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ClearOne Reports First Quarter Results

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SOURCE ClearOne

Investments During the Quarter Position ClearOne to Drive Sales of Industry-Leading Portfolio

SALT LAKE CITY, May 6, 2014 /PRNewswire/ --

First Quarter 2014 Highlights

  • Achieved record first quarter revenue of $12.7 million
  • Reported revenue growth of 13%
  • Closed acquisition of Sabine
  • Added a seasoned video conferencing sales and business development team to drive all-inclusive ClearOne video collaboration portfolio to market

Financial Summary


(Dollars in thousands, except per share values)


First Quarter



2014


2013


Change

Revenue


$

12,708


$

11,293


13%

Gross Profit


7,702


6,999


10%

Non-GAAP Net Income


831


966


(14)%

Non-GAAP Adjusted EBITDA


1,616


1,574


3%

Non-GAAP Diluted EPS


$

0.09


$

0.10


(10)%

ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication solutions, today reported financial results for the first quarter of 2014.  Results include Sabine operations for the period following the acquisition on March 7. The results do not include Spontania operations since the acquisition closed on April 1.

For the 2014 first quarter, revenue increased by 13% to $12.7 million, compared with $11.3 million for the first quarter of 2013.  Gross profit for the first quarter was $7.7 million, or 61% of revenue, compared with $7.0 million, or 62% of revenue, for the first quarter of 2013.  Non-GAAP net income decreased 14% to $0.83 million, or $0.09 per diluted share, from $0.97 million, or $0.10 per diluted share, for the first quarter of 2013. Non-GAAP adjusted EBITDA for the 2014 first quarter increased 3% to $1.62 million, or $0.17 per diluted share, from $1.57 million, or $0.17 per diluted share, a year ago.

The reduction in GAAP net income for the first quarter of 2014 was caused primarily by acquisition expenses related to Sabine and Spontania acquisitions. Non-GAAP and GAAP net income were also impacted by increased operating costs related to Sabine operations and investments made in the new video collaboration sales and marketing team ahead of expected contributions in revenue from Sabine and Spontania acquisitions for the remainder of 2014.  Results also reflect increased tax expense for this quarter as Congress did not extend certain R&D tax credits.

During the quarter, the company acquired the supplier of its complementary professional wireless microphone solutions, Sabine, Inc., securing continued access to products central to ClearOne's microphones portfolio. In 2014, ClearOne's full suite of wireless microphone products is expected to achieve revenue between $5.4 million to $6.9 million including the Sabine acquisition, compared to $1.3 million revenue from wireless microphone products in 2013, before Sabine's acquisition.  ClearOne also expects to improve profitability of its wireless microphone products by reducing operating expenses as the integration of the Sabine business moves forward.

On April 1, 2014 ClearOne completed the acquisition of Spontania cloud-based video collaboration solutions from Spain-based Dialcom Networks. In order to effectively grow video collaboration revenue, during the first quarter of 2014 ClearOne made important additions to its video collaboration sales team, led by industry veteran David Moss and consisting of professionals with rich backgrounds including experience working for marquee industry players like Cisco, Polycom, Siemens, and Vidyo. ClearOne intends to further build and broaden the sales channel of the complete portfolio led by Spontania as part of ClearOne's full range of video collaboration solutions.

"The quarterly results reflect our continued plan of prudently leveraging our profits from current growth to fuel future growth by making complementary and balanced investments in sales and marketing and research and development," said Zee Hakimoglu, President and Chief Executive Officer. "We expect the acquisitions and the associated investments in sales and marketing capabilities to contribute to higher revenues and increased earnings growth in the following quarters of 2014. We are confident that these timely and essential steps will create increasing value for ClearOne, its partners, and its shareholders."

Cash, cash equivalents and investments totaled $34.0 million at March 31, 2014, down from $42.7 million on December 31, 2013.  The decrease in cash balance reflects the amounts paid for both Sabine and Spontania acquisitions. Cash payment of about $5.0 million was made towards the Spontania acquisition before the end of the first quarter though the transaction closed in April 2014. While the company filed a shelf registration statement with the Securities and Exchange Commission to register the shares of common stock issued as part of the acquisition of Sabine, the company has no plans to issue additional equity or debt.

Non-GAAP Financial Measures

ClearOne provides non-GAAP financial information in the form of non-GAAP net income, non-GAAP EDBITDA and non-GAAP 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, non-GAAP EDBITDA and non-GAAP 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.  Detailed reconciliation of the non-GAAP measures used in this news release to the corresponding GAAP measures 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

March 31, 2014


As of

December 31, 2013

ASSETS




Current assets:




Cash and cash equivalents

$

7,649


$

17,192

Marketable securities

4,734


3,200

Receivables, net of allowance for doubtful accounts of $102 and $129, respectively

8,849


9,378

Inventories, net

11,063


10,758

Distributor channel inventories

1,578


1,520

Deferred income taxes

3,325


3,325

Prepaid expenses and other assets

7,050


2,693

Total current assets

44,248


48,066

Long-term marketable securities

21,645


22,326

Long-term inventories, net

575


551

Property and equipment, net

2,209


1,825

Intangibles, net

6,816


3,710

Goodwill

9,872


3,472

Deferred income taxes

980


1,024

Other assets

91


87

Total assets

$

86,436


$

81,061

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

3,324


$

2,730

Accrued liabilities

2,627


1,761

Deferred product revenue

4,107


4,158

Total current liabilities

10,058


8,649

Deferred rent

246


286

Other long-term liabilities

2,363


1,791

Total liabilities

12,667


10,726

Shareholders' equity:




Common stock, par value $0.001, 50,000,000 shares authorized, 9,309,529 and 8,986,080 shares issued and outstanding

9


9

Additional paid-in capital

44,182


41,311

Accumulated other comprehensive income

96


23

Retained earnings

29,482


28,992

Total shareholders' equity

73,769


70,335

Total liabilities and shareholders' equity

$

86,436


$

81,061



CLEARONE INC.

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

(Dollars in thousands, except per share values)



Three months ended March 31,


2014


2013

Revenue

$

12,708


$

11,293

Cost of goods sold

5,006


4,294

Gross profit

7,702


6,999





Operating expenses:




Sales and marketing

2,736


2,267

Research and product development

2,241


1,866

General and administrative

1,964


1,797

Total operating expenses

6,941


5,930





Operating income

761


1,069

Other income (expense), net

81


(14)

Income before income taxes

842


1,055

Provision for income taxes

352


324

Net income

$

490


$

731





Basic earnings per common share

$

0.05


$

0.08

Diluted earnings per common share

$

0.05


$

0.08





Basic weighted average shares outstanding

9,082,546


9,152,859

Diluted weighted average shares outstanding

9,558,941


9,394,181





Comprehensive income:




Net income

$

490


$

731

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

96


-

Comprehensive income

$

586


$

731



CLEARONE INC.

UNAUDITED STATEMENT OF NON-GAAP NET INCOME AND

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

(Dollars in thousands, except per share values)




Three months ended March 31,



2014


2013

Unaudited Statement of Non-GAAP Net Income





Revenue


$

12,708


$

11,293

Cost of goods sold


5,004


4,292

Gross profit


7,704


7,001






Operating expenses:





Sales and marketing


2,716


2,252

Research and product development


2,230


1,855

General and administrative


1,379


1,486

Total operating expenses


6,325


5,593






Operating income


1,379


1,408

Other income (expense), net


81


(14)

Income before income taxes


1,460


1,394

Provision for income taxes


629


428

Non-GAAP Net income


$

831


$

966






Basic earnings per common share


$

0.09


$

0.11

Diluted earnings per common share


$

0.09


$

0.10






Basic weighted average shares outstanding


9,082,546


9,152,859

Diluted weighted average shares outstanding


9,558,941


9,394,181






Reconciliation of GAAP Net Income to Non-GAAP Net Income





GAAP Net Income


$

490


$

731

Adjustments:





Share-based compensation


84


59

Amortization of purchased intangibles


164


143

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


29


89

Acquisition related expenses


341


48

Total of adjustments before taxes


618


339

Income taxes affected by the above adjustments


277


104

Total adjustments


341


235

Non-GAAP Net Income


$

831


$

966



CLEARONE INC.

UNAUDITED RECONCILIATION OF GAAP NET INCOME

TO NON-GAAP EBITDA AND NON-GAAP ADJUSTED EBITDA

(Dollars in thousands, except per share values)




Three months ended March 31,



2014


2013

GAAP net income


$

490


$

731

Adjustments:





Provision for income taxes


352


324

Depreciation and amortization


320


323

Non-GAAP EBITDA


1,162


1,378

Share-based compensation


84


59

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


29


89

Acquisition related expenses


341


48

Non-GAAP Adjusted EBITDA


$

1,616


$

1,574






Basic weighted average shares outstanding


9,082,546


9,152,859

Diluted weighted average shares outstanding


9,558,941


9,394,181






Basic Non-GAAP Adjusted EBITDA per common share


$

0.18


$

0.17

Diluted Non-GAAP Adjusted EBITDA per common share


$

0.17


$

0.17

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