Q2 NEXTMap license revenues increase 40%
NEXTMap USA commercially launched
$6.5M CDN financing completed
DENVER – August 10, 2010 (TSX: IMP.TO) – Intermap Technologies Corporation (“Intermap” or the “Company”) today reported financial results for the second quarter ended June 30, 2010. A conference call will be held today, August 10, 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.
“We have begun the process of restructuring the Intermap organization to focus on our strengths and the markets which can provide the greatest returns,” said Howard Nellor, Intermap's interim chief executive officer. “There have been some shifts in the market and going forward we are aligning our strengths to take advantage of these market trends. I’m pleased that NEXTMap license revenue came in ahead of budget again this quarter, up 40%, however, total revenues were still lower than expected due to a delay in the signing of pending contract service agreements. While the company anticipates these contracts will close in the third quarter, we continue to reduce operating expenses and to aggressively manage our working capital. Additionally, we are in discussions with potential buyers of our surplus production capabilities and equipment, and we strengthened our working capital in July with a $6.5 million CDN financing. On the expense side, 2010 will reflect a substantial reduction in cash outlays when compared to 2009 now that the NEXTMap USA and Europe databases are complete.”
Intermap has reduced data collection and production operations and finalized the cost restructuring that was executed in the fourth quarter of 2009 with the closing its facility in Ottawa. Consolidated headcount was 596 at June 30, 2010, a decrease from 868 at June 30, 2009. The decrease was primarily driven by a decrease in operations personnel by approximately 38%, or 238 full-time personnel. The decrease in operations personnel resulted primarily from the Company’s completion of the NEXTMap Europe and NEXTMap USA programs. R&D and administrative personnel also decreased by 15%, or 22 employees during the year. Salaries and related personnel costs for the second quarter of 2010 and 2009 were $4.9 million and $6.6 million respectively. Company spending on property and equipment and the Investment in the Multi-Client Data Library (MCDL) has decreased by $5.2 million in the first half of 2010 compared to the first half of 2009.
For the quarter ended June 30, 2010, Intermap reported total revenue of $5.3 million, up 52% over Q1 2010, but a decrease from $6.2 million for the second quarter of 2009. The decline in year over year revenue was the result of lower revenue from Intermap's contract services business. MCDL license revenue for Q2 was $3.7 million representing an increase of 40% quarter over quarter and 57% year over year, partially offsetting lower contract services revenue. During the second quarter of 2010, approximately 52% of MCDL license revenue was associated with the NEXTMap Europe dataset, 15% was associated with the NEXTMap USA dataset, and 33% was associated with the Asia dataset.
Revenue from contract services work during the second quarter of 2010 decreased to $1.6 million from $3.5 million for the same period in 2009. The decrease was primarily the result of a reduction in revenue from mapping projects in South East Asia where the Company had $3.2 million in revenue during the second quarter of 2009, compared to $Nil in the second quarter of 2010. The revenue recognized in the second quarter of 2010 related largely to a mapping project in Alaska totaling $1.3 million. Several new contract service projects are under bid in various global regions, providing anticipated increases in contract services revenue in the second half of 2010.
Gross operations expense, prior to capitalization, for the quarter ended June 30, 2010 was $3.8 million, compared to $4.3 million during the same period in 2009. The decrease in gross operations expense was primarily due to the reduction in production operations as a result of the completion of the NEXTMap Europe program and the completion of the airborne collection associated with the NEXTMap USA program. Net operations expense for the quarter ended June 30, 2010 totaled $2.5 million compared to $1.6 million for the same period in 2009. The increase in net operations expense resulted from a reduction in costs capitalized to the NEXTMap Europe and NEXTMap USA programs.
Sales, general and administrative (“SG&A”) expense for the quarter ended June 30, 2010 was $6.9 million, an increase from $6.5 million for the same period in 2009. The increase in SG&A expense in Q2 2010 is due primarily to a one-time expense associated with closing the Ottawa facility, resulting in the recognition of a liability for future lease payments of $0.7 million. Without this charge, sales, general and administrative expense decreased by $0.3 million to $6.2 million during Q2 2010. Since 2009, the Company has added several new sales people in 2010 to extend its reach within the USA, Europe, and Asia. Notwithstanding the need to expand sales coverage, SG&A is an area where costs continue to be reduced now that the production of the core NEXTMap products are complete.
Adjusted EBITDA, a non-GAAP measure, for the quarter ended June 30, 2010 was a loss of $3.5 million compared to a loss of $2.3 million for the same period in 2009. The adjusted EBITDA loss for the 3 months ended June 30, 2010 is primarily attributable to a decrease in revenue of $0.9 million and an increase in net operations costs of $0.9 million offset by $0.7 million for a one-time expense related to the lease accrual related to closing the Ottawa office, as compared to the same period in 2009.
Amortization expense of the MCDL database increased to $3.8 million from $2.4 million in the second 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 second quarter of 2010, Intermap reported a net loss of $10.1 million or ($0.19) per share, compared to a net loss of $6.9 million or ($0.14) per share for the second quarter of 2009.
The cash position of the Company at June 30, 2010 (cash and cash equivalents) was $3.3 million, compared to $10.4 million at December 31, 2009. Working capital decreased to $4.0 million as of June 30, 2010 from $18.1 million as of December 31, 2009.
Subsequent to the close of the second quarter, on July 6, 2010, the Company issued 8,125,000 Common Shares at a price of $0.80 CDN per Common Share representing gross proceeds to the Company of $6.5 million CDN. The $5.8 million CDN net proceeds of the offering will be primarily used to help fund the short term working capital requirements of the Company. Specifically, the Company has signed and anticipates entering into large contract service projects that will require the Company to utilize up to $4 million in working capital during the contract. The balance of the net proceeds will be used to fund sales, business development and further existing technology development efforts directed at accelerating revenue from the MCDL asset.
Management believes that the existing cash resources of $3.3 million, together with the $5.8 million CDN net proceeds from the bought deal, the anticipated contract services and NEXTMap license revenue, the cost reductions initiatives implemented, and the anticipated sales of surplus production capability and equipment will be sufficient to fund operations through at least June 30, 2011. As the year progresses management will continue to monitor the level of sales and take appropriate actions to ensure that the company can fund future operations.
Management and the board of directors are fully engaged in a process to generate positive cash flow from operations, which includes implementing a number of cost containment and risk reduction initiatives that will support this objective. Gross operating costs have come down year over year, but further reductions will be implemented over the next nine months.
As of August 10, 2010, there were 60,659,737 common shares outstanding.
Detailed financial results and management’s discussion and analysis can be found on SEDAR at:www.sedar.com.
On July 13, 2010 Intermap announced the full commercial availability of its NEXTMap USA countrywide digital mapping program. This concludes the Company’s two major undertakings, to create uniformly accurate digital elevation models and images for the contiguous United States and Hawaii, “NEXTMap USA” (approximately eight million square kilometers), and “NEXTMap Europe” for all of Western Europe (2.5 million square kilometers). Combined with other regions in the Company's extensive geospatial data library, including include Malaysia and significant regions in Indonesia, Afghanistan, the Philippines and Australia, this equates to more than 12.5 million square kilometers of available data.
Following several quarters of weakness in contract services revenue, in the second quarter Intermap received notification of a $2.2 million initial contract to immediately begin IFSAR mapping of a selected region in Alaska. The project is sponsored by several federal and state government agencies. The objective is to have the entire state mapped over the next few years, with a total budget estimated at $60 million. Several other projects are under bid in various global regions, providing anticipated increases in contract services revenue in the second half of 2010.
GPS Navigation Devices and Smartphones
In the second quarter Intermap signed an agreement with Garmin to integrate data from NEXTMap Europe and NEXTMap USA with Garmin's GPS and navigation products. Initial Garmin products using NEXTMap data were shipped beginning in the second quarter of 2010. Garmin continues to test NEXTMap data for use in other Garmin products. Intermap believes that NEXTMap data can be applied to Garmin’s outdoor GPS products, automotive portable navigation devices, and aviation product lines.
Automotive Market – Fuel Efficiency, Safety and Navigation
In the second quarter Intermap responded to requests for quotations for provision of 3D road data to three Tier 1 automotive suppliers. The first related licensing agreement to be announced is for 3D road data to Audi Electronics Venture GmbH (AEV), a wholly owned subsidiary of Audi AG. Intermap´s accurate and uniform 3D road geometries for all German roads have been delivered to the VW Group to be added to its research and development platform. The VW Group is integrating Intermap 3D Roads into a research and development platform with the aim to developing, testing, and enhancing various energy management and advanced driver assistance systems (ADAS) applications. Intermap’s 3D Roads product is the only map dataset that covers all classes of roads – featuring more than one million line kilometers of accurate road centerline position and elevation data for the entire country. This product enables the VW group to test innovative technologies throughout the entire country – from small rural roads to the largest Autobahn. This licensing agreement is another example of how NEXTMap 3D Roads are being used to support energy management and ADAS applications that rely on the 100% road coverage that NEXTMap’s 3D road vectors provide.
“We continue to see momentum in the need for 3D road data to support high priority applications such as energy management and carbon emission reduction,” explained Mr. Nellor. “NEXTMap can be utilized to improve fuel efficiency through eco routing and eco drive, to accurately and dynamically predict range for electric vehicles and to improve vehicle safety. It is important that vehicle safety systems encompass 3D road vectors for all classes of roads, including smaller rural roads, as these are often where the more difficult curves, dips, and slopes are encountered.”
Other partners are also testing NEXTMap data for eco-routing applications in Europe.
Since completing NEXTMap Europe, the Company has licensed a total of $4 million of NEXTMap data to several wireless telecommunications companies for Germany and border countries. In addition, Intermap announced the immediate availability of its Web-based application that produces NEXTMap Online Terrain Profiles (OTPs) for microwave link planning, designed specifically to support microwave tower placement and network expansion by delivering precise terrain profiles (including 3D terrain data and profile graphs) via the Company’s TerrainOnDemand Web services portal. The online allows quick, cost-effective, and reliable line-of-sight determination for telecommunications companies and emergency service providers in Western Europe and the United States. Leading customers report that use of the web service reduces the requirement for field surveys by 70 to 80 percent.
Customers can access the new OTP web portal at: http://mlp.TerrainOnDemand.com/
Intermap will host a conference call today, August 10, 2010 at 4:30 pm ET (2:30 pm MT). To participate in the call, please dial +1-416-695-6622 or +1-800-766-6630 approximately 10 minutes prior to the conference call. A recording of the conference call will be available through August 17, 2010. Please dial +1-416-695-5800 or +1-800-408-3053 and provide the password 6357014 to listen to the rebroadcast.
A full pdf version (including financials) can be found at:
About Intermap Technologies
Intermap (TSX: IMP.TO) is a preeminent digital mapping company creating uniform high-resolution 3D digital models of the earth’s surface. The Company has proactively remapped entire countries and is building uniform national datasets, called NEXTMap®, consisting of elevation data and geometric images of unprecedented accuracy. Demand for NEXTMap data continues to grow as new commercial applications emerge within the GIS, engineering, automotive, consumer electronics, insurance risk assessment, oil and gas, renewable energy, hydrology, environmental planning, wireless communications, transportation, aviation, and 3D visualization markets.
Intermap is headquartered in Denver, Colorado, with additional offices in Calgary, Detroit, Jakarta, London, Madrid, Munich, Paris, Perth, Prague and Washington, D.C. For more information, visit www.Intermap.com orwww.AccuTerra.com.
NEXTMap data is available directly from Intermap, online at www.TerrainOnDemand.com, or through selected partners worldwide.
NEXTMap® and AccuTerra® are registered trademarks of Intermap Technologies Corporation
For more information, please contact:
Brian Musfeldt, Vice President & Chief Financial Officer
+1 (303) 708-0955
Canada – Financial
Cory Pala, Investor Relations
e.vestor Communications Inc.
+1 (416) 657-2400
United States – Financial
Budd Zuckerman, Investor Relations
Genesis Select Corporation
+1 (303) 415-0200
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.