Image Sensing Systems Announces Third Quarter Financial Results
October 31 2012 - 4:00PM
Image Sensing Systems, Inc. (Nasdaq:ISNS), announced today the
results for its first nine months of its fiscal year and third
quarter ended September 30, 2012.
Revenue for the nine months ended September 30, 2012 was $18.1
million compared to $21.7 million for the same period of 2011,
while revenue for the third quarter of 2012 was $7.2 million
compared to $7.4 million for the same period a year ago. Revenue
from royalties was $9.2 million in the first nine months of 2012
compared to $9.1 million in 2011 and $3.8 million in the third
quarter of 2012 compared to $3.3 million in the same period of
2011. Product sales were $9.0 million for the first nine months of
2012 compared to $12.6 million in 2011 and were $3.4 million in the
third quarter of 2012 compared to $4.1 million in the same period
in 2011. World-wide CitySync product sales were $3.7 million in the
first nine months of 2012 and $1.1 million in the third quarter and
RTMS® product sales and royalties were $1.8 million and $621,000,
respectively, in the first nine months of 2012 and $799,000 and
$258,000, respectively in the third quarter. Econolite distribution
of RTMS in North America began in the first quarter of 2012.
Net loss for the first nine months of 2012 was $(3.3) million or
$(0.68) per share compared to a net loss of $(9.3) million or
$(1.93) per share for the same period in 2011. Net income for our
2012 third quarter was $1.0 million or $0.20 per diluted share
compared to net loss of $(8.7) million or $(1.81) per share for the
same period in 2011. We recorded non-cash goodwill impairment
charges in the second quarter of 2012 and the third quarter of
2011. On a non-GAAP basis, excluding the goodwill impairment
charge, restructuring and intangible asset amortization, all net of
tax, net income for the first nine months of 2012 was $735,000 or
$0.15 per share and net income for the third quarter was $831,000
or $0.17 per share. Gross margins on product sales in the third
quarter of 2012 were negatively impacted by a $150,000 lower of
cost or market adjustment to inventory procured for a contract that
was subsequently cancelled. Our effective income tax rate for 2012
is impacted by a non-deductible portion of the goodwill impairment
charge and our tax credit status in multiple jurisdictions.
Kris Tufto, CEO, said, "Certain of our assets continued to
underperform their potential, but we saw improved results in
numerous areas. In combination with reduced operating expenses, and
despite a $0.05 per share charge to separate from our prior CEO, we
had our most profitable quarter since 2010 and this is encouraging
for sustaining profitable growth. Further, we again increased our
cash and investments balances at quarter-end to $10.6 million, up
from $9.7 million at June 30 and $7.3 million at the start of the
year.
"We are in a transition period and are reexamining our business
model, operational tactics and markets. And while we are optimistic
that long-term U.S. Federal funding commitments will help buoy our
North American outlook, our business faces continued uncertainty.
We likely will determine that operational expense in the near term
should be increased to solidify our efforts in various engineering
and marketing areas. We believe we can achieve reasonable
profit levels and revenue growth through better utilization of our
assets.
"The rollout of our Autoscope® Duo hybrid product remains a key
focus and we have recently made some important enhancements to Duo
based on feedback from the field. We are excited to see the
demonstration sites achieving detection rates equal to those of
in–ground loops. We expect strong pick up for demand after the
enhancements are trialed and added to customer specifications,
although this is a quarter or two later than our original target,"
continued Mr. Tufto.
Non-GAAP Information
We provide certain non-GAAP financial information as
supplemental information to GAAP amounts. This non-GAAP information
excludes the impact, net of tax, of amortizing the intangible
assets from the 2007 EIS asset acquisition and the 2010 CitySync
acquisition and may exclude other non-recurring
items. Management believes that this presentation facilitates
the comparison of our current operating results to historical
operating results. Management uses this non-GAAP information to
evaluate short-term and long-term operating trends in our core
operations. Non-GAAP information is not prepared in accordance with
GAAP and should not be considered a substitute for or an
alternative to GAAP financial measures and may not be computed
the same as similarly titled measures used by other companies.
About Image Sensing
Image Sensing Systems, Inc. is a provider of software-based
detection solutions for the Intelligent Transportation Systems
(ITS) sector and adjacent markets including security, police and
parking. We have sold more than 125,000 units of our industry
leading Autoscope® machine-vision, RTMS® radar and CitySync
automatic number plate recognition (ANPR) products in over 60
countries worldwide. This depth of our experience coupled with the
breadth of our product portfolio uniquely positions us to provide
powerful hybrid technology solutions and to exploit the convergence
of the traffic, security and environmental management markets. We
are headquartered in St. Paul, Minnesota. Visit us on the web at
imagesensing.com.
The Image Sensing Systems, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=13894
Safe Harbor
Statement: Statements made in this release
concerning the Company's or management's intentions, expectations,
or predictions about future results or events are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements reflect management's current
expectations or beliefs, and are subject to risks and uncertainties
that could cause actual results or events to vary from stated
expectations, which variations could be material and adverse.
Factors that could produce such a variation include, but are not
limited to, the following: the inherent unreliability of earnings,
revenue and cash flow predictions due to numerous factors, many of
which are beyond the Company's control; developments in the demand
for the Company's products and services; relationships with the
Company's major customers and suppliers; the mix of and margins on
the products we sell; unanticipated delays, costs and expenses
inherent in the development and marketing of new products and
services, including ANPR products; adverse weather conditions in
our markets; the impact of governmental laws and regulations;
increased international presence; our success in integrating
acquisitions; and competitive factors. Our forward-looking
statements speak only as of the time made, and we assume no
obligation to publicly update any such statements. Additional
information concerning these and other factors that could cause
actual results and events to differ materially from the Company's
current expectations are contained in the Company's reports and
other documents filed with the Securities and Exchange Commission,
including its Annual Report on Form 10-K for the year ended
December 31, 2011 filed in March 2012.
Image Sensing Systems,
Inc. |
Condensed Consolidated
Statements of Operations |
(in thousands, except per share
information) |
(unaudited) |
|
|
|
|
|
|
Three-Month Period |
Nine-Month Period |
|
Ended September 30, |
Ended September 30, |
|
2012 |
2011 |
2012 |
2011 |
Revenue |
|
|
|
|
Royalties |
$3,774 |
$3,337 |
$9,159 |
$9,052 |
Product sales |
3,403 |
4,085 |
8,983 |
12,617 |
|
7,177 |
7,422 |
18,142 |
21,669 |
Cost of revenue (exclusive of amortization
below) |
1,861 |
1,775 |
4,493 |
5,598 |
Gross profit |
5,316 |
5,647 |
13,649 |
16,071 |
|
|
|
|
|
Operating expenses |
|
|
|
|
Selling, marketing and product
support |
1,567 |
2,616 |
5,237 |
7,874 |
General and administrative |
1,532 |
1,743 |
4,072 |
4,749 |
Research and development |
954 |
1,091 |
3,241 |
3,119 |
Restructuring |
-- |
-- |
430 |
-- |
Goodwill impairment |
-- |
11,685 |
3,175 |
11,685 |
Amortization of intangible
assets |
409 |
417 |
1,227 |
1,243 |
|
4,462 |
17,552 |
17,382 |
28,670 |
Income (loss) from operations |
854 |
(11,905) |
(3,733) |
(12,599) |
Other income |
3 |
1 |
27 |
7 |
Income (loss) before income taxes |
857 |
(11,904) |
(3,706) |
(12,592) |
Income tax benefit |
(132) |
(3,174) |
(369) |
(3,264) |
Net income (loss) |
$989 |
$(8,730) |
$(3,337) |
$(9,328) |
|
|
|
|
|
Basic net income (loss) per
share |
$0.20 |
$(1.81) |
$(0.68) |
$(1.93) |
Diluted net income (loss) per
share |
$0.20 |
$(1.81) |
$(0.68) |
$(1.93) |
|
|
|
|
|
Weighted shares – basic |
4,904 |
4,836 |
4,878 |
4,826 |
Weighted shares – diluted |
4,964 |
4,836 |
4,878 |
4,826 |
|
Reconciliation of GAAP to non-GAAP
basis |
|
|
|
|
Non-GAAP operating expenses (1) |
$4,053 |
$5,450 |
$12,550 |
$15,742 |
Non-GAAP income from operations |
1,263 |
197 |
1,099 |
329 |
Other income |
3 |
1 |
27 |
7 |
Non-GAAP income before income taxes |
1,266 |
198 |
1,126 |
336 |
Non-GAAP income tax expense
(benefit) (2) |
435 |
(384) |
391 |
(194) |
Non-GAAP net income |
$831 |
$582 |
$735 |
$530 |
|
|
|
|
|
Non-GAAP basic net income per
share |
$0.17 |
$0.12 |
$0.15 |
$0.11 |
Non-GAAP diluted net income per
share |
$0.17 |
$0.12 |
$0.15 |
$0.11 |
|
|
|
|
|
Notes to non-GAAP adjustments |
|
|
|
|
(1)
Amortization of intangible assets, restructuring expenses and
goodwill impairment for the applicable period as shown above are
removed |
(2) Income
tax expense (benefit) is increased (reduced) by impact of (1) at
ISS' effective rate after adjusting for amortization of intangible
assets, restructuring and goodwill impairment |
|
|
|
Image Sensing
Systems, Inc. |
Condensed
Consolidated Balance Sheet |
(in thousands) |
(unaudited) |
|
|
|
|
September 30, 2012 |
December 31, 2011 |
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 7,466 |
$ 5,224 |
Investments |
3,155 |
2,093 |
Receivables, net |
8,278 |
10,148 |
Inventories |
4,950 |
6,142 |
Prepaid expenses and deferred
taxes |
2,306 |
2,073 |
|
26,155 |
25,680 |
Property and equipment,
net |
1,230 |
1,435 |
Deferred taxes |
3,668 |
3,131 |
Goodwill and intangible assets,
net |
6,909 |
11,008 |
|
$37,962 |
$41,254 |
Liabilities and Shareholders' Equity |
|
|
Current liabilities |
|
|
Accounts payable and accrued
expenses |
$ 3,071 |
$ 4,545 |
Income taxes payable |
621 |
67 |
|
3,692 |
4,612 |
Income taxes payable |
316 |
316 |
Shareholders' equity |
33,954 |
36,326 |
|
$37,962 |
$41,254 |
|
|
|
Image Sensing
Systems, Inc. |
Condensed
Consolidated Statement of Cash Flows |
(in thousands) |
(unaudited) |
|
Nine-Month
Period Ended September 30, |
|
2012 |
2011 |
Operating activities |
|
|
Net loss |
$ (3,337) |
$ (9,328) |
Adjustments to reconcile net loss to net cash
provided by (used in) operations |
|
|
Goodwill impairment |
3,175 |
11,685 |
Depreciation and
amortization |
1,778 |
1,620 |
Stock option expense |
186 |
308 |
Changes in operating assets and
liabilities |
1,372 |
(6,546) |
Net cash provided by (used in) operating
activities |
3,174 |
(2,261) |
|
|
|
Investing activities |
|
|
Purchases of property and
equipment, net of disposals |
(293) |
(566) |
Payments of earn-outs |
-- |
(2,361) |
Sales (purchases) of
investments |
(1,062) |
1,274 |
Net cash used in investing activities |
(1,355) |
(1,653) |
|
|
|
Financing activities |
|
|
Proceeds from exercise of
stock options |
121 |
70 |
Net cash provided by financing
activities |
121 |
70 |
|
|
|
Effect of exchange rate changes on cash |
302 |
(35) |
|
|
|
Increase (decrease) in cash and cash
equivalents |
2,242 |
(3,879) |
Cash and cash equivalents, beginning of
period |
5,224 |
8,021 |
Cash and cash equivalents, end of period |
$7,466 |
$4,142 |
CONTACT: Greg Smith, Chief Financial Officer
Image Sensing Systems, Inc.
Phone: 651.603.7700
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