GlobeNewswire Inc | Aug 12, 2021 04:05PM EDT

August 12, 2021

ST. PAUL, Minn., Aug. 12, 2021 (GLOBE NEWSWIRE) -- AutoscopeTechnologies Corporation (Nasdaq: AATC) today announced results for itsquarter and first halfendedJune 30, 2021and that its Board of Directors has authorized and declared a quarterly cash dividend of $0.12 per share of its common stock. The dividend is payable on August 30, 2021 to shareholders of record at the close of business on August 23, 2021.

Second Quarter 2021Financial Summary

-- Secondquarter royalties were $2.5 million, anincrease of 12 percent from the same period in the prior year. -- Second quarter product sales were $1.3 million, anincrease of 11percent from the same period in the prior year. -- Operating expenses totaled $2.1 million in thesecond quarter of 2021, adecrease of 14 percent from the prior year period. -- Capitalized software costs in thesecondquarter of 2021were $55,000 compared to no costs in the prior year period. -- Net income for thesecond quarter of 2021 totaled $752,000compared to a net income of $150,000 for the same period in the prior year. -- Cash balance increased to $8.4 million at June 30, 2021, up from $8.2 million at the end of the first quarter of2021.

FirstHalf2021Financial Summary

-- Royalties for the first half of2021remained constant at$4.3million compared to the same period in the prior year. -- Productsales for the first half of2021were $2.5million, anincreaseof11percent from the same period in the prior year. -- Operating expenses totaled $3.9million in the first half of2021, adecreaseof25percent from the prior year period. -- Capitalized software costs in the first half of2021were$178,000compared to $22,000 in the prior year period. -- The Company recognized other income of $931,000for the forgiveness of the Paycheck Protection Program loan and accrued interest during the first half of 2020, and there were no comparable items in the same period in 2021. -- Net income for the first half of2021totaled $1.9millioncompared to net income of $39,000for the same period in the prior year. -- Cash balance decreased to $8.4million at June 30, 2021, down from $8.6million when compared to the cash balance at December 31,2020.

Second-Quarter Results:

Second quarter revenue for AutoscopeTechnologies Corporation ("ATC," the "Company," "us," "we," or "our") in 2021 was $3.8million compared to $3.4million in the second quarter of 2020.Revenue from royalties was $2.5million in thesecondquarter of2021compared to $2.2million thesecondquarter of2020.Product sales increased to $1.3million in thesecondquarter of2021, an11percentincreasefrom $1.2million in thesecondquarter of2020.Autoscopevideo product sales and royalties were $154,000and $2.5million, respectively, and RTMS radar product sales were $1.2million in thesecondquarter of2021.

Gross margin for thesecond quarter of 2021was 78percent, a 4percentage point or 5 percentdecreasefrom a gross margin of 82percent for the same period in 2020. Gross margin from royalties remained constant at96percent in the second quarter of 2021 compared tothe second quarter of 2020.Product sales gross margin for thesecondquarter of2021was44percent compared to56percent in the prior year period.The decrease in the gross margin percent was primarily the result of a reduction in warranty reserve in the secondquarter of 2020.

The2021secondquarter net income includes operating expenses of $2.1million, a14percentdecreasefrom thesecondquarter of2020. The decrease in operating expenses isdue to the increase in capitalized software development costs and decreased headcount in the secondquarter of 2021 compared to the secondquarter of 2020.During thesecondquarter of2021, the Companycapitalized $55,000 of internal software development costs compared to no costsin the prior year period. The Company'snet income for thesecond quarter was $752,000, or $0.14 per diluted share compared to net income of $150,000or $0.03per 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 thesecond quarter of 2021was $1.1million compared to operating income of $621,000in the prior year period.

"AutoscopeTechnologies Corporation's financial results have been enhanced by the combinationof increased royalties and product sales along with improved cost efficiencies in its Image Sensing Systems subsidiary.

The team at Image Sensing Systems deserves credit for quickly adapting towards new methods and processes to achieve efficiency improvementswhile setting the course for broadeningour product development by laying the groundwork for the opening of our offshore Research and Developmentoffice later this year.

Autoscope'sphilosophy is to question everythinginour businessto ensure we build strong teams who produce winning products, while running a growing, efficient, and profitable operation to enable us to build an exceptional company and, in turn, provide excellent results to stockholders," said Andrew Berger, CEO of AutoscopeTechnologies Corporation.

Year-to-Date Results:

ATCs revenue for the firstsix monthsof 2021was $6.8million, a 3percentincreasefrom revenue of $6.5million in the firstsix monthsof 2020. Sales gross margin for the firstsix monthsof 2021was 77percent, a 4 percentage point or 5 percent decrease from the prior year period. The decreasein gross margin is mainly attributable to a lower percentage of revenue from royalties in the first halfof 2021in addition to a reduction in warranty reserve in the second quarter of 2020. Revenue from royalties remained constant at $4.3million in the firstsix monthsof 2021compared tothe same period in 2020. Product sales were $2.5million in the firstsix monthsof 2021, an11percentincreasefrom $2.2million in the firstsix monthsof 2020.

The firstsix monthsof revenue for 2021included Autoscopevideo product sales and royalties of $230,000and $4.3million, respectively, and RTMS radar product sales of $2.2million. Product sales gross margin for the firstsix monthsof 2021was46percent,a 7 percentage point or 13 percent decrease compared to the same period in the prior year. The decrease in product gross margin percent was primarily the result of a reduction in warranty reserve in the second quarter of 2020.

The Companys net income for the firstsix monthsof 2021was $1.9million, or $0.35per diluted share, compared to a net income of $39,000, or $0.01per diluted share, in the firstsix monthsof 2020. The firstsix monthsof 2021net income includes operating expenses of $3.9million, a 25percentdecreasefrom the same period in 2020. During the firstsix monthsof 2021, the Company capitalized $178,000of software development costs compared to $22,000in the firstsix monthsof 2020. Other income of $931,000was recorded during the first quarter of2021when the Company received forgiveness of the Paycheck Protection Program loan and accrued interest, and there were no comparable items in the first half of 2021.

On a non-GAAP basis, excluding intangible asset amortization, depreciation and restructuring charges for the applicable periods, operating income for the firstsix monthsof 2021was $1.8million compared to an operating income of $576,000in the firstsix monthsof 2020.

"Autoscope royalties posted a strong quarter, due in part to the introduction of pedestrian detection on our Autoscope Vision product line. Through deployment of deep learning, an Artificial Intelligence technique that enables appearance-based object detection, the Autoscope Vision platform now detects pedestrians waiting at the landing and monitors their movements within the crosswalk. The resultant data enables real-time activation of pedestrian calls and provide insights into the behaviors of vulnerable road users," said Chad Stelzig, CEO for Image Sensing Systems, Inc., a wholly-owned subsidiary of ATC.

"Within our highway segment we have experienced faster than anticipated adoption of our RTMS Echo product, supporting our expectation that it will be central to achieving our organic growth objectives and ensuring a smooth transition away from our legacy SX-300 platform. Our goal is to continue to evolve the Echo product through introduction of additional connectivity and interface options that support both traditional and future use cases.As we look toward the future we continue to strive for more meaningful, insightful data that allows transportation and urban planning professionals to better understand and influence the behaviors of roadway users," concluded Mr. Stelzig.

Non-GAAP Financial Measures:

We provide certain non-GAAP financial information as supplemental information to financial measures calculated and presented in accordance with GAAP (Generally Accepted Accounting Principles in the United States). This non-GAAP information excludes the impact of amortizing intangible assets and depreciation 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 maynot be computed the same as similarly titled measures used by other companies.

About AutoscopeTechnologies Corporation

AutoscopeTechnologies Corporationis 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 St. Paul, Minnesota. Visit us on the web at imagesensing.com.

Safe Harbor Statement:Statements made in this release concerning the Companys or managements 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 managements 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 Companys control; developments in the demand for the Companys products and services; relationships with the Companys 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; adverse weather conditions in our markets; the impact of governmental laws, regulations, and orders, including as a result of the COVID-19 pandemic causedby the coronavirus; international presence; tariffsand other trade barriers; our success in integrating any acquisitions; potential disruptions to our supply chains (including disruptions caused by geopolitical events, military actions, work stoppages, nature disasters, or international health emergencies, such as the COVID-19 pandemic) 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 Companys current expectations are contained in the Companys 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, 2020 filed on March 11, 2021.

Contact: Frank Hallowell, Chief Financial Officer AutoscopeTechnologiesCorporationPhone: 612.438.2363

AutoscopeTechnologies CorporationCondensed Consolidated Statements of Operations(in thousands, except per share information)(unaudited)

Three-Month Periods Six-Month Periods Ended June 30, Ended June 30, 2021 2020 2021 2020Revenue Product sales $ 1,305 $ 1,172 $ 2,468 $ 2,222Royalties 2,483 2,215 4,299 4,324 3,788 3,387 6,767 6,546Cost of revenue 827 611 1,533 1,234Gross profit 2,961 2,776 5,234 5,312 Operating expenses Selling, general and 1,516 1,563 2,882 3,472administrativeResearch and development 541 842 1,037 1,744 2,057 2,405 3,919 5,216Income from operations 904 371 1,315 96Other income, net - - 925 -Income from operations 904 371 2,240 96before income taxesIncome tax expense 152 221 357 57Net income $ 752 $ 150 $ 1,883 $ 39 Basic net income per share $ 0.14 $ 0.03 $ 0.35 $ 0.01Diluted net income per $ 0.14 $ 0.03 $ 0.35 $ 0.01share Weighted shares - basic 5,341 5,296 5,332 5,281Weighted shares - diluted 5,350 5,299 5,343 5,299

AutoscopeTechnologies CorporationCondensed Consolidated Balance Sheets(in thousands)(unaudited)

June 30, December 31, 2021 2020Assets Current assets Cash and cash equivalents $ 8,427 $ 8,605Receivables, net 3,498 2,261Inventories 723 770Prepaid expenses and other current assets 430 480 13,078 12,116Property and equipment, net 227 303Operating lease asset, net 30 136Intangible assets, net 2,957 3,161Deferredincome taxes 5,360 5,708 $ 21,652 $ 21,424Liabilities and Shareholders? Equity Current liabilities Accounts payable $ 335 $ 547Short-term debt - 349Warranty and other current liabilities 659 576 994 1,472 Non-current liabilities Operating lease obligation 4 8Long-term debt - 574 4 582 Shareholders? equity 20,654 19,370 $ 21,652 $ 21,424



AutoscopeTechnologies CorporationCondensed Consolidated Statements of Cash Flows(in thousands)(unaudited)

Six-Month Periods Ended June 30, 2021 2020 Operating activities Net income $ 1,883 $ 39 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 462 480 Stock option expense 107 113 Deferred income tax expense 348 - Forgiveness income from PPP Loan (931 ) - Loss on disposal of assets 1 - Changes in operating assets and liabilities (1,161 ) 337 Net cash provided by operating activities 709 969 Investing activities Capitalized software development costs (178 ) (22 )Purchases of property and equipment (8 ) (102 )Net cash used for investing activities (186 ) (124 ) Financing activities Stock for tax withholding (35 ) (6 )Dividend distribution (644 ) - Proceeds from exercise of stock options 8 - Proceeds from PPP Loan - 924 Net cash provided by (used for) financing activities (671 ) 918 Effect of exchange rate changes on cash (30 ) (47 )Increase (decrease) in cash and cash equivalents (178 ) 1,716 Cash and cash equivalents at beginning of period 8,605 5,118 Cash and cash equivalents at end of period $ 8,427 $ 6,834

AutoscopeTechnologies CorporationNon-GAAP Income from Continuing Operations(in thousands)(unaudited)

We define non-GAAP income from operations as income from operations before amortization of intangible assets and depreciation 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 Six-Month Periods Ended June 30, Ended June 30, 2021 2020 2021 2020Income from operations $ 904 $ 371 $ 1,315 $ 96Amortization of intangible assets 195 188 382 362Depreciation 40 62 80 118Non-GAAP income from operations $ 1,139 $ 621 $ 1,777 $ 576

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 Companys financial performance by investors and financial analysts.