“We are very pleased to be releasing our audited financial statements for 2010 ahead of our March 31, 2011 deadline. We have worked very hard, together with our independent auditor, in preparing this document, and are confident it puts to rest all unfounded speculation about the audit or the contents of our 10-K,” said Brandon T. O’Brien, CFO of ZAGG. “We want our shareholders to know that we are singularly focused on building our company and creating shareholder value.”
Financial Highlights of Q4 and Full Year 2010
- Record revenue for the fourth quarter of $29.3 million, an increase of 157% year over year and up 27% sequentially. Revenue for the full year was $76.1 million, a 98% increase from $38.4 million in 2009.
- Gross profit for the fourth quarter was $13.4 million, or 46% of sales, compared to $6.1 million, or 54% of sales in the fourth quarter of 2009. Gross profit for the full year was $37.4 million, or 49% of sales, compared to $22.1 million, or 58% of sales in 2009. Gross profit for the fourth quarter, net of a charge related to slow-moving inventory of $1.1 million, was 49%.
- Adjusted EBITDA for the fourth quarter was $6.6 million or $0.27 per share versus $1.7 million or $0.07 per share for Q4 2009, an increase of 281%.
- Net income attributable to stockholders for the quarter was $3.4 million or $0.13 per diluted share for the fourth quarter 2010 versus $0.3 million or $0.01 for the fourth quarter 2009, an increase of $0.12 per share year-over-year. Net income attributable to stockholders for the quarter net of a charge related to slow-moving inventory of $1.1 million and a one-time tax return to provision entry of $0.4 million was $4.9 million or $0.20 per share.
- Net income attributable to stockholders for the full year was $10.0 million or $0.41 per diluted share as compared to net income attributable to stockholders of $3.4 million or $0.15 per diluted share in the prior year.
Financial Guidance
On the fourth quarter 2010 conference call hosted by the company on March 14, 2011, ZAGG gave financial guidance for 2011 revenues of $95 – $100 million, and operating margins of in the range of 19 – 22%. For margins in 2011, we are currently guiding for Gross Margins in the mid 40’s, and for Operating Margins of 19 – 22%. The guidance provided is based on the company’s outlook for demand for our products, primarily the invisibleSHIELD and the ZAGGmate, announced distribution agreements, increased contribution from Europe as a function of the new European distribution facility and the ongoing growth of mobile devices sales. The introduction of new ZAGG products, the announcement of new retail channel partners, as well as any contribution from HzO or ZAGGbox are not included in this outlook.
Non-GAAP Financial Disclosure
Investors are cautioned that the Adjusted EBITDA, or earnings/(loss) before other income/(expense), taxes, depreciation and amortization, impairment losses and stock-based compensation, and adjusted EBITDA per common share information contained in this press release are not financial measures under generally accepted accounting principles. In addition, they should not be construed as alternatives to any other measures of performance determined in accordance with generally accepted accounting principles, or as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address. We present this financial information because we believe that it is helpful to some investors as a measure of our performance. 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 current results with our results from other reporting periods and with the results of other companies.
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.
About ZAGG Inc.:
ZAGG® is a market leader in providing innovative consumer products like films, skins, audio and power solutions that protect, personalize, and enhance the mobile experience. ZAGG’s products are distributed worldwide with popular, award-winning brands such as the invisibleSHIELD®, ZAGGskins™, ZAGGsparq™, ZAGGbuds™, ZAGG LEATHERskins™, and ZAGGmate™. The patent-pending invisibleSHIELD, ZAGG’s flagship product, is the original thin film full-body protector, and is available in over 5,000 precision pre-cut designs with a lifetime replacement warranty. ZAGG products are available online at ZAGG.com and in most major retailers. For more product or investor information please visit the Company’s web site at www.ZAGG.com.
Media:
ZAGG Inc.
Nathan Nelson, 801-263-0699 ext. 107
or
Investor Relations:
Genesis Select Corp.
Kim Rogers-Carrete, 949-429-7408