Exhibit 99.1
Zoom Telephonics Reports Sales of $10.9 million for Q3
2019
Company to Host Conference Call on Tuesday, November 5, 2019 at
9:00 a.m. Eastern Time
Boston, MA, November 4, 2019 – 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 third quarter ended September 30,
2019.
2019 Third Quarter Financial Highlights (with comparisons to 2018
third quarter)
●
Net
sales increased 20.8% to $10.9 million due primarily to strong,
improved sales from both E-tail and Best Buy.
●
Gross
margin was 28.8%, down from 36.4%, as China tariffs increased COGS
by $1.03 million
●
Net
loss was approximately $200 thousand or $0.01 per diluted share,
compared to net income of $346 thousand or $0.02 per diluted
share.
Management Commentary
Frank Manning, Zoom’s CEO, commented on the quarter,
“In Q3 2019 we achieved our highest Q3 net sales since 2002.
We would have had $800 thousand in net income without the China
tariffs, and we will discuss expected improvements in our tariff
status in our conference call tomorrow. Sales through E-tail were
strong. We have dramatically increased our product placement and
shelf position at Best Buy, and Q4 2019 sales should benefit from a
recent increase in our Target shelf space.
Joe Wytanis, Zoom’s President added, “We’re
broadening our supply chain with a strong new manufacturing partner
that has been manufacturing outside of China for many years. That
partner, smaller new partners, and our current cable modem
manufacturer will help us to quickly bring new, exciting products
to market starting early next year. We are excited about the
actions we’ve taken, and continue to make, to enable our
company to achieve profitable growth in the near
term.”
2019 Third Quarter Financial Review
The Company reported an increase in net sales of 20.8% to $10.9
million for the third quarter ended September 30, 2019, up from
$9.0 million for the third quarter ended September 30, 2018. The
increase in sales was driven by increased sales through Best Buy,
Amazon, and Target.
Gross profit was $3.1 million or 28.8% of net sales in the third
quarter of 2019, as compared to $3.3 million or 36.4% of net sales
for the third quarter of 2018. The decrease in gross profit and
gross margin was primarily due to China tariffs increasing cost of
goods by $1.03 million or 9.5% of net revenues in Q3
2019.
Operating expenses were $3.4 million or 30.9% of net sales in the
third quarter of 2019, compared to $2.9 million or 32.1% of net
sales in the same period of 2018. Selling expenses increased
approximately $35 thousand for the third 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
$295 thousand to $733 thousand for the third quarter of 2019 due to
salary and fringe benefit expenses for new hires, recruiting costs,
and audit and consulting expenses. Research and development
expenses were $564 thousand for the 2019 third quarter, up from
$420 thousand in the same period of 2018, with the change largely
due to salary and related costs to support accelerated product
development.
Zoom reported a net loss of $200 thousand or $0.01 per share for
the third quarter of 2019, compared to net income of $346 thousand
or $0.02 per share in the same period of 2018. The decline in
profitability in the third quarter of 2019 was due primarily to the
impact of tariffs on Zoom’s cost of goods sold and higher
operating expenses.
Balance Sheet Highlights
At September 30, 2019 Zoom had $2.3 million in cash; $0 drawn on a
$3.0 million line of credit; no long-term debt; $7.2 million
stockholders’ equity; working capital of $6.6 million; and a
current ratio of 1.92.
Conference Call Details
Date/Time: Tuesday, November 5, 2019 – 9:00 a.m.
ET
Participant Dial-In Numbers:
(United States): 866-393-7958
(International): 706-643-5255
Conference ID: 4926578
To access the call, please dial-in approximately five minutes
before the start time and, when asked, provide the operator with
the conference ID 4926578. An accompanying slide presentation will
be available in PDF format via the Investor Relations section of
Zoom Telephonics’ website at www.zoom.net/SQ319
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
ZOOM TELEPHONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months and Nine Months Ended September 30, 2019 and
2018
(in thousands, except per share
data)
|
|
Three Months Ended
|
Nine Months Ended
|
||
|
|
9/30/19
|
9/30/18
|
9/30/19
|
9/30/18
|
|
|
|
|
|
|
|
Net sales
|
$10,874
|
$9,000
|
$27,043
|
$24,859
|
|
Cost of goods sold
|
7,747
|
5,727
|
18,729
|
15,572
|
|
|
|
|
|
|
|
Gross
profit
|
3,127
|
3,273
|
8,314
|
9,287
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Selling
|
2,068
|
2,033
|
7,069
|
6,210
|
|
General
and administrative
|
733
|
438
|
1,858
|
1,060
|
|
Research
and development
|
564
|
420
|
1,484
|
1,199
|
|
Total
operating expenses
|
3,365
|
2,891
|
10,411
|
8,469
|
|
|
|
|
|
|
|
Operating
income (loss)
|
(238)
|
382
|
(2,097)
|
818
|
|
|
|
|
|
|
|
Other income (expense), net
|
42
|
(33)
|
(5)
|
(45)
|
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
(196)
|
349
|
(2,102)
|
773
|
|
|
|
|
|
|
|
Income tax expense (benefit)
|
4
|
3
|
24
|
21
|
|
|
|
|
|
|
|
Net
income (loss)
|
$(200)
|
$346
|
$(2,126)
|
$752
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
Earnings (loss) per share
|
$(0.01)
|
$0.02
|
$(0.11)
|
$0.05
|
|
Diluted
Earnings (loss) per share
|
$(0.01)
|
$0.02
|
$(0.11)
|
$0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
20,832
|
16,051
|
18,696
|
15,905
|
|
Diluted
|
20,832
|
16,776
|
18,696
|
16,630
|
ZOOM TELEPHONICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)
|
|
09/30/19
|
12/31/18
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash
|
$2,280
|
$126
|
|
Accounts
receivable, net
|
4,747
|
2,761
|
|
Inventories,
net
|
6,342
|
7,928
|
|
Prepaid
expenses and other
|
385
|
918
|
|
|
|
|
|
Total
current assets
|
13,754
|
11,733
|
|
|
|
|
|
Property and equipment, net
|
284
|
261
|
|
Operating lease right-of-use assets
|
127
|
|
|
Other assets
|
203
|
222
|
|
|
|
|
|
Total
assets
|
$14,368
|
$12,216
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
Bank
debt
|
$––
|
$1,741
|
|
Accounts
payable
|
4,361
|
4,369
|
|
Operating
lease liabilities
|
101
|
––
|
|
Accrued
other expenses
|
2,707
|
2,011
|
|
|
|
|
|
Total
current liabilities
|
7,169
|
8,340
|
|
|
|
|
|
Long-term
operating leases
|
26
|
––
|
|
|
|
|
|
Total
liabilities
|
7,195
|
8,340
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
Common
stock and additional paid-in capital
|
46,620
|
41,197
|
|
Retained
earnings (accumulated deficit)
|
(39,447)
|
(37,321)
|
|
|
|
|
|
Total
stockholders’ equity
|
7,173
|
3,876
|
|
|
|
|
|
Total
liabilities and stockholders’ equity
|
$14,368
|
$12,216
|