IDS Announces Record Third Quarter Results
TORONTO, Nov. 1 /CNW/ - IDS Intelligent Detection Systems (TSE-ISD)
reported strong quarter results for the third quarter and the nine months
ended September 30, 1999.
For the three months ending September 30, 1999, revenues increased 96 per
cent to $10.2 million from $5.2 million in the same period in 1998. For the
nine-month period revenues increased 237 per cent to $36.0 million, compared
to $10.7 million in 1998.
Net income for the three months ended September 30, 1999, increased to
$2.9 million, or $0.13 share, compared to a loss of $770,000, or $(.03) per
share, for the same period in 1998. On a fully diluted basis, earnings
increased to $0.13 per share compared to a loss of $.03 in the third quarter
of 1998.
''I am very pleased with our strong and steady performance this quarter
and fiscal 1999 to date,'' said Dr. Mariusz Rybak, chairman and CEO of IDS.
''These results even exceeded our projections for revenues, EBITDA and net
earnings. The cyclical return of exploration markets, combined with our strong
40 year position in the industry, are fueling our geophysical growth''.
''I am also pleased that we are creating value for the shareholders in a
number of new areas and markets, based on developing assets and revenues from
our core competencies of advanced sensing technologies and services,'' he
continued. These include:
- Recording a major $2.5 million gravity data measurement contract from
Pemex, Mexico's state oil company.
- Reaching agreement to acquire Colorado based Micro-g Solutions, the
world's only commercial manufacturer of absolute gravimeters that are
used by survey and standards organizations in almost every major
industrialized country
- Building on the strength of Caduceon, our medical detection subsidiary,
with the appointment of Dr. Graham Strachan, a leading Canadian
biotechnology authority, as executive chair
- Creating, in partnership with the Sun - Netscape Alliance, Geo-Portal
E-commerce business to business gateways, which will provide an online
virtual marketplace for mining and geophysical industries.
''Our third quarter represents, continuing momentum, and recent events
announced in the fourth quarter point to an outstanding fiscal year overall,''
commented Dr. Rybak.
IDS is a dynamic developer, manufacturer and marketer of sophisticated
detection devices and systems. The Company operates through seven business
unit: Analytical & Security Products and Solutions, IDS Power Control Systems,
Sinter Earth Science Instrumentation, Survey & Exploration Technology
Services, IEC (Integration, Engineering and Consulting), ChemiCorp
International and Caduceon Inc. Its more than 70 products range from drug and
explosive detectors to nuclear safety control instruments, airborne and ground
geophysical survey services, geophysical instrumentation for mineral, oil and
gas exploration and developing technologies for industrial process control and
point-of-care health analysis.
The full text of the Report to the Shareholder is attached to this
release.
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Report to Shareholders
IDS Announces Strong Third Quarter Results
Toronto, ON (November 1, 1999) IDS Intelligent Detection Systems
(TSE-ISD) reported strong results for the third quarter and nine months ending
September 30, 1999.
Total revenue for the three months ended September 30, 1999, increased to
$ 10.2 million from $5.2 million from the same period in 1998, an increase of
96%. On a year-to-date basis, revenues were $ 36.0 million compared to $ 10.7
million for the first nine months of 1998.
Net income for the third quarter of fiscal 1999 increased to $ 2.9
million, or $ 0.13 per share, compared to a loss of $0.8 million (loss of
$0.03 per share). On a fully diluted basis, earnings increased to $ 0.13 per
share compared to a (loss of $ 0.03 per share) for the third quarter of 1998.
<<
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Financial Highlights Three Months Ended Nine Months Ended
September 30 September 30
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In thousands of dollars 1999 1998 1999 1998
except per-share amounts
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Revenue $10,247 $5,221 $36,016 $10,691
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EBITDA $3,732 $(88) $10,593 $(956)
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Net income (loss) $2,905 $(770) $8,318 $(1,998)
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Earnings per share (loss)
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Basic $0.13 $(0.03) $0.37 $ (0.12)
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Fully diluted $0.13 $(0.03) $0.36 $(0.11)
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Cash flow per share $0.16 $ 0.00 $0.47 $(0.05)
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>>
''I am very pleased with our strong steady performance this quarter and
fiscal 1999 to date,'' said Dr. Maruisz Rybak, president, chairman and CEO of
IDS Intelligent Detection Systems. ''Our performance has exceeded our internal
projections for revenue, EBITDA and net earnings.''
Recent Company highlights:
The cyclical return of exploration markets is fueling growth in IDS's
geophysical businesses. Together, both Scintrex Earth Science Instrumentation
and Survey and Exploration Technology have secured new contracts valued at
over $ 4.5 million in the last couple of months. This includes a significant
new airborne survey for Pemex, Mexico's state-owned Oil Company, as well as an
order for 14 of our CG-3 gravity meters. A typical order for gravity meters is
approximately one or two units. We view the size of this order as a key
indicator that a rebound in exploration markets is well underway.
New opportunities and new markets are emerging as a result of our strong
40-year position in geophysical and exploration markets. This includes the
pursuit of select acquisitions to build critical mass and achieve economies of
scale. We announced recently an agreement to acquire Micro-g Solutions, a
high-end geophysical technology firm based in Colorado. Their state-of-the-art
laser-based gravity measuring system is an ideal complement to our
market-leading CG-3 gravity meters. The acquisition agreement indicates an all
share transaction of Scintrex Limited shares. Pending the finalization of the
acquisition, IDS holds 100% of the outstanding shares in Scintrex Limited.
Significant new orders in Q3 helped solidify IDS's growing dominance in
handheld explosives detection technology. The EVD-3000 continues to open new
markets around the world because it combines the sensitivity of our standalone
units with the portability and flexibility of a handheld unit.
IDS Power Control Systems has secured initial key orders for a newly
developed integrated communication systems valued at more than $1 million. The
Post Accident Communications System is a highly reliable tool, which provides
crucial communications abilities in the event of a power plant accident. The
Plant Display System is an integrated monitoring display technology that
presents mission critical instrument and systems data on several large screens
in the operations control centre. Each of these new solutions represents the
state-of-the-art in power generation safety worldwide.
All of our divisions continued to report strong and steady performance
during the quarter. Revenue, gross margin and earnings all improved markedly
over the same period last year. This was achieved despite the traditional
slowdown in orders customary in the summer months of Q3. We remain well on
track to meet our year end targets in all measures of our business.
IDS's Caduceon health diagnostics technology unit was formally launched
with the naming of Graham Strachan as Executive Chair. We are pleased that
Graham Strachan has chosen to head this project. He is one of this country's
leading biotechnology authorities. As head of Allellix Biopharmaceuticals
Inc., Mr. Strachan oversaw the reorganization of the company and the
subsequent initial public offering. He brings a wealth of experience and
leadership to Caduceon. Caduceon is pursuing health and fitness applications
for IDS's automated chemical analysis technology - GC/IMS.
A significant E-commerce business to business initiative was introduced.
In partnership with the Sun/Netscape Alliance, we announced the development of
centralized online trading and resource centres for the mining, geophysical
and exploration markets. These portals will be located at www.mineonline.com
and www.geophysicsonline.com. They are being developed to serve the $ 300
billion-plus market. Each of these sites will enable users to research
products and services, negotiate prices and terms and conclude transactions
including billing and shipping.
Financial Review
Revenue
Revenue increased as a result of growing sales in worldwide markets for
our divisions. Revenue increased 96% in the third quarter to $ 10.2 million
from $ 5.2 million from the third quarter of 1998. Although revenues for the
quarter declined compared to the second quarter of 1999, this reflects the
traditional slowdown in orders over the summer months. Revenue for the last 12
months ending September 30, 1999, topped $ 47 million.
EBITDA
Earnings before income taxes, depreciation and amortization (EBITDA) were
$ 3.7 million for the third quarter of 1999, compared to a loss of $ 0.1
million for the third quarter of 1998. On a year-to-date basis to September
30, 1999, EBITDA was $ 10.6 million, compared to a loss of $ 0.1 million for
the first nine months of 1998.
Net Income
On a year-to-date basis, net income was $ 8.3 million for the first nine
months ended September 30, 1999, compared to a loss of $ 2.0 million for the
same period in 1998. On a per-share basis, fully diluted earnings for the
first nine months of 1999 were $ 0.36, compared to a loss of $ 0.11 per share
for the same period last year. The increased income from operations was
attributed to the savings from selling, general and administrative expenses
relating to the company's cost reductions that were implemented earlier in the
year.
Cash Flow
Cash flow was $ 10.6 million for the first nine months of 1999, compared
to $ 0.1 million for the first nine months of 1998. On a per-share basis, cash
flow for the third quarter in 1999 was $ 0.16. Cash flow for the comparable
quarter in 1998 was a loss of $ 0.1 million. Cash flow per share for the first
nine months of 1999 was $ 0.47, compared to a loss of $ 0.05 for the
comparable period in 1998.
Backlog
IDS's order backlog continues to remain strong at the end of the third
quarter at $ 17.6 million.
Review of Operations
Analytical and Security Products and Solutions
Sales revenue for the Analytical and Security Products division for the
nine months ended September 30, 1999, was $ 14.0 million. This division is
successfully penetrating new markets around the world, including new sales in
the first nine months of 1999 to organizations in the U.S., China, India, Sri
Lanka, Saudi Arabia and the United Arab Emirates.
The installation of our Large Vehicle Bomb Detection System (LVBDS) has
been delayed as we await the completion of the surrounding facility. Our LVBDS
is part of a large-scale project that has endured a number of slowdowns. It is
now scheduled for completion Q1 2000. While the structure of the contract has
enabled us to receive payment for the system, sales and marketing of new
systems is reliant to a significant extent upon the successful installation
and proven performance of this initial system. We expect to use this
installation as a platform for selling additional LVBD systems in 2000.
Power Control Systems
Sales revenue for the Power Control Systems division for the nine months
ended September 30, 1999, was $ 11.0 million.
Recent orders include significant domestic customers such as Ontario
Hydro and Atomic Energy Canada Limited and foreign markets including Romania
and Korea. The nuclear power industry represents a significant market
particularly outside North America. In addition to providing state-of-the-art
products worldwide, IDS provides upgrade services to existing facilities in
China, Korea, India and the U.S. The division remains a steady contributor of
revenue and earnings while continuing to broaden its market through aggressive
sales and industry leading innovation. A special task force has been
established to review the ways in which the capabilities and experience of
this division might contribute to the pursuit of process control
instrumentation in conjunction with ChemiCorp International.
Scintrex Earth Science Instrumentation
Sales revenue for the Earth Sciences Instrumentation division for the
nine months ended September 30, 1999, was $ 5.2 million.
''A wave of new orders of new equipment and sharply increased activity in
our rental pool indicate a significant rebound in geophysical markets in Q3,''
said Phil Hembruff, vice-president and general manager of Scintrex. ''If this
trend continues, we believe Scintrex is in an excellent position to capitalize
upon the momentum. We are also very excited about the recent addition of
products from Micro-g Solutions. The high quality of Micro-g's products helps
to expand the Scintrex product line. This is also an opportunity for the
Micro-g products to get sales and marketing distribution not previously
possible.''
Survey and Exploration Technology Services
Sales revenue for the Survey and Exploration technology for the nine
months ended September 30, 1999, was $ 4.6 million.
Like our instrumentation business, our Survey and Exploration division is
similarly experiencing significant new activity in exploration markets
including contracts such as major contract from Pemex worth $ 2.5 million. IDS
also announced 2 new contracts for its 3D-Gradient Magnetic(TM) survey system
in Western Canada, and a fixed wing survey aircraft in Chile.
The Pemex project is important not just because of its size but perhaps
more significantly because it is being conducted in the heart of strategic oil
exploration region reaching into the Gulf of Mexico. Because of the location
of this survey we expect extensions into adjoining areas in the future. The
project is also an important showcase of our unique multi-discipline
capability. The survey will use a combination of the company's proprietary
gravity systems to acquire the data, including SeaGrav(TM), HeliGrav(TM),
BoatGrav(TM), and CG Land gravity tools.
IEC (Integration, Engineering and Consulting)
Sales revenue for the IEC division for the nine months ended September
30, 1999, was $ 0.9 million.
IEC provides ultra-secure communications systems consulting services
primarily to the Canadian government in strategies related to NATO and the
United Nations. With 10 years of experience, IEC also provides key technical
expertise to other IDS divisions, such as ChemiCorp's development of process
control technology.
Caduceon Inc.
With the appointment of Mr. Graham Strachan as Executive Chair of
Caduceon, Inc., this division is on track to unveil a fully operational
prototype of its diagnostic breath analysis at the Ontario Hospital
Association Convention in Toronto (November 22 and 23). This device, which
uses IDS's GC/IMS technology, can detect and measure specific volatile organic
chemicals in parts per trillion levels of sensitivity from within the complex
soup of compounds that comprise a single human breath.
ChemiCorp International
The integration of ChemiCorp, which IDS acquired a majority position in
April 1999, remains on track in the pursuit of high-speed in-line measurement
instruments for use in process controls, product inspection and management
systems. A synergy between this initiative and our Power Control Systems is
emerging. Joint R&D teams are being established to share resources and
streamline the path to market for this exciting new application for our GC/IMS
technology.
IDS is a dynamic developer, manufacturer and marketer of sophisticated
detection devices and systems. The Company operates through seven business
unit: Analytical & Security Products and Solutions, IDS Power Control Systems,
Scintrex Earth Science Instrumentation, Survey & Exploration Technology
Services, IEC (Integration, Engineering and Consulting), ChemiCorp
International and Caduceon Inc. Its more than 70 products range from drug and
explosive detectors to nuclear safety control instruments, airborne and ground
geophysical survey services, geophysical instrumentation for mineral, oil and
gas exploration and developing technologies for industrial process control and
point-of-care health analysis.
IDS operates worldwide in Canada, the U.S., France, the U.K., Australia
and Brazil, and is publicly traded on The Toronto Stock Exchange (symbol:
ISD).
<<
IDS INTELLIGENT DETECTION SYSTEMS INC.
Consolidated Balance Sheets
As at September 30
(In Thousands of Canadian Dollars)
(Unaudited)
-------------------------------------------------------------------------
1999 1998
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Assets
Current assets:
Cash $ 723 $ 5,437
Accounts receivable 21,920 8,307
Investment tax credit receivable 119 61
Income taxes recoverable 128 85
Inventory 13,294 12,329
Prepaid expenses 1,049 258
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37,233 26,477
Long-term investments 327 -
Capital assets 15,062 12,756
Deferred development costs 824 213
Goodwill 18,018 18,931
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$71,464 $58,377
-------------------------------------------------------------------------
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Liabilities and Shareholders' Equity
Current liabilities:
Bank loan $ 1,478 $ -
Accounts payable and accrued liabilities 6,634 4,230
Deferred revenue 84 39
Income taxes payable 214 221
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8,410 4,490
Deferred income taxes 81 94
Deferred lease inducement 31 128
Due to related parties 245 128
Non-controlling interest 214 221
Shareholders' equity:
Share capital 55,027 55,005
Cumulative translation adjustment 135 33
Retained earnings (deficit) 7,535 (1,501)
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63,054 53,887
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$71,464 $58,377
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IDS INTELLIGENT DETECTION SYSTEMS INC.
Consolidated Income Statement
For the nine months ended September 30
(In Thousands of Canadian Dollars)
(Unaudited)
Three Months ended
September 30
1999 1998 1999 1998
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Sales $36,016 $10,691 $10,247 $ 5,221
Cost of Goods Sold 16,901 6,003 4,362 2,350
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19,115 4,688 5,885 2,871
Expenses:
Selling, general and
administrative 7,871 5,087 2,212 2,598
Depreciation and amortization 2,319 1,122 791 660
Interest and finance 133 - 36 -
Research and development 829 1,106 159 682
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11,152 7,315 3,198 3,940
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Income (loss) from continuing
operations 7,963 (2,627) 2,687 (1,069)
Interest and other income (expense) 275 782 238 292
Restructuring costs (78) (225) (43) 25
Minority Interest (19) (8) 23 4
-------------------------------------------------------------------------
Net income (loss) before income
taxes 8,141 (2,078) 2,905 (748)
Income tax (recovery) position (177) 25 - 22
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Net income (loss) from continuing
operations 8,318 (2,103) 2,905 (770)
Net income (loss) from discontinued
operations - 105 -
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Net income (loss) $ 8,318 $(1,998) $ 2,905 $ (770)
-------------------------------------------------------------------------
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Net earnings (loss) per share:
Basic $ 0.37 $ (0.12) $ 0.13 $ (0.03)
Fully diluted $ 0.36 $ (0.11) $ 0.13 $ (0.03)
Cash flow per share $ 0.47 $ (0.05) $ 0.16 $ (0.00)
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IDS INTELLIGENT DETECTION SYSTEMS INC.
Consolidated Statements of Cash Flows
For the nine months ending September 30
(In Thousands of Canadian Dollars)
(Unaudited)
1999 1998
-------------------------------------------------------------------------
Cash Flows from Operating Activities:
Earnings (loss) from continuing operations $ 8,318 $(2,103)
Items not involving cash:
Depreciation and amortization 2,319 1,122
Deferred taxes (41) 94
Increase in minority interest 245 128
Net changes in non-cash working capital (9,130) (8,586)
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1,711 (9,345)
Discontinued operations 76 3,676
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1,787 (5,669)
Cash Flows from Investing Activities:
Increase in long-term debt (84) -
Additions to capital assets (3,641) (1,554)
Increase in deferred lease inducement (8) 78
Acquisition of subsidiaries - (36,323)
Decrease (Increase) in deferred development costs 155 (213)
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(3,578) (38,012)
Cash Flows from Financing Activities:
Increase (decrease) in bank loan 1,111 (1,552)
Decrease due to/from shareholders - (46)
Decrease in long-term debt - (88)
Issuance of common shares 30 37,683
Cumulative foreign exchange 219 33
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1,360 36,030
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Decrease in cash for the period (431) (7,651)
Cash, beginning of the year 1,154 13,088
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Cash, end of period $ 723 $ 5,437
-------------------------------------------------------------------------
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Notes:
1. Interest received and paid
Interest received $ 70 $ 634
Interest paid 133 44
>>
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