SALT LAKE CITY (Business Wire) -- ZAGG Inc. (NASDAQ: ZAGG), a leading producer of mobile electronics accessories including the popular invisibleSHIELD™ and ZAGGaudio™ brands, announces successful results for the third quarter of Fiscal Year 2009, ended September 30, 2009. ZAGG highlighted a 42% increase in revenues when compared to third quarter 2008 and also reported positive fully diluted earnings per share of $0.04 for the second quarter 2009. For the nine months ended September 30, 2009, ZAGG had a 116% increase in revenues when compared to the nine months ended September 30, 2008 and also reported positive fully diluted earnings per share of $0.14 for the same period.
During the quarter, a decline in website sales as a percentage of revenue adversely affected gross margins. With the expected launch of ZAGGskins in Q4 2009, we expect gross margins to increase. On November 11, 2009 we pre-released ZAGGskins™ to our ZAGG Zealots email database to test front and back end capabilities. A full launch of ZAGGskins can be expected in the next couple of weeks. ZAGGskins will offer our unique invisibleSHIELD protection with full printed customization at a comparable pricing point to competing customizable sticker applications. We believe ZAGGskins will be widely used and quickly accepted as people look to customize and protect their consumer electronics. The expected success of ZAGGskins will propel high margin website sales. In addition, starting in Q4 2009, ZAGG expects raw material costs to materially decrease, thus further increasing gross margins.
“ZAGG's growth is consistent and reliable, this is our fifth consecutive record revenue producing quarter and we believe we will continue to grow for the foreseeable future,” said Robert G. Pedersen II, President and CEO of ZAGG. “We look forward to discussing our future initiatives with our investors, including ZAGGskins, ZAGGsparq and ZAGGbox, and expanding opportunities with national retail, international, and wireless partners.”
The Company will host an investor conference call Friday, November 13, 2009 at 11:00 AM EST to answer questions regarding the results from their Form 10-Q for the three and nine months ended September 30, 2009. To participate in the call please dial (877) 407-0782. Interested parties may also listen via the Internet at the event website and on the Company website at: www.ZAGG.com. The call will be available for replay for 30 days by dialing (877) 660-6853 and entering account number 286 and call ID number 337196.
Financial Results
Net sales for the quarter ended September 30, 2009 were $9,728,528, an increase of 42% compared to net sales of $6,854,916 for the quarter ended September 30, 2008. Net sales for the nine months ended September 30, 2009 were $26,964,159, an increase of 116% compared to net sales of $12,460,812 for the nine months ended September 30, 2008.
Gross profit for the quarter ended September 30, 2009 was $5,206,973, or 54% of sales, compared to $4,437,928, or 65% of sales, in the quarter ended September 30, 2008. Gross profit for the nine months ended September 30, 2009 was $15,908,256, or 59% of sales, compared to $8,540,809, or 69% of sales for the nine months ended September 30, 2008. We reported net income of $908,081 or $0.04 per fully diluted share for the quarter ended September 30, 2009, compared to net income of $889,743 or $0.05 per fully diluted share for the quarter ended September 30, 2008. We reported net income of $3,130,585 or $0.14 per fully diluted share for the nine months ended September 30, 2009, compared to net income of $950,278 or $0.05 per fully diluted share for the nine months ended September 30, 2008.
For more information about ZAGG, please visit the investor relations page on www.ZAGG.com. This calendar of events may be subject to change without notice.
About ZAGG Inc.:
ZAGG is dedicated to protecting and enhancing the mobile experience. ZAGG designs, manufactures, and distributes protective clear coverings and accessories for consumer electronic and hand-held devices, worldwide under the brand names invisibleSHIELD(TM) and ZAGGaudio(TM). ZAGG has also introduced beta testing of AppSpace.com, an online destination for the fast-growing mobile app market, combined with the networking power of social media. The invisibleSHIELD is a protective, high-tech patented film covering, designed for iPods, laptops, cell phones, digital cameras, PDAs, watch faces, GPS systems, gaming devices, and other items. The patent-pending invisibleSHIELD application of clear protective film covering a device is the first scratch protection solution of its kind on the market, and has sold millions of units. Currently, ZAGG offers over 4,000 precision pre-cut designs with a lifetime replacement warranty through ZAGG.com, major retailers like Best Buy, Radio Shack, and Cricket, resellers, college bookstores, Mac stores, mall kiosks, and other online retailers. The company continues to increase its product lines to offer additional electronic accessories and services to its tech-savvy customer base, including upcoming technologies like ZAGGbox, to be introduced at CES 2010, and HzO, a breakthrough gadget waterproofing technology. For more product or investor information, please visit the company's web site at www.ZAGG.com.
Safe Harbor Statement:
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in filings made by the company with the Securities and Exchange Commission.
| ZAGG INCORPORATED AND SUBSIDIARY | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (Unaudited) | |||||||||||
| September 30, | December 31, | ||||||||||
| 2009 | 2008 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash | $ | 2,102,779 | $ | 1,065,652 | |||||||
| Accounts receivable, net | 5,878,412 | 3,593,887 | |||||||||
| Inventories | 3,488,350 | 1,913,297 | |||||||||
| Prepaid expenses and other current assets | 2,854,625 | 676,077 | |||||||||
| Notes receivable | 513,000 | 513,000 | |||||||||
| Convertible bridge loan | 1,151,000 | - | |||||||||
| Deferred income tax assets | - | 81,663 | |||||||||
| Total current assets | 15,988,166 | 7,843,576 | |||||||||
| Property and equipment, net | 808,459 | 549,370 | |||||||||
| Deferred income tax assets | - | 4,937 | |||||||||
| Deposits and other assets | 9,688 | 9,688 | |||||||||
| Intangible assets, net | 97,773 | 47,344 | |||||||||
| Total assets | $ | 16,904,086 | $ | 8,454,915 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Notes payable | $ | - | $ | 20,223 | |||||||
| Accounts payable | 2,473,835 | 1,626,390 | |||||||||
| Accrued liabilities | 136,645 | 212,754 | |||||||||
| Accrued wages and wage related expenses | 151,086 | 121,112 | |||||||||
| Deferred revenue | 269,737 | 366,590 | |||||||||
| Deferred income tax liability | 1,235,948 | - | |||||||||
| Sales returns liability | 335,574 | 291,119 | |||||||||
| Total current liabilities | 4,602,825 | 2,638,188 | |||||||||
| Total liabilities | 4,602,825 | 2,638,188 | |||||||||
| Stockholders' equity | |||||||||||
|
Common stock, $0.001 par value; 50,000,000 shares authorized; 21,690,195 and 19,163,995 shares issued and outstanding, respectively |
|||||||||||
| 21,691 | 19,165 | ||||||||||
| Warrants to purchase common stock | 456,579 | 739,338 | |||||||||
| Additional paid-in capital | 7,470,076 | 3,808,280 | |||||||||
| Cumulative translation adjustment | (133,894 | ) | (106,630 | ) | |||||||
| Retained earnings | 4,486,809 | 1,356,574 | |||||||||
| Total stockholders' equity | 12,301,261 | 5,816,727 | |||||||||
| Total liabilities and stockholders' equity | $ | 16,904,086 | $ | 8,454,915 | |||||||
| ZAGG INCORPORATED AND SUBSIDIARY | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
| September 30, 2009 | September 30, 2008 | September 30, 2009 | September 30, 2008 | |||||||||||||
| Net sales | $ | 9,728,528 | $ | 6,854,916 | $ | 26,964,159 | $ | 12,460,812 | ||||||||
| Cost of sales | 4,521,555 | 2,416,988 | 11,055,903 | 3,920,003 | ||||||||||||
| Gross profit | 5,206,973 | 4,437,928 | 15,908,256 | 8,540,809 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Advertising and marketing | 1,327,126 | 1,169,073 | 4,168,854 | 2,483,356 | ||||||||||||
| Selling, general and administrative | 2,408,559 | 1,898,149 | 6,801,112 | 4,715,538 | ||||||||||||
| Total operating expenses | 3,735,685 | 3,067,222 | 10,969,966 | 7,198,894 | ||||||||||||
| Income from operations | 1,471,288 | 1,370,706 | 4,938,290 | 1,341,915 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (62,034 | ) | (796 | ) | (64,654 | ) | (3,470 | ) | ||||||||
| Interest and other income | 49,107 | 49,139 | 141,381 | 178,069 | ||||||||||||
| Total other (expense) income | (12,927 | ) | 48,343 | 76,727 | 174,599 | |||||||||||
| Income before provision for income taxes | 1,458,361 | 1,419,049 | 5,015,017 | 1,516,514 | ||||||||||||
| Income tax provision | (550,280 | ) | (529,306 | ) | (1,884,432 | ) | (566,236 | ) | ||||||||
| Net income | $ | 908,081 | $ | 889,743 | $ | 3,130,585 | $ | 950,278 | ||||||||
| Basic net income per common share | $ | 0.04 | $ | 0.05 | $ | 0.15 | $ | 0.05 | ||||||||
| Diluted net income per common share | $ | 0.04 | $ | 0.05 | $ | 0.14 | $ | 0.05 | ||||||||
| Weighted average number of shares outstanding - basic | 21,540,033 | 18,981,386 | 20,630,819 | 18,956,290 | ||||||||||||
| Weighted average number of shares outstanding - diluted | 24,252,718 | 19,436,146 | 22,902,264 | 19,290,502 | ||||||||||||
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