DENVER – (TSX: IMP.TO) – Intermap Technologies Corporation (“Intermap” or the “Company”) today reported financial results for the third quarter ended September 30, 2010. A conference call will be held today, November 12, at 4:30 p.m. eastern time to discuss the results.
All amounts in this news release are in United States dollars unless otherwise noted.
“The third quarter of 2010 proved very difficult with significant declines in revenue from both contract services and NEXTMap Multi Client Data Licensing (MCDL) businesses. We continue to diligently work to close several material contracts in the fourth quarter of 2010, the majority of which will generate revenue and cash in 2011,” stated Howard Nellor, interim CEO of Intermap. “We have restructured the organization and reduced our expenses in order to reach our objective of positive cash flow in 2011. Management and the board of directors are evaluating all strategic alternatives to preserve the Corporation’s ability to realize the value of the NEXTMap data bases and its unique 3D data collection and processing systems. This includes reducing operating and overhead costs to a level that will result in achieving positive cash flow from projected contract and MCDL sales in 2011.”
Intermap’s contract services business, which is substantially government oriented, has historically had uneven revenue distribution. While the global financial crisis has resulted in several weak quarters, the Company believes it is well positioned for the coming year and is currently actively engaged in the bidding process on numerous projects around the world.
Mr. Nellor explained: “We expect a rebound in our contract services business in 2011 with several projects already in the bidding process in the U.S., Australia, Central America, South America, and Asia. On a large project we are bidding on in Asia, Intermap was the only firm that qualified against the technical specification on an international tender and we are now in contract negotiations. If successfully awarded, this contract services project would be expected to generate revenues of approximately $12 million to Intermap in 2011. While we have not been awarded this contract to date, we believe it is important to share where we are in the process with our shareholders at this time.”
With NEXTMap completed, Intermap has been undergoing the transition from an engineering and production company to a streamlined customer- and market-driven organization. “We are focused on the federal and civil government, national mapping programs, defense and intelligence mapping, insurance and risk management, telecommunication, the automotive industry, and cloud-based Web services,” added Mr. Nellor. “We anticipate announcing meaningful progress in each of these markets during this and future quarters.”
For the quarter ended September 30, 2010, Intermap reported total revenue of $1.6 million, down 85% from $10.4 million for the third quarter of 2009. As of September 30, 2010, there remained $3.4 million in revenue from existing contracts, $1.1 million in contract services and $2.3 million in multi-client data library (MCDL) license contracts, to be recognized in future periods. MCDL license revenue for Q3 2010 was $0.9 million, compared to $3.0 million for Q3, 2009, representing a decrease of 72% year over year. During the third quarter of 2010, approximately 28% of MCDL license revenue was associated with the NEXTMap Europe dataset, 39% was associated with the NEXTMap USA dataset, and 33% was associated with the Asia dataset.
Revenue from contract services work during the third quarter of 2010 decreased to $0.7 million from $7.5 million for the third quarter of 2009. The decrease was primarily the result of a reduction in revenue from mapping projects in Southeast Asia where the Company had $6.6 million in revenue during the third quarter of 2009, compared to $nil in the third quarter of 2010. The revenue recognized in the third quarter of 2010 related primarily to a mapping project in Alaska totaling $0.4 million. Several new contract service projects are under bid in various global regions, providing anticipated increases in contract services revenue in future quarters. World economic difficulties continued to affect the Company’s revenues during 2010. Existing and potential customers have maintained a cautious approach to their businesses, conserving cash by deferring previously planned projects and re-evaluating their short-term operating budgets. Although the Company is continuing to see significant proposal activity, we believe the current challenging economic environment will continue to impact contract service revenue into the fourth quarter of 2010.
Gross operations expense, prior to capitalization, for the quarter ended September 30, 2010 was $2.7 million, compared to $5.1 million during the same period in 2009. Net operations expense for the quarter ended September 30, 2010 totaled $1.8 million compared to $2.8 million for the same period in 2009. The decrease in both gross and net operations expense during the third quarter of 2010 was primarily the result of the reduction in production operations that reflects the completion of the NEXTMap Europe and NEXTMap USA programs. The change in net operations expense was also offset with a decrease in costs of $1.5 million capitalized to the NEXTMap Europe and NEXTMap USA programs.
Sales, general and administrative (“SG&A”) expense for the quarter ended September 30, 2010 was $6.2 million, a decrease from $6.9 million for the same period in 2009. The decrease in SG&A expense in Q3 2010 resulted primarily from a reduction in personnel related costs and a reduction in external consulting and professional services costs offset partially by an increase in one-time expenses associated with the reduction in workforce which resulted in a charge of $1.1 million during the third quarter of 2010. Consolidated active employee headcount was 568 at September 30, 2010, a decrease from 874, or 35% from September 30, 2009. The decrease in operations personnel resulted from the Company’s completion of the NEXTMap Europe and NEXTMap USA programs. Before the end of the third quarter, Intermap completed an organizational restructuring, further decreasing employee head count by 17%, including a significant reduction at the executive level. The restructuring supports management's effort to lower expenses in alignment with current revenues. Total active employee head count of the Company is now approximately 533 worldwide, with 191 in North America and Europe, and 342 in Jakarta, Indonesia.
Salaries and related personnel costs for the third quarter of 2010 and 2009 were $5.7 million and $6.2 million respectively. For 2011, The Company expects to realize an additional annual savings of approximately $2.1 million in personnel related expense as a result of the headcount reduction implemented during 2010. Intermap has reduced its annual cash expenditure from $52 million in 2009 to a current run rate of approximately $34 million.
Adjusted EBITDA, a non-GAAP measure, for the quarter ended September 30, 2010 was a loss of $5.7 million compared to income of $0.5 million for the same period in 2009. The adjusted EBITDA loss for the 3 months ended September 30, 2010 is primarily attributable to the decrease in revenue of $8.8 million as compared to the same period in 2009.
Amortization expense of the MCDL database increased to $3.5 million from $2.6 million in the third quarter of 2009. The increase is due to increased MCDL sales, and the impact of the Company’s amortization policy on an expanded NEXTMap dataset.
For the third quarter of 2010, Intermap reported a net loss of $11.8 million, or ($0.20) per share, compared to a net loss of $4.3 million, or ($0.08) per share, for the third quarter of 2009.
On a year-to-date basis, consolidated revenue was $10.3 million compared to $22.1 million for the nine months ended September 30.
Contract services revenue was $3.5 million compared to $15.3 million for the same period in 2009, and MCDL was $6.8 million in both 2010 and 2009. On a year-to-date basis, gross operations expense, prior to capitalization totaled $10.5 million in 2010 down from $15.5 million for the same period in 2009. On a year-to-date basis, net operations expense totaled $7.2 million in 2010, compared to $6.2 million for the same period in 2009. Capitalized costs decreased by $5.9 million on a year-to-date basis for 2010 as compared to 2009 due to the completion of NEXTMap Europe and NEXTMap USA programs. SG&A expense decreased to $19.1 million from $19.6 million, and adjusted EBITDA was a loss of $14.5 million, compared to a loss of $4.6 million for the same period in 2009.
The cash position of the Company at September 30, 2010 (cash and cash equivalents) was $2.5 million, compared to $10.4 million at December 31, 2009. Working capital decreased to $3.1 million as at September 30, 2010 from $18.1 million as of December 31, 2009.
Net cash generated by financing activities totaled $4.7 million during the third quarter of 2010, and was primarily due to the completion of a share issuance of 8,125,000 shares for total gross consideration of $6.2 million (C$6.5 million), offset by $0.7 million of securities issuance costs and $0.8 million due to the repayment of long-term debt. Subsequent to the close of the third quarter Intermap announced the sale of one of its three aircraft, a King Air 200T, which was no longer required following completion of the Company’s NEXTMap Europe and NEXTMap USA mapping programs. Intermap sold the aircraft for $3.5 million, which will be received in three installments during the fourth quarter of 2010.