SOURCE: ChyronHego

ChyronHego

November 10, 2014 07:30 ET

ChyronHego Reports Financial Results for the Third Quarter 2014

MELVILLE, NY--(Marketwired - Nov 10, 2014) - ChyronHego Corporation (NASDAQ: CHYR), a global leader in broadcast graphics creation, playout, and real-time data visualization with a wide variety of products and services for live television, news and sports production, today announced its financial results for the third quarter ended September 30, 2014.

Third Quarter Financial Highlights:

  • Net loss of $2.6 million in Q3 2014 compared to a net loss of $1.1 million in Q3 2013;
  • Excluding mark to market adjustments and Q3 2013 severance described below, net income of $1.2 million in Q3 2014 compared to $0.8 million in Q3 2013;
  • Q3 2014 revenues increased 15% to $16.0 million compared to $14.0 million in Q3 2013;
  • Operating loss in Q3 2014 of $2.4 million compared to operating loss in Q3 2013 of $1.0 million; and
  • Excluding mark to market adjustments and Q3 2013 severance, operating income of $1.4 million in Q3 2014 compared to $0.9 million in Q3 2013.

President and CEO Johan Apel commented, "We are pleased with our strong third quarter performance. This is the first quarter where we can make year-over-year comparisons on the quarterly results since the Chyron and Hego merger, and we are encouraged by growth in revenues of 15%. We would have achieved a 19% growth in revenues without the impact of the strengthening US dollar as compared to various European currencies. Our operating results are improving with a large part of the revenue growth falling to the bottom line. With continued improvement, we expect operating results to increase in the coming quarters."

Mr. Apel added, "Our strategy of helping our customers to create or enhance live content through use of graphics and sports data has proven successful, and we have a positive outlook for 2015. The sports industry is growing, which presents tremendous opportunity for ChyronHego."

Third Quarter 2014 Financial Results

Revenues for the third quarter of 2014 increased 15% to $16.0 million as compared to $14.0 million in the third quarter of 2013. This $2.0 million increase was primarily driven by the revenues associated with our tracking and sports solutions. Revenues would have increased approximately $2.6 million, or 19%, in Q3 2014 compared to Q3 2013 if foreign exchange rates had remained the same in both periods. 

Gross profit margins for each of the third quarters in 2014 and 2013 were 63%.

Operating expenses for the third quarter of 2014 were $8.7 million, excluding the mark to market adjustment of $3.8 million, compared to $8.9 million in the third quarter of 2013, excluding the mark to market adjustment of $0.9 million. Research & development (R&D) expenses were $2.2 million in Q3 2014 which is fairly consistent with $2.4 million in the third quarter of 2013. Sales and marketing (S&M) expenses were $4.7 million, up 32% from $3.5 million in Q3 2013 due to increased presence at trade shows and other marketing costs and additional sales and support personnel in Europe. General and administrative (G&A) expenses were $1.8 million, a decrease of $1.2 million from $3.0 million in the third quarter of 2013. The decrease was primarily due to inclusion in Q3 2013 of $1.0 million in severance costs.

Operating loss for the third quarter of 2014 was $2.4 million and included a charge of $3.8 million for the change in the fair value of our contingent consideration. This compares to a $1.0 million operating loss in Q3 2013 which also includes a similar charge of $0.9 million and $1.0 million in severance costs. Absent the effect of these charges, operating income in Q3 2014 was $1.4 million as compared to Q3 2013 of $0.9 million.

Net loss for the third quarter of 2014 was $2.6 million, or $(0.07) per basic and diluted share, as compared to a net loss of $1.1 million, or $(0.04) per basic and diluted share, in the third quarter of 2013. Excluding the mark to market charges of $3.8 million and $0.9 million, respectively, from revaluation of the contingent consideration and the Q3 2013 severance costs, the Company would have reported net income of $1.2 million for the third quarter of 2014 and $0.8 million in Q3 2013.

Nine Month Results

The financial results for the first nine months of 2013 include the results of operations for Hego and its subsidiaries from May 22, 2013, the closing date of the transaction, through September 30, 2013.

Revenues for the first nine months of 2014 were $43.3 million, up $10.6 million or 33% over the comparable prior year period. The increase is substantially due to the contribution of services from the 2013 merger with Hego and higher revenues associated with our tracking and sports solutions.

Gross profit margin declined to 62% in the first nine months of 2014 as compared to 67% in the first nine months of 2013 due to the change in product mix resulting from the large increase in service revenues from the merger with Hego. Operating loss in the first nine months of 2014 was $2.5 million compared to $3.7 million in the first nine months of 2013. The first nine months of 2014 includes a charge of $4.2 million resulting from the change in fair value of the contingent consideration. First nine months of 2013 includes charges of $ 0.9 million resulting from the change in fair value of the contingent consideration and $4.3 million in merger related expenses and restructuring costs. Excluding these items, the Company would have reported operating income of $1.7 million and $1.5 million for the nine months ended September 30, 2014 and 2013, respectively.

The net loss for the first nine months of 2014 was $2.9 million including the $4.2 million charge for the change in fair value of the contingent consideration. This compares to a net loss of $4.1 million, which includes a charge for the change in the fair value of the contingent consideration of $0.9 million and $4.3 million in merger related expenses and restructuring costs. Excluding these items, the Company would have reported net income of $1.3 million and $1.1 million for the nine months ended September 30, 2014 and 2013, respectively.

Operating income (loss) and net income (loss) amounts shown herein, that are exclusive of certain mark to market changes in the fair value of contingent consideration and merger-related expenses, severance and restructuring costs, are not U.S. generally accepted accounting principles basis operating income (loss) and net income (loss), and are reported herein solely to disclose the operating income (loss) and net income (loss) amounts that might have been reported had these items not been recognized, as a basis for comparison between periods. Management believes that disclosing operating income (loss) and net income (loss) exclusive of these amounts for the third quarter and nine months of 2014 and 2013 provides an alternative basis on which to compare results between the periods and an understanding of earnings that would have resulted in the 2014 and 2013 periods had these amounts not been recognized.

Conference Call and Webcast: Third Quarter Financial Results

ChyronHego management will host a conference call on Monday, November 10, 2014 at 10:00 a.m. Eastern Time to review the third quarter 2014 results. Participants using the telephone should dial 877-303-9145 (U.S. and Canada) or 760-536-5203 (International) and refer to conference code 18502854. Web participants are encouraged to go to http://investor.chyronhego.com (click on Events & Presentations). A replay will be available shortly after the call on http://investor.chyronhego.com.

About ChyronHego
ChyronHego (NASDAQ: CHYR) is a global leader in broadcast graphics creation, playout and real-time data visualization with a wide range of products and services for live television, news and sports production. Joining forces in 2013, with over 80 years of combined industry expertise, Chyron and Hego Group offer award-winning solutions -- such as the TRACAB™ player tracking system and end-to-end BlueNet™ graphics workflow -- under the collective ChyronHego brand. Headquartered in Melville, N.Y., the Company also has offices in the Czech Republic, Denmark, Finland, Germany, Mexico, Norway, Singapore, Slovak Republic, Sweden, and the United Kingdom. For more information on ChyronHego, visit www.chyronhego.com.

Special Note Regarding Forward-looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to (i) our belief that our business is more balanced and predictable in terms of geographies and products and services; (ii) our belief that as a result of the merger we have an exceptionally strong product offering backed up by extensive product development and engineering resources and strong global service and support capability; and, (iii) our belief that we are assuming a normalized level of operating expenses and anticipate that our future results should show growth in revenues. These forward-looking statements are based on management's current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: current and future economic conditions that may adversely affect our business and customers; potential fluctuation of our revenues and profitability from period to period which could result in our failure to meet expectations; our ability to maintain adequate levels of working capital; our ability to successfully maintain the level of operating costs; our ability to obtain financing for our future needs should there be a need; our ability to incentivize and retain our current senior management team and continue to attract and retain qualified scientific, technical and business personnel; our ability to develop, introduce and sell other new products and services; rapid technological changes and new technologies that could render certain of our products and services to be obsolete; competitors with significantly greater financial resources; introduction of new products and services by competitors; challenges associated with expansion into new markets; failure to stay in compliance with all applicable NASDAQ requirements that could result in NASDAQ delisting our common stock; and, other factors discussed under the heading "Risk Factors" contained in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2013 which has been filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time. All information in this press release is as of the date of the release and we undertake no duty to update this information unless required by law.

- Financial Tables on Following Pages - 

 
 
CHYRONHEGO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2014     2013     2014     2013  
                                 
Product revenues   $ 7,105     $ 7,697     $ 20,540     $ 20,415  
Service revenues     8,906       6,262       22,796       12,277  
Total revenues     16,011       13,959       43,336       32,692  
Gross profit     10,099       8,749       26,911       21,802  
Operating expenses:                                
  Selling, general and administrative     6,441       6,487       18,691       18,074  
  Research and development     2,247       2,399       6,553       6,524  
  Change in fair value of contingent consideration     3,776       878       4,176       933  
Total operating expenses     12,464       9,764       29,420       25,531  
Operating loss     (2,365 )     (1,015 )     (2,509 )     (3,729 )
Interest and other income (expense), net     (53 )     (64 )     (298 )     (240 )
Loss before taxes     (2,418 )     (1,079 )     (2,807 )     (3,969 )
Income tax (expense) benefit, net     (137 )     32       (12 )     (72 )
Net loss     (2,555 )     (1,047 )     (2,819 )     (4,041 )
Less: Net income attributable to non-controlling interests     5       30       36       38  
Net loss attributable to ChyronHego shareholders   $ (2,560 )   $ (1,077 )   $ (2,855 )   $ (4,079 )
Net loss per common share attributable to ChyronHego shareholders -                                
  Basic   $ (0.07 )   $ (0.04 )   $ (0.08 )   $ (0.17 )
  Diluted   $ (0.07 )   $ (0.04 )   $ (0.08 )   $ (0.17 )
Weighted average number of common and                                
common equivalent shares outstanding:                                
  Basic     36,754       30,236       34,341       23,576  
  Diluted     36,754       30,236       34,341       23,576  
                                 
 
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
 
    September 30,   December 31,
    2014   2013
Assets:            
Cash and cash equivalents   $ 5,874   $ 5,266
Accounts receivable, net     12,227     7,781
Inventories, net     2,216     2,816
Other current assets     2,683     2,525
  Total current assets     23,000     18,388
Goodwill and intangible assets, net     35,189     27,916
Other non-current assets     4,080     4,348
  Total assets   $ 62,269   $ 50,652
Liabilities and shareholders' equity:            
Current liabilities   $ 15,954   $ 17,152
Non-current liabilities     17,792     18,033
  Total liabilities     33,746     35,185
Shareholders' equity     28,523     15,467
Total liabilities and shareholders' equity   $ 62,269   $ 50,652
             
             

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