Costar Technologies / Arecont H1 2020 Financials Examined

By Isabella Cheng and Joey Walter, Published Sep 16, 2020, 08:34am EDT (Info+)

Costar's financial results have been hit by the coronavirus with the company telling IPVM they are focused on "turning around" Arecont and plans for 2021.

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Costar made a splash acquiring Arecont in 2018, formerly one of the largest megapixel camera manufacturers, who later struggled and became the integrators' worst choice 3 years in a row prior to the acquisition.

Their CEO spoke to IPVM about making progress integrating Arecont, and their future outlook leading into 2021, including:

  • YOY revenue / income down
  • Costs reduced
  • Arecont integration
  • Organic growth
  • R&D / manufacturing
  • Product delays
  • PPP loan / Covid-19 impact
  • Vertical breakdown
  • Outlook

Revenue **** **% ** **

******'* ************** ** **** *****, ****** *** height ** *********** *********, **** **** 28% *** ** $**.* ******* ***.

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*** *** ****** ** ****, ******* was **** *%.

Solid **

*******, ****** ***********, ** **, ******* had ****** ****** **%:

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Significant **** ****

** *** **** ****, *** ******* has **** *********** **** **** ** Q2: *********** *** *********** (*&*) ********* 23% *** *******, ******* *** ************** expenses ********* **.*% ** ****** **** they ********** ************ **** ************.

Arecont ***********

** ****,****** ******** *******'* *********** *** $**.** million**** *** *********** ** "**** ***** results ** ****".

********* ** ******** *******, *******, **** ****** ****** ******* out ** ********** ** ****, **** of “********** ********” ** **** *** 2019 ******** ******’* ********* *******.

**** *****-** *** ******* ******* ********, Costar **** **** ***** ** ********** the "************** ** *** ************" *** "to ********** *** ******** *** *** how **** ***** **** ***** ********* going *******".

One ******

******* ** * ******-**** *** **** plan *** "*** ******", **** *** **** *********** **** unified *********** ***** *** ********** ****, product, *** ******* ***** ********* **** fewer *********. *** *******, ****** **** IPVM "*** ****" **** ******* ********* are *** ********** */* ** *** business *****.

****** ********** ******* ********* ** * result ** ******* ************ ********* **** deeper **** **** ***** ****-*********** ************.

**** ** ** *** **** *** will ** ***** **** **** ** those **** *** ********** ** **** reduce ******* *******, ********* ******* *** been ******* *** ********* ********** ************.

Organic ******

****** **** *&* ** *** ********* they *** ******* ** **** **** in ******** ** ***** ****, **** and **** ************.. *******, **** *** they *** ********** ******* ** *** One ****** ********** ** "***** ******* from *** ** ****** ********** *** organization".

***** ******** ******** **** **** **** was ***** $*-** ******* ** ******* ************ ************. **** *** ******* ** focusing ** ***** "*** ****** ********** and ********** ********* ** ******* *****-******* and ******* *******".

R&D ****** ********

****** *** *** *** *** **** to "**** *********** ** *** ************", stated ** * **** ** ****. The ******* ********* **** ***** ** able ** **** ***** ******* *********** through "**** ********* *** ********* ******** cash **** **** ********** ** *** only *** **** *** **** ****, but **** **** *********** ** *** organization".

****** **** **** **** *** ** make ******* ** ***** **** ** R&D ** ***** ** **** ***** debt ******** ** *********************************. *&* ** * ********** ** revenue ********* ** ** **** (*.*%) compared ** ** **** (*.**%) **** as ******* ******** *******, *** *** company's **** *** **** ** ***** 11-12% ** **** *****.

SoC ******* *** ******* ***********

******* ****** *** **** ******** *** SoCs **** ***. ** *** ****** side, *** *** ********, **** ******** from ***** ****-**** ********** ********* ***** to********. ** *** ***** ******************* ****, ***** *** **** ***** Huawei *********, **** *** ******* ** replacing **** ************************ ** **** ********* ** *** products ** ** ****.

***** *** *** **** ***** ** unify *** *******'* *****-******* ***** *** platform, *******, **** ** ******* ** well ** **-** ****.

PPP ****

****** *** *** ****+ ******** ********* ****** *** ***, **** ****** *** ** *** largest ** ~$* *******. ******'* ******** ************** *** **** *** ********* **** on ******** ******** *.*. **** *** payroll, *** ******* *** ******* ** retain "****" *********.

** ******** ** *** ~$* ******* PPP *******, ******'* ******* *** **** nearly $* ******* ** ** ****.

Sales ************

****** **** ** ******* *** ***** by ** ****** ******* *** ************ and ******* ********* *** ************* ********. Historically, ****** *** ****** ** *** business ********** ** **********, *** **** now **** ** *** ******* **** different *********.

** **** ****, ****** ********** ****** ***** ******* *******. **** *** worked ** * ****** ** ******** companies ********* ********* *** *******.

*********

******'* ********** **** **** **** ******, focused ** "**************, ****** ******** *** other ********** ************" *** * ****** Q1 ** * ****** ** ****** protection ********. ** *** ** ********* disclosure, ****** ***** ** * ******* that ********* *** ************ ** **** business *******, **** *** ************* ******** driving ~**% ** *****.

****** *** **** "**********" ******* ** its ****** *** ********* ********* ********* from *****-**. ******* **** **** ****** Video's ********* ******** *** ** ******** that ****** ****** ****** ****** ** the ** ********* *******, ** ******* were **** ** ******* ******** **** students ***. ******, *** ** *** primary ********* *** ****** *****, *** had "**/**" ******* ********* ** *******. Some *** ******** ********* **** **** very **** *** ****** **** ********** shut ****.

****** **** **** **** ************* ******** overall ** ******* ** ********* **** risk, *******, **** *** ****** ******** in **** *** ****** *********** ** the ****** **** *.*. *****.

Comments (1)

Noticed today that Costars market capitalization is now under $10 million. While market cap does not necessarily indicate if the company is doing well or not, especially with such low trading activity (around 145 shares avg daily volume), it doesn't look good when they paid over $11 million for Arecont in 2018.

What if anything might this mean for them?

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