MINNEAPOLIS, Aug. 10, 2023 (GLOBE NEWSWIRE) -- Autoscope Technologies Corporation (OTCQX: AATC) today announced results for its quarter and six months ended June 30, 2023.
Second Quarter 2023 Financial Summary
- Increasing demand for Autoscope Vision drove higher royalty revenue during the quarter. Second quarter royalties increased to $3.7 million compared to $1.4 million in the same period in the prior year.
- Second quarter product sales were $0.4 million, a decrease of 75 percent from the same period in the prior year.
- Operating expenses totaled $2.2 million in the second quarter of 2022, an increase of 17 percent from the prior year period.
- Net income for the second quarter of 2023 totaled $1.1 million, an increase of $1.1 million compared to net income of $74,000 for the same period in the prior year.
First Half 2023 Financial Summary
- Royalties for the first half of 2023 increased to $6.7 million compared to $3.2 million for the same period in the prior year.
- Product sales for the first half of 2023 were $1.2 million, a decrease of 51 percent from the same period in the prior year.
- Operating expenses totaled $4.2 million in the first half of 2023, an increase of 7 percent from the prior year period.
- There were no capitalized software costs in the first half of 2023 compared to $534,000 in the prior year period.
- Net income for the first half of 2023 totaled $2.0 million compared to net income of $92,000 for the same period in the prior year.
- Cash and cash equivalents increased to $2.9 million, an increase of 141 percent from $1.2 million at December 31, 2022.
Second-Quarter Results
Second quarter 2023 revenue for Autoscope Technologies Corporation ("AATC," the "Company," "us," "we," or "our"), which includes the results of Image Sensing Systems, Inc., a wholly-owned subsidiary of AATC ("ISS"), was $4.0 million compared to $2.8 million in the second quarter of 2022. Revenue from royalties increased to $3.7 million in the second quarter of 2023 compared to $1.4 million during the second quarter of 2022. Product sales decreased to $0.4 million in the second quarter of 2023, a 75 percent decrease from $1.4 million in the second quarter of 2022.
Gross margin for the second quarter of 2023 was 88 percent, a 17 percentage point increase from a gross margin of 71 percent for the same period in 2022. Gross margin from royalties increased to 97 percent in the second quarter of 2023 compared to 92 percent in the second quarter of 2022. The increase in the royalty gross margin percent for the first quarter of 2023 resulted primarily from higher sales of video detection products yielding higher royalty revenues. Product sales gross margin for the second quarter of 2023 was (5) percent compared to 50 percent in the prior year period. The decrease in the product sales gross margin percent was the result of lower margins sales on discontinued video detection product sold in the EMEA markets and a radar detection product sold worldwide, as well as inventory obsolescence recognized for these discontinued product lines.
The 2023 second quarter net income includes operating expenses of $2.2 million, an increase of 17 percent compared to $1.9 million for the second quarter of 2022. The increase in operating expenses is due to having no capitalized software development costs in the second quarter of 2023 compared to $221,000 in capitalized software development costs in the second quarter of 2022. The Company's net income for the 2023 second quarter was $1.1 million, or $0.21 per diluted share, compared to net income of $74,000, or $0.01 per diluted share, 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 second quarter of 2023 was $1.6 million compared to operating income of $395,000 in the prior year period.
Year-to-Date Results:
AATC's revenue for the first six months of 2023 was $7.8 million, a 40 percent increase from revenue of $5.6 million in the first six months of 2022. Revenue from royalties increased to $6.7 million in the first six months of 2023 compared to $3.2 million in the same period in 2022. Product sales were $1.2 million in the first six months of 2023, a 51 percent decrease from $2.4 million in the first six months of 2022.
Gross margin for the first six months of 2023 was 84 percent, a 10 percentage point increase from a gross margin of 74 percent for the same period in 2022. Gross margin from royalties increased to 97 percent in the first six months of 2023 compared to 93 percent in the first six months of 2022. The increase in the royalty gross margin percent for the first six months of 2023 resulted primarily from higher sales of video detection products yielding higher royalty revenues. Product sales gross margin for the first six months of 2023 was 14 percent compared to 21 percent in the prior year period. The decrease in the product sales gross margin percent was the result of lower margins sales on planned discontinued video and radar detection products, as well as inventory obsolescence recognized for these discontinued product lines.
The Company's net income for the first six months of 2023 was $2.0 million, or $0.36 per diluted share, compared to a net income of $92,000, or $0.02 per diluted share, in the first six months of 2022. The first six months of 2023 net income includes operating expenses of $4.2 million, a 7 percent increase from the same period in 2022. During the first six months of 2023, there were no capitalized software costs compared to $534,000 in the first six months of 2022.
On a non-GAAP basis, excluding the amortization of intangible assets and depreciation for the applicable periods, operating income for the second quarter of 2023 was $2.8 million compared to operating income of $0.7 million in the prior year period.
Liquidity and Capital Resources
We believe that cash and cash equivalents on hand, coupled with readily available investments in debt and equity securities on June 30, 2023, totaling $6.0 million, along with the cash provided by operating activities, will satisfy our projected working capital needs, investing activities, and other cash requirements for the foreseeable future.
As of June 30, 2023, we had $2.9 million in cash and cash equivalents compared to $1.2 million on December 31, 2022.
Net cash provided by operating activities increased to $2.6 million in the first six months of 2023 compared to net cash provided by operating activities of $79,000 in the same period in 2022. Net cash provided by operating activities increased in the first six months of 2023 compared to the same period in 2022 primarily due to higher net income and lower prepaid expenses in 2023 compared to 2022.
Net cash provided by investing activities was $636,000 in the first six months of 2023 compared to net cash used for investing activities of $4.9 million in the same period in 2022. The decrease in net cash used for investing activities in the first six months of 2023 compared to the same period in the prior year is primarily the result of lower purchases of equity and debt securities and lower capitalization of software costs in the first six months of 2023. To generate a greater return on our cash position, the Company purchased various debt and equity securities of $2.8 million during the first quarter of 2022. There were no debt or equity securities purchases in the first six months of 2023. There were no capitalized software costs in the first six months of 2023 compared to $534,000 of capitalized software costs in the same period of 2022.
Net cash used for financing activities was $1.4 million in the first six months of 2023 compared to net cash used of $1.3 million in the first six months of 2022. The increase in net cash used for financing activities in 2023 is primarily due to increased cash dividends paid. The Company paid dividends of $0.26 per share in the first six months of 2023 compared to total dividends of $0.24 per share paid in the first six months of 2022.
"Stronger than expected demand for Autoscope Vision drove higher royalty returns during the quarter. Product sales came in below expectations primarily due to timing of deliveries on new Echo installations. As a result, our order backlog is three times the size of our historical backlog as major projects are staged for delivery and installation. Additionally, sales of our Wrong Way detection solutions have been slower than expected due to lengthy qualification cycles. Product gross margins were negatively impacted by the write-off of components on our legacy video and radar detection solutions that were repurchased from suppliers as the Company withdrew the products from the market," said Frank Hallowell, Interim CEO of Autoscope Technologies Corporation. "Vision and Echo near-term order demand is solid, and we expect to close on several Wrong Way solutions in the second half of 2023 because we have been added to statewide qualified product lists. We continue to focus on bringing to market several new products that leverage the capabilities of our new video technology platform, IntelliSight," concluded Mr. Hallowell.
About Autoscope Technologies Corporation
Autoscope Technologies Corporation 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 Minneapolis, Minnesota. Visit us on the web at www.autoscope.com.
Forward-Looking Statements
Certain statements and information included in this release constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange of 1934, as amended. Forward looking statements represent our expectations or beliefs concerning future events and can be identified by the use of forward-looking words such as "believes," "may," "will," "should," "intends," "plans," "estimates," "expects," "anticipates" or other comparable terminology. Forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from the results discussed in the forward-looking statements. Some factors that might cause these differences include the factors listed below. Although we have attempted to list these factors comprehensively, we wish to caution investors that other factors may prove to be important in the future and may affect our operating results. New factors may emerge from time to time, and it is not possible to predict all of these factors, nor can we assess the effect each factor or combination of factors may have on our business.
Those risks and uncertainties may include, but are not limited to, our historical dependence on a single product for most of our revenue; competition; potential changes in government spending on transportation technology; acceptance of our product offerings and designs; budget constraints by governmental entities that purchase our products, including constraints caused by declining tax revenue; the continuing ability of Econolite Control Products, Inc. to sell our products and pay royalties owed to us; the mix of and margins on the products we sell; our dependence on third parties for manufacturing and marketing our products; our dependence on single-source suppliers to meet manufacturing needs; our failure to secure adequate protection for our intellectual property rights; our inability to develop new applications and product enhancements; the potential disruptive effect on the markets we serve of new and emerging technologies and applications, including vehicle-to-vehicle communications and autonomous vehicles; unanticipated delays, costs and expenses inherent in the development and marketing of new products; our inability to respond to low-cost local competitors; our inability to properly manage any growth in revenue and/or production requirements; the influence over our voting stock by affiliates; our inability to hire and retain key scientific and technical personnel; the effects of legal matters in which we may become involved; our inability to achieve and maintain effective internal controls; our inability to successfully integrate any acquisitions; tariffs and other trade barriers; our operating costs tend to be fixed, while our revenue tends to be seasonal, thereby resulting in operating results that fluctuate from quarter to quarter; any significant variations between actual amounts and the amounts estimated for those matters identified as our critical accounting estimates and other significant accounting estimates made in the preparation of our financial statements; political and economic instability, including continuing volatility in the economic and political environment of the European Union and the war in Ukraine; our inability to comply with international regulatory restrictions over hazardous substances and electronic waste; the impact of international supply chain disruptions and delays; the impact of changes in U.S. federal and state income tax regulations; the impact of inflation and our ability to pass on rising prices to its customers; and conditions beyond our control such as war, terrorist attacks, health epidemics (including the COVID-19 pandemic caused by the coronavirus) and economic recession..
We further caution you not to unduly rely on any forward-looking statements because they reflect our views only as of the date the statements were made. We undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
| Autoscope Technologies Corporation | |||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||
| (in thousands, except per share information) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Three-Month Period Ended June 30, | Six-Month Period Ended June 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | |||||||||||||||
| Royalties | $ | 3,655 | $ | 1,387 | $ | 6,667 | $ | 3,205 | |||||||
| Product sales | 361 | 1,432 | 1,159 | 2,366 | |||||||||||
| 4,016 | 2,819 | 7,826 | 5,571 | ||||||||||||
| Cost of revenue | 486 | 824 | 1,222 | 1,440 | |||||||||||
| Gross profit | 3,530 | 1,995 | 6,604 | 4,131 | |||||||||||
| 88 | % | 71 | % | 84 | % | 74 | % | ||||||||
| Operating expenses | |||||||||||||||
| Selling, general and administrative | 1,493 | 1,324 | 2,921 | 3,009 | |||||||||||
| Research and development | 679 | 526 | 1,312 | 954 | |||||||||||
| 2,172 | 1,850 | 4,233 | 3,963 | ||||||||||||
| Income from operations | 1,358 | 145 | 2,371 | 168 | |||||||||||
| Other income | 9 | 10 | 16 | 21 | |||||||||||
| Investment income (loss) | 75 | (30 | ) | 128 | (25 | ) | |||||||||
| Interest expense, net | (17 | ) | (18 | ) | (34 | ) | (36 | ) | |||||||
| Income before income taxes | 1,425 | 107 | 2,481 | 128 | |||||||||||
| Income tax expense | 287 | 33 | 512 | 36 | |||||||||||
| Net income | $ | 1,138 | $ | 74 | $ | 1,969 | $ | 92 | |||||||
| Basic net income(loss) per share | $ | 0.21 | $ | 0.01 | $ | 0.36 | $ | 0.02 | |||||||
| Diluted net income(loss) per share | $ | 0.21 | $ | 0.01 | $ | 0.36 | $ | 0.02 | |||||||
| Weighted shares - basic | 5,412 | 5,381 | 5,411 | 5,371 | |||||||||||
| Weighted shares - diluted | 5,412 | 5,387 | 5,411 | 5,373 | |||||||||||
| Autoscope Technologies Corporation | |||||
| Condensed Consolidated Balance Sheets | |||||
| (in thousands) | |||||
| June 30, 2023 (unaudited) | December 31, 2022 | ||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | $ | 2,860 | $ | 1,177 | |
| Receivables, net | 4,124 | 3,688 | |||
| Inventories | 2,523 | 2,287 | |||
| Investment in debt and equity securities | 3,177 | 3,138 | |||
| Prepaid expenses and other current assets | 411 | 545 | |||
| 13,095 | 10,835 | ||||
| Property and equipment, net | 2,071 | 2,132 | |||
| Intangible assets, net | 2,206 | 2,601 | |||
| Deferred taxes | 3,962 | 4,475 | |||
| Long term investment securities | 431 | 1,054 | |||
| Operating lease asset, net | 24 | 3 | |||
| $ | 21,789 | $ | 21,100 | ||
| Liabilities and Shareholders' Equity | |||||
| Current liabilities | |||||
| Accounts payable | $ | 438 | $ | 423 | |
| Current maturities on long-term debt | 59 | 58 | |||
| Warranty and other current liabilities | 475 | 386 | |||
| 972 | 867 | ||||
| Non-Current liabilities | |||||
| Long-term debt | 1,586 | 1,616 | |||
| Shareholders' equity | 19,231 | 18,617 | |||
| $ | 21,789 | $ | 21,100 | ||
| Autoscope Technologies Corporation | |||||||
| Condensed Consolidated Statements of Cash Flows | |||||||
| (in thousands) | |||||||
| (unaudited) | |||||||
| Six-Month Period Ended June 30, | |||||||
| 2023 | 2022 | ||||||
| Operating activities | |||||||
| Net income | $ | 1,969 | $ | 92 | |||
| Adjustments to reconcile net income to net cash | |||||||
| provided by operating activities | |||||||
| Depreciation and amortization | 465 | 499 | |||||
| Stock-based compensation | 102 | 268 | |||||
| Loss on disposal of assets | - | 5 | |||||
| Investment amortization | (18 | ) | |||||
| Realized loss on equity investments | - | 53 | |||||
| Unrealized gain (loss) on equity investments | (1 | ) | 3 | ||||
| Investment loss | - | 6 | |||||
| Amortization of debt issuance costs | 1 | 1 | |||||
| Deferred income tax benefit | 506 | 30 | |||||
| Changes in operating assets and liabilities | (455 | ) | (878 | ) | |||
| Net cash provided by operating activities | 2,569 | 79 | |||||
| Investing activities | |||||||
| Capitalized software development costs | - | (534 | ) | ||||
| Sale of securities | 2,604 | 10 | |||||
| Purchase of securities | (1,968 | ) | (4,316 | ) | |||
| Purchases of property and equipment | - | (41 | ) | ||||
| Net cash provided by (used) for investing activities | 636 | (4,881 | ) | ||||
| Financing activities | |||||||
| Stock for tax withholding | - | (15 | ) | ||||
| Dividends paid | (1,408 | ) | (1,291 | ) | |||
| Proceeds from exercise of stock options | - | 32 | |||||
| Principal payments on long-term debt | (30 | ) | (29 | ) | |||
| Net cash used for financing activities | (1,438 | ) | (1,303 | ) | |||
| Effect of exchange rate changes on cash | (84 | ) | (191 | ) | |||
| Increase (decrease) in cash and cash equivalents | 1,683 | (6,296 | ) | ||||
| Cash and cash equivalents at beginning of period | 1,177 | 8,229 | |||||
| Cash and cash equivalents at end of period | $ | 2,860 | $ | 1,933 | |||
| Non-Cash investing activities: | |||||||
| Sale of equity securities included in due from broker | $ | - | $ | 481 | |||
Autoscope Technologies Corporation
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 Period Ended June 30, | Six-Month Period Ended June 30, | ||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||
| Income from Operations | $ | 1,358 | $ | 145 | $ | 2,371 | $ | 168 | |||
| Amortization of intangible assets | 198 | 204 | 395 | 404 | |||||||
| Depreciation | 44 | 46 | 70 | 95 | |||||||
| Non-GAAP income from operations | $ | 1,600 | $ | 395 | $ | 2,836 | $ | 667 | |||
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.
| Contact: | Frank Hallowell, Interim Chief Executive Officer and Chief Financial Officer |
| 612-438-2363 |
