ZMTP: Hitting 52-week highs with record sales and departure of the CEO....
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.” ? Charles Dickens, A Tale of Two ZMTP Press Releases
Zoom Telephonics Reports Record Sales of $12 Million for Q1 2020; Up 49.3% From Prior Year Quarter
•May 11, 2020
Boston, MA, May 11, 2020 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- Zoom Telephonics, Inc. (“Zoom”) (ZMTP), a leading creator of cable modems and other Internet access products, reported financial results for its 2020 first quarter ended March 31, 2020.
First Quarter 2020 Financial Highlights
Net sales were $12 million, up 49% year over year
Gross profit was $3.1 million, up 28% year over year
Gross profit margin was 25.9%, down from 30.2% in prior year first quarter
GAAP net loss was $0.8 million, a 33% improvement year over year
Non-GAAP net income was $0.7 million after adjusting for tariff expenses of $1.5 million
First Quarter 2020 Business Overview
Overall, the company produced record sales of $12 million during the quarter, despite the significant economic disruptions resulting from the Covid-19 pandemic. This level of sales has not been seen in over a decade. Consumer demand for networking products was strong throughout the quarter, supported by substantial online shipping activity. Zoom was able to ensure continuity of supply through Covid-19 disruptions experienced in Asia as early as January 2020, and supply chain conditions can be characterized as “returning to normal” at present.
The company expects to have completed the shifting of its manufacturing operations to other locations by the end of the second quarter, with the tariff expense declining to near zero by early in the third quarter. After the quarter end, Zoom announced the extension and expansion of its Motorola license. In addition to the inclusion of new product families, the license agreement now runs through 2025.
Zoom’s 2020 plan centers on an aggressive new product rollout schedule that remains very much on track. The proliferation of video-based communication services, due in part to so many people working from home, is driving an increased emphasis on optimizing home networks. The company is experiencing strong demand for its already popular gateway products, which are available through online shopping and brick and mortar platforms such as Amazon and BestBuy.
As previously reported, the company has convened a search committee to identify a CEO following the resignation of Joe Wytanis.
First Quarter 2020 Financial Review
Zoom reported an increase in net sales of 49.3% to $12.0 million for the first quarter ended March 31, 2020 up from $8.0 million for the first quarter ended March 31, 2019. The increase in sales resulted from robust demand in its ecommerce and retail channels.
Gross profit was $3.1 million or 25.9% of net sales in the first quarter of 2020, compared to $2.4 million or 30.2% of net sales for the first quarter of 2019. Tariff expenses increased cost of goods by $1.5 million in the first quarter of 2020, compared to $445 thousand in the first quarter of 2019. Excluding tariff expense, gross profit margin in the first quarter of 2020 would have been 38.4%. The company also experienced one-time increased supply-chain fulfillment costs brought on by Covid-19 disruptions in order to assure the ability to satisfy customer demand.
Operating expenses were $3.8 million, compared to $3.5 million in the year-ago quarter. The increase versus the prior year was primarily due to increased General and Administrative expenses incurred in support of Zoom’s product rollout and growth strategy.
The company ended the quarter with $5.0 million of working capital and a current ratio of 1.83x. Zoom had drawn $387 thousand on a $3.0 million line of credit; with no long-term debt; and $5.7 million of stockholders’ equity.
Conference Call Details
The conference call for this quarter, which was previously scheduled for Tuesday, May 12, 2020 – 10:00 a.m. ET, has been cancelled. The company intends to issue its first quarter 2020 earnings in its Form 10-Q quarterly report, as planned on May 15, 2020.
Zoom Telephonics Announces CEO Transition
•May 11, 2020
Boston, MA, May 11, 2020 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- Zoom Telephonics, Inc. (“Zoom”) (ZMTP), a leading creator of cable modems and other Internet access products, today announced that Joe Wytanis has stepped down from the position of CEO. To ensure a smooth transition, Wytanis will act as an advisor to the board. Zoom’s Board of Directors has formed a CEO search committee, led by Zoom Chairman Jeremy Hitchcock.
“I am extremely proud of the team’s accomplishments throughout my tenure,” said Wytanis. “As the demand for reliable home connectivity has never been higher, Zoom is on an exciting trajectory. We’ve seen outstanding growth in e-commerce and storefront retail, inspiring Zoom to focus its product development and marketing initiatives. Accordingly, we have decided Zoom needed leadership more specialized in those areas as I pursue career opportunities closer to my home location and in the cable MSO space. I look forward to my continued involvement.”
Joe Wytanis joined Zoom in 2018 as a veteran of the Cable Multi-Network Operator (MSO) industry, serving in executive roles at High Tech Associates, Flextronics, SMC Networks, and Cisco Systems.
“On behalf of the Board, I would like to thank Joe for his exceptional leadership,” said Hitchcock. “He has expertly leveraged the company’s strengths in manufacturing, supply chain management, and talent to unlock new growth opportunities, even in the face of Covid-19 challenges. We appreciate his participation in finding his successor and wish him much success in his future endeavors.”
This management announcement follows Zoom’s recent CFO appointment last quarter. In the past year, Zoom has bolstered the executive team for a new phase of expansion. Key hires include:
• Jacquelyn Barry Hamilton, now Zoom CFO, formerly served as CFO at Modo Labs, Netcracker Technology, Intronis, and the Global Technology Division at Monster Worldwide.
• Phil Stanhope, now Zoom CTO, formerly served as VP Technology Strategy, Dyn/Oracle and VP Engineering at Yottaa, Wimba, Aspen Technology, and Adesso Systems.
• John Lauten, now Zoom SVP Operations, formerly served in operational leadership roles at SKULLY Technologies, TechCXO, FOX Factory, and Cisco.
Later today, Zoom Telephonics will be releasing Q1 2020 financial results. The earnings call previously scheduled for May 12, 2020 will be cancelled. For more information, visit http://www.zoomtel.com