ClearOne Reports Record Fourth Quarter Revenue

February 27, 2014

SALT LAKE CITY, Feb. 27, 2014 /PRNewswire/ --  

Fourth Quarter 2013 Highlights

  • Record revenue of $14.2 million.
  • Revenue increased by 9%.
  • Non-GAAP net income increased by 49%.

Full Year 2013 Highlights

  • Record revenue of $49.6 million.
  • Revenue increased by 7%
  • Non-GAAP net income increased by 44%.

Financial Summary

(Dollars in thousands, except per share values)

Fourth Quarter

Full Year

2013

2012

Change

2013

2012

Change

Revenue

$

14,230

$

13,036

9%

$

49,592

$

46,417

7%

Gross Profit

8,549

7,411

15%

29,857

27,328

9%

Non-GAAP Operating Income

2,881

2,290

26%

8,404

6,792

24%

Non-GAAP Net Income

1,821

1,225

49%

5,710

3,977

44%

Non-GAAP Adjusted EBITDA

3,157

2,856

11%

9,331

8,011

16%

Non-GAAP Diluted EPS

$

0.19

$

0.13

46%

$

0.60

$

0.43

40%











ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication solutions, today reported financial results for the fourth quarter and the year ended December 31, 2013.  Results reflect continuing growth from a strategically-built portfolio of innovative and profitable products. 

For the 2013 fourth quarter, revenue increased by 9% to $14.2 million, compared with $13.0 million for the fourth quarter of 2012.  Gross profit for the quarter was $8.5 million, or 60% of revenue, compared with  $7.4 million, or 57% of revenue, for the fourth quarter of 2012. Non-GAAP operating income increased by 26% to $2.9 million from $2.3 million for the 2012 fourth quarter. Non-GAAP net income increased 49% to $1.8 million, or $0.19 per diluted share, from $1.2 million, or $0.13 per diluted share, for the fourth quarter of 2012. Non-GAAP adjusted EBITDA for the 2013 fourth quarter increased 11% to $3.2 million, or $0.34 per diluted share, from $2.9 million, or $0.31 per diluted share, a year ago.

For the year ended December 31, 2013, revenue increased 7% to $49.6 million from $46.4 million for the year ended December 31, 2012.  Gross profit was $29.9 million, or 60% of revenue, compared with $27.3 million, or 59% of revenue, for the year ended December 31, 2012.  Non-GAAP operating income for the year ended December 31, 2013 increased by 24% to $8.4 million from $6.8 million for the year ended December 31, 2012.  Non-GAAP net income for year ended December 31, 2013 increased 44% to $5.7 million, or $0.60 per diluted share, from $4.0 million, or $0.43 per diluted share, for the year ended December 31, 2012.  Non-GAAP adjusted EBITDA increased 17% to $9.3 million, or $0.99 per diluted share, from $8.0 million, or $0.87 per diluted share, for the year ended December 31, 2012.

Cash, cash equivalents and investments totaled $42.7 million at December 31, 2013, down from $55.5 million on December 31, 2012.  These balances include the final net amount retained from the December 2012, $45 million favorable settlement relating to auction-rate securities, after paying $13.8 million of associated income taxes and $6.75 million in attorneys' fees. The cash balance also includes $364,000, net of legal expenses received during the fourth quarter of 2013 as final settlement from escrow monies earlier deposited on account of our dispute with  a former officer of the company. 

ClearOne continued its stock repurchase plan in the fourth quarter, bringing the total repurchase amount to approximately $2.8 million against an allocation of $10 million.

"We are pleased to report record revenue for the last quarter of 2013 and our fourth consecutive year of revenue growth, combined with high margins and consistent profitability," said Zee Hakimoglu, President, Chief Executive Officer and Chairman of ClearOne.  "Strong demand, generated by our large and well-developed partner ecosystem in North America and EMEA, drove our revenue growth."

"The recently announced strategic acquisition of Spontania completes our exceptional portfolio of technologies needed for a strong video solutions model. As the market transitions to software and services, ClearOne is the only company to offer an entirely software-based and standards-based video conferencing product line that provides on-premise and cloud-based Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS) solutions," added Hakimoglu.  "We look forward to gaining significant market share and establishing ClearOne as a recognized leader in on-premise and cloud-based visual communication solutions in the rapidly growing desktop and mobile visual communications markets."

Non-GAAP Financial Measures
ClearOne provides non-GAAP financial information in the form of non-GAAP net income, Adjusted EBITDA and corresponding earnings per share to investors to supplement GAAP financial information.  ClearOne believes that excluding certain items from GAAP results allows ClearOne's management to better understand ClearOne's consolidated financial performance from period to period as management does not believe that the excluded items are reflective of underlying operating performance.  Non-GAAP net income, Adjusted EBITDA and corresponding earnings per share excludes certain costs and expenses, the details of which are provided in the tables below containing the reconciliation between GAAP and non-GAAP financial measures.  The exclusion of these items in the non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent, or unusual.  ClearOne believes non-GAAP financial measures will provide investors with useful information to help them evaluate ClearOne's operating results and projections.  This non-GAAP financial information is not meant to be considered in isolation or as a substitute for operating income, net income or other financial measures prepared in accordance with GAAP.  There are limitations to the use of non-GAAP financial measures.  Other companies, including companies in ClearOne's industry, may calculate non-GAAP financial measures differently than ClearOne does, limiting the usefulness of those measures for comparative purposes.  A detailed reconciliation of non-GAAP net income to GAAP net income is included with this news release.

About ClearOne
ClearOne is a global company that designs, develops and sells conferencing, collaboration, streaming and digital signage solutions for voice and visual communications.  The performance and simplicity of its advanced comprehensive solutions offer unprecedented levels of functionality, reliability and scalability.  More information about the company can be found at www.clearone.com.

This release contains "forward-looking" statements that are based on present circumstances and on ClearOne's predictions with respect to events that have not occurred, that may not occur, or that may occur with different consequences and timing than those now assumed or anticipated.  Such forward-looking statements, including acquisitions or investments the company may make to fuel growth, the purchase of common stock under the company's stock repurchase program and any statements of the plans and objectives of management for future operations, are not guarantees of future performance or results and involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements.  Such forward-looking statements are made only as of the date of this release and ClearOne assumes no obligation to update forward-looking statements to reflect subsequent events or circumstances.  Readers should not place undue reliance on these forward-looking statements.

http://investors.clearone.com

Contact:
Brent Johnson
Investor Relations
801-303-3577
brent.johnson@clearone.com

CLEARONE, INC.

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)

As of December 31, 2013

As of December 31, 2012

ASSETS


Current assets:


Cash and cash equivalents

$

17,192

$

55,509

Marketable securities

3,200

—

Receivables, net of allowance for doubtful accounts of $129 and $60, respectively

9,378

8,388

Inventories, net

10,758

9,584

Distributor channel inventories

1,520

1,289

Deferred income taxes

3,325

3,148

Prepaid expenses and other assets

2,693

1,369

Total current assets

48,066

79,287

Long-term marketable securities

22,326

—

Long-term inventories, net

551

1,955

Property and equipment, net

1,825

1,708

Intangibles, net

3,710

4,258

Goodwill

3,472

3,472

Deferred income taxes

1,024

1,195

Other assets

87

64

Total assets

$

81,061

$

91,939

LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:


Accounts payable

$

2,730

$

2,302

Accrued liabilities

1,761

2,143

Income taxes payable

—

14,782

Deferred product revenue

4,158

3,593

Total current liabilities

8,649

22,820

Deferred rent

286

422

Other long-term liabilities

1,791

2,029

Total liabilities

10,726

25,271

Shareholders' equity:


Common stock, par value $0.001, 50,000,000 shares authorized, 8,986,080 and 9,163,462 shares issued and outstanding

9

9

Additional paid-in capital

41,311

40,430

Accumulated other comprehensive income

23

—

Retained earnings

28,992

26,229

Total shareholders' equity

70,335

66,668

Total liabilities and shareholders' equity

$

81,061

$

91,939

CLEARONE, INC.

 

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

(Dollars in thousands, except per share values)

Quarter ended December 31,

Year ended December 31,

2013

2012

2013

2012

Revenue

$

14,230

$

13,036

$

49,592

$

46,417

Cost of goods sold

5,681

5,625

19,735

19,089

  Gross profit

8,549

7,411

29,857

27,328








Operating expenses:






Sales and marketing

2,321

1,903

8,896

8,112

Research and product development

2,065

2,265

7,562

8,261

General and administrative

1,777

2,374

6,416

6,934

Proceeds from litigation, net

(367)

(38,250)

(639)

(38,500)

  Total operating expenses

5,796

(31,708)

22,235

(15,193)








Operating income

2,753

39,119

7,622

42,521

Other income (expense), net

30

(7)

147

34

  Income before income taxes

2,783

39,112

7,769

42,555

Provision for income taxes

1,042

14,598

2,590

15,908

  Net income

$

1,741

$

24,514

$

5,179

$

26,647








Basic earnings per common share

$

0.19

$

2.69

$

0.57

$

2.93

Diluted earnings per common share

$

0.19

$

2.67

$

0.55

$

2.89








Basic weighted average shares outstanding

8,985,518

9,109,552

9,064,340

9,107,234

Diluted weighted average shares outstanding

9,340,741

9,192,714

9,455,518

9,214,685








Comprehensive income:






Net income

$

1,741

$

24,514

$

5,179

$

26,647

Unrealized gain on available-for-sale securities, net of tax

56

—

23

—

     Comprehensive income

$

1,797

$

24,514

$

5,202

$

26,647

CLEARONE, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(Dollars in thousands, except per share values)

Quarter ended December 31,

Year ended December 31,

2013

2012

2013

2012

Revenue

$

14,230

$

13,036

$

49,592

$

46,417

Cost of goods sold

5,678

5,622

19,726

19,083

Gross profit

8,552

7,414

29,866

27,334









Operating expenses:







Sales and marketing

2,302

1,890

8,822

8,054

Research and product development

2,052

2,254

7,511

8,224

General and administrative

1,317

980

5,129

4,264

Total operating expenses

5,671

5,124

21,462

20,542









Operating income

2,881

2,290

8,404

6,792

Other income (expense), net

30

(7)

147

34

Income before income taxes

2,911

2,283

8,551

6,826

Provision for income taxes

1,090

1,058

2,841

2,849

Non-GAAP Net income

$

1,821

$

1,225

$

5,710

$

3,977









Basic earnings per common share

$

0.20

$

0.13

$

0.63

$

0.44

Diluted earnings per common share

$

0.19

$

0.13

$

0.60

$

0.43









Basic weighted average shares outstanding

8,985,518

9,109,552

9,064,340

9,107,234

Diluted weighted average shares outstanding

9,340,741

9,192,714

9,455,518

9,214,685









GAAP Net Income

$

1,741

$

24,514

$

5,179

$

26,647

Adjustments:







Share-based compensation

91

65

296

241

Amortization of purchased intangibles

143

301

547

679

Legal expenses for litigation relating to indemnification of former officers, theft of our intellectual property claims and our claim for damages

98

376

332

902

Acquisition related expenses

163

57

246

327

Proceeds from litigation

(367)

(37,628)

(639)

(37,878)

Total of adjustments before taxes

128

(36,829)

782

(35,729)

Income taxes affected by the above adjustments

48

(13,540)

251

(13,059)

      Total adjustments

80

(23,289)

531

(22,670)

Non-GAAP Net Income

$

1,821

$

1,225

$

5,710

$

3,977

CLEARONE, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EBITDA

(Dollars in thousands, except per share values)

Quarter ended December 31,

Year ended December 31,

2013

2012

2013

2012

GAAP net income

$

1,741

$

24,514

$

5,179

$

26,647

Adjustments:







Provision for income taxes

1,042

14,598

2,590

15,908

Depreciation and amortization

344

874

1,327

1,864

Non-GAAP EBITDA

3,127

39,986

9,096

44,419

Proceeds from litigation, net of legal expenses and special bonus to officers

(367)

(37,628)

(639)

(37,878)

Share-based compensation

91

65

296

241

Legal expenses for litigation relating to indemnification of former officers, theft of our intellectual property claims and our claim for damages

98

376

332

902

Acquisition related expenses

163

57

246

327

Non-GAAP Adjusted EBITDA

$

3,112

$

2,856

$

9,331

$

8,011









Basic weighted average shares outstanding

8,985,518

9,109,552

9,064,340

9,107,234

Diluted weighted average shares outstanding

9,340,741

9,192,714

9,455,518

9,214,685









Basic Non-GAAP Adjusted EBITDA per common share

$

0.35

$

0.31

$

1.03

$

0.88

Diluted Non-GAAP Adjusted EBITDA per common share

$

0.34

$

0.31

$

0.99

$

0.87

SOURCE ClearOne

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