SALT LAKE CITY, April 20, 2018 /PRNewswire/ -- ClearOne
(NASDAQ: CLRO), a global provider of audio and visual communication
solutions, reported financial results for the three months and
twelve months ended December 31,
2017.
"Our recently introduced products and the video category of our
business continued to make progress in the fourth quarter," said
Zee Hakimoglu, president and chief executive officer.
"Notwithstanding the overall revenue decline, Converge Pro 2, our
new platform for professional audio conferencing, along with our
Beamforming Microphone Array 2 made significant gains in the Pro AV
market and posted robust quarter over quarter revenue growth of
48%. Our video category, especially the
Collaborate® suite of video collaboration products
has continued its revenue growth with year over year increases. Our
confidence in our solutions and the potential for success with our
strategy are reinforced by these successes."
Financial Summary
The Company uses certain non-GAAP
financial measures and reconciles those to GAAP measures in the
attached tables.
- Q4 2017 revenue was $9.3 million,
compared to $10.7 million in Q4 2016
and $10.6 million in Q3 2017. The
year-over-year decrease as well as sequential revenue decline
reflect the continuing transition to the next generation
professional audio conferencing platform, and the on-going harm of
infringement of ClearOne's patents.
- GAAP gross profit in Q4 2017 was $4.8
million, compared to $5.7
million in Q4 2016 and $6.5
million in Q3 2017. GAAP gross profit margin was 51% in Q4
2017, compared to 53% in Q4 2016 and 62% in Q3 2017. Year over year
gross margin decline was mainly due to increased inventory
obsolescence costs. Sequential decline in gross margin was largely
due to higher than usual gross margin from the large order that was
fulfilled in Q3 2017.
- Operating expenses in Q4 2017 were $5.8
million which included net litigation proceeds of
$0.8 million, compared to
$6.8 million in Q4 2016 and
$20.0 million in Q3 2017 which
included impairment charges of $13.54
million. The majority of the decrease in operating expenses
over Q4 2016 is attributable to reduced legal expenses in general
in Q4 2017 and due to capitalization of legal expenses related to
patent litigation. Non-GAAP operating expenses in Q4 2017 were
$6.1 million, compared to
$5.3 million in Q4 2016 and
$6.0 million in Q3 2017. The year
over year increase in Non-GAAP operating expenses was mainly due to
the increase in R&D expenditure.
- Net loss in Q4 2017 was $3.6
million, or $0.43 per share,
compared to net loss of $1.1 million,
or $0.12 per share, in Q4 2016 and
net loss of $9.3 million, or
$1.07 per share, in Q3 2017. Net loss
in Q4 2017 was largely caused by the reduction in tax benefits of
approximately $2.6 million due to
changes in federal income tax rates effective 2018. Non-GAAP net
loss was $2.3 million, or
$0.27 per share, in Q4 2017, compared
to non-GAAP net loss of $0.1 million
in Q4 2016 and net income of $0.8
million, or $0.09 per share,
in Q3 2017. Non-GAAP net loss in Q4 2017 was caused by lower
revenues and increased R&D expenditures mentioned in the
previous paragraphs as well as reduction in tax benefit claimed due
to tax rate change.
($ in 000, except
per share)
|
|
Three months ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
2017
|
|
|
2016
|
|
Change
|
|
|
2017
|
|
|
2016
|
|
Change
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
9,255
|
|
$
|
10,730
|
|
-14%
|
|
$
|
41,804
|
|
$
|
48,637
|
|
-14%
|
Gross
Profit
|
|
4,753
|
|
|
5,690
|
|
-16%
|
|
|
24,009
|
|
|
29,487
|
|
-19%
|
Operating Income
(Loss)
|
|
(1,052)
|
|
|
(1,151)
|
|
-9%
|
|
|
(16,193)
|
|
|
3,566
|
|
-554%
|
Net Income
(Loss)
|
|
(3,608)
|
|
|
(1,088)
|
|
-232%
|
|
|
(14,172)
|
|
|
2,444
|
|
-680%
|
Earnings (Loss) Per
Share (Diluted)
|
|
(0.43)
|
|
|
(0.12)
|
|
-258%
|
|
|
(1.65)
|
|
|
0.26
|
|
-735%
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Profit
|
$
|
4,759
|
|
$
|
5,909
|
|
-19%
|
|
$
|
24,036
|
|
$
|
30,007
|
|
-20%
|
Non-GAAP Operating
Income (Loss)
|
|
(1,337)
|
|
|
630
|
|
-312%
|
|
|
(309)
|
|
|
7,560
|
|
-104%
|
Non-GAAP Net Income
(Loss)
|
|
(2,297)
|
|
|
(168)
|
|
-1267%
|
|
|
(1,490)
|
|
|
4,994
|
|
-130%
|
Non-GAAP Adjusted
EBITDA
|
|
(1,171)
|
|
|
919
|
|
-231%
|
|
|
571
|
|
|
8,648
|
|
-93%
|
Non-GAAP Earnings
(Loss) per share (Diluted)
|
|
(0.27)
|
|
|
(0.02)
|
|
-1250%
|
|
|
(0.17)
|
|
|
0.54
|
|
-132%
|
Balance Sheet Highlights
At December 31, 2017, cash, cash equivalents and
investments were $18.6 million, as
compared with $38.5 million at
December 31, 2016. A
significant portion of this decrease can be attributed to patent
litigation expenses ($3.4 million),
share repurchases ($5.1 million),
dividend payments ($2.2 million) and
higher investment in inventory related to the Converge Pro 2
platform and wireless microphones ($9.5
million) which is expected to be realized in cash. The
Company continued to have no debt.
During Q4 of 2017, the Company paid a cash dividend of
$0.07 per share and repurchased
approximately 119,000 shares amounting to $1.0 million. As of December 31, 2017, the Company has acquired
approximately 1.1 million shares amounting to $11.2 million since this program commenced in
March 2016.
ClearOne senior management will host an investor conference
call, the details of which will be announced later, after the
financial results of the 2018 first quarter results are available.
About ClearOne
ClearOne is a global company that
designs, develops and sells conferencing, collaboration, and
network streaming 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
|
|
December 31,
2017
|
|
December
31, 2016
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
5,571
|
|
$
|
12,100
|
Marketable
securities
|
|
2,689
|
|
|
5,030
|
Receivables, net of
allowance for doubtful accounts of $472 and $187,
respectively
|
|
7,794
|
|
|
7,461
|
Inventories,
net
|
|
14,415
|
|
|
11,377
|
Distributor channel
inventories
|
|
1,555
|
|
|
1,530
|
Prepaid expenses and
other assets
|
|
1,862
|
|
|
2,642
|
Total current
assets
|
|
33,886
|
|
|
40,140
|
Long-term marketable
securities
|
|
10,349
|
|
|
21,365
|
Long-term
inventories, net
|
|
8,708
|
|
|
1,664
|
Property and
equipment, net
|
|
1,549
|
|
|
1,513
|
Intangibles,
net
|
|
6,543
|
|
|
5,677
|
Goodwill
|
|
|
|
|
12,724
|
Deferred income
taxes
|
|
6,531
|
|
|
4,654
|
Other
assets
|
|
311
|
|
|
387
|
Total assets
|
$
|
67,877
|
|
$
|
88,124
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
4,122
|
|
$
|
3,545
|
Accrued
liabilities
|
|
1,843
|
|
|
1,894
|
Deferred product
revenue
|
|
4,635
|
|
|
3,882
|
Total current
liabilities
|
|
10,600
|
|
|
9,321
|
Deferred
rent
|
|
103
|
|
|
103
|
Other long-term
liabilities
|
|
607
|
|
|
1,251
|
Total
liabilities
|
|
11,310
|
|
|
10,675
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Common stock, par
value $0.001, 50,000,000 shares authorized, 8,319,022 and 8,812,644
shares issued and outstanding
|
|
8
|
|
|
9
|
Additional paid-in
capital
|
|
47,464
|
|
|
46,669
|
Accumulated other
comprehensive income (loss)
|
|
(65)
|
|
|
(205)
|
Retained
earnings
|
|
9,160
|
|
|
30,976
|
Total shareholders'
equity
|
|
56,567
|
|
|
77,449
|
Total liabilities and
shareholders' equity
|
$
|
67,877
|
|
$
|
88,124
|
CLEARONE,
INC.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Dollars in
thousands, except per share values)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenue
|
$
|
9,255
|
|
$
|
10,730
|
|
$
|
41,804
|
|
$
|
48,637
|
Cost of goods
sold
|
|
4,502
|
|
|
5,040
|
|
|
17,795
|
|
|
19,150
|
Gross
profit
|
|
4,753
|
|
|
5,690
|
|
|
24,009
|
|
|
29,487
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
2,603
|
|
|
2,337
|
|
|
10,996
|
|
|
10,032
|
Research and product
development
|
|
2,395
|
|
|
2,083
|
|
|
9,342
|
|
|
8,564
|
General and
administrative
|
|
1,564
|
|
|
2,421
|
|
|
7,161
|
|
|
7,325
|
Impairment of
intangibles
|
|
33
|
|
|
—
|
|
|
769
|
|
|
—
|
Impairment of
goodwill
|
|
—
|
|
|
—
|
|
|
12,724
|
|
|
—
|
Legal proceeds,
net
|
|
(790)
|
|
|
—
|
|
|
(790)
|
|
|
—
|
Total operating
expenses
|
|
5,805
|
|
|
6,841
|
|
|
40,202
|
|
|
25,921
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
(1,052)
|
|
|
(1,151)
|
|
|
(16,193)
|
|
|
3,566
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
36
|
|
|
118
|
|
|
300
|
|
|
312
|
Income (loss) before
income taxes
|
|
(1,016)
|
|
|
(1,033)
|
|
|
(15,893)
|
|
|
3,878
|
Provision for
(benefit from) income taxes
|
|
2,592
|
|
|
55
|
|
|
(1,721)
|
|
|
1,434
|
Net income
(loss)
|
$
|
(3,608)
|
|
$
|
(1,088)
|
|
$
|
(14,172)
|
|
$
|
2,444
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
|
8,384,938
|
|
|
8,860,186
|
|
|
8,576,588
|
|
|
9,021,980
|
Diluted weighted
average shares outstanding
|
|
8,384,938
|
|
|
9,089,328
|
|
|
8,576,588
|
|
|
9,306,034
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per common share
|
$
|
(0.43)
|
|
$
|
(0.12)
|
|
$
|
(1.65)
|
|
$
|
0.27
|
Diluted earnings
(loss) per common share
|
$
|
(0.43)
|
|
$
|
(0.12)
|
|
$
|
(1.65)
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
(3,608)
|
|
|
(1,088)
|
|
|
(14,172)
|
|
|
2,444
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on
available-for-sale securities, net of tax
|
|
(32)
|
|
|
(180)
|
|
|
36
|
|
|
(1)
|
Change in foreign
currency translation adjustment
|
|
16
|
|
|
(57)
|
|
|
104
|
|
|
(38)
|
Comprehensive income
(loss)
|
|
(3,624)
|
|
|
(1,325)
|
|
|
(14,032)
|
|
|
2,405
|
CLEARONE,
INC.
|
UNAUDITED
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
|
(Dollars in
thousands, except per share values)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
GAAP gross
profit
|
$
|
4,753
|
|
$
|
5,690
|
|
$
|
24,009
|
|
$
|
29,487
|
Inventory scrap
related to wireless manufacturing move
|
|
—
|
|
|
211
|
|
|
—
|
|
|
494
|
Stock-based
compensation
|
|
6
|
|
|
8
|
|
|
27
|
|
|
26
|
Non-GAAP gross
profit
|
$
|
4,759
|
|
$
|
5,909
|
|
$
|
24,036
|
|
$
|
30,007
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
income (loss)
|
$
|
(1,052)
|
|
$
|
(1,151)
|
|
$
|
(16,193)
|
|
$
|
3,566
|
Inventory scrap
related to wireless manufacturing move
|
|
—
|
|
|
211
|
|
|
—
|
|
|
494
|
Stock-based
compensation
|
|
150
|
|
|
173
|
|
|
665
|
|
|
667
|
Amortization of
intangibles
|
|
258
|
|
|
266
|
|
|
964
|
|
|
1,122
|
Impairment of
intangible asset
|
|
33
|
|
|
—
|
|
|
769
|
|
|
—
|
Impairment of
goodwill
|
|
—
|
|
|
—
|
|
|
12,724
|
|
|
—
|
Legal proceeds,
net
|
|
(910)
|
|
|
—
|
|
|
(910)
|
|
|
—
|
Legal expenses,
acquisition expenses, re-audit expenses, restructuring expenses,
etc. not related to regular operations
|
|
184
|
|
|
1,131
|
|
|
1,672
|
|
|
1,711
|
Non-GAAP operating
income (loss)
|
$
|
(1,337)
|
|
$
|
630
|
|
$
|
(309)
|
|
$
|
7,560
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
$
|
(3,608)
|
|
$
|
(1,088)
|
|
$
|
(14,172)
|
|
$
|
2,444
|
Inventory scrap
related to wireless manufacturing move
|
|
—
|
|
|
211
|
|
|
—
|
|
|
494
|
Stock-based
compensation
|
|
150
|
|
|
173
|
|
|
665
|
|
|
667
|
Amortization of
intangibles
|
|
258
|
|
|
266
|
|
|
964
|
|
|
1,122
|
Impairment of
intangible asset
|
|
33
|
|
|
—
|
|
|
769
|
|
|
—
|
Impairment of
goodwill
|
|
—
|
|
|
—
|
|
|
12,724
|
|
|
—
|
Legal proceeds,
net
|
|
(910)
|
|
|
—
|
|
|
(910)
|
|
|
—
|
Legal expenses,
acquisition expenses, re-audit expenses, restructuring expenses,
etc. not related to regular operations
|
|
184
|
|
|
1,131
|
|
|
1,672
|
|
|
1,711
|
Loss on disposal of
assets related to wireless microphones manufacturing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
Tax effect of
non-GAAP adjustments
|
|
1,596
|
|
|
(861)
|
|
|
(3,202)
|
|
|
(1,497)
|
Non-GAAP net
income (loss)
|
$
|
(2,297)
|
|
$
|
(168)
|
|
$
|
(1,490)
|
|
$
|
4,994
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
$
|
(3,608)
|
|
$
|
(1,088)
|
|
$
|
(14,172)
|
|
$
|
2,444
|
Number of shares used
in computing GAAP income per share (diluted)
|
|
8,384,938
|
|
|
9,089,328
|
|
|
8,576,588
|
|
|
9,306,034
|
GAAP income (loss)
per share (diluted)
|
$
|
(0.43)
|
|
$
|
(0.12)
|
|
$
|
(1.65)
|
|
$
|
0.26
|
Non-GAAP net income
(loss)
|
$
|
(2,297)
|
|
$
|
(168)
|
|
$
|
(1,490)
|
|
$
|
4,994
|
Number of shares used
in computing Non-GAAP income per share (diluted)
|
|
8,384,938
|
|
|
9,089,328
|
|
|
8,576,588
|
|
|
9,306,034
|
Non-GAAP income
(loss) per share (diluted)
|
$
|
(0.27)
|
|
$
|
(0.02)
|
|
$
|
(0.17)
|
|
$
|
0.54
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP total net
income (loss)
|
$
|
(3,608)
|
|
$
|
(1,088)
|
|
$
|
(14,172)
|
|
$
|
2,444
|
Inventory scrap
related to wireless manufacturing move
|
|
—
|
|
|
211
|
|
|
—
|
|
|
494
|
Stock-based
compensation
|
|
150
|
|
|
173
|
|
|
665
|
|
|
667
|
Depreciation
|
|
130
|
|
|
171
|
|
|
580
|
|
|
723
|
Amortization of
intangibles
|
|
258
|
|
|
266
|
|
|
964
|
|
|
1,122
|
Impairment of
intangible asset
|
|
33
|
|
|
—
|
|
|
769
|
|
|
—
|
Impairment of
goodwill
|
|
—
|
|
|
—
|
|
|
12,724
|
|
|
—
|
Legal proceeds,
net
|
|
(910)
|
|
|
—
|
|
|
(910)
|
|
|
—
|
Legal expenses,
acquisition expenses, re-audit expenses, restructuring expenses,
etc. not related to regular operations
|
|
184
|
|
|
1,131
|
|
|
1,672
|
|
|
1,711
|
Loss on disposal of
assets related to wireless microphones manufacturing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
Provision for
(benefit from) income taxes
|
|
2,592
|
|
|
55
|
|
|
(1,721)
|
|
|
1,434
|
Non-GAAP Adjusted
EBITDA
|
$
|
(1,171)
|
|
$
|
919
|
|
$
|
571
|
|
$
|
8,648
|
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SOURCE ClearOne