Image Sensing Systems Announces Third Quarter Financial Results
Contacts: Greg Smith, Chief Financial Officer
Image Sensing Systems, Inc., Phone: 651.603.7700
Highlights
- Revenue for the third quarter of $9.1 million
- Non-GAAP earnings per share of $0.28 for the third quarter and $0.65 for nine months
- CitySync ANPR revenue of $1.9 million for the third quarter in first full quarter with ISS
Saint Paul, Minn., November 4, 2010-- Image Sensing Systems, Inc. (NASDAQ: ISNS), announced today the results for its first nine months of its fiscal year and third quarter ended September 30, 2010.
Revenue for the nine months ended September 30, 2010 was $21.1 million compared to $17.9 million for the same period of 2009, while revenue for the third quarter of 2010 was $9.1 million compared to $6.8 million for the same period a year ago. Revenue from royalties was $9.2 million in first nine months of 2010 compared to $9.1 million in 2009 and $3.4 million in the third quarter of 2010, flat compared to the same period of 2009. Product sales were $11.9 million for the first nine months of 2010 compared to $8.8 million in 2009 and were $5.7 million in the third quarter of 2010 compared to $3.4 million in the same period of 2009. RTMS and CitySync product sales world-wide for the third quarter were $2.5 million and $1.9 million, respectively.
Net income for the nine months ended September 30, 2010 was $1.9 million ($0.41 per diluted share) compared to $3.0 million ($0.74 per diluted share) for the same period of 2009. Net income for our third quarter was $1.1 million ($0.23 per diluted share) compared to $1.6 million ($0.38 per diluted share) for the same period in 2009. The results for 2010 include the impact of acquisition expenses incurred in conjunction with our June purchase of CitySync Limited as well as its operational activity post-acquisition, and the 2010 per share results are further impacted by the issuance of 798,000 shares of common stock in our stock offering completed in April.
On a non-GAAP basis, excluding intangible asset amortization net of tax and acquisition related expenses, net income for the first nine months of 2010 was $3.0 million ($0.65 per diluted share) and for the third quarter was $1.4 million ($0.28 per diluted share).
Ken Aubrey, CEO, said, “Although the CitySync integration is still in its early stages, we are encouraged that the performance of our new ANPR business was in keeping with expectations. This performance, along with improved year over year results for our traditional international businesses, is helping us achieve our goal of over-proportionate growth in the international arena. We are also heartened that our domestic business is showing signs of stabilization and even modest growth.
“Taken together, CitySync and RTMS constituted just under half of the quarter’s revenue and that bespeaks success in gaining product portfolio breadth while pursuing our strategy of designing or acquiring complementary detection technologies for traffic, security and environmental management markets.”
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 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 110,000 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 Company’s or management’s 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 management’s 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 Company’s control; developments in the demand for the Company’s products and services; relationships with the Company’s 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; 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 Company’s current expectations are contained in the Company’s 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, 2009.
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Image Sensing Systems, Inc. Unaudited Condensed Consolidated Statements of Income (in thousands, except per share information) |
||||||||
|
Three-Month Periods Ended September 30 |
Nine-Month Periods Ended
September 30 |
|||||||
2010 |
2009 |
2010 |
2009 |
|||||
| Revenue | ||||||||
| Royalties | $3,444 |
$3,389 |
$9,222 |
$9,068 |
||||
| Product sales | 5,677 |
3,434 |
11,886 |
8,825 |
||||
9,121 |
6,823 |
21,108 |
17,893 |
|||||
| Cost of revenue | ||||||||
| Product sales | 1,950 |
1,269 |
4,392 |
2,947 |
||||
| Gross Profit | 7,171 |
5,554 |
16,716 |
14,946 |
||||
| Operating expenses | ||||||||
| Selling, marketing and product support | 2,791 |
1,721 |
6,793 |
5,272 |
||||
| General and administrative | 1,307 |
796 |
3,283 |
2,574 |
||||
| Research and development | 989 |
868 |
2,600 |
2,541 |
||||
| Acquisition related expenses | - |
- |
527 |
- |
||||
| Amortization of intangible assets | 411 |
192 |
819 |
576 |
||||
5,498 |
3,577 |
14,022 |
10,963 |
|||||
| Income from operations | 1,673 |
1,977 |
2,694 |
3,983 |
||||
| Other income (expense), net | (74) |
9 |
(146) |
18 |
||||
| Income before income taxes | 1,599 |
1,986 |
2,548 |
4,001 |
||||
| Income tax expense | 472 |
426 |
652 |
1,010 |
||||
| Net income | $1,127 |
$1,560 |
$1,896 |
$2,991 |
||||
| Net income per common share | ||||||||
| Basic | $0.23 |
$0.39 |
$0.42 |
$0.75 |
||||
| Diluted | $0.23 |
$0.38 |
$0.41 |
$0.74 |
||||
| Weighted average shares outstanding | ||||||||
| Basic | 4,805 |
3,986 |
4,471 |
3,985 |
||||
| Diluted | 4,911 |
4,073 |
4,584 |
4,065 |
||||
Reconciliation of GAAP to non-GAAP basis |
|||||||
| Non-GAAP operating expenses (1,2) | 5,087 |
3,385 |
12,676 |
10,387 |
|||
| Non-GAAP income from operations | 2,084 |
2,169 |
4,040 |
4,559 |
|||
| Other income (expense), net | (74) |
9 |
(146) |
18 |
|||
| Non-GAAP income before income taxes | 2,010 |
2,178 |
3,894 |
4,577 |
|||
| Non-GAAP income taxes (3) | 612 |
727 |
930 |
1,442 |
|||
| Non-GAAP net income | $1,398 |
$1,451 |
$2,964 |
$3,135 |
|||
| Non-GAAP basic net income per share | $0.29 |
$0.36 |
$0.66 |
$0.79 |
|||
| Non-GAAP diluted net income per share | $0.28 |
$0.36 |
$0.65 |
$0.77 |
|||
| Notes to Non-GAAP adjustments | |||||||
| (1) Amortization of intangible asset for period as shown above is removed | |||||||
| (2) Acquisition related expenses for period shown above is removed | |||||||
| (3) Income taxes are increased by impact of (1) at ISS' marginal tax rate of 34% | |||||||
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Image Sensing Systems, Inc. Unadudited Condensed Consolidated Balance Sheet (in thousands) |
|||||
September 30, 2010 |
December 31, 2009 |
||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | $9,361 |
$14,084 |
|||
| Investments | 3,590 |
3,935 |
|||
| Receivables, net | 7,876 |
5,660 |
|||
| Inventories | 3,529 |
2,734 |
|||
| Prepaid expenses and deferred taxes | 1,696 |
916 |
|||
26,052 |
27,329 |
||||
| Property and equipment, net | 1,095 |
998 |
|||
| Deferred income taxes | - |
1,485 |
|||
| Goodwill and intangible assets, net | 22,536 |
11,338 |
|||
$49,683 |
$41,150 |
||||
| Liabilities and Shareholders' Equity | |||||
| Current liabilities | |||||
| Accounts payable and accrued expenses | $3,669 |
$2,454 |
|||
| Bank debt | - |
4,000 |
|||
| Earnout payable | 1,010 |
1,541 |
|||
| Income taxes payable | 10 |
234 |
|||
4,689 |
8,229 |
||||
| Deferred income taxes | 391 |
- |
|||
| Income taxes payable | 186 |
208 |
|||
| Shareholders' equity | 44,417 |
32,713 |
|||
$49,683 |
$41,150 |
||||
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Image Sensing Systems, Inc. Unaudited Condensed Consolidated Statement of Cash Flows (in thousands) |
||||
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Nine-Month Period Ended September 30 |
||||
2010 |
2009 |
|||
| Operating activities | ||||
| Net income | $1,896 |
$2,991 |
||
| Adjustments to reconcile net income to net cash provided by operations | ||||
| Depreciation and amortization | 1,157 |
906 |
||
| Stock option expense | 251 |
266 |
||
| Changes in operating assets and liabilities | (2,640) |
(1,217) |
||
| Net cash provided by (used in) operating activities | 664 |
2,946 |
||
| Ivesting activities | ||||
| Cash paid to sellers of CitySync equity | (7,871) |
- |
||
| Repayment of CitySync seller loans | (445) |
- |
||
| Purchase of property and equipment, net of disposals | (224) |
(496) |
||
| Payment of EIS earnout | (1,541) |
(1,192) |
||
| Sales of investments | 345 |
60 |
||
| Net cash used in investing activities | (9,736) |
(1,628) |
||
| Financing activities | ||||
| Repayment of bank debt | (4,556) |
(3,750) |
||
| Net proceeds from common stock offering | 8,818 |
- |
||
| Proceeds from exercise of stock options | 87 |
4 |
||
| Net cash provided by (use in) financing activities | 4,349 |
(3,746) |
||
| Decrease in cash and cash equivalents | (4,723) |
(2,428) |
||
| Cash and cash equivalents, beginning of period | 14,084 |
10,289 |
||
| Cash and cash equivalents, end of period | $9,361 |
$7,861 |
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