ZAGG - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen and thank you for standing by. Welcome to the ZAGG Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode to prevent background noise.

We will have a question-and-answer session later and the instructions will be given at that time. [Operator instructions] As a reminder, this conference is being recorded.

to ICR. turn like Brendon call would of Frey we welcome the and to Now may you Brendon, begin.

Brendon Frey

third results. Giles. you today ZAGG for you, joining XXXX Thank Good us to afternoon, review and thank quarter financial the

Chief On the have will Holiday. and call we will call review Brad a their Chief Officer, session. and and for Executive then open President Financial we Randy ZAGG's Randy Officer Hales, today, and Brad prepared question-and-answer comments the

the press release at was Our market third after Time. closed X:XX today quarter Eastern PM earnings approximately issued

As published the a we on Relations release, X-K. follow-on also to the on and SEC the our earnings we’ve website to information supplemental financial document Form furnished this Investor

Quarterly all on Financials website You the Investor can tab. documents earning our find section Results under in our the Relations at www.zagg.com

and are webcast Investor ZAGG for webpage this We conference archived be call at one of call tab a Events the recording will year. under the Relations the

forward-looking of remarks are and outlook company. response not management date and questions. for we statements everyone in statements certain to remind begin, would make limited forward-looking may but include, contain to we the These performance estimate Before like additional statements the that statements not project your These hereof. results speak that performance as our of of or guarantee prepared the statements future future do operations to, or company the and the

non-GAAP filed XX-K addition be the discuss differ of call. in materially no of Commission. of explanation required projected and An ZAGG obligation in today's and results for Form Risk that the found again company's and measures. The to G a measure forward-looking performance the non-GAAP revise for ZAGG's not adjusted call, today, financial to and that the accordance on non-GAAP I on release Please detailed Investor derived the company, all cause turn ZAGG's use GAAP financial contained Regulation release the or measures Randy? Relations press is discussing Annual Securities the those in now, on we financial factors today's And website. results outlook more EBITDA, this XX-Q to of from and statements be has in press SEC reports company's discussion quarterly which GAAP non-GAAP Randy such to information Factors the are Hales. a Report which any call included to use is a by the substitute any Exchange made any would can we to Form with limitations, non-GAAP in on For like over forward-looking section that of can note call in measure the assumes with ZAGG's the reconciliation you release. the between measures and refer detailed may will statements, GAAP in on in actual this the

Randy Hales

you, Thank and thank for afternoon call the for you today. joining us Brenden and good

against continue executing near-term performed our while extremely to driving maximizing long-term the well shareholder quarter job to teams Our progress excellent objectives do as our commitment our business meaningful on third our initiatives including corporate an value. during

the consolidated the quarter and the mophie, driven InvisibleShield two record growth continued Third of brands strongest to million, increased a revenues by $XXX.X in of lifestyle X% wireless category.

quarter, area last growing year. U.S. XX% results been key compared a to the another of also Our posted focus, outside have which strong

mophie by new of the highlighted charge were the the that wireless introduction results quarter supports third The iPhones. pad

the numerous experiencing into success category. third overall minimal, XXXX. this to and impact up underscores reinforces the are tirelessly brand The this we quarter project its for power Our with prospects exciting quarter positively to acquire its will continued market-leading our while team recent for the fourth contribution us it growth within was and worked mophie on decision and sets growth

addition to and important sales, go-to-market our we've our structure In made headway enhancing improving driving strategies. operating also

end into the revenue by third down of increase post market mophie work the in InvisibleShield $XX.X decreased strong us million our reported X% business, be helps million proved quarter we've cell of $XX the a their also adjusted mophie share a The combined for the our share NPD from generated guidance. Group, XX% the at market screen mophie year-to-date, high increasing million market quarter dollar on with translate the of EBITDA a the the in we're front XX%. debt business one the from this and range sales expect a with $XXX to the on $XX introduction core in $XXX result critical million. perspective net performance of as to share achieving cash protection to to Our strong million million of phone be growth and and brands the respective acquisition. charging by $XX We wireless adjusted number monthly new annual remain pad, our categories of record to EBITDA now between as Based XXXX

to come. the to increased Looking we Brad. company over well-positioned our the that believe and capitalize on a deliver and confident the company brands, OEM growth many shift runway will for strong I opportunities industry-leading years is beyond the ahead value turn I given to has am lie this shareholders relationships growing year, the long towards wireless. to our that for call will now

Brad Holiday

today, the the details Thanks just like a in Since take financial on minutes of additional few add earlier to issued of to supplemental our many comments performance. quarterly financial financial performance I included our would recent some information Randy. were

due our a the of screen in as past line, increased XX% XX% well as we've phones in market strong protection the as Third to the international our quarter of screen which Meanwhile, product operational improvement business, revenue last into improved XXX an to Gross new continuing realized the result to a growth results of in in year. were strong overall improved basis cost over our with part launch points in line a and XX% year. performance. in operating protection increase synergies to dramatically increase as business our by compared our expenses margins percentage driven in sales with expectations growth

was or XX% also aided quarter the $X.XX improvements Our of price adjusted from of these that purchase the to of ago million $X.XX net the fact third million our $XX we line $X.X year from XXXX. charge and bottom or a a large $X.X the million of or net to The last loss share period recognized income third share in of sales of of in didn't mophie year XXXX in result million a per increasing diluted per improving to year-over-year the sales of related EBITDA quarter was XX% improvement recur. by or $XX

with phone During the to battery Dollar screen categories. number one XX%, in sell-through retail respective XX%, increasing to to products. quarter across and experience protection cell market all we their share up continued XX% portable to in strong core for was cases the Board power September our

to the with in strong. remained end an to receivable new compared due sheet year. $XX charge million increase balance and of the as higher our The were of compared days primarily Importantly, overall XX very the quarter. to X% X% increased the Accounts period and last to to of quality inventory last wireless retail days incremental of shift a result sales XX along app our same increased revenues Inventory good. year, after remained DSOs quarterly receivables shortly balances

last With to improved a of and of facility XX% by high the X.X to to quarter last we past GAAP, down credit incremental consolidated debt to Excluding at $XX compared the have year. times from X.X inventory the balance consolidated reduced to turns respect inventory, acquisition after end the our our over on manage this outstanding mophie $XX our times continue million year. million

We have business. our of liquidity demands sufficient the to meet

new to to million of the from million. As $XXX our sales into previous in to consideration Randy This million the incremental quarter. very increase for mentioned, late increasing estimated $XXX sales $XXX charge wireless we are introduced million third our pad takes $XXX for year our estimate

Our remaining to within is $XXX original tracking made range. of which million still previous our million the business, estimate $XXX

to to are in date the XX. new comfortable end screen overall the with the into low ship launch demand protection now the timing from for of as of our device delay of year next the original of supply phones new We projections, sales quarter increases. However, will impact more will on be we first our business similar new the demand due believe some the iPhone the but the

or increase sales, adjusted million approximately to million $XX the net in $XX results from EBITDA our our our to of of result increasing of million a range of sales. XX% estimate new to estimate are $XX As $XX previous million

for remarks. Finally, for our to be rate million to $X open XX% concludes call XXXX, year. be the to and We the our we would now like That approximately tax questions. prepared for CapEx estimate

Operator

line your question Craig-Hallum [Operator from comes is from first Mike Mike Capital. open. Malouf instructions] The

Mike Malouf

Thanks Great. questions. for taking guys my

Randy Hales

bet. You

Mike Malouf

the your $XXX So million you're the if range end is million to pads, million said I comfortable without you let's charging about Does the of here that make sense interpret $XX million that just million with of guidance lower $XXX that to talking $XX what you? you're that previous charging it with so sales new and call pad? in for so $XXX really

Brad Holiday

Mike. right that's Yes,

Mike Malouf

on fourth it's into going Great. the of a -- to Can it Okay. imagine doing that's competition thought? think us you continuing once maybe maybe and how your impact against to is to I how sense that the huge how what And give a How then a obviously relative to out? this perhaps going some you is quarter year. us stack you give gets just color product selling can Apple you commentary the and next on would relative up you to product are be

Randy Hales

Mike, Yeah things. couple a

don't competition, tell right insight us with me of pleased anticipated what selling we're let that all, really versus line as of we that. any as performance we it far First and with you into it's the have in

know pad than new be we're designs animal putting it's one. it's different to charger the on there what phone, Apple And and the the watch. hard then a new lastly appears So, where airpods charge little out that to

I targeted some of say this a very it's ecosystem. would So, app towards entire user

positioned probably probably little pads wireless a chart one that to by it's toward initially can area a get that have lifestyle. Ours family consumers up see multiple one into end area extend just they and room a where and priced is is a in price work from perspective, may a so or nightstand and on wireless bit charging

Mike Malouf

of some expectations like moving guidance from the Okay. real And the quarter InvisibleShield then your just sounds the to fourth for first your quarter. it quick you're to back

little this year So, the versus into quarter are might you seasonality thinking less move you first other periods? see that you a as bit

Randy Hales

Mike. Yeah, think fair that's I

I think bit QX. just this between and think just move out because QX of the that a shift will we'll see a delay, a I little

a flattening think little will best. I just So, the that seasonality

new overall the we're very are think going previous as demand I to launches. phones still that be for feeling the similar

new the the for just timing and to it's held phone of people think have waiting off I lot demand. that's on think come a out been I

So, and that we more the past. than would shift we've quarter expect more into the to in quarter fourth from the towards seen first

Mike Malouf

Thanks for Great. the help. Okay.

Randy Hales

Yeah you bet Mike.

Operator

the from open. comes question Dave line of next from Dave is Your line ROTH King your Capital.

Dave King

Afternoon Thanks. guys.

Randy Hales

Hey Dave.

Dave King

of the the charge on much I $XX sales of already that or through with the big it, website guess sticking a pad some to and maybe $XX you're call app locations million and million, in all re-plans first carrier and how the is looks retailers like planning box to my million to let's various have ship your bit questioning I then versus million planning consumers you own shipments through sell a initial of to through maybe to customers where of is through, those it's that $XX expect little on, $XX kind demand take customers ready? and terms in been do when already it to base along out thanks? to guess those from to expect else distributed of and the Just what lines of trying get sense that wireless the charging who there?

Randy Hales

of customers the our anticipation our be is our product? and that during the asking out a quarter. have hope to fourth questions basis, shipping a daily There start us we'll now there on access ask good will you're customers the And channels to lot and right long-standing the certainly when able rest Yeah, Dave. they on question is interest that of

Dave King

Okay.

lines as re-plan a million of lot $XX that, the embedded in along stores there the on it So, some of to Apple $XX own and website is that that those sell million, customers well? into sounds is your through or

Randy Hales

in is of with We're not want working in the make whole rest still product. hard is they from that coming lot to that sure there of Yeah the Apple to the channel. a be position

So market actually, as have XX coming the that iPhone they think and now demand there. to is sometimes we

for numbers of there's forecast those year channel. So, a in rest of not this lot

Dave King

bit they as those thinking of on -- as are on what of big for because did the lines then their seasonality XX? same a there some it gears think worrying talked of because has year switching helpful, make waiting be XX? about little of similarly, delay maybe the get then pent-up I in eight demand bet your XX in order on seems six? eight that's like somewhat, but have the -- time and Have think a XX. the they guess they did the what to the they And from along I to would next sense. screen makes I That Okay. say the bit, due the the what what date they sort for the seen in business expectations for thanks? of launch the you may as protector context terms underperformed I be you retail protector customers? the patterns shift just screen And Are color

Randy Hales

tell seen It's would similar spread three total I we've on cycles. past last this couple of in demand what has devices versus across you been two the just iPhone years Dave, to that launches. time

So, Brad in as into bit quarter shifting see early seeing mentioned, little there this a and little bit and XXXX. we're I of should think anomaly later a

Dave King

quarter. All Thanks taking Okay. nice my for right. and questions

Randy Hales

you. Thank

Operator

next of Your question your line Mike open. Mike from from Latimore Capital. comes the is line Northland

Nick Altmann

Nick guys, this our is Altmann actually for for hey Mike. Thanks questions? Yeah on taking

Randy Hales

You bet.

Nick Altmann

every you only Xs let's guess on XXX charging So, now, seeing kind for that the first wireless rate attachment of iPhone Apple one, stores are charger what right but I say the sold? pads an are guys

Randy Hales

that don't We to us. with visibility it. They share have information don't

of we probably and there. point at won't really data, channel we have read store that we this visibility a until So good have some but of time, in rest to into on the get see start don't

Nick Altmann

color not shelves going just hit a date wireless retailers earlier, of when definitive gave that, after Apple in will little you And other Store? Do charging or bit besides have the Okay. but a guys pad you yet?

Randy Hales

bit Not started shipments hope those a a have that a It's get before end date yet. and the fourth our but don't target we get that can moving definitive the quarter, of is of we yet. --

Nick Altmann

just then said there's last help this fourth fourth you can hurt this in understand quarter, guidance guys that the guys constraints you the perspective year, maybe kind versus one, seems And a like your last last? just from quarter, me year Okay. year dynamic of supply different it Apple similar your what's

Randy Hales

you a strong little it bit of into Yeah, has shift really a if that see I back will a us a years XXXX. quarter we've start even again, than to think really that but and nice there little past. for go in is coming in you can our frankly fourth with together guidance got It look and shift faster

out So, for in us balances there? all it

Nick Altmann

Okay. Thank you.

Randy Hales

you, Nick. Thank Yeah.

Operator

line the from from Hickman comes of John, is Thalmann. question next Your line Jon your Ladenburg open.

Jon Hickman

for Thanks question. my Hi. taking

you InvisibleShield going like right iPhone the are launches the like latter go? you past X Friday, have selling start to get is hits at the XX are So, the in shelves or an

Randy Hales

go. to ready we're Yes,

much inventory in like Our very we've past. been and the customers have

Jon Hickman

Okay.

then you I your talk was about I'm if than administrative. seemed there -- about another line got on so question earlier. you had marketing, -- operating It about addressed late, little but little sorry, sales, So, were a higher bit; expense I talking in remarks, you could this the a question

Brad Holiday

would John, down seen that being in way if half. at the bit to first the second throughout operating half, overall you I first look down at the think look half at half, it second to a the year. go expense compared we We've the little look our

second the it few in is be first less to in going than it's half half. the million So,

down to And we we're and you first some going operating second be to have really pad, So, charge -- expenses have did that the if out jumped line the infrastructure expense from additional did project slightly in during you but down for should if be half this should half. put support we look have overall quarter to will. wireless nothing just at

Jon Hickman

again sorry, but previously, are Okay. talked Asian progress question you the And you region? one in about this making if last I'm geographic then any internationally

Randy Hales

in were point and very people make ground generated Nothing we to the the like starting of the a time the right starting to part got quarter. slow big. the for build, on the there. bit to it now, revenue that's was this break company's out history, would at nice right John, some connections in but but time, traction a that from get We little world this first feel we see we certainly Yeah it finally of

Jon Hickman

Okay. Thank you Appreciate very it. much.

Randy Hales

Thank bet. You you.

Operator

Van comes line Jeff from of your last is Riley line Jeff, question open. Our FBR. Sinderen B from the

Jeff Van Sinderen

my taking questions. Thanks for

Just in is management that the is pad segment, correct? power to clarify wireless charging your

Randy Hales

is. it Yes,

Jeff Van Sinderen

Okay. in give margins any that we terms of you? about And us should sense then you think for how can product margin, from

Randy Hales

of with of year get talked it the XX% the them range earlier in what and mophie in we've high goal in to XXs low our XXXX. both Think the then into maybe about year teens the this up in was

we would So typically similar structure gross the product as see for line. margin mophie

Jeff Van Sinderen

And Got new rate, to growth growth just then sense since as on the for it. your in trying organic a Okay. your factored what's in I organic guidance, as was guidance? you did get far change

Brad Holiday

seeing for full the pads, call $XXX screen XX. orders of reason some really into probably with strong still. core quarter early the really iPhone that, seeing delay the million of ex the guidance original wireless guidance be our first of of It's As million would the timing shifted protection at what guess. that very the We're been only range business for the business the is really be new the we part was mentioned, we're year, $XXX to charge lower going base and I we're and to the the

the to of guidance is the $XXX had the this in certainly still that business still given within lower at range, million that we million but core end the but So, $XXX year. earlier you will if original

Jeff Van Sinderen

And know of visibility or Okay. far you the from you’re thinking as about have life may early the the am for with if Got how lot should rate broader perspective, I across we all it's new into wireless really data product it. think attach rate? attach I then just you guess but a I rate historical I change pad a attach as the for from that your iPhones? you're wondering rate, don't and guess platforms all attach charging the

Randy Hales

here obviously I the I visibility than that to attach we've be of our Jeff, best now. we'll in protection similar historically mid rates think going what think and see is screen around rate to high experienced teens kind

of the the of over the a glass a One things Actually, iPhone about interesting how out they new were and we'll released time. XX, this back. iPhones that see front fall, three this glass all have plays

So think protecting opportunity full a probably is lift It are the could that devices some there interest. body the do we to that expensive maybe some interest there bit larger increased those little an of consumer, or the minds devices more protection. and in and have a in

but five climb four over watch attach a a years. point the closely, last seen we've steady year rates two we'll of or So, pretty

Jeff Van Sinderen

Great. Thanks, Okay. and rest we'll take the offline.

Randy Hales

Great. Thanks Jeff.

Brad Holiday

Jeff. Thanks

Randy Hales

other Hey, if are there no questions…

Operator

I would Randy to call over back to the turn now like Hales.

Randy Hales

the to Okay. And for results us joining thank the fourth discussing Thank quarter next you look you you. call. we call with on Well our forward today. on

Operator

This today's call. conference concludes

You disconnect. may now

ZAGG (ZAGG) 1 Nov 172017 Q3 Earnings call transcript