SOURCE: SPY Inc.

SPY Inc.

March 05, 2015 16:05 ET

SPY Inc. Reports Financial Results for the Fourth Quarter 2014

Fourth Quarter Year Over Year Growth of 13.2%; SPY Inc. Total Company Year Ended December 31, 2014 Net Sales of $38.1 Million

CARLSBAD, CA--(Marketwired - March 05, 2015) - SPY Inc. (OTCBB: XSPY) today announced financial results for the year ended December 31, 2014.

Fourth quarter sales were $9.8 million in 2014, an increase of 13.2% or $1.2 million more than in the fourth quarter of 2013. The increase in our net sales was primarily driven by strong goggle sales and continued growth in our prescription frames. Gross profit as a percentage of net sales was 46.8% for the quarter ended December 31, 2014, compared to 47.0% for the same period in 2013. 

Annual sales were $38.1 million in 2014, an increase of 0.9% or $0.3 million more than in the year ended December 31, 2013. Sales included lower closeout sales of $2.0 million in 2014, compared to $2.8 million in 2013. The overall increase in net sales during the 2014 period was principally attributable to higher sales of our prescription frames and goggle lines. Gross profit as a percentage of net sales was 50.6% for the year ended December 31, 2014, compared to 49.9% for the year ended December 31, 2013.

"In the fourth quarter, we were once again happy with our continued positive sales trend and with such significant growth in our top three major categories: prescription frames, snow goggles and sunglasses," said Michael Marckx, president and CEO. "We achieved a solid operating profit margin driven by the success of our snow goggle line, which for the first time included our proprietary Happy Lens™. We are also excited by the increases achieved in our sun and prescription frame categories and believe these trends will continue as we move through the first quarter of this year."

Mr. Marckx continued, "In 2015, we are focused on building our business in the prescription frame channel, as well as the sporting and outdoor channels. As a portion of our goal to grow our snow goggle business and the outdoor channel we have positioned ourselves to achieve continued growth from the investments that we made in the sponsorships with Powdr Resorts and those that we are making in 2015 with Boyne Resorts. In addition, we are very committed to driving growth in SPY's e-commerce business with our online partners. This growth, along with a further expansion of our Happy Lens™ offering, improving our product margins and controlling our expenses will carry SPY to a successful and happy 2015."

Income from operations increased by $0.5 million to $0.1 million for the fourth quarter of 2014, compared to a loss from operations of approximately $0.4 million in the fourth quarter of 2013. The $0.5 million increase was primarily due to the increase in sales and partially offset by a 20 basis point decrease in gross profit as a percent of sales. Additionally, total operating expenses in the fourth quarter of 2014 were higher by $0.3 million, compared to the fourth quarter of 2013.

Income from operations increased by $0.5 million to $0.9 million for the year ended December 31, 2014, compared to $0.4 million for the year ended December 31, 2013. The $0.5 million increase was primarily due to the increase in sales and a 70 basis point improvement in gross profit as a percent of sales. Additionally, total operating expenses for the year ended December 31, 2014 were lower by $0.1 million, compared to the same period in 2013.

The Company incurred a net loss of $0.4 million and $1.3 million during the fourth quarter of 2014 and 2013, respectively.

The Company incurred a net loss of $1.9 million and $2.9 million during the years ended December 31, 2014 and 2013, respectively.

The results of our operations for the years ended December 31, 2014 and 2013 are more fully discussed in our Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on March 5, 2015.

SPY Inc.:
We have a happy disrespect for the usual way of looking (at life) and the need to SEE HAPPY. It is this mindset that drives us to design, market, and distribute premium products for people who "live" to be outdoors, pushing the boundaries in action sports, motorsports, snow sports, cycling and multi-sports. We actively support the lifestyle subcultures that surround these pursuits, and as a result our products serve the broader fashion, music and entertainment markets of the youth culture. Our reason for being is to create the unusual and this is what helps us deliver distinctive products to people who are active, fun and a bit irreverent, like us. Our principal products -- sunglasses, goggles and prescription frames -- are marketed with fun and creativity under the SPY® brand. More information about SPY may be obtained from: www.spyoptic.com, www.facebook.com/spyoptic, Twitter @spyoptic and Instagram @spyoptic.

Safe Harbor Statement:
This press release contains forward-looking statements. These statements relate to future events or future financial performance and are subject to risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "feel," "estimate," "predict," "hope," the negative of such terms, expressions of optimism or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Factors that could cause actual results to differ from those contained in our forward-looking statements include, but are not limited to lack of continuity and effectiveness of our management team, our ability to generate sufficient incremental sales of our core SPY® brand and new products to recoup our significant investments in sales and marketing, our ability to lower our expenses or otherwise reduce our breakeven point on an operating basis, our ability to maintain or increase the availability of our existing credit facilities and otherwise finance our strategic objectives, and the other risks identified from time to time in our filings made with the U.S. Securities and Exchange Commission. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results. Moreover, except as required by law, we assume no responsibility for the accuracy or completeness of such forward-looking statements and undertake no obligation to update any of these forward-looking statements.

 
SPY INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(Thousands, except number of shares and per share amounts)
     
   December 31,    December 31,  
   2014    2013  
Assets              
Current assets              
 Cash  $ 351    $ 686  
 Accounts receivable, net    7,171      6,543  
 Inventories, net    7,697      5,872  
 Prepaid expenses and other current assets    796      680  
 Income taxes receivable    -      3  
               
  Total current assets    16,015      13,784  
Property and equipment, net    509      438  
Intangible assets, net of accumulated amortization of $818 and $782 at December 31, 2014 and December 31, 2013, respectively    37      72  
Other long-term assets    44      63  
               
  Total assets  $ 16,605    $ 14,357  
               
Liabilities and Stockholders' Deficit              
Current liabilities              
 Lines of credit  $ 6,775    $ 4,024  
 Current portion of capital leases    73      77  
 Current portion of notes payable    16      16  
 Accounts payable    1,216      1,302  
 Accrued expenses and other liabilities    3,910      3,069  
               
  Total current liabilities    11,990      8,488  
Capital leases, less current portion    22      92  
Notes payable, less current portion    -      16  
Notes payable to stockholders    21,568      21,452  
               
  Total liabilities    33,580      30,048  
Stockholders' deficit              
 Preferred stock: par value $0.0001; 5,000,000 authorized; none issued    -      -  
 Common stock: par value $0.0001; 100,000,000 shares authorized; 13,392,293 and 13,184,876 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively    1      1  
 Additional paid-in capital    46,043      45,331  
 Accumulated other comprehensive income    450      520  
 Accumulated deficit    (63,469 )    (61,543 )
               
  Total stockholders' deficit    (16,975 )    (15,691 )
               
  Total liabilities and stockholders' deficit  $ 16,605    $ 14,357  
          
 
SPY INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Thousands, except per share amounts)
    
   Three Months Ended 
December 31,
   Year Ended 
December 31,
   2014    2013    2014    2013
   (Unaudited)     
Net sales  $ 9,768    $ 8,627    $ 38,120    $ 37,782
Cost of sales    5,199      4,571      18,831      18,921
                           
 Gross profit    4,569      4,056      19,289      18,861
Operating expenses:                          
 Sales and marketing    2,790      2,547      11,506      11,314
 General and administrative    1,405      1,607      5,692      6,112
 Shipping and warehousing    122      155      540      534
 Research and development    140      158      661      502
                           
  Total operating expenses    4,457      4,144      18,399      18,462
                           
 Income (loss) from operations    112      (577 )    890      399
Other expense:                          
 Interest expense    497      737      2,500      2,966
 Foreign currency transaction loss    32      116      138      290
 Other expense    6      2      175      5
                           
  Total other expense    (535 )    (855 )    (2,813)      (3,261)
                           
 Loss before provision for income taxes    (423 )    (1,265 )    (1,923)      (2,862)
Income tax provision    -      -      3      -
                           
Net loss  $ (423 )  $ (1,265 )  $ (1,926)    $ (2,862)
                           
Net loss per share of Common Stock                          
  Basic and diluted  $ (0.03)    $ (0.10)    $ (0.14)    $ (0.22)
                           
Shares used in computing net loss per share of Common Stock                          
  Basic and diluted    13,388      13,185      13,331      13,155
                           
Other comprehensive income (loss):                          
 Foreign currency translation adjustment  $ 941    $ (107 )  $ 703    $ (239)
 Unrealized gain (loss) on foreign currency exposure of net investment in foreign operations    (963 )    118      (773 )    265
                           
  Total other comprehensive income (loss)    (22 )    11      (70 )    26
                           
Comprehensive loss  $ (445 )  $ (1,254 )  $ (1,996 )  $ (2,836)
                           

Contact Information

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