L-1 Identity Solutions (ID)

Q1 2010 Earnings Call

May 05, 2010 4:00 pm ET


James DePalma - Chief Financial Officer, Executive Vice President and Treasurer

Lisa Cradit - Financial Dynamics

Unknown Speaker -

Robert LaPenta - Chairman, Chief Executive Officer and President


Michael French - Morgan Joseph & Co., Inc.

Michael Kim - Sandler O'Neill & Partners

Daniel Meron - RBC Capital Markets Corporation

James Ricchiuti - Needham & Company, LLC

Howard Rubel - Jefferies & Company, Inc.

Stephen Velgot - Susquehanna Financial Group, LLLP

Jeffrey Kessler - Lehman Brothers

Paul Coster - JP Morgan Chase & Co



Welcome to L-1 Identity Solutions Conference Call regarding the company's first quarter 2010 financial results. [Operator Instructions] Now I will turn the floor over to Lisa Cradit.

Lisa Cradit

Thank you for joining us for the first quarter 2010 financial results conference call. Statements that representatives of L-1 Identity Solutions make during this call that are not historical facts are forward-looking statements made under the safe provision harbor (sic) [Safe Harbor provision], Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's current beliefs and assumptions and involve inherent risks and uncertainties. Any statements made today about future expectations or results are necessarily only estimates.

Factual (sic) [Actual] results could differ materially from any forward-looking expectation. Factors that may cause differences between forward-looking expectations and future actual results are fully described in the company's SEC filings. The company expressly disclaims any obligation to revise or update any forward-looking statement. Representatives of L-1 plan to use a number of defined financial terms during today's call, including certain non-GAAP financial term. Please refer to the company's press release issued this morning, which appears on our website for further definition of and context for the use of these terms, including a reconciliation of the non-GAAP financial term to the most currently relevant GAAP financial term.

With that, I would like to turn the call over to Bob LaPenta. Mr. LaPenta?

Robert LaPenta

Good afternoon, everyone. Thanks for participating in our Q1 financial performance conference call. We issued a press release this morning, and we tried to provide a lot more color, a lot more clarity and kind of give you a bridge from the first quarter performance through the second quarter, and then on through the year. I'm sure there'll be a lot of questions about that, so we're going to leave plenty of time for Q&A to address those questions. But first, let me talk about what I think most of you want to hear right off the bat and that's the strategic alternative process.

And first, regarding that process, let me make a couple of comments. Some individuals are indicating that we're talking about the strategic alternative process as a crutch, that couldn't be anything that's more further from the truth. This is a great company. We're very proud of the company we've built here. And I believe starting in the second quarter on through the second half and into next year, you're going to begin to see what a great company we've built. So we're proud of the company and we're under no stress, no pressure to do anything and that includes using as a crutch to hide results that some may perceive not to be stealth [ph].

And with respect to that, let me point out also, we did not provide first quarter guidance. So a lot of people are saying we've missed guidance, we've missed -- we haven't missed guidance. We are maintaining our guidance for the first half and hopefully by the end of the conversation today, we'll be able to demonstrate to you why we have a high confidence, particularly in the EBITDA area, of hitting and maybe even coming in on the high end of that EBITDA guidance.

But back to the strategic alternative process, I indicated and again, as quoted here, I think, that in 45 to 60 days we have a pretty good idea of how this process was going. Let me say a couple of things. I also said that one item or one alternative that have been eliminated is the alternative of splitting the company up. What I meant by that, and again, I thought I explained it back in the prior call, is that we, at this point, are not interested in selling a part of the company and retaining the other part. So many people are saying, well, the process, the bankers are out there and they're marketing Intel, they're marketing the Identity Solutions business separately, that's not true. There are companies that are interested in one part of the business, there are companies that are interested in the other part of the business. So while it may look like the bankers are out there saying, what about Intel and what about the Identity Solution. This process will be concluded if one party wants to buy the whole company, they'll buy the whole company, if one company wants Intel and the other company wants Biometrics, we'll team them up and we'll complete the process that way.

I can't really say too much more about the process other than I'm encouraged, we're talking to a number of parties, the process is continuing, the board is satisfied and has decided to continue. And we're expecting this process to move out of the administrative phase, NDAs and things in that nature into a more substantive phase in the days and months ahead. If anything material happens, we'll get back to you. But I could tell you right now, I'm encouraged by the response and the process will proceed.

Now let's talk about the quarter. I indicated and there was one thing I can't wait to stop talking about. I'm not going to call it an enterprise license any more, but we talked about it being a disappointment in the December quarter and although we didn't give guidance, I'm going to talk about it being a disappointment because really I thought we would get it in the first quarter.

Having said that, I am reasonably confident, I don't want to say too much, that we will finally get this done in the second quarter of this year. And I'm not really going to say anything more about the license other than that. So let me just quickly track back and talk about some of our divisions and how they're doing.

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