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| 8-K - FORM 8-K - INSIGNIA SYSTEMS INC/MN | isig_form8k20170803.htm |
EXHIBIT
99.1
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Contact:
Insignia Systems,
Inc.
Investor
Relations
(763)
392-6200
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FOR IMMEDIATE RELEASE
INSIGNIA SYSTEMS, INC. ANNOUNCES
2017 SECOND QUARTER FINANCIAL
RESULTS
AND SIX MONTH FINANCIAL RESULTS
MINNEAPOLIS, MN – August 3, 2017 – Insignia Systems, Inc. (Nasdaq: ISIG)
(“Insignia”) today reported financial results
for the second quarter ended June 30, 2017
(“Q2”).
Insignia
reported a decrease in sales of 11.6% in the second quarter of 2017
compared to 2016. The decrease in first quarter 2017 sales was
21.6% compared to 2016. The net loss for the second quarter was
$534,000 compared to a net loss of $87,000 in the year ago period.
The net loss for the first quarter of 2017 was $1.2
million.
Insignia’s President and CEO Kristine Glancy commented,
“As shared in our previous releases and our Annual
Shareholder Meeting, we expected to have a slower start in 2017
driven by customer budget shifts and overall industry trends. We
are making good progress against our strategic initiatives with the
addition of new CPG customers, business development projects and
key leadership. These new customers and business development
projects will positively impact the remainder of 2017 and
beyond.”
Ms. Glancy continued, “We are currently ahead of pace for
delivering the $1.0 million in cost reductions in 2017 against the
plan we announced in February. We continue to be focused on
building a high performance team with our two additions to the
leadership team this quarter, Jeff Jagerson, as the Chief Financial
Officer and Adam May, as the Senior Vice President of Sales. Both
individuals will be critical players in driving our overall
transformation. We are rebuilding the roots of our organization by
transforming our products, operating model, sales approach and
partnerships. While our first half results don’t reflect the
progress we have made, the organization and Board are optimistic
about our future.”
Current POPS bookings for third quarter 2017 are approximately $6.9
million, compared to $6.1 million at the same point in the third
quarter 2016. Our total bookings for POPS programs planned to run
in the final two quarters of 2017 are $11.2 million compared to
$8.8 million in 2016 at the same point one year ago. The positive
trend is driven by our core CPG customers as well as new CPG
customers recently contracted.
Q2 2017 Results
Net
sales decreased 11.6% to $5,849,000 in Q2 2017, from $6,617,000 in
Q2 2016, primarily due to a 7.6% decrease in the number of signs
placed, partially due to programming shifts from second quarter to
third quarter to support CPG new item launches, and a 4.5% decrease
in average price per sign, which was the result of program and
customer mix.
Gross
profit in Q2 2017 decreased to $1,498,000, or 25.6% of net sales,
from $2,116,000, or 32.0% of net sales, in Q2 2016. The lower gross
profit was primarily the result of decreased sales, as our gross
profit is highly dependent on sales levels due to the relatively
fixed nature of a portion of our payments to retailers, combined
with a decreased average price per sign, and partially offset by
decreased expense due to the discontinued sale of The Like Machine
in Q4 2016. The Company is currently undertaking actions to reduce
the fixed portion of its payments to retailers. The Company
incurred costs of approximately $50,000 in Q2 2017 associated with
the development of its new IT operating infrastructure compared to
approximately $80,000, in Q2 2016. The project is expected to be
substantially completed during the fourth quarter of 2017, with
estimated incremental expense of $300,000 in the remainder of
2017.
Selling
expenses in Q2 2017 were $831,000, or 14.2% of net sales, compared
to $1,036,000, or 15.6% of net sales, in Q2 2016. The decrease in
expenses was primarily due to lower variable compensation, as a
result of lower sales, fewer sales personnel and decreased staff
related expenses.
Marketing
expenses in Q2 2017 were $427,000, or 7.3% of net sales, compared
to $257,000, or 3.9% of net sales, in Q2 2016. The increase was
primarily due to increased marketing personnel and staff related
costs, partially offset by decreased consulting fees.
General
and administrative expenses in Q2 2017 decreased to $814,000, or
13.9% of net sales, from $1,110,000, or 16.8% of net sales, in Q2
2016. The decrease was primarily due to decreased legal, executive
recruiting, and other consulting fees, partially offset by
increased employee compensation costs.
Income
tax benefit for Q2 2017 was 6.6% of pretax loss, or a benefit of
$38,000, compared to income tax benefit of 68.0% of pretax loss, or
$185,000, in Q2 2016. 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. A valuation allowance of $192,000 was
recorded in Q2 2017 against a portion of the deferred tax asset
resulting from the Company’s net operating loss
carryforward.
As a
result of the items above, the net loss for Q2 2017 was $534,000,
or $0.05 per basic and diluted share, compared to a net loss of
$87,000, or $0.01 per basic and diluted share, in Q2
2016.
As of
June 30, 2017, cash and cash equivalents totaled $3.2 million,
compared to $12.3 million as of December 31, 2016. The amounts for
December 31, 2016 are prior to the one-time special dividend of
$8.2 million paid on January 6, 2017.
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 12,000 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,
Nestl? 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
“anticipates,” “believes,”
“expects,” “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: 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; areas of
growth; 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 the company may be unable to fully or successfully
implement our 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; (vi) certain bookings for Q3 and
the final two quarters of 2017 are subject to cancellation or
deferral; and (vii) 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, 2016 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.
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Insignia Systems, Inc.
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STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
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(Unaudited)
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||||
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Three
Months Ended
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Six
Months Ended
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June
30,
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June
30,
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2017
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2016
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2017
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2016
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Net
sales
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$5,849,000
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$6,617,000
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$10,616,000
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$12,695,000
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Cost
of sales
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4,351,000
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4,501,000
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8,489,000
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8,612,000
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Gross
profit
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1,498,000
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2,116,000
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2,127,000
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4,083,000
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Operating
expenses:
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Selling
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831,000
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1,036,000
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1,719,000
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2,144,000
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Marketing
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427,000
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257,000
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853,000
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527,000
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General
and administrative
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814,000
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1,110,000
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1,867,000
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2,270,000
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Operating
loss
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( 574,000)
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( 287,000)
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( 2,312,000)
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( 858,000)
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Other
income, net
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2,000
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15,000
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5,000
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32,000
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Loss
before taxes
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( 572,000)
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( 272,000)
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( 2,307,000)
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( 826,000)
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Income
tax benefit
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( 38,000)
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( 185,000)
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( 582,000)
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( 417,000)
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Net
loss
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( 534,000)
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( 87,000)
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( 1,725,000)
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( 409,000)
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Other
comprehensive income,
net
of tax
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-
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2,000
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-
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11,000
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Comprehensive
loss
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$( 534,000)
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$( 85,000)
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$( 1,725,000)
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$( 398,000)
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Net
loss per share:
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Basic
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$( 0.05)
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$( 0.01)
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$( 0.15)
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$( 0.04)
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Diluted
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$( 0.05)
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$( 0.01)
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$( 0.15)
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$( 0.04)
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Shares
used in calculation of net loss per share:
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Basic
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11,674,000
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11,612,000
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11,667,000
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11,618,000
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Diluted
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11,674,000
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11,612,000
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11,667,000
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11,618,000
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SELECTED BALANACE SHEET DATA
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(Unaudited)
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June 30,
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December 31,
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2017
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2016
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Cash
and cash equivalents
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$3,200,000
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$12,267,000
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Working
capital
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10,128,000
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11,850,000
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Total
assets
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18,752,000
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28,228,000
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Total
liabilities
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5,102,000
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13,119,000
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Shareholders'
equity
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13,650,000
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15,109,000
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