ZAGG Inc (NASDAQ: ZAGG) (“ZAGG” or the “Company”), a leading global
mobile lifestyle company, today announced that the Board of
Directors (the ”Board”) has appointed Ron Garriques and Edward
Terino as members of the Board effective immediately, expanding the
Board to seven members. The Board also announced that, effective
immediately, it has changed its cash and stock-based Director
compensation to an all stock compensation program in an effort to
preserve cash and more closely align Director compensation to
stockholder interests.
“We welcome Ron and Ed to the ZAGG Board and
look forward to their valuable counsel and perspective as we
continue to execute on our strategic plan and to maximize value for
all of our stockholders,” said Cheryl A. Larabee, Chair of
ZAGG.
"We are pleased that ZAGG has taken steps to
expand and refresh the Board of Directors. We are highly supportive
of this decision and believe that the Board has added strong
experience and expertise through this refreshment process in order
to leverage the embedded value in its portfolio of brands,” stated
James Roumell, Partner and Portfolio Manager, Roumell Asset
Management.
“We believe that Ron and Ed bring valuable
skills and experience to help guide ZAGG. ZAGG is a great company
with multiple ways to unlock significant stockholder value. We
believe that the new directors bring fresh perspectives and added
expertise to support our mutual goal of maximizing value for all
stockholders,” added Andrew Rechtschaffen, Managing Partner, AREX
Capital Management.
As part of the appointment of the new Directors,
the Company entered into a cooperation agreement with each of
Roumell Asset Management, owner of 4.00%, and AREX Capital
Management, owner of 7.64%, that includes customary standstill and
voting commitments. Both firms have agreed to vote their shares in
favor of the Company’s slate of director nominees at the Company’s
2020 annual meeting of stockholders. The full agreements between
the Company and Roumell and the Company and AREX will be filed on a
Current Report on Form 8-K with the U.S. Securities and Exchange
Commission.
About Ron Garriques
Ron Garriques, age 56, has been the CEO of VEYEP
Holdings, LLC for the past four years. He previously worked in the
consumer electronics and mobile technology industry for nearly 35
years. He served as President of the Motorola Personal
Communications Sector, and President of the Global Consumer Group
at Dell Inc.
He started his career as a wireless systems
mechanical engineer working at Bell Laboratories in New Jersey,
where he subsequently led the deployment of wireless digital
systems globally. Mr. Garriques holds a Master’s Degree in Business
Administration from The Wharton School at the University of
Pennsylvania, a Master’s in Mechanical Engineering from Stanford
University, and a Bachelor’s Degree in Mechanical Engineering from
Boston University.
About Edward Terino
Edward Terino, age 66, has significant board and
operating management experience in B2B and B2C technology
businesses and possesses significant M&A experience. Mr. Terino
was previously the Chief Executive Officer and Director of
SeaChange International Inc. (NASDAQ: SEAC), a global leader in
video technology solutions to content owners, telecommunications
providers and cable operators. He has served on a number of public
company boards, including Baltic Trading Ltd. Extreme Networks
Inc., S1 Corporation, and Phoenix Technologies Ltd. Mr.
Terino has served as Chairman of the Audit Committee and a member
of the Compensation Committee on most of these Boards. Mr.
Terino has over 30 years of management experience in the roles of
CFO, COO and CEO in a number of publicly-traded companies in the
technology, maritime transportation, and educational publishing
industries. He began his career at Deloitte & Touche and
spent 9 years in their consulting services organization. Mr.
Terino earned a B.S. in Management from Northeastern University and
he earned a MBA from Suffolk University.
COVID-19 Response
The Company and its Board of Directors have
taken the following proactive measures to provide enhanced
financial flexibility during the COVID-19 pandemic:
- Closed on amendment to its secured revolving credit facility to
increase available borrowings by $19.8 million through March
2021.
- Closed on a small business administration loan under the CARES
Act of approximately $9.4 million that is expected to fund in the
next five business days.
- Implemented temporary furloughs or lay-off of approximately 20
percent of U.S. employees and reduced its Europe and Asia Pacific
staff, excluding China, by approximately 20 percent. Employees on
temporary furlough will retain their health insurance coverage
throughout the furlough.
- Temporarily reduced salaries, led by the executive team,
including a 15% percent reduction for its Chief Executive Officer,
10% reductions for the rest of the executive team and 5% reductions
for senior management.
- Temporarily reduced the cash portion of the Board of Directors’
compensation by 15% and replaced such compensation with stock-based
compensation.
- Deferred spending on all non-essential projects.
- Implemented a host of global cost reduction initiatives.
- Cancelled or delayed purchase orders to align with adjusted
demand forecast.
Chris Ahern, Chief Executive Officer of ZAGG,
commented, “These are unprecedented and challenging times and our
first thoughts are with everyone affected by this pandemic.
In the face of ongoing uncertainty related to COVID-19, we have
taken a number of actions to reduce our operating costs in the near
term and further enhance our financial flexibility. This includes
very difficult decisions relating to our team members in the United
States and overseas. These decisions were not taken lightly,
however we believe they are critical for the long-term benefit of
the Company and all its stakeholders.”
2020 Outlook Update
As a result of ongoing disruption and uncertainty related to the
global COVID-19 pandemic, ZAGG has withdrawn its first quarter and
full-year 2020 outlook provided on March 11, 2020 and will not
offer an updated outlook at this time. More information will be
provided during the Company's first quarter fiscal 2020 conference
call.
About ZAGG:
ZAGG is a global leader in accessories and
technologies that empower mobile lifestyles. The Company has an
award-winning product portfolio that includes screen protection,
mobile keyboards, power management solutions, social tech, and
personal audio sold under the ZAGG, mophie, InvisibleShield,
IFROGZ, BRAVEN, Gear4, and HALO brands. ZAGG has operations in the
United States, Ireland, and China. ZAGG products are available
worldwide and can be found at leading retailers including Best Buy,
Verizon, AT&T, Sprint, T-Mobile, Walmart, Target, and
Amazon.com. For more information, please visit the Company’s
website at www.ZAGG.com and follow us on Facebook, Twitter, and
Instagram.
Forward-Looking Statements
This press release contains “forward-looking
statements” within the meaning of the safe harbor provisions of the
U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by words such as
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,”
“predict,” “project,” “target,” “future,” “seek,” “likely,”
“strategy,” “may,” “should,” “will” and similar references to
future periods. Examples of forward-looking statements include,
among others, statements we make regarding our outlook for the
Company, the duration of salary reductions, workforce reductions
and other cost-cutting measures as a result of the COVID-19
pandemic, the impact of additional borrowings and statements that
estimate or project future results of operations or the performance
of the Company.
Forward-looking statements are neither
historical facts nor assurances of future performance. Instead,
they are based only on our current beliefs, expectations and
assumptions regarding the future of our business, future plans and
strategies, projections, anticipated events and trends, the economy
and other future conditions. Because forward-looking statements
relate to the future, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict
and many of which are outside of our control. Our actual results
and financial condition may differ materially from those indicated
in the forward-looking statements. Therefore, you should not rely
on any of these forward-looking statements. Important factors that
could cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, among others, the following:
- the impacts of certain environmental and health risks,
including the recent outbreak of the coronavirus (COVID-19) and its
potential impact on the Company's operations, sourcing from China,
and future demand for the Company's products for an uncertain
duration of time;
- the ability to design, produce, and distribute the creative
product solutions required to retain existing customers and to
attract new customers;
- building and maintaining marketing and distribution functions
sufficient to gain meaningful international market share for our
products;
- the ability to respond quickly with appropriate products after
the adoption and introduction of new mobile devices by major
manufacturers like Apple®, Samsung®, and Google®;
- changes or delays in announced launch schedules for (or recalls
or withdrawals of) new mobile devices by major manufacturers like
Apple, Samsung, and Google;
- the ability to successfully integrate new operations or
acquisitions;
- the impacts of inconsistent quality or reliability of new
product offerings;
- the impacts of lower profit margins in certain new and existing
product categories, including certain mophie products;
- the impacts of changes in economic conditions, including on
customer demand;
- managing inventory in light of constantly shifting consumer
demand;
- the failure of information systems or technology solutions or
the failure to secure information system data, failure to comply
with privacy laws, security breaches, or the effect on the Company
from cyber-attacks, terrorist incidents or the threat of terrorist
incidents;
- changes in U.S. and international trade policy and tariffs,
including the effect of increases in U.S.-China tariffs on selected
materials used in the manufacture of products sold by the Company
which are sourced from China;
- adoption of or changes in accounting policies, principles, or
estimates; and
- changes in the law, economic and financial conditions,
including the effect of enactment of US tax reform or other tax law
changes.
Any forward-looking statement made by us in this
press release speaks only as of the date on which such statement is
made. New factors emerge from time to time and it is not possible
for management to predict all such factors, nor can it assess the
impact of any such factor on the business or the extent to which
any factor, or combination of factors, may cause results to differ
materially from those contained in any forward-looking statement.
Readers should also review the risks and uncertainties listed in
our most recent Annual Report on Form 10-K and other reports we
file with the U.S. Securities and Exchange Commission, including
(but not limited to) Item 1A - “Risk Factors” in the Form 10-K and
Management's Discussion and Analysis of Financial Condition and
Results of Operations and the risks described therein from time to
time. We undertake no obligation to publicly update any
forward-looking statement, whether written or oral, that may be
made from time to time, whether as a result of new information,
future developments or otherwise. The forward-looking statements
contained in this press release are intended to qualify for the
safe harbor provisions of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended.
Investor Contacts:
ICR, Inc. Brendon Frey 203-682-8216 brendon.frey@icrinc.com
Georgeson LLCWilliam P. Fiske (212)
440-9128bfiske@georgeson.com
Company Contact:
ZAGG IncJeff DuBois801-506-7336jeff.dubois@ZAGG.com
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