MINNEAPOLIS, May 11, 2023 (GLOBE NEWSWIRE) -- Autoscope Technologies Corporation (OTCQX: AATC) today announced results for its quarter and year ended December 31, 2022.
Fourth Quarter 2022 Financial Summary
- Royalties were $2.4 million, an increase of 34 percent from the same period in the prior year.
- Product sales were $1.3 million, a decrease of 9 percent from the same period in the prior year.
- Operating expenses totaled $2.1 million in the fourth quarter of 2022, an increase of 2 percent from the prior year period.
- There were no capitalized software costs in the fourth quarter of 2022 compared to $307,000 of capitalized software costs in the prior year period.
- Net income for the fourth quarter of 2022 totaled $468,000 compared to a net loss of $201,000 for the same period in the prior year.
2022 Full Year Financial Summary
- 2022 royalties decreased to $8.2 million compared to $8.5 million in the prior year.
- 2022 product sales were $4.2 million, a decrease of 10 percent from the prior year.
- 2022 operating expenses were $7.9 million, a decrease of 1 percent from the prior year.
- Capitalized software costs in 2022 were $534,000 compared to $485,000 in the prior year.
- Net income for 2022 totaled $1.2 million, a $1.1 million decrease from the prior year.
- Cash balance decreased to $1.2 million, down from $8.2 million at the end of the prior year.
Fourth-Quarter Results
The 2022 fourth quarter revenue for Autoscope Technologies Corporation. ("AATC" or the "Company") which includes the results of Image Sensing Systems, Inc., a wholly owned subsidiary of AATC ("ISNS") was $3.7 million compared to $3.2 million in the fourth quarter of 2021. Revenue from royalties was $2.4 million in the fourth quarter of 2022 compared to $1.8 million in the fourth quarter of 2021, a 34 percent increase. The increase in royalties resulted primarily from available components to fulfill the sales order backlog during the quarter. Product sales were $1.3 million in the 2022 fourth quarter compared to $1.4 million in the fourth quarter of 2021, a 9 percent decrease. The decrease in Product sales was primarily due to the expected decline in sales on the announced end-of-sale of the Company's legacy video detection product in sold in the European, Middle East and Asian Pacific ("EMEA") markets.
Gross margin for the fourth quarter of 2022 was 75 percent, a 3-percentage point increase from a gross margin of 72 percent for the same period in 2021. Royalty gross margin for the fourth quarter of 2022 was 96%, a 2-percentage point increase from a gross margin of 94% for the same period in 2021. The increase in the royalty gross margin percent for the fourth quarter of 2022 resulted primarily from higher sales of video detection products yielding higher royalty revenues. Product sales gross margin percent for the fourth quarter of 2022 was 36 percent compared to 46 percent in the prior year period. The decrease in the product sales gross margin percent was the result of lower margins sales on legacy video detection products sold in the EMEA markets.
The Company reported net income for the fourth quarter of $468,000 or $0.09 per diluted share, compared to a net loss of ($201,000) or $(0.04) per diluted share, in the prior year period. This increase is higher gross profits and lower operating expenses during the fourth quarter of 2022 compared to the same period in 2021.
Full Year Results
Total revenue decreased to $12.4 million in 2022 compared to total revenue of $13.2 million reported in 2021. Royalty income fell to $8.2 million in 2022 compared to $8.5 million in 2021, a decrease of 4.1%. The decline in royalty revenue is primarily due to component shortages during the second quarter of 2022, which resulted in the purchase of higher costing alternatives directly by the Company, to meet customer order demand. Product sales decreased to $4.2 million in 2022 from $4.7 million in 2021, a decrease of 10.4%. The decrease in product sales was primarily due to lower sales of the Company's legacy video detection product in the EMEA markets, that was announced end-of-life in 2021, coupled with an anticipated decline in sales of the Company's Sx-300 radar line announced end-of-life in 2022.
Gross margins on product sales decreased to 40.5% in 2022 from 44.6% in 2021.Product sales gross profit in 2022 decreased by $395,000 or 18.8% compared to the prior year. The decrease in product sales gross profit and gross margins is primarily the result of lower sales at higher costs on the legacy video detection in the EMEA markets and SX 300 radar product line, that were announced end-of-life.
Gross margins on royalty sales decreased to 94.9% in 2022 compared to 95.3% in 2021. Gross profit for royalties in 2022 decreased by $369,000 or 4.5% compared to the prior year. The decrease in royalty gross profits and percentage is primarily the result of increased amortization costs associated with the release of IntelliSight detection software and component shortages during the second quarter of 2022. The Company announced the release of IntelliSight in the first quarter of 2022 and began amortizing certain capitalized development costs. Software amortization expenses are netted against royalty revenue.
Other income decreased by $885,000 in 2022 from $927,000 in 2021. The Company recognized other income of $931,000 for the forgiveness of the Paycheck Protection Program loan and accrued interest during the first quarter of 2021. There were no comparable items in 2022.
Consolidated net income was $1.2 million, or $0.22 per basic and diluted share, in 2022 compared to $2.3 million, or $0.43 per basic and diluted share, in 2021.
Liquidity and Capital Resources
As of December 31, 2022, we had $1.2 million in cash and cash equivalents compared to $8.2 million on December 31, 2021.
Net cash provided by operating activities decreased to $668,000 in 2022 compared to $2.6 million in 2021. Net cash provided by operating activities decreased in 2022 compared to the prior year primarily due to lower net income, higher investment in accounts receivable and inventory, and lower deferred taxes and accrued expenses in 2022, compared to 2021.
Net cash used for investing activities was $5.0 million in 2022 compared to net cash used for investing activities of $2.6 million in 2021. The increase in net cash used for investing activities in 2022 compared to the prior year is primarily the result of the purchase of equity and debt securities offset by lower purchases of property and equipment. To generate a greater return on our cash position, the Company purchased and sold various debt and equity securities during the first nine months of 2022, totaling $5.5 million and $1.4 million, respectively.
Net cash used for financing activities was $2.6 million in 2022 compared to net cash used of $229,000 in 2021. The increase in net cash used for financing activities is primarily due to higher quarterly cash dividends paid and lower borrowings on long-term debt in 2022 compared to 2021. The Company paid four quarterly cash dividends of $0.12 per share compared to three quarterly cash dividends of $0.12 per share in 2021. ISNS financed the purchase of an office building through a loan from Coulee Bank in December 2021. There were no borrowings on long-term debt in 2022.
We believe that cash and cash equivalents on hand, coupled with readily available investment in debt and equity securities on December 31, 2022 totaling $5.4 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.
"We continue to improve our top and bottom lines compared to the third quarter of 2022 and the fourth quarter of 2021. Efforts to resolve recent supply chain disruptions through investments in inventory have been successful. Product order demand remains solid, but we continue to monitor our supply chain to ensure we have components and labor to support our direct product sales channel," said Frank Hallowell, Interim CEO of Autoscope Technologies Corporation. "We are cautiously optimistic that market conditions will continue to improve in the near term and we are excited about the growth possibilities of our new and expanding product line up, including IntelliSight, launched in 2022," 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 Annual Report 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-Months Period | Years Ended | |||||||||||||
| Ended December 31, | December 31, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Revenue | ||||||||||||||
| Royalties | $ | 2,371 | $ | 1,766 | $ | 4,222 | $ | 4,710 | ||||||
| Product sales | 1,308 | 1,437 | 8,183 | 8,532 | ||||||||||
| 3,679 | 3,203 | 12,405 | 13,242 | |||||||||||
| Cost of revenue | 936 | 889 | 2,934 | 3,007 | ||||||||||
| Gross profit | 2,743 | 2,314 | 9,471 | 10,235 | ||||||||||
| 75 | % | 72 | % | |||||||||||
| Operating expenses | ||||||||||||||
| Selling, general and administrative | 1,521 | 1,532 | 5,752 | 5,748 | ||||||||||
| Research and development | 585 | 532 | 2,120 | 2,214 | ||||||||||
| 2,106 | 2,064 | 7,872 | 7,962 | |||||||||||
| Income from operations | 637 | 250 | 1,599 | 2,273 | ||||||||||
| Other income | 13 | 2 | 42 | 927 | ||||||||||
| Investment income | 41 | - | 24 | - | ||||||||||
| Interest expense, net | (18 | ) | - | (71 | ) | - | ||||||||
| Income before income taxes | 673 | 252 | 1,594 | 3,200 | ||||||||||
| Income tax expense | 205 | 453 | 391 | 905 | ||||||||||
| Net income (loss) | $ | 468 | $ | (201 | ) | $ | 1,203 | $ | 2,295 | |||||
| Basic net income(loss) per share | $ | 0.09 | $ | (0.04 | ) | $ | 0.22 | $ | 0.43 | |||||
| Diluted net income(loss) per share | $ | 0.09 | $ | (0.04 | ) | $ | 0.22 | $ | 0.43 | |||||
| Weighted shares - basic | 5,399 | 5,355 | 5,383 | 5,342 | ||||||||||
| Weighted shares - diluted | 5,404 | 5,369 | 5,392 | 5,358 | ||||||||||
Autoscope Technologies Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
| Years Ended | |||||
| December 31, | |||||
| 2022 | 2021 | ||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | $ | 1,177 | $ | 8,229 | |
| Receivables, net | 3,688 | 2,369 | |||
| Inventories | 2,287 | 1,429 | |||
| Investment in debt and equity securities | 3,138 | - | |||
| Prepaid expenses and other current assets | 545 | 355 | |||
| 10,836 | 12,382 | ||||
| Property and equipment, net | 2,132 | 2,237 | |||
| Intangible assets, net | 2,601 | 2,866 | |||
| Deferred taxes | 4,475 | 4,824 | |||
| Long term investment securities | 1,054 | - | |||
| Operating lease asset, net | 3 | 58 | |||
| $ | 21,101 | $ | 22,368 | ||
| Liabilities and Shareholders' Equity | |||||
| Current liabilities | |||||
| Accounts payable | $ | 423 | $ | 236 | |
| Current maturities on long-term debt | 58 | 56 | |||
| Warranty and other current liabilities | 386 | 607 | |||
| 867 | 898 | ||||
| Non-Current liabilities | |||||
| Long-term debt | 1,616 | 1,674 | |||
| Shareholders' equity | 18,617 | 19,794 | |||
| $ | 21,099 | $ | 22,366 | ||
Autoscope Technologies Corporation.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Years Ended | |||||||
| December 31, | |||||||
| 2022 | 2021 | ||||||
| Operating activities | |||||||
| Net income | $ | 1,203 | $ | 2,295 | |||
| Adjustments to reconcile net income to net cash | |||||||
| provided by operating activities | |||||||
| Depreciation and amortization | 970 | 928 | |||||
| Stock-based compensation | 381 | 226 | |||||
| Loss on disposal of assets | 6 | 4 | |||||
| Investment amortization | 7 | - | |||||
| Realized loss on equity investments | 53 | - | |||||
| Realized loss on available-for-sale investments | 20 | - | |||||
| Unrealized loss on equity investments | 5 | - | |||||
| Amortization of debt issuance costs | 2.0 | ||||||
| Deferred income tax benefit | 367 | 884 | |||||
| Forgiveness of PPP loan | - | (931 | ) | ||||
| Changes in operating assets and liabilities | (2,346 | ) | (844 | ) | |||
| Net cash provided by operating activities | 668 | 2,562 | |||||
| Investing activities | |||||||
| Capitalized software development costs | (534 | ) | (485 | ) | |||
| Sale (purchase) of securities | (4,358 | ) | - | ||||
| Purchases of property and equipment | (84 | ) | (2,087 | ) | |||
| Net cash used for investing activities | (4,976 | ) | (2,572 | ) | |||
| Financing activities | |||||||
| Stock for tax withholding | (14 | ) | (35 | ) | |||
| Dividends paid | (2,589 | ) | (1,932 | ) | |||
| Proceeds from exercise of stock options | 32 | 8 | |||||
| Proceeds from long-term debt | - | 1,730 | |||||
| Principal payments on long-term debt | (58 | ) | - | ||||
| Net cash provided by (used for) financing activities | (2,629 | ) | (229 | ) | |||
| Effect of exchange rate changes on cash | (115 | ) | (137 | ) | |||
| Increase (decrease) in cash and cash equivalents | (7,052 | ) | (376 | ) | |||
| Cash and cash equivalents at beginning of period | 8,229 | 8,605 | |||||
| Cash and cash equivalents at end of period | $ | 1,177 | $ | 8,229 | |||
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:
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 |
