Costar Technologies, Inc. Announces Financial Results For the Second Quarter Ended June 30, 2021

COPPELL, Texas, Aug. 12, 2021

Financial Results for the Quarter Ended June 30, 2021

• Revenues of $14,717, a 0.5% increase compared to the second quarter of 2020.
   
• Operating expenses, excluding second quarter 2020 restructuring costs of $635, were down 13.3% to $4,615, compared to $5,321 in the second quarter of 2020.
   
• GAAP net income of $4,862, or $2.94 per diluted share, compared to GAAP net loss of $498, or ($0.31) per diluted share, in the second quarter of 2020.
   
• Adjusted earnings of $371, or $0.22 per diluted share, compared to $508, or $0.32 per diluted share, for the quarter ended June 30, 2020. Adjusted earnings, a non-GAAP measure, is defined below.
   
• Adjusted EBITDA of $783, compared to $650 for the quarter ended June 30, 2020. Adjusted EBITDA, a non-GAAP measure, is defined below.

Scott Switzer, the Company's Interim Chief Executive Officer stated, "The second quarter of 2021 presented a recovering but difficult global business environment. Our revenues rebounded from the first quarter of 2021 and the continued reduction in our operating expenses drove improved profitability. We launched our NDAA compliant cameras with enhanced artificial intelligence and pedestrian detection, expanding our target market and meeting customer needs. The Costar team has continued to show great resilience in a challenging situation. The strength of the team and the progress of our business transformation confirms the direction for the years ahead."

Sarah Ryder, the Company's Chief Financial Officer went on to say, "Our second quarter revenues were consistent with the prior year despite increases in sales quotation activity and order volumes. The global chip shortage and shipping and logistics issues experienced in the second quarter caused delays, pushing several orders to the third and fourth quarters of 2021. We enter the third quarter with a strong sales backlog as we continue to manage supply chain and logistics challenges. Our overall debt position decreased from $19,600 to $13,300 due to improved cash management and full forgiveness of our Payroll Protection Program loan in June 2021. In addition the Company is eligible to receive an Employee Retention Credit for the first three quarters of 2021. This credit results in a significant decrease in our payroll tax obligation, estimated to be approximately $2,550 over the three quarters."

The Company's independent auditors completed their analysis of the Company's financial condition. The Independent Auditor's 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 (loss) excluding stock-based compensation, amortization of acquisition-related intangible assets, restructuring costs, PPP loan forgiveness and accrual of Employee Retention Credit. The Company defines adjusted EBITDA, a non-GAAP measure, as earnings before interest, taxes, depreciation, amortization, stock-based compensation, restructuring costs, PPP loan forgiveness and accrual of Employee Retention Credit. The following tables reconcile the non-GAAP financial measures disclosed in this release to GAAP net income (loss):