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EX-99.2 - EX-99.2 - INSIGNIA SYSTEMS INC/MN | isig_exh99220170303.htm |
8-K - FORM 8-K - INSIGNIA SYSTEMS INC/MN | isig_form8k20170303.htm |
Exhibit 99.1
Contact:
Insignia Systems,
Inc.
Kristine Glancy,
CEO
(763)
392-6200
|
FOR IMMEDIATE RELEASE
INSIGNIA SYSTEMS, INC. ANNOUNCES
FOURTH QUARTER AND FULL YEAR 2016
FINANCIAL RESULTS
MINNEAPOLIS, MN – March 3, 2017 – Insignia Systems, Inc. (Nasdaq: ISIG)
(“Insignia”) today reported financial results
for the fourth quarter (“Q4”) and full year ended
December 31, 2016.
Insignia’s President and CEO Kristine Glancy commented,
“Net sales in 2016 decreased 11.7% compared to 2015. The
majority of the decrease was due to our second half performance,
where we elected not to repeat a promotion from 2015 to avoid
establishing expectations of pricing discounts. Industry shifts,
including zero-based-budgeting by our customers and an increase in
competition, resulted in a decline in POPS revenue. Our net loss
for the year was $1.29 million, primarily attributable to the
decline in revenue, gross margin pressure from our retailer growth
initiatives; new IT operating infrastructure expense (pre-tax
impact of approximately $400,000), costs associated with The Like
Machine™ (pre-tax impact of $1.2 million) and increased legal
costs driven by board matters (pre-tax impact of
$390,000).”
“We have strengthened our new management with the September
2016 restructure by hiring several CPG and Retail leaders, and
eliminating programs and personnel that did not fit our plan for
sustained growth. This new team, with deep industry expertise, is
leveraging their existing networks to expand our client base. In
addition, the new team is creating new solutions, several of which
are currently being tested in-market that we expect to create new
sales opportunities in the back half of 2017. These new solutions
leverage our core capabilities for our existing retailers as well
as retailers not currently in our network. After completing market
tests and developing our new strategy, the company decided to
discontinue sales of The Like Machine,
effective March 31st,
2017, at the end of our distribution agreement.
Ms. Glancy continued, “We are addressing the industry shifts
by investing in product line expansions, increasing our focus on
retailer centric opportunities, expanding our CPG relationships and
forging new partnerships to expand the business. As we invest in
these initiatives to address recent revenue declines, we are also
reducing overall costs and are implementing a $1.0 million cost
reduction plan.
“Looking ahead to 2017 performance, we expect growth plans
will more heavily contribute to back half revenue. We are expecting
a net loss in the first quarter driven by reduced revenues. Current
POPS bookings for Q1 2017 are $4.4 million, compared to $5.6
million for Q1 2016 one year ago. Our total bookings for POPS
programs set to run in the final three quarters of 2017 is $8.6
million which is up from $8.4 million at the same time period one
year ago.”
Q4 2016 Results
Total
net sales decreased 22.8% to $5,748,000 in Q4 2016 from $7,449,000
in Q4 2015, primarily due to a 20% decrease in the number of signs
placed, partially due to a 2015 sales promotion that was not
repeated in 2016, and a 6% decrease in average price per sign,
which was a result of competitive pressures and changes in CPG
spending patterns, partially offset by a 5% increase in product
sales.
Gross
profit in Q4 2016 decreased to $980,000, or 17.0% of total net
sales, from $3,384,000, or 45.4% of total net sales, in Q4 2015.
The lower gross profit was primarily the result of decreased
service revenues against our relatively fixed payment structure to
retailers, combined with increased costs associated with retail
network growth initiatives, increased costs associated with our
decision to discontinue sales of The Like Machine™ product,
and costs associated with the implementation project for our new IT
operating infrastructure.
Selling
expenses in Q4 2016 were $779,000, or 13.6% of total net sales,
compared to $1,047,000, or 14.1% of total net sales, in Q4 2015.
The decrease in expenses was primarily due to lower variable
compensation, as a result of lower sales, and fewer sales personnel
and staff related expenses.
Marketing expenses
in Q4 2016 were $421,000, or 7.3% of total net sales, compared to
$369,000, or 5.0% of total net sales, in Q4 2015. The increase was
primarily due to increased marketing personnel and staff related
costs, partially offset by decreased advertising fees.
General
and administrative expenses in Q4 2016 decreased to $960,000, or
16.7% of total net sales, from $976,000, or 13.1% of total net
sales, in Q4 2015. The decrease was primarily due to lower staffing
and staffing-related costs, partially offset by increased
consulting fees.
Income
tax for Q4 2016 was 43.1% of pretax loss, or a benefit of $538,000,
compared to income tax expense of 38.0% of pretax income, or
$385,000, in Q4 2015. Tax expense will vary between periods, given
the company’s policy of reassessing the annual effective rate
on a quarterly basis, as well as the impact of any discrete tax
items during the quarter.
As a
result of the items above, the net loss for Q4 2016 was $710,000,
or $0.06 per basic and diluted share, compared to net income of
$627,000, or $0.05 per basic and diluted share, in Q4
2015.
As of
December 31, 2016, cash and cash equivalents totaled $12.3 million,
compared to cash, cash equivalents and available-for-sale
investments of $18.0 million as of December 31, 2015. The amounts
for December 31, 2016 are prior to the one-time special dividend of
$8.2 million paid on January 6th, 2017.
Declared Dividend
As
previously announced, the Board of Directors declared a one-time
special dividend of $0.70 per share to shareholders of record as of
December 16, 2016, paid on January 6, 2017 in a total amount of
$8.2 million. For preliminary information on the taxability of the
dividend to shareholders, the Company has published a copy of IRS
Form 8937 on its website.
Share Repurchase Plan
As
previously announced, the Board of Directors has approved a Stock
Repurchase Plan authorizing the repurchase of up to $5.0 million of
the Company’s common stock, from time to time on the open
market or in privately negotiated transactions through October 30,
2017. During Q4 2016, the Company purchased 4,803 shares at an
average price of $2.28 per share.
Conference
Call
Insignia
will host a conference call today at 8:45 am ET/7:45 am CT to
discuss these results. Interested parties may participate in the
call by dialing 201-689-8029, or 877-407-8029. Please call in 10
minutes before the conference call is scheduled to begin and ask
for the Insignia call.
The
conference call will also be broadcast live over the internet. To
listen to the live call, please go to www.insigniasystems.com,
click on the Investor
Relations section where the conference call is posted.
Please go to the website 15 minutes early to download and install
any necessary audio software. If you are unable to listen live, the
webcast of the conference call will be archived and can be accessed
for approximately 90 days. We suggest listeners use Microsoft
Explorer as their browser.
About Insignia Systems, Inc.
Insignia Systems, Inc. markets in-store advertising products,
programs and services primarily to consumer packaged goods
manufacturers. Insignia provides at-shelf media solutions in
approximately 13,000 retail supermarkets, 1,000 mass merchants and
8,000 dollar stores. With a client list of over 200 major consumer
goods manufacturers, including General Mills, Kraft Heinz Company,
Nestlé and P&G, Insignia helps major brands deliver on
their key engagement, promotion, and advertising objectives right
at the point-of-purchase. For additional information, contact (888)
474-7677, or visit the Insignia website at www.insigniasystems.com.
Investor inquiries can be submitted to investorrelations@insigniasystems.com.
Cautionary Statement for the Purpose of Safe Harbor Provisions of
the Private Securities Litigation Reform Act of 1995
Statements
in this press release that are not statements of historical or
current facts are considered forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended. The words
“believes,” “expects,”
“anticipates,” “seeks” and similar
expressions identify forward-looking statements. Readers are
cautioned not to place undue reliance on these or any
forward-looking statements, which speak only as of the date of this
press release. Statements made in this press release regarding, for
instance: current expectations as to full year and future financial
performance;
benefits of sales and marketing investments and IT
infrastructure investments; timing of implementation of technology
operating infrastructure; position in the industry; and ability to
sustain and grow core products and status and timing of launch of
new products, are forward-looking statements. These forward-looking
statements are based on current information, which we have assessed
and which by its nature is dynamic and subject to rapid and even
abrupt changes. As such, actual results may differ materially from
the results or performance expressed or implied by such
forward-looking statements. Forward-looking statements involve
known and unknown risks, uncertainties and other factors,
including: (i) the risk that management may be unable to fully
or successfully implement its business plan to achieve and maintain
profitability in the future; (ii) the risk that the Company will
not be able to sustain and grow core product offerings or to
develop, implement and grow new product offerings in a successful
manner, including our ability to gain retailer acceptance of new
product offerings; (iii) the unexpected loss of a major consumer
packaged goods manufacturer relationship or retailer agreement or
termination of our relationship with News America; (iv) prevailing
market conditions in the in-store advertising industry, including
intense competition for agreements with retailers and consumer
packaged goods manufacturers and the effect of any delayed or
cancelled customer programs; (v) potentially incorrect assumptions
by management with respect to the financial effect of cost
containment or reduction initiatives, current strategic decisions,
current sales trends for fiscal year 2017; and (vi) other economic,
business, market, financial, competitive and/or regulatory factors
affecting the Company’s business generally, including those
set forth in our Annual Report on Form 10-K for the year ended
December 31, 2015 and additional risks, if any, identified in our
Quarterly Reports on Form 10-Q and our Current Reports on Forms 8-K
filed with the SEC. Such forward-looking statements should be read
in conjunction with the Company's filings with the SEC. The Company
assumes no responsibility to update the forward-looking statements
contained in this press release or the reasons why actual results
would differ from those anticipated in any such forward-looking
statement, other than as required by law.
Insignia Systems, Inc.
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STATEMENTS OF OPERATIONS
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(Unaudited)
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Three
Months Ended
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Year
Ended
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December
31,
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December
31,
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2016
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2015
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2016
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2015
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Net
sales
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$5,748,000
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$7,449,000
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$24,912,000
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$28,211,000
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Cost
of sales
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4,768,000
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4,065,000
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17,849,000
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15,540,000
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Gross
profit
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980,000
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3,384,000
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7,063,000
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12,671,000
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Operating
expenses:
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Selling
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779,000
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1,047,000
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3,840,000
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4,498,000
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Marketing
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421,000
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369,000
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1,190,000
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1,623,000
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General
and administrative
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960,000
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976,000
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4,109,000
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4,086,000
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Operating
income (loss)
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( 1,180,000)
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992,000
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( 2,076,000)
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2,464,000
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Other
income (loss), net
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( 68,000)
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20,000
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( 24,000)
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76,000
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Income
(loss) before taxes
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( 1,248,000)
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1,012,000
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( 2,100,000)
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2,540,000
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Income
tax expense (benefit)
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( 538,000)
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385,000
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( 814,000)
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1,006,000
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Net
income (loss)
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$( 710,000)
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$627,000
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$( 1,286,000)
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$1,534,000
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Net
income (loss) per share:
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Basic
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$( 0.06)
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$0.05
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$( 0.11)
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$0.13
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Diluted
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$( 0.06)
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$0.05
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$( 0.11)
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$0.13
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Shares
used in calculation of net income (loss) per share:
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Basic
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11,636,000
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11,644,000
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11,629,000
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12,044,000
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Diluted
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11,636,000
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11,809,000
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11,629,000
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12,216,000
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SELECTED BALANCE SHEET DATA
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(Unaudited)
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December 31,
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December 31,
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2016
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2015
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Cash,
cash equivalents, and debt security investments
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$12,267,000
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$18,013,000
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Working
capital
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11,850,000
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21,297,000
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Total
assets
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28,228,000
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31,714,000
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Total
liabilities
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13,119,000
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6,994,000
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Shareholders'
equity
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15,109,000
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24,720,000
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Working
capital represents current assets less current
liabilities.
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