MINNEAPOLIS, March 21, 2024 (GLOBE NEWSWIRE) -- Autoscope Technologies Corporation (OTCQX: AATC) today announced results for its quarter and year ended December 31, 2023.

Fourth Quarter 2023 Financial Summary

  • Royalties increased 5 percent to $2.5 million compared to $2.4 million in the same period in the prior year.
  • Product sales increased 219 percent to $102,000 compared to $32,000 in the same period in the prior year.
  • Operating expenses from continuing operations were comparable at $2.0 million in the fourth quarter of 2023 and in the same period in the prior year period.  
  • There were no capitalized software costs in the fourth quarter of 2023 or the prior year.
  • Net income from continuing operations for the fourth quarter of 2023 totaled $1.1 million compared to $103,000 for the same period in the prior year.

2023 Full Year Financial Summary

  • 2023 royalties increased 58 percent to $13.0 million compared to $8.2 million in the prior year.
  • 2023 product sales decreased 53 percent to $173,000 compared to $366,000 in the prior year.
  • 2023 operating expenses from continuing operations increased 4 percent to $7.8 million compared to $7.5 million in the prior year.  
  • There were no capitalized software costs in 2023 compared to $534,000 in the prior year.
  • Net income from continuing operations for 2023 totaled $4.5 million, a $4.4 million increase from the prior year.
  • Net income from discontinued operations, net of tax, was $125,000 in 2023 compared to $1.1 million in the prior year.
  • The gain on sale of discontinued operations in 2023 was $2.0 million, net of tax, from the sale of the RTMS business to Sensys Networks, Inc. in August 2023. There was no comparable sale in the prior year.
  • Cash balance increased to $6.5 million from $1.2 million at the end of the prior year.

Fourth-Quarter Results

The 2023 fourth-quarter 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 $2.6 million compared to $2.4 million in the fourth quarter of 2022. Revenue from royalties was $2.5 million in the fourth quarter of 2023 compared to $2.4 million in the fourth quarter of 2022, a 5 percent increase. The increase in royalties resulted from increased selling prices and continued strong demand for Autoscope Vision in North America. Product sales were $102,000 in the 2023 fourth quarter compared to $32,000 in the fourth quarter of 2022, a 219 percent increase. The increase in product sales was primarily due to increased sales of Wrong Way detection products.

Gross margin for the fourth quarter of 2023 was 93 percent, a 1-percentage point decrease from a gross margin of 94 percent for the same period in 2022. Royalty gross margin for the fourth quarter of 2023 was unchanged at 96 percent. Product sales gross margin percent for the fourth quarter of 2023 was 16 percent compared to (53) percent in the prior year period. The increase in the product sales gross margin percent was the result of higher sales of Wrong Way detection products, which have higher margins due to the lack of fixed costs associated with capitalized software development amortization.

Investment income was $178,000 for the fourth quarter of 2023 compared to $41,000 in the prior year period. The increase in investment income is a result of the increased investments, primarily in debt securities.

The Company recognized a tax benefit of $437,000 compared to a tax expense of $189,000 in the prior year period. The tax benefit resulted from changes in the valuation allowance against deferred tax assets.

The Company reported net income from continuing operations for the fourth quarter of 2023 of $1.1 million or $0.20 per basic and diluted share, compared to a net income of $103,000 or $0.02 per basic and diluted share in the prior year period. This increase is primarily due to increased royalty revenue, increased investment income, and the income tax benefit recognized during the fourth quarter of 2023 compared to the same period in 2022.

Full Year Results

Revenue from continuing operations increased $4.6 million in 2023 compared to 2022. Royalty income increased to $13.0 million in 2023 compared to $8.2 million in 2022, an increase of 58.4 percent. The increase in royalty revenue resulted primarily from the increased availability of components to fulfill the sales order backlog in 2023 compared to 2022 in addition to increased end user selling prices and strong market demand for Autoscope Vision in North America. Product sales decreased to $173,000 in 2023 from $366,000 in 2022, a decrease of 52.7 percent. The decrease in product sales was primarily due to the expected decline of the Company’s legacy video detection product sold in the Europe, Middle East, and Africa (“EMEA”) markets.

Gross margins increased to 94.4 percent in 2023 compared to 91.5 percent in 2022. Gross margins on royalty sales increased to 96.7 percent in 2023 compared to 94.9 percent in 2022. Gross profit for royalties in 2023 increased $4.6 million or 58.9 percent compared to the prior year. The increase in royalty gross profits and percentage is primarily the result of increased volume and increased end user selling prices for Autoscope Vision. Gross margin on product sales decreased to (74.0) percent in 2023 from 16.1 percent in 2022. Product sales gross profit in 2023 decreased $187,000 or 316.9 percent compared to the prior year. The decrease in product sales gross margin percent was the result of lower margin sales on planned discontinued video detection products, as well as inventory obsolescence recognized for these discontinued products and fixed costs associated with capitalized software development cost amortization.

Investment income was $377,000 for the year ended December 31, 2023 compared to $24,000 for the year ended December 31, 2022. The increase in investment income is a result of the increased investments, primarily in debt securities.

Consolidated net income from continuing operations was $4.5 million, or $0.83 per basic and diluted share, in 2023 compared to $149,000, or $0.03 per basic and diluted share, in 2022.

Liquidity and Capital Resources

As of December 31, 2023, we had $6.5 million in cash and cash equivalents compared to $1.2 million on December 31, 2022.

Net cash provided by operating activities of continuing operations increased to $5.0 million in 2023 compared to net cash used by operating activities of continuing operations of $0.6 million in 2022. Net cash provided by continuing operating activities increased in 2023 compared to the prior year primarily as the result of higher net income, higher accounts payable, lower accounts receivables, and lower deferred taxes offset by higher inventory in 2023 compared to 2022.

Net cash used by investing activities of continuing operations was $2.0 million in 2023 compared to net cash used by investing activities of continuing operations of $5.0 million in 2022. The decrease in the amount of net cash used by investing activities of continuing operations in 2023 compared to the prior year is primarily the result of lower net activity of purchases and sales of securities, lower purchases of property and equipment and lower capitalized software development costs. To generate a greater return on our cash position, the Company purchased and sold various debt and equity securities, the net of which was $2.0 million during 2023, compared to $4.4 million in 2022.

Net cash used by financing activities of continuing operations was $2.9 million in 2023 compared to net cash used of $2.6 million in 2022. The increase in net cash used for financing activities of continuing operations is primarily due to higher quarterly cash dividends paid in 2023 compared to 2022. The Company paid quarterly cash dividends of $0.13 per share in 2023 compared to quarterly cash dividends of $0.12 per share in 2022.

“Overall, we are pleased with our top-line performance as demand for Autoscope Vision remains strong. The 2023 sale of the RTMS radar business has enabled us to focus our resources on creating additional value by leveraging our video detection expertise with the benefit of a reduction in overall operational expenses. We are encouraged by the wide market adoption of video technology and the markets emphasis on safety, which reaffirms our dedication to developing solutions aimed at improving roadway safety and efficiency for all users, including our latest innovation, Autoscope IntelliSight,” said Andy Markese, Interim CEO of Autoscope Technologies and President and CEO of Image Sensing Systems. “Our financial position remains strong, providing us with sufficient capital to meet the needs of the business going forward,” 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 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, 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 Ended
December 31,		 Twelve-Month Period Ended
December 31,
  2023   2022   2023   2022 
Revenue       
Royalties$2,501  $2,371  $12,960  $8,183 
Product sales 102   32   173   366 
  2,603   2,403   13,133   8,549 
Cost of revenue 187   154   729   727 
Gross profit 2,416   2,249   12,404   7,822 
  93%  94%  94%  91%
Operating expenses       
Selling, general and administrative 1,355   1,408   5,214   5,358 
Research and development 598   585   2,577   2,120 
  1,953   1,993   7,791   7,478 
Income from operations 463   256   4,613   344 
Other income 53   13   79   42 
Investment income 178   41   377   24 
Interest expense, net (17)  (18)  (69)               (71)
Income before income taxes 677   292   5,000   339 
Income tax expense (benefit) (437)  189   499   190 
Net income from continuing operations 1,114   103   4,501   149 
        
Discontinued operations       
Net income from discontinued operations, net of tax 27   365   125   1,054 
Gain (loss) on disposal of discontinued operations, net of tax (32)  -   1,999   - 
Earnings (loss) from discontinued operations (5)  365   2,124   1,054 
        
Consolidated net income$1,109  $468  $6,625  $1,203 
        
Net income per share from continuing operations, basic and diluted$0.20  $0.02  $0.83  $0.03 
Net income per share from discontinued operations, basic and diluted$(0.00) $0.07  $0.39  $0.20 
Net income per share from operations, basic and diluted$0.20  $0.09  $1.22  $0.22 
        
Weighted shares – basic 5,438   5,399   5,423   5,383 
Weighted shares – diluted 5,440   5,404   5,425   5,392 
                

Autoscope Technologies Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

 December 31,
2023		 December 31,
2022
Assets   
Current assets   
Cash and cash equivalents$6,506 $1,177
Receivables, net 3,080  3,688
Inventories 2,891  976
Investment in debt and equity securities 5,923  3,138
Prepaid expenses and other current assets 689  545
Current assets held for sale -  1,311
  19,089  10,835
Property and equipment, net 1,973  2,076
Intangible assets, net 995  1,521
Deferred taxes 3,471  4,475
Long term investment securities 101  1,054
Operating lease asset, net 18  3
Long term assets held for sale -  1,136
 $25,647 $21,100
Liabilities and Shareholders’ Equity   
Current liabilities   
Accounts payable$1,101 $423
Current maturities on long-term debt 60  58
Warranty and other current liabilities 360  273
Current liabilities held for sale 24  113
  1,545  867
Non-Current liabilities    
Long-term debt, net of current liabilities 1,556  1,616
    
Shareholders’ equity  22,546  18,617
 $25,647 $21,100
    

Autoscope Technologies Corporation.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 Year Ended December 31,
  2023   2022 
Operating activities   
Net income$6,625  $1,203 
Less: Net income from discontinued operations, net of tax 2,124   1,054 
Net income from continuing operations 4,501   149 
Adjustments to reconcile net income to net cash   
provided by operating activities   
Depreciation and amortization 632   593 
Stock-based compensation 187   381 
Loss on disposal of assets 3   6 
Investment amortization (76)  7 
Realized loss on available for sale investments -   20 
Realized (gain) loss on equity investments -   53 
Unrealized gain on available for sale investments (4)  - 
Unrealized loss on equity investments -   5 
Amortization of debt issuance costs 3   2 
Deferred income tax expense 425   159 
Changes in operating assets and liabilities (642)  (2,019)
Net cash provided (used) by operating activities of continuing operations 5,029   (644)
Net cash provided by discontinued operating activities 450   1,312 
Net cash provided by operating activities 5,479   668 
    
Investing activities   
Capitalized software development costs -   (534)
Purchases of property and equipment (6)  (74)
Sale of securities 8,220   1,936 
Purchase of securities (10,170)  (6,294)
Net cash used by investing activities of continuing operations (1,956)  (4,966)
Net cash provided (used) by investing activities of discontinued operations 4,757   (10)
Net cash provided (used) by investing activities 2,801   (4,976)
    
Financing activities   
Stock for tax withholding -   (14)
Dividends paid (2,822)  (2,589)
Proceeds from exercise of stock options 13   32 
Principal payments on long-term debt (60)  (58)
Net cash used by financing activities of continuing operations (2,869)  (2,629)
Net cash used by financing activities of discontinued operations -   - 
Net cash used by financing activities  (2,869)  (2,629)
    
Effect of exchange rate changes on cash (82)  (115)
Increase (decrease) in cash and cash equivalents 5,329   (7,052)
    
Cash and cash equivalents at beginning of period  1,177   8,229 
Cash and cash equivalents at end of period$6,506  $1,177 
    
Non-Cash investing activities:   
Cash paid for interest 69   72 
Cash paid for taxes -   11 

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
December 31,		 Twelve-Month Period Ended
December 31,
  2023  2022  2023  2022
        
Income from continuing operations$463 $256 $4,613 $344
Amortization of intangible assets 131  131  526  476
Depreciation 25  30  106  117
Non-GAAP income from continuing operations$619 $417 $5,245 $937
        

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:  Andrew Markese, Interim CEO of AATC and President and CEO of ISNS
 612-438-2363

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Source: Autoscope Technologies Corporation

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