MINNEAPOLIS, Aug. 10, 2023 (GLOBE NEWSWIRE) -- Autoscope Technologies Corporation (OTCQX: AATC) today announced results for its quarter and six months ended June 30, 2023.
Second Quarter 2023 Financial Summary
Increasing demand for Autoscope Vision drove higher royalty revenue during the quarter. Second quarter royalties increased to $3.7 million compared to $1.4 million in the same period in the prior year.
Second quarter product sales were $0.4 million, a decrease of 75 percent from the same period in the prior year.
Operating expenses totaled $2.2 million in the second quarter of 2022, an increase of 17 percent from the prior year period.
Net income for the second quarter of 2023 totaled $1.1 million, an increase of $1.1 million compared to net income of $74,000 for the same period in the prior year.
First Half 2023 Financial Summary
Royalties for the first half of 2023 increased to $6.7 million compared to $3.2 million for the same period in the prior year.
Product sales for the first half of 2023 were $1.2 million, a decrease of 51 percent from the same period in the prior year.
Operating expenses totaled $4.2 million in the first half of 2023, an increase of 7 percent from the prior year period.
There were no capitalized software costs in the first half of 2023 compared to $534,000 in the prior year period.
Net income for the first half of 2023 totaled $2.0 million compared to net income of $92,000 for the same period in the prior year.
Cash and cash equivalents increased to $2.9 million, an increase of 141 percent from $1.2 million at December 31, 2022.
Second-Quarter Results
Second quarter 2023 revenue for Autoscope Technologies Corporation ("AATC," the "Company," "us," "we," or "our"), which includes the results of Image Sensing Systems, Inc., a wholly-owned subsidiary of AATC ("ISS"), was $4.0 million compared to $2.8 million in the second quarter of 2022. Revenue from royalties increased to $3.7 million in the second quarter of 2023 compared to $1.4 million during the second quarter of 2022. Product sales decreased to $0.4 million in the second quarter of 2023, a 75 percent decrease from $1.4 million in the second quarter of 2022.
Gross margin for the second quarter of 2023 was 88 percent, a 17 percentage point increase from a gross margin of 71 percent for the same period in 2022. Gross margin from royalties increased to 97 percent in the second quarter of 2023 compared to 92 percent in the second quarter of 2022. The increase in the royalty gross margin percent for the first quarter of 2023 resulted primarily from higher sales of video detection products yielding higher royalty revenues. Product sales gross margin for the second quarter of 2023 was (5) percent compared to 50 percent in the prior year period. The decrease in the product sales gross margin percent was the result of lower margins sales on discontinued video detection product sold in the EMEA markets and a radar detection product sold worldwide, as well as inventory obsolescence recognized for these discontinued product lines.
The 2023 second quarter net income includes operating expenses of $2.2 million, an increase of 17 percent compared to $1.9 million for the second quarter of 2022. The increase in operating expenses is due to having no capitalized software development costs in the second quarter of 2023 compared to $221,000 in capitalized software development costs in the second quarter of 2022. The Company's net income for the 2023 second quarter was $1.1 million, or $0.21 per diluted share, compared to net income of $74,000, or $0.01 per 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 the second quarter of 2023 was $1.6 million compared to operating income of $395,000 in the prior year period.
Year-to-Date Results:
AATC’s revenue for the first six months of 2023 was $7.8 million, a 40 percent increase from revenue of $5.6 million in the first six months of 2022. Revenue from royalties increased to $6.7 million in the first six months of 2023 compared to $3.2 million in the same period in 2022. Product sales were $1.2 million in the first six months of 2023, a 51 percent decrease from $2.4 million in the first six months of 2022.
Gross margin for the first six months of 2023 was 84 percent, a 10 percentage point increase from a gross margin of 74 percent for the same period in 2022. Gross margin from royalties increased to 97 percent in the first six months of 2023 compared to 93 percent in the first six months of 2022. The increase in the royalty gross margin percent for the first six months of 2023 resulted primarily from higher sales of video detection products yielding higher royalty revenues. Product sales gross margin for the first six months of 2023 was 14 percent compared to 21 percent in the prior year period. The decrease in the product sales gross margin percent was the result of lower margins sales on planned discontinued video and radar detection products, as well as inventory obsolescence recognized for these discontinued product lines.
The Company’s net income for the first six months of 2023 was $2.0 million, or $0.36 per diluted share, compared to a net income of $92,000, or $0.02 per diluted share, in the first six months of 2022. The first six months of 2023 net income includes operating expenses of $4.2 million, a 7 percent increase from the same period in 2022. During the first six months of 2023, there were no capitalized software costs compared to $534,000 in the first six months of 2022.
On a non-GAAP basis, excluding the amortization of intangible assets and depreciation for the applicable periods, operating income for the second quarter of 2023 was $2.8 million compared to operating income of $0.7 million in the prior year period.
Liquidity and Capital Resources
We believe that cash and cash equivalents on hand, coupled with readily available investments in debt and equity securities on June 30, 2023, totaling $6.0 million, along with the cash provided by operating activities, will satisfy our projected working capital needs, investing activities, and other cash requirements for the foreseeable future.
As of June 30, 2023, we had $2.9 million in cash and cash equivalents compared to $1.2 million on December 31, 2022.
Net cash provided by operating activities increased to $2.6 million in the first six months of 2023 compared to net cash provided by operating activities of $79,000 in the same period in 2022. Net cash provided by operating activities increased in the first six months of 2023 compared to the same period in 2022 primarily due to higher net income and lower prepaid expenses in 2023 compared to 2022.
Net cash provided by investing activities was $636,000 in the first six months of 2023 compared to net cash used for investing activities of $4.9 million in the same period in 2022. The decrease in net cash used for investing activities in the first six months of 2023 compared to the same period in the prior year is primarily the result of lower purchases of equity and debt securities and lower capitalization of software costs in the first six months of 2023. To generate a greater return on our cash position, the Company purchased various debt and equity securities of $2.8 million during the first quarter of 2022. There were no debt or equity securities purchases in the first six months of 2023. There were no capitalized software costs in the first six months of 2023 compared to $534,000 of capitalized software costs in the same period of 2022.
Net cash used for financing activities was $1.4 million in the first six months of 2023 compared to net cash used of $1.3 million in the first six months of 2022. The increase in net cash used for financing activities in 2023 is primarily due to increased cash dividends paid. The Company paid dividends of $0.26 per share in the first six months of 2023 compared to total dividends of $0.24 per share paid in the first six months of 2022.
“Stronger than expected demand for Autoscope Vision drove higher royalty returns during the quarter. Product sales came in below expectations primarily due to timing of deliveries on new Echo installations. As a result, our order backlog is three times the size of our historical backlog as major projects are staged for delivery and installation. Additionally, sales of our Wrong Way detection solutions have been slower than expected due to lengthy qualification cycles. Product gross margins were negatively impacted by the write-off of components on our legacy video and radar detection solutions that were repurchased from suppliers as the Company withdrew the products from the market,” said Frank Hallowell, Interim CEO of Autoscope Technologies Corporation. “Vision and Echo near-term order demand is solid, and we expect to close on several Wrong Way solutions in the second half of 2023 because we have been added to statewide qualified product lists. We continue to focus on bringing to market several new products that leverage the capabilities of our new video technology platform, IntelliSight,” concluded Mr. Hallowell.
