Industry News from Conferencing

TMCNet:  ClearOne Reports Fourth Quarter and Full-Year 2016 Financial Results

[March 14, 2017]

ClearOne Reports Fourth Quarter and Full-Year 2016 Financial Results

SALT LAKE CITY, March 14, 2017 /PRNewswire/ -- ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication solutions, reported financial results for the three and twelve months ended December 31, 2016.

"Our underlying fundamentals held strong and set the stage for a better 2017; however, in the fourth quarter, several factors continued to negatively impact our financial results," said Zee Hakimoglu, president and chief executive officer. "The transition to our next generation professional audio conferencing platform has taken longer than projected. To stimulate customer interest and sales in the current generation products, we reduced pricing on the CONVERGE® Pro 1. While we successfully spurred sales, revenue was still lower than prior periods and it negatively impacted gross margin. An overall weak global economy, including pressures caused by an uncertain political climate in Europe and the U.S. elections, further aggravated infrastructure and capital equipment spending and dampened our 2016 fourth quarter sales."

"We are, however, pleased to report our efforts in video products contributed over $5 million in revenue and grew 40% year-over-year. In fact, video posted double digit year-over-year revenue growth for the ninth quarter out of the ten most recent. Also, while we began shipping a limited number of SKUs of CONVERGE Pro 2 in the fourth quarter, we are now shipping all 10 SKUs of the new audio platform as well as our award-winning Beamforming Microphone Array 2."

"Looking ahead, we are building positive momentum in the first quarter of 2017. Already our revenue including backlog is tracking to the first quarter of 2016 and revenue from the new audio platform is well ahead of fourth quarter revenue. We believe the transition to our new audio platform is gaining traction. Our highly scalable and cost-effective audio, video conferencing and collaboration, and network media streaming products extend our addressable market to more workspaces and more businesses worldwide. To accelerate momentum in the market in 2017, we are focused on broadening our sales and marketing initiatives and activities. We are confident in ClearOne's business and long-term positive prospects, as is our board of directors. In March 2017, the board increased the quarterly dividend by $0.02 per share to $0.07 per share as well as extended our stock repurchase program to $10 million over the next twelve months. These actions reiterate our commitment to creating long-term shareholder value," concluded Hakimoglu.

Financial Summary
The Company uses certain non-GAAP financial measures and reconciles those to GAAP measures in the attached tables.

  • Q4'16 revenue was $10.7 million, compared to $14.3 million in Q4'15. The year-over-year reduction reflects the transition to the next generation professional audio conferencing platform launched in June 2016, price reductions to CONVERGE Pro 1 products and the weaknesses in capital expenditure spending in U.S. and other major markets.  
  • Gross profit in Q4'16 was $5.7 million, as compared to $9.1 million in Q4'15. Gross profit margin declined to 53% in Q4'16 from 64% in Q4'15, caused mainly by price reductions, increased overhead absorption due to reduction in inventory and scrapping of inventory related to wireless mics production transition. Non-GAAP gross profit margin was 55% in Q4'16 compared to 64% in Q4'15.
  • Operating expenses in Q4'16 were $6.8 million, compared to $6.5 million in Q4'15.
  • Net loss in Q4'16 was $1.1 million, or $0.12 per diluted share, compared to net income of $1.6 million in Q4'15, or $0.16 per diluted share. Non-GAAP net loss was $0.2 million in Q4'16, or $0.02 per diluted share, compared to $2.3 million in Q4'15, or $0.24 per diluted share.

 




($ in 000, except per share)

Three months ended December 31,


Twelve months ended December 31,


2016


2015


Change


2016


2015


Change

GAAP












Revenue

$ 10,730


$14,283


-25%


$48,637


$57,796


-16%

Gross Profit

$ 5,690


$9,079


-37%


$29,487


$36,719


-20%

Operating Income (Loss)

$ (1,151)


$2,562


-145%


$3,566


$10,262


-65%

Net Income (Loss)

$ (1,088)


$1,572


-169%


$2,444


$6,776


-64%

Earnings (Loss) Per Share (Diluted)

$ (0.12)


$0.16


-175%


$0.26


$0.71


-63%

Non-GAAP












Non-GAAP Gross Profit

$ 5,909


$9,084


-35%


$30,007


$36,740


-18%

Non-GAAP Operating Income

$ 630


$3,661


-83%


$7,560


$13,282


-43%

Non-GAAP Net Income (Loss)

$ (168)


$2,289


-107%


$4,994


$8,715


-43%

Non-GAAP Adjusted EBITDA

$919


$3,909


-76%


$8,648


$14,379


-40%

Non-GAAP Earnings (Loss) per share (Diluted)

$ (0.02)


$0.24


-108%


$0.53


$0.91


-42%

 

Full Year 2016 Financial Results as compared to 2015
For the twelve months ended December 31, 2016, revenue was $48.7 million, compared to $57.8 million in 2015, reflecting a reduced demand for our products across most regions except parts of Asia. Net income was $2.4 million, or $0.26 per diluted share, compared to $6.8 million, or $0.71 per diluted share. Non-GAAP net income was $5.0 million, or $0.53 per diluted share, compared to $8.7 million, or $0.91 per diluted share. Non-GAAP Adjusted EBITDA was $8.6 million, compared to $14.4 million.

Continued Investment in Shareholder Value
During the fourth quarter of 2016, the Company paid a cash dividend of $0.05 per share and repurchased approximately 86,000 shares amounting to $0.9 million under its $10 million stock repurchase program announced in March 2016.  As of Dec. 31, 2016, the Company has acquired approximately 542,000 shares amounting to $6.1 million under the stock repurchase program. The Company intends to continue to repurchase shares of its common stock, and in March 2017 the Company renewed and extended its stock repurchase program for up to an additional $10 million in the open market, subject to price, volume and other safe harbor restrictions over the next twelve months.  After payments totaling $1.8 million for the dividend and stock and option repurchases during 2016, cash, cash equivalents and investments were $38.5 million at Dec. 31, 2016, as compared with $39.8 million at December 31, 2015.  The Company continued to have no debt.

Conference Call Information
ClearOne senior management will host an investor conference call today, March 14th 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 73865177. 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



 December 31, 2016


 December 31, 2015

ASSETS







Current assets:







Cash and cash equivalents


$

12,100


$

13,412

Marketable securities



5,030



7,161

Receivables, net of allowance for doubtful accounts of $187 and $54, respectively



7,461



8,692

Inventories, net



11,377



13,447

Distributor channel inventories



1,530



1,628

Prepaid expenses and other assets



2,642



1,806

     Total current assets



40,140



46,146

Long-term marketable securities



21,365



19,204

Long-term inventories, net



1,664



2,018

Property and equipment, net



1,513



1,589

Intangibles, net



5,677



6,638

Goodwill



12,724



12,724

Deferred income taxes



4,654



5,093

Other assets



387



117

     Total assets


$

88,124


$

93,529

LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities:







Accounts payable


$

3,545


$

2,815

Accrued liabilities



1,894



2,243

Deferred product revenue



3,882



4,549

Total current liabilities



9,321



9,607

Deferred rent



103



150

Other long-term liabilities



1,251



1,203

Total liabilities



10,675



10,960








Shareholders' equity:







Common stock, par value $0.001, 50,000,000 shares authorized, 8,812,644 and 9,183,957 shares issued and outstanding



9



9

Additional paid-in capital



46,669



46,291

Accumulated other comprehensive income (loss)



(205)



(166)

Retained earnings



30,976



36,435

Total shareholders' equity



77,449



82,569

Total liabilities and shareholders' equity


$

88,124


$

93,529

 

CLEARONE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share values)
















Three months ended December 31,


Year ended December 31,



2016


2015


2016


2015

Revenue


$

10,730


$

14,283


$

48,637


$

57,796

Cost of goods sold



5,040



5,204



19,150



21,077

Gross profit



5,690



9,079



29,487



36,719














Operating expenses:













Sales and marketing



2,337



2,520



10,032



10,646

Research and product development



2,083



2,190



8,564



8,318

General and administrative



2,421



1,807



7,325



7,493

Total operating expenses



6,841



6,517



25,921



26,457














Operating income (loss)



(1,151)



2,562



3,566



10,262














Other income, net



118



45



312



289

Income (loss) before income taxes



(1,033)



2,607



3,878



10,551

Provision for income taxes



55



1,035



1,434



3,775

Net income (loss)


$

(1,088)


$

1,572


$

2,444


$

6,776














Basic weighted average shares outstanding



8,860,186



9,149,524



9,021,980



9,127,385

Diluted weighted average shares outstanding



9,089,930



9,641,623



9,416,085



9,594,659














Basic earnings (loss) per common share


$

(0.12)


$

0.17


$

0.27


$

0.74

Diluted earnings (loss) per common share


$

(0.12)


$

0.16


$

0.26


$

0.71














   Net income (loss)



(1,088)



1,572



2,444



6,776














Comprehensive income:













   Unrealized gain (loss) on available-for-sale securities, net of tax



(179)



(76)



-



(81)

   Change in foreign currency translation adjustment



(57)



(19)



(38)



(77)

   Comprehensive income (loss)



(1,324)



1,477



2,406



6,618

 

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,



2016


2015


2016


2015

GAAP gross profit


$

5,690


$

9,079


$

29,487


$

36,719

Inventory scrap related to wireless manufacturing move



211



-



494



-

Stock-based compensation



8



5



26



21

Non-GAAP gross profit


$

5,909


$

9,084


$

30,007


$

36,740














GAAP operating income (loss)


$

(1,151)


$

2,562


$

3,566


$

10,262

Inventory scrap related to wireless manufacturing move



211



-



494



-

Stock-based compensation



173



200



667



848

Amortization of intangibles



266



315



1,122



1,258

Legal expenses, acquisition expenses, re-audit expenses, restructuring expenses, etc. not related to regular operations



1,131



584



1,711



914

Non-GAAP operating income


$

630


$

3,661


$

7,560


$

13,282














GAAP net income (loss)


$

(1,088)


$

1,572


$

2,444


$

6,776

Inventory scrap related to wireless manufacturing move



211



-



494



-

Stock-based compensation



173



200



667



848

Amortization of intangibles



266



315



1,122



1,258

Legal expenses, acquisition expenses, re-audit expenses, restructuring expenses, etc. not related to regular operations



1,131



584



1,711



914

Loss on disposal of assets related to wireless microphones manufacturing



-



-



53



-

Tax effect of non-GAAP adjustments



(861)



(382)



(1,497)



(1,081)

Non-GAAP net income (loss)


$

(168)


$

2,289


$

4,994


$

8,715














GAAP net income (loss)


$

(1,088)


$

1,572


$

2,444


$

6,776

Number of shares used in computing GAAP income per share (diluted)



9,089,930



9,641,623



9,416,085



9,594,659

GAAP income (loss) per share (diluted)


$

(0.12)


$

0.16


$

0.26


$

0.71














Non-GAAP net income (loss)


$

(168)


$

2,289


$

4,994


$

8,715

Number of shares used in computing Non-GAAP income per share (diluted)



9,089,930



9,641,623



9,416,085



9,594,659

Non-GAAP income (loss) per share (diluted)


$

(0.02)


$

0.24


$

0.53


$

0.91














GAAP total net income (loss)


$

(1,088)


$

1,572


$

2,444


$

6,776

Inventory scrap related to wireless manufacturing move



211



-



494



-

Stock-based compensation



173



200



667



848

Depreciation



171



203



723



808

Amortization of intangibles



266



315



1,122



1,258

Legal expenses, acquisition expenses, re-audit expenses, restructuring expenses, etc. not related to regular operations



1,131



584



1,711



914

Loss on disposal of assets related to wireless microphones manufacturing



-



-



53



-

Provision for income taxes



55



1,035



1,434



3,775

Non-GAAP Adjusted EBITDA


$

919


$

3,909


$

8,648


$

14,379

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/clearone-reports-fourth-quarter-and-full-year-2016-financial-results-300423205.html

SOURCE ClearOne


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