Earnings News & Notes

Cogent Systems [COGT]

Sales in the quarter soared 83% on a big boost in revenues from the Department of Homeland Security–which made up over half of the overall sales–and work for Spain, Pennsylvania and others. Net income rose nearly 50% on the spike in sales although gross margins dipped on a shift in product mix, in line with estimates. Net income was impacted by a $1M non-cash charge for share based compensation expense. Company officials say they have been able to diversify their customer base and their revenue base and point to several wins at the end of last year and the beginning of 2009 as examples. In the past week Cogent has been selected as the preferred bidder for the United Kingdom Post Office contract to provide integrated biometric data collection services, potentially the largest foreign contract ever for the company. A final contract is expected soon. The company was also selected for a Belgian police project, increasing its presence in Europe, and for the U.S. Army’s Biometrics Operations and Support Services Unrestricted (BOSS-U) contract. Backlog at the end of 2008 stood at a record $168M versus $140M a year ago. The backlog excludes any potential work under the U.K. Post Office, Belgium and BOSS-U contracts. Despite the strong growth in 2008 and the record backlog, Cogent provided conservative guidance for 2009, with sales forecast at around $130M and earnings per share, excluding share-based compensation expenses, expected to be between 34 to 38 cents. Company officials say there is upside to the forecast from the U.K., Belgium and BOSS-U awards as well as more work from DHS.

Implant Sciences Corp. [IMX]

Revenues increased over 300% on higher sales of its handheld QS-150 explosives trace detectors. Company officials say that the handhelds made up 88 percent of sales with the remainder from U.S. government contract research and development work. A year ago government R&D revenues made up over 50% of sales. Despite the higher sales and dramatically improved gross margins, losses widened due to higher interest expense and the realization of unrealized loss of Implant’s chare of CardioTech’s stock owned by CorNova. Implant is now a pure security company having shed its former semiconductor business and ongoing sales of its medical unit. Implant’s financial condition continues to be precarious as it needs additional cash within the next few weeks to continue operating and to continue to pursue a slew of business opportunities, most of which appear to be international. The company’s market research shows there is upwards of $50 million in opportunities for its QS-150 over the next 12 to 18 months, in particular in Japan, India and Pakistan. Implant also says it has completed development of its QS H-300 air cargo screening system, with a one week trial that began on Feb. 23. Company officials say they have interest from several indirect air carriers for the cargo screening system and believe the QS H-300 will be available for delivery in the second half of this year. That timing seems aggressive given the amount of testing that would likely still need to be done, and as the company acknowledges, the need for the Transportation Security Administration to approve it for air cargo screening. The officials say that the IACs are not happy with current screening technologies approved by TSA because the throughput of the systems is too slow.