ChyronHego Reports Financial Results for the Second Quarter Ended June 30, 2013

ChyronHego Reports Financial Results for the Second Quarter Ended June 30, 2013 
MELVILLE, NY -- (Marketwired) -- 08/08/13 --  ChyronHego Corporation
(NASDAQ: CHYR), a global leader in broadcast graphics creation,
playout, and real-time data visualization with a wide variety of
products and services for live television, news, and sports
production, today announced its financial results for the second
quarter ended June 30, 2013. 
Second Quarter 2013 Financial Summary 


 
--  Total revenues of $10.7 million for the second quarter, an increase of
    39% when compared to $7.7 million for the prior year's second quarter;
--  Operating loss of $1.9 million for the second quarter, as compared to
    an operating loss of $1.1 million for the prior year's second quarter;
--  Excluding Hego AB (Hego) merger-related expenses and restructuring
    costs of $2.8 million in second quarter results, operating profit of
    $0.9 million for the second quarter as compared to an operating loss
    of $1.1 million for the prior year's second quarter;
--  Net loss of $2.1 million for the second quarter of 2013, as compared
    to net loss of $0.6 million for the prior year's second quarter; and
--  Excluding Hego merger-related expenses, restructuring costs and a
    valuation adjustment for contingent consideration related to the Hego
    merger in second quarter results, net income of $0.8 million, as
    compared to net loss of $0.6 million for the prior year's second
    quarter.

  
Michael Wellesley-Wesley, ChyronHego CEO, said, "The second quarter was
a pivotal quarter in the formation of ChyronHego. Having effected an
extensive rebranding, we presented the combined company to our
customers at the NAB tradeshow in April and received a very
encouraging response. In early May, 2013, we eliminated a number of
Chyron positions primarily in the United States, thus completing a
restructuring initiative that began in 2012, and on May 22, 2013, we
formally completed our merger with Hego AB to form ChyronHego. We've
now been conducting business as a brand new company for just over two
months. We have won significant new business in terms of product
sales with BT Sport and ITV Regional News in the UK and major US and
LatAm networks, as well as with US TV Station Groups. In the area of
multi-year sports production services contracts, Hego announced its
largest ever contract with the German Soccer League, during the
quarter. I am optimistic regarding our business prospects for the
second half of 2013." 
Mr. Wellesley-Wesley concluded, "The strategic thinking underpinning
the creation of ChyronHego is to create a market leading company in
the fields of TV Graphics, Data Visualization and Production Services
for 'Live' TV and Online News and Sports production. This merger
creates a strong, global graphics company that is committed to
innovation and to evolving existing products and services to support
our customers in the future. Our second quarter financial results
were inevitably impacted by one-time cash and non-cash expenses
associated with the transaction. We anticipate that the compelling
financial logic for the transaction will become clearer as we
progress through the second half of 2013 and into 2014." 
Second Quarter 2013 Financial Results 
The financial results for the second quarter of 2013 include the
results of operations for Hego and its subsidiaries from May 22,
2013, the closing date of the transaction, through June 30, 2013. 
Revenues for the second quarter of 2013 increased 39% to $10.7
million as compared to $7.7 million in the second quarter of 2012. Of
this $3.0 million increase, $0.7 million was from sales of Chyron
products and services, a 9% increase over last year's second quarter,
and $2.3 million was from sales of Hego products and services for the
period from the merger closing date of May 22, 2013 through June 30,
2013. 
Gross profit margin for the second quarter of 2013 was 68.4%, down
slightly from 69.2% for last year's second quarter. 
Operating expenses for the second quarter of 2013 were $9.2 million
compared to $6.4 million in the second quarter of 2012. Research &
development (R&D) expenses were $2.3 million, up 21% from $1.9
million in second quarter 2012, primarily due to the inclusion of
$0.4 million of Hego R&D expenses in the second quarter of 2013.
Sales and marketing (S&M) expenses were $3.3 million, down 6% from
$3.5 million in the second quarter 2012, primarily due to inclusion
of $0.2 million of Hego S&M expenses and $0.2 million in expense from
amortization of intangibles from the Hego merger, offset by a $0.6
million decrease in Chyron S&M expenses. General and administrative
(G&A) expenses were $3.6 million, an increase of $2.6 million from
$1.0 million in the second quarter of 2012. The additional $2.6
million was due to inclusion of $0.3 million in Hego G&A expenses and
a $2.3 million increase in Chyron G&A expenses, primarily due to Hego
merger-related expenses of $1.6 million. Included in second quarter
of 2013 operating expenses in connection with the May restructuring
were severance expenses of $0.6 million and equity-based compensation
expense of $0.4 million, which restructuring expenses were spread
among R&D, S&M and G&A operating expenses. 
Operating loss for the second quarter of 2013 was $1.9 million as
compared to an operating loss of $1.1 million in the second quarter
of 2012. Excluding Hego merger-related expenses and restructuring
costs of $2.8 million, the Company would have reported an operating
profit of $0.9 million for the second quarter of 2013. 
Net loss for the second quarter of 2013 was $2.1 million, or $(0.09)
per basic and diluted share, as compared to net loss of $0.6 million,
or $(0.04) per basic and diluted share, in the second quarter of
2012. Excluding $1.8 million of Hego merger-related expenses, a $0.1
million valuation adjustment for the Hego merger contingent
consideration and restructuring costs of $1.0 million, $0.8 million
of net income would have been reported for the second quarter of
2013. 
Six Month Results 
The financial results for the first half of 2013 include the results
of operations for Hego and its subsidiaries from May 22, 2013, the
closing date of the transaction with Hego, through June 30, 2013. 
Revenues for the first half of 2013 increased 20% to $18.7 million as
compared to $15.6 million in the first half of 2012. Of this $3.1
million increase, $0.8 million was from sales of Chyron products and
services, a 5% increase over last year's first half, and $2.3 million
was from sales of Hego products and services for the period from the
merger closing date of May 22, 2013 through June 30, 2013. 
Gross profit margin for the first half of 2013 was 69.7%, which was
comparable to 69.8% for last year's first half. 
Operating expenses for the first half of 2013 were $15.7 million
compared to $13.0 million in the first half of 2012. The increase of
$2.7 million resulted from inclusion of $1.0 million in Hego
operating expenses, $2.5 million in Hego-merger related expenses and
$1.0 million of restructuring expenses in the first half of 2013,
offset by a $1.8 million net decline in other Chyron operating
expenses. R&D expenses were $4.1 million, a $0.2 million, or 5%,
increase from $3.9 million in the first half 2012, due to inclusion
of $0.4 million of Hego R&D expenses offset by a $0.2 million
decrease in Chyron R&D expenses. S&M expenses were $6.2 million, an
11% decrease from $7.0 million in the first half 2012, due to
inclusion of $0.2 million of Hego S&M expenses and $0.2 million in
expense from amortization of intangibles from the Hego merger, offset
by a $1.2 million net decline in Chyron S&M expenses. G&A expenses
were $5.4 million, a $3.2 million increase from $2.2 million in the
first half 2012. Included in the $5.4 million of G&A expenses for the
first half of this year were $2.3 million of Hego merger-related
expenses incurred. Included in first half of 2013 operating expenses
were restructuring expenses of $1.0 million, which were spread among
R&D, S&M and G&A operating expenses. 
Operating loss for the first half of 2013 was $2.7 million as
compared to an operating loss of $2.2 million in the first half of
2012. Excluding Hego merger-related expenses and restructuring costs
of $3.5 million, the Company would have reported an operating profit
of $0.8 million for the first half of 2013. 
Net loss for the first half of 2013 was $3.0 million, or $(0.15) per
basic and diluted share, as compared to net loss of $1.6 million, or
$(0.09) per basic and diluted share, in the first half of 2012.
Excluding $2.5 million of Hego merger related expenses, $1.0 million
of restructuring costs and a $0.1 million valuation adjustment for
the Hego-merger contingent consideration, the Company would have
reported net income of $0.6 million for the first half of 2013. 
Operating income and net income amounts shown herein that are
exclusive of Hego merger-related expenses, restructuring costs and
the contingent consideration valuation adjustment are not US
generally accepted accounting principles basis operating income or
net income, and are reported herein solely to disclose the operating
income and net income amounts that might have been reported had these
costs and expenses not been recorded, as a basis for comparison to
prior periods. 
Conference Call and Webcast: Second Quarter Financial Results 
ChyronHego management will host a conference call on Thursday, August
8, 2013, at 10:00 a.m. Eastern Time to review the second quarter
ended June 30, 2013 results. Participants using the telephone should
dial 877-303-9145 (U.S. and Canada) or 760-536-5203 (International)
and refer to conference code 23162311. Web participants are
encouraged to go to http://investor.chyron.com or www.earnings.com. A
replay will be available shortly after the call on
http://investor.chyron.com, click on Events & Presentations. 
About ChyronHego  
ChyronHego (NASDAQ: CHYR) is a global leader in broadcast graphics
creation, playout and real-time data visualization with a
comprehensive range of products and services for live television,
news and sports production. ChyronHego's end-to-end graphics
offerings include hosted services for graphics creation and order
management, on-air graphics systems, clip servers, social media and
second screen applications, channel branding, graphics asset
management, virtual and touch graphics, telestration, and 3D player
tracking. Headquartered in Melville, N.Y., the company also has
offices in the Czech Republic, Denmark, Finland, Mexico, Norway,
Singapore, Slovak Republic, Sweden and the United Kingdom. More
information about ChyronHego products and services is available at
www.chyronhego.com. The Company's investor relations information is
at www.chyron.com, click on Investors. 
Special Note Regarding Forward-looking Statements 
This press release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements relating to (i) our optimism regarding improved
business prospects for the second half of this year, and (ii) our
belief that the financial logic for the merger of Chyron and Hego
will become clearer during the second half of 2013 and into 2014.
These forward-looking statements are based on management's current
expectations and are subject to certain risks and uncertainties that
could cause actual results to differ materially from those set forth
in or implied by such forward-looking statements. These risks and
uncertainties include, but are not limited to: current and future
economic conditions that may adversely affect our business and
customers; potential fluctuation of our revenues and profitability
from period to period which could result in our failure to meet
expectations; our ability to integrate the operations of Chyron and
Hego successfully and in a timely manner; our ability to maintain
adequate levels of working capital; our ability to successfully
maintain the level of operating costs; our ability to obtain
financing for our future needs should there be a need; our ability to
incentivize and retain our current senior management team and
continue to attract and retain qualified scientific, technical and
business personnel; our ability to expand our Axis online graphics
creation solution or to develop other new products and services; our
ability to generate sales and profits from our Axis online graphics
services, workflow and asset management solutions; rapid
technological changes and new technologies that could render certain
of our products and services to be obsolete; competitors with
significantly greater financial resources; introduction of new
products and services by competitors; challenges associated with
expansion into new markets; failure to stay in compliance with all
applicable NASDAQ requirements that could result in NASDAQ delisting
our common stock; and, other factors discussed under the heading
"Risk Factors" contained in Item 1A in our Annual Report on Form 10-K
for the year ended December 31, 2012 and Part II, Item 1A of our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2013,
which have been filed with the Securities and Exchange Commission, as
well as any updates to those risk factors filed from time to time.
All information in this press release is as of the date of the
release and we undertake no duty to update this information unless
required by law.  


 
                                                                            
                           CHYRONHEGO CORPORATION                           
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)        
                   (In thousands, except per share amounts)                 
                                                                            
                                  Three Months Ended     Six Months Ended   
                                       June 30,              June 30,       
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
                                                                            
Product revenues                 $   6,744  $   5,771  $  12,718  $  11,573 
Service revenues                     3,972      1,913      6,015      3,988 
                                 ---------  ---------  ---------  --------- 
Total revenues                      10,716      7,684     18,733     15,561 
Gross profit                         7,331      5,319     13,053     10,861 
Operating expenses:                                                         
  Selling, general and                                                      
   administrative                    6,836      4,479     11,587      9,164 
  Research and development           2,345      1,929      4,125      3,860 
                                 ---------  ---------  ---------  --------- 
Total operating expenses             9,181      6,408     15,712     13,024 
                                 ---------  ---------  ---------  --------- 
Operating loss                      (1,850)    (1,089)    (2,659)    (2,163)
Interest and other income                                                   
 (expense), net                       (134)       (17)      (231)       (15)
                                 ---------  ---------  ---------  --------- 
Loss before taxes                   (1,984)    (1,106)    (2,890)    (2,178)
Income tax (expense) benefit,                                               
 net                                   (93)       476       (104)       597 
                                 ---------  ---------  ---------  --------- 
Less net income attributable to                                             
 non-controlling interests               8          -          8          - 
                                 ---------  ---------  ---------  --------- 
Net loss attributable to                                                    
 ChyronHego shareholders         $  (2,085) $    (630) $  (3,002) $  (1,581)
                                 =========  =========  =========  ========= 
Net loss per common share                                                   
 attributable to ChyronHego                                                 
 shareholders -                                                             
  Basic                          $   (0.09) $   (0.04) $   (0.15) $   (0.09)
  Diluted                        $   (0.09) $   (0.04) $   (0.15) $   (0.09)
Weighted average number of                                                  
 common and                                                                 
common equivalent shares                                                    
 outstanding:                                                               
  Basic                             22,989     16,898     20,191     16,852 
  Diluted                           22,989     16,898     20,191     16,852 
                                                                            
                                                                            
                                                                            
              CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)             
                               (in thousands)                               
                                                                            
                                                    June 30,    December 31,
                                                      2013          2012    
                                                 ------------- -------------
Assets:                                                                     
Cash and cash equivalents                        $       2,189 $       2,483
Accounts receivable, net                                 9,958         5,630
Inventories, net                                         2,686         2,285
Other current assets                                     1,987           626
                                                 ------------- -------------
  Total current assets                                  16,820        11,024
Goodwill and intangible assets, net                     26,859         2,625
Other non-current assets                                 3,808         1,466
                                                 ------------- -------------
  Total assets                                   $      47,487 $      15,115
                                                 ============= =============
Liabilities and shareholders' equity:                                       
Current liabilities                              $      15,755 $       7,315
Non-current liabilities                                 13,842         5,819
                                                 ------------- -------------
  Total liabilities                                     29,597        13,134
                                                 ------------- -------------
Shareholders' equity                                    17,890         1,981
                                                 ------------- -------------
Total liabilities and shareholders' equity       $      47,487 $      15,115
                                                 ============= =============

 
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Copyright 2013 ChyronHego Corporation 
Contact:
ChyronHego Investor Relations
Tel: (631) 845-2000, press 7
Email: IRelations@chyron.com