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8-K - CURRENT REPORT - MINIM, INC. | zmtp_8k.htm |
Exhibit 99.1
Zoom Telephonics Reports Sales of $10.6 Million for Q4 2019 and
$37.6 Million for Year 2019
Company to Host Conference Call on Friday, February 28, 2020 at
10:00a.m. Eastern Time
Boston, MA, February 27, 2020 – Zoom Telephonics, Inc. (“Zoom”
or “the Company”) (OTCQB: ZMTP), a leading producer of
cable modems and other communication products, today reported
financial results for its 2019 fourth quarter and year ended
December 31, 2019.
Financial Highlights (Q4 and full year 2019 comparisons to prior
year’s period)
●
Q4
net sales increased 41.6% to $10.6 million in comparison to Q4 of
2018.
●
Q4
gross margin decreased to 24.5% from 31.6% in the same quarter of
2018, as China tariffs increased cost of goods by $1.3 million in
Q4 2019.
●
Year-over-year
net sales increased 16.4% to $37.6 million due primarily to strong
sales from E-tail/Retail.
●
2019
gross margin decreased to 29.0% from 36.0% in the prior year. China
tariffs impacted margin by $3.2 million in 2019.
●
Q4
net loss was approximately $1.15 million, or $0.06 per share,
compared to a net loss of $0.8 million, or $0.05 per share, for Q4
2018. 2019 net loss was $3.28 million, or $0.18 per share, compared
to a net loss of $74 thousand, or $0.00 per share, for
2018.
Management Commentary
Joe Wytanis, Zoom’s CEO, commented on the fiscal year and
quarter, “2019 turned out to be our best year in revenue
since 2001 and we closed with year over year growth accelerating.
Our Q4FY2019 sales were up 41.6% from the prior year quarter
whereas third quarter sales were up 20.8% and the second quarter
saw sales grow 8.5%. Our products continue to gain recognition for
their quality and value, as we reported right at year end,
Wirecutter magazine named our MB7621 Cable Modem as “The Best
Modem For Most People”. We intend to build on this sort of
recognition with an aggressive sales and marketing program
supported by a steady cadence of new product
rollouts.”
Mr. Wytanis continued, “While we were pleased with our top
line performance in both the fourth quarter and full year, our
bottom line was negatively impacted by the significant burden of
China tariffs which led to a net loss again in Q4FY2019. Similar to
what we experienced in Q3FY2019, we would have been profitable in
Q4FY2019 with $164 thousand of net income, but again the tariffs
changed that. Our laser focus is to transition our production from
China to Vietnam as quickly as possible. We have a production
transition plan in place and we’re executing on
it.”
John Lauten, Zoom’s Senior Vice President of Operations
added, “With our sales growth momentum, rising customer
demand and the expansion of our product portfolio, we plan to
execute on our operational objectives to optimize our supply chain
and organizational capabilities. Moving our production to Vietnam
will not only benefit us with a lower overall tariff exposure, but
it will also further strengthen and diversify our global supply
chain model.”
2019 Fourth Quarter Financial Review
The Company reported an increase in net sales of 41.6% to $10.6
million for the fourth quarter ended December 31, 2019, up from
$7.5 million for the fourth quarter ended December 31, 2018. The
increase in sales was driven by increased sales through
E/Retail.
Gross profit was $2.6 million or 24.5% of net sales in the fourth
quarter of 2019, compared to $2.4 million or 31.6% of net sales for
the fourth quarter of 2018. The decrease in gross profit and gross
margin was primarily due to China tariffs increasing cost of goods
$1.3 million and $0.23 million in the fourth quarter of 2019 and
2018 respectively.
Operating expenses were $3.7 million or 35.2% of net sales in the
fourth quarter of 2019, compared to $3.1 million or 41.8% of net
sales in the same period of 2018. Selling expenses increased
approximately $193 thousand for the fourth quarter of 2019,
primarily
due to increases in
trademark royalty costs and brick-and-mortar retailer marketing
expenses, offset by a reduction in advertising costs. General and
administrative expenses increased approximately $220 thousand to
$809 thousand for the fourth quarter of 2019 mostly due to a
one-time bad debt reserve. Research and development expenses were
$753 thousand for the 2019 fourth quarter, up from $573 thousand in
the same period of 2018, with the $180 thousand increase largely
due to salary, consulting, and related costs to support accelerated
product development.
Zoom reported a net loss of $1.15 million thousand or $0.06 per
share for the fourth quarter of 2019, compared to net loss of $0.8
million or $0.05 per share in the same period of 2018. The loss in
the fourth quarter of 2019 was primarily due to the impact of
tariffs on Zoom’s cost of goods sold.
1
2019 Fiscal Year Financial Review
Net sales for year 2019 increased 16.4% to $37.6 million from $32.3
million for 2018. Sales increased mostly through retail and e-tail
channels. Sales grew in routers, MoCA adapters, and DSL products,
with the largest sales increase in cable modems and cable modem
routers.
Gross profit in 2019 was $10.9 million or 29.0% of net sales, down
from $11.6 million or 36.0% of net sales for year 2018. The
decrease in gross profit and gross margin from prior year was
primarily due tariff costs of $3.2 million.
Operating expenses in 2019 were $14.1 million or 37.6% of net
sales, versus $11.6 million or 35.9% of net sales in 2018. Selling
expenses increased approximately $1.1 million to $9.2 million for
the year, as increases in trademark royalty costs and
brick-and-mortar retailer marketing expenses, were partially offset
by savings in advertising costs. General and administrative
expenses increased approximately $1.0 million to $2.7 million for
year 2019, due to increased salary and related expenses,
consulting, outside service costs, and a one-time bad debt
provision. Research and development expenses were $2.2 million for
2019, up from $1.8 million in 2018. The increase of approximated
$0.5 million was primarily due salary and related costs, and
increased product testing, certification and software development
costs.
Zoom reported a net loss of $3.28 million or $0.18 per share for
the year 2019, compared to net loss of $74 thousand or $0.00 per
share for year 2018. This increase in net loss from prior year was
primarily due to tariff costs of $3.2 million.
Balance Sheet Highlights
At December 31, 2019 Zoom had $1.2 million in cash; $0 drawn on a
$3.0 million line of credit; no long-term debt; $6.1 million
stockholders’ equity; working capital of $5.4 million; and a
current ratio of 1.69.
Conference Call Details
Date/Time:
|
Friday,
February 28, 2020 – 10:00 a.m. ET
|
|
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Participant
Dial-In Numbers:
|
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(United States):
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866-393-7958
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(International):
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706-643-5255
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Conference ID
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7762499
|
To access the call, please dial-in approximately five minutes
before the start time and, when asked, provide the operator with
the conference ID 7762499. An accompanying slide presentation will
be available in PDF format via the Investor Relations section of
Zoom Telephonics’ website at www.zoom.net/SQ419
shortly before the
call.
About Zoom Telephonics
Zoom Telephonics, Inc. designs, produces, markets, and supports
cable modems and other communication products. The Company’s
worldwide Motorola license agreement includes cable modems and
gateways, local area network products including routers and MoCA
Adapters, DSL modems and gateways, cellular modems and routers and
sensors, and other Internet and network products. For more
information about Zoom and its products, please visit
www.zoom.net.
MOTOROLA and the Stylized M Logo are trademarks or registered
trademarks of Motorola Trademark Holdings, LLC and are used under
license.
Forward Looking Statements
This release contains forward-looking information relating to
Zoom’s plans, expectations, and intentions. Actual results
may be materially different from expectations as a result of known
and unknown risks, including: the potential increase in tariffs on
the Company's imports; potential difficulties and supply
interruptions from moving the manufacturing of most of the
Company’s products to Vietnam; potential changes in NAFTA;
the potential need for additional funding which Zoom may be unable
to obtain; declining demand for certain of Zoom’s products;
delays, unanticipated costs, interruptions or other uncertainties
associated with Zoom’s production and shipping; Zoom’s
reliance on several key outsourcing partners; uncertainty of key
customers’ plans and orders; risks relating to product
certifications; Zoom’s dependence on key employees;
uncertainty of new product development, including certification and
overall project delays, budget overruns, and the risk that newly
introduced products may contain undetected errors or defects or
otherwise not perform as anticipated; costs and senior management
distractions due to patent-related matters; and other risks set
forth in Zoom’s filings with the Securities and Exchange
Commission. Zoom cautions readers not to place undue reliance upon
any such forward-looking statements, which speak only as of the
date made. Zoom expressly disclaims any obligation or undertaking
to release publicly any updates or revisions to any such statements
to reflect any change in Zoom’s expectations or any change in
events, conditions or circumstance on which any such statement is
based.
Investor Relations Contact:
Jeremy Hellman, Vice-President
The Equity Group Inc.
Phone: 212-836-9626
Email: jhellman@equityny.com
2
ZOOM TELEPHONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months and Twelve Months Ended December 31, 2019 and
2018
(in thousands, except per share
data)
|
Three
Months Ended
|
Twelve
Months Ended
|
||
|
12/31/19
|
12/31/18
|
12/31/19
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12/31/18
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Net sales
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$10,571
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$7,464
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$37,614
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$32,323
|
Cost of goods sold
|
7,979
|
5,107
|
26,708
|
20,679
|
|
|
|
|
|
Gross
profit
|
2,592
|
2,357
|
10,906
|
11,644
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
Selling
|
2,154
|
1,961
|
9,223
|
8,171
|
General
and administrative
|
809
|
589
|
2,667
|
1,648
|
Research
and development
|
753
|
573
|
2,237
|
1,772
|
Total
operating expenses
|
3,716
|
3,123
|
14,127
|
11,591
|
|
|
|
|
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Operating
profit (loss)
|
(1,124)
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(766)
|
(3,221)
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53
|
|
|
|
|
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Other income (expense), net
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(18)
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(56)
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(23)
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(101)
|
|
|
|
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Income
(loss) before income taxes
|
(1,142)
|
(822)
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(3,244)
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(48)
|
|
|
|
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Income tax expense
|
8
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4
|
32
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26
|
|
|
|
|
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Net
income (loss)
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$(1,150)
|
$(826)
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$(3,276)
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$(74)
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
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Basic
and Diluted Earnings (loss) per share
|
$(0.06)
|
$(0.05)
|
$(0.18)
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$(0.00)
|
|
|
|
|
|
|
|
|
|
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Weighted average number of shares outstanding:
|
|
|
|
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Basic
and Diluted
|
20,893
|
16,109
|
18,051
|
15,957
|
3
ZOOM TELEPHONICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)
|
12/31/19
|
12/31/18
|
|
|
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ASSETS
|
|
|
|
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Current assets:
|
|
|
|
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Cash
and cash equivalents
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$1,217
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$126
|
Restricted
Cash
|
150
|
––
|
Accounts
receivable, net
|
4,071
|
2,761
|
Inventories,
net
|
7,440
|
7,928
|
Prepaid
expenses and other
|
270
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918
|
|
|
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Total
current assets
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13,148
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11,733
|
|
|
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Property and equipment, net
|
303
|
261
|
Operating lease right-of-use assets
|
103
|
––
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Other assets
|
349
|
222
|
|
|
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Total
assets
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$13,903
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$12,216
|
|
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
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Current liabilities:
|
|
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Bank
debt
|
$––
|
$1,741
|
Accounts
payable
|
5,025
|
4,369
|
Operating
lease liabilities
|
103
|
––
|
Accrued
other expenses
|
2,666
|
2,230
|
|
|
|
Total
current liabilities
|
7,794
|
8,340
|
|
|
|
Total
liabilities
|
7,794
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8,340
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
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Common
stock and additional paid-in capital
|
46,706
|
41,197
|
Retained
earnings (accumulated deficit)
|
(40,597)
|
(37,321)
|
|
|
|
Total
stockholders’ equity
|
6,109
|
3,876
|
|
|
|
Total
liabilities and stockholders’ equity
|
$13,903
|
$12,216
|
4