Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - ZAGG Inc | f8k030717_zagginc.htm |
| EX-99.3 - CFO COMMENTARY ON 2016 FINANCIAL RESULTS - ZAGG Inc | f8k030717ex99iii_zagginc.htm |
| EX-99.2 - RESULTS OF OPERATIONS PRESS RELEASE DATED MARCH 7, 2017 - ZAGG Inc | f8k030717ex99ii_zagginc.htm |
Exhibit 99.1
| ZAGG INC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| (in thousands, except par value) |
| (Unaudited) |
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 11,604 | $ | 13,002 | ||||
| Accounts receivable, net of allowances of $824 in 2016 and $568 in 2015 | 83,835 | 57,647 | ||||||
| Inventories | 72,769 | 45,912 | ||||||
| Prepaid expenses and other current assets | 3,414 | 3,142 | ||||||
| Income tax receivable | 2,814 | 1,158 | ||||||
| Deferred income tax assets | 23,050 | 10,840 | ||||||
| Total current assets | 197,486 | 131,701 | ||||||
| Property and equipment, net of accumulated depreciation at $18,371 in 2016 and $10,539 in 2015 | 17,755 | 8,309 | ||||||
| Goodwill | 12,272 | - | ||||||
| Intangible assets, net of accumulated amortization at $55,298 in 2016 and $41,803 in 2015 | 53,362 | 23,045 | ||||||
| Deferred income tax assets | 27,313 | 15,386 | ||||||
| Other assets | 2,541 | 1,100 | ||||||
| Total assets | $ | 310,729 | $ | 179,541 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 85,022 | $ | 33,846 | ||||
| Accrued liabilities | 22,216 | 5,068 | ||||||
| Sales returns liability | 28,373 | 7,849 | ||||||
| Accrued wages and wage related expenses | 6,169 | 2,244 | ||||||
| Deferred revenue | 273 | 17 | ||||||
| Line of Credit | 31,307 | - | ||||||
| Current portion of long-term debt, net of deferred loan costs of $65 in 2016 | 10,484 | - | ||||||
| Total current liabilities | 183,844 | 49,024 | ||||||
| Noncurrent portion of long-term debt, net of deferred loan costs of $141 in 2016 | 9,623 | - | ||||||
| Total liabilities | 193,467 | 49,024 | ||||||
| Stockholders' equity | ||||||||
| Common stock, $0.001 par value; 100,000 shares authorized; 33,840 and 33,219 shares issued in 2016 and 2015, respectively | 34 | 33 | ||||||
| Additional paid-in capital | 92,782 | 88,983 | ||||||
| Accumulated other comprehensive income (loss) | (2,114 | ) | (1,597 | ) | ||||
| Treasury stock, 5,831 and 5,679 common shares in 2016 and 2015 respectively, at cost | (36,145 | ) | (35,194 | ) | ||||
| Retained earnings | 62,705 | 78,292 | ||||||
| Total stockholders' equity | 117,262 | 130,517 | ||||||
| Total liabilities and stockholders' equity | $ | 310,729 | $ | 179,541 | ||||
| ZAGG INC AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| (in thousands, except per share amounts) |
| (Unaudited) |
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||
| Net sales | $ | 114,929 | $ | 78,632 | $ | 401,857 | $ | 269,311 | ||||||||
| Cost of sales | 85,075 | 49,733 | 274,255 | 167,627 | ||||||||||||
| Gross profit | 29,854 | 28,899 | 127,602 | 101,684 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Advertising and marketing | 3,862 | 2,986 | 12,440 | 10,436 | ||||||||||||
| Selling, general and administrative | 25,986 | 15,739 | 96,229 | 56,752 | ||||||||||||
| Loss on disputed mophie purchase price | - | - | 24,317 | - | ||||||||||||
| Transaction costs | 124 | 179 | 2,591 | 179 | ||||||||||||
| Amortization of definite-lived intangibles | 3,476 | 2,051 | 13,385 | 8,453 | ||||||||||||
| Total operating expenses | 33,448 | 20,955 | 148,962 | 75,820 | ||||||||||||
| Income (loss) from operations | (3,594 | ) | 7,944 | (21,360 | ) | 25,864 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (484 | ) | (16 | ) | (1,851 | ) | (97 | ) | ||||||||
| Other income (expense) | (76 | ) | (15 | ) | (348 | ) | (69 | ) | ||||||||
| Total other expense, net | (560 | ) | (31 | ) | (2,199 | ) | (166 | ) | ||||||||
| Income (loss) before provision for income taxes | (4,154 | ) | 7,913 | (23,559 | ) | 25,698 | ||||||||||
| Income tax benefit (provision) | 9 | (2,956 | ) | 7,972 | (10,111 | ) | ||||||||||
| Net income (loss) | $ | (4,145 | ) | $ | 4,957 | $ | (15,587 | ) | 15,587 | |||||||
| Earnings (loss) per share attributable to stockholders: | ||||||||||||||||
| Basic earnings (loss) per share | $ | (0.15 | ) | $ | 0.18 | $ | (0.56 | ) | $ | 0.54 | ||||||
| Diluted earnings (loss) per share | $ | (0.15 | ) | $ | 0.18 | $ | (0.56 | ) | $ | 0.54 | ||||||
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| ZAGG INC AND SUBSIDIARIES |
| RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP |
| (Unaudited) |
Unaudited Supplemental Data
The following information is not a financial measure under generally accepted accounting principals (GAAP). In addition, it should not be construed as an alternative to any other measures of performance determined in accordance with 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 it is helpful to some investors as a measure of our operations. We caution investors that non-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 | Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||
| Net income (loss) in accordance with GAAP | $ | (4,145 | ) | $ | 4,957 | $ | (15,587 | ) | $ | 15,587 | ||||||
| Adjustments: | ||||||||||||||||
| a. Stock based compensation expense | 151 | 1,185 | 3,830 | 3,893 | ||||||||||||
| b. Depreciation and amortization | 5,787 | 3,372 | 22,270 | 12,923 | ||||||||||||
| c. Recovery of reserves on note receivable | - | - | - | (639 | ) | |||||||||||
| d. Other (income) expense | 560 | 31 | 2,199 | 166 | ||||||||||||
| e. mophie transaction expenses | 124 | 179 | 2,591 | 179 | ||||||||||||
| f. mophie fair value inventory write-up related to acquisition | - | - | 2,586 | - | ||||||||||||
| g. mophie restructuring charges | 959 | - | 2,160 | - | ||||||||||||
| h. mophie employee retention bonus | 341 | - | 841 | - | ||||||||||||
| i. Loss on disputed mophie purchase price | - | - | 24,317 | - | ||||||||||||
| j. Provision for income taxes | (9 | ) | 2,956 | (7,972 | ) | 10,111 | ||||||||||
| Adjusted EBITDA | $ | 3,768 | $ | 12,680 | $ | 37,235 | $ | 42,220 | ||||||||
Adjusted Net Income Reconciliation - Three and Twelve Months Ended December 31, 2016 and 2015
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||
| Net income (loss) in accordance with GAAP | $ | (4,145 | ) | $ | 4,957 | $ | (15,587 | ) | $ | 15,587 | ||||||
| Adjustments: | ||||||||||||||||
| a. Amortization of mophie acquired intangibles | 1,818 | - | 6,303 | - | ||||||||||||
| b. mophie transaction costs | 124 | - | 2,591 | - | ||||||||||||
| c. mophie fair value inventory write-up related to acquisition | - | - | 2,586 | - | ||||||||||||
| d. mophie restructuring charges | 959 | - | 2,160 | - | ||||||||||||
| e. mophie employee retention bonus | 341 | - | 841 | - | ||||||||||||
| f. Loss on disputed mophie purchase price | - | - | 24,317 | - | ||||||||||||
| g. Income tax effects | (1,240 | )* | - | (14,840 | )* | - | ||||||||||
| Adjusted net income | $ | (2,143 | ) | $ | 4,957 | $ | 8,371 | $ | 15,587 | |||||||
| Adjusted diluted earnings per share | $ | (0.08 | ) | $ | 0.18 | $ | 0.30 | $ | 0.54 | |||||||
| Weighted average number of shares outstanding - diluted | 28,061 | 28,021 | 28,006 | 29,089 | ||||||||||||
* For comparative purposes, we applied an annualized statutory tax rate of 38.25% in 2016.
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