganization that included significant reductions in personnel and operating costs.
“Intermap suffered much larger operating losses than was originally anticipated in 2010,” said Todd Oseth, president and CEO of Intermap. “Even with these large losses, net cash used in operations in 2010 was $8.2 million, significantly lower than the operating net loss for the year, thanks to the one-time sale of assets in the fourth quarter. We are now better positioned for 2011 having significantly cut operating expenses by more than $17 million annually, restructured the size of the overall organization to coincide with revenue expectations, and refocused the efforts of the Company. Several new contracts received in the fourth quarter of 2010, combined with prior contracts in process at year end, are valued at $17 million, the majority of which is deliverable in 2011."
An asset impairment review was performed at year end to determine if the carrying value of the NEXTMap USA and NEXTMap Europe datasets were recoverable. Based on current sales experience, the Company determined that the current fair value of the datasets was insufficient to recover the carrying value of the assets, resulting in an asset impairment charge of $52.8 million. This extraordinary loss was recorded in the fourth quarter. The impairment was driven by several factors, including the booked value of the asset exceeding the market capitalization of the Company and historical cash flows from the database not being supportive of previously forecasted long-term future cash flows.
As a result of the recent corporate reorganization, the new sales-oriented leadership at Intermap, led by incoming president and CEO, Todd Oseth, is transitioning from a primarily direct sales strategy to an expanded indirect sales approach using channel partners and cloud-based web services. Intermap’s direct sale model, which focuses primarily on large customer wins, suffered in 2009 and 2010; however, the Company’s NEXTMap recurring revenue model continued to gain traction during this period. The fastest growth segment for the Company was the broader sub-one hundred thousand dollar customer space, which grew in the number of customer sales by 70% in 2010 over 2009. This large segment, which includes telecommunications and corporate / government GIS customers, has increased in the number of customer sales at a cumulative annual growth rate of 56% for the past four years. The Company has grown this segment to more than 1,110 customer sales, contributing $2.7 million of revenue for the year. In addition, the Company believes it has reasonable near-term visibility to meaningful sales opportunities during 2011 for telecommunications applications in North America, as well as additional mapping services contracts in Asia. Management has refocused the Company’s sales force and believes that the value of the data lies in application solutions for specific vertical markets, and not solely in the data as a standalone product.
Intermap will support this trend through new product development, improved marketing programs, and expanded pricing plans. New product offerings for this segment will provide a growing catalog of data layer options, including the integration of third-party data. Improved marketing plans include new channel partner strategies, a cloud-based web services model, and improved recognition of the Company’s branding and capabilities.
“This approach is expected to address thousands of new corporate / government GIS customer groups. With new channel partners, we believe we have the ability to address the unique requirements of dramatically more customers than the prior direct sales strategy that was primarily used,” said Mr. Oseth. “We’re optimistic that we can drive significant customer growth through this revised sales strategy in the future.”
Financial Review
For the year ended December 31, 2010, Intermap reported total revenue of $13.9 million, a 54% decrease from $30.3 million in 2009. During the fourth quarter of 2010, Intermap announced three significant contracts, and as of December 31, 2010, there remained $17.0 million in revenue from existing contracts to be recognized in future periods: $12.9 million in contract services and $4.1 million in NEXTMap’s multi-client data library (“MCDL”) license contracts.
Contract services revenue for the year ended December 31, 2010 decreased to $4.3 million from $20.1 million for the same period in 2009. The decrease was primarily the result of a reduction in revenue from mapping projects in Southeast Asia where the Company had $16.5 million in revenue during 2009, compared to $1.0 million in 2010. The remaining contract services revenue for 2010 related primarily to a mapping project in the United States totaling $2.1 million.
MCDL license revenue for the year ended December 31, 2010 totaled $9.7 million, compared to $10.2 million in 2009. During 2010, approximately 54% of MCDL license revenue was associated with the NEXTMap Europe dataset, 19% was associated with the NEXTMap USA dataset, and 27% was associated with the Company’s Asia dataset.
Year-over-year operations-related personnel decreased by approximately 28%, or 139 full-time personnel, following the completion of the NEXTMap Europe and NEXTMap USA programs in 2010. R&D, sales, and administrative personnel decreased by 30%, or 66 employees during the year. Salaries and related personnel expenses for the year ended December 31, 2010 and 2009 were $20.2 million and $24.4 million, respectively. On an annualized basis, the net impact on total expenses (after severance-related costs) of the workforce reductions made in 2010 will be a reduction of approximately $4.6 million of personnel-related expenses.
In January 2011, the Company made further workforce reductions and expects to incur approximately $845,000 in restructuring-related expenses during the first quarter of 2011. On an annualized basis, the net impact on total expenses (after severance-related costs) of the workforce reductions made in January 2011 will be a reduction of approximately $5.5 million of personnel-related expenses. The total full time equivalent headcount of the Company at the culmination of these restructuring efforts will be approximately 140 people worldwide, compared to approximately 306 on a year-over-year basis.
Net operations expense for the year ended December 31, 2010 totaled $10.5 million, compared to $10.0 million for the same period in 2009. The increase in net operations expense resulted primarily from a reduction of the capitalization of costs associated with the creation of the NEXTMap USA and NEXTMap Europe datasets. Operations-related capitalized costs decreased from $10.9 million in 2009 to $4.5 million in 2010. Gross operations expense, prior to capitalization, for the period ended December 31, 2010 and 2009 was $15.0 million and $20.9 million, respectively. The decrease in gross operations expense was primarily the result of the reduction in production operations (including significant personnel reductions) coinciding with the completion of the NEXTMap Europe and NEXTMap USA datasets.
Sales, general and administrative (“SG&A”) expense for the year ended December 31, 2010 was $22.2 million, compared to $25.8 million for the same period in 2009, the decrease was primarily attributable to a reduction in personnel-related costs.
Adjusted EBITDA, a non-GAAP measure, for the year ended December 31, 2010 showed a loss of $19.5 million, compared to a loss of $6.2 million for 2009.
Amortization expense of the MCDL database for the year increased to $14.7 million from $10.1 million for 2009. This increase, using the Company’s standard amortization policy, was primarily due to the expansion of the underlying NEXTMap datasets.
As previously mentioned, an asset impairment review was performed at year end to determine if the carrying value of the NEXTMap USA and NEXTMap Europe datasets were recoverable. The Company determined that the estimated fair value of the datasets was insufficient to recover the carrying value of the assets, resulting in a pre-tax asset impairment charge of $52.8 million.
For 2010, Intermap reported a net loss of $96.8 million or ($1.71) per share, compared to a net loss of $25.8 million or ($0.51) per share for 2009.
Fourth Quarter Results
For the fourth quarter of 2010, Intermap reported total revenue of $3.6 million, down 56% from $8.2 million for the fourth quarter of 2009. Contract services revenue decreased 84% in the fourth quarter of 2010 to $0.8 million, compared to $4.9 million in the same period in 2009. The decrease was primarily due to the recognition of revenue in the fourth quarter of 2009 from two large contract services projects in Asia and Germany totaling $1.8 million and $1.2 million, respectively, without any similar-sized projects in the fourth quarter of 2010. MCDL license revenue recognized during the fourth quarter of 2010 was $2.8 million, compared to $3.3 million during the same period in 2009. The decrease in MCDL license revenue was primarily attributable to decreased sales of NEXTMap USA data.
Net operations expense for the quarter ended December 31, 2010 totaled $3.8 million, unchanged from the same period in 2009. Gross operations expense, prior to capitalization, for the quarter ended December 31, 2010 was $4.4 million, compared to $5.5 million during the fourth quarter of 2009. The decrease in gross operations expense during the fourth quarter of 2010 was primarily from reduced production and overhead expenses associated with the completion of the NEXTMap Europe and NEXTMap USA programs.
SG&A expense for the quarter ended December 31, 2010 was $5.2 million, a decrease from $6.2 million for the same period in 2009. The decrease in SG&A expense resulted primarily from a reduction in personnel-related costs and a reduction in external consulting and professional services. These reductions were offset partially by an increase in rent expense related to the closure of the Company’s Ottawa, Canada office.
Intermap reported a net loss of $63.8 million or ($1.13) per share in the fourth quarter, compared to a net loss of $7.6 million or ($0.15) per share for the fourth quarter of 2009.
The cash position of the Company at December 31, 2010 (cash and cash equivalents) was $4.4 million, compared to $10.4 million at December 31, 2009. Working capital decreased to ($3.4) million at December 31, 2010.
As of March 3, 2010, there were 60,796,507 common shares outstanding.
Detailed financial results and management’s discussion and analysis can be found on SEDAR at: www.sedar.com.
Conference Call
Intermap will host a conference call today, March 3, 2011, at 4:30 p.m. EST (2:30 p.m. MST). To participate in the call, please dial +1-416-340-8530 or +1-888-340-9642 approximately 10 minutes prior to the conference call. A recording of the conference call will be available through March 10, 2011. Please dial +1-905-694-9451 or +1-800-408-3053 and provide the password 3663446 to listen to the rebroadcast.
About Intermap Technologies
Intermap (TSX: IMP) is a preeminent digital mapping and geospatial solutions provider that has set the industry standard for creating uniform high-resolution 3D digital models of the earth’s surface. The Company has proactively remapped entire countries and built uniform national datasets, called NEXTMap®, consisting of affordably priced elevation data and geometric images of unprecedented accuracy. Demand for NEXTMap data and the Company’s contract mapping services is growing as commercial applications emerge within the GIS, federal & civil government, national mapping, defense and intelligence, automotive, insurance risk assessment, wireless telecommunications, and cloud-based web services markets.
Headquartered in Denver, Colorado, Intermap has offices in Calgary, Jakarta, Munich, Prague and Washington, D.C. For more information, visit www.Intermap.com.
Intermap Reader Advisory
Certain information provided in this news release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Although Intermap believes that these statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a variety of known and unknown risks and uncertainties. You can find a discussion of such risks and uncertainties in our Annual Information Form and other securities filings. While the Company makes these forward-looking statements in good faith, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive therefrom. All subsequent forward-looking statements, whether written or oral, attributable to Intermap or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the forward-looking statements made herein, whether as a result of new information, future events or otherwise, except as may be required by applicable securities law.
| INTERMAP TECHNOLOGIES CORPORATION | ||||||||||
| Consolidated Balance Sheet | ||||||||||
| (In thousands of United States dollars) | ||||||||||
| December 31, | December 31, | |||||||||
| 2010 | 2009 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 4,356 | $ | 10,355 | ||||||
| Amounts receivable | 4,156 | 12,270 | ||||||||
| Unbilled revenue | 1,016 | 343 | ||||||||
| Work in process | 59 | 2,057 | ||||||||
| Prepaid expenses | 1,039 | 1,481 | ||||||||
| Available for sale assets | 1,700 | - | ||||||||
| 12,326 | 26,506 | |||||||||
| Property and equipment | 7,766 | 13,380 | ||||||||
| Multi-client data library | 23,049 | 85,276 | ||||||||
| Intangible assets | 488 | 909 | ||||||||
| Future income taxes | 5 | 136 | ||||||||
| $ | 43,634 | $ | 126,207 | |||||||
| Liabilities and Shareholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued liabilities | $ | 5,889 | $ | 5,916 | ||||||
| Current portion of deferred lease inducements | 123 | 171 | ||||||||
| Deferred revenue | 4,873 | 674 | ||||||||
| Deposit for sale of aircraft | 4,000 | - | ||||||||
| Income taxes payable | 50 | 42 | ||||||||
| Current portion of obligations under capital lease | 151 | 229 | ||||||||
| Current portion of long-term debt | 527 | 1,383 | ||||||||
| 15,613 | 8,415 | |||||||||
| Deferred lease inducements | 286 | 129 | ||||||||
| Other long-term liabilities | 531 | - | ||||||||
| Obligations under capital lease | 41 | 130 | ||||||||
| Long-term debt | 658 | 1,121 | ||||||||
| Future income tax liability | 93 | 218 | ||||||||
| 17,222 | 10,013 | |||||||||
| Shareholders' equity: | ||||||||||
| Share capital | 187,253 | 181,623 | ||||||||
| Contributed surplus | 8,342 | 6,882 | ||||||||
| Deficit | (175,377 | ) | (78,505 | ) | ||||||
| Accumulated other comprehensive income | 6,194 | 6,194 | ||||||||
| 26,412 | 116,194 | |||||||||
| $ | 43,634 | $ | 126,207 | |||||||
| INTERMAP TECHNOLOGIES CORPORATION | ||||||||||
| Consolidated Statements of Operations, Comprehensive Loss and Deficit | ||||||||||
| (In thousands of United States dollars) | ||||||||||
| For the year | ||||||||||
| ended December 31, | ||||||||||
| 2010 | 2009 | |||||||||
| Revenue: | ||||||||||
| Contract services | $ | 4,280 | $ | 20,143 | ||||||
| Multi-client data licenses | 9,652 | 10,164 | ||||||||
| 13,932 | 30,307 | |||||||||
| Operating costs: | ||||||||||
| Operations | 10,511 | 9,404 | ||||||||
| Research and development | 2,486 | 3,643 | ||||||||
| Sales, general and administrative | 22,173 | 25,772 | ||||||||
| Restructuring costs | 2,541 | 673 | ||||||||
| Depreciation of property and equipment | 4,577 | 6,302 | ||||||||
| Amortization of multi-client data library | 14,702 | 10,074 | ||||||||
| Amortization of intangible assets | 421 | 422 | ||||||||
| Loss (gain) on disposal of equipment | 72 | (119 | ) | |||||||
| Impairment of multi-client data library | 52,762 | - | ||||||||
| 110,245 | 56,171 | |||||||||
| Loss before interest, foreign | ||||||||||
| exchange and income taxes | (96,313 | ) | (25,864 | ) | ||||||
| Interest expense, net | (142 | ) | (199 | ) | ||||||
| (Loss) gain on foreign currency translation | (354 | ) | 372 | |||||||
| (Loss) before income taxes | (96,809 | ) | (25,691 | ) | ||||||
| Income tax expense (recovery) | ||||||||||
| Current | 57 | 156 | ||||||||
| Future | 6 | (7 | ) | |||||||
| 63 | 149 | |||||||||
| Net loss and comprehensive loss | (96,872 | ) | (25,840 | ) | ||||||
| Deficit, beginning of period | (78,505 | ) | (52,665 | ) | ||||||
| Deficit, end of period | $ | (175,377 | ) | $ | (78,505 | ) | ||||
| Basic and diluted loss per share | $ | (1.71 | ) | $ | (0.51 | ) | ||||
| Weighted average number of Class A | ||||||||||
| common shares - basic and diluted | 56,502,778 | 50,342,816 | ||||||||
| INTERMAP TECHNOLOGIES CORPORATION | ||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||
| (In thousands of United States dollars) | ||||||||||||
| For the year | ||||||||||||
| ended December 31, | ||||||||||||
| 2010 | 2009 | |||||||||||
| Cash flows (used in) provided by: | ||||||||||||
| Operations: | ||||||||||||
| Net loss | $ | (96,872 | ) | $ | (25,840 | ) | ||||||
| Items not involving cash and cash equivalents: | ||||||||||||
| Depreciation of property and equipment | 4,577 | 6,302 | ||||||||||
| Amortization of multi-client data library | 14,702 | 10,074 | ||||||||||
| Impairment of multi-client data library | 52,762 | - | ||||||||||
| Amortization of intangible assets | 421 | 422 | ||||||||||
| Stock-based compensation | 1,685 | 2,247 | ||||||||||
| Loss (gain) on disposal of property & equipment | 72 | (119 | ) | |||||||||
| Amortization of deferred lease inducements | (279 | ) | (240 | ) | ||||||||
| Future income taxes | 6 | (7 | ) | |||||||||
| Change in non-cash operating working capital | 14,766 | (4,800 | ) | |||||||||
| (8,160 | ) | (11,961 | ) | |||||||||
| Financing: | ||||||||||||
| Proceeds from issuance of common shares | 6,157 | 9,540 | ||||||||||
| Securities issuance costs | (725 | ) | (841 | ) | ||||||||
| Repayment of obligations under capital lease | (167 | ) | (342 | ) | ||||||||
| Repayment of long-term debt | (1,390 | ) | (882 | ) | ||||||||
| 3,875 | 7,475 | |||||||||||
| Investments: | ||||||||||||
| Purchase of property and equipment | (1,015 | ) | (1,288 | ) | ||||||||
| Investment in multi-client data library | (4,606 | ) | (12,627 | ) | ||||||||
| Proceeds from sale of property & equipment | 4,019 | 1,039 | ||||||||||
| (1,602 | ) | (12,876 | ) | |||||||||
| Effect of foreign exchange on cash | (112 | ) | 470 | |||||||||
| Decrease in cash and cash equivalents | (5,999 | ) | (16,892 | ) | ||||||||
| Cash and cash equivalents, beginning of period | 10,355 | 27,247 | ||||||||||
| Cash and cash equivalents, end of period | $ | 4,356 | $ | 10,355 | ||||||||
| Supplemental cash flow information: | ||||||||||||
| Cash paid for interest expense | $ | 140 | $ | 220 | ||||||||
| Cash paid for income taxes | $ | 154 | $ | 96 | ||||||||
Contact:
Intermap Technologies
Rich Mohr, +1-303-708-0955
Senior
Vice President and Chief Financial Officer
Email Contact
or
Canada
– Financial
e.vestor Communications Inc.
Cory Pala,
+1-416-657-2400
Investor Relations
Email Contact
or
United
States – Financial
Genesis Select Corporation
Budd
Zuckerman, +1-303-415-0200
Investor Relations
Email Contact