Image Sensing Systems Announces First Quarter Financial Results
Contacts: Greg Smith, Chief Financial Officer
Image Sensing Systems, Inc., Phone: 651.603.7700
Saint Paul, Minn., May 2, 2012 – Image Sensing Systems, Inc. (NASDAQ: ISNS), announced today the results for its first quarter ended March 31, 2012.
Revenue for the 2012 first quarter was $5.3 million compared to $6.1 million for the same period a year ago. Revenue from royalties was $2.3 million in the first quarter of 2012 compared to $2.7 million in the same period of 2011. Product sales were $2.9 million in the first quarter compared to $3.4 million in the same period of 2011. World-wide, in the first quarter of 2012, CitySync product sales were $1.6 million and RTMS® product sales and royalties were $658,000 and $125,000, respectively. The March 31, 2012 quarter was the first quarter of Econolite distribution of RTMS in North America.
Net loss for the first quarter of 2012 was $(668,000) or $(0.14) per share compared to a net loss of $(808,000) or $(0.17) per share for the same period in 2011. On a non-GAAP basis, excluding intangible asset amortization and restructuring expense net of tax, net loss for the first quarter of 2012 was $(327,000) or $(0.07) per share compared to $(536,000) or $(0.11) in the same period a year ago.
Ken Aubrey, CEO, said, “Even though our revenue model has changed from product sale to royalty for RTMS, the results indicate an overall decrease in revenue from last year’s first quarter on a like comparison. Although we typically experience downward first quarter seasonality, demand in our domestic royalty businesses was below our expectations and we believe this trend may continue in the near-term. Despite the equivalent revenue shortfall, our non-GAAP operating loss was improved when compared to the 2011 first quarter owing primarily to expense reductions realized through our previously disclosed restructuring initiatives.”
The Company also announced the following significant new sales or distribution agreements:
- An order in excess of $2.0 million in Eastern Europe of Autoscope® product for an urban traffic control (UTC) system. The order is expected to be substantially delivered in Q2 and Q3.
- An original equipment manufacturer (OEM) agreement with Siemens A.G. that allows Siemens to offer Autoscope technology on a non-exclusive basis in the European market.
- An exclusive agreement with Beijing Univaid Technology Co., Ltd. for the distribution of RTMS products in the People’s Republic of China. Under the agreement, Univaid has made commitments to certain minimum purchase levels for the first year in excess of $1.0 million.
“These agreements give us confidence for continuing improved results internationally for the remainder of 2012. We are active in the final transition of domestic RTMS manufacturing and distribution to Econolite and Q1 showed related balance sheet improvements with cash and investments increasing by $1.2 million and inventories decreasing by $625,000 compared to December 31, 2011 levels. Also, as we indicated in our previous quarter’s release, we continue to be mindful of keeping operating expenses at a level commensurate to revenue achieved to improve profitability,” said Aubrey.
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 ISS
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. The 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.
Image Sensing Systems, Inc.
Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share information) |
||||||||
Three-Month Period
Ended March 31, |
||||||||
2012
|
2011
|
|||||||
Revenue | ||||||||
Royalties |
$2,348
|
$2,698
|
||||||
Product sales |
2,909
|
3,447
|
||||||
5,257
|
6,145
|
|||||||
Cost of revenue |
1,314
|
1,664
|
||||||
Gross profit |
3,943
|
4,481
|
||||||
Operating expenses | ||||||||
Selling, marketing and product support |
1,849
|
2,620
|
||||||
General and administrative |
1,231
|
1,472
|
||||||
Research and development |
1,270
|
1,029
|
||||||
Restructuring |
76
|
-
|
||||||
Amortization of intangible assets |
408
|
412
|
||||||
4,834
|
5,533
|
|||||||
Loss from operations |
(891)
|
(1,052)
|
||||||
Other income |
5
|
4
|
||||||
Loss before income taxes |
(886)
|
(1,048)
|
||||||
Income tax benefit |
(218)
|
(240)
|
||||||
Net loss |
$(668)
|
$(808)
|
||||||
Basic net loss per share |
$(0.14)
|
$(0.17)
|
||||||
Weighted shares - basic |
4,854
|
4,824
|
Reconciliation of GAAP to non-GAAP basis | |||
Non-GAAP operating expenses (1) |
4,350
|
5,121
|
|
Non-GAAP loss from operations |
(407)
|
(640)
|
|
Other income |
5
|
4
|
|
Non-GAAP loss before income taxes |
(402)
|
(636)
|
|
Non-GAAP income tax benefit (2) |
(75)
|
(100)
|
|
Non-GAAP net loss |
$(327)
|
$(536)
|
|
Non-GAAP basic net loss per share |
$(0.07)
|
$(0.11)
|
|
Notes to non-GAAP adjustments
|
Image Sensing Systems, Inc.
Unadudited Condensed Consolidated Balance Sheet (in thousands) |
|||||
March 31,
2012 |
December 31,
2011 |
||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents |
$5,734
|
$5,224
|
|||
Investments |
2,811
|
2,093
|
|||
Receivables, net |
7,976
|
10,148
|
|||
Inventories |
5,517
|
6,142
|
|||
Prepaid expenses and deferred taxes |
2,053
|
2,073
|
|||
24,091
|
25,680
|
||||
Property and equipment, net |
1,574
|
1,435
|
|||
Deferred taxes, goodwill and intangible assets, net |
14,045
|
14,139
|
|||
$39,710
|
$41,254
|
||||
Liabilities and Shareholders' Equity | |||||
Current liabilities | |||||
Accounts payable and accrued expenses |
$3,084
|
$4,545
|
|||
Income taxes payable |
30
|
67
|
|||
3,114
|
4,612
|
||||
Income taxes payable |
316
|
316
|
|||
Shareholders' equity |
36,280
|
36,326
|
|||
$39,710
|
$41,254
|
Image Sensing Systems, Inc.
Unaudited Condensed Consolidated Statement of Cash Flows (in thousands) |
||||
Three-Month Period Ended March 31,
|
||||
2012
|
2011
|
|||
Operating activities | ||||
Net loss |
$(668)
|
$(808)
|
||
Adjustments to reconcile net loss to net cash provided by (used in) operations | ||||
Depreciation and amortization |
550
|
537
|
||
Stock option expense |
97
|
94
|
||
Changes in operating assets and liabilities |
1,321
|
(1,887)
|
||
Net cash provided by (used in) operating activities |
1,300
|
(2,064)
|
||
Investing activities | ||||
Purchase of property and equipment, net of disposals |
(281)
|
(158)
|
||
Payments of earn-outs |
-
|
(2,361)
|
||
Sales (purchase) of investments |
(718)
|
313
|
||
Net cash used in investing activities |
(999)
|
(2,206)
|
||
Financing activities | ||||
Proceeds from exercise of stock options |
3
|
35
|
||
Net cash provided by financing activities |
3
|
35
|
||
Effect of exchange rate changes on cash |
206
|
315
|
||
Increase (decrease) in cash and cash equivalents |
510
|
(3,920)
|
||
Cash and cash equivalents, beginning of period |
5,224
|
8,021
|
||
Cash and cash equivalents, end of period |
$5,734
|
$4,101
|