Biometric identification systems provider Cogent Systems Inc. (COGT) posted fourth-quarter revenues of $40.0 million and earnings of 14 cents per share excluding items compared to revenue of $21.9 million and earnings of 8 cents per share on the same basis a year ago.
For the year, Cogent increased revenues to $125.7 million from $105.8 million in fiscal 2007, while earnings grew to 52 cents per share from 32 cents per share a year earlier.
Cogent’s Automated Fingerprint/Palmprint Identification Systems enable customers to capture fingerprint or palm print images electronically and encode prints into searchable files and are sold to governments, law enforcement agencies and commercial enterprises.
The company said it expects revenue of $130 million for 2009 with adjusted earnings in the 34 cents to 38 cents per share. However analysts polled by Thomson Reuters were expecting a profit of 56 cents per share on sales of about $154 million. The shares sold off mildly the day of the announcement.
Cogent’s Chief Financial Officer Paul Kim said Q4 gross margins were impacted by product mix, and expects them to improve in the first (current) quarter. “We also generated $24 million in cash this quarter, ending the quarter with our cash and investments position at approximately $480 million, or $5.32 per share,” he said. Cogent also sports a debt-free balance sheet.
CEO Ming Hsieh said Cogent entered 2009 with a solid backlog of orders and deferred revenues of $75 million. He said during the year Cogent saw increased demand from a number of core customers, and also expanded its customer base with a number of key wins at the U.S. Census Bureau and the Department of Defense.
Mr. Hsieh said the company was one of 12 companies to be selected for the Biometrics Operations and Support Services Unrestricted (BOSS-U) contract by the U.S. Army. He believes the Department of Defense will be a leading driver of biometrics in the years to come and expects BOSS-U to be an important purchasing vehicle for future orders.
He also said that last week the UK Post Office, Post Office Limited, notified Cogent of its decision to appoint the company as its preferred bidder for the contract to provide integrated biometric data collection services to Post Office Limited. That was one of the final main steps leading to the award and signing of Post Office Limited’s competitive tendering process. With 12,500 branches in the UK, the size of the initial award is potentially larger than any other single international win in Cogent’s history.
Mr. Hsieh says that the recent wins will help the company to continue to grow and diversify its business, and expects several significant contracts to be awarded over the next several months by large government agencies both here and abroad.
Due to timing and revenue recognition they could potentially have a positive impact on the company’s outlook for 2009. Analysts believe management was very conservative in its outlook for the year and these contracts could provide a significant boost going forward as they weren’t included in its guidance.
This article was written by Jamie Dlugosch, contributor to InvestorPlace Media. For more actionable insights likes this, visit www.InvestorPlace.com.
