Intermap Technologies Corp. (“Intermap” or the “Company”) today reported financial results for the fourth quarter and year ended December 31, 2008. A conference call will be held today, March 3, at 4:30 p.m. EST to discuss the results.
All amounts in this news release are in United States dollars unless otherwise noted.
Multi-client data license (“MCDL”) revenue increased 94% to $10.8 million, compared to $5.6 million in 2007. The increase resulted from an increased availability of data from the NEXTMap USA, Europe, and Asia databases. In 2008, approximately 70% of MCDL license revenue was associated with the NEXTMap USA program, 17% was associated with the NEXTMap Europe program, and 13% was associated with the Asia dataset. In comparison, in 2007 approximately 80% of the MCDL license revenue was associated with the NEXTMap USA program, 14% was associated with the NEXTMap Europe program, and 6% was associated with the Asia dataset.
Intermap’s contract services revenue component was $26.2 million compared to $28.2 million in 2007. Contract services revenue for 2008 contained several contracts received during the year for mapping projects in Asia totaling over $24.7 million.
At year-end, there remained $7.8 million in revenue to be recognized on contracts accounted for on a percentage of completion basis. Revenue on these contracts is recognized based on the ratio of costs incurred to estimated final costs required to fulfill the terms of such contracts. Of the $7.8 million of revenue expected to be recognized in future periods, $5.0 million relates to contract services work with the balance relating to MCDL licensing.
“As more of our NEXTMap data in Europe and the USA came available during the year, we were able to nearly double our MCDL revenues year-over-year,” stated Brian Bullock, president & CEO of Intermap Technologies. “Since its inception, total revenue from NEXTMap licensing has reached $45 million. With Western Europe and the USA nearing full commercial availability, management sees customer opportunities continuing to increase. We remain on target to complete NEXTMap Europe near the end of the first quarter of 2009. Our NEXTMap USA program currently has data available representing 35 states, including complete datasets of California, Florida, Hawaii, Mississippi, and Oklahoma. At the end of the year we completed the airborne collection of approximately 7.96 million square kilometers, or 99% of the entire NEXTMap USA program. We expect to have the collection portion of the program completed by the end of the first quarter of 2009, with the entire country available for sale during the first quarter of 2010.”
To date, the total capital invested by Intermap into building the NEXTMap datasets is approximately $90 million. Cash on hand at the end of 2008, combined with cash generated from the ongoing licensing of Intermap’s datasets, is expected to be adequate to fund the completion of the NEXTMap initiatives.
Operations expense for the year ended December 31, 2008 totaled $8.2 million compared to $11.6 million for 2007. The $3.4 million decrease was primarily the result of reduced aircraft hours flown on contract services work in 2008. Approximately 207,000 square kilometers of data was collected for contract services work during 2008, compared to 483,000 square kilometers during 2007.
Sales, general and administrative (“SG&A”) expense for 2008 was $25.9 million compared to $21.0 million for 2007. The increase resulted primarily from an increase in the costs of personnel in business development (including automotive), recreational-map-enabled GPS/PND applications, insurance risk assessment initiatives, sales, and marketing associated with the MCDL. Gross SG&A expense for the period ended December 31, 2008 and 2007, prior to capitalization, was $28.6 million and $23.0 million, respectively.
Adjusted EBITDA, a non-GAAP measure, for the year ended December 31, 2008 showed a significant improvement to a positive $1.3 million, as compared to a loss of $0.3 million for the same period in 2007. This improvement in EBITDA was driven by an increase in overall revenue, which was partially offset by an increase in non depreciation and amortization related operating expenses. The term EBITDA consists of net income (loss) plus interest, taxes, depreciation, and amortization. Adjusted EBITDA excludes gain (loss) on foreign currency translation, charges related to the disposal of assets, and stock based compensation expense. Adjusted EBITDA is included as a supplemental disclosure because management believes that such measurement provides useful information regarding the Company’s financial performance and will increase in importance as investors focus on cash flow in future periods.
Amortization expense of the MCDL database for the year increased to $6.8 million from $4.5 million for 2007. The increase was primarily due to increased revenue associated with the NEXTMap initiatives and an increase in the size of the underlying NEXTMap datasets.
For 2008, Intermap reported a net loss of $13.9 million, or ($0.30) per share, compared to a net loss of $8.9 million, or ($0.22) per share for 2007.
For the fourth quarter of 2008, Intermap reported total revenue of $9.6 million, compared to $6.2 million in the fourth quarter of 2007. Intermap’s contract services revenue component increased 42%, contributing $7.5 million compared to $5.3 million in the fourth quarter of 2007. Multi-client data license revenue from NEXTMap datasets increased 133% to $2.1 million, compared to $0.9 million in the same period of 2007. The increase in MCDL license revenue was primarily attributable to increased sales of NEXTMap USA data resulting from additional data availability.
The Company collected approximately 100,000 square kilometers more data on contract services work in the fourth quarter of 2008 than in the same period in 2007. The increase in data collection resulted in operations expense increasing to $2.3 million in the fourth quarter of 2008 compared with $1.8 million for the same period in 2007. SG&A expense for the fourth quarter of 2008 decreased to $6.1 million from $6.4 million for the same period in 2007. Amortization expense of the multi-client data library increased 54.6% to $1.7 million from $1.1 million. Intermap reported a smaller net loss of $3.7 million, or ($0.08) per share in the fourth quarter, compared to a net loss of $4.4 million or ($0.08) per share for the same period in 2007.
The cash position of the Company at December 31, 2008 (cash and cash equivalents) was $27.2 million compared to $56.8 million at December 31, 2007. Working capital decreased to $30.0 million as of December 31, 2008 from $65.0 million as of December 31, 2007.
“In 2008, we collected about 4 million square kilometers of data for our NEXTMap initiatives, leaving only 100,000 square kilometers to collect in 2009. With the reduced requirement for data collection, the NEXTMap investment required in 2009 will be approximately $10 million less than was required in 2008. This reduction, coupled with a positive operations outlook, is expected to produce a healthy cash balance for the Company at year-end,” commented Mr. Bullock.
The collection of NEXTMap Europe was completed in the second quarter of 2008. Processing of the data is near completion and on schedule to make the entire database commercially available beginning in the second quarter of 2009. NEXTMap Europe encompasses the mapping of 17 European countries including Austria, Belgium, Czech Republic, Denmark, England, France, Germany, Irish Republic, Italy, Luxembourg, Netherlands, Northern Ireland, Portugal, Spain, Scotland, Switzerland, and Wales. NEXTMap Europe includes an area of approximately 2.5 million square kilometers. NEXTMap Europe currently has data available off-the-shelf for approximately 61% of Western Europe, including the entire countries of England, Wales, Scotland, France, Germany, and Italy.
During 2008, the Company continued to make progress towards the completion of the NEXTMap USA program, the largest NEXTMap program to date. During the year, the Company had two Learjet aircraft equipped with IFSAR mapping technology focused on airborne data collection for NEXTMap initiatives. The dedication of these aircraft allowed the Company to complete 99% of NEXTMap USA data collection by year-end.
At the end of 2008, the NEXTMap USA program had data available off-the-shelf representing over 3.9 million square kilometers, or approximately 48% of the entire NEXTMap USA program. The funding of the remainder of this project is expected to occur through a combination of existing cash resources, customer data sales and ongoing operations. The Company expects to have the NEXTMap USA program commercially available during the first quarter of 2010.
During the year, Intermap developed flood risk management models for France, Hungary, and the Czech and Slovak Republics. A model is also underway for Switzerland. In France, Intermap announced an agreement with Guy Carpenter & Company, LLC, a leading global risk and reinsurance specialist and a part of the Marsh & McLennan group of companies, to develop comprehensive flood hazard maps and a state-of-the-art national flood risk management model.
In late 2008, Intermap launched a risk assessment service direct to home owners in the Czech Republic. This service includes address-specific flood risk reports for consumers interested in obtaining specific property information for flood prone areas in the Czech Republic. After selecting a specific property, users receive an insurance risk report specifying potential risks related to their selection for a modest price. Until recently, flood risk information has only been available to insurance companies during the underwriting and risk-management process.
In addition to risk management applications for European flood modeling, Intermap is developing wind storm modeling and assessment applications throughout Europe. The Company has teamed with a German-based firm with the technology to intersect synoptic wind fields with Intermap’s NEXTMap terrain models and develop very precise delineation of high-risk areas.
Insurance companies can use NEXTMap’s superior insurance risk information to better define risk. The result can be more effective portfolio management and a net reduction of costs through a reduced need for reinsurance coverage and lower payouts after insurable events occur. Intermap is also in discussions with United States insurers for similar commercial insurance applications.
Intermap has a similar relationship with Bushnell Outdoor Products. Intermap’s advanced AccuTerra topographic maps provide access to digital terrain data, off-road and recreation-related roads, trails, and points of interest such as campgrounds, service facilities, and landmarks. In addition, customers can benefit from a land management data layer that displays the location of public lands (national forest, wilderness areas, state parks, etc.) and private property for most recreation areas in the United States.
Subsequent to the close of 2008, Intermap announced the inclusion of their AccuTerra starter maps on a new line of next-generation hand-held GPS devices from Lowrance. In addition to the starter maps, select devices will ship with full AccuTerra premium content, including high-resolution topographic maps, extensive outdoor trail networks, land management maps and extensive points of interest for outdoor recreation.
During the year, Intermap also expanded its AccuTerra GPS maps product line into Western Europe. The launch of AccuTerra Europe ushers in a new breed of GPS maps, with unprecedented detail, accuracy and uniformity unavailable in Europe until now.
Intermap is creating highly accurate 3-D road vectors within NEXTMap to enhance fuel efficiency and help improve vehicle safety in the transportation industry. During the year, a Detroit-area office was established to complement Intermap’s Munich office initiative to support and accelerate advanced automotive technologies in the industry.
Next generation safety systems using high-precision 3-D road vectors can provide vehicles with precise knowledge of the road ahead to anticipate potentially dangerous situations, thereby helping reduce the number of serious injuries and fatalities. These 3-D road vectors can enable systems that alert drivers of upcoming curves and hills and are a critical element in the development of predictive headlights that automatically follow the road by physically turning into curves and up and down according to the change in grade. Precision road vectors can also provide advanced knowledge of the road ahead to extend the range of electric power sources in hybrid vehicles and automatically adjust engine and drive-line control units to increase fuel efficiency and decrease carbon emissions in commercial vehicles.
NEXTMap USA license sales in 2008 included petroleum companies in North Dakota and wind energy farms in the Midwest. Petroleum and wind energy represent new markets for NEXTMap data and the Company foresees further sales in these industries.
NEXTMap data is available directly from Intermap or through selected partners worldwide.
Intermap will host a conference call today, March 3, 2009, at 4:30 p.m. EST (1:30 p.m. PST, 2:30 p.m. MST, 9:30 p.m. GMT). To participate in the call, please dial +1-416-695-6140 or +1-800-952-6845 approximately 10 minutes prior to the conference call. A recording of the conference call will be available through March 18, 2009. Please dial +1-416-695-5800 or +1-800-408-3053 and provide the password 3283915 to listen to the rebroadcast.
Loss before interest, foreign exchange and income taxes
Weighted average number of Class A common shares – basic and diluted