Fourth Quarter and Full Year 2013 Financial Summary
Q4 2013 revenues of $14.7 million, an increase of 98% when compared to $7.4 million for the prior year's fourth quarter;
Excluding revenues from Hego, with whom the Company merged in May 2013, Q4 revenues increased 23%;
Net loss of $3.8 million for the fourth quarter, as compared to a net loss of $20.0 million for the prior year's fourth quarter;
Excluding fourth quarter 2013 severance expense and a charge for the change in fair value of the Hego transaction contingent earn-out liability, net income of $0.6 million for the fourth quarter of 2013. This compares to a fourth quarter 2012 net loss of $0.5 million, excluding the $19.5 million valuation allowance for deferred tax assets;
Full year 2013 revenues of $47.4 million, an increase of 57% when compared to $30.2 million in 2012;
Excluding revenues from Hego, full year 2013 revenues increased 14%;
Net loss of $7.8 million for 2013, as compared to a net loss of $22.3 million in 2012;
Excluding 2013 severance expense, a charge for the change in fair value of the Hego transaction contingent earn-out liability, transaction costs and other one-time charges, full year net income of $1.7 million. This compares to a 2012 net loss of $2.8 million, excluding the $19.5 million valuation allowance for deferred tax assets.
"We are very happy with the results of the fourth quarter and the full year 2013 as the traditional Chyron business grew the top-line by 23% for the second quarter in a row and the Hego business grew by 27% for full year 2013," said ChyronHego CEO, Johan Apel.
Mr. Apel added, "We have successfully concluded the merger and our product lines are now fully integrated. At the same time, we have achieved the main targets of the merger to create a company with a more robust business model. We are also very excited about our recent gains in live sports production where our TRACAB Player Tracking System and Paint Sports Telestrator were used during Super Bowl XLVIII and our Lyric PRO graphics platform helped deliver high-quality graphics during the 2014 Olympic Games. Our focus will remain on putting cost-efficient, cutting-edge products on the market to sustain our growth."
Fourth Quarter 2013 Financial Results
Revenues for the fourth quarter of 2013 increased 98% to $14.7 million as compared to $7.4 million in the fourth quarter of 2012. Of this $7.3 million increase, $1.7 million was from sales of Chyron products and services, a 23% increase over last year's fourth quarter, and $5.6 million was from sales of Hego products and services.
Gross profit margin for the fourth quarter of 2013 was 63%, down from 69% for last year's fourth quarter. A higher percentage of services, which generally carry a lower gross profit margin than products, as a percentage of total revenues, resulted in the lower overall gross profit margin.
Operating expenses for the fourth quarter of 2013 were $13.2 million compared to $5.7 million in the fourth quarter of 2012. Research & development (R&D) expenses were $2.6 million, up 50% from $1.8 million in the fourth quarter 2012, primarily due to the inclusion of $1.2 million of Hego R&D expenses in the fourth quarter of 2013. Sales and marketing (S&M) expenses were $3.6 million, up 24% from $2.9 million in the fourth quarter 2012, primarily due to inclusion of $0.5 million of Hego S&M expenses and $0.6 million in expense from amortization of intangibles from the Hego merger, offset by a $0.4 million decrease in Chyron S&M expenses. General and administrative (G&A) expenses were $3.2 million, an increase of $2.1 million from $1.1 million in the fourth quarter of 2012. The increase was primarily due to inclusion of $1.0 million in Hego G&A expenses, severance expense of $0.5 million and a $0.6 million increase in Chyron G&A expenses. Also included in operating expenses for the fourth quarter of 2013, was a $3.8 million charge for the change in fair value of the Hego transaction contingent earn-out liability.
Net loss for the fourth quarter of 2013 was $3.8 million, or $(0.12) per basic and diluted share, as compared to net loss of $20.0 million, or $(1.17) per basic and diluted share, in the fourth quarter of 2012. Excluding fourth quarter 2013 severance expense of $0.5 million and mark-to-market expense of $3.8 million from revaluation of the contingent earn-out shares related to the Hego merger, the Company would have reported net income of $0.6 million for the fourth quarter of 2013. Excluding the $19.5 million charge for the increase in the valuation allowance for deferred tax assets, the Company would have reported a net loss of $0.5 million for the fourth quarter of 2012.
Full Year 2013 Results
The financial results for the year 2013 include the results of operations for Hego and its subsidiaries from May 22, 2013, the closing date of the merger with Hego, through December 31, 2013.
Revenues for 2013 increased 57% to $47.4 million as compared to $30.2 million for 2012. Of this $17.2 million increase, $4.2 million was from sales of Chyron products and services, a 14% increase over last year, and $13.0 million was from sales of Hego products and services for the period from the merger closing date of May 22, 2013.
Gross profit margin for 2013 was 66%, down from 69% for last year, due to a higher percentage of services in 2013 revenues than the prior year.
Operating expenses for 2013 were $38.8 million compared to $24.7 million in 2012. The increase of $14.1 million resulted from inclusion of $7.0 million in Hego operating expenses, $2.3 million in Hego-merger related expenses, $1.0 million of restructuring expenses, $1.5 million in severance costs and a $4.8 million charge from revaluation of the Hego transaction contingent earn-out liability in 2013, offset by a $2.5 million net decline in other Chyron operating expenses. R&D expenses were $9.2 million, a $1.8 million, or 23%, increase from $7.4 million in 2012, due to inclusion of $2.6 million of Hego R&D expenses offset by a $0.8 million decrease in Chyron R&D expenses. S&M expenses were $13.3 million, a 2% increase from $13.0 million in 2012, due to inclusion of $1.2 million of Hego S&M expenses and $1.4 million in expense from amortization of intangibles from the Hego merger, offset by a $2.3 million net decline in Chyron S&M expenses. G&A expenses were $11.6 million, a $7.4 million increase from $4.2 million in 2012. Included in $11.6 million of G&A expenses for this year were $1.7 million of Hego G&A expenses, $2.3 million of Hego merger-related expenses, $1.5 million of severance expense, and $0.8 million in incentive compensation arrangements. Included in 2013 operating expenses were restructuring expenses of $1.0 million, which was spread among R&D, S&M and G&A operating expenses. Also included in operating expenses for 2013 was a $4.8 million charge for the change in fair value of the Hego transaction contingent earn-out liability.
Net loss in 2013 was $7.8 million, or $(0.31) per basic and diluted share, as compared to net loss of $22.3 million, or $(1.31) per basic and diluted share in 2012. Excluding restructuring charges of $1.0 million, Hego merger-related expenses of $2.3 million, severance expense of $1.5 million and a charge for the change in fair value of the Hego transaction contingent earn-out liability of $4.8 million, the Company would have reported net income of $1.7 million for 2013. Excluding the charge for the increase in the valuation allowance for deferred tax assets of $19.5 million, the Company would have reported a net loss of $2.8 million for 2012.
Net income (loss) amounts shown herein that are exclusive of restructuring charges, Hego merger-related expenses, severance costs, the charge for the change in fair value of the Hego transaction contingent earn-out liability and the increase in the valuation allowance, are not US generally accepted accounting principles basis net income (loss), and are reported herein solely to disclose the net income (loss) amounts that might have been reported had these costs and expenses not been incurred, as a basis for comparison between periods. Management believes that disclosing net income (loss) exclusive of such costs and expenses for the fourth quarters and full years 2013 and 2012 provides an alternative basis on which to compare results between the periods and an understanding of earnings that would have resulted in the 2013 and 2012 periods had these costs and expenses not been incurred.
