ChyronHego Reports Profit for the Second Quarter 2014

ChyronHego Reports Profit for the Second Quarter 2014 
MELVILLE, NY -- (Marketwired) -- 08/11/14 --  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, 2014. 
Second Quarter Financial Highlights: 


 
--  Net income of $2.9 million in Q2 2014 compared to a net loss of $2.1
    million in Q2 2013;
--  First profitable quarter since Q2 2011;
--  Excluding a mark to market adjustment described below, net income of
    $0.8 million in Q2 2014;
--  Q2 2014 revenues increased 37% to $14.7 million compared to $10.7
    million in Q2 2013;
--  Operating income in Q2 2014 of $3.0 million compared to operating loss
    in Q2 2013 of $1.9 million; and
--  Excluding the mark to market adjustment, operating income of $0.8
    million in Q2 2014.

  
President and CEO Johan Apel commented, "We are very excited to show
our first profitable quarter since Q2 2011. Our efforts in both
keeping costs under control and driving revenue growth are bearing
fruit. We are expecting growth in revenues to continue in the coming
quarters. In terms of revenues, we are ahead of plan in both the U.S.
and Europe and we have a positive outlook regarding the development
of these markets. Our customers are investing with us and they
appreciate our efforts to create the most complete offering within
broadcast graphics." 
Mr. Apel added, "We closed the acquisition of ZXY Sport Tracking AS
on April 30th and they have since received orders from several new
customers. The WeatherOne AS acquisition closed on July 1st and we
expect to see positive impact from their operations in the Q3
financials." 
Second Quarter 2014 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 2014 increased 37% to $14.7
million as compared to $10.7 million in the second quarter of 2013.
This $4.0 million increase was primarily driven by the contribution
of services from the 2013 merger with Hego, which included a sale of
tracking systems to a European Soccer League.  
Gross profit margin for the second quarter of 2014 was 62%, down from
68% in Q2 2013. Services, increasing to 48% of revenues as compared
to 37% in Q2 2013, carry a lower gross profit margin than products. 
Operating expenses for the second quarter of 2014 were $8.3 million,
excluding the benefit of the mark to market adjustment of $2.2
million, compared to $9.2 million in the second quarter of 2013.
Research & development (R&D) expenses were $2.1 million, down 9% from
$2.3 million in the second quarter 2013, primarily due to inclusion
of Hego R&D expenses for a full quarter, offset by cost savings from
the 2013 workforce reduction. Sales and marketing (S&M) expenses were
$4.8 million, up 46% from $3.3 million in Q2 2013, also due to the
incremental costs from the Hego merger. General and administrative
(G&A) expenses were $1.4 million, a decrease of $2.2 million from
$3.6 million in the second quarter of 2013. The decrease was
primarily due to inclusion in Q2 2013 of $2.0 million in
merger-related expenses. 
Operating income for the second quarter of 2014 was $3.0 million and
included the benefit of a $2.2 million change in the fair value of
our contingent consideration. This compares to a $1.9 million
operating loss in Q2 2013 which included merger-related expenses and
restructuring costs of $2.6 million. 
Net income for the second quarter of 2014 was $2.9 million, or $0.08
per basic and diluted share, as compared to a net loss of $2.1
million, or $(0.09) per basic and diluted share, in the second
quarter of 2013. Excluding the mark to market benefit of $2.2 million
from revaluation of the contingent consideration, the Company would
have reported net income of $0.8 million for the second quarter of
2014. This compares to a net income in Q2 2013 of $0.5 million,
excluding $2.6 million of merger-related expenses and restructuring
costs. 
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, through June 30, 2013. 
Revenues for the first half of 2014 were $27.3 million, up $8.6
million or 46% over the comparable prior year period. Product
revenues were $13.4 million and represent 49% of total revenues. This
represents an increase of 6% over the first half of 2013. Service
revenues were $13.9 million and represent 51% of total revenues. This
represents an increase of 131% over the first half of 2013. 
Gross profit margin declined to 62% in the first half of 2014 as
compared to 70% in the first half of 2013 due to the change in
product mix resulting from the large increase in service revenues
from the merger with Hego. Operating loss in the first half of 2014
was $0.1 million compared to $2.7 million in the first half of 2013.
First half of 2014 includes a charge of $0.4 million resulting from
the change in fair value of the contingent consideration. First half
of 2013 includes charges of $3.3 million in merger related expenses
and restructuring costs. 
The net loss for the first half of 2014 was $0.3 million including
the $0.4 million charge for the change in fair value of the
contingent consideration. This compares to a net loss of $3.0 million
which includes $3.3 million in merger related expenses and
restructuring costs. 
Operating income (loss) and net income (loss) amounts shown herein,
that are exclusive of certain mark to market changes in the fair
value of contingent consideration and merger-related expenses and
restructuring costs, are not U.S. generally accepted accounting
principles basis operating income (loss) and net income (loss), and
are reported herein solely to disclose the operating income (loss)
and net income (loss) amounts that might have been reported had these
items not been recognized, as a basis for comparison between periods.
Management believes that disclosing operating income (loss) and net
income (loss) exclusive of these amounts for the second quarter and
six months of 2014 and 2013 provides an alternative basis on which to
compare results between the periods and an understanding of earnings
that would have resulted in the 2014 and 2013 periods had these
amounts not been recognized. 
Conference Call and Webcast: Fourth Quarter Financial Results 
ChyronHego management will host a conference call on Monday, August
11, 2014 at 10:00 a.m. Eastern Time to review the second quarter 2014
results. Participants using the telephone should dial 877-303-9145
(U.S. and Canada) or 760-536-5203 (International) and refer to
conference code 82854996. Web participants are encouraged to go to
http://investor.chyronhego.com (click on Events & Presentations). 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 wide range of products and services for live television, news
and sports production. Joining forces in 2013, with over 80 years of
combined industry expertise, Chyron and Hego Group offer
award-winning solutions -- such as the TRACAB(TM) player trac
king
system and end-to-end BlueNet(TM) graphics workflow -- under the
collective ChyronHego brand. Headquartered in Melville, N.Y., the
Company also has offices in the Czech Republic, Denmark, Finland,
Germany, Mexico, Norway, Singapore, Slovak Republic, Sweden, and the
United Kingdom. For more information on ChyronHego, visit
www.chyronhego.com. 
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 exceptionally 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 revenues. 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 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 develop,
introduce and sell other new products and services; 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, 2013 which has 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.  
- Financial Tables on Following Pages -  


 
                                                                            
                           CHYRONHEGO CORPORATION                           
        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)         
                  (In thousands, except per share amounts)                  
                                                                            
                               Three Months Ended       Six Months Ended    
                                    June 30,                June 30,        
                                2014        2013        2014        2013    
                             ----------  ----------  ----------  ---------- 
                                                                            
Product revenues             $    7,654  $    6,744  $   13,435  $   12,718 
Service revenues                  7,050       3,972      13,890       6,015 
                             ----------  ----------  ----------  ---------- 
Total revenues                   14,704      10,716      27,325      18,733 
Gross profit                      9,076       7,331      16,812      13,053 
Operating expenses:                                                         
  Selling, general and                                                      
   administrative                 6,139       6,836      12,250      11,587 
  Research and development        2,128       2,345       4,306       4,125 
  Change in fair value of                                                   
   contingent consideration      (2,156)          -         400           - 
                             ----------  ----------  ----------  ---------- 
Total operating expenses          6,111       9,181      16,956      15,712 
                             ----------  ----------  ----------  ---------- 
Operating income (loss)           2,965      (1,850)       (144)     (2,659)
Interest and other income                                                   
 (expense), net                     (49)       (134)       (245)       (231)
                             ----------  ----------  ----------  ---------- 
Income (loss) before taxes        2,916      (1,984)       (389)     (2,890)
Income tax (expense) benefit,                                               
 net                                 37         (93)        125        (104)
                             ----------  ----------  ----------  ---------- 
Net income (loss)                 2,953      (2,077)       (264)     (2,994)
Less: Net income attributable                                               
 to non-controlling interests         6           8          31           8 
                             ----------  ----------  ----------  ---------- 
Net income (loss)                                                           
 attributable to ChyronHego                                                 
 shareholders                $    2,947  $   (2,085) $     (295) $   (3,002)
                             ==========  ==========  ==========  ========== 
Net income (loss) per common                                                
 share attributable to                                                      
 ChyronHego shareholders -                                                  
    Basic                    $     0.08  $    (0.09) $    (0.01) $    (0.15)
    Diluted                  $     0.08  $    (0.09) $    (0.01) $    (0.15)
Weighted average number of                                                  
 common and                                                                 
common equivalent shares                                                    
 outstanding:                                                               
    Basic                        35,089      22,989      33,114      20,191 
    Diluted                      36,090      22,989      33,114      20,191 
                                                                            
                                                                            
                                                                            
              CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)             
                               (in thousands)                               
                                                                            
                                                   June 30,     December 3
1,
                                                     2014           2013    
                                                 ------------   ------------
Assets:                                                                     
Cash and cash equivalents                        $      4,972   $      5,266
Accounts receivable, net                               10,077          7,781
Inventories, net                                        1,587          2,816
Other current assets                                    2,810          2,525
                                                 ------------   ------------
  Total current assets                                 19,446         18,388
Goodwill and intangible assets, net                    32,878         27,916
Other non-current assets                                4,467          4,348
                                                 ------------   ------------
  Total assets                                   $     56,791   $     50,652
                                                 ============   ============
Liabilities and shareholders' equity:                                       
Current liabilities                              $     15,363   $     17,152
Non-current liabilities                                13,938         18,033
                                                 ------------   ------------
  Total liabilities                                    29,301         35,185
                                                 ------------   ------------
Shareholders' equity                                   27,490         15,467
                                                 ------------   ------------
Total liabilities and shareholders' equity       $     56,791   $     50,652
                                                 ============   ============

 
All trademarks and registered trademarks mentioned herein are the
property of their respective owners. 
Social Media
 Facebook: http://www.facebook.com/chyronhego 
 Twitter:
http://twitter.com/chyronhego 
 LinkedIn:
http://www.linkedin.com/company/chyron 
 YouTube:
http://www.youtube.com/user/chyronmelville 
Copyright 2014 ChyronHego Corporation 
Contact:
ChyronHego Investor Relations
Tel: (631) 845-2000, press 6
Email: Investor.Relations@chyronhego.com 
 
 
Press spacebar to pause and continue. Press esc to stop.