Image Sensing Systems Announces First Quarter 2018 Financial Results
May 14 2018 - 4:10PM
Image Sensing Systems, Inc. (NASDAQ:ISNS) today announced results
for its first quarter ended March 31, 2018.
First Quarter 2018 Financial
Highlights
- First quarter royalties were
$2.2 million, an increase of 32 percent from the same period
in the prior year.
- First quarter product sales were
$844,000, a decrease of 41 percent from the same period
in the prior year.
- Operating expenses totaled
$2.6 million in the first quarter of 2018, an increase of
15 percent from the prior year period. Capitalized
software costs in the first quarter were $66,000 compared to
$174,000 in the prior year period.
- Net loss for the first quarter of
2018 totaled $17,000, compared to net income of $197,000 for
the same period in the prior year.
- Cash balance increased to
$3.3 million, up from $3.2 million at the end of 2017.
First-Quarter Results:Image Sensing Systems'
(ISS) 2018 first quarter revenue was $3.0 million,
compared to $3.1 million in the first quarter of 2017.
Gross margin from the first quarter of 2018 was 85
percent, a 6 percent increase from a gross margin of
79 percent for the same period in 2017. The increase in the
gross margin percent was primarily the result of a larger portion
of sales from royalties during the quarter. Revenue from royalties
was $2.2 million in the first quarter of 2018 compared to
$1.6 million in the first quarter of 2017, a 32 percent
increase.
Product sales decreased to $844,000 in the 2018
first quarter, a 41 percent decrease from $1.4 million in
the first quarter of 2017. The decrease in product sales
resulted from lower volumes of sales in all
jurisdictions. Autoscope video product sales and
royalties were $251,000 and $2.2 million, respectively, and RTMS
radar product sales were $593,000 in the first quarter of
2018. Product sales gross margin for the first quarter of
2018 was 58 percent, compared to 62 percent in the prior year
period. The decrease in product margin was due to a higher
percentage of Autoscope video product sold during the quarter,
compared to the same period in the prior year.
ISS’s net loss in the first quarter was
$17,000, or no income (loss) per basic share, compared to
net income of $197,000, or $0.04 per basic share, in the
prior year period. The first quarter of 2018 net income
includes operating expenses of $2.6 million, a 15 percent
increase from the first quarter of 2017. This increase is
primarily due to increased sales and marketing costs related
to a semi-annual industry trade show, Intertraffic, that took place
in the first quarter of 2018. During the first quarter of 2018, ISS
capitalized $66,000 of internal software development costs compared
to $174,000 in the prior year period.
On a non-GAAP basis, excluding the amortization
of intangible assets and depreciation for the applicable periods,
operating income for the first quarter of 2018 was $157,000
compared to operating income of $353,000 in the prior year
period.
“While we are encouraged by the increase in
Autoscope royalty from the prior year period, we are very
disappointed in the decrease in product sales. In response to
this product revenue erosion, we have appointed new sales
leadership. We are excited to have Andrew Markese join our
team as Vice President of Global Sales and Marketing effective May
21st,” said Chad Stelzig, CEO of ISS. “Andy has demonstrated
success cultivating high performing sales teams and taking a
hands-on approach to generating sales growth.”
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 depreciation 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 SystemsImage 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)
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; adverse weather conditions in our markets; the impact of
governmental laws and regulations; 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, 2017 filed on March 14, 2018.
Image Sensing Systems, Inc.Condensed Consolidated
Statements of Operations(in thousands, except per share
information)(unaudited) |
|
|
|
Three-Month PeriodsEnded March 31, |
|
|
2018 |
|
|
2017 |
Revenue |
|
|
|
|
|
|
Product
sales |
|
$ |
844 |
|
|
$ |
1,440 |
Royalties |
|
|
2,166 |
|
|
|
1,644 |
|
|
|
3,010 |
|
|
|
3,084 |
Cost of revenue |
|
|
447 |
|
|
|
634 |
Gross profit |
|
|
2,563 |
|
|
|
2,450 |
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
Selling,
general and administrative |
|
|
1,761 |
|
|
|
1,436 |
Research
and development |
|
|
819 |
|
|
|
816 |
|
|
|
2,580 |
|
|
|
2,252 |
Income
(loss) from operations |
|
|
(17) |
|
|
|
198 |
Other
income |
|
|
- |
|
|
|
3 |
Income (loss) before
income taxes |
|
|
(17) |
|
|
|
201 |
Income tax expense |
|
|
- |
|
|
|
4 |
Net income (loss) |
|
$ |
(17) |
|
|
$ |
197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net
income (loss) per share |
|
$ |
(0.00) |
|
|
$ |
0.04 |
Diluted
net income (loss) per share |
|
$ |
(0.00) |
|
|
$ |
0.04 |
|
|
|
|
|
|
|
Weighted shares -
basic |
|
|
5,181 |
|
|
|
5,096 |
Weighted shares -
diluted |
|
|
5,181 |
|
|
|
5,096 |
|
|
|
|
|
|
|
Image Sensing Systems, Inc.Condensed Consolidated
Balance Sheets(in thousands)(unaudited) |
|
|
March 31,2018 |
|
December 31,2017 |
Assets |
|
|
|
|
|
Current
assets |
|
|
|
|
|
Cash and
cash equivalents |
$ |
3,322 |
|
$ |
3,190 |
Receivables, net |
|
2,756 |
|
|
3,339 |
Inventories |
|
388 |
|
|
335 |
Prepaid
expenses and other current assets |
|
347 |
|
|
255 |
|
|
6,813 |
|
|
7,119 |
Property
and equipment, net |
|
472 |
|
|
486 |
Intangible assets, net |
|
3,440 |
|
|
3,485 |
Deferred
taxes |
|
37 |
|
|
38 |
|
$ |
10,762 |
|
$ |
11,128 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Accounts
payable |
$ |
612 |
|
$ |
563 |
Warranty
and other current liabilities |
|
1,452 |
|
|
1,924 |
|
|
2,064 |
|
|
2,487 |
|
|
|
|
|
|
Shareholders’ equity |
|
8,698 |
|
|
8,641 |
|
$ |
10,762 |
|
$ |
11,128 |
|
|
|
|
|
|
Image Sensing Systems, Inc.Condensed Consolidated
Statements of Cash Flows(in thousands)(unaudited) |
|
|
Three-Month PeriodsMarch 31, |
|
2018 |
|
|
2017 |
|
Operating
activities |
|
|
|
|
|
Net
income (loss) |
$ |
(17) |
|
|
$ |
197 |
|
|
|
|
|
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities: |
|
|
|
|
|
Depreciation and amortization |
|
174 |
|
|
|
155 |
|
Stock
option expense |
|
85 |
|
|
|
65 |
|
Loss on
disposal of assets |
|
1 |
|
|
|
- |
|
Changes
in operating assets and liabilities |
|
13 |
|
|
|
277 |
|
Net cash provided by
operating activities |
|
256 |
|
|
|
694 |
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
Capitalized software development costs |
|
(66) |
|
|
|
(95) |
|
Purchases
of property and equipment |
|
(47) |
|
|
|
(33) |
|
Net cash used for
investing activities |
|
(113) |
|
|
|
(128) |
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
Stock for
tax withholding |
|
(10) |
|
|
|
- |
|
Net cash used for
financing activities |
|
(10) |
|
|
|
- |
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash |
|
(1) |
|
|
|
7 |
|
Increase in cash and
cash equivalents |
|
132 |
|
|
|
573 |
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period |
|
3,190 |
|
|
|
1,547 |
|
Cash and cash
equivalents at end of period |
$ |
3,322 |
|
|
$ |
2,120 |
|
|
|
|
|
|
|
Non-Cash
investing and financing activities: |
|
|
|
|
|
Purchase of property
and equipment in accounts payable |
$ |
25 |
|
|
$ |
11 |
|
Capitalization of
software development costs in accounts payable |
|
- |
|
|
|
79 |
|
Image Sensing Systems, Inc.Non-GAAP Income from
Continuing Operations(in thousands)(unaudited)
We define non-GAAP income from operations as
income from operations before amortization of intangible assets and
depreciation for the applicable periods. Management believes
non-GAAP income 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 from operations
may not be comparable to similarly titled definitions used by other
companies. The table below reconciles non-GAAP income from
operations, which is a non-GAAP financial measure, to comparable
GAAP financial measures:
|
|
Three-Month Periods Ended March 31, |
|
|
2018 |
|
|
2017 |
Income (loss) from
operations |
|
$ |
(17) |
|
|
$ |
198 |
Amortization of
intangible assets |
|
|
111 |
|
|
|
90 |
Depreciation |
|
|
63 |
|
|
|
65 |
Non-GAAP income from
operations |
|
$ |
157 |
|
|
$ |
353 |
|
|
|
|
|
|
|
|
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: Todd Slawson, Interim Chief
Financial Officer Image Sensing
Systems Phone: 651.603.7700
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