New Products Help Drive 16% Revenue Increase
Net Income Up 43% Over Previous Year
Web Site Sales Jump 177% Over Previous Year
SAN JOSE, Calif., July 21 /PRNewswire/ -- Hello Direct, Inc.
(Nasdaq: HELO), the leading developer and direct marketer of desktop telephony
productivity tools, today reported financial results for the second quarter
and for the six months ended June 30, 1999.
Net sales for the second quarter were a record $19.3 million, an increase
of 16 percent over net sales of $16.6 million in the same quarter of the prior
year. Net income for the quarter was a record $828,000, or $0.16 per share
(on 5,291,000 diluted shares outstanding), a 43 percent increase over net
income of $579,000, or $0.11 per share (on 5,242,000 diluted shares
outstanding), in the second quarter of 1998.
The Company also reported second quarter operating income of $1,195,000, a
57 percent increase over operating income of $761,000 in the same quarter last
year.
For the six months, net sales reached $38.7 million, a 12 percent increase
over net sales of $34.5 million in the same period of the prior year. Net
income for the six months was $1,719,000, or $0.32 per share (diluted), an
increase of 45 percent over net income of $1,182,000, or $0.23 per share, in
the first six months of 1998.
"Excellent progress in a number of key areas combined to give Hello Direct
its tenth consecutive quarter of improved net sales and income over the
comparable prior year period," said Alec Glover, president and CEO. "First,
we saw continued strong sales of the corded and cordless headset products
introduced in the first quarter. Second, our Corporate Accounts outbound
telemarketing group set sales records each month. Finally, our Internet sales
were well above targets, increasing by 177 percent over the second quarter of
last year, reflecting further recognition of our web site as the preeminent
online marketplace for telecommunications solutions."
According to Glover, the quarter's results reflect continued successful
execution of the Company's profit-focused growth strategy. "For several
quarters our sales growth rate was below our traditional pace as we eliminated
over the half our products in early 1998 because they did not meet new profit
criteria. Returning to a higher sales growth rate this quarter, while
continuing to improve margins and order sizes, demonstrates that our customers
require the high value-added products we develop and market, and that our non-
catalog sales channels are an increasingly effective way to reach our most
profitable target markets. We plan continued expansion of our outbound
telemarketing and Internet channels during the remainder of the year," he
said.
The Company's gross margin for the quarter was 54.7 percent, compared with
gross margin of 53.9 percent in the second quarter of 1998. Average order
size reached $281, up from $257 in the same quarter of last year.
Hello Direct also reported that cash and short-term investments as of June
30, 1999 were $5.3 million, compared with $9.6 million as of December 31,
1998. Working capital as of June 30, 1999 was $17.7 million, compared with
working capital of $19.2 million at the close of the year. The decrease in
working capital results from stock repurchases, the purchase of PhoneZone.com,
and the purchase of capital assets.
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 a
combination of distinctive catalogs, outbound telemarketing and Internet sales
channels, the Company offers a broad selection of commercial-grade products
and information that provide solutions to its customers' evolving
telecommunications needs.
This release contains forward-looking statements including, but not
limited to, statements regarding continued expansion of the Company's outbound
telemarketing and Internet channels and the continued execution of the
Company's profit-focused growth strategy. 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.
For more information on Hello Direct, Inc. via fax at no cost, dial
800-PRO-INFO (908-544-2850 outside the U.S.), ticker symbol: HELO.
HELLO DIRECT, INC.
Condensed Statements of Operations
For the Three and Six Months Ended
June 30, 1999 and 1998
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Net sales $19,282,000$16,620,000$38,732,000 $34,530,000
Cost of goods sold 8,734,000 7,670,000 17,667,000 15,989,000
Gross profit 10,548,000 8,950,000 21,065,000 18,541,000
Selling, general and
administrative expenses 8,696,000 7,866,000 17,345,000 16,076,000
Product development expenses 657,000 323,000 1,264,000 902,000
Operating income 1,195,000 761,000 2,456,000 1,563,000
Other income - net 186,000 204,000 410,000 407,000
Income before income taxes 1,381,000 965,000 2,866,000 1,970,000
Income taxes 553,000 386,000 1,147,000 788,000
Net income $828,000 $579,000 $1,719,000 $1,182,000
Basic per share amounts:
Net income $0.16 $0.11 $0.33 $0.23
Weighted average shares
outstanding 5,105,000 5,111,000 5,132,000 5,100,000
Diluted per share amounts:
Net income $0.16 $0.11 $0.32 $0.23
Weighted average
shares outstanding 5,291,000 5,242,000 5,323,000 5,211,000
HELLO DIRECT, INC.
Condensed Balance Sheets
June 30, December 31,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $5,298,000 $5,745,000
Short-term investments -- 3,860,000
Trade accounts receivable,
less allowance for returns
and doubtful accounts. 7,151,000 5,491,000
Inventories 6,602,000 6,119,000
Deferred tax assets 894,000 847,000
Other current assets 2,444,000 2,474,000
Total current assets 22,389,000 24,536,000
Notes receivable 4,078,000 4,239,000
Property and equipment, net 7,655,000 6,246,000
Goodwill, net 1,800,000 --
Total assets $35,922,000 $35,021,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,069,000 $3,567,000
Accrued expenses 1,580,000 1,736,000
Total current liabilities 4,649,000 5,303,000
Non-current liabilities 440,000 364,000
Total liabilities 5,089,000 5,667,000
Stockholders' equity:
Common stock 5,000 5,000
Additional paid-in capital 28,712,000 28,319,000
Retained earnings 3,440,000 1,721,000
Less treasury stock, at cost (1,324,000) (691,000)
Total stockholders' equity 30,833,000 29,354,000
Total liabilities and
stockholders' equity $35,922,000 $35,021,000
SOURCE Hello Direct, Inc.
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Related links:
http://www.hellodirect.com
CONTACT:
Dean Witter III, Chief Financial Officer,
Hello Direct, Inc., 408-363-6158, general, Don Markley or
analyst, Reid Cox, 415-986-1591, both of the Financial Relations
Board
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