Blueprint
Exhibit 99.1
Contact:
Insignia Systems,
Inc.
Kristine Glancy,
CEO
(763)
392-6200
|
FOR IMMEDIATE RELEASE
INSIGNIA SYSTEMS, INC. ANNOUNCES
2017 FIRST
QUARTER FINANCIAL
RESULTS
MINNEAPOLIS, MN – May
3, 2017 – Insignia
Systems, Inc. (Nasdaq: ISIG) (“Insignia”) today
reported financial results for the first quarter ended March 31,
2017 (“Q1”).
Insignia’s President and CEO Kristine Glancy commented,
“We continue to expect to deliver our board approved budget
despite our challenging first quarter results. Drivers of the
decline in the first quarter are consistent with current trends in
retail and the CPG industry. Our first quarter net sales decreased
21.6% resulting in a net loss of $1,191,000. The decrease in sales
was primarily driven by two customers who experienced significant
budget cuts early in their planning cycles and organizational
restructuring. Separate from these two customers, our cumulative
net Q1 results were relatively flat across most of our other
clients. We are working to diversify our client base in order to
better manage quarter to quarter and client specific
fluctuations. At the same time, we
are collaborating with our current clients to identify ways
in-store advertising can complement their out-of-store programs and
highlight the overall effectiveness of our
tactic.”
Ms. Glancy continued, “Despite our slower start in 2017, we
continue to focus on our strategic initiatives we previously
announced to stabilize our revenues and profits. The four areas of
growth we discussed are: product line expansions, retailer-centric
opportunities, expanding our CPG relationships and forging new
partnerships. In the first quarter of 2017, we added a number of
new clients compared to first quarter of 2016. We are continuing to
test several products in the marketplace, and look forward to
sharing more details in the coming months assuming the products
scale to an appropriate size and formally launch.
In addition, we are on track for
delivering the $1.0 million in cost reductions across Cost of Sales
and Operating Expenses in 2017, which we had announced in
February.”
“Current POPS bookings for Q2 2017 are approximately $6.0
million, compared to $5.6 million at the same point Q2 2016 one
year ago. Our total bookings for POPS programs set to run in the
final three quarters of 2017 are $12.4 million compared to $12.4
million in 2016 at the same point one year ago. Significant work is
underway to stabilize the business and deliver more reliable and
stable results. The company continues to work on its
broad-scale business model transformation. As discussed
previously, this transformation will take time but good progress
has been made.”
Q1 2017 Results
Net
sales decreased 21.6% to $4,767,000 in Q1 2017, from $6,078,000 in
Q1 2016, primarily due to a 13.7% decrease in the number of signs
placed, mostly due to two customers who experienced significant
budget cuts early in their planning cycles and organizational
restructuring, and a 10.5% decrease in average price per sign,
which was the result of program and customer mix.
Gross
profit in Q1 2017 decreased to $629,000, or 13.2% of net sales,
from $1,967,000, or 32.4% of net sales, in Q1 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.
The company is currently undertaking actions to reduce the fixed
portion of its payments to certain retailers. The company incurred
costs of approximately $100,000 associated with the implementation
of its new IT infrastructure during both Q1 2017 and Q1 2016. The
project is expected to be substantially completed during the third
quarter of 2017, with estimated incremental expense of $300,000 in
the remainder of 2017.
Selling
expenses in Q1 2017 were $888,000, or 18.7% of net sales, compared
to $1,108,000, or 18.3% of net sales, in Q1 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 Q1 2017 were $426,000, or 8.9% of net sales, compared
to $270,000, or 4.4% of net sales, in Q1 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 Q1 2017 decreased to $1,053,000, or
22.1% of net sales, from $1,160,000, or 19.1% of net sales, in Q1
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 Q1 2017 was 31.4% of pretax loss, or a benefit of
$544,000, compared to income tax benefit of 41.9% of pretax loss,
or $232,000, in Q1 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.
As a
result of the items above, the net loss for Q1 2017 was $1,191,000,
or $0.10 per basic and diluted share, compared to a net loss of
$322,000, or $0.03 per basic and diluted share, in Q1
2016.
As of
March 31, 2017, cash and cash equivalents totaled $4.4 million,
compared to $12.3 million as of December 31, 2016. The amounts for
December 31, 2016 were prior to the one-time special dividend of
$8.2 million paid on January 6, 2017.
One-Time Special 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, which was 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 the three months ended March 31, 2017, there was no
share repurchase activity. As of March 31, 2017, the approximate
dollar value of share that may yet be purchased under the plan was
$4.7 million.
Annual Meeting
We look
forward to providing an operational update at our Annual Meeting of
Shareholders of Insignia Systems, Inc. The Meeting will be held on
Tuesday, June 6, 2017, at 9:00 a.m.
Central Time, at the Minneapolis Marriott West, located at 9960
Wayzata Boulevard, Minneapolis, Minnesota.
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,
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; 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, 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.
Insignia Systems, Inc.
|
STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
|
(Unaudited)
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
|
|
|
|
|
Net
sales
|
$4,767,000
|
$6,078,000
|
Cost
of sales
|
4,138,000
|
4,111,000
|
Gross
profit
|
629,000
|
1,967,000
|
Operating
expenses:
|
|
|
Selling
|
888,000
|
1,108,000
|
Marketing
|
426,000
|
270,000
|
General
and administrative
|
1,053,000
|
1,160,000
|
|
|
|
Operating
loss
|
(1,738,000)
|
(571,000)
|
Other
income, net
|
3,000
|
17,000
|
|
|
|
Loss
before taxes
|
(1,735,000)
|
(554,000)
|
Income
tax benefit
|
(544,000)
|
(232,000)
|
|
|
|
Net
loss
|
(1,191,000)
|
(322,000)
|
|
|
|
Other
comprehensive income, net of tax
|
—
|
9,000
|
|
|
|
Comprehensive
loss
|
$(1,191,000)
|
$(313,000)
|
|
|
|
Net
loss per share:
|
|
|
Basic
|
$(0.10)
|
$(0.03)
|
Diluted
|
$(0.10)
|
$(0.03)
|
|
|
|
Shares
used in calculation of net loss per share:
|
|
|
Basic
|
11,661,000
|
11,624,000
|
Diluted
|
11,661,000
|
11,624,000
|
SELECTED BALANCE SHEET DATA
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$4,393,000
|
$12,267,000
|
Working capital
|
10,622,000
|
11,850,000
|
Total assets
|
19,001,000
|
28,228,000
|
Total liabilities
|
4,936,000
|
13,119,000
|
Shareholders' equity
|
14,065,000
|
15,109,000
|