ZAGG Inc (Nasdaq: ZAGG), a leading global mobile lifestyle company,
today announced financial results for the fourth quarter and year
ended December 31, 2018.
Fourth Quarter 2018 Highlights (Comparisons versus
Fourth Quarter 2017)
- Net sales of $166.5 million compared to $176.9 million
- Gross profit of 35% compared to 32%
- Net income of $14.3 million compared to $8.1 million
- Diluted earnings per share of $0.52 compared to $0.28
- Adjusted EBITDA of $28.1 million compared to $35.8 million
2018 Full Year Highlights (Comparisons versus Full Year
2017)
- Net sales of $538.2 million compared to $519.5 million
- Gross profit of 35% compared to 33%
- Net income of $39.2 million compared to $15.1 million
- Diluted earnings per share of $1.38 compared to $0.53
- Adjusted EBITDA of $76.4 million compared to $73.0 million
- Acquired BRAVEN Audio and Gear4
Chris Ahern, chief executive officer, commented, “Our fourth
quarter performance was shaped by results from our core business
that were generally in-line with our expectations coupled with
incremental revenue, expenses and transaction costs associated with
our acquisition of Gear4. While soft demand for smartphone devices
has created some headwinds for our business, we were able to
increase screen protection sales double digits through new product
innovation, strong international growth and some domestic retailer
requests for early deliveries ahead of a potential tariff increase.
As expected, fourth quarter power sales were down as we lapped the
launch and sell-in of our initial wireless charge pad a year ago
combined with the impact on juice pack demand from the previously
discussed delay in made for iPhone certification.”
“Despite certain challenges, we delivered record sales and
profitability in 2018,” continued Mr. Ahern. “We also executed
three strategic acquisitions that diversify our business and
represent compelling growth vehicles for the future. With our
expanding portfolio of authentic brands, robust product innovation
teams, and network of leading retail partners, we have created a
powerful platform to capture additional share of the multi-billion
dollar mobile accessories market. In 2019, we plan to invest in
additional programs to ensure the Company is best positioned to
capitalize on the numerous opportunities we believe exist for ZAGG,
including investment to drive growth from our recent acquisitions.
I am confident in the course we have set for achieving our
long-term goal of $1 billion in annual sales and mid-teens Adjusted
EBITDA margins.”
Fourth Quarter 2018 Results (in millions,
except per share amounts)
|
For the Three Months Ended |
|
December 31, 2018 |
|
December 31, 2017 |
|
|
|
|
Net
sales |
$ |
166.5 |
|
$ |
176.9 |
Gross
profit |
$ |
58.5 |
|
$ |
56.2 |
Gross profit
margin |
|
35
% |
|
|
32
% |
Net
income |
$ |
14.3 |
|
$ |
8.1 |
Diluted
earnings per share |
$ |
0.52 |
|
$ |
0.28 |
Diluted
operating earnings per share1 |
$ |
0.55 |
|
$ |
0.28 |
Adjusted
EBITDA |
$ |
28.1 |
|
$ |
35.8 |
1 “Diluted operating earnings per share” excludes the impact of
transaction-related expenses incurred for the BRAVEN and Gear4
acquisitions in 2018 and HALO acquisition in 2019, including the
following charges: transaction costs, inventory step-up, and
amortization expense. See further discussion below under “About
Non-GAAP Financial Information”.
Net sales decreased 6% to $166.5 million, compared to $176.9
million. The decrease in net sales was primarily attributable to
(1) decreased sales of wireless charging accessories due to
challenging sell-in comparisons from the initial product launch
last year, and (2) a decrease in sales of power cases. These
decreases were partially offset by increased sales of screen
protection products driven by the new iPhone® launch as well as the
introduction of the Glass + VisionGuard® screen protection
products.
Gross profit was $58.5 million (35% of net sales) compared to
$56.2 million (32% of net sales). The increase in gross profit
margin was primarily attributable to the mix of screen protection
products, our highest margin product category, which increased to
57% of net sales during the three months ended December 31, 2017
compared to 39% of net sales in the same period last year.
Operating expenses increased 45% to $38.1 million (23% of net
sales) compared to $26.2 million (15% of net sales). The increase
in operating expenses was primarily attributable to (1) a $7.0
million gain recorded in the year ago period associated with the
settlement of litigation related to the disputed mophie purchase
price, (2) additional selling, general and administrative expense
associated with the newly acquired BRAVEN and Gear4 businesses, (3)
transaction costs incurred in connection with the acquisition of
Gear4 in November 2018 and HALO in January 2019, and (4) higher
amortization of long-lived intangibles related to the BRAVEN and
Gear4 acquisitions. These increases were partially offset by a
decrease in depreciation expense resulting from lower carrying
amounts of property and equipment during the three months ended
December 31, 2018.
Net income increased 78% to $14.3 million compared to $8.1
million. Diluted earnings per share increased 86% to $0.52 (on 28.3
million shares) compared to $0.28 (on 28.8 million shares). The
fourth quarter of 2017 included a primarily non-cash charge of
$12.4 million to income tax expense to reflect (1) the
re-measurement of deferred tax assets utilizing the lower federal
income tax rate and (2) the tax on mandatory deemed repatriation of
foreign earnings following the passage of the Tax Cuts and Jobs Act
in December 2017. Excluding the impact of tax reform, fourth
quarter 2017 net income was $20.5 million and diluted earnings per
share was $0.71.
Adjusted EBITDA was $28.1 million compared to $35.8 million.
Full Year 2018 Results (in
millions, except per share amounts)
|
For the Years Ended |
|
December 31, 2018 |
|
December 31, 2017 |
|
|
|
|
Net
sales |
$ |
538.2 |
|
$ |
519.5 |
Gross
profit |
$ |
185.9 |
|
$ |
169.0 |
Gross profit
margin |
|
35
% |
|
|
33
% |
Net
income |
$ |
39.2 |
|
$ |
15.1 |
Diluted
earnings per share |
$ |
1.38 |
|
$ |
0.53 |
Diluted
operating earnings per share1 |
$ |
1.44 |
|
$ |
0.53 |
Adjusted
EBITDA |
$ |
76.4 |
|
$ |
73.0 |
1 “Diluted operating earnings per share” excludes the impact of
transaction-related expenses incurred for the BRAVEN and Gear4
acquisitions in 2018 and HALO acquisition in 2019, including the
following charges: transaction costs, inventory step-up, and
amortization expense. See further discussion below under “About
Non-GAAP Financial Information”.
Net sales increased 4% to $538.2 million, compared to $519.5
million. The increase in net sales was primarily attributable to
(1) increases in screen protection products driven by the new
iPhone launch as well as the introduction of the Glass +
VisionGuard screen protection products, and (2) the increase in
sales of our power management products, specifically related to
wireless charging accessories. These increases were partially
offset by a decrease in sales of power cases.
Gross profit increased 10% to $185.9 million (35% of net sales)
compared to $169.0 million (33% of net sales). The increase in
gross profit margin was primarily attributable to the mix of screen
protection products, our highest margin product category, which
increased to approximately 57% of net sales for the year ended
December 31, 2018 compared to approximately 48% of net sales for
the year ended December 31, 2017.
Operating expenses increased 8% to $134.2 million (25% of net
sales) compared to $124.3 million (24% of net sales). The increase
was primarily attributable to (1) a $7.0 million gain recorded in
the year ago period associated with the settlement of litigation
related to the disputed mophie purchase price, (2) increases in
headcount to support additional growth of the Company, (3)
additional selling, general and administrative expense associated
with the newly acquired BRAVEN and Gear4 businesses, and (4)
transaction costs incurred in connection with the acquisition of
BRAVEN and Gear4 in 2018, and HALO in January 2019. These increases
were partially offset by (1) a decrease in depreciation expense,
(2) a $2.0 million charge in 2017 related to the impairment of a
patent that did not recur in 2018, and (3) operating expense
synergies realized related to the mophie integration.
Net income increased 160% to $39.2 million compared to net
income of $15.1 million. Diluted earnings per share increased 160%
to $1.38 (on 28.5 million shares) compared to $0.53 (on 28.4
million shares). The fourth quarter of 2017 included a primarily
non-cash charge of $12.4 million to income tax expense to reflect
(1) the re-measurement of deferred tax assets utilizing the lower
federal income tax rate and (2) the tax on mandatory deemed
repatriation of foreign earnings following the passage of the Tax
Cuts and Jobs Act in December 2017. Excluding the impact of tax
reform, 2017 net income was $27.5 million and diluted earnings per
share was $0.97.
Adjusted EBITDA increased 5% to $76.4 million compared to $73.0
million.
Acquisitions
During 2018 and early January 2019, the Company acquired three
additional brands to strengthen its leadership position in mobile
lifestyle:
- In July 2018, the Company purchased BRAVEN, the creator of the
rugged Bluetooth audio category, for cash consideration of
approximately $4.5 million.
- In November 2018, the Company purchased Gear4, the U.K.'s
number one smartphone case brand, for a combination of cash and
stock consideration valued at approximately $39.8 million.
- In January 2019, the Company purchased HALO, a leading
direct-to-consumer accessories company with a strong relationship
with QVC, for a combination of cash and stock consideration
totaling approximately $43.0 million.
The addition of these three brands provides the Company with
increased diversification and an innovative product portfolio in
the growing product categories of Bluetooth audio, rugged cases,
and portable power. The Company expects to grow sales and
profitability over the next several years by taking these brands to
its current retail distribution network and further investing in
the direct-to-consumer channel.
Share Repurchase Authorization
On March 11, 2019, the Board of Directors approved a new $20.0
million share repurchase authorization. This authorization replaces
the $20.0 million share repurchase authorization the Board approved
during the fourth quarter of 2015, which had approximately $5.5
million remaining at the end of 2018.
2019 Business Outlook
For the full year 2019, the Company currently expects the
following:
- Net sales of $610 to $630 million
- Gross profit margin as a percentage of net sales in the mid
30's range
- Adjusted EBITDA of $82 to $86 million
- Diluted Operating Earnings Per Share of $1.47 to $1.60
Impact of 2017 Tax Reform Bill
During the fourth quarter of 2017, the United States Government
passed the Tax Cuts and Jobs Act (the “Act”), which enacted
significant changes to the United States’ federal tax code,
including a reduction in the federal income tax rate for
corporations from 35% to 21%. As of December 31, 2017, Management
recorded a primarily non-cash charge of $12.4 million to income tax
expense primarily to reflect (1) the re-measurement of deferred tax
assets utilizing the lower federal income tax rate and (2) the tax
on mandatory deemed repatriation of foreign earnings.
The impact of this $12.4 million charge on the income tax rate,
net income, and earnings per share for the three and twelve months
ended December 31, 2017, is illustrated in the table below (amounts
in millions, except per share data):
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2017 |
|
December 31, 2017 |
(in millions, except
per share amounts) |
|
|
|
Income before provision
for income taxes |
$ |
30.0 |
|
$ |
43.4 |
Tax provision before
impact of tax reform |
$ |
(9.5) |
|
$ |
(15.9) |
Net income before
impact of tax reform |
$ |
20.5 |
|
$ |
27.5 |
Diluted earnings per
share before impact of tax reform |
$ |
0.71 |
|
$ |
0.97 |
Effective income tax
rate before impact of tax reform |
|
32% |
|
|
37% |
|
|
|
|
Tax provision
attributable to tax reform |
$ |
(12.4) |
|
$ |
(12.4) |
Net income |
$ |
8.1 |
|
$ |
15.1 |
Diluted earnings per
share |
$ |
0.28 |
|
$ |
0.53 |
Effective income tax
rate |
|
73% |
|
|
65% |
Conference Call
A conference call will be held today, March 12, 2019, at
5:00 p.m. Eastern to review these results. Interested parties may
access via the Internet on the Company's website at:
investors.zagg.com (the URLs are included here in this exhibit as
inactive textual references and information contained on, or
accessible through, our websites is not a part of, and is not
incorporated by reference into, this report).
About Non-GAAP Financial Information
This press release includes Adjusted EBITDA, Diluted Operating
Earnings Per Share, and 2017 net income and diluted earnings per
share before impact of tax reform, all of which are non-GAAP
financial measures. Readers are cautioned that (1) Adjusted EBITDA
(earnings before interest, taxes, depreciation, amortization,
stock-based compensation expense, other expense, transaction costs,
mophie restructuring charges, mophie employee retention bonus,
consulting fee to former CEO, inventory step-up amount in
conjunction with the BRAVEN and Gear4 acquisitions, CEO signing
bonus, CFO retention bonus, and impairment of intangible asset),
(2) Diluted Operating Earnings Per Share (diluted earnings per
share excluding the impact of transaction costs, inventory step-up,
and amortization expense – all in conjunction with the BRAVEN,
Gear4 and HALO acquisitions), and (3) 2017 net income and diluted
earnings per share before impact of tax reform (2017 net income and
diluted earnings per share excluding the impact of 2017 income tax
reform) are not financial measure under U.S. generally accepted
accounting principles (“GAAP”). In addition, this financial
information should not be construed as an alternative to any other
measure of performance determined in accordance with GAAP, or as an
indicator of operating performance, liquidity or cash flows
generated by operating, investing and financing activities, as
there may be significant factors or trends that it fails to
address. As such, it should be read only in conjunction with our
consolidated financial statements prepared in accordance with GAAP.
We present Adjusted EBITDA, Diluted Operating Earnings Per Share,
and 2017 net income and diluted earnings per share before the
impact of tax reform because we believe that these measures are
helpful to some investors as a measure of performance and to
normalize the impact of acquisitions or 2017 tax reform. We caution
readers that non-GAAP financial information, by its nature, departs
from traditional accounting conventions. Accordingly, its use can
make it difficult to compare current results with results from
other reporting periods and with the financial results of other
companies. We have provided a reconciliation of Adjusted EBITDA and
Diluted Operating Earnings Per Share to the most directly
comparable GAAP measures in the supplemental financial information
attached to this press release. The reconciliation of 2017 net
income and diluted earnings per share before the impact of tax
reform is provided in this press release.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains (and oral communications made by us
may contain) “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 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 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 US and international trade policy an tariffs,
including the possible effect of recent US tariff proposals on
select 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.
About ZAGG Inc
ZAGG Inc (NASDAQ: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, Walmart, Target, Walgreens and
Amazon.com. For more information, please visit the Company’s
websites at www.ZAGG.com, www.mophie.com, www.Gear4.com, and
www.HALO.com and follow us on Facebook, Twitter and Instagram.
CONTACT:
Investor Relations:ICR Inc.Brendon
Frey203-682-8216brendon.frey@icrinc.com
Company:ZAGG IncJeff DuBois801-506-7336jeff.dubois@ZAGG.com
ZAGG INC AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands, except par value)(Unaudited)
|
|
As of December 31, |
|
|
2018 |
|
2017 |
|
|
|
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
|
Cash and cash
equivalents |
$ |
15,793 |
|
$ |
24,989 |
|
Accounts receivable,
net of allowances of $885 and $734 |
156,667 |
|
123,220 |
|
Income tax
receivable |
375 |
|
— |
|
Inventories |
82,919 |
|
75,046 |
|
Prepaid expenses and
other current assets |
5,473 |
|
4,547 |
Total current assets |
261,227 |
|
227,802 |
|
|
|
|
|
Property
and equipment, net of accumulated depreciation of $11,844 and
$12,540 |
16,118 |
|
13,444 |
Intangible
assets, net of accumulated amortization of $78,627 and $66,639 |
52,054 |
|
39,244 |
Deferred
income tax assets |
19,403 |
|
24,403 |
Goodwill |
27,638 |
|
12,272 |
Other
assets |
1,571 |
|
3,426 |
Total assets |
$ |
378,011 |
|
$ |
320,591 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ |
80,908 |
|
$ |
96,472 |
|
Income tax payable |
— |
|
2,052 |
|
Sales returns
liability |
54,432 |
|
34,536 |
|
Accrued wages and wage
related expenses |
6,624 |
|
5,652 |
|
Accrued
liabilities |
13,723 |
|
8,168 |
|
Deferred revenue |
— |
|
315 |
|
Line of credit |
— |
|
23,475 |
|
Current portion of
long-term debt, net of deferred loan costs of $0 and $141 |
— |
|
13,922 |
Total current liabilities |
155,687 |
|
184,592 |
|
|
|
|
|
Line of
credit |
58,363 |
|
— |
Other
long-term liabilities |
5,470 |
|
— |
Total liabilities |
219,520 |
|
184,592 |
Commitments and contingencies (Note 13) |
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
Common stock, $0.001
par value; 100,000 shares authorized; 34,457 and 34,104 shares
issued |
34 |
|
34 |
|
Treasury stock, 6,983
and 6,065 common shares, at cost |
(49,733) |
|
(37,637) |
|
Additional paid-in
capital |
96,486 |
|
96,145 |
|
Accumulated other
comprehensive loss |
(1,410) |
|
(348) |
|
Retained earnings |
113,114 |
|
77,805 |
|
|
|
|
|
Total stockholders' equity |
158,491 |
|
135,999 |
Total liabilities and stockholders' equity |
$ |
378,011 |
|
$ |
320,591 |
ZAGG INC AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS(in thousands, except per share
amounts)(Unaudited)
|
|
For the Three Months Ended
December 31, |
|
For the Years Ended December
31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
166,513 |
|
$ |
176,924 |
|
$ |
538,231 |
|
$ |
519,495 |
Cost of sales |
108,062 |
|
120,748 |
|
352,358 |
|
350,497 |
Gross profit |
58,451 |
|
56,176 |
|
185,873 |
|
168,998 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Advertising and
marketing |
3,672 |
|
3,399 |
|
11,994 |
|
11,101 |
|
Selling, general and
administrative |
29,931 |
|
26,671 |
|
108,623 |
|
105,398 |
|
Gain on disputed mophie
purchase price |
— |
|
(6,967) |
|
— |
|
(6,967) |
|
Transaction costs |
1,042 |
|
114 |
|
1,678 |
|
725 |
|
Impairment of
intangible asset |
— |
|
— |
|
— |
|
1,959 |
|
Amortization of
long-lived intangibles |
3,478 |
|
3,007 |
|
11,882 |
|
12,047 |
Total operating expenses |
38,123 |
|
26,224 |
|
134,177 |
|
124,263 |
|
|
|
|
|
|
|
|
|
Income from operations |
20,328 |
|
29,952 |
|
51,696 |
|
44,735 |
|
|
|
|
|
|
|
|
|
Other (expense) income: |
|
|
|
|
|
|
|
|
Interest expense |
(552) |
|
(555) |
|
(1,684) |
|
(2,081) |
|
Other (expense)
income |
(120) |
|
633 |
|
(483) |
|
698 |
Total other (expense) income |
(672) |
|
78 |
|
(2,167) |
|
(1,383) |
|
|
|
|
|
|
|
|
|
Income before provision for income taxes |
19,656 |
|
30,030 |
|
49,529 |
|
43,352 |
|
|
|
|
|
|
|
|
|
Income tax provision |
(5,337) |
|
(21,971) |
|
(10,340) |
|
(28,252) |
|
|
|
|
|
|
|
|
|
Net
income |
$ |
14,319 |
|
$ |
8,059 |
|
$ |
39,189 |
|
$ |
15,100 |
|
|
|
|
|
|
|
|
|
Earnings per share attributable to
stockholders: |
|
|
|
|
|
|
|
|
Basic earnings per
share |
$ |
0.52 |
|
$ |
0.29 |
|
$ |
1.40 |
|
$ |
0.54 |
|
Diluted earnings per
share |
$ |
0.52 |
|
$ |
0.28 |
|
$ |
1.38 |
|
$ |
0.53 |
ZAGG INC AND
SUBSIDIARIESRECONCILIATION OF NON-U.S. GAAP
FINANCIAL INFORMATION TO U.S. GAAP(in
thousands)(Unaudited)
UNAUDITED
SUPPLEMENTAL DATA |
|
|
|
|
|
|
|
The following are not financial measures under United States
(“U.S.”) generally accepted accounting principles (“U.S. GAAP”). In
addition, these measures should not be construed as alternatives to
any other measures of performance determined in accordance with
U.S. GAAP, or as indicators of our operating performance, liquidity
or cash flows generated by operating, investing and financing
activities as there may be significant factors or trends that they
fail to address. We present this financial information because we
believe that it is helpful to some investors as measures of our
operations. We caution investors that non-U.S. GAAP financial
information, by its nature, departs from traditional accounting
conventions; accordingly, its use can make it difficult to compare
our results with our results from other reporting periods and with
the results of other companies. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Reconciliation |
For the Three Months Ended
December 31, |
|
For the Years Ended December
31, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
Net income in
accordance with U.S. GAAP |
$ |
14,319 |
|
$ |
8,059 |
|
$ |
39,189 |
|
$ |
15,100 |
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
a. |
Stock-based
compensation expense |
844 |
|
1,067 |
|
3,009 |
|
3,602 |
|
b. |
Depreciation and
amortization |
4,959 |
|
5,382 |
|
18,288 |
|
21,888 |
|
c. |
Impairment of
intangible asset |
— |
|
— |
|
— |
|
1,959 |
|
d. |
Other expense (income),
net |
672 |
|
(76) |
|
2,167 |
|
1,383 |
|
e. |
Inventory step up
expense |
108 |
|
— |
|
179 |
|
— |
|
f. |
Transaction costs |
1,042 |
|
(611) |
|
1,678 |
|
— |
|
g. |
mophie restructuring
charges |
— |
|
— |
|
— |
|
437 |
|
h. |
mophie employee
retention bonus |
— |
|
— |
|
— |
|
346 |
|
i. |
BRAVEN employee
retention bonus |
77 |
|
— |
|
77 |
|
— |
|
j. |
CFO retention
bonus |
366 |
|
— |
|
366 |
|
— |
|
k. |
CEO signing bonus |
400 |
|
— |
|
400 |
|
— |
|
l. |
Consulting fees to
former CEO |
— |
|
— |
|
700 |
|
— |
|
m. |
Income tax
provision |
5,337 |
|
21,971 |
|
10,340 |
|
28,252 |
|
Total Adjustments |
13,805 |
|
27,733 |
|
37,204 |
|
57,867 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
28,124 |
|
$ |
35,792 |
|
$ |
76,393 |
|
$ |
72,967 |
|
Diluted Operating Earnings per Share
Reconciliation |
For the Three Months Ended
December 31, |
|
For the Years Ended December
31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Net
income in accordance with U.S. GAAP |
$ |
14,319 |
|
$ |
8,059 |
|
$ |
39,189 |
|
$ |
15,100 |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
a. |
Amortization expense
related to acquisitions of |
|
|
|
|
|
|
|
|
BRAVEN and Gear4 |
705 |
|
— |
|
792 |
|
— |
b. |
Transaction costs
related to acquisitions of BRAVEN, |
|
|
|
|
|
|
|
|
Gear4 and HALO |
1,042 |
|
— |
|
1,678 |
|
— |
c. |
Inventory step-up
amortization related to acquisitions |
|
|
|
|
|
|
|
|
of BRAVEN and
Gear4 |
108 |
|
— |
|
179 |
|
— |
Total adjustments before tax |
1,855 |
|
— |
|
2,649 |
|
— |
Tax
effect1 |
(502) |
|
— |
|
(716) |
|
— |
Adjustments, net of tax |
1,353 |
|
— |
|
1,933 |
|
— |
Adjusted net income |
15,672 |
|
8,059 |
|
41,122 |
|
15,100 |
|
|
|
|
|
|
|
|
|
Diluted
shares outstanding |
28,258 |
|
28,781 |
|
28,500 |
|
28,407 |
Diluted operating earnings per share |
$ |
0.55 |
|
$ |
0.28 |
|
$ |
1.44 |
|
$ |
0.53 |
1 Income tax effect calculated using the 2018 statutory rate of
27.04%
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