ChyronHego Reports Financial Results for the Third Quarter Ended September 30, 2013

ChyronHego Reports Financial Results for the Third Quarter Ended September 30, 
2013 
MELVILLE, NY -- (Marketwired) -- 11/08/13 --  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 third
quarter ended September 30, 2013. 
Third Quarter 2013 Financial Summary 


 
--  Total revenues of $14.0 million for the third quarter, an increase of
    94% when compared to $7.2 million for the prior year's third quarter;
--  Excluding revenues from Hego, with whom the Company merged in May
    2013, revenues increased 23%;
--  Operating loss of $1.0 million for the third quarter, as compared to
    an operating loss of $1.0 million for the prior year's third quarter;
--  Excluding third quarter 2013 severance expense and a charge for the
    change in fair value of the Hego transaction contingent earn-out
    liability, operating profit of $0.9 million for the third quarter as
    compared to an operating loss of $0.9 million for the prior year's
    third quarter if $0.1 million of severance expense were to be
    excluded;
--  Net loss of $1.0 million for the third quarter of 2013, as compared to
    net loss of $0.7 million for the prior year's third quarter; and
--  Excluding third quarter 2013 severance expense and a charge for the
    change in fair value of the Hego transaction contingent earn-out
    liability, net income of $0.8 million, as compared to net loss of $0.6
    million for the prior year's third quarter if $0.1 million of
    severance expense were to be excluded.

  
Michael Wellesley-Wesley, ChyronHego CEO, said, "Third quarter revenues
for ChyronHego were ahead of plan. North America revenues accounted
for 48% of our total revenues and Rest of World revenues accounted
for 52%. This compares with 71% and 29%, respectively, in the prior
year third quarter. The percentage revenue split between products and
services was 55%/45% in the third quarter and this compares with
67%/33% in the prior year third quarter. Two key objectives of the
Hego transaction were to increase our international revenues as a
proportion of total revenues and to increase our recurring services
revenues. We achieved both of these objectives in the third quarter
and as a result, we believe our business is more balanced and
predictable in terms of geographies and products and services. In the
third quarter we experienced strong revenue growth and now our focus
is to aggressively grow our top line in 2014 and beyond. As a result
of the merger we have an exceptionally strong product offering backed
up by extensive product development and engineering resources and
strong global service and support capability." 
Mr. Wellesley-Wesley concluded, "Excluding third quarter 2013
severance expense and a charge for the change in fair value of the
Hego transaction contingent earn-out liability, we are generating
positive cash and assuming a normalized level of operating expenses,
we anticipate that our future results will show growth in operating
profitability based on our current gross profit margin levels. I am
optimistic for the future and believe shareholder patience will be
rewarded." 
Third Quarter 2013 Financial Results 
Revenues for the third quarter of 2013 increased 94% to $14.0 million
as compared to $7.2 million in the third quarter of 2012. Of this
$6.8 million increase, $1.7 million was from sales of Chyron products
and services, a 23% increase over last year's third quarter, and $5.1
million was from sales of Hego products and services. 
Gross profit margin for the third quarter of 2013 was 62.7%, down
from 67.9% for last year's third 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 third quarter of 2013 were $9.8 million
compared to $5.9 million in the third quarter of 2012. Research &
development (R&D) expenses were $2.4 million, up 33% from $1.8
million in the third quarter 2012, due to the inclusion of $1.0
million of Hego R&D expenses in the third quarter of 2013. Sales and
marketing (S&M) expenses were $3.5 million, up 13% from $3.1 million
in the third quarter 2012, primarily due to inclusion of $0.6 million
of Hego S&M expenses and $0.6 million in expense from amortization of
intangibles from the Hego merger, offset by a $0.8 million decrease
in Chyron S&M expenses. General and administrative (G&A) expenses
were $3.0 million, an increase of $2.0 million from $1.0 million in
the third quarter of 2012. The additional $2.0 million in G&A
expenses was due to inclusion of $0.6 million in Hego G&A expenses,
severance expense of $1.0 million and a $0.4 million increase in
Chyron G&A expenses. Also included in operating expenses for the
third quarter of 2013, was a $0.9 million charge for the change in
fair value of the Hego transaction contingent earn-out liability. 
Operating loss for the third quarter of 2013 was $1.0 million as
compared to an operating loss of $1.0 million in the third quarter of
2012. Excluding third quarter 2013 severance expense of $1.0 million
and mark-to-market expense of $0.9 million from revaluation of the
contingent earn-out shares related to the Hego merger, the Company
would have reported an operating profit of $0.9 million for the third
quarter of 2013. Excluding severance expenses of $0.1 million, the
Company would have reported an operating loss of $0.9 million for the
third quarter of 2012. 
Net loss for the third quarter of 2013 was $1.0 million, or $(0.04)
per basic and diluted share, as compared to net loss of $0.7 million,
or $(0.04) per basic and diluted share, in the third quarter of 2012.
Excluding third quarter 2013 severance expense of $1.0 million and
mark-to-market expense of $0.9 million from revaluation of the
contingent earn-out shares related to the Hego merger, the Company
would have reported net income of $0.8 million for the third quarter
of 2013. Excluding severance expenses of $0.1 million, the Company
would have reported a net loss of $0.6 million for the third quarter
of 2012. 
Nine Month Results 
The financial results for the nine months of 2013 ended September 30,
2013 include the results of operations for Hego and its subsidiaries
from May 22, 2013, the closing date of the merger with Hego, through
September 30, 2013. 
Revenues for the first nine months of 2013 increased 43% to $32.7
million as compared to $22.8 million in the first nine months of
2012. Of this $9.9 million increase, $2.5 million was from sales of
Chyron products and services, an 11% increase over last year's first
nine months, and $7.4 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 the first nine months of 2013 was 66.7%, down
from 69.2% for last year's first nine months, due to a higher
percentage of services in first nine month 2013 revenues than the
prior year's period.  
Operating expenses for the first nine months of 2013 were $25.5
million compared to $19.0 million in the first nine months of 2012.
The increase of $6.5 million resulted from inclusion of $3.7 million
in Hego operating expenses, $2.3 million in Hego-merger related
expenses, $1.0 million of restructuring expenses, $1.0 million in
severance costs and a $0.9 million charge from revaluation of the
Hego transaction contingent earn-out liability in the first nine
months of 2013, offset by a $2.4 million net decline in other Chyron
operating expenses. R&D expenses were $6.5 million, a $0.8 million,
or 14%, increase from $5.7 million in the first nine months of 2012,
due to inclusion of $1.4 million of Hego R&D expenses offset by a
$0.6 million decrease in Chyron R&D expenses. S&M expenses were $9.7
million, a 4% decrease from $10.1 million in the first nine months of
2012, due to inclusion of $0.8 million of Hego S&M expenses and $0.8
million in expense from amortization of intangibles from the Hego
merger, offset by a $2.0 million net decline in Chyron S&M expenses.
G&A expenses were $8.4 million, a $5.2 million increase from $3.2
million in the first nine months of 2012. Included in the $8.4
million of G&A expenses for the first nine months of this year were
$0.7 million of Hego G&A expenses, $2.3 million of Hego
merger-related expenses and $1.0 million of severance expense, offset
by a $0.8 million net decline in Chyron G&A expenses. Included in
first nine months of 2013 operating expenses were Chyron
restructuring expenses of $1.0 million, which were spread among R&D,
S&M and G&A operating expenses. Also included in operating expenses
for the first nine months of 2013 was a $0.9 million charge for the
change in fair value of the Hego transaction contingent earn-out
liability. 
Operating loss for the first nine months of 2013 was $3.7 million as
compared to an operating loss of $3.2 million in the first nine
months of 2012. Excluding second quarter restructuring charges of
$1.0 million, Hego merger-related expenses of $2.3 million, third
quarter severance expense of $1.0 million and a charge for the change
in fair value of the Hego transaction contingent earn-out liability
of $0.9 million, the Company would have reported an operating profit
of $1.5 million for the first nine months of 2013. Excluding
severance expenses of $0.2 million, the Company would have reported
an operating loss of $3.0 million for the first nine months of 2012. 
Net loss for the first nine months of 2013 was $4.1 million, or
$(0.17) per basic and diluted share, as compared to net loss of $2.3
million, or $(0.13) per basic and diluted share, in the first nine
months of 2012. Excluding second quarter restructuring charges of
$1.0 million, Hego merger-related expenses of $2.3 million, third
quarter severance expense of $1.0 million and a charge for the change
in fair value of the Hego transaction contingent earn-out liability
of $0.9 million, the Company would have reported net income of $1.1
million for the first nine months of 2013. Excluding severance
expenses of $0.2 million, the Company would have reported a net loss
of $2.1 million for the first nine months of 2012. 
Operating income and net income amounts shown herein that are
exclusive of restructuring charges, Hego merger-related expenses,
severance costs and the charge for the change in fair value of the
Hego transaction contingent earn-out liability, 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 incurred, as a basis for comparison between
periods. Management believes that disclosing operating income and net
income exclusive of such costs and expenses for third quarter and
first nine months of 2013 and 2012 provides a better basis on which
to compare results between the periods and a better understanding of
earnings that would have resulted in the 2013 and 2012 periods had
these costs and expenses not been incurred. 
Conference Call and Webcast: Third Quarter Financial Results 
ChyronHego management will host a conference call on Friday, November
8, 2013, at 10:00 a.m. Eastern Time to review the third quarter ended
September 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 94555253. Web participants are
encouraged to go to http://investor.chyronhego.com (click on Events &
Presentations) or www.earnings.com. A replay will be available
shortly after the call on http://investor.chyronhego.com. 
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.chyronhego.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 belief that our business is
more balanced and predictable in terms of geographies and products
and services; (ii) our belief that as a result of the merger we have
an exceptional strong product offering backed up by extensive product
development and engineering resources and strong global service and
support capability; and, (iii) our belief that we are assuming a
normalized level of operating expenses and anticipate that our future
results should show growth in operating profitability at current
gross profit margin levels. 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, Part II,
Item 1A of our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2013, and Part II, Item 1A of our Quarterly Report on Form
10-Q for the quarter ended June 30, 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     Nine Months Ended  
                                     September 30,         September 30,    
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
                                                                            
Product revenues                 $   7,697  $   4,861  $  20,415  $  16,434 
Service revenues                     6,262      2,387     12,277      6,375 
                                 ---------  ---------  ---------  --------- 
Total revenues                      13,959      7,248     32,692     22,809 
Gross profit                         8,749      4,923     21,802     15,784 
Operating expenses:                                                         
  Selling, general and                                                      
   administrative                    6,487      4,114     18,074     13,278 
  Research and development           2,399      1,822      6,524      5,682 
  Change in fair value of                                                   
   contingent consideration            878          -        933          - 
                                 ---------  ---------  ---------  --------- 
Total operating expenses             9,764      5,936     25,531     18,960 
                                 ---------  ---------  ---------  --------- 
Operating loss                      (1,015)    (1,013)    (3,729)    (3,176)
Interest and other income                                                   
 (expense), net                        (64)        11       (240)        (4)
                                 ---------  ---------  ---------  --------- 
Loss before taxes                   (1,079)    (1,002)    (3,969)    (3,180)
Income tax (expense) benefit,                                               
 net                                    32        302        (72)       899 
                                 ---------  ---------  ---------  --------- 
Net loss                            (1,047)      (700)    (4,041)    (2,281)
Less: Net income attributable to                                            
 non-controlling interests              30          -         38          - 
                                 ---------  ---------  ---------  --------- 
Net loss attributable to                                                    
 ChyronHego shareholders         $  (1,077) $    (700) $  (4,079) $  (2,281)
                                 =========  =========  =========  ========= 
Net loss per common share                                                   
 attributable to ChyronHego                                                 
 shareholders -                                                             
  Basic                          $   (0.04) $   (0.04) $   (0.17) $   (0.13)
  Diluted                        $   (0.04) $   (0.04) $   (0.17) $   (0.13)
Weighted average number of                                                  
 common and common equivalent                                               
 shares outstanding:                                                        
  Basic                             30,236     17,023     23,576     16,910 
  Diluted                           30,236     17,023     23,576     16,910 
                                                                            
                                                                            
                                                                            
              CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)             
                               (in thousands)                               
                                                September 30,  December 31, 
                                                    2013           2012     
                                               -------------- --------------
Assets:                                                                     
Cash and cash equivalents                      $        2,701 $        2,483
Accounts receivable, net                               10,203          5,630
Inventories, net                                        3,019          2,285
Other current assets                                    2,498            626
                                               -------------- --------------
  Total current assets                                 18,421         11,024
Goodwill and intangible assets, net                    26,721          2,625
Other non-current assets                                4,820          1,466
                                               -------------- --------------
  Total assets                                 $       49,962 $       15,115
                                               ============== ==============
Liabilities and shareholders' equity:                                       
Current liabilities                            $       17,075 $        7,315
Non-current liabilities                                15,559          5,819
                                               -------------- --------------
  Total liabilities                                    32,634         13,134
                                               -------------- --------------
Shareholders' equity                                   17,328          1,981
                                               -------------- --------------
Total liabilities and shareholders' equity     $       49,962 $       15,115
                                               ============== ==============

 
All trademarks and registered trademarks mentioned herein are the
property of their respective owners. 
Facebook: http://www.facebook.com/chyronhego
 LinkedIn:
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 Twitter:
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Copyright 2013 ChyronHego Corporation 
Contact:
ChyronHego Investor Relations
Tel: (631) 845-2000, press 7
Email: Investor.Relations@chyronhego.com 
 
 
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