GlobeNewswire 14-Mar-2018 4:32 PM
SAINT PAUL, Minn., March 14, 2018 (GLOBE NEWSWIRE) -- Image Sensing Systems, Inc. (NASDAQ:ISNS) today announced results for itsfourth quarter andyear ended December 31, 2017.
Fourth Quarter 2017 Financial Highlights
2017 Full Year Financial Highlights
Image Sensing Systems' (ISS) 2017fourth quarter revenue was $4.3 million, compared to $2.8million in the fourth quarter of 2016. Gross margin from the fourth quarter of 2017was 79percent, a 28percent increase from a gross margin of 51 percent for the same period in 2016. The increase in the gross margin percent was primarily the result of a $473,000 warranty charge in the prior year period. Contributing to the gross margin percent increase was a larger portion of sales from royalties during the quarter. Revenue from royalties was $2.6 million in the fourth quarter of 2017compared to $1.6 million in the fourth quarter of 2016, a 60percent increase. Included in the fourth quarter of 2017 were royalties related to the previously announced Miami-Dade County sales through our exclusive North American video distributor,Econolite Control Products, Inc. (Econolite).
Product sales increased to $1.7million in the 2017 fourth quarter, a 43 percent increase from $1.2 million in the fourth quarter of 2016. Theincrease in product sales resulted from higher volumes in Europe, partially offset by lower volumes in North America. Autoscope video product sales and royalties were $528,000 and $2.6 million, respectively, and RTMS radar product sales were $1.2 million in the fourth quarter of 2017. Product sales gross margin for the fourth quarter of 2017 was 54 percent, a 62percent increase from the same periodin2016. The increase in product gross margin is due to previously discussed individually significant warranty charges in the prior year period.
The Companys net income in the fourth quarter was $688,000, or $0.13per basic share, compared to net loss of $683,000, or $0.14 per basic share, in the prior year period. The fourth quarter 2017 net income includes operating expenses of $2.7million, a 25percent increase from the fourth quarter of 2016. This increase is primarily related to a binding arbitrationdecision related to theEconolitelitigation of approximately $303,000. During the fourth quarter of 2017, ISS capitalized $181,000 of internal software development costs compared to $43,000 in the prior year period.
On a non-GAAP basis, excluding the amortization of intangible assets, depreciation, restructuring charges and the arbitrationdecision for the applicable periods, operating income for the fourth quarter of 2017 was $1.2 millioncompared to a loss of $546,000in the prior year period.
It is great to see Autoscope royalties finish strong in the fourth quarter of 2017. This is due in part to delivery of product for the Miami-Dade adaptive corridor project. While product sales resulted in a year-over-year fourth quarter improvement, we are continuing to identify opportunities to improve our global product offerings. Our continued investment in research and development yielded the launch of our Wrong WayAlerting solution and announcement of the IntellitraffiQ traffic measurement and data collection software. Our Wrong Way Alerting solution pairs with our RTMS Sx-300 HD CAM offering and leverages video analytics to detect wrong way drivers, initiate warning devices, and alert authorities of the event. IntellitraffiQtraffic measurement and data collection software offers the end user a rich environment to monitor and gather data from our RTMS products, said Chad Stelzig, CEO of ISS.
Full Year Results:
ISS2017 revenue was $14.5million, compared to $14.1million in2016. Gross margin for 2017 was80percent, a9percent increase from a gross margin of71percent in2016. The increase in the gross margin percent was primarily the result of the previously discussed warranty charge in the prior year. Contributing to this gross margin percent increase was a larger portion of sales from royalties compared to the prior year. Revenue from royalties was $8.6million in 2017compared to $7.7million in2016, an 11percent increase. The previously announced Miami-Dade County sale through Econolite is included in year-to-date royalties.
Product sales decreased to $5.9million in 2017, a7percent decrease from $6.4million in2016. Thedecrease in product sales resulted from lower volume in North America, partially offset by higher volumes in Europe.Autoscope video product sales and royalties were $1.5 millionand $8.6million, respectively, and RTMS radar product sales were $4.4million in 2017. Product sales gross margin for 2017was57percent, a 20percent increase from2016. The increase in product gross margin is due to previously discussed individually significant warranty charges in the prior year.
The Companys net income in 2017 was $2.1million, or $0.41per basic share, compared to $687,000, or $0.14per basic share, in the prior year. The2017net income includes operating expenses of $9.5million, a1percent increase from2016. During 2017, ISS capitalized $1.1 millionof internal software development costs compared to $1.7 millionin 2016.
On a non-GAAP basis, excluding the amortization of intangible assets, depreciation, restructuring charges and the arbitrationdecision for the applicable periods, operating income for 2017was $3.0millioncompared to $1.2 millionin the prior year.
Even more important than our financial results is the development progress we have made towards the introduction of future ground-breaking products across all market segments that will increase the companys value proposition and accelerate future growth. As we entered 2017, we set forth a goal to operate within a leaner, more agile corporate structure focused on engineering and technology opportunities essential to this growth. I am happy to report that our efforts resulted in positive cash flow for the first time in 5 years, 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 maynot 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 Companys or managements 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 managements 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 Companys control; developments in the demand for the Companys products and services; relationships with the Companys 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 Companys current expectations are contained in the Companys 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, 2016 filed on March 24, 2017.
|Image Sensing Systems, Inc.|
|Condensed Consolidated Statements of Operations|
|(in thousands, except per share information)|
|Three-Month PeriodsEnded December 31,||Years EndedDecember 31,|
|Cost of revenue||891||1,402||2,925||4,098|
|Selling, general and administrative||1,945||1,244||6,467||6,285|
|Research and development||744||913||3,010||2,946|
|Income (loss) from operations||761||(714||)||2,122||687|
|Other income (loss)||8||2||41||(25||)|
|Income (loss) before income taxes||769||(712||)||2,163||662|
|Income tax expense (benefit)||81||(29||)||85||(25||)|
|Net income (loss)||$||688||$||(683||)||$||2,078||$||687|
|Basic net income (loss) per share||$||0.13||$||(0.14||)||$||0.41||$||0.14|
|Diluted net income (loss) per share||$||0.13||$||(0.14||)||$||0.40||$||0.14|
|Weighted shares - basic||5,159||5,050||5,128||5,050|
|Weighted shares - diluted||5,175||5,050||5,136||5,055|
|Image Sensing Systems, Inc.|
|Condensed Consolidated Balance Sheets|
|December 31,2017||December 31,2016|
|Cash and cash equivalents||$||3,190||$||1,547|
|Prepaid expenses and other current assets||255||281|
|Property and equipment, net||486||371|
|Intangible assets, net||3,485||2,795|
|Liabilities and Shareholders Equity|
|Warranty and other current liabilities||1,924||1,739|
|Image Sensing Systems, Inc.|
|Condensed Consolidated Statements of Cash Flows|
|Years EndedDecember 31,|
|Adjustments to reconcile net income to net cashprovided by (used in) operating activities:|
|Depreciation and amortization||580||390|
|Stock option expense||301||247|
|Loss on disposal of assets||2||17|
|Deferred income tax (benefit)||20||(39||)|
|Changes in operating assets and liabilities||(31||)||(855||)|
|Net cash provided by operating activities||2,950||447|
|Capitalized software development costs||(1,052||)||(1,675||)|
|Purchases of property and equipment||(300||)||(163||)|
|Net cash used for continuing investing activities||(1,352||)||(1,838||)|
|Net cash provided by discontinued investing activities||-||420|
|Net cash used for investing activities||(1,352||)||(1,418||)|
|Stock for tax withholding||-||(17||)|
|Net cash used for continuing financing activities||-||(17||)|
|Effect of exchange rate changes on cash||45||(113||)|
|Increase (decrease) in cash and cash equivalents||1,643||(1,101||)|
|Cash and cash equivalents at beginning of period||1,547||2,648|
|Cash and cash equivalents at end of period||$||3,190||$||1,547|
|Non-Cash investing and financing activities:|
|Purchase of property and equipment in accounts payable||$||27||$||-|
Image Sensing Systems, Inc. Non-GAAP Income from Continuing Operations(in thousands)(unaudited)
We define non-GAAP income (loss) from operations as income (loss) from operations before amortization of intangible assets, depreciation, restructuring charges and the arbitrationdecision for the applicable periods. Management believes non-GAAP income (loss) from operations is a useful indicator of our financial performance and our ability to generate cash flows from operations. Our definition of non-GAAP income (loss) from operations may not be comparable to similarly titled definitions used by other companies. The table below reconciles non-GAAP income (loss) from operations, which is a non-GAAP financial measure, to comparable GAAP financial measures:
|Three-Month Periods EndedDecember 31,||Years EndedDecember 31,|
|Income (loss) from operations||$||761||$||(714||)||$||2,122||$||687|
|Amortization of intangible assets||92||90||362||90|
|Non-GAAP income (loss) from operations||$||1,183||$||(546||)||$||3,005||$||1,203|
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 Companys financial performance by investors and financial analysts.
|Contact:||Todd Slawson, Interim Chief Financial Officer|
|Image Sensing Systems, Inc. Phone:651.603.7700|
Source: Image Sensing Systems, Inc.
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