ClearOne Reports Second Quarter 2015 Financial Results

August 6, 2015

SALT LAKE CITY, Aug. 6, 2015 /PRNewswire/ --

Second Quarter 2015 Highlights


  • Gross margin increased to 64% from 57%
  • Non-GAAP operating income up 79%
  • Non-GAAP net income up 39%
  • Non-GAAP adjusted EBITDA up 70%
  • Revenue down 1% to $14.0 million

Financial Summary


(Dollars in thousands, except per share values)

 

Second Quarter

Year to Date

2015

2014

Change

2015

2014

Change

Revenue

$

14,013

$

14,111

-1%

$

27,600

$

26,819

3%

Gross Profit

8,991

8,064

11%

17,453

15,766

11%

Non-GAAP Operating Income

2,889

1,615

79%

5,416

2,994

81%

Non-GAAP Net Income

1,895

1,366

39%

3,566

2,197

62%

Non-GAAP Adjusted EBITDA

3,179

1,874

70%

6,017

3,490

72%

Non-GAAP Diluted EPS

$

0.20

$

0.14

43%

$

0.37

$

0.23

61%

 

ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication solutions, today reported financial results for the three and six months ended June 30, 2015.

For the 2015 second quarter, revenue decreased 1% to $14.0 million from $14.1 million for the second quarter of 2014.  Gross profit was $9.0 million, or 64% of revenue, compared with $8.1 million, or 57% of revenue, for the second quarter of 2014. Non-GAAP operating income increased 79% to $2.9 million from $1.6 million for the second quarter of 2014. Non-GAAP net income increased 39% to $1.9 million, or $0.20 per diluted share, from $1.4 million, or $0.14 per diluted share, for the second quarter of 2014. Non-GAAP Adjusted EBITDA increased 70% to $3.2 million, or $0.33 per diluted share, from $1.9 million, or $0.19 per diluted share, for the second quarter of 2014.

For the six months ended June 30, 2015, revenue increased 3% to $27.6 million from $26.8 million for the six months ended June 30, 2014.  Gross profit was $17.5 million, or 63% of revenue, compared with $15.8 million, or 59% of revenue, for the six months ended June 30, 2014. Non-GAAP operating income increased 81% to $5.4 million from $3.0 million for the six months ended June 30, 2014. Non-GAAP net income increased 62% to $3.6 million, or $0.37 per diluted share, from $2.2 million, or $0.23 per diluted share, for the six months ended June 30, 2014. Non-GAAP Adjusted EBITDA increased 72% to $6.0 million, or $0.63 per diluted share, from $3.5 million, or $0.36 per diluted share, for the six months ended June 30, 2014.

Cash, cash equivalents and investments totaled $36.0 million at June 30, 2015, up from $33.6 million at December 31, 2014. The company continued to have no debt.

"During the second quarter, we reported record gross profit and operating income," said Zee Hakimoglu, President and Chief Executive Officer. "Revenue however, was down modestly due to several factors, including a temporary delay in shipping a major project and a lull in the U.S. market during the month of May.  The ongoing effects of a strong U.S. dollar, weakness in EMEA and Australia markets and lower spending by the China government also impacted our revenue."

"Nevertheless, we are confident in our ability to generate positive revenue growth in the second half of the current year and beyond.  We continue to successfully execute our operating plan and are encouraged by, among other things, a number of recent, initial product installations with large new marquee customers, both domestic and international."

Unveiled CONNECT Bluetooth

In June, the company introduced CONNECT® Bluetooth®, a compact and portable USB adapter that brings Bluetooth connectivity to its line of personal, premium and professional audio products, including CHAT® speakerphones, INTERACT® mixers and CONVERGE® products. CONNECT Bluetooth simply and conveniently enables mobile devices to connect directly to ClearOne audio products to make mobile calls and provides audio bridging capability that can connect PC-based voice or video calls and mobile phone calls into a unified group conference.

Expanded CONVERGE® Matrix Line

In June, the company released two new models in its CONVERGE® Matrix line of Dante™-based network audio distribution solutions, to complement its larger scale 256- and 512-channel mixers and routers.  The new, smaller scale 64 and 128 channel models work equally well with Dante digital network audio distribution technology, interoperate with all third-party Dante devices and accommodate a full spectrum of system sizes and applications.

Introduced New, Innovative Media Collaboration Series with "True Cloud" Functionality

Also in June, the company launched a new series of integrated packages in its COLLABORATE® line of professional collaboration solutions, the world's first technology that combines low cost appliances with powerful, scalable, cloud collaboration capabilities. The COLLABORATE media appliance provides standards-based video conferencing with a wide assortment of collaboration tools, including wireless presentation and whiteboarding, streaming, recording and multi-party conferencing, and adds more functionality, flexibility and participant value to elevate the company's leadership in the enterprise conferencing marketplace.

Non-GAAP Financial Measures

ClearOne provides non-GAAP financial information in the form of non-GAAP operating income, non-GAAP net income, non-GAAP Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (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 operating income, non-GAAP net income, non-GAAP Adjusted EBITDA and corresponding earnings per share excludes certain costs and expenses, the details of which are provided below in the tables 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 financial measures to the most directly comparable GAAP financial measures is included with this 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 and any statements of the plans and objectives of management for future operations and forecasts of future growth and value, 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

 

CLEARONE, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)

As of June 30, 2015

As of December 31, 2014

ASSETS


Current assets:


Cash and cash equivalents

$

10,873

$

7,440

Marketable securities

6,385

6,994

Receivables, net of allowance for doubtful accounts of $52 and $58, respectively

8,557

9,916

Inventories, net

14,340

12,766

Distributor channel inventories

1,629

1,698

Deferred income taxes

3,824

3,824

Prepaid expenses and other assets

2,545

2,143

Total current assets

48,153

44,781

Long-term marketable securities

18,756

19,162

Long-term inventories, net

680

876

Property and equipment, net

1,811

2,039

Intangibles, net

7,267

7,896

Goodwill

12,724

12,724

Deferred income taxes

1,278

1,265

Other assets

114

117

Total assets

$

90,783

$

88,860

LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:


Accounts payable

$

3,033

$

3,057

Accrued liabilities

2,908

2,694

Deferred product revenue

4,744

5,004

Total current liabilities

10,685

10,755

Deferred rent

196

248

Other long-term liabilities

1,237

1,841

Total liabilities

12,118

12,844

Shareholders' equity:


Common stock, par value $0.001, 50,000,000
shares authorized, 9,128,053 and
  9,097,827 shares issued and outstanding

9

9

Additional paid-in capital

45,513

44,939

Accumulated other comprehensive (loss)

(81)

(8)

Retained earnings

33,224

31,076

Total shareholders' equity

78,665

76,016

Total liabilities and shareholders' equity

$

90,783

$

88,860

 

CLEARONE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Dollars in thousands, except per share values)

Quarter ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Revenue

$

14,013

$

14,111

$

27,600

$

26,819

Cost of goods sold

5,022

6,047

10,147

11,053

Gross profit

8,991

8,064

17,453

15,766








Operating expenses:






Sales and marketing

2,753

2,976

5,375

5,713

Research and product development

2,054

2,330

3,996

4,571

General and administrative

1,891

1,712

3,890

3,680

Total operating expenses

6,698

7,018

13,261

13,964








Operating income

2,293

1,046

4,192

1,802

Other income, net

85

64

190

145

Income before income taxes

2,378

1,110

4,382

1,947

Provision for income taxes

863

228

1,595

578

Net income

$

1,515

$

882

$

2,787

$

1,369








Basic earnings per common share

$

0.17

$

0.10

$

0.31

$

0.15

Diluted earnings per common share

$

0.16

$

0.09

$

0.29

$

0.14








Basic weighted average shares outstanding

9,119,907

9,266,071

9,110,062

9,174,816

Diluted weighted average shares outstanding

9,603,682

9,677,726

9,560,914

9,618,172








Comprehensive income:






Net income

$

1,515

$

882

$

2,787

$

1,369

     Other comprehensive income






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

(77)

65

(23)

138

     Change in foreign
     currency translation adjustment

129

—

(50)

—

   Comprehensive income

$

1,567

$

947

$

2,714

$

1,507

 

CLEARONE, INC.

UNAUDITED RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

(Dollars in thousands, except per share values)

Quarter ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Revenue

$

14,013

$

14,111

$

27,600

$

26,819

Cost of goods sold

5,016

6,045

10,136

11,049

Gross profit

8,997

8,066

17,464

15,770








Operating expenses:






Sales and marketing

2,714

2,956

5,296

5,673

Research and product development

2,021

2,320

3,930

4,550

General and administrative

1,373

1,175

2,822

2,553

Total operating expenses

6,108

6,451

12,048

12,776








Non-GAAP operating income

2,889

1,615

5,416

2,994

Other income (expense), net

85

64

190

145

Income before income taxes

2,974

1,679

5,606

3,139

Provision for income taxes

1,079

313

2,040

942

Non-GAAP Net income

$

1,895

$

1,366

$

3,566

$

2,197








Basic Non-GAAP earnings per common share

$

0.21

$

0.15

$

0.39

$

0.24

Diluted Non-GAAP earnings per common share

$

0.20

$

0.14

$

0.37

$

0.23








Basic weighted average shares outstanding

9,119,907

9,266,071

9,110,062

9,174,816

Diluted weighted average shares outstanding

9,603,682

9,677,726

9,560,914

9,618,172








GAAP Net Income

$

1,515

$

882

$

2,787

$

1,369

Adjustments:






Share-based compensation

217

84

455

168

Amortization of purchased intangibles

315

352

629

521

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

—

31

7

60

Acquisition related expenses

64

102

133

443

Total of adjustments before taxes

596

569

1,224

1,192

Income taxes affected by the above adjustments

216

85

445

364

      Total adjustments

380

484

779

828

Non-GAAP Net Income

$

1,895

$

1,366

$

3,566

$

2,197

 

CLEARONE, INC.

UNAUDITED RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA

(Dollars in thousands, except per share values)

Quarter ended June 30,

Six months ended June 30,

2015

2014

2015

2014

GAAP net income

$

1,515

$

882

$

2,787

$

1,369

Adjustments:






Provision for income taxes

863

228

1,595

578

Depreciation and amortization

520

547

1,040

872

Non-GAAP EBITDA

2,898

1,657

5,422

2,819

Share-based compensation

217

84

455

168

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

—

31

7

60

Acquisition related expenses

64

102

133

443

Non-GAAP Adjusted EBITDA

$

3,179

$

1,874

$

6,017

$

3,490








Basic weighted average shares outstanding

9,119,907

9,266,071

9,110,062

9,174,816

Diluted weighted average shares outstanding

9,603,682

9,677,726

9,560,914

9,618,172








Basic Non-GAAP Adjusted EBITDA per common share

$

0.35

$

0.20

$

0.66

$

0.38

Diluted Non-GAAP Adjusted EBITDA per common share

$

0.33

$

0.19

$

0.63

$

0.36

 

Contact:
Investor Relations
801-975-7200
investor_relations@clearone.com

 

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SOURCE ClearOne

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