Costar Technologies, Inc (fka CSTI)

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Costar Technologies, Inc. Announces Financial Results for the Fourth Quarter and Year Ended December 31, 2013


Highlights for the Year Ended December 31, 2013 vs December 31, 2012

Net income increased by 222%, to $1,907, from $592, the third consecutive profitable year.
Revenue increased 35%, to $26,476, from $19,581.
Earnings per share were $1.31 (shown in whole amounts) compared to $0.41 per share.
The Company increased its cash position to $1,637 from $114, and owed $0 on its line of credit.
Financial Results, Fourth Quarter of 2013 as Compared to Fourth Quarter of 2012

Revenue for the fourth quarter of 2013 totaled $4,331, as compared to revenue of $4,220 for the fourth quarter of the prior year, an increase of approximately 3%. The increase was primarily due to the continuation in remodel activity and new store openings by several of the Company's customers.

Gross profit for the fourth quarter of 2013 totaled $923. This compares to gross profit of $1,215 for the fourth quarter of 2012, a decrease of 24%. The Company experienced a one-time write-down of cost of goods sold of $551 related to the prepayment of inventory. The supplier in question is experiencing serious financial difficulty and there is substantial doubt regarding the receipt of the ordered product or the return of the prepaid funds. The Company is exploring its options with respect to this vendor and has qualified a new vendor to provide a substitute product.

Selling, general and administrative expenses for the fourth quarter of 2013 totaled $1,163. This compares to selling, general and administrative expenses of $1,285 for the fourth quarter of 2012, a decrease of 9%. The decrease of $122 was primarily due to a reduction of incentive based compensation and a decline in bank fees.

Net (loss) income for the fourth quarter of 2013 was approximately $(177), or $(0.12) earnings per share. This compares to net (loss) for the fourth quarter of 2012 of $(59), or $(0.04) earnings per share.

Financial Results, Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

Revenue for the year ended December 31, 2013 totaled $26,476, an increase of 35% as compared to revenue of $19,581 for the same period last year. The increase was primarily due to a surge in remodel activity and new store openings by several of the Company's customers.

Gross profit for the year ended December 31, 2013 totaled $7,467. This compares to gross profit of $5,673 for the year ended December 31, 2012. The rise is due to a more favorable overall sales and product mix, including increased interest in the Company's higher margin network product line.

Selling, general and administrative expenses for the year ended December 31, 2013 totaled $5,598. This compares to selling, general and administrative expenses of $4,987 for the year ended December 31, 2012, an increase of 12%. The increase of $611 was primarily due to the hiring of four sales and support employees in the latter half of 2012 to stimulate future growth, along with increased commissions and other incentive compensation related to the Company's improved performance.

Net income for the year ended December 31, 2013 was approximately $1,907, or $1.31 earnings per share, as compared to net income of $592, or $0.41 earnings per share for the year ended December 31, 2012.

James Pritchett, President and Chief Executive Officer of the Company, stated, "The Company's performance in 2013 generated record profits, positively positioning the Company for future opportunities. One of our largest retail customers significantly increased their remodel program in 2013, making up for a limited number of remodels in the prior two years due to a weak economy. We are pursuing additional revenue opportunities in 2014 to offset the temporary increase in sales caused by this "catch up" period, which we estimate increased 2013 revenue by approximately $3,000 to $4,000. We are encouraged by our results and are dedicated to delivering on our commitment of strong earnings and averaged double digit sales growth over a multiyear span."