Insignia Systems, Inc. Announces 2021 Second Quarter and Six-Month Financial Results

Rhea-AI Summary

Insignia Systems (NASDAQ:ISIG) reported a significant increase in Q2 2021 net sales, rising 82.1% to $6.1 million from $3.3 million in Q2 2020. Operating loss improved to $853,000, compared to a $1.8 million loss in the prior year. The net loss was $894,000, or $0.51 per share, down from $1.8 million, or $1.07 per share in Q2 2020. Notably, non-POPS revenue surged 182%, contributing 79% of total revenue. However, the POPS revenue decreased by 9%. Despite challenges in the POPS segment, the company is focused on growth in its non-POPS solutions.

Positive

• Net sales increased 82.1% to $6.1 million in Q2 2021 compared to Q2 2020.
• Non-POPS revenue rose 182%, accounting for 79% of total revenue.
• Operating loss improved to $853,000 from $1.8 million in the prior year.

Negative

• POPS revenue declined by 9% due to competitive pressures.
• Net loss was $894,000, though improved from $1.8 million in Q2 2020.
• Cash and cash equivalents decreased to $6 million from $7.1 million at year-end 2020.

MINNEAPOLIS, MN / ACCESSWIRE / August 23, 2021 / Insignia Systems, Inc. (NASDAQ:ISIG) ("Insignia") today reported financial results for the second quarter ended June 30, 2021 ("Q2").

Overview

• Q2 2021 net sales increased 82.1% to $6.1 million from $3.3 million in Q2 2020.
• Q2 2021 operating loss was $853,000 compared to operating loss of $1.8 million in Q2 2020.
• Q2 2021 net loss was $894,000, or $0.51 per basic and diluted share, compared to a net loss of $1.8 million, or $1.07 per basic and diluted share in Q2 2020.

Insignia's President and CEO, Kristine Glancy, commented, "Q2 2021 revenue was strong driven by the continued momentum on our non-POPS portfolio. Our non-POPS revenue increased 182% versus Q2 2020 partially offset by our POPS revenue declining 9% in the same time period. Similar to Q1 2021, our non-POPS revenue contributed the majority of our revenue with 79% being driven by display, on-pack and mobile businesses. While we are lapping Q2 2020, our most negatively impacted quarter from COVID, the team was also successful in retaining existing clients for repeat programs as well as acquiring new clients for first time programs. I'm optimistic given our expanded internal knowledge, and capabilities from our new hires as well as our existing team, that we can continue to grow in our Non-POPS businesses. While I'm optimistic about the continued potential of our non-POPS businesses, our POPS business continues to be challenged driven by continued competitive presses and the expiration of our 10-year selling agreement with News America Marketing in April 2021."

Ms. Glancy continued, "We are eager to start engaging with our clients again in-person with the opening of our new office in Minneapolis as well as the return of industry trade shows that we will be both attending and exhibiting. Our new branding continues to resonate with our current and prospective clients, with engagement levels surpassing previous levels on all three of our main social media platforms. Our website has also experienced significant growth in both users +216%, as well as time spent on our site +128%. As we execute and plan for the remainder of 2021 and into 2022, our primary focus will be on our growing solutions as we allocate resources and investment; and right-size our resources on POPS. It is imperative that we continue to listen to our clients' needs and pivot the organization's focus to where brands and retailers are looking to spend. With the overall diversity in our product solutions, we believe we are well-suited to address both a brands and retailers need in-store and digitally."

On August 13, Insignia filed an 8-K with the Securities and Exchange Commission (SEC) announcing that it would restate its audited financial results for years ended December 31, 2020 and 2019, and the unaudited financial results for the first quarter of 2021 and the first three quarters of 2020 and 2019. The restatement was necessary to correct material misstatements related to accounting for sales taxes. On August 23, 2021, the Company filed Form 10-K/A for the years ended December 31, 2020 and 2019 and Form 10-Q/A for the quarters ended March 31, 2021 and 2020 to restate the financial statements. The Company has taken remedial action and will continue to enhance controls over sales taxes. Additional information can be found in the Form 10-K/A filed with the SEC on August 23, 2021.

Q2 2021 Results

Net sales increased 82.1% to $6,096,000 in Q2 2021, from $3,347,000 in Q2 2020, primarily due to a 182% increase in non-POPS revenue, partially offset by a 9% decrease in POPS solutions revenue. Our non-POPS revenue has increased due to both sales to new CPGs and an increase in sales to existing CPGs, as well as the comparison to sales being depressed by the impact of COVID-19 in the three months ended June 30, 2020. Our POPS revenue continues to be negatively impacted by competitive pressures and brands not spending on syndicated signage due to COVID-19.

Gross profit in Q2 2021 increased to $1,208,000, or 19.8% of net sales, from $332,000, or 9.9% of net sales, in Q2 2020. The increase in gross profit was primarily due to the increase in non-POPS revenue, as well as increases to POPS solutions margin as the Company reduced guaranteed payment obligations in 2021 by renegotiating several fixed or store-based retail payment contracts to sign placement-based payment contracts.

Selling expenses in Q2 2021 were $465,000, or 7.6% of net sales, compared to $927,000, or 27.7% of net sales, in Q2 2020 due to staff restructuring-related expense incurred in 2020.

Marketing expenses in Q2 2021 were $260,000, or 4.3% of net sales, were relatively consistent compared to $243,000, or 7.3% of net sales, in Q2 2020.

General and administrative expenses in Q2 2021 were $1,336,000, or 21.9% of net sales, compared to $992,000, or 29.6% of net sales, in Q2 2020 due to increased litigation expenses.

Income tax expense for Q2 2021 was 1.1% of pretax loss, or an expense of $10,000, compared to income tax expense of 0.6% of pretax loss, or an expense of $11,000, in Q2 2020.

As a result of the items above, the net loss for Q2 2021 was $894,000, or $0.51 per basic and diluted share, compared to a net loss of $1,843,000, or $1.07 per basic and diluted share, in Q2 2020.

As of June 30, 2021, cash and cash equivalents and restricted cash totaled $6.0 million, compared to $7.1 million as of December 31, 2020.

About Insignia Systems, Inc.

Insignia Systems, Inc. sells product solutions ranging from in-store to digital advertising. Consumer-packaged goods (CPG) manufacturers and retailers across the country rely on our deep expertise in the dynamic retail environment to provide a full suite of shopper engagement solutions.

Contact:
Insignia Systems, Inc.
Kristine Glancy, CEO
(763) 392-6200

Insignia Systems, Inc. STATEMENTS OF OPERATIONS (Unaudited)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
						As Restated								As Restated
		2021				2020				2021				2020
Net sales		$	6,096,000			$	3,347,000			$	11,482,000			$	7,993,000
Cost of sales			4,888,000				3,015,000				9,345,000				6,728,000
Gross profit			1,208,000				332,000				2,137,000				1,265,000
Operating expenses:
Selling			465,000				927,000				981,000				1,647,000
Marketing			260,000				243,000				495,000				608,000
General and administrative			1,336,000				992,000				3,273,000				1,996,000
Operating loss			(853,000	)			(1,830,000	)			(2,612,000	)			(2,986,000	)
Other income (expense), net			(31,000	)			(2,000	)			1,004,000				7,000
Loss before taxes			(884,000	)			(1,832,000	)			(1,608,000	)			(2,979,000	)
Income tax expense (benefit)			10,000				11,000				23,000				(211,000	)
Net loss			(894,000	)			(1,843,000	)			(1,631,000	)			(2,768,000	)
Net loss per share:
Basic		$	(0.51	)		$	(1.07	)		$	(0.93	)		$	(1.60	)
Diluted		$	(0.51	)		$	(1.07	)		$	(0.93	)		$	(1.60	)
Shares used in calculation of net loss per share:
Basic			1,755,000				1,725,000				1,753,000				1,725,000
Diluted			1,755,000				1,725,000				1,753,000				1,725,000

SELECTED BALANCE SHEET DATA
		(Unaudited)				As Restated
		June 30,				December 31,
		2021				2020
Cash and cash equivalents and restricted cash		$	5,964,000			$	7,128,000
Working capital			5,756,000				7,668,000
Total assets			11,582,000				14,289,000
Total liabilities			6,386,000				7,621,000
Shareholders' equity			5,196,000				6,668,000
Working capital represents current assets less current liabilities.

SOURCE: Insignia Systems, Inc.

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FAQ

What were Insignia Systems' Q2 2021 net sales?

Insignia Systems reported net sales of $6.1 million in Q2 2021, an increase of 82.1% from Q2 2020.

How much did Insignia's non-POPS revenue increase in Q2 2021?

Non-POPS revenue increased by 182% in Q2 2021 compared to Q2 2020.

What was Insignia's net loss per share in Q2 2021?

The net loss per share for Insignia in Q2 2021 was $0.51, down from $1.07 in Q2 2020.

What challenges did Insignia face in its POPS business?

Insignia's POPS revenue faced challenges from competitive pressures and a decline in syndicated signage spending.