Costar Technologies, Inc. Announces Financial Results For the Fourth Quarter and Year Ended December 31, 2017

COPPELL, Texas, April 9, 2018 /PRNewswire/ -- Costar Technologies, Inc. (the "Company") (OTC Markets Group: CSTI) announced today its financial results for the fourth quarter and year ended December 31, 2017 that have been reviewed by the independent accounting firm BKD, LLP.

Financial Highlights for the Fourth Quarter and Year Ended December 31, 2017

• Record revenue of $44,266, an increase of $5,706 or 14.8% from the year ended December 31, 2016. Revenue in the fourth quarter of 2017 was up approximately $3,500 or 37% compared to the fourth quarter of 2016.
• GAAP net loss of ($371) or ($0.25) per share based on 1,513 fully diluted shares outstanding, compared to GAAP net income of $634 or $0.41 per share based on 1,541 fully diluted shares for the year ended December 31, 2106. The primary driver of the GAAP net loss in 2017 was approximately $2,700 in income tax expense relating to the revaluation of the Company's deferred tax asset under the new tax legislation effective in 2018.
• Adjusted earnings of $1,837 or $1.21 per diluted share compared to $1,586 or $1.03 per diluted share for the year ended December 31, 2016, an increase per share of 17.5%. 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.
• Adjusted EBITDA of $3,731 compared to $2,040 for the year ended December 31, 2016, an increase of 82.9%. 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.
• Cash flow from operations of $2,805 for the 2017 year, allowing the Company to pay the balance on its line of credit and make additional payments on its long term debt.

Business Highlights for the Year Ended December 31, 2017

• CohuHD launched the new RISE 4290, a dual-head thermal and visual camera which secured a $2,400 order of which $2,200 was included in revenue during the fourth quarter of 2017. CohuHD's RISE 4290 has been awarded the 2017 GSN Airport, Seaport, Border Security Award for Best Long-Range/High-Res Camera by Government Security News.
• The Company made several long-term investments in its business including a new IT infrastructure and the successful implementation of NetSuite, a new ERP system, bringing all three of the Company's locations onto the same platform and providing enhanced analytics, efficiency and security.

James Pritchett, President and Chief Executive Officer of the Company, stated, "In 2013, two customers accounted for more than 60% of our revenue, prompting us to set a goal to reduce revenue reliance through acquisition and organic growth. I am pleased to announce that we have substantially achieved that goal in 2017 where our two largest customers accounted for only 19% of our total revenue. The acquisition of Innotech in late 2016 and the increase in revenue generated by the CohuHD business segment provide improved earnings quality for the Company and our investors. In 2017, we delivered record revenue and continued margin improvement. We also received our largest single order with the new RISE 4290 camera. With our refreshed product portfolio, expanded retail markets and share gains in the transportation market, we anticipate ongoing revenue and earnings growth in the future."

The Company reevaluated its deferred tax asset as of December 31, 2017 in relation to the new tax regulations effective in 2018. See Footnote 9 in the Company's consolidated financial statements as of December 31, 2017 for further information.

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 following tables reconcile the non-GAAP financial measures disclosed in this release to GAAP net income (loss):

Adjusted earnings and Adjusted EBITDA are not presented in accordance with generally accepted accounting principles (GAAP) and are not intended as a substitute for GAAP, but are included solely for informational and comparative purposes. These non-GAAP measures are presented because management believes they provide additional information to investors with respect to the performance of our fundamental business activities. Management believes these non-GAAP measures allow investors to evaluate the Company's financial performance using some of the same measures as management.

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 2017. 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.

SOURCE Costar Technologies, Inc.

Related Links

http://www.costartechnologies.com