Image Sensing Systems, Inc. (Nasdaq: ISNS) today announced results
for its quarter ended March 31, 2020.
First Quarter 2020 Financial Summary
- First quarter royalties were
$2.1 million, an increase of 20 percent from the same period
in the prior year.
- First quarter product sales were
$1.1 million, a decrease of 35 percent from the same period in
the prior year.
- Operating expenses totaled $2.8
million in the first quarter of 2020, an increase of 23
percent from the prior year period.
- Capitalized software costs in
the first quarter were $22,000 compared to $419,000
in the prior year period.
- Net loss for the first quarter
of 2020 totaled $111,000 compared to net income of
$308,000 for the same period in the prior year.
- Cash balance increased to $5.4
million, up from $5.1 million at the end of the fourth quarter
of 2019.
First-Quarter Results:
The 2020 first quarter revenue for
Image Sensing Systems, Inc. ("ISS," the "Company," "us," "we," or
"our") was $3.2 million compared to $3.4 million in the
first quarter of 2019. Gross margin for the first quarter of
2020 was 80 percent, a 3 percentage point or 4
percent increase from a gross margin of 77 percent
for the same period in 2019. The increase in the gross margin
percent was primarily the result of a larger portion of total
revenue from royalties compared to the first quarter of 2019.
Revenue from royalties was $2.1 million in the first
quarter of 2020 compared to $1.8 million in
the first quarter of 2019, a 20 percent
increase.
Product sales decreased to $1.1 million in the first
quarter of 2019, a 35 percent decrease from $1.6 million
in the first quarter of 2019. Autoscope video
product sales and royalties were $141,000 and $2.1 million,
respectively, and RTMS radar product sales were $909,000 in
the first quarter of 2020. Product sales gross margin for
the first quarter of 2020 was 49 percent compared to
58 percent in the prior year period.
The 2020 first quarter net loss includes
operating expenses of $2.8 million,
a 23 percent increase from
the first quarter of 2019. The increase is primarily
due to the decrease in capitalized costs in the first quarter of
2020 compared to the prior year period. During
the first quarter of 2020, ISS capitalized $22,000
of internal software development costs compared to $419,000 in
the prior year period. ISS’ net loss in the first
quarter was $(111,000), or $(0.02) per diluted share, compared to
net income of $308,000, or $0.06 per diluted share, in
the prior year period. The increase in operating expenses in the
first quarter of 2020 compared to the same period last year was
also a result of increased expenses for legal and outside
consulting costs related to the efforts around exploring strategic
alternatives to maximize shareholder value.
On a non-GAAP basis, excluding the amortization
of intangible assets, depreciation, and restructuring charges for
the applicable periods, the operating loss for the first
quarter of 2020 was $(51,000) compared to operating income of
$511,000 in the prior year period.
"First I need to recognize our employees and their continued
resilience in these uncertain times. We successfully executed
a transition to a remote work environment within a few short days
and have experienced continued productivity and the completion of
initiatives key to our strategic plan," said Chad Stelzig, CEO for
ISS.
"Royalty performance got off to a solid start early in the
quarter, which allowed us to realize year over year growth in the
face of late quarter COVID-19 disruptions within the market.
To meet our product revenue plan we needed to realize several late
quarter orders that were delayed as a result of the pandemic.
We do anticipate these delayed orders materializing in subsequent
quarters of 2020 unless progress with COVID-19 remains delayed or
unresolved," concluded Mr. Stelzig.
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 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) 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, regulations, and orders, including as a result
of the COVID-19 pandemic caused by the coronavirus;
international presence; tariffs and other trade barriers; our
success in integrating any acquisitions; potential disruptions to
our supply chains (including disruptions caused by geopolitical
events, military actions, work stoppages, nature disasters, or
international health emergencies, such as the COVID-19 pandemic);
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, 2019 filed on March 12, 2020.
Contact: Frank
Hallowell, Chief Financial Officer |
Image Sensing Systems, Inc.
Phone: 651.603.7744 |
Image Sensing Systems,
Inc.Condensed Consolidated Statements of
Operations(in thousands, except per share
information)(unaudited)
|
|
Three-Month Periods Ended March 31, |
|
|
2020 |
|
|
2019 |
Revenue |
|
|
|
|
|
|
Product sales |
|
$ |
1,050 |
|
|
$ |
1,621 |
Royalties |
|
|
2,109 |
|
|
|
1,751 |
|
|
|
3,159 |
|
|
|
3,372 |
Cost of revenue |
|
|
623 |
|
|
|
777 |
Gross profit |
|
|
2,536 |
|
|
|
2,595 |
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
Selling, general and administrative |
|
|
1,909 |
|
|
|
1,667 |
Research and development |
|
|
902 |
|
|
|
620 |
|
|
|
2,811 |
|
|
|
2,287 |
Income (loss) from operations before income taxes |
|
|
(275 |
) |
|
|
308 |
Income tax benefit |
|
|
(164 |
) |
|
|
- |
Net income (loss) |
|
$ |
(111 |
) |
|
$ |
308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share |
|
$ |
(0.02 |
) |
|
$ |
0.06 |
Diluted net income (loss) per share |
|
$ |
(0.02 |
) |
|
$ |
0.06 |
|
|
|
|
|
|
|
Weighted shares - basic |
|
|
5,267 |
|
|
|
5,224 |
Weighted shares - diluted |
|
|
5,267 |
|
|
|
5,243 |
|
|
|
|
|
|
|
Image Sensing Systems,
Inc.Condensed Consolidated Balance
Sheets(in
thousands)(unaudited)
|
March 31, 2020 |
|
December 31,2019 |
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
5,425 |
|
$ |
5,118 |
Receivables, net |
|
2,898 |
|
|
3,126 |
Inventories |
|
686 |
|
|
781 |
Prepaid expenses and other current assets |
|
571 |
|
|
463 |
|
|
9,580 |
|
|
9,488 |
Property and equipment, net |
|
444 |
|
|
419 |
Intangible assets, net |
|
3,722 |
|
|
3,875 |
Deferred taxes |
|
5,218 |
|
|
5,220 |
Operating lease asset, net |
|
115 |
|
|
181 |
|
$ |
19,079 |
|
$ |
19,183 |
Liabilities and Shareholders’
Equity |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable |
$ |
570 |
|
$ |
373 |
Warranty and other current liabilities |
|
721 |
|
|
858 |
|
|
1,291 |
|
|
1,231 |
|
|
|
|
|
|
Non-Current liabilities |
|
|
|
|
|
Operating lease obligation |
|
13 |
|
|
19 |
|
|
|
|
|
|
Shareholders’ equity |
|
17,775 |
|
|
17,933 |
|
$ |
19,079 |
|
$ |
19,183 |
Image Sensing Systems,
Inc.Condensed Consolidated Statements of Cash
Flows(in
thousands)(unaudited)
|
Three-Month Periods Ended March 31, |
|
2020 |
|
|
2019 |
|
Operating activities |
|
|
|
|
|
Net income (loss) |
$ |
(111 |
) |
|
$ |
308 |
|
|
|
|
|
|
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
224 |
|
|
|
201 |
|
Stock option expense |
|
59 |
|
|
|
50 |
|
Changes in operating assets and liabilities |
|
322 |
|
|
|
(375 |
) |
Net cash provided by operating
activities |
|
494 |
|
|
|
184 |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Capitalized software development costs |
|
(22 |
) |
|
|
(419 |
) |
Purchases of property and equipment |
|
(75 |
) |
|
|
(75 |
) |
Net cash used for investing
activities |
|
(97 |
) |
|
|
(494 |
) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Stock
for tax withholding and options exercised |
|
- |
|
|
|
(8 |
) |
Net cash used for financing
activities |
|
- |
|
|
|
(8 |
) |
|
|
|
|
|
|
Effect of exchange rate changes
on cash |
|
(90 |
) |
|
|
30 |
|
Increase (decrease) in cash and
cash equivalents |
|
307 |
|
|
|
(288 |
) |
|
|
|
|
|
|
Cash and cash equivalents at
beginning of period |
|
5,118 |
|
|
|
4,236 |
|
Cash and cash equivalents at end
of period |
$ |
5,425 |
|
|
$ |
3,948 |
|
|
|
|
|
|
|
Non-Cash investing and
financing activities: |
|
|
|
|
|
Purchase of property and
equipment in accounts payable |
$ |
25 |
|
|
$ |
9 |
|
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,
depreciation, and restructuring charges 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, |
|
|
|
2020 |
|
|
2019 |
|
Income (loss)
from operations |
|
$ |
(275 |
) |
|
$ |
308 |
|
Amortization of intangible assets |
|
|
174 |
|
|
|
150 |
|
Depreciation |
|
|
50 |
|
|
|
51 |
|
Restructuring charges |
|
|
- |
|
|
|
2 |
|
Non-GAAP income (loss) from operations |
|
$ |
(51 |
) |
|
$ |
511 |
|
Note – Our calculation of non-GAAP income 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.
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