PENNSAUKEN, NJ — (Marketwired) — 03/31/15 — Lattice Incorporated (OTCQB: LTTC) (“Lattice” or the “Company”), a cloud-solutions provider of inmate management network systems for correction facilities, announced its financial results for the fiscal year ended December 31, 2014.
Technology revenue increased 52% year-over-year
Direct services revenue increased 9% year-over-year
Total revenue increased 8% to $8.9 million; gains in other segments offset by decrease in wholesale service revenue as Company continues to transition away from wholesale service accounts
Recurring revenues accounted for 61% of total revenue
Gross margin percentage increased to 40.3%
“Our direct services and technology revenue, the core components of our focus moving forward, increased 24% year-over-year,” stated Paul Burgess, CEO of Lattice. “This growth was partially offset by a decline in revenue for our lower margin wholesale services, which we exited in 2014.”
Burgess continued, “We closed out 2014 with 50% market share in Oklahoma, serving 35 of the 69 facilities in our target market. With our direct services business beginning in Oklahoma, our success in the state provides a blueprint for future expansion in other key markets. During 2014 we hired CMA (Communication Media Advisors) to review our domestic expansion plans and maximize our near-term opportunities. As a result we identified eight additional markets where we are best positioned to replicate the successful market penetration of Oklahoma. In addition, we identified key products and services that would enable us to maximize revenue generation in each account. By the end of 2014 we gained certification in six of the eight new states and anticipate receiving certification in the remaining two shortly. Heading into 2015 we repositioned our sales and marketing efforts to focus primarily on these nine key markets, setting the stage for strong performance in 2015.” In 2013 Lattice introduced its next-generation cloud-based technology platform ICON (Integrated Corrections Operations Network). The system includes a full suite of services and products available in modules, enabling service providers and correctional facilities to choose from a number of services that best fit their needs.
Ongoing upgrades to the ICON platform were completed throughout 2014 and subsequent releases are anticipated in 2015. Video visitation technology was integrated into the ICON platform in 2013 as a result of the Innovisit acquisition, resulting in a sales contribution of approximately $1.7 million in 2014. In 2015, Lattice anticipates a number of product upgrades and the commercial release of its tablet technology. The launch of the new product and the integration of the Company–s new call center with the ICON platform has enabled Lattice to provide a full suite of services that have not been traditionally made available to small and mid-sized correctional facilities, maximizing revenue opportunities.
Burgess continued, “The quality and accessibility of our service, combined with our innovative product mix, has been the key driver behind our success both domestically and internationally. In addition to growing market share in the U.S., we currently have customers in the U.K., Canada, Singapore, Japan, and Bermuda, and we–re exploring further opportunities in several additional markets.”
Total revenue for the 12-months ended December 31, 2014 increased 8% year-over-year to $8.9 million, while recurring revenues accounted for $5.5 million or 61% of total revenue. Direct phone service revenue increased 9% to $4.7 million, up from $4.3 million in 2013. The direct services revenue increase is mainly attributable to volume growth from new customer contracts. Technology sales increased 52% to $3.5 million, up from $2.3 million in 2013, driven primarily by the November 2013 acquisition of Innovisit.
Gross profit for the 12-months ended December 31, 2014 increased 28% to $3.6 million, up from $2.8 million in 2013. Gross margin, as a percentage of revenues, increased to 40.3% in 2014, up from 34.0% in the year ago period. Margins in both lines of the Company–s business, technology sales and recurring service revenue, remained consistent with prior year levels, in the 60% and mid-20% ranges respectively.
Cash and cash equivalents decreased to $256,000 at December 31, 2014, down from $313,000 at December 31, 2013.
“We continue to successfully navigate the transition from government and wholesale services to our current focus on technology sales and recurring direct services revenue. Our success in Oklahoma is testament to the strength of our new business model and quality of our industry leading technology. Add in a compelling value proposition that meets the needs of a $5 billion market opportunity, and I believe we are well-positioned to see significant shareholder value improvement in the months ahead,” concluded Burgess.
Additional information may be found in the Company–s 10-K filing with the U.S. Securities and Exchange Commission.
Lattice will hold a conference call today, March 31, with CEO Paul Burgess and CFO Joseph Noto, at 2:00 p.m. Eastern time (11:00 a.m. Pacific).
To participate in the call, please dial (888) 417-8516, or (719) 325-2144 for international calls, approximately 10 minutes prior to the scheduled start time.
A replay of the call will be available for two weeks from 5:00 p.m. ET on March 31, 2015, until 11:59 p.m. ET on April 14, 2015. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the passcode for the replay is 1615806. In addition, a recording of the call will be available at for one year.
Lattice is a provider of inmate management and communications solutions that improve efficiency, reduce administrative burden, and deliver recurring revenue opportunities for corrections facilities globally. Lattice–s Integrated Corrections Operating Network (ICON) is a platform of innovative, highly secure solutions including phone systems, prepaid calling options, voicemail, on-site and remote video visitation and arraignment, point-of-sale kiosks, e-mail, text messaging, and social media. ICON–s inmate management module efficiently manages prison processes, including communications monitoring, commissary purchases, account funding and billing, biometrics, booking, incident reporting, and more. For more information, visit .
Safe-Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company–s financing plans; (ii) trends affecting the company–s financial condition or results of operations; (iii) the company–s growth strategy and operating strategy; and (iv) the risk factors disclosed in the Company–s periodic reports filed with the SEC. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company–s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk factors disclosed in the company–s Forms 10-Q previously filed with the SEC.
Contact:
Investor Relations
Jon Cunningham
RedChip Companies, Inc.
Tel: +1-800-733-2447, ext. 107
Corporate
Scott Raskas
Director of Marketing
Lattice Incorporated
Tel: +1-856-910-1166, x2113
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