Image Sensing Systems, Inc. Announces 2020 Third Quarter and Year-to-Date Financial Results

Rhea-AI Summary

Image Sensing Systems reported financial results for Q3 and the first nine months of 2020. Third quarter royalties were $2.2 million, down 7% year-over-year, while product sales rose 18% to $1.5 million. Net income fell significantly to $659,000 from $6.1 million in Q3 2019. Year-to-date results showed total revenue of $10.3 million, a 9% decrease compared to 2019. The company's cash balance increased to $7.5 million. Operating expenses rose 8% year-to-date, impacting overall profitability.

Positive

• Third quarter product sales increased 18% to $1.5 million.
• Royalties for the first nine months rose 3% to $6.5 million.
• Cash balance grew to $7.5 million from $5.1 million year-over-year.

Negative

• Third quarter royalties decreased by 7% from the prior year.
• Net income for Q3 2020 was $659,000, down from $6.1 million in Q3 2019.
• Product sales for the first nine months fell by 24% to $3.8 million.
• Operating expenses increased by 8% in the first nine months of 2020.

SAINT PAUL, Minn., Nov. 10, 2020 (GLOBE NEWSWIRE) --  Image Sensing Systems, Inc. (Nasdaq: ISNS) today announced results for its third quarter and nine months ended September 30, 2020.

Third Quarter 2020 Financial Summary

• Third quarter royalties were $2.2 million, a decrease of 7 percent from the same period in the prior year.
• Third quarter product sales were $1.5 million, an increase of 18 percent from the same period in the prior year.
• Operating expenses totaled $2.2 million in the third quarter of 2020, a decrease of 1 percent from the prior year period.
• There were no capitalized software costs in the third quarter of 2020 compared to $281,000 in the prior year period.
• Net income for the third quarter of 2020 totaled $659,000 compared to net income of $6.1 million for the same period in the prior year.
• A non-recurring, non-cash $5.2 million tax benefit was recorded during the third quarter of 2019.
• Cash balance increased to $7.5 million at September 30, 2020, up from $6.8 million at the end of the second quarter of 2020.
  

2020 Year-to-Date Financial Summary

• Royalties for the first nine months of 2020 were $6.5 million, an increase of 3 percent from the same period in the prior year.
• Product sales for the first nine months of 2020 were $3.8 million, a decrease of 24 percent from the same period in the prior year.
• Operating expenses totaled $7.4 million in the first nine months of 2020, an increase of 8 percent from the prior year period.
• Capitalized software costs in the first nine months of 2020 were $22,000 compared to $1.0 million in the prior year period.
• Net income for the first nine months of 2020 totaled $698,000 compared to net income of $7.1 million for the same period in the prior year.
• The Company received funding of $924,000 under the Paycheck Protection Program in the form of a loan in April 2020.
• Cash balance increased to $7.5 million at September 30, 2020, up from $5.1 million when compared to the cash balance at December 31, 2019.
  

Third-Quarter Results:

Third quarter revenue for Image Sensing Systems, Inc. ("ISS," the "Company," "us," "we," or "our") in 2020 was $3.8 million compared to $3.7 million in the third quarter of 2019. Revenue from royalties was $2.2 million in the third quarter of 2020 compared to $2.4 million the third quarter of 2019. Product sales increased to $1.5 million in the third quarter of 2020, an 18 percent increase from $1.3 million in the third quarter of 2019. Autoscope video product sales and royalties were $290,000 and $2.2 million, respectively, and RTMS radar product sales were $1.2 million in the third quarter of 2020.

Gross margin for the third quarter of 2020 was 76 percent, a 10 percentage point or 12 percent decrease from a gross margin of 86 percent for the same period in 2019. Gross margin from royalties was consistent at 96 percent in the third quarter of 2020 compared to 96 percent in the third quarter of 2019. Product sales gross margin for the third quarter of 2020 was 49 percent compared to 68 percent in the prior year period. The decrease in the gross margin percent was primarily the result of a reduction in warranty reserve and revenues related to consulting services in the third quarter of 2019. 

The 2020 third quarter net income includes operating expenses of $2.2 million, a 1 percent decrease from the third quarter of 2019. The decrease is primarily due to the decrease in capitalized software costs offset by lower operating expenses due to limited travel and decreased headcount in the third quarter of 2020 compared to the third quarter of 2019. During the third quarter of 2020, the Company capitalized no internal software development costs compared to $281,000 in the prior year period. The Company's net income for the third quarter was $659,000, or $0.12 per diluted share, compared to net income of $6.1 million, or $1.17 per diluted share, in the prior year period. The third quarter 2019 net income included a $5.2 million non-cash income tax benefit due to the release of a significant portion of the deferred tax asset valuation allowance of $5.4 million.

On a non-GAAP basis, excluding the amortization of intangible assets and depreciation for the applicable periods, the operating income for the third quarter of 2020 was $886,000 compared to operating income of $1.1 million in the prior year period.

Year-to-Date Results:

ISS’ revenue for the first nine months of 2020 was $10.3 million, a 9 percent decrease from revenue of $11.3 million in the first nine months of 2019. Sales gross margin for the first nine months of 2020 was 79 percent, a 1 percentage point or 1 percent increase from the prior year period. The increase in gross margin was the result of a higher percentage of revenue from royalties in the first nine months of 2020 compared to the first nine months of 2019. Revenue from royalties was $6.5 million in the first nine months of 2020 compared to $6.3 million in the same period in 2019, a 3 percent increase. Product sales were $3.8 million in the first nine months of 2020, a 24 percent decrease from $4.9 million in the first nine months of 2019.

The first nine months of revenue for 2020 included Autoscope video product sales and royalties of $681,000 and $6.5 million, respectively, and RTMS radar product sales of $3.1 million. Product sales gross margin for the first nine months of 2020 was 51 percent, a 4 percentage point or 7 percent decrease compared to the same period in the prior year.

The Company’s net income for the first nine months of 2020 was $698,000, or $0.13 per diluted share, compared to a net income of $7.1 million, or $1.35 per diluted share, in the first nine months of 2019. The first nine months of 2020 net income includes operating expenses of $7.4 million, an 8 percent increase from the same period in 2019. During the first nine months of 2020, the Company capitalized $22,000 of software development costs compared to $1.0 million in the first nine months of 2019. The third quarter 2019 net income included a $5.2 million non-cash income tax benefit due to t

FAQ

What were the Q3 2020 financial results for ISNS?

In Q3 2020, ISNS reported royalties of $2.2 million, product sales of $1.5 million, and net income of $659,000.

How did ISNS's product sales perform in the first nine months of 2020?

Product sales for the first nine months of 2020 decreased by 24% to $3.8 million compared to the same period in 2019.

What was the cash balance reported by ISNS as of September 30, 2020?

ISNS's cash balance increased to $7.5 million as of September 30, 2020.

How did ISNS's net income change year-over-year in Q3 2020?

ISNS's net income in Q3 2020 dropped to $659,000 from $6.1 million in Q3 2019.

What were the operating expenses for ISNS in the first nine months of 2020?

Operating expenses for ISNS in the first nine months of 2020 totaled $7.4 million, an 8% increase from the previous year.