Web Site Sales Also Continue Rapid Growth
SAN JOSE, Calif., April 13 /PRNewswire/ -- Hello Direct, Inc.
(Nasdaq: HELO), the leading developer and direct marketer of desktop telephony
productivity tools, today reported financial results for the first quarter
ended March 31, 1999.
Net sales for the quarter were a record $19.5 million, an increase of
8.6 percent over net sales of $17.9 million in the first quarter of the prior
year. Net income was $891,000 or $0.17 per share (on 5,361,000 diluted shares
outstanding), an increase of 47.8 percent over net income of $603,000, or
$0.12 per share (on 5,182,000 diluted shares outstanding), for the same
quarter a year ago.
The Company also reported a record quarterly operating income of
$1,261,000, a 57.2 percent increase over operating income of $802,000 in the
first quarter of last year.
"Especially pleasing this quarter was the very strong market acceptance of
our new proprietary corded and cordless headsets, Ultralight(R) EX, Solo(R)
II, and Cordless(TM) XLT ," said Alec Glover, Hello Direct's President and
CEO. "Demand for all three of these next generation models significantly
exceeded our ability to supply the market. As a result, quarterly sales would
have been even greater were it not for the backorder situation we experienced
on these new products for most of the quarter. Our manufacturing yields have
now improved so that the backorder situation is largely resolved."
According to Glover, another key contributor to record results was the
strong performance of Hello Direct's non-catalog sales channels. "Sales
through our web site in the first quarter increased approximately 200 percent
over the same period last year, and represented nearly 10 percent of our total
revenue. In addition, our outbound telemarketing group, which targets
corporate accounts, achieved record sales in each of the three months and for
the quarter contributed 35 percent of total net revenue. Aggressively
developing these channels to their fullest potentials remains another
important element of our profit focused growth strategy," he said.
Glover also noted that the integration of recently acquired PhoneZone.com,
the leading Web buyer's guide, is proceeding very well. "We are merging and
evolving the two sites and in only two months have seen traffic increase
nearly 50%. During the same brief period we have also developed relationships
with just over 100 new alliance partners that should drive even more traffic
to our site. I am very pleased with the progress we are making to ensure our
web site remains the preeminent Internet marketplace for telecommunications
solutions."
The Company's gross margin for the quarter was 54.1 percent, compared with
gross margin of 53.6 percent in the first quarter of 1998. Average order size
reached $264, up from $259 in the same quarter of last year.
Hello Direct also reported that cash and short-term investments as of
March 31, 1999 declined to $7.0 million, compared with $9.6 million as of
December 31, 1998, primarily as a result of the PhoneZone.com acquisition and
an ongoing stock repurchase program. Working capital as of March 31, 1999 was
$17.9 million, compared with working capital of $19.2 million at the close of
the year.
About Hello Direct, Inc.
Hello Direct, Inc. (http://www.hellodirect.com) is the leading developer and
direct marketer of telephone productivity tools including headsets,
teleconferencing, wireless and related desktop products. Through its
distinctive catalogs, web site and outbound telemarketing programs, the
Company offers a broad selection of commercial-grade brand name, proprietary
and private label products at competitive prices that provide solutions to its
customers' evolving communication needs.
This release contains forward-looking statements including, but not
limited to, statements regarding improved manufacturing yields, development of
the outbound telemarketing channel and the ongoing status of improving the
Company's web site. These forward looking statements involve risks and
uncertainties that could cause actual results to differ, and such differences
could be material. Such risks and uncertainties include, but are not limited
to, the following: the uncertainty of the Company's future operating results,
the fact that the market for telecommunication products is generally
characterized by rapidly changing technology, the Company's need and ability
to successfully develop new products, the Company's dependence on and market
acceptance of its current and newly introduced headset products, the Company's
dependence on sole or limited source suppliers and foreign manufacturing, the
highly competitive market for telecommunications products, the dependence of
Internet sales on the continued growth in electronic commerce, risks
associated with managing a growing business and the Company's dependence on
key personnel. Investors should also review the Company's reports on Form
10-K and Form 10-Q on file with the SEC for a discussion of risks and
uncertainties.
HELLO DIRECT, INC.
Condensed Statements of Operations
For the Three Months Ended
March 31, 1999 and 1998
Three Months Ended
March 31,
1999 1998
Net sales $19,450,000 $17,910,000
Cost of goods sold 8,933,000 8,319,000
Gross profit 10,517,000 9,591,000
Selling, general and
administrative expenses 8,649,000 8,210,000
Product development expenses 607,000 579,000
Operating income 1,261,000 802,000
Other income - net 224,000 203,000
Income before income taxes 1,485,000 1,005,000
Income taxes 594,000 402,000
Net income $891,000 $603,000
Basic per share amounts:
Net income $0.17 $0.12
Weighted average
shares outstanding 5,158,000 5,087,000
Diluted per share amounts:
Net income $0.17 $0.12
Weighted average
shares outstanding 5,361,000 5,182,000
HELLO DIRECT, INC.
Condensed Balance Sheets
March 31, December 31,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $6,418,000 $5,745,000
Short-term investments 604,000 3,860,000
Trade accounts receivable,
less allowance for returns
and doubtful accounts. 7,154,000 5,491,000
Inventories 5,557,000 6,119,000
Deferred tax assets 1,064,000 847,000
Other current assets 1,298,000 2,474,000
Total current assets 22,095,000 24,536,000
Notes receivable 4,159,000 4,239,000
Property and equipment, net 6,622,000 6,246,000
Goodwill, net 1,900,000 --
Total assets $34,776,000 $35,021,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $2,232,000 $3,567,000
Accrued expenses 2,000,000 1,736,000
Total current liabilities 4,232,000 5,303,000
Non-current liabilities 409,000 364,000
Total liabilities 4,641,000 5,667,000
Stockholders' equity:
Common stock 5,000 5,000
Additional paid-in capital 28,641,000 28,319,000
Retained earnings 2,612,000 1,721,000
Less treasury stock, at cost (1,123,000) (691,000)
Total stockholders' equity 30,135,000 29,354,000
Total liabilities and
stockholders' equity $34,776,000 $35,021,000
SOURCE Hello Direct, Inc.
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CONTACT:
Dean (Kip) Witter III, Chief Financial
Officer of Hello Direct, 408-363-6158, or general information,
Don Markley, or analysts, Reid Cox of The Financial Relations
Board, 415-986-1591
NOTE TO EDITORS: For more information on Hello Direct, Inc. via
fax at no cost, dial 800-PRO-INFO or 908-544-2850 outside the
U.S., ticker symbol: HELO
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