Duos Technologies Group Reports Third Quarter 2018 Results

Company Increases Full Year 2018 Revenue Guidance to $11.0 Million

JACKSONVILLE, Fla., Nov. 14, 2018 (GLOBE NEWSWIRE) -- Duos Technologies Group, Inc. (“Duos” or the “Company”) (OTCQB: DUOT), a provider of intelligent security analytical technology solutions, reported financial results for the third quarter ended September 30, 2018.

Third Quarter 2018 and Recent Operational Highlights

• Awarded contract in the aggregate of $1.0 million from a regional bank (the “Bank”) with a national footprint for the installation of Duos’ praesidium® and centraco® systems, which will provide comprehensive security solutions for 19 of the Bank’s sites in 14 locations across the United States
• Awarded a software license and application model agreement from a leading North American Class-1 transportation and logistics company to develop enhanced inspection algorithms, which covers the development and licensing of 17 artificial intelligence-based detection algorithm models
• Awarded a patent by the U.S. Patent and Trademark Office for the Company’s Linear Speed Measurement technology, which enables the “stitching” of images that are a single pixel wide into an accurate high-definition image of a train with up to 100 or more cars, significantly increasing the accuracy of the speed information compared to commercially available measurement devices
• Completed integration and received certification under the Lenel Open Access Alliance Program (“OAAP”) for enhanced security offerings, which greatly expands the capabilities of the Physical Security Information Management (“PSIM”) component of the Duos centraco® 3.0 platform
• Increased headcount to 50 staff during the quarter
• Opened Operations Center of Excellence site, housing the company’s technical staff, research and development and testing facility

Third Quarter 2018 Financial Results

Total revenue increased 388% to a Company record $5.1 million, from $1.0 million in the same quarterly period last year. The significant increase in total revenue was driven by an increase in project revenue and maintenance and technical support, which was offset by a decrease in IT asset management services revenues. The increase in project revenue is a result of the Company’s ongoing transition to new offerings, including intelligent analytics and machine learning, from traditional legacy security-centric offerings.

Gross profit increased 501% to more than $2.3 million, from $387,000 in the same quarterly period last year. The significant increase in gross profit was due to the increase in project revenues as discussed above. In previous quarters, gross profit was impacted by certain accounting changes related to the implementation of Accounting Standards Codification (ASC) 606. The Company had anticipated these profits to be recorded later in the year and, therefore, the third quarter’s accounting is directly comparable with the equivalent quarter in 2017. Gross profit was slightly impacted by revenues related to construction on two projects that were essentially “pass-through” or low margin. Management anticipates gross profit to be close to historical norms for the full year.

Operating expenses increased 44% to $1.7 million from $1.2 million in the same quarterly period last year. The increase in operating expenses was mainly due to an increase in resources related to the significant increase in revenues for the period. Selling and marketing as well as research and development both increased in line with the Company’s investment in resources to grow the business. The increase in salaries, wages and contract labor was higher during the period due to an increase in number of employees and additional contract expenses related to the overall significant increase in revenues.

Net Income totaled $633,000, or $0.03 per share , an improvement from net loss of $125,000, or $(0.07) per share (basic), in the same quarter a year-ago. The improvement in net income was primarily attributable to the increase in project revenue mentioned above.

Financial Outlook
For the fiscal year ending December 31, 2018, the Company has increased its revenue outlook to $11.0 million from $10.1 million, which would represent an approximate 183% increase as compared to the $3.9 million reported revenue in the fiscal year ended December 31, 2017. The Company’s guidance is based on contracts in backlog that are already performing and scheduled to be executed during, or which have been executed before, the fourth quarter of 2018. Management also anticipates receiving additional awards in the remainder of 2018. 

Management Commentary
“We delivered yet another record financial performance in the third quarter of this year and continued to make significant operational progress in our long-term growth plan,” said Duos Chairman and CEO Gianni Arcaini. “We expect our performance and growth to continue through the remainder of the year.  With our new engineering and operations facility up and running, as well as the addition of several key executives to our management team, we believe we have the tools and the talent to take our success to new heights.

“Looking ahead, we are in discussions with a number of multi-national organizations to partner on expanded technologies and distribution of our systems to the global markets.  Furthermore, we are in the process of consolidating our machine learning and artificial intelligence program in a new division which will operate under the brand ‘TrueVue360’.”

Conference Call
The Company’s management will host a conference call on Thursday, November 15, 2018 at 11:00 a.m. Eastern time (8:00 a.m. Pacific time) to discuss these results, followed by a question and answer period.

Date: Thursday, November 15, 2018
Time: 11:00 a.m. Eastern time (8:00 a.m. Pacific time)
U.S. dial-in: (888) 339-2688
International dial-in: (617) 847-3007
Passcode: 92814227

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at (949) 574-3860.

The conference call will be broadcast live and available for replay via the investor section of the Company’s website.

About Duos Technologies Group, Inc.
Duos Technologies Group, Inc. (OTCQB: DUOT), based in Jacksonville, Florida, through its wholly owned subsidiary, Duos Technologies, Inc., provides advanced intelligent security and analytical technology solutions with a strong portfolio of intellectual property. The Company’s core competencies include intelligent technologies that combine machine learning, artificial intelligence and advanced video analytics that are delivered through its proprietary integrated enterprise command and control centraco® platform. The Company provides its broad range of technology solutions with an emphasis on mission critical security, inspection and operations within the rail transportation, retail, petrochemical, government, and banking sectors. Duos Technologies also offers professional and consulting services for large data centers. For more information, visit www.duostech.com.

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates,” “plans,” or similar expressions or the negative of these terms and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause Duos Technologies Group, Inc.’s actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to, those described in Item 1A in Duos’ Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Duos’ filings with the SEC.

Released November 14, 2018