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Zoom Telephonics Reports Positive Net Income And Higher Sales For Q2 2018

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Company to Host Conference Call on Thursday, August 2, 2018 at 4:30 p.m. ET

BOSTON, Aug. 02, 2018 (GLOBE NEWSWIRE) -- Zoom Telephonics, Inc. ("Zoom") (OTCQB:ZMTP) (the "Company"), a leading producer of cable modems and other communication products, today reported financial results for its 2018 second quarter ended June 30, 2018.

2018 Second Quarter Financial Highlights (comparisons to prior year's period)

  • Net sales increased 10.2% to $7.5 million due to the strength of Zoom's Motorola brand products;
  • Gross margin improved to 36.3% from 32.1%; and
  • Net income was approximately $47 thousand or $0.00 per share, compared to a net loss of $269 thousand or $0.02 per share

Management Commentary
Frank Manning, Zoom's President and CEO, commented on the quarter.  "During the quarter we made significant progress and reported an increase in net income over the prior year.  Our sales continued to show year-over-year growth, even with some short-term e-tailing issues that significantly lowered our sales. We are encouraged by the sales momentum from recent Motorola product introductions including our 24x8 cable modem, 24x8 AC1900 cable gateway, AC1700 and AC2600 routers, VDSL/ADSL AC1600 gateway, and MoCA Adapter.  We recently announced our first Verizon Wireless certification, which we achieved for our ZoomCell LTE CAT1 USB Modem; and we are already seeing some good sales leads from Verizon.  We are making good progress toward important new product introductions including our Motorola 24x8 AC1900 cable gateway with two telephone ports and our Motorola Cellular MultiSensor.  We are still generating the vast majority of our revenues in the USA, but we are making progress to increase sales outside the USA.  Our balance sheet is strong, and we are excited about our prospects in the coming quarters."

2018 Second Quarter Financial Review
The Company reported an increase in net sales of 10.2% to $7.5 million for the second quarter ended June 30, 2018, up from $6.8 million for the second quarter ended June 30, 2017.  Sales of cable modems and gateways increased; but most of the sales increase was due to higher sales of routers, MoCA Adapters, and DSL products.

Gross profit was $2.7 million, or 36.3% of net sales, in the second quarter of 2018, as compared to $2.2 million, or 32.1% of net sales, for the second quarter of 2017.  The increase in gross profit and gross margin was primarily due to higher sales through e-tailers.

Operating expenses were $2.7 million, or 35.4% of net sales, in the second quarter of 2018, compared to $2.4 million, or 35.5% of net sales, in the same period of 2017. Selling expenses increased approximately $441 thousand to $2.1 million for the second quarter of 2018, primarily due to increases in advertising expenses and in Motorola trademark royalty costs. General and administrative expenses decreased approximately $166 thousand to $173 thousand for the second quarter of 2018, primarily due to a re-assessment of the Company's sales tax reserve.  Research and development expenses were $368 thousand for the 2018 second quarter, compared to $402 thousand in the same period of 2017, largely due to decreases in certification expenses.

Zoom reported net income of $47 thousand or $0.00 per share for the second quarter of 2018, compared to a net loss of $269 thousand or $0.02 per share in the same period of 2017.  The improvement in profitability in the second quarter of 2018 was due to an increase in sales and gross profits.

Balance Sheet Highlights
At June 30, 2018, Zoom had $118 thousand in cash, $191 thousand drawn on a $3.0 million line of credit, working capital of $3.6 million, a current ratio of 1.5, and no long-term debt.  

(in thousands except for percentages) 6/30/2018 12/31/2017 % Change  
Cash $ 118 $ 229 (48.5 %)
Total Current Assets $ 10,461 $ 8,239 27.0 %
Total Assets $ 10,893 $ 8,793 23.9 %
Total Current Liabilities $
6,907
$ 5,621 22.9 %
Working Capital $ 3,554 $ 2,618 35.7 %
Stockholders' Equity $ 3,985 $ 3,172 25.6 %
             

             

Conference Call Details          
Date/Time:   Thursday, August 2, 2018 – 4:30 p.m. ET
     
Participant Dial-In Numbers:    
(United States):   866-393-7958
(International):   706-643-5255
     
Conference ID   3565889
     

To access the call, please dial-in approximately five minutes before the start time and, when asked, provide the operator with the conference ID 3565889.  An accompanying slide presentation will be available in PDF format via the Investor Relations section of Zoom Telephonics' website at www.zoomtel.com/SQ218 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, 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.zoomtel.com/investor and www.motorolanetwork.com.

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 from China;  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:
Adam Prior, Senior Vice-President
The Equity Group Inc.
Phone: 212-836-9606
Email: aprior@equityny.com


ZOOM TELEPHONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months and Six Months Ended June 30, 2018 and 2017

(in thousands, except per share data)

    Three Months Ended Six Months Ended
    6/30/18   6/30/17   6/30/18   6/30/17  
                           
Net sales   $ 7,522   $ 6,828   $ 15,859   $ 11,974  
Cost of goods sold     4,790     4,634     9,845     8,046  
                           
Gross profit     2,732     2,194     6,014     3,928  
                           
Operating expenses:                          
Selling     2,123     1,682     4,177     3,528  
General and administrative     173     339     621     770  
Research and development     368     402     779     911  
Total operating expenses     2,664     2,423     5,577     5,209  
                           
Operating profit (loss)     68     (229 )   437     (1,281 )
                           
Other income (expense), net     (6 )   (31 )   (12 )   (67 )
                           
Income (loss) before income taxes     62     (260 )   425     (1,348 )
                           
Income tax expense (benefit)     15     9     19     9  
                           
Net income (loss)   $ 47   $ (269 ) $ 406   $ (1,357 )
                           
Earnings (loss) per share:                          
Basic Earnings (loss) per share   $ 0.00   $ (0.02 ) $ 0.03   $ (0.09 )
Diluted Earnings (loss) per share   $ 0.00   $ (0.02 ) $ 0.02   $ (0.09 )
                           
                           
Weighted average number of shares outstanding:                          
                           
Basic     15,935     14,817     15,832     14,800  
Diluted     16,751     14,817     16,647     14,800  
                           
                           

ZOOM TELEPHONICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)

  06/30/18   12/31/17  
               
ASSETS              
               
Current assets:              
               
Cash   $ 118   $ 229  
Accounts receivable, net     2,648     2,230  
Inventories, net     6,947     5,202  
Prepaid expenses and other     749     578  
               
Total current assets     10,461     8,239  
               
Property and equipment, net     157     162  
               
Other assets     274     392  
               
Total assets   $ 10,893   $ 8,793  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
               
               
Current liabilities:              
Bank debt   $ 191   $ 90  
Accounts payable     4,713     3,527  
Accrued sales tax     263     831  
Accrued other expenses     1,740     1,173  
               
Total current liabilities     6,907     5,621  
               
Total liabilities     6,907     5,621  
               
Stockholders' equity:              
               
Common stock and additional paid-in capital     40,825     40,418  
Retained earnings (accumulated deficit)     (36,840 )   (37,246 )
               
Total stockholders' equity     3,985     3,172  
               
Total liabilities and stockholders' equity   $ 10,893   $ 8,793  
               

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