- Full year 2013 product sales increased 17 percent over prior
year, to $14.7 million
- Autoscope® License Plate Recognition (LPR) 2013 product revenue
grew 34 percent over 2012, to $6.4 million
- Company continues to invest in research, development and
marketing for Safe City solution
Image Sensing Systems, Inc. (Nasdaq:ISNS), today announced results
for its fiscal year and fourth quarter ended December 31, 2013.
Fourth Quarter Results:
Image Sensing's 2013 fourth quarter revenue was $6.5 million, a
5 percent decrease from revenue of $6.8 million in the fourth
quarter of 2012. Revenue from royalties was $2.4 million in the
quarter, compared to $3.2 million in the fourth quarter of 2012.
Product sales increased to $4.0 million in the quarter, a 13
percent increase from $3.6 million in the fourth quarter of 2012.
Fourth quarter revenue included $1.3 million of worldwide sales for
Autoscope® License Plate Recognition (LPR) products, compared to
$236,000 in the prior-year period. Autoscope Video product sales
and royalties were $1.0 million and $2.1 million, respectively, and
Autoscope Radar product sales and royalties were $1.7 million and
$290,000 respectively, in the quarter.
The Company's net loss in the fourth quarter was $10.8 million,
or $2.17 per basic share, compared to a net loss of $15,000, or
breakeven on a per share basis, in the fourth quarter of 2012. The
fourth-quarter 2013 net loss includes operating expenses of $8.0
million, a $3.6 million increase from 2012. Included in the 2013
fourth quarter are $509,000 of expenses related to the previously
disclosed investigation. Fourth-quarter 2013 operating expenses
include research and development costs of $898,000, a $4,000
increase from the prior year. Contributing to the fourth-quarter
net loss, the Company recognized $5.8 million of income tax
expense, which included a tax valuation allowance of $8.1 million
in the quarter.
"Consistent with the seasonality we see during the winter
months, fourth-quarter revenue was sequentially constrained, yet in
line with our expectations. However, we continue to see our sales
pipeline grow across all product lines both in terms of size and
quality, and we look forward to the full rollout of our
best-in-class Safe City solution in 2014. We are receiving positive
customer feedback on the capabilities of our Safe City solution,
and we look forward to sharing more details in the coming quarters.
Additionally, we will continue to make measured investments in our
business to drive growth and shareholder value in 2014 and beyond,"
said Kris Tufto, Image Sensing Systems' chief executive
officer.
Product sales gross margin for the 2013 fourth quarter was 16
percent, which includes charges related to the write-off of
obsolete finished products and additional expenses related to the
transition of the Company's warranty repair service for Autoscope
Radar products to its contract manufacturer. These factors
negatively impacted gross margins by approximately 21 percent.
Management believes gross margins for the current period are not
indicative of future performance, and expects gross margins to
return to historical levels.
Full-Year Results:
In 2013, revenue increased to $26.3 million, up 5 percent from
$25.0 million in 2012. Revenue from royalties decreased to $11.6
million in 2013, down 7 percent from $12.4 million in the previous
year. Product sales increased to $14.7 million for the year, a 17
percent increase compared to $12.6 million in 2012. Full-year
revenue included $6.4 million of worldwide LPR products, compared
to $4.8 million in the prior year. Autoscope Video product sales
and royalties were $3.1 million and $10.3 million, respectively,
and Autoscope Radar product sales and royalties were $5.1 million
and $1.3 million, respectively, for 2013. The net loss for 2013 was
$15.9 million, or $(3.21) per share, compared to a net loss of $3.4
million, or $(0.69) per share, in 2012. Contributing to the 2013
full year net loss, the Company recognized $3.9 million of income
tax expense, which includes a valuation allowance of $8.1
million.
"We are encouraged by the momentum we saw in product sales
growth in the second half of 2013 and believe that this momentum
provides a springboard as we enter 2014. The investments that we
made in our business in 2013 are starting to show positive results.
We are excited by the full rollout of our Safe City solution, which
we anticipate mid-year, and its growth potential for supporting the
law enforcement sector. I look forward to updating you in the
future as we restore sustained growth to historical levels,"
concluded Tufto.
Non-GAAP Financial Measures:
We provide certain non-GAAP financial information as
supplemental information to financial measures calculated and
presented in accordance with GAAP (Generally Accepted Accounting
Principles in the United States). This non-GAAP information
excludes the impact of amortizing intangible assets 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.
On a non-GAAP basis, excluding intangible asset amortization,
costs of the investigation, restructuring expense, and goodwill
impairment for the applicable periods, net operating loss for 2013
was $6.7 million compared to net operating income of $1.7 million
in 2012.
Investigation Matter
As was previously disclosed, the investigation is ongoing and
the Company continues to cooperate with authorities. The Company is
presently unable to determine the likely outcome or range of loss,
if any, or predict with certainty the timeline for resolution of
these matters.
About Image Sensing Systems
Image Sensing Systems, Inc. is a global company dedicated to
helping improve safety and efficiency for cities and highways by
developing and delivering above-ground detection technology,
applications and solutions. We give Intelligent Transportation
Systems (ITS), security, police and parking professionals more
precise and accurate information – including real-time reaction
capabilities and in-depth analytics to make more confident and
proactive decisions. We are headquartered in St. Paul, Minnesota.
Visit us on the web at imagesensing.com.
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 LPR products; adverse weather
conditions in our markets; the impact of governmental laws and
regulations; increased international presence; our success in
integrating any 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, 2012 filed in March 2013.
|
Image Sensing Systems,
Inc. |
Condensed Consolidated
Statements of Operations |
(in thousands, except per share
information) |
(unaudited) |
|
|
|
|
|
|
Three-Month Period Ended
December 31, |
Year Ended December
31, |
|
2013 |
2012 |
2013 |
2012 |
Revenue |
|
|
|
|
Royalties |
$2,431 |
$3,240 |
$11,598 |
$12,399 |
Product sales |
4,035 |
3,581 |
14,692 |
12,564 |
|
6,466 |
6,821 |
26,290 |
24,963 |
|
|
|
|
|
Cost of revenue |
3,378 |
2,213 |
9,889 |
6,706 |
Gross profit |
3,088 |
4,608 |
16,401 |
18,257 |
|
|
|
|
|
Operating expenses |
|
|
|
|
Selling, marketing and product
support |
4,223 |
2,052 |
11,768 |
7,289 |
General and administrative |
1,864 |
1,095 |
6,290 |
5,167 |
Research and development |
898 |
894 |
5,036 |
4,135 |
Investigation matter |
509 |
-- |
3,723 |
-- |
Amortization of intangible assets |
545 |
395 |
1,554 |
1,622 |
Restructuring charges |
-- |
-- |
-- |
430 |
Goodwill impairment |
-- |
-- |
-- |
3,175 |
|
8,039 |
4,436 |
28,371 |
21,818 |
Income (loss) from operations |
(4,951) |
172 |
(11,970) |
(3,561) |
Other income |
7 |
2 |
6 |
29 |
Income (loss) before income taxes |
(4,944) |
174 |
(11,964) |
(3,532) |
Income tax expense (benefit) |
5,824 |
189 |
3,937 |
(180) |
Net loss |
$(10,768) |
$(15) |
$(15,901) |
$(3,352) |
|
|
|
|
|
Basic net loss per share |
$(2.17) |
$(0.00) |
$(3.21) |
$(0.69) |
Diluted net loss per share |
$(2.17) |
$(0.00) |
$(3.21) |
$(0.69) |
|
|
|
|
|
Weighted shares – basic |
4,972 |
4,910 |
4,955 |
4,886 |
Weighted shares – diluted |
4,972 |
4,910 |
4,955 |
4,886 |
|
Image Sensing Systems,
Inc. |
Condensed Consolidated Balance
Sheet |
(in thousands) |
(unaudited) |
|
|
|
|
December 31, 2013 |
December 31, 2012 |
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$3,564 |
$ 8,334 |
Investments |
2,639 |
4,817 |
Receivables, net |
5,252 |
6,722 |
Inventories |
3,589 |
4,485 |
Other current assets |
1,414 |
1,797 |
|
16,458 |
26,155 |
Property and equipment, net |
1,025 |
1,875 |
Other assets |
300 |
-- |
Deferred taxes |
139 |
4,017 |
Goodwill and intangible assets, net |
6,463 |
6,489 |
|
$24,385 |
$38,536 |
Liabilities and Shareholders' Equity |
|
|
Current liabilities |
|
|
Accounts payable and accrued
expenses |
$5,560 |
$ 4,129 |
Income taxes payable |
10 |
18 |
|
5,570 |
4,147 |
Deferred taxes and other long-term
liabilities |
301 |
409 |
Shareholders' equity |
18,514 |
33,980 |
|
$24,385 |
$38,536 |
|
Image Sensing Systems,
Inc. |
Condensed Consolidated
Statement of Cash Flows |
(in thousands) |
(unaudited) |
|
|
|
|
Year Ended December
31, |
|
2013 |
2012 |
Operating activities |
|
|
Net loss |
$(15,901) |
$ (3,352) |
Adjustments to reconcile net loss to net cash
provided by (used in) operations |
|
|
Goodwill impairment |
-- |
3,175 |
Depreciation and amortization |
2,227 |
2,349 |
Stock option expense |
213 |
244 |
Changes in operating assets and
liabilities |
7,943 |
3,523 |
Net cash provided by (used in) operating
activities |
(5,518) |
5,939 |
|
|
|
Investing activities |
|
|
Purchases of property and equipment, net
of disposals |
(221) |
(487) |
Purchase of other investments |
(300) |
-- |
Capitalized software development
costs |
(867) |
-- |
Sales (purchases) of investments,
net |
2,179 |
(2,724) |
Net cash provided by (used in) investing
activities |
791 |
(3,211) |
|
|
|
Financing activities |
|
|
Proceeds from exercise of stock
options |
9 |
121 |
Net cash provided by financing
activities |
9 |
121 |
|
|
|
Effect of exchange rate changes on cash |
(52) |
261 |
|
|
|
Increase (decrease) in cash and cash
equivalents |
(4,770) |
3,110 |
Cash and cash equivalents, beginning of
year |
8,334 |
5,224 |
Cash and cash equivalents, end of year |
$3,564 |
$8,334 |
Image Sensing Systems, Inc. Non-GAAP Income
(Loss) from Operations (in thousands) (unaudited)
We define Non-GAAP Income (loss) from Operations as income
(loss) from operations before amortization of intangible assets,
investigation matter expense, restructuring expense, and goodwill
impairment for the applicable periods. Management believes
Non-GAAP Income (Loss) from Operations is a useful indicator of our
financial performance and our ability to generate cash flows from
operations. Our definition of Non-GAAP Income (Loss) from
Operations may not be comparable to similarly titled definitions
used by other companies. The table below reconciles Non-GAAP
Income (Loss) from Operations, which is a non-GAAP financial
measure, to comparable GAAP financial measures:
|
Three-Month Period Ended
December 31, |
Year Ended December
31, |
|
2013 |
2012 |
2013 |
2012 |
Income (loss) from operations |
$(4,951) |
$172 |
$(11,970) |
$(3,561) |
Amortization of intangible assets |
545 |
395 |
1,554 |
1,622 |
Investigation matter |
509 |
-- |
3,723 |
-- |
Restructuring charges |
-- |
-- |
-- |
430 |
Goodwill impairment |
-- |
-- |
-- |
3,175 |
Non-GAAP income (loss) from operations |
$(3,897) |
$567 |
$(6,693) |
$1,666 |
Note – Our calculation of Non-GAAP Income (Loss) from Operations
is considered a non-GAAP financial measure and is not in accordance
with, or preferable to, "as reported", or GAAP financial
data. However, we are providing this information, as we
believe it facilitates analysis of the Company's financial
performance by investors and financial analysts.
CONTACT: Dale Parker, Chief Financial Officer
Image Sensing Systems, Inc. Phone: 651.603.7700
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