InfoSonics Reports Fourth Quarter 2013 Results

SAN DIEGO, March 6, 2014 /PRNewswire/ -- InfoSonics Corporation (NASDAQ: IFON), the provider of verykool® wireless handset solutions and tablets, today announced results for its fourth quarter ended December 31, 2013.

"We are pleased to report a second consecutive quarter of profitability," said Joseph Ram, president and CEO of InfoSonics.  "Sales in the fourth quarter grew 40% over the same quarter last year, gross profit grew 48% and operating expenses declined by 26%.  It was a record quarter for verykool® products in terms of both sales dollars and units shipped.  Unit shipments during the quarter rose 96% compared to the prior year and resulted in another record year with over 1.9 million units shipped during 2013.  We are beginning to see a higher overall demand for smartphones, and are adjusting our portfolio of products accordingly.  In 2014, we also plan to increase our sales efforts in the United States."

InfoSonics reported net sales for the 2013 fourth quarter of $11.9 million, which represented a $3.4 million, or 40%, increase from $8.5 million for the fourth quarter of 2012.  The Company reported growth in a number of geographical areas including Mexico, Puerto Rico and Peru, as well as increased sales to private label customers in EMEA and APAC.  Unit shipments during the quarter nearly doubled compared to the prior year, and the average selling price declined by 28% as carrier customers in Latin America purchased more low-end feature phones.  Net sales for the year ended December 31, 2013 amounted to $37.9 million, which represented a $3.6 million, or 11%, increase from $34.3 million for the 2012 year.  Excluding the $2.7 million of distribution sales in the first quarter of 2012, the quarter in which the Company ceased its third-party distribution business, sales of verykool® products during 2013 grew by $6.3 million, or 20%, compared to 2012.

Gross profit in the fourth quarter of 2013 was $2.0 million, a 48% increase over $1.4 million in the 2012 fourth quarter.  The gross profit margin as a percent of sales in the fourth quarter of 2013 rose to 16.9% compared to 16.0% in the 2012 fourth quarter.  Gross profit for the year ended December 31, 2013 amounted to $6.9 million, a $136,000, or 2%, increase from $6.8 million for the 2012 year.  The gross profit margin as a percent of sales for 2013 declined to 18.3% from 19.9% in the prior year, reflecting an increase in the sale of low-end feature phones at lower margins during the year.

Operating expenses in the fourth quarter of 2013 were $1.9 million, a decrease of $654,000, or 26%, compared to $2.5 million in the 2012 fourth quarter.  This reflects a $176,000, or 10%, decrease in SG&A expenses and a $478,000, or 69%, decrease in R&D expenses.  Operating expenses for the year ended December 31, 2013 amounted to $8.1 million, a $1.2 million, or 13%, decrease from $9.3 million for the 2012 year, reflecting decreased bad debt and other expenses, partially offset by increased legal fees, and substantially reduced R&D expenses incident to the Company's restructurings during 2013 of its China-based development team.

Net income for the fourth quarter of 2013 was $125,000, or $0.01 per share, compared to a net loss of $1.2 million, or $0.08 per share, in the fourth quarter of 2012.  The net loss for the year ended December 31, 2013 was $597,000, or $0.04 per share, compared to a loss for the year ended December 31, 2012 of $2.5 million, or $0.18 per share.

At December 31, 2013, the Company had $2.4 million in cash, $15.9 million of net working capital and no outstanding indebtedness.  Cash and restricted cash balances declined by $3.9 million compared to the December 31, 2012 balances primarily as a result of the growth in receivables and prepaid inventories.

About InfoSonics Corporation
InfoSonics is a San Diego-based designer, manufacturer and provider of wireless handsets and related products to OEMs, carriers, distributors and consumers in the United States, Latin America, Europe, Africa and Asia Pacific.  The company is committed to delivering quality products with innovative industrial designs that appeal to consumers and offer exceptional value.  InfoSonics sells and supports its own line of products under the verykool® and other private label brands.  Additional information can be found on our corporate website at www.infosonics.com and www.verykool.net.

Except for the factual statements made herein, the information contained in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that are difficult to predict.  Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as "believes," "hopes," "intends," "estimates," "expects," "projects," "plans," "anticipates" and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Such forward-looking statements are not guarantees of performance and our actual results could differ materially from those contained in such statements. Factors that could cause or contribute to such differences include, without limitation: (1) intense competition internationally, including competition from alternative business models, such as manufacturer-to-carrier sales, which may lead to reduced prices, lower sales, lower gross margins, extended payment terms with customers, increased capital investment and interest costs, bad debt risks and product supply shortages; (2) our ability to develop new verykool® handsets and successfully introduce them into new emerging markets; (3) extended general economic downturn in world markets; (4) inability to secure adequate supply of competitive products on a timely basis and on commercially reasonable terms; (5) the ability of the Company to maintain and improve its gross margins despite intense competition; (6) foreign exchange rate fluctuations, devaluation of a foreign currency, adverse governmental controls or actions, political or economic instability, or disruption of a foreign market, including, without limitation, the imposition, creation, increase or modification of tariffs, taxes, duties, levies and other charges and other related risks of our international operations which could significantly increase selling prices of our products to our customers and end-users; (7) the ability to attract new sources of profitable business from expansion of products or services or risks associated with entry into new markets, including geographies, products and services; (8) an interruption or failure of our information systems or subversion of access or other system controls may result in a significant loss of business, assets, or competitive information; (9) significant changes in supplier terms and relationships, disruptions in production at contract manufacturers or shortages in product supply; (10) loss of business from one or more significant customers; (11) customer and geographical accounts receivable concentration risk and other related risks; (12) rapid product improvement and technological change resulting in inventory obsolescence; (13) uncertain political and economic conditions internationally, including terrorist or military actions; (14) the loss of a key executive officer or other key employees and the integration of new employees; (15) changes in consumer demand for multimedia wireless handset products and features; (16) our failure to adequately adapt to industry changes and to manage potential growth and/or contractions; (17) seasonal buying patterns; (18) the resolution of any litigation for or against the Company, including claims for infringement of intellectual property; (19) the ability of the Company to have access to adequate capital to fund its operations; and (20) the ability of the Company to generate taxable income in future periods. Reference is also made to other factors detailed from time to time in our periodic reports filed with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this release and we undertake no obligation to publicly update any forward-looking statements to reflect new information, events or circumstances after the date of this release.



 InfoSonics Corporation 

 Consolidated Statements of Operations 

 (Amounts in thousands, except per share data) 




 Three months ended 


 Year ended 



 December 31, 


 December 31, 



2013


2012


2013


2012



 (Unaudited) 


 (Audited) 

 Net sales 

$   11,865


$    8,452


$   37,895


$   34,294

 Cost of sales 

9,863


7,096


30,953


27,488

 Gross profit 

2,002


1,356


6,942


6,806










 Operating expenses: 









 Selling, general and administrative 

1,637


1,813


6,751


7,075


 Research and development 

217


695


1,336


2,218



1,854


2,508


8,087


9,293

 Operating income (loss) 

148


(1,152)


(1,145)


(2,487)










 Other income (expense): 









 Other income (expense), net 

(2)


(7)


582


(72)


 Interest 

2


8


17


61

 Income (loss) before provision for income taxes 

148


(1,151)


(546)


(2,498)

 Benefit (provision) for income taxes 

(23)


-


(51)


(2)

 Net income (loss) 

$         125


$  (1,151)


$       (597)


$   (2,500)










 Net income (loss) per share: 









 Basic 

$        0.01


$    (0.08)


$     (0.04)


$     (0.18)


 Diluted 

$        0.01


$    (0.08)


$     (0.04)


$     (0.18)










 Weighted-average number of common shares outstanding: 









 Basic 

14,184


14,184


14,184


14,184


 Diluted 

14,294


14,184


14,184


14,184

 

 InfoSonics Corporation 

 Consolidated Balance Sheets 

 (Amounts in thousands, except per share data) 














December 31,


December 31,



2013


2012

 ASSETS 




 Current assets: 





Cash and cash equivalents 

$                 2,369


$                 5,230


Restricted cash 

-


1,003


Trade accounts receivable, net of allowance for doubtful accounts of $373 and $339, respectively 

11,856


10,247


Other accounts receivable 

163


95


Inventory 

2,467


3,429


Prepaid assets 

3,435


1,521


     Total current assets 

20,290


21,525

 Property and equipment, net 

200


367

 Other assets 

179


229


     Total assets 

$               20,669


$               22,121






 LIABILITIES AND STOCKHOLDERS' EQUITY 




 Current liabilities: 





Accounts payable 

$                 1,161


$                 1,514


Accrued expenses 

3,180


3,786


     Total current liabilities 

4,341


5,300






 Stockholders' equity: 





Preferred stock, $0.001 par value, 10,000 shares authorized (no shares issued and outstanding) 

-


-


Common stock, $0.001 par value, 40,000 shares authorized, 14,184 shares issued and outstanding as of December 31, 2013 and December 31, 2012 





14


14


Additional paid-in capital 

32,391


32,282


Accumulated other comprehensive loss 

(18)


(13)


Accumulated deficit 

(16,059)


(15,462)


     Total stockholders' equity 

16,328


16,821


     Total liabilities and stockholders' equity 

$               20,669


$               22,121

 

 InfoSonics Corporation 

 Consolidated Statements of Cash Flows 

 (Amounts in thousands) 

 (Unaudited) 














 For the Year Ended 






 December 31, 






2013


2012

 Cash flows from operating activities: 





 Net loss 

$   (597)


$ (2,500)


 Adjustments to reconcile net loss to net cash used in operating activities: 






 Depreciation 

263


276



 Loss on disposal of fixed assets 

49


64



 Provision for bad debts 

34


242



 Provision for obsolete inventory 

(194)


171



 Stock-based compensation expense 

109


231



 (Increase) decrease in: 







 Trade accounts receivable 

(1,643)


(1,879)




 Other accounts receivable 

(68)


(19)




 Inventory 

1,156


(1,362)




 Prepaids 

(1,914)


964




 Other assets 

50


(160)



 Decrease in: 







 Accounts payable 

(353)


(992)




 Accrued expenses 

(606)


(933)





 Net cash used in operating activities 

(3,714)


(5,897)









 Cash flows from investing activities: 





 Purchase of property and equipment 

(145)


(396)


 (Increase) decrease in restricted cash 

1,003


(3)



 Net cash provided by (used in) investing activities 

858


(399)









 Effect of exchange rate changes on cash 

(5)


104









 Net decrease in cash and cash equivalents 

(2,861)


(6,192)


 Cash and cash equivalents, beginning of period 

5,230


11,422


 Cash and cash equivalents, end of period 

$  2,369


$   5,230










 Cash paid for interest 

$           -


$            -


 Cash paid for taxes 

-


-

 

 

SOURCE InfoSonics Corporation



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