SALT LAKE CITY, Aug. 9, 2017 /PRNewswire/ -- ClearOne (NASDAQ:
CLRO), a global provider of audio and visual communication
solutions, reported financial results for the three months and six
months ended June 30, 2017.
"Our major product transition continued to impact the company
resulting in a disappointing second quarter, notwithstanding the
34% sequential increase in revenues in Q2 from the new Converge®
Pro 2 (CP2), which with our Beamforming Microphone Array 2 is our
next generation conferencing platform," said Zee Hakimoglu,
president and chief executive officer. "CP2 platform is taking
longer than previous product ramps and extending the normal
sales-cycle because of infringing activities and the additional
training needed by AV consultants, integrators and large
end-customers on significant changes between platforms, including
new architecture, scalability, interoperability and user
interfaces. At the end of Q1, we completed implementation of
important software feature upgrades, enabling us to introduce the
new platform to AV consultants to specify for future large-scale
projects. We are making good progress with our AV
practitioner channel partners for design/build projects and secured
wins with well-known, leading companies. Along with sequential
growth of the new platform, Q2 positives included video revenue
growing 25% year-over-year and gross margins improving from 57% in
Q1 to 59% in Q2.
"Over the last several years, we have launched new products
building upon our core base in pro AV and establishing a complete
value chain including professional microphones, video
collaboration, and networked audio video streaming. Frequently
recognized by the industry, in June we received three prestigious
'Best of Show' awards at InfoComm. During the quarter, we were
awarded three new patents, one of which was our innovative patent
on a system and method involving the combination of echo
cancellation, beamforming microphone arrays, and smart beam
selection--the technology underpinning the 'acoustic intelligence'
of our ground-breaking Beamforming Microphone Array. We continued
to take the necessary steps to enforce this strategic patent to
remedy having to compete against our own patented technology, and
to defend the validity of our patents.
"Our fundamentals are strong as a result of our award-winning
product set, efficient operations and strong balance sheet. As we
further our revenue expansion with CP2 platform and video, we
expect to close the profitability gap. In addition, we continue to
create shareholder value through our on-going repurchase program
and dividend plan," concluded Hakimoglu.
2017 InfoComm Awards
InfoComm International®, the association
representing the professional audiovisual and information
communications industries worldwide, hosts the largest trade show
of the industry.
- AV Technology InfoComm 2017 Best of Show Award for ClearOne®
VIEW® Pro 4K IP-based, Multimedia Networked AV Streaming
Solution
- rAVe ProAV Edition's Best of InfoComm 2017 Award: Best AV over
IP Product for ClearOne® VIEW® Pro 4K IP Products
- SOUND&VIDEO CONTRACTOR (SVC) Best of InfoComm 2017 award
for COLLABORATE® Versa™ 150
Financial Summary
The Company uses certain non-GAAP financial measures and
reconciles those to GAAP measures in the attached tables.
- Q2 2017 revenue was $10.3
million, compared to $12.0
million in Q2 2016 and $11.7
million in Q1 2017. The year-over-year decrease reflects
continuing transition to the next generation professional audio
conferencing platform and the price reductions to corresponding
legacy products. Sequential revenue drop was caused by the
reduction in revenues from legacy Converge Pro 1 platform at a rate
higher than the increase in revenues from the new Converge Pro 2
platform. This trend is expected to reverse when the transition is
complete.
- GAAP gross profit in Q2 2017 was $6.1
million, compared to $7.7
million in Q2 2016 and $6.7
million in Q1 2017. GAAP gross profit margin was 59% in Q2
2017, compared to 64% in Q2 2016 and 57% in Q1 2017. Non-GAAP gross
profit margin was 59% in Q2 2017, compared to 64% in Q2 2016 and
57% in Q1 2017. Year-over-year and sequentially the product
mix was still heavily weighted toward the lower margin, legacy
Converge Pro 1, impacting both GAAP and non-GAAP gross profit
margin.
- Operating expenses in Q2 2017 were $7.2
million, compared to $6.3
million in Q2 2016 and $7.2
million in Q1 2017. The majority of the increase over Q2
2016 is attributable to litigation, primarily related to the patent
lawsuit.
- Net loss in Q2 2017 was $0.8
million, or $0.09 per diluted
share, compared to net income of $1.0
million, or $0.10 per diluted
share, in Q2 2016 and net loss of $0.5 million,
or $0.05 per diluted share, in Q1 2017.
- Non-GAAP net loss was $0.1
million, or $0.01 per diluted
share, in Q2 2017, compared to non-GAAP net income of $1.4 million, or $0.15 per diluted share, in Q2 2016, and non-GAAP
net income of $0.1 million, or
$0.02 per diluted share, in Q1
2017.
($ in 000, except
per share)
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$10,311
|
|
$11,966
|
|
-14%
|
|
$21,989
|
|
$24,999
|
|
-12%
|
Gross
Profit
|
6,069
|
|
7,664
|
|
-21%
|
|
12,747
|
|
16,129
|
|
-21%
|
Operating Income
(Loss)
|
(1,109)
|
|
1,320
|
|
-184%
|
|
(1,635)
|
|
3,293
|
|
-150%
|
Net Income
(Loss)
|
(820)
|
|
955
|
|
-186%
|
|
(1,288)
|
|
2,323
|
|
-155%
|
Earnings (Loss) Per
Share (Diluted)
|
(0.09)
|
|
0.10
|
|
-190%
|
|
(0.15)
|
|
0.24
|
|
-163%
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Profit
|
$6,076
|
|
$7,671
|
|
-21%
|
|
$12,761
|
|
$16,140
|
|
-21%
|
Non-GAAP Operating
Income
|
136
|
|
1,941
|
|
-93%
|
|
502
|
|
4,462
|
|
-89%
|
Non-GAAP Net Income
(Loss)
|
(102)
|
|
1,405
|
|
-107%
|
|
47
|
|
3,161
|
|
-99%
|
Non-GAAP Adjusted
EBITDA
|
365
|
|
2,206
|
|
-83%
|
|
999
|
|
4,981
|
|
-80%
|
Non-GAAP Earnings
(Loss) per share (Diluted)
|
(0.01)
|
|
0.15
|
|
-107%
|
|
0.01
|
|
0.33
|
|
-98%
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Highlights
At June 30, 2017, cash, cash
equivalents and investments were $29.2
million, as compared with $38.5 million at December 31,
2016. A significant portion of this decrease can be
attributed to legal expenses, share repurchases, dividend payments
and higher investment in inventory related to the Converge Pro 2
platform and wireless microphones which is expected to flow back
into cash in the near term. The Company continued to have no
debt.
During Q2 of 2017, the Company paid a cash dividend
of $0.07 per share and repurchased approximately 215,000
shares amounting to $2.1 million.
As of June 30, 2017, the
Company has acquired approximately 836,000 shares amounting to
$9.2 million since this program
commenced in March 2016 and was
renewed and extended by the board in March
2017. The Company intends to continue to repurchase shares
of its common stock under this program in the open market, subject
to price, volume and other safe harbor restrictions. The
Company also announced on August 7,
2017 a cash dividend of $0.07 per share for Q3 2017.
Conference Call Information
ClearOne senior management will host an investor conference call
today, August 9th
at 11:30 a.m. Eastern Time to review the company's
financial results. The conference call will be available to
interested parties by dialing +1- 877-369-6586 (domestic) or
+1- 253-237-1165 (international). The conference ID is 60167958.
The call will also be available through a live, listen-only
audio Internet broadcast
at http://investors.clearone.com/events.cfm. For those who are
not available to listen to the live broadcast, the call will be
archived on the same web site for at least three months.
About ClearOne
ClearOne is a global company that designs, develops and
sells conferencing, collaboration, and network streaming &
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.
Non-GAAP Financial Measures
To supplement our consolidated financial statements presented on
a GAAP basis, ClearOne uses non-GAAP measures of gross profit,
operating income (loss), net income (loss), adjusted Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA) and
net income (loss) per share, which are adjusted to exclude certain
costs, expenses, gains and losses we believe appropriate to enhance
an overall understanding of our past financial performance from
period to period and also our prospects for the future. These
adjustments to our current period GAAP results are made with the
intent of providing both management and investors a more complete
understanding of ClearOne's underlying operational results and
trends and our marketplace performance. The non-GAAP results are an
indication of our baseline performance before certain gains,
losses, or other charges that are considered by management to be
outside of our core operating results. In addition, these adjusted
non-GAAP results are among the primary indicators management uses
as a basis for our planning and forecasting of future
periods. The presentation of this additional non-GAAP
financial information is not meant to be considered in isolation or
as a substitute for gross profit, operating income (loss), net
income (loss), income (loss) per share 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 below.
Forward Looking Statements
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. The information
in this press release should be read in conjunction with, and is
modified in its entirety by, the Annual Report on Form 10-K
(the "10-K") filed by the Company for the same period with the
Securities and Exchange Commission (the "SEC") and all of the
Company's other public filings with the SEC (the "Public Filings").
In particular, the financial information contained herein is
subject to and qualified by reference to the financial statements
contained in the 10-K, the footnotes thereto and the limitations
set forth therein. Investors may not rely on the press release
without reference to the 10-K and the Public Filings.
Contact:
Investor Relations
801-975-7200
investor_relations@clearone.com
http://investors.clearone.com
|
CLEARONE,
INC
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Dollars in
thousands, except par value)
|
|
|
|
|
|
|
|
As
at
|
|
June 30,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
3,367
|
|
$
|
12,100
|
Marketable
securities
|
|
6,147
|
|
|
5,030
|
Receivables, net of
allowance for doubtful accounts of $200 and $187,
respectively
|
|
7,213
|
|
|
7,461
|
Inventories,
net
|
|
17,099
|
|
|
11,377
|
Distributor channel
inventories
|
|
1,511
|
|
|
1,530
|
Prepaid expenses and
other assets
|
|
3,280
|
|
|
2,642
|
Total current
assets
|
|
38,617
|
|
|
40,140
|
Long-term marketable
securities
|
|
19,726
|
|
|
21,365
|
Long-term
inventories, net
|
|
1,707
|
|
|
1,664
|
Property and
equipment, net
|
|
1,609
|
|
|
1,513
|
Intangibles,
net
|
|
5,337
|
|
|
5,677
|
Goodwill
|
|
12,724
|
|
|
12,724
|
Deferred income
taxes
|
|
4,654
|
|
|
4,654
|
Other
assets
|
|
369
|
|
|
387
|
Total assets
|
$
|
84,743
|
|
$
|
88,124
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
4,979
|
|
$
|
3,545
|
Accrued
liabilities
|
|
2,169
|
|
|
1,894
|
Deferred product
revenue
|
|
3,805
|
|
|
3,882
|
Total current
liabilities
|
|
10,953
|
|
|
9,321
|
Deferred
rent
|
|
60
|
|
|
103
|
Other long-term
liabilities
|
|
1,286
|
|
|
1,251
|
Total
liabilities
|
|
12,299
|
|
|
10,675
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Common stock, par
value $0.001, 50,000,000 shares authorized, 8,548,716 and 8,812,644
shares issued and outstanding
|
|
9
|
|
|
9
|
Additional paid-in
capital
|
|
47,091
|
|
|
46,669
|
Accumulated other
comprehensive income (loss)
|
|
(83)
|
|
|
(205)
|
Retained
earnings
|
|
25,427
|
|
|
30,976
|
Total shareholders'
equity
|
|
72,444
|
|
|
77,449
|
Total liabilities and
shareholders' equity
|
$
|
84,743
|
|
$
|
88,124
|
|
|
|
CLEARONE,
INC.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Dollars in
thousands, except per share values)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenue
|
$
|
10,311
|
|
$
|
11,966
|
|
$
|
21,989
|
|
$
|
24,999
|
Cost of goods
sold
|
|
4,242
|
|
|
4,302
|
|
|
9,242
|
|
|
8,870
|
Gross
profit
|
|
6,069
|
|
|
7,664
|
|
|
12,747
|
|
|
16,129
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
2,646
|
|
|
2,681
|
|
|
5,387
|
|
|
5,306
|
Research and product
development
|
|
2,322
|
|
|
2,096
|
|
|
4,679
|
|
|
4,365
|
General and
administrative
|
|
2,210
|
|
|
1,567
|
|
|
4,316
|
|
|
3,165
|
Total operating
expenses
|
|
7,178
|
|
|
6,344
|
|
|
14,382
|
|
|
12,836
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
(1,109)
|
|
|
1,320
|
|
|
(1,635)
|
|
|
3,293
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
84
|
|
|
84
|
|
|
186
|
|
|
95
|
Income (loss) before
income taxes
|
|
(1,025)
|
|
|
1,404
|
|
|
(1,449)
|
|
|
3,387
|
Provision for
(benefit from) income taxes
|
|
(205)
|
|
|
449
|
|
|
(161)
|
|
|
1,064
|
Net income
(loss)
|
$
|
(820)
|
|
$
|
955
|
|
$
|
(1,288)
|
|
$
|
2,323
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
|
8,638,091
|
|
|
9,112,613
|
|
|
8,702,743
|
|
|
9,154,568
|
Diluted weighted
average shares outstanding
|
|
8,638,091
|
|
|
9,362,037
|
|
|
8,702,743
|
|
|
9,512,559
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per common share
|
$
|
(0.09)
|
|
$
|
0.10
|
|
$
|
(0.15)
|
|
$
|
0.25
|
Diluted earnings
(loss) per common share
|
$
|
(0.09)
|
|
$
|
0.10
|
|
$
|
(0.15)
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
(820)
|
|
|
955
|
|
|
(1,288)
|
|
|
2,323
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on available-for-sale securities, net of
tax
|
|
20
|
|
|
97
|
|
|
58
|
|
|
218
|
Change
in foreign currency translation adjustment
|
|
52
|
|
|
(20)
|
|
|
64
|
|
|
13
|
Comprehensive income (loss)
|
|
(748)
|
|
|
1,032
|
|
|
(1,166)
|
|
|
2,554
|
|
|
|
CLEARONE,
INC.
|
UNAUDITED
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
|
(Dollars in
thousands, except per share values)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
GAAP gross
profit
|
$
|
6,069
|
|
$
|
7,664
|
|
$
|
12,747
|
|
$
|
16,129
|
Stock-based
compensation
|
|
7
|
|
|
7
|
|
|
14
|
|
|
11
|
Non-GAAP gross
profit
|
$
|
6,076
|
|
$
|
7,671
|
|
$
|
12,761
|
|
$
|
16,140
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
income (loss)
|
$
|
(1,109)
|
|
$
|
1,320
|
|
$
|
(1,635)
|
|
$
|
3,293
|
Stock-based
compensation
|
|
169
|
|
|
171
|
|
|
340
|
|
|
319
|
Amortization of
intangibles
|
|
231
|
|
|
286
|
|
|
468
|
|
|
576
|
Legal expenses,
acquisition expenses, re-audit expenses, restructuring expenses,
etc. not related to regular operations
|
|
845
|
|
|
163
|
|
|
1,329
|
|
|
274
|
Non-GAAP operating
income
|
$
|
136
|
|
$
|
1,940
|
|
$
|
502
|
|
$
|
4,462
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
$
|
(820)
|
|
$
|
955
|
|
$
|
(1,288)
|
|
$
|
2,323
|
Stock-based
compensation
|
|
169
|
|
|
171
|
|
|
340
|
|
|
319
|
Amortization of
intangibles
|
|
231
|
|
|
286
|
|
|
468
|
|
|
576
|
Legal expenses,
acquisition expenses, re-audit expenses, restructuring expenses,
etc. not related to regular operations
|
|
845
|
|
|
163
|
|
|
1,329
|
|
|
274
|
Loss on disposal of
assets related to wireless microphones manufacturing
|
|
-
|
|
|
4
|
|
|
-
|
|
|
53
|
Tax effect of
non-GAAP adjustments
|
|
(527)
|
|
|
(174)
|
|
|
(802)
|
|
|
(384)
|
Non-GAAP net
income (loss)
|
$
|
(102)
|
|
$
|
1,405
|
|
$
|
47
|
|
$
|
3,161
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
$
|
(820)
|
|
$
|
955
|
|
$
|
(1,288)
|
|
$
|
2,323
|
Number of shares used
in computing GAAP income per share (diluted)
|
|
8,638,091
|
|
|
9,362,037
|
|
|
8,702,743
|
|
|
9,512,559
|
GAAP income (loss)
per share (diluted)
|
$
|
(0.09)
|
|
$
|
0.10
|
|
$
|
(0.15)
|
|
$
|
0.24
|
Non-GAAP net income
(loss)
|
$
|
(102)
|
|
$
|
1,405
|
|
$
|
47
|
|
$
|
3,161
|
Number of shares used
in computing Non-GAAP income per share (diluted)
|
|
8,638,091
|
|
|
9,362,037
|
|
|
8,702,743
|
|
|
9,512,559
|
Non-GAAP income
(loss) per share (diluted)
|
$
|
(0.01)
|
|
$
|
0.15
|
|
$
|
0.01
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP total net
income (loss)
|
$
|
(820)
|
|
$
|
955
|
|
$
|
(1,288)
|
|
$
|
2,323
|
Stock-based
compensation
|
|
169
|
|
|
171
|
|
|
340
|
|
|
319
|
Depreciation
|
|
145
|
|
|
178
|
|
|
311
|
|
|
372
|
Amortization of
intangibles
|
|
231
|
|
|
286
|
|
|
468
|
|
|
576
|
Legal expenses,
acquisition expenses, re-audit expenses, restructuring expenses,
etc. not related to regular operations
|
|
845
|
|
|
163
|
|
|
1,329
|
|
|
274
|
Loss on disposal of
assets related to wireless microphones manufacturing
|
|
-
|
|
|
4
|
|
|
-
|
|
|
53
|
Provision for
(benefit from) income taxes
|
|
(205)
|
|
|
449
|
|
|
(161)
|
|
|
1,064
|
Non-GAAP Adjusted
EBITDA
|
$
|
365
|
|
$
|
2,206
|
|
$
|
999
|
|
$
|
4,981
|
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SOURCE ClearOne