Costar Technologies announces financial results for the first quarter

Financial highlights for the first quarter ended March 31, 2018

• Revenue of $10,917, an increase of $1,346 or 14.1% from the quarter ended March 31, 2017.
• GAAP net income of $50 or $0.03 per share based on 1,589 fully diluted shares outstanding, compared to GAAP net loss of ($159) or ($0.11) per share based on 1,493 fully diluted shares for the quarter ended March 31, 2017.
• Adjusted earnings of $399 or $0.25 per diluted share compared to $252 or $0.17 per diluted share for the quarter ended March 31, 2017, an increase per share of 47.1%. (Adjusted earnings, a non-GAAP measure, is defined below.)
• Adjusted EBITDA of $551 compared to $316 for the quarter ended March 31, 2017, an increase of 74.4%. (Adjusted EBITDA, a non-GAAP measure, is defined below.)

“The first quarter is typically a seasonally slow period for our Company; however, this year we are off to a solid start,” said James Pritchett, the Company’s President and CEO. “The shipment of a $1 million sale out of the CohuHD business segment, an increase in purchases by one of Costar Video Systems’ largest customers and the continued expansion of our general security business all contributed to our year-over-year revenue growth.”

Mr. Pritchett continued, “Solid financial results were driven by operational performance with ongoing improvements in cost and production efficiency. The rapid acceptance of our RISE product line enabled us to discontinue older models more quickly than anticipated, resulting in an increased inventory reserve for the end-of-life products, which negatively impacted our gross profit margin for the quarter by 210 basis points. Aside from the effect of that program, our gross profit margin improved 120 basis points.”

“We head into the second quarter with a solid backlog and higher growth in our general security markets. I am optimistic that 2018 will be another positive year showing year-over-year growth for our Company,” concluded Mr. Pritchett.

The Company’s outside independent auditors completed their analysis of the Company’s financial condition. The Independent Auditor’s Review 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 excluding stock- based compensation, amortization of acquisition-related intangible assets, adjustments to the fair value of acquisition-related contingent consideration, transaction related expenses and the income tax effect relating to the revaluation of the Company’s deferred tax asset. The Company defines adjusted EBITDA, a non-GAAP measure, as earnings before interest, taxes, depreciation, amortization, transaction and related expenses and adjustments to the fair value of acquisition- related contingent consideration. The following tables reconcile the non-GAAP financial measures disclosed in this release to GAAP net income (loss):
 

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.