Source: Seeking Alpha
Implant Sciences’ (IMSC) CEO Glenn Bolduc discusses Q4 2014 results on a conference call held on September 19, 2014…
Implant Sciences (IMSC) Q4 2014 Results – Earnings Call Webcast Audio
Glenn Bolduc – Chairman, President, Chief Executive Officer
Roger Deschenes – Chief Financial Officer
Darryl Jones – VP, Sales and Marketing
Bill McGann – Chief Operating Officer
Mark Jordan – Noble Financial
Kenneth Rybicki – Private Investor
Joe Munda – Sidoti & Company
Patrick Mayor – Private Investor
Eric Panzik – Private Investor
Mark Wilcheck – Private Investor
Sean Sullivan – Private Investor
Implant Sciences Corporation (OTCQB:IMSC) Q4 2014 Results Earnings Conference Call September 29, 2014 4:15 PM ET
Good day, ladies and gentlemen, and welcome to the Q4 2014 Implant Sciences Corporation earnings conference call. My name is Whitney, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this call is being recorded for replay purposes.
I would now like to turn the conference over to your host for today, Mr. Glenn Bolduc, President and Chief Executive Officer. Please, proceed.
Glenn Bolduc – Chairman, President, Chief Executive Officer
Thank you very much, Whitney. And I would like to thank everyone to Implant Sciences’ fourth quarter fiscal 2014 earnings conference call. We are going to do this a little differently today. I am going to offer some brief remarks at the beginning, ask Roger to review the financials with you and then I will offer more description on the activities in the business. We also welcome those of you who are joining us via a webcast today.
On the call with me this afternoon are Dr. Bill McGann, our Chief Operating Officer; Roger Deschenes, who I just mentioned a moment ago, our Chief Financial Officer, and Dr. Darryl Jones, our Vice President of Sales and Marketing. In many regards, fiscal 2014 was a very good year for the company. If a few things had happened faster that we will discuss with you, we believe that we would be talking about our best year ever.
We did achieve two major approvals. Addition to the qualified product section of the air cargo screening technology list and certification by STAC in France. I embarrassed myself once telling you what STAC was, just know it’s the likely equivalent to TSA in France. We continue to make progress on other certifications and in August, we passed our biggest milestone to-date when the QS-B220, our benchtop was added to the TSA’s qualified product list, also known as the QPL.
Our relationship with the Transportation Security Laboratory remains very strong, and in April of this year we announced that we have signed a new cooperative research and development agreement with the TSL to use the benchtop as a “gold standard” trace detector in the development of the next generation of trace detection requirements. With this agreement, Implant Sciences has moved from a company chasing performance standards to one that is truly helping to define them.
Despite the delays in certifications, we were able to achieve significant growth in new international sales bookings. The missing component from our original plan was sales to the U.S. government. We have reported that to you previously. Our remaining steps for this are executing an indefinite delivery, indefinite quantity or IDIQ contract with the TSA and then securing orders against that IDIQ. The history of this process again demonstrates the difficulties in predicting exact timelines. However, we believe that the IDIQ is on track and we remain confident regards to an anticipated procurement award in the near future.
We believe that fiscal 2014 has positioned Implant Sciences for immediate and long-term success and we remain excited about the opportunities that are in front of us. Roger will provide a brief financial report on the company’s results for the quarter and fiscal year ended June 30, 2014. We will then provide deeper insight into the non-financial aspects of the company, its operations, and our plans going forward. Following our prepared marks, we will open the call up for questions from today’s participants.
Roger, why don’t you take over?
Roger Deschenes – Chief Financial Officer
Okay. Thank you, Glenn. A little bit of housekeeping. During this afternoon’s presentation, we will make forward-looking statements concerning upcoming events and our expectations regarding the company’s financial performance. Each time we do we’ll try to identify these statements with words such as expect, believe, anticipate and other words that indicate potential events. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those stated in the forward-looking statements.
Please consider the risk factors contained in the press release issued today September 29, 2014 and stated during this conference call as well as the risk factors and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014, which is on file with the Securities and Exchange Commission.
During our presentation, we may discuss or disclose non-GAAP measures. These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with U.S. GAAP. The presentation of non-GAAP information is intended instead to provide additional information to investors to facilitate the comparison of past and present results.
A replay of the conference call will be available for a limited time by dialing 888-286-8010 within United States or 617-801-6888 outside the United States and entering the passcode 70417507.
Any forward-looking statements we make today are based on assumptions which we believe to be reasonable as of today, September 29, 2014. We undertake no obligation to update these statements as a result of future events. Finally, this conference call is the property of Implant Sciences Corporation and any recording, reproduction or rebroadcast of this conference call without the expressed written consent of Implant Sciences Corporation is prohibited.
On September 29, 2014, we issued an earnings press release summarizing our financial performance for the quarter and year ended June 30, 2014. Our annual report on Form 10-K for the fiscal year ended June 30, 2014 was filed this afternoon with the Securities and Exchange Commission.
I will began now by reviewing the fiscal results. Revenues for the quarter ended June 30, 2014 were $1,529,000 as compared with $2,402,000 for the comparable prior year period, a decrease of $873,000 or approximately 36%. For the year ended June 30, 2014, revenues were $8,552,000 which compares with $12,017,000 for the prior-year period, a decrease of $3,465,000 or approximately 29%.
The revenue decrease in the quarter ended June 30, 2014 is due primarily to decreased shipments of our QS-B220 desktop into Asia, Europe, the Middle East and United States air cargo screening facilities, decreased unit shipments of our QS-H150 handheld units in Latin America and to a lesser extent, decreased sales of parts and supplies.
For the year ended June 30, 2014 the revenue decrease is primarily due to the shipment of QS-H150 handheld units under our contract with the India Ministry of Defense in the prior-year period and this is partially offset by increased sales of our QS-B220 desktop units to U.S. air cargo screening facilities, increased shipments into Latin America, Europe and agencies of the U.S. government.
The average unit sell price on sales of our QS-H150 handheld units for the quarter and year decreased approximately 8% and 4%, respectively. The average unit sell price for our QS-B220 remained relatively unchanged.
Gross margin for the quarter ended June 30, 2014 was a loss of $135,000 or 8.8% of revenues which compares with $697,000 or 29% of revenues for the prior-year period. For the year ended June 30, 2014 gross margin was $2,054,000 or 24.2% of revenues which compares with $3,429,000 or 28.5% of revenues. The decrease in gross margin dollars for the quarter and year ended June 30, 2014 is due primarily to decreased sales of our QS-H150 handheld units. The decrease in gross margin percentage for both the quarter and year ended June 30, 2014 is primarily due to an increase in our manufacturing overhead and this is mainly personnel and occupancy costs, an increase in provisions for obsolete inventory as compared to the prior year period and this is partially offset by the decrease in stock-based compensation recorded on stock option grants to officers and directors in September 2012.
Research and development expense for the quarter ended June 30, 2014 was $1,186,000 which compares with $1,233,000 for the prior-year period, a decrease of $47,000 or approximately 4%. Our research and development expense for the year ended June 30, 2014 was $4,787,000 which compares with $4,754,000 for the comparable prior year period, an increase of $33,000 or just under 1%.
The decrease in research and development expense for the quarter is due to the stock-based compensation recorded on the September 2012 officer and director option grants in the prior-year period. For the full year the increase in research and development expense is primarily due to increased payroll related benefit cost and occupancy cost. Again, this is offset partially by the decrease in stock-based compensation. Stock-based compensation for our research and development expense decreased $139,000 and $626,000 respectively for the quarter and year when compared to the prior year periods.
Selling, general and administrative expenses for the quarter ended June 30, 2014 were $2,449,000 as compared with $3,515,000 for the prior year period, a decrease of $1,066,000 or about 30%. For year ended June 30, 2014, selling, general and administrative expenses were $11,388,000 as compared with $20,630,000 for the comparable prior year period, a decrease of $9,242,000 or just under 45%.
The decrease in selling, general and administrative expenses for the quarter and the year are due primarily to decreased stock-based compensation recorded on the September 2012 officer and director option grants. This decrease is partially offset by increases in several administrative expenses which are detailed in the earnings release.
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