Costar Technologies, Inc. Announces Financial Results For the Fourth Quarter and Year Ended December 31, 2020

Rhea-AI Summary

Costar Technologies, Inc. (CSTI) reported a 23.4% decline in Q4 2020 revenues, totaling $12,972, compared to Q4 2019. Despite decreased revenues, operating expenses fell 31.2% to $4,368. In 2020, total revenues reached $60,367, down 13.2% year-over-year, while operating expenses dropped 19.4% from $28,117 in 2019. The company achieved a GAAP net income of $12 for Q4 2020, contrasting a net loss of $8,971 for the year. Adjusted EBITDA showed improvement at $2,264 for 2020, up from $617 in 2019.

Positive

• Achieved GAAP net income of $12 in Q4 2020, a significant turnaround from a net loss of $1,467 in Q4 2019.
• Reduced operating expenses by 31.2% in Q4 2020, contributing to overall cost management.
• Adjusted EBITDA increased to $2,264 for the year, significantly improved from $617 in 2019.

Negative

• Revenues decreased by 23.4% in Q4 2020 compared to Q4 2019.
• Total revenues for 2020 dropped 13.2% year-over-year.
• GAAP net loss for 2020 reached $8,971, compared to a net loss of $2,698 in 2019.

COPPELL, Texas, March 29, 2021 /PRNewswire/ -- Costar Technologies, Inc. (the "Company") (OTC Markets Group: CSTI) announced today its financial results for the fourth quarter and year ended December 31, 2020.

Financial Results for the Quarter Ended December 31, 2020

• Revenues of $12,972, a 23.4% decrease compared to the fourth quarter of 2019.

• Operating expenses were down 31.2% to $4,368, compared to $6,348 in the fourth quarter of 2019. The $6,348 of operating expenses in the fourth quarter of 2019 excludes $498 relating to the change in earnout fair.

• GAAP net income of $12 or $0.01 per diluted share, compared to GAAP net loss of $1,467, or ($0.94) per diluted share, in the fourth quarter of 2019.

• Adjusted earnings of ($156), or ($0.09) per diluted share, compared to ($531), or ($0.34) per diluted share, for the quarter ended December 31, 2019. Adjusted earnings, a non-GAAP measure, is defined below.

• Adjusted EBITDA of $140, compared to ($286) for the quarter ended December 31, 2019. Adjusted EBITDA, a non-GAAP measure, is defined below.

Financial Results for the Year Ended December 31, 2020

• Revenues of $60,367, a 13.2% decrease compared to the prior year.

• Operating expenses, net of a goodwill impairment loss of $939 and restructuring costs of $635, were down 19.4% to $21,368, compared to $28,117 in 2019. The $28,117 of operating expenses in 2019 excludes $498 relating to the change in earnout fair.

• GAAP net loss of $8,971, or ($5.59) per diluted share, compared to a GAAP net loss of $2,698, or ($1.72) per diluted share, in 2019.

• Adjusted earnings of $880, or $0.55 per diluted share, compared to ($494), or ($0.32) per diluted share, for the year ended December 31, 2019. Adjusted earnings, a non-GAAP measure, is defined below.

• Adjusted EBITDA of $2,264, compared to $617 for the year ended December 31, 2019. Adjusted EBITDA, a non-GAAP measure, is defined below.

Scott Switzer, the Company's Interim Chief Executive Officer stated, "In 2020 Costar Technologies faced the many challenges of COVID-19 and the associated impact to the business. The Costar team responded, developed and executed a restructuring plan to right size the business while not losing sight of new product development and the needs of our customers. We expanded our product portfolio to include a new line of NDAA compliant cameras and solutions. As we look to 2021, we are seeing evidence of increased activity in key markets as many of our customers return to full operations and resume projects that were placed on hold with the global pandemic."

Sarah Ryder, the Company's Chief Financial Officer went on to say, "The unification of our departments through our One Costar initiative drove efficiencies in many areas of the business, allowing us to generate positive income in the fourth quarter of 2020. The result of the unification also drove company-wide efficiencies which led to a large reduction in operational expenses. I am encouraged with how well the organization has adopted the One Costar Initiative and continue to be optimistic with the recent increase we are seeing in sales activity."

The Company's independent auditors completed their analysis of the Company's financial condition. The Independent Auditor's Report, including financial statements and applicable footnote disclosures, is available on our website at www.costartechnologies.com.

Non-GAAP Financial Measures

The Company defines adjusted earnings, a non-GAAP measure, as net income (loss) excluding stock-based compensation and amortization of acquisition-related intangible assets. The Company defines adjusted EBITDA, a non-GAAP measure, as earnings before interest, taxes, depreciation, amortization and stock-based compensation. The following tables reconcile the non-GAAP financial measures disclosed in this release to GAAP net income (loss):

		Quarter Ended 12/31/20	Quarter Ended 12/31/2019	Year Ended 12/31/20	Year Ended 12/31/19
	Adjusted Earnings	(156)	(531)	880	(494)
	Less:
	Stock-Based Compensation	(73)	(115)	(185)	(412)
	Intangible Amortization	(319)	(323)	(1,272)	(1,294)
	Contingent Consideration Fair Value Adjustment		(498)		(498)
	Restructuring Costs			(635)
	Impairment Loss			(939)
	Revaluation of Deferred Tax Asset			(4,614)
	Modification to Inventory Reserve Policy	560		(2,206)
	Net Income (Loss)	12	(1,467)	(8,971)	(2,698)
		Quarter Ended 12/31/20	Quarter Ended 12/31/2019	Year Ended 12/31/20	Year Ended 12/31/19
	Adjusted EBITDA	140	(286)	2,264	617
	Less:
	Interest	(213)	(314)	(916)	(1,320)
	Income Taxes (Benefit)	29	187	(4,624)	661
	Depreciation	(112)	(118)	(458)	(452)
	Intangible Amortization	(319)	(323)	(1,272)	(1,294)
	Stock-Based Compensation	(73)	(115)	(185)	(412)
	Contingent Consideration Fair Value Adjustment		(498)		(498)
	Restructuring Costs			(635)
	Impairment Loss			(939)
	Modification to Inventory Reserve Policy	560		(2,206)
	Net Income (Loss)	12	(1,467)	(8,971)	(2,698)

These reconciliations of GAAP to non-GAAP measures should be considered together with the Company's financial statements. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company's management believes that this information can assist investors in evaluating the Company's operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate the Company's financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures.

About Costar Technologies, Inc.

Costar Technologies, Inc. develops, designs, manufactures and distributes a range of security solution products including surveillance cameras, lenses, digital video recorders and high-speed domes. The Company also develops, designs and distributes industrial vision products to observe repetitive production and assembly lines, thereby increasing efficiency by detecting faults in the production process. Headquartered in Coppell, Texas, the Company's shares currently trade on the OTC Markets Group under the ticker symbol "CSTI". Costar was ranked as the 40^th largest company in a&s magazine's Security 50 for 2020. Security 50 is an annual ranking by the magazine of the world's largest security manufacturers in the areas of video surveillance, access control and intruder alarms, based on sales revenue.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements, including statements regarding the Company's ability to grow revenue and earnings, that are subject to substantial risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements, including but not limited to risks related to the ability to diversify business across vertical markets, secure new customer wins, and launch new products. You can often identify forward-looking statements by words such as "believe," "may," "estimate," "continue," "anticipate," "intend," "plan," "expect," "predict," "potential," or the negative of these terms or other comparable terminology. These forward-looking statements are based on management's current expectations, but they involve risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of the risks and uncertainties.

You should not place undue reliance on any forward-looking statements. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable laws.

COSTAR TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS SHOWN IN THOUSANDS)
				December 31, 2020			December 31, 2019
ASSETS
Current assets
Cash and cash equivalents				$	480		$	1
Accounts receivable, less allowance for doubtful accounts
of $175 and $396, respectively					8,579			9,056
Inventories					14,225			20,196
Prepaid expenses and other current assets					2,170			2,295
	Total current assets				25,454			31,548
Non-current assets
Property and equipment, net					533			910
Deferred financing costs, net					20			59
Deferred tax asset, net								4,514
Intangible assets, net					6,411			7,683
Goodwill					5,574			6,513
Right of use assets, net					2,185			3,131
Other non-current assets					149			149
	Total non-current assets				14,872			22,959
	Total assets			$	40,326		$	54,507
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable				$	4,591		$	5,639
Accrued expenses and other current liabilities					5,141			5,879
Line of credit					13,024			15,953
Current maturities of long-term debt, net of unamortized
financing fees					3,592			781
Contingent purchase price								1,490
Current maturities of notes payable, unrelated party								583
Current maturities of lease liabilities					1,049			990
	Total current liabilities				27,397			31,315
Long-Term liabilities
Long-term debt, net of current maturities and
unamortized financing fees								3,592
Payroll Protection Program loan					3,025
Deferred tax liability					116
Non-current maturities of lease liabilities					1,340			2,389
	Total long-term liabilities				4,481			5,981
	Total liabilities				31,878			37,296
Stockholders' Equity
Preferred stock
Common stock					3			3
Additional paid-in capital					157,686			157,478
Accumulated deficit					(144,720)			(135,749)
Less common stock held in treasury, at cost					(4,521)			(4,521)
	Total stockholders' equity				8,448			17,211
	Total liabilities and stockholders' equity			$	40,326		$	54,507

 

 

 

COSTAR TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS SHOWN IN THOUSANDS, EXCEPT NET INCOME PER SHARE)
					For the Three Months Ended December 31,						For the Years Ended December 31,
				2020			2019			2020			2019
Net revenues				$	12,972		$	16,938		$	60,367		$	69,526
Cost of revenues					8,408			11,433			40,857			42,960
Gross profit					4,564			5,505			19,510			26,566
Selling, general and administrative expenses					3,587			5,037			17,035			22,395
Engineering and development expense					781			1,311			4,333			5,722
Restructuring costs											635
Impairment loss											939
Change in fair value of contingent
purchase price								498						498
					4,368			6,846			22,942			28,615
Income (Loss) from operations					196			(1,341)			(3,432)			(2,049)
Other expenses
	Interest expense				(213)			(314)			(916)			(1,320)
	Other income, net							1			1			10
Total other expenses, net					(213)			(313)			(915)			(1,310)
Income (Loss) before taxes					(17)			(1,654)			(4,347)			(3,359)
Current income tax (benefit) expense					(6)			597			(6)			123
Deferred income tax expense (benefit)					(23)			(784)			4,630			(784)
Net Income (Loss)				$	12		$	(1,467)		$	(8,971)		$	(2,698)
Net income (loss) per share:
	Basic			$	0.01		$	(0.94)		$	(5.60)		$	(1.72)
	Diluted			$	0.01		$	(0.94)		$	(5.60)		$	(1.72)
Weighted average shares outstanding:
	Basic				1,625			1,568			1,603			1,568
	Diluted				1,645			1,568			1,603			1,568

 

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SOURCE Costar Technologies, Inc.

FAQ

What were Costar Technologies' Q4 2020 financial results?

Costar Technologies reported Q4 2020 revenues of $12,972, a 23.4% decrease from Q4 2019, with a GAAP net income of $12.

How did Costar Technologies perform in 2020 compared to 2019?

In 2020, Costar Technologies had total revenues of $60,367, a 13.2% decline from 2019, with a GAAP net loss of $8,971.

What improvements were seen in Costar's adjusted EBITDA for 2020?

Costar's adjusted EBITDA improved to $2,264 in 2020, compared to $617 in 2019.

What operational cost reductions did Costar Technologies achieve?

Operating expenses decreased by 19.4% in 2020, down to $21,368 from $28,117 in 2019.