IASG sets sights on the future
ALBANY, N.Y.--The storm clouds appeared to lift for Integrated Alarm Services Group in July, as the company returned to its four letter stock symbol and ended a months-long process to submit its earnings reports.
IASG faced delisting from Nasdaq as the result of failing to file its annual report with the Securities & Exchange Commission by the end of March. The company citied it could not meet compliance requirements of the Sarbanes-Oxley Act of 2002, and also cited inadequate internal financial controls.
By mid-June, however, the company got back on track and reported revenue of $80 million for 2004, almost doubling its previous year's earnings. In addition, revenue was also released for the first quarter of this year.
Earnings for the first three months jumped to $25.5 million, an increase of 34.3 percent from the previous year's first quarter. However, the net loss for the quarter was up from the previous year to $2.6 million compared to $1.1 million in the first quarter of 2004.
The delay not only cost the company the temporary listing of IASGE, which indicated it was not in compliance with Nasdaq's rules, but also millions of dollars in expenses and a distraction from its current focus on account acquisitions.
"(We spent) approximately $4 million on the entire audit and Sarbanes-Oxley process," according to Timothy McGinn, chairman and chief executive officer of the company. These costs included accounting, auditing, consulting and IT expenses, he said. PricewaterhouseCoopers handled the audit for the company.
IASG set a goal of adding between 80,000 and 100,000 accounts through organic growth and acquisitions during 2005. In the first three months, it added just 16,000.
"I expect them to do some deals now they have this behind them," said Matthew Rogers, managing director at investment firm USBX Advisory Services. "They'll have to meet the forecast they put out on the street."
Through its third-party central station, which operates under the Criticom name, IASG monitors more than 720,000 accounts. Last year, the company increased its monitoring portfolio by 31.7 percent.
Last November, IASG completed its largest deal to date, acquiring National Alarm Computer Center from Tyco International for $50 million. The transaction brought 240,000 subscribers into the fold, as well as a central station, loan portfolio and alarm contracts.
Asked if the company can come back from this setback, McGinn said the company could meet its objective.
"We feel confidant that we will hit that range," he said. However, he doesn't expect a deal similar in size to NACC to close in the short term. "I don't see anything that big on our radar screens."