Advantage IQ, the Avista Corp. subsidiary that specializes in handling utility bills and other facility costs for companies with multiple locations, is investing heavily in its computerized systems, and those outlays could limit profits in the short term, its parent company warns.


In its annual report for 2006, Avista says strategic investments at Advantage IQ will boost the units short-term operating and capitalized costs and could limit earnings growth, although the company adds that the outlays will enhance Advantage IQs long-term profit potential.


Stu Stiles, Advantage IQs president and CEO, says that when the company opened its doors 11 years ago, it initially processed 10,000 bills a month from utilities and other service providers with its AviTrack data base, but the system now handles 570,000 invoices a month.


What we wanted to do is to take a look at the next 10 years, when it will be handling 1 million bills a month and beyond, and upgrade the system to handle such volumes, Stiles says. Advantage IQ, which is located at 1313 N. Atlantic, also employs its AviTrack system to generate reports for clients on information gathered from their invoices.


As of year-end 2006, Advantage IQ handled energy, water, garbage, and other bills at almost 200,000 sites for 373 mostly Fortune 500 customers, such as Starbucks and Home Depot. Advantage IQ handled $10.8 billion in such billings last year and chalked up $39.6 million in revenues and $6.3 million in net income, the latter up from $3.9 million in 2005. The companys assets grew to $100 million at year-end, up from $46 million at the end of 2005, and as of the end of April, it employed 430 full-time equivalent staff members, up from 350 at the end of June 2006.


Last year was a very successful year for us, Stiles says.


In its information-technology systems upgrade, Advantage IQ is enhancing the capabilities of its consulting business, which develops and evaluates energy, water, garbage-pickup, and other site-related budgets for clients and helps them find cheaper rates, Stiles says. He says the companys consulting services also produce reports that enable clients to control their utility and service costs and consumption and help them to compare costs at different locations.


Advantage IQs consulting services business is growing, and the companys telecommunications business also has flourished, Stiles says. Through that business, Advantage IQ manages clients local dial-tone, long-distance, wireless, and data-network expenses.


Advantage IQs information-technology upgrade also includes increasing the capability of the companys Facility IQ system, which provides clients operational information drawn from utility and other facility-related bills, Stiles says.


He declines to say how much Advantage IQ is investing in the upgrade, although he says the amounts are meaningful to us. Theyre the kind of amounts, based on our research, that are absolutely prudent.


Stiles also declines to say how much the investments are expected to cut into profits, but adds, We have not altered earnings guidance for 2007.


Avista has said it expects Advantage IQ to produce earnings of 13 cents to 14 cents a share this year, compared with 13 cents a share last year. Advantage IQ contributed $1.6 million, or 3 cents a share, in net income to Avista Corp.s earnings in the first quarter this year.


Contact Richard Ripley at (509) 344-1261 or via e-mail at [email protected].