ClearOne Reports 2013 Second Quarter Financial Results

July 31, 2013

SALT LAKE CITY, July 31, 2013 /PRNewswire/ -- ClearOne (NASDAQ: CLRO) today reported its financial results for the three and six months ended June 30, 2013.

For the 2013 second quarter, revenue was $11.70 million, compared with $11.66 million for the second quarter of 2012. Gross profit was $6.9 million, or 59% of revenue, compared with $7.1 million, or 61% of revenue, for the second quarter of 2012. Non-GAAP operating income increased by 7% to $1.8 million from $1.7 million for the 2012 second quarter. Non-GAAP net income grew 40% to $1.2 million, or $0.13 per diluted share, from $885,000, or $0.10 per diluted share, last year. Non-GAAP Adjusted EBITDA for the 2013 second quarter increased 9% to $2.0 million, or $0.22 per diluted share, from $1.9 million, or $0.20 per diluted share, a year ago.

For the first half of 2013, revenue rose to $23.0 million from $21.8 million for the same period in 2012.  Gross profit was $13.9 million, or 60% of revenue, compared with $13.2 million, or 61% of revenue, for the first half of 2012.  Non-GAAP operating income for the first half of 2013 increased by 22% to $3.2 million from $2.6 million for the second half of 2012. Non-GAAP net income for the 2013 year-to-date period grew 46% to $2.2 million, or $0.23 per diluted share, from $1.5 million , or $0.16 per diluted share, last year. Non-GAAP Adjusted EBITDA for the first half of 2013 increased 18% to $3.6 million, or $0.38 per diluted share, from $3.1 million, or $0.33 per diluted share, for the corresponding period a year ago.

The reconciliation between GAAP and Non-GAAP measures is available in the tables attached to this release.

At June 30, 2013, the company had cash, cash equivalents, and investments of $41.6 million. The company continues to selectively evaluate modest acquisition and organic growth opportunities to complement its product portfolio.

"At the halfway mark for fiscal 2013, we are optimistic that our positive momentum will continue," said Zee Hakimoglu, President, Chief Executive Officer and Chairman of ClearOne. "Although the company's performance in the Asia and EMEA markets continues to reflect a slowdown in growth and lingering macroeconomic uncertainty, we remain confident that the best is yet to come, as the market continues to recognize the value of the lower-cost software-based solutions that define the future in video and are addressed by the strong ClearOne offering."

Recent highlights

  • ClearOne made progress on an important strategic goal in the quarter by successfully signing major distribution partners in the EMEA region and the U.S. These new distribution partners expand the reach of ClearOne's unified communications and video products.
  • The company continued to develop its unified media engine for its next-generation video products. This advanced technology will enhance the performance of the COLLABORATE® video conferencing and VIEW® multimedia streaming products, as well as contribute to stronger gross margins when the next-generation products launch.
  • ClearOne took another leap ahead with the Pro Audio industry's most powerful innovation, the Beamforming Microphone Array, by adding expanded support for tabletop and wall applications.

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 audio and visual communications.  The performance and simplicity of its advanced comprehensive solutions offer unprecedented levels of functionality, scalability and reliability.  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

June 30, 2013

As of

December 31, 2012

ASSETS

Current assets:

Cash and cash equivalents

$

32,386

$

55,509

Marketable securities

337

-

Receivables, net of allowance for doubtful accounts of $55 and $60, respectively

8,439

8,388

Inventories, net

12,304

10,873

Deferred income taxes

3,148

3,148

Prepaid expenses and other assets

1,785

1,369

Total current assets

58,399

79,287

Long-term inventories, net

1,609

1,955

Property and equipment, net

1,783

1,708

Long-term marketable securities

8,873

-

Intangibles, net

3,996

4,258

Goodwill

3,472

3,472

Deferred income taxes

1,195

1,195

Other assets

61

64

Total assets

$

79,388

$

91,939

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$3,031

$2,302

Accrued liabilities

2,009

2,143

Income taxes payable

-

14,782

Deferred product revenue

4,300

3,593

Total current liabilities

9,340

22,820

Deferred rent

365

422

Other long-term liabilities

2,028

2,029

Total liabilities

11,733

25,271

Shareholders' equity:

Common stock, par value $0.001, 50,000,000 shares authorized, 9,080,060 and 9,163,462 shares issued and outstanding, respectively

9

9

Additional paid-in capital

39,729

40,430

Accumulated other comprehensive loss

(87)

-

Retained earnings

28,004

26,229

Total shareholders' equity

67,655

66,668

Total liabilities and shareholders' equity

$

79,388

$

91,939





CLEARONE, INC.

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS


(Dollars in thousands, except per share value)

Quarter ended June 30,

6 Months ended June 30,

2013

2012

2013

2012

Revenue

$

11,703

$

11,655

$

22,996

$

21,809

Cost of goods sold

4,839

4,562

9,133

8,608

Gross profit

6,864

7,093

13,863

13,201




Operating expenses:




Sales and marketing

2,088

2,254

4,356

4,388

Research and product development

1,843

2,029

3,709

4,037

General and administrative

1,437

1,611

3,234

3,091

Proceeds from litigation, net

-

-

-

(250)

Total operating expenses

5,368

5,894

11,299

11,266




Operating income

1,496

1,199

2,564

1,935

Other income (expense), net

47

(5)

33

11

Income before income taxes

1,543

1,194

2,597

1,946

Provision for income taxes

498

544

822

818

Net income

$

1,045

$

650

$

1,775

$

1,128




Basic earnings per common share

$

0.11

$

0.07

$

0.19

$

0.12

Diluted earnings per common share

$

0.11

$

0.07

$

0.19

$

0.12




Basic weighted average shares outstanding

9,093,461

9,107,420

9,122,996

9,102,786

Diluted weighted average shares outstanding

9,459,495

9,226,426

9,499,452

9,224,727




Net Income

1,045

650

1,775

1,128

Comprehensive income:




Unrealized loss on available for sale securities, net of tax

(87)

-

(87)

-

Comprehensive income

$

958

$

650

$

1,688

$

1,128







CLEARONE, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP NET INCOME


(Dollars in thousands, except per share value)

Quarter ended June 30, 2013

Quarter ended June 30, 2012

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments

Non-GAAP

Revenue

$   11,703

$          -

$      11,703

$   11,655

$          -

$    11,655

Cost of goods sold

4,839

(2)

4,837

4,562

-

4,562

Gross profit

6,864

2

6,866

7,093

-

7,093






Operating expenses:






Sales and marketing

2,088

(19)

2,069

2,254

(17)

2,237

Research and product development

1,843

(13)

1,830

2,029

(10)

2,019

General and administrative

1,437

(256)

1,181

1,611

(439)

1,172

Proceeds from litigation

-

-

-

-

-

Total operating expenses

5,368

(288)

5,080

5,894

(466)

5,428






Operating income

1,496

290

1,786

1,199

466

1,665

Other income (expense), net

47

-

47

(5)

-

(5)

Income before income taxes

1,543

290

1,833

1,194

466

1,660

Provision for income taxes

498

95

593

544

231

775

Net income

$       1,045

$     195

$          1,240

$          650

$     235

$           885






Basic earnings per common share

$       0.11

$            0.14

$         0.07

$          0.10

Diluted earnings per common share

$       0.11

$            0.13

$         0.07

$          0.10






Basic weighted average shares outstanding

9,093,461

9,093,461

9,107,420

9,107,420

Diluted weighted average shares outstanding

9,459,495

9,459,495

9,226,426

9,226,426














The adjustments consist of the following:






Share-based compensation

$       67


$       60

Amortization of purchased intangibles

118


129

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

95


237

Acquisition related expenses

10


40

Total of adjustments before taxes

290


466

Income taxes affected by the above adjustments

95


231

Total adjustments

$      195


$      235





CLEARONE, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP NET INCOME


(Dollars in thousands, except per share value)

6 months ended June 30, 2013

6 months ended June 30, 2012

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments

Non-GAAP

Revenue

$   22,996

$           -

$     22,996

$   21,809

$           -

$     21,809

Cost of goods sold

9,133

(4)

9,129

8,608

(1)

8,607

Gross profit

13,863

4

13,867

13,201

1

13,202






Operating expenses:






Sales and marketing

4,356

(34)

4,322

4,388

(30)

4,358

Research and product development

3,709

(24)

3,685

4,037

(17)

4,020

General and administrative

3,234

(567)

2,667

3,091

(885)

2,206

Proceeds from litigation

-

-

-

(250)

250

-

Total operating expenses

11,299

(625)

10,674

11,266

(682)

10,584






Operating income

2,564

629

3,193

1,935

683

2,618

Other income (expense), net

33

-

33

11

-

11

Income before income taxes

2,597

629

3,226

1,946

683

2,629

Provision for income taxes

822

199

1,021

818

300

1,118

Net income

$       1,775

$       430

$         2,205

$       1,128

$       383

$         1,511






Basic earnings per common share

$         0.19

$           0.24

$         0.12

$           0.17

Diluted earnings per common share

$         0.19

$           0.23

$         0.12

$           0.16






Basic weighted average shares outstanding

9,122,996

9,122,996

9,102,786

9,102,786

Diluted weighted average shares outstanding

9,499,452

9,499,452

9,224,727

9,224,727














The adjustments consist of the following:






Share-based compensation

$     126


$     111

Amortization of purchased intangibles

261


231

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

184


364

Acquisition related expenses

58


227

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

-


(250)

Total of adjustments before taxes

629


683

Income taxes affected by the above adjustments

199


300

Total adjustments

$       430


$       383





CLEARONE, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EBITDA


(Dollars in thousands, except per share value)

Quarter ended June 30,

6 Months ended June 30,

2013

2012

2013

2012

GAAP net income

$          1,045

$           650

$       1,775

$      1,128

Adjustments:





Provision for income taxes

498

544

822

818

Depreciation and amortization

323

342

646

654

Non-GAAP EBITDA

1,866

1,536

3,243

2,600

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

-

-

-

(250)

Share-based compensation

67

60

126

111

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

95

237

184

364

Acquisition related expenses

10

40

58

227

Non-GAAP Adjusted EBITDA

$          2,038

$        1,873

$       3,611

$      3,052





Basic weighted average shares outstanding

9,093,461

9,107,420

9,122,996

9,102,786

Diluted weighted average shares outstanding

9,459,495

9,226,426

9,499,452

9,224,727





Basic Adjusted EBITDA per common share

$            0.22

$          0.21

$         0.40

$        0.34

Diluted Adjusted EBITDA per common share

$            0.22

$          0.20

$         0.38

$        0.33

SOURCE ClearOne

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