Autoscope Technologies Corporation Announces Financial Results and Increases Quarterly Dividend to $0.15 per Share
Minneapolis, Minn., November 7, 2024--Autoscope Technologies Corporation (OTCQX: AATC) today announced results for its quarter and nine months ended September 30, 2024. Net income from continuing operations for the quarter ended September 30, 2024, was $0.25 and $0.24 per basic and diluted share, respectively. Net income from continuing operations for the nine months ended September 30, 2024, was $0.69 per basic and diluted share. The Board of Directors has authorized and declared a quarterly cash dividend of $0.15 per share of its common stock. The dividend is payable on November 25, 2024 to the shareholders of record at the close of business on November 18, 2024.
Third Quarter 2024 Financial Summary
- Royalties decreased 12 percent in the third quarter of 2024 to $3.3 million compared to $3.8 million in the same period in the prior year.
- Operating expenses from continuing operations decreased 12 percent to $1.6 million in the third quarter of 2024 compared to $1.8 million in the same period in the prior year.
- Income from operations decreased 11 percent in the third quarter of 2024 to $1.6 million compared to $1.8 million for the same period in the prior year.
First Nine Months of 2024 Financial Summary
- Royalties decreased 3 percent in the first nine months of 2024 to $10.2 million compared to $10.5 million in the same period in the prior year.
- Operating expenses from continuing operations decreased 11 percent to $5.2 million in the first nine months of 2024 compared to $5.8 million in the same period in the prior year.
- Income from operations increased 12 percent in the first nine months of 2024 to $4.7 million compared to $4.1 million for the same period in the prior year.
Third-Quarter Results
Revenue from continuing operations 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 $3.4 million in the third quarter of 2024, an 11 percent decrease from $3.8 million in the same period of 2023. Revenue from royalties was $3.3 million in the third quarter of 2024, a 12 percent decrease from $3.8 million in the third quarter of 2023. Royalty revenues decreased in the third quarter of 2024 in comparison to the third quarter of 2023 due to lower sales prices in the third quarter of 2024 and the sales order backlog fulfillment that occurred in the third quarter of 2023 as a result of increased availability of components. Product sales in the third quarter of 2024 were $50,000 compared to $0 in the third quarter of 2023. The increased product sales were primarily due to sales of our Wrong Way and Autoscope products in the third quarter of 2024, which had no sales in the same period of 2023.
Gross margin from continuing operations was unchanged at 96 percent for the third quarter of 2024 and 96 percent for the same period in 2023. Royalty gross margin for the third quarter of 2024 was 97 percent, unchanged from 97 percent for the same period in 2023. Product sales gross margin for the third quarter of 2024 was 10 percent due to the low sales volume and amortization costs associated with capitalized software development, which are fixed. There was no product sales gross margin percent in the third quarter of 2023 because there were no product sales in that period.
Operating expenses were $1.6 million in the third quarter of 2024, a 12 percent decrease compared to $1.8 million in the same period of 2023. The decrease in operating expenses is primarily due to decreased salaries and benefits due to decreased headcount.
The Company recognized a tax expense of $318,000 in the third quarter of 2024, compared to a tax expense of $437,000 in the prior year period. The decreased tax expense is primarily due to the lower pre-tax net income from continuing operations.
The Company reported net income from continuing operations for the third quarter 2024 of $1.3 million or $0.25 per basic share and $0.24 per diluted share compared to net income from continuing operations of $1.5 million or $0.27 per basic and diluted share in the prior year period. This decrease is the result of lower revenue, offset by a decrease in operating expenses in the third quarter of 2024 compared to the same period in 2023.
Year-to-Date Results
AATC’s revenue for the first nine months of 2024 was $10.3 million, a 2 percent decrease from revenue of $10.5 million in the first nine months of 2023. Revenue from royalties decreased 3 percent to $10.3 million in the first nine months of 2024 compared to $10.5 million in the same period in 2023. Royalty revenues decreased during the first nine months of 2024 compared to the first nine months of 2023 due to lower sales prices in the first nine months of 2024 and the sales order backlog fulfillment that occurred in the first nine months of 2023 as a result of increased availability of components. Product sales were $137,000 in the first nine months of 2024, a 93 percent increase from $71,000 in the first nine months of 2023. The increased product sales were primarily due to sales of our Wrong Way and Autoscope products in the first nine months of 2024, which had no sales in the same period of 2023, offset by the expected decline of the Company's legacy video detection product sold in the Europe, Middle East and Africa ("EMEA") markets.
Gross margin for the first nine months of 2024 was 96 percent, a 1 percentage point increase from a gross margin of 95 percent for the same period in 2023. Gross margin from royalties for the first nine months of 2024 was 97 percent, unchanged from 97 percent in the first nine months of 2023. As a percent of revenue, product sales gross margin increased to -8 percent in the first nine months of 2024 compared to -203 percent in the prior year period. Product sales gross margin percentages were negative for the first nine months of 2024 and the same period in 2023 due to the amortization of capitalized software development, which is fixed. The increase in the product sales gross margin percent was primarily the result of higher product sales and lower costs, primarily due to lower inventory obsolescence recognized for discontinued video products.
Operating expenses were $5.2 million in the first nine months of 2024, an 11percent decrease compared to $5.8 million in the same period of 2023. The decrease in operating expenses is primarily due to decreased salaries and benefits due to decreased headcount and decreased spending on building maintenance projects.
The Company recognized a tax expense of $987,000 in the first nine months of 2024, compared to a tax expense of $936,000 in the prior year period. The increased tax expense is primarily due to the higher pre-tax net income from continuing operations.
The Company’s net income from continuing operations for the first nine months of 2024 was $3.7 million, or $0.69 per basic and diluted share, compared to a net income from continuing operations of $3.4 million, or $0.63 per basic and diluted share, in the first nine months of 2023. The increase is primarily the result of lower operating expenses partially offset by lower gross margins as a result of product and royalty revenue mix and lower investment income in the first nine months of 2024 compared to the same period in 2023.
On a non-GAAP basis, excluding the amortization of intangible assets and depreciation for the applicable periods, operating income from continuing operations for the third quarter of 2024 was $1.8 million compared to operating income from continuing operations of $2.0 million in the prior year period and $5.1 million for the first nine months of 2024 compared to $4.6 million in the same period of 2023.
Liquidity and Capital Resources
As of September 30, 2024, we had $4.3 million in cash and cash equivalents compared to $6.5 million on December 31, 2023.
Net cash provided by operating activities of continuing operations was $3.2 million in the first nine months of 2024 compared to net cash provided by operating activities of continuing operations of $2.9 million in the same period in 2023. Net cash provided by operating activities of continuing operations increased in the first nine months 2024 compared to the same period in 2023 primarily due to higher net income, increased cash provided by accounts receivable due to timing of sales, and lower inventory purchases, offset by increased cash used for accounts payable in 2024 compared to 2023 relating inventory purchased during the fourth quarter of 2023. In addition, we paid all accounts payable as of September 30, 2024 in preparation for our transition to a new ERP system in the fourth quarter of 2024.
Net cash provided by investing activities of continuing operations was $4.0 million in the first nine months of 2024 compared to net cash used by investing activities of continuing operations of $5.1 million in the same period in 2023. The increase in net cash provided by investing activities of continuing operations in the first nine months of 2024 compared to the same period in the prior year is primarily the result of sales of debt securities previously purchased as investments. Sales of debt securities were $8.6 million in the first nine months of 2024 compared to $4.9 million in the first nine months of 2023, offset by purchases of debt securities of $4.5 million in the first nine months of 2024 and $10.0 million in the first nine months of 2023. Proceeds from the sale of debt securities during the first nine months of 2024 were used to fund the special one-time dividend paid in February 2024. Cash used for purchases of property and equipment increased during the first nine months of 2024 compared to the same period in 2023 due to payments made for a new ERP system launched in October 2024.
Net cash used by financing activities of continuing operations was $9.4 million in the first nine months of 2024 compared to net cash used by financing activities of continuing operations of $1.5 million in the first nine months of 2023. The increase in net cash used for financing activities of continuing operations in 2024 is due to the special one-time dividend paid in February 2024 of $1.32 per share, totaling $7.2 million. There was no special cash dividend paid in the first nine months of 2023. In addition, the Company made cash dividend payments of $0.39 per share, totaling $2.1 million in the first nine months of 2024, compared to cash dividend payments of $0.26 per share, totaling $1.4 million in the same period of 2023. This difference is due to timing as the third quarter 2023 cash dividend payment of $0.13 per share totaling $0.7 million was not made prior to the end of the third quarter 2023 and was paid on October 9, 2023.
“We are pleased with the continued strong demand for Autoscope Vision and with the introduction of Autoscope Analytics, we can take advantage of strong market momentum as communities increasingly adopt our solutions to drive impactful safety improvements. We remain committed to supporting these communities in pursuing Vision Zero,” said Andy Markese, Interim CEO of Autoscope Technologies and President and CEO of Image Sensing Systems. “Our data-driven approach is already yielding significant results, empowering cities in California, Ohio, and Texas to accelerate their Vision Zero initiatives and create safer streets with improved efficiency and precision,” concluded Mr. Markese.
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 results fluctuate from quarter to quarter due to, among other reasons, the fact that our operating costs tend to be fixed, while our revenue tends to be seasonal; 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, and the conflict between Israel and Hamas; 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 Periods Ended September 30, |
|
Nine-Month Periods Ended September 30, |
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Revenue |
|
|
|
|
|
|
|
|
Royalties |
$ 3,329 |
|
$ 3,792 |
|
$ 10,154 |
|
$ 10,459 |
|
Product sales |
50 |
|
- |
137 |
71 |
||
|
|
3,379 |
3,792 |
|
10,291 |
|
10,530 |
|
|
Cost of revenue |
150 |
|
133 |
463 |
|
542 |
|
|
Gross profit |
3,229 |
|
3,659 |
9,828 |
|
9,988 |
|
|
|
96% |
|
96% |
|
96% |
95% |
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Selling, general and administrative |
1,002 |
|
1,154 |
|
3,410 |
|
3,859 |
|
Research and development |
595 |
664 |
|
1,761 |
|
1,979 |
|
|
|
1,597 |
|
1,818 |
|
5,171 |
|
5,838 |
|
Income from operations |
1,632 |
|
1,841 |
|
4,657 |
|
4,150 |
|
Other income |
9 |
|
9 |
|
29 |
|
26 |
|
Investment income |
32 |
|
72 |
|
89 |
|
199 |
|
Interest expense, net |
(16) |
(17) |
(49) |
(52) |
|||
|
Income before income taxes |
1,657 |
|
1,905 |
|
4,726 |
|
4,323 |
|
Income tax expense |
318 |
|
437 |
|
987 |
|
936 |
|
Net income from continuing operations |
1,339 |
|
1,468 |
|
3,739 |
|
3,387 |
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
Net income from discontinued operations, net of tax |
- |
|
48 |
|
|
|
98 |
|
Gain on disposal of discontinued operations, net of tax |
- |
|
2,031 |
|
- |
|
2,031 |
|
Earnings from discontinued operations, net of tax |
- |
|
2,079 |
|
- |
|
2,129 |
|
Consolidated net income |
$ 1,339 |
|
$ 3,547 |
|
$ 3,739 |
|
$ 5,516 |
|
|
|
|
|
|
|
|
|
|
Net income per share from continuing operations, basic |
$ 0.25 |
|
$ 0.27 |
|
$ 0.69 |
|
$ 0.63 |
|
Net income per share from continuing operations, diluted |
$ 0.24 |
|
$ 0.27 |
|
$ 0.69 |
|
$ 0.63 |
|
Net income per share from discontinued operations, basic and diluted |
$ - |
|
$ 0.38 |
|
$ - |
|
$ 0.39 |
|
Net income per share from operations, basic |
$ 0.25 |
|
$ 0.65 |
|
$ 0.69 |
|
$ 1.02 |
|
Net income per share from operations, diluted |
$ 0.24 |
|
$ 0.65 |
|
$ 0.69 |
|
$ 1.02 |
|
|
|
|
|
|
|
|
|
|
Weighted shares - basic |
5,461 |
|
5,431 |
|
5,453 |
|
5,418 |
|
Weighted shares - diluted |
5,466 |
|
5,432 |
|
5,457 |
|
5,419 |
Autoscope Technologies Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
|
|
September 30, 2024 |
|
December 31, 2023 |
|
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
$ 4,323 |
|
$ 6,506 |
|
Receivables, net |
4,158 |
|
3,080 |
|
Inventories |
2,848 |
|
2,891 |
|
Investment in debt and equity securities |
2,113 |
|
5,923 |
|
Prepaid expenses and other current assets |
642 |
|
689 |
|
|
14,084 |
|
19,089 |
|
Property and equipment, net |
2,040 |
|
1,973 |
|
Intangible assets, net |
601 |
|
995 |
|
Deferred taxes |
2,480 |
|
3,471 |
|
Long term investment securities |
- |
|
101 |
|
Operating lease asset, net |
12 |
|
18 |
|
|
$ 19,217 |
|
$ 25,647 |
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
$ - |
|
$ 1,101 |
|
Current maturities on long-term debt |
62 |
|
60 |
|
Warranty and other current liabilities |
486 |
|
360 |
|
Current liabilities held for sale |
- |
|
24 |
|
|
548 |
|
1,545 |
|
Non-Current liabilities |
|
|
|
|
Long-term debt, net of current liabilities |
1,509 |
|
1,556 |
|
|
|
|
|
|
Shareholders’ equity |
17,160 |
|
22,546 |
|
|
$ 19,217 |
|
$ 25,647 |
|
|
|
|
|
Autoscope Technologies Corporation.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|
Nine-Month Periods Ended September 30, |
||
|
|
2024 |
|
2023 |
|
Operating activities |
|
|
|
|
Net income |
$ 3,739 |
|
$ 5,516 |
|
Less: Net income from discontinued operations, net of tax |
- |
|
2,129 |
|
Net income from continuing operations |
3,739 |
|
3,387 |
|
Adjustments to reconcile net income to net cash |
|
|
|
|
provided by operating activities |
|
|
|
|
Depreciation and amortization |
476 |
|
473 |
|
Stock-based compensation |
167 |
|
153 |
|
Loss on disposal of assets |
1 |
|
- |
|
Investment amortization |
69 |
|
(17) |
|
Realized gain on available for sale investments |
(32) |
|
- |
|
Unrealized gain on available for sale investments |
- |
|
(4) |
|
Unrealized gain on equity investments |
(4) |
|
(2) |
|
Amortization of debt issuance costs |
2 |
|
2 |
|
Deferred income tax expense |
982 |
|
920 |
|
Changes in operating assets and liabilities |
(2,181) |
|
(1,982) |
|
Net cash provided by operating activities of continuing operations |
3,219 |
|
2,930 |
|
Net cash provided by operating activities of discontinued operations |
- |
|
4,787 |
|
Net cash provided by operating activities |
3,219 |
|
7,717 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Purchases of property and equipment |
(151) |
|
(6) |
|
Sale of securities |
8,635 |
|
4,907 |
|
Purchase of securities |
(4,477) |
|
(9,969) |
|
Net cash provided (used) by investing activities of continuing operations |
4,007 |
|
(5,068) |
|
Net cash provided by investing activities of discontinued operations |
- |
|
946 |
|
Net cash provided (used) by investing activities |
4,007 |
|
(4,122) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Dividends paid |
(9,333) |
|
(1,408) |
|
Principal payments on long-term debt |
(47) |
|
(45) |
|
Net cash used by financing activities of continuing operations |
(9,380) |
|
(1,453) |
|
Net cash used by financing activities of discontinued operations |
- |
|
- |
|
Net cash used by financing activities |
(9,380) |
|
(1,453) |
|
|
|
|
|
|
Effect of exchange rate changes on cash |
(29) |
|
(65) |
|
Increase (decrease) in cash and cash equivalents |
(2,183) |
|
2,077 |
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
6,506 |
|
1,177 |
|
Cash and cash equivalents at end of period |
$ 4,323 |
|
$ 3,254 |
|
|
|
|
|
|
Non-Cash investing activities: |
|
|
|
|
Cash paid for interest |
50 |
|
52 |
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 Periods Ended September 30, |
|
Nine-Month Periods Ended September 30, |
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
$ 1,632 |
|
$ 1,841 |
|
$ 4,657 |
|
$ 4,150 |
|
Amortization of intangible assets |
132 |
|
131 |
|
394 |
|
394 |
|
Depreciation |
29 |
|
24 |
|
82 |
|
79 |
|
Non-GAAP income from continuing operations |
$ 1,793 |
|
$ 1,996 |
|
$ 5,133 |
|
$ 4,623 |
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.