Image Sensing Systems Announces Second Quarter Financial Results
Contacts: Greg Smith, Chief Financial Officer
Image Sensing Systems, Inc., Phone: 651.603.7700
Saint Paul, Minn., August 4, 2011 Image Sensing Systems, Inc. (NASDAQ: ISNS), announced today the results for its first six months of its fiscal year and second quarter ended June 30, 2011.
Revenue for the first six months of 2011 was $14.2 million compared to $12.0 million for the same period of 2010, while revenue for the second quarter of 2011 was $8.1 million compared to $6.6 million for the same period a year ago. Revenue from royalties was $5.7 million in the first six months of 2011 compared to $5.8 million in 2010 and $3.0 million in the second quarter of 2011 compared to $3.2 million in the same period of 2010. Product sales were $8.5 million for the first six months of 2011 compared to $6.2 million in 2010 and were $5.1 million in the second quarter of 2011 compared to $3.4 million in the same period in 2010. World-wide, RTMS and CitySync product sales in the first six months of 2011 were $4.1 million and $3.4 million, respectively, and were $3.1 million and $1.3 million for the second quarter of 2011.
Net loss for the first six months of 2011 was $(598,000) or $(0.12) per share compared to net income of $769,000 or $0.17 per diluted share for the same period in 2010. Net income for our 2011 second quarter was $210,000 or $0.04 per diluted share compared to $367,000 or $0.08 per diluted share for the same period in 2010. On a non-GAAP basis, excluding intangible asset amortization net of tax, net loss for the first six months of 2011 was $(52,000) or $(0.01) per diluted share and net income for the second quarter was $484,000 or $0.10 per diluted share.
Ken Aubrey, CEO, said, While our second quarter results improved from a difficult first quarter, they still were below our expectations. We havent climbed as quickly as we anticipated to what we believe should be normal levels of revenue. As in the first quarter, we saw revenue lumpiness continue RTMS on the upside and CitySync on the downside. Royalties also ran below our expectations. Our overall product gross margins improved but remain slightly lower than our targets. As stated previously, we expect margin improvement as increased revenues offset fixed costs and our integration and process improvements gain traction.
Our Hybrid product development is continuing toward our targeted Q1 2012 product launch, continued Mr. Aubrey.
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.
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 120,000 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. 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, including ANPR products; adverse weather conditions in our markets; the impact of governmental laws and regulations; increased international presence; our success in integrating 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, 2010 filed in March 2011.
|
Image Sensing Systems, Inc. Unaudited Condensed Consolidated Statements of Income (in thousands, except per share information) |
||||||||
|
Three-Month Periods
Ended June 30 |
Six-Month Periods Ended
June 30
|
|||||||
|
2011
|
2010
|
2011
|
2010
|
|||||
| Revenue | ||||||||
| Royalty income |
$3,017
|
$3,187
|
$5,715
|
$5,778
|
||||
| Product sales |
5,085
|
3,397
|
8,532
|
6,209
|
||||
|
8,102
|
6,584
|
14,247
|
11,987
|
|||||
| Cost of revenue |
2,159
|
1,510
|
3,823
|
2,442
|
||||
| Gross Profit |
5,943
|
5,074
|
10,424
|
9,545
|
||||
| Operating expenses | ||||||||
| Selling, marketing and product support |
2,638
|
2,146
|
5,258
|
4,002
|
||||
| General and administrative |
1,534
|
938
|
3,006
|
1,976
|
||||
| Research and development |
999
|
834
|
2,028
|
1,611
|
||||
| Acquisition related expenses |
-
|
527
|
-
|
527
|
||||
| Amortization of intangible assets |
414
|
216
|
826
|
408
|
||||
|
5,585
|
4,661
|
11,118
|
8,524
|
|||||
| Income (loss) from operations |
358
|
413
|
(694)
|
1,021
|
||||
| Other income (expense), net |
2
|
(36)
|
6
|
(72)
|
||||
| Income (loss) before income taxes |
360
|
377
|
(688)
|
949
|
||||
| Income taxes expense (benefit) |
150
|
10
|
(90)
|
180
|
||||
| Net income (loss) |
$210
|
$367
|
$(598)
|
$769
|
||||
| Net income per common share | ||||||||
| Basic |
$0.04
|
$0.08
|
$(0.12)
|
$0.18
|
||||
| Diluted |
$0.04
|
$0.08
|
$(0.12)
|
$0.17
|
||||
| Weighted average shares outstanding | ||||||||
| Basic |
4,828
|
4,676
|
4,826
|
4,333
|
||||
| Diluted |
4,916
|
4,751
|
4,826
|
4,420
|
||||
|
Reconciliation of GAAP to non-GAAP basis
|
|||||||
| Non-GAAP operating expenses (1,2) |
$5,171
|
$3,918
|
$10,292
|
$7,589
|
|||
| Non-GAAP income (loss) from operations |
772
|
1,156
|
132
|
1,956
|
|||
| Other income (expense), net |
2
|
(36)
|
6
|
(72)
|
|||
| Non-GAAP income before income taxes |
774
|
1,120
|
138
|
1,884
|
|||
| Non-GAAP income taxes (3) |
290
|
75
|
190
|
310
|
|||
| Non-GAAP net income (loss) |
$484
|
$1,045
|
$(52)
|
$1,574
|
|||
| Non-GAAP basic net income (loss) per share |
$0.10
|
$0.22
|
$(0.01)
|
$0.36
|
|||
| Non-GAAP diluted net income (loss) per share |
$0.10
|
$0.22
|
$(0.01)
|
$0.36
|
|||
| Notes to Non-GAAP adjustments | |||||||
| (1) Amortization of intangible asset for period as shown above is removed | |||||||
| (2) Acquisition related expenses for period as shown above is removed | |||||||
| (3) Income taxes are increased by impact of (1) at ISS' marginal tax rate of 34% | |||||||
|
Image Sensing Systems, Inc. Unadudited Condensed Consolidated Balance Sheet (in thousands) |
|||||
|
June 30,
2011 |
December 31,
2010 |
||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents |
$5,034
|
$8,021
|
|||
| Investments |
3,180
|
3,954
|
|||
| Receivables, net |
9,945
|
10,137
|
|||
| Inventories |
5,279
|
4,649
|
|||
| Prepaid expenses and deferred taxes |
2,468
|
2,247
|
|||
|
25,906
|
29,008
|
||||
| Property and equipment, net |
1,295
|
1,122
|
|||
| Goodwill and intangible assets, net |
23,826
|
24,226
|
|||
|
$51,027
|
$54,356
|
||||
| Liabilities and Shareholders' Equity | |||||
| Current liabilities | |||||
| Accounts payable and accrued expenses |
$3,563
|
$4,925
|
|||
| Earn-outs payable |
618
|
2,928
|
|||
| Income taxes payable |
98
|
17
|
|||
|
4,279
|
7,870
|
||||
| Income taxes payable and deferred taxes |
473
|
465
|
|||
| Shareholders' equity |
46,275
|
46,021
|
|||
|
$51,027
|
$54,356
|
||||
|
Image Sensing Systems, Inc. Unaudited Condensed Consolidated Statement of Cash Flows (in thousands) |
||||
|
Six-Month Period Ended June 30 |
||||
|
2011
|
2010
|
|||
| Operating activities | ||||
| Net income (loss) |
$(598)
|
$769
|
||
| Adjustments to reconcile net income (loss) to net cash provided by operations | ||||
| Depreciation and amortization |
1,078
|
653
|
||
| Stock option expense |
202
|
164
|
||
| Changes in operating assets and liabilities |
(2,291)
|
(856)
|
||
| Net cash provided by (used in) operating activities |
(1,609)
|
730
|
||
| Ivesting activities | ||||
| Cash paid to sellers of CitySync equity |
-
|
(7,871)
|
||
| Purchase of property and equipment, net of disposals |
(441)
|
(209)
|
||
| Repayment of CitySync seller loans |
-
|
(445)
|
||
| Payment of earn-outs |
(2,361)
|
(1,541)
|
||
| Sale of investments |
774
|
514
|
||
| Net cash provided by (used in) investing activities |
(2,028)
|
(9,552)
|
||
| Financing activities | ||||
| Repayment of bank debt |
-
|
(200)
|
||
| Net proceeds from common stock offering |
-
|
8.818
|
||
| Proceeds from exercise of stock options |
51
|
80
|
||
| Net cash provided by (use in) financing activities |
51
|
8,698
|
||
| Effect of exchange rate changes on cash |
599
|
(299)
|
||
| Decrease in cash and cash equivalents |
(2,987)
|
(423)
|
||
| Cash and cash equivalents, beginning of period |
8,021
|
14,084
|
||
| Cash and cash equivalents, end of period |
$5,034
|
$13,661
|
||