ZAGG Inc (Nasdaq: ZAGG) (the “Company”), a leading global mobile
lifestyle company, today announced financial results for the fourth
quarter and full year ended December 31, 2019.
Fourth Quarter 2019 Review (Comparisons versus Fourth
Quarter 2018)
- Net sales of $189.9 million, an increase of 14% compared to
$166.5 million
- Gross profit of 36% compared to 35%
- Net income of $25.0 million compared to $14.3 million
- Diluted earnings per share of $0.85 compared to $0.52
- Adjusted EBITDA of $30.5 million compared to $28.1 million
2019 Full Year Review (Comparisons versus 2018 Full
Year)
- Net sales of $521.9 million compared to $538.2 million
- Gross profit of 35% compared to 35%
- Net income of $13.9 million compared to $39.2 million
- Diluted earnings per share of $0.48 compared to $1.38
- Adjusted EBITDA of $44.7 million compared to $76.4 million
Chris Ahern, Chief Executive Officer, commented, “While we
delivered a record quarter in terms of net sales, our overall
performance was below our expectations and represented a difficult
finish to a challenging year. Over the past 18 months we have
strengthened ZAGG’s position as a leader in the mobile lifestyle
category through acquisitions and organic product innovation. With
InvisibleShield®, mophie®, Gear4®, HALO®, ZAGG®, IFROGZ®, and
BRAVEN®, we have created a powerful portfolio of brands that
address key consumer needs including protection, power, audio, and
productivity. We have also enhanced our strong retail relationships
and extensive global distribution network that we are leveraging to
further expand our overall presence. In 2019, we made important
progress integrating our recent acquisitions and investing in these
businesses to drive growth. Unfortunately, a number of factors
negatively impacted the performance of our business, including
declining smartphone unit sales, higher tariffs, a more difficult
than expected holiday season, and additional operating costs from
acquired brands. Despite the recent setbacks, we are confident of
the Company’s strategic direction. Looking forward, our focus is on
continuing to drive innovation in product categories that address
consumer pain points, executing strategies aimed at increasing
market share, including capitalizing on the rollout of 5G wireless
technology, and improving profitability through optimization of our
operating expense structure and improved inventory management. We
are confident that we can deliver improved top and bottom-line
results in 2020 and over the long-term.”
Strategic Review Process
The Company also announced that its Board of Directors (the
“Board”) suspended its review of strategic alternatives, which was
first publicly announced on August 6, 2019. Despite a thorough and
rigorous process conducted by the Board with BofA Securities’
assistance, during which time the Company reached out to over 60
strategic and financial parties, the Company was unable to finalize
a definitive offer at a price that was not significantly below the
current trading levels. The Board determined that stockholder value
would be better enhanced on a standalone basis than by pursuing a
transaction on the terms and pricing proposed.
Fourth Quarter Results
(Amounts in millions, except per share amounts)
| |
For the Three Months Ended |
| |
December 31, 2019 |
|
December 31, 2018 |
| |
|
|
|
|
Net sales |
$ |
189.9 |
|
|
$ |
166.5 |
|
| Gross
profit |
$ |
67.4 |
|
|
$ |
58.5 |
|
| Gross profit
margin |
36 |
% |
|
35 |
% |
| Net
income |
$ |
25.0 |
|
|
$ |
14.3 |
|
| Diluted earnings per
share |
$ |
0.85 |
|
|
$ |
0.52 |
|
| Diluted operating
earnings per share |
$ |
0.94 |
|
|
$ |
0.55 |
|
| Adjusted
EBITDA |
$ |
30.5 |
|
|
$ |
28.1 |
|
Net sales increased 14% to $189.9 million, compared to $166.5
million. The increase in net sales was primarily attributable to
(1) increased sales of protective cases under our Gear4 brand and
(2) increased power management sales driven primarily by HALO
product sales and new mophie wireless product launches during the
second half of 2019. This was partially offset by lower sales of
screen protection and power case products.
Gross profit was $67.4 million (36% of net sales) compared to
$58.5 million (35% of net sales). Gross profit margin has not
changed significantly, although we saw upside from an increase in
sales of Gear4 cases, HALO power products, and InvisibleShield
VisionGuard products. These improvements were offset by increased
duties from product manufactured in China and a decrease in sales
of our screen protection products.
Operating expenses increased 20% to $45.6 million (24% of net
sales) compared to $38.1 million (23% of net sales). The increase
in operating expenses was primarily attributable to (1) additional
selling, general and administrative expense associated with the
newly acquired BRAVEN, Gear4, and HALO brands, (2) increased
marketing investments to support our growing portfolio of brands
and products, (3) investment in our InvisibleShield On Demand
infrastructure, and (4) higher amortization of long-lived
intangibles related to the BRAVEN, Gear4, and HALO acquisitions.
These increases were partially offset by a company-wide restructure
executed during the third quarter of 2019 that were realized more
fully in the fourth quarter of 2019.
Full Year 2019 Results(Amounts in millions,
except per share amounts)
| |
For the Years Ended |
| |
December 31, 2019 |
|
December 31, 2018 |
| |
|
|
|
|
Net sales |
$ |
521.9 |
|
|
$ |
538.2 |
|
| Gross
profit |
$ |
183.4 |
|
|
$ |
185.9 |
|
| Gross profit
margin |
35 |
% |
|
35 |
% |
| Net
income |
$ |
13.9 |
|
|
$ |
39.2 |
|
| Diluted earnings per
share |
$ |
0.48 |
|
|
$ |
1.38 |
|
| Diluted operating
earnings per share |
$ |
0.85 |
|
|
$ |
1.44 |
|
| Adjusted
EBITDA |
$ |
44.7 |
|
|
$ |
76.4 |
|
Net sales decreased 3% to $521.9 million, compared to $538.2
million. The decrease in net sales was primarily attributable to
(1) a decrease in sales of screen protection products due to a pull
forward of shipments into the fourth quarter of 2018 ahead of a
then-expected tariff increase, combined with softer market demand
for smartphones in the U.S. and (2) decreased sales of mophie power
management due to challenging sell-in comparisons during the first
half of 2019 and a decrease in power case sales. These decreases
were partially offset by increased sales of Gear4 cases and HALO
products.
Gross profit was $183.4 million (35% of net sales) compared to
$185.9 million (35% of net sales). Gross profit margin has not
changed significantly, though we saw upside from an increase in
sales of Gear4 cases, HALO power products, and InvisibleShield
VisionGuard products. These improvements were offset by increased
duties from product manufactured in China and a decrease in sales
of our screen protection products.
Operating expenses increased 29% to $173.2 million (33% of net
sales) compared to $134.2 million (25% of net sales). The increase
in operating expenses was primarily attributable to (1) additional
selling, general and administrative expense associated with the
newly acquired BRAVEN, Gear4, and HALO brands, (2) severance
charges of $2.2 million associated with corporate restructurings
during the second and third quarter of 2019, (3) increased
marketing investments to support our growing portfolio of brands
and products, (4) investment in our Invisible Shield On Demand
infrastructure, and (5) higher amortization of long-lived
intangibles related to the BRAVEN, Gear4, and HALO
acquisitions.
Restructuring
To position the Company for long-term profitable growth, the
Company initiated a restructuring plan during the second quarter of
2019. These initiatives included reductions of approximately 10% of
our global headcount, acceleration of cost synergies from recent
acquisitions into 2019, and the reduction of a number of
discretionary operating expense categories.
As a result, 2019 results include one-time severance
restructuring charges totaling approximately $2.2 million. The
headcount reductions are expected to provide gross annualized
savings of approximately $8.0 million.
2020 Business Outlook
For the full year of 2020, the Company expects:
- Flat net sales compared to 2019
- Gross profit margin as a percentage of net sales in the mid
30's range
- Adjusted EBITDA of approximately $48 million
- Diluted earnings per share of approximately $0.50
Conference Call
A conference call will be held today, March 11, 2020, at
5:00 p.m. Eastern Standard Time to review these results. Interested
parties may access via the Internet on the Company's website at
investors.zagg.com (the URLs are included 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-U.S. GAAP Financial Information
This press release includes Adjusted EBITDA and Diluted
Operating Earnings Per Share. Readers are cautioned that (1)
Adjusted EBITDA (earnings before stock-based compensation expense,
depreciation and amortization, other expense, net, inventory
step-up amount in connection with acquisitions in 2018 and 2019,
transaction costs, BRAVEN employee retention bonus, former CFO
retention bonus, CEO signing bonus, consulting fee to former CEO,
restructuring expenses, adjustment to fair value of acquisition
contingent consideration, legal settlements, and income tax
(benefit) provision) and (2) Diluted Operating Earnings Per Share
(diluted operating earnings per share excluding the impact of
amortization expense related to 2018 and 2019 acquisitions,
transaction costs, inventory step-up amount in connection with
acquisitions in 2018 and 2019, BRAVEN employee retention bonus,
restructuring expenses, stock-based compensation issued as
retention, and adjustment to fair value of acquisition contingent
consideration) are not financial measures prepared in accordance
with accounting principles generally accepted in the United States
of America (“U.S. GAAP”). In addition, this financial information
should not be construed as an alternative to any other measure of
performance determined in accordance with U.S. 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 U.S.
GAAP. We present Adjusted EBITDA and Diluted Operating Earnings Per
Share because we believe that these measures are helpful to some
investors as a measure of performance and to normalize the impact
of acquisitions. We caution readers that non-U.S. 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 U.S. GAAP measures in the
supplemental financial information attached to 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 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.
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, 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.
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(Amounts in thousands, except par value
amounts)(Unaudited)
| |
|
December 31, 2019 |
|
December 31, 2018 |
| |
|
|
|
|
|
ASSETS |
|
|
|
| Current
assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
17,801 |
|
|
$ |
15,793 |
|
| |
Accounts receivable, net of
allowances of $1,143 and $885 |
142,804 |
|
|
156,667 |
|
| |
Income tax receivable |
— |
|
|
375 |
|
| |
Inventories |
144,944 |
|
|
82,919 |
|
| |
Prepaid expenses and other
current assets |
6,124 |
|
|
5,473 |
|
| Total
current assets |
311,673 |
|
|
261,227 |
|
| |
|
|
|
|
| Property and
equipment, net of accumulated depreciation of $14,159 and
$11,844 |
18,019 |
|
|
16,118 |
|
| Intangible assets,
net of accumulated amortization of $95,632 and $78,627 |
63,110 |
|
|
52,054 |
|
| Deferred income
tax assets |
22,657 |
|
|
19,403 |
|
| Operating lease
right of use assets |
9,636 |
|
|
— |
|
| Goodwill |
43,569 |
|
|
27,638 |
|
| Other assets |
567 |
|
|
1,571 |
|
| Total
assets |
$ |
469,231 |
|
|
$ |
378,011 |
|
| |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
| Current
liabilities: |
|
|
|
| |
Accounts payable |
$ |
87,303 |
|
|
$ |
80,908 |
|
| |
Income tax payable |
5,266 |
|
|
— |
|
| |
Sales returns liability |
43,853 |
|
|
54,432 |
|
| |
Accrued wages and wage related
expenses |
6,328 |
|
|
6,624 |
|
| |
Accrued liabilities |
15,164 |
|
|
13,723 |
|
| |
Current portion of operating
lease liabilities |
2,099 |
|
|
— |
|
| Total
current liabilities |
160,013 |
|
|
155,687 |
|
| |
|
|
|
|
| Line of
credit |
107,140 |
|
|
58,363 |
|
| Operating lease
liabilities |
10,599 |
|
|
— |
|
| Other long-term
liabilities |
— |
|
|
5,470 |
|
| Total
liabilities |
277,752 |
|
|
219,520 |
|
| |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
| |
Common stock, $0.001 par
value; 100,000 shares authorized; 36,610 and 34,457 shares
issued |
37 |
|
|
34 |
|
| |
Treasury stock, 7,055 and
6,983 common shares at cost |
(50,455 |
) |
|
(49,733 |
) |
| |
Additional paid-in
capital |
116,533 |
|
|
96,486 |
|
| |
Accumulated other
comprehensive loss |
(1,631 |
) |
|
(1,410 |
) |
| |
Retained earnings |
126,995 |
|
|
113,114 |
|
| Total
stockholders’ equity |
191,479 |
|
|
158,491 |
|
| Total
liabilities and stockholders’ equity |
$ |
469,231 |
|
|
$ |
378,011 |
|
ZAGG INC AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS(Amounts in thousands, except per share
amounts)(Unaudited)
| |
For the Three Months Ended |
|
For the Years Ended |
| |
December 31,2019 |
|
December 31,2018 |
|
December 31,2019 |
|
December 31,2018 |
| |
|
|
|
|
|
|
|
|
Net sales |
$ |
189,888 |
|
|
$ |
166,513 |
|
|
$ |
521,922 |
|
|
$ |
538,231 |
|
| Cost of
sales |
122,445 |
|
|
108,062 |
|
|
338,553 |
|
|
352,358 |
|
| Gross
profit |
67,443 |
|
|
58,451 |
|
|
183,369 |
|
|
185,873 |
|
| |
|
|
|
|
|
|
|
| Operating
expenses: |
|
|
|
|
|
|
|
|
Advertising and marketing |
5,955 |
|
|
3,672 |
|
|
19,183 |
|
|
11,994 |
|
|
Selling, general and administrative |
34,901 |
|
|
29,931 |
|
|
135,039 |
|
|
108,623 |
|
|
Transaction costs |
762 |
|
|
1,042 |
|
|
1,930 |
|
|
1,678 |
|
|
Amortization of intangible assets |
3,992 |
|
|
3,478 |
|
|
17,005 |
|
|
11,882 |
|
| Total operating
expenses |
45,610 |
|
|
38,123 |
|
|
173,157 |
|
|
134,177 |
|
| |
|
|
|
|
|
|
|
| Income from
operations |
21,833 |
|
|
20,328 |
|
|
10,212 |
|
|
51,696 |
|
| |
|
|
|
|
|
|
|
| Other income
(expense): |
|
|
|
|
|
|
|
|
Interest expense |
(1,576 |
) |
|
(552 |
) |
|
(4,910 |
) |
|
(1,684 |
) |
|
Other income (expenses) |
351 |
|
|
(121 |
) |
|
565 |
|
|
(483 |
) |
| Total other
expenses |
(1,225 |
) |
|
(673 |
) |
|
(4,345 |
) |
|
(2,167 |
) |
| |
|
|
|
|
|
|
|
| Income before
provision for income taxes |
20,608 |
|
|
19,655 |
|
|
5,867 |
|
|
49,529 |
|
| |
|
|
|
|
|
|
|
| Income tax benefit
(provision) |
4,390 |
|
|
(5,337 |
) |
|
8,053 |
|
|
(10,340 |
) |
| |
|
|
|
|
|
|
|
| Net
income |
$ |
24,998 |
|
|
$ |
14,318 |
|
|
$ |
13,920 |
|
|
$ |
39,189 |
|
| |
|
|
|
|
|
|
|
| Earnings per share
attributable to stockholders: |
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.86 |
|
|
$ |
0.52 |
|
|
$ |
0.48 |
|
|
$ |
1.40 |
|
|
Diluted earnings per share |
$ |
0.85 |
|
|
$ |
0.52 |
|
|
$ |
0.48 |
|
|
$ |
1.38 |
|
ZAGG INC AND
SUBSIDIARIESRECONCILIATION OF NON-U.S. GAAP
FINANCIAL INFORMATION TO U.S. GAAP(Amounts in
thousands)(Unaudited)
| UNAUDITED
SUPPLEMENTAL DATA |
|
| |
|
| The
following information are not financial measures prepared in
accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”). In addition, they should
not be construed as an alternative to any other measures of
performance determined in accordance with U.S. GAAP, or as an
indicator of our 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. We present this financial information because we believe
that these measures are helpful to some investors as a measure 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 |
|
For the Years Ended |
|
|
December 31,2019 |
|
|
December 31,2018 |
|
|
December 31,2019 |
|
|
|
December 31,2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income in accordance with U.S. GAAP |
$ |
24,998 |
|
|
|
$ |
14,318 |
|
|
$ |
13,920 |
|
|
|
$ |
39,189 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| a. |
Stock-based compensation
expense |
731 |
|
|
|
844 |
|
|
4,022 |
|
|
|
3,009 |
|
|
| b. |
Depreciation and
amortization |
5,896 |
|
|
|
4,959 |
|
|
23,903 |
|
|
|
18,288 |
|
|
| c. |
Other expense, net |
1,225 |
|
|
|
673 |
|
|
4,345 |
|
|
|
2,167 |
|
|
| d. |
Inventory step-up amount in
connection with acquisitions in 2018 and 2019 |
— |
|
|
|
108 |
|
|
589 |
|
|
|
179 |
|
|
| e. |
Transaction costs |
762 |
|
|
|
1,042 |
|
|
1,930 |
|
|
|
1,678 |
|
|
| f. |
BRAVEN employee retention
bonus |
— |
|
|
|
77 |
|
|
93 |
|
|
|
77 |
|
|
| g. |
Former CFO retention
bonus |
— |
|
|
|
366 |
|
|
110 |
|
|
|
366 |
|
|
| h. |
CEO signing bonus |
— |
|
|
|
400 |
|
|
— |
|
|
|
400 |
|
|
| i. |
Consulting fees to former
CEO |
— |
|
|
|
— |
|
|
— |
|
|
|
700 |
|
|
| j. |
Restructuring expenses |
— |
|
|
|
— |
|
|
2,225 |
|
|
|
— |
|
|
| k. |
Adjustment to fair value of
acquisition contingent consideration |
560 |
|
|
|
— |
|
|
915 |
|
|
|
— |
|
|
| l. |
Legal settlements |
750 |
|
|
|
— |
|
|
750 |
|
|
|
— |
|
|
| m. |
Income tax (benefit)
provision |
(4,390 |
) |
|
|
5,337 |
|
|
(8,053 |
) |
|
|
10,340 |
|
|
| Total
Adjustments |
5,534 |
|
|
|
13,806 |
|
|
30,829 |
|
|
|
37,204 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted
EBITDA |
$ |
30,532 |
|
|
|
$ |
28,124 |
|
|
$ |
44,749 |
|
|
|
$ |
76,393 |
|
|
ZAGG INC AND
SUBSIDIARIESRECONCILIATION OF NON-U.S. GAAP
FINANCIAL INFORMATION TO U.S. GAAP(Amounts in thousands,
except per share amounts)(Unaudited)
|
DILUTED OPERATING EARNINGS PER SHARE
RECONCILIATION |
For the Three Months Ended |
|
|
For the Years Ended |
|
|
December 31,2019 |
|
|
|
December 31,2018 |
|
|
|
December 31,2019 |
|
|
|
December 31,2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income
in accordance with U.S. GAAP |
$ |
24,998 |
|
|
|
$ |
14,318 |
|
|
|
$ |
13,920 |
|
|
|
$ |
39,189 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| a. |
Amortization expense related
to 2018 and 2019 acquisitions |
1,975 |
|
|
|
705 |
|
|
|
7,901 |
|
|
|
792 |
|
|
| b. |
Transaction costs |
762 |
|
|
|
1,042 |
|
|
|
1,930 |
|
|
|
1,678 |
|
|
| c. |
Inventory step-up amount in
connection with acquisitions in 2018 and 2019 |
— |
|
|
|
108 |
|
|
|
589 |
|
|
|
179 |
|
|
| d. |
BRAVEN employee retention
bonus |
— |
|
|
|
— |
|
|
|
93 |
|
|
|
77 |
|
|
| e. |
Restructuring expenses |
— |
|
|
|
— |
|
|
|
2,225 |
|
|
|
— |
|
|
| f. |
Stock-based compensation
issued as retention |
332 |
|
|
|
— |
|
|
|
1,363 |
|
|
|
— |
|
|
| g. |
Adjustment to fair value of
acquisition contingent consideration |
560 |
|
|
|
— |
|
|
|
915 |
|
|
|
— |
|
|
| Total
adjustments before tax |
3,629 |
|
|
|
1,855 |
|
|
|
15,016 |
|
|
|
2,726 |
|
|
| |
Tax effect 1 |
(981 |
) |
|
|
(502 |
) |
|
|
(4,060 |
) |
|
|
(737 |
) |
|
| |
Adjustments, net of tax |
2,648 |
|
|
|
1,353 |
|
|
|
10,956 |
|
|
|
1,989 |
|
|
| Adjusted
net income |
$ |
27,646 |
|
|
|
$ |
15,671 |
|
|
|
$ |
24,876 |
|
|
|
$ |
41,178 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted shares
outstanding |
29,379 |
|
|
|
28,258 |
|
|
|
29,242 |
|
|
|
28,500 |
|
|
| Diluted
operating earnings per share |
$ |
0.94 |
|
|
|
$ |
0.55 |
|
|
|
$ |
0.85 |
|
|
|
$ |
1.44 |
|
|
1 Income tax effect calculated using the estimated 2019
statutory rate of 27.04%
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