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Edited Transcript of ZAGG earnings conference call or presentation 6-Nov-18 10:00pm GMT

Q3 2018 ZAGG Inc Earnings Call

SALT LAKE CITY Nov 7, 2018 (Thomson StreetEvents) -- Edited Transcript of ZAGG Inc earnings conference call or presentation Tuesday, November 6, 2018 at 10:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Bradley J. Holiday

ZAGG Inc - CFO

* Chris Ahern

ZAGG Inc - CEO & Director

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Conference Call Participants

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* David Michael King

Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst

* Elliot Alper

* Jon Robert Hickman

Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst

* Michael Fawzy Malouf

Craig-Hallum Capital Group LLC, Research Division - Partner, Senior Research Analyst & Head of Boston Team

* Richard Frederick Magnusen

B. Riley FBR, Inc., Research Division - Associate Analyst

* Brendon Frey

ICR, LLC - MD

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, and welcome to the ZAGG's Third Quarter 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. Now I would like to welcome and turn the call over to Brendon Frey of ICR. Brendon, you may begin.

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Brendon Frey, ICR, LLC - MD [2]

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Thank you, Olivia. Good afternoon, and thank you for joining us today to review the ZAGG Third Quarter 2018 Financial Results. On the call today, we have Chris Ahern, Chief Executive Officer; and ZAGG's Chief Financial Officer, Brad Holiday. Chris and Brad will review their prepared comments, and then we will open the call for a question-and-answer session.

Our third quarter earnings press release was issued today after the market closed at approximately 4:00 p.m. Eastern time. As a follow-on to the earnings release, we published a supplemental financial information on our Investor Relations website, and we also furnished this document to the SEC on Form 8-K. You can find all of our earnings documents on our Investor Relations website at zagg.com in the Quarterly Results section under the Financials tab. We are recording this call and a podcast of the conference call will be archived at the ZAGG Investor Relations webpage under the Events tab for 1 year.

Before we begin, I would like to remind everyone that the prepared remarks contain certain forward-looking statements and management may make additional forward-looking statements in response to your questions. These statements include, but are not limited to, our outlook for the company and statements that estimate or project future results of operations or the performance of the company. These statements do not guarantee future performance and speak as of the date hereof. For a more detailed discussion on the factors that can cause actual results to differ materially from those projected in any forward-looking statements, we refer all of you to the risk factors contained in ZAGG's annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. ZAGG assumes no obligation to revise any forward-looking statements that maybe made in today's release or call.

Please note that on today's call, in addition to discussing the GAAP financial results and the outlook for the company, we will discuss adjusted EBITDA, a non-GAAP financial measure. An explanation of ZAGG's use of this non-GAAP financial measure in this call and the reconciliation between GAAP and non-GAAP measures required by SEC Regulation G is included in ZAGG's press release today which, again, can be found on the Investor Relations section of the company's website. The non-GAAP information is not a substitute for any performance measure derived in accordance with GAAP, and the use of such non-GAAP measures has limitations, which are detailed in the company's press release.

And I'd now like to turn the call over to Chris Ahern. Chris?

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Chris Ahern, ZAGG Inc - CEO & Director [3]

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Thank you, Brendon, and good afternoon, everyone. Thank you for joining us on the call today. We achieved record third quarter results for revenue, adjusted EBITDA and EPS driven by strong demand for screen protection, portable batteries and our wireless charging products. Unfortunately, the strong performances from these categories was partially offset by the delay in certification of the iPhone X juice pack.

As we go through the call today, I'll walk you through the key drivers for each category in the third quarter, touch on our long-range growth strategy and discuss how we are tackling the most recent round of tariff increases. Brad will then walk through the numbers in more detail, including our updated guidance, which now reflects the later launch date for the iPhone X juice pack, after which we'll be happy to take questions.

Starting with screen protection, sales increased 16% versus the same quarter last year. We experienced strong sell-in for our InvisibleShield product line ahead of the new iPhone launches in late September. This included InvisibleShield's newest most innovative product, Glass+ VisionGuard, which has been very well received by both retailers and consumers. Glass+ VisionGuard features patented protective Eyesafe technology that filters out harmful blue light emitted from digital device screens without affecting the true colors of the display.

Blue light has been shown to contribute to digital eye strain, sleep disruption, blurred vision and premature eye aging, especially in children. VisionGuard is a great example of how we continue to innovate, drive higher ASPs and further separate InvisibleShield from its competitors in the screen protection category.

At the same time, we've continued to expand our innovative InvisibleShield On Demand program. ISoD has had tremendous success in Europe and is part of a great solution for retailers with limited shelf space to instantly produce screen protection for the wide variety of mobile devices used by consumers in that market.

More recently, we've expanded the service throughout the U.S., primarily through our partnership with Cell Phone Repair, the largest and fastest-growing repair franchise in North America. We are in the process of rolling out ISoD machines to each of the 430 locations, and we expect this number to increase as CPR expands its footprint globally over the next 3 years.

Along with the 100 ZAGG franchise locations across the U.S. and Canada, we are creating the premium network for same-day cellphone repair and refurbishing services while ensuring consumer devices are protected and supported at the 2 critical times for screen protection attachment: when you buy your device and when you repair your device.

With respect to power cases, we recently received a certification for the mophie iPhone X compatible juice pack and we expect to have that product to market in time for the holiday selling season. We have anticipated getting this approval in Q3, and the delay negatively impacted our third quarter sales as well as the full year outlook.

While we are disappointed in this delay, we are very confident in our plans to recapture and grow this business in 2019. I think it's important to note that even with the decline in sales year-to-date, mophie has maintained its dominant position in power cases with a market share of approximately 60%.

Turning to power management. Sales were up 24% as we continue to see solid demand for our mophie portable battery packs and growing ecosystem of wireless charging products, which now includes wireless battery cases and a number of universal high-speed charging products. During the quarter, we launched Lightning in power stations at Apple retail and additional wireless charging products including the vent mount, the desk mount and our compact travel charger kit across all of our distribution channels.

I do want to point out that although sales throughout our wireless charge pad remained strong globally, the initial launch and load-in shipments of those products took place primarily in the fourth quarter last year, which creates a tough comparison for this year as we don't have a similarly sized launch planned which is, again, taken into consideration in our guidance.

To summarize, the third quarter outside of juice pack certification delay, the quarter played out as we expected, maybe even slightly better, thanks to strong performance from screen protection, our portable batteries and wireless charging products. And as I said, we fully expect juice pack growth to rebound next year with the launch of our new juice pack products for the recently announced Apple devices.

The fundamentals of our business remains strong and we continue to feel confident about the long-term growth plan we laid out for the investment community during our September meeting in New York. Let me reiterate the key drivers of our plan to reach $1 billion in revenue over the next 3 to 5 years. First is stacks of our powerful portfolio of mobile lifestyle brands that now includes InvisibleShield, mophie, ZAGG, iFrogz and BRAVEN leveraging our product innovation as strong distribution network to drive organic growth within the existing categories as well as penetrate new adjacent categories for each business. We see opportunities to do this in all geographies and channels.

Additionally, we plan to leverage our strong balance sheet and be active in the M&A front to further diversify our product offerings, accelerate growth and enhance profitability. We recently acquired BRAVEN, the category creator of premium rugged Bluetooth audio, which provides us with authentic position in the new segments of the large and growing audio space. While currently small in terms of volume, BRAVEN is a strong brand with fantastic IP portfolio and a world-class audio engineering team. We believe we can quickly scale the business by fueling their innovation road map and driving sales into our existing distribution network globally.

Since our investor meeting in September, the government announced a new round of tariffs on Chinese imports that includes certain products within our screen protection and wireless charging categories. We've been working diligently in ways to mitigate the impact of these tariffs, including cost-reduction initiatives with our suppliers, exploring alternative manufacturing options outside of the U.S. -- outside of China and working with our local government officials to pursue exemptions or possible reclassifications.

Our guidance for 2018 takes into account the initial 10% increase that went into effect in September 24, and we are bringing in additional inventory in the fourth quarter ahead of the next proposed increased schedule for January 1. In terms of 2019 and beyond, we believe, through a combination of the efforts I just mentioned and select price increases, that we'll able to offset the majority of the impact to our gross margins.

I'll now hand the call over to Brad who will go through our third quarter financials and guidance in more detail.

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Bradley J. Holiday, ZAGG Inc - CFO [4]

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Thanks, Chris. Since many of the details of our quarterly and year-to-date financial performance were included in the supplemental financial information issued earlier today, I would just like to take a few minutes to add some additional comments with respect to our year-to-date financial performance. Year-to-date sales increased 9% to a record $372 million due to the continued growth of our screen protection and power management product categories. These increases were partially offset by a decrease in sales of our power cases.

As Chris mentioned, the juice pack for the iPhone X just received certification. We had expected this to occur in September, and the delay negatively impacted Q3 by approximately $10 million. While we are pleased that we'll have product at retail for the holiday selling season, we estimate that the later launch date will also impact Q4 by approximately $10 million in sales compared with our previous forecast.

Gross margins as a percent of sales remain strong and improved by 140 basis points due primarily to a higher mix of screen protection sales during the year. Our operating expenses decreased 2% compared to last year due to a $2 million patent impairment charge in 2017 that did not recur this year and a reduction in depreciation and amortization expense. These reductions were partially offset by headcount increases to support our growing business.

Adjusted EBITDA increased 30% to $48 million due to the increase in sales, improved margins and improved leverage on operating expenses. Our earnings per share increased to $0.87 on 28.6 million shares outstanding compared to $0.25 on 28.2 million shares outstanding last year. Importantly, our balance sheet has continued to strengthen. Compared to a year ago, accounts receivable increased 20% to $116 million due primarily to the increase in sales. DSOs increased to 76 days compared to 66 days last year due to the timing of Q3 2018 product launches compared to last year. The overall quality of our receivables remains very good.

Inventory increased 9% to $79 million compared to the same period last year due to higher sales and incremental inventory of the new wireless charging products. Consolidated inventory turns improved to 7x compared to 6.8x last year due to continued improvements in forecasting, channel inventory management and supply chain processes. Net debt, which is consolidated debt less cash, decreased to $10 million compared to $20 million last year. Net debt at the end of third quarter would have been close to 0 had we not invested $6 million over the last 2 quarters to buy back ZAGG stock and use $4 million in cash for the purchase of BRAVEN. We have a sufficient liquidity to meet the demands of our business.

With regards to our cash flow, our priorities have consistently been, in no particular order, to service our outstanding debt, repurchase stock and fund acquisitions. With low outstanding debt, this allows us the flexibility to focus on acquisitions and continued investment in share repurchase. During the third quarter, we repurchased an additional $3 million in stock and have approximately $11 million remaining in our board share repurchase authorization.

A quick comment on SEC filings. In addition to our normal Q3 quarterly filings, we're in the process of updating our S-3 share registration statement that expires in the next few months. We have no current plans to access the public markets, but we maintain an active S-3 as a matter of good corporate governance. We wanted to make sure that no one will be surprised when they saw the S-3 filing in the next few days.

I also wanted to take a few minutes to reiterate some of the actions we're taking on the current tariff situation. As Chris mentioned, we're actively focusing on several mitigation activities, including working with our suppliers to reduce product cost, purchasing certain inventory items in advance of year-end, exploring alternate manufacturing sites outside of China, working with our elected officials and U.S. Customs to apply for tariff exemptions for our impacted products and passing along price increases for certain products.

Last, I want to spend a few minutes discussing our annual guidance. As we've mentioned, the certification for the iPhone X juice pack has been delayed throughout the year, but was recently approved so that we can have product at retail for the holiday selling season. However, power case sales are down $38 million on a year-to-date basis, which we've been able to partially offset with the growth of screen protection and power management.

The additional delay in the launch of this product until Q4 has adversely impacted our annual revenue projections by approximately $20 million. Because of this, we now estimate annual sales to be approximately $535 million compared with our previous range of $550 million to $570 million. Our estimate of gross margins remain unchanged in the low to mid-30s. We estimate now that our annual tax rate will improve slightly to 24% compared to our last estimate of 25%.

And due to the lower sales outlook, we are adjusting our EPS guidance to the lower half of our original guidance, which was a $1.30 to $1.50 and now expect earnings per share in the range of $1.30 to $1.40. This guidance takes into consideration our lower estimated annual tax rate and is based on approximately 28.5 million weighted shares outstanding. Adjusted EBITDA is now expected to be approximately $77 million, which is the low end of our earlier guidance range of $77 million to $80 million.

With that, we will now turn -- open the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question coming from the line of Mike Malouf from Craig-Hallum.

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Michael Fawzy Malouf, Craig-Hallum Capital Group LLC, Research Division - Partner, Senior Research Analyst & Head of Boston Team [2]

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Can we focus a little bit more on the power cases side? In 2017, I think when you got these cases out pretty much on schedule, you did about 70 -- let's call it $76 million. This year, just sort of based on your numbers, it's going to be down 60%, probably. Is this category still as robust as it once was? Meaning, can you do $70 million to $80 million in revenue if you had the product out? And then, I guess, sort of a follow up is, what's going on with the XR. It doesn't look like you have the XS stamped as approved and just kind of give us an update of what's going on with the approvals on subsequent products.

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Chris Ahern, ZAGG Inc - CEO & Director [3]

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Yes. Thanks, Mike. So I would tell you, I still see it very relevant in terms of the category. I would see us being able to get back to that type of revenue. The main thing, as I said in previous calls was, I guess, the pain going through the process of the testing for the certification, as those devices last year brought in wireless for the first time, the protocol and the testing suite was more difficult for us to, basically, to work around. So -- but we feel really confident after just receiving the certification on how to -- how we walk in those parameters. So as we look at the newer devices, we feel strongly that we can bring out juice packs a lot quicker this year for the newer devices, primarily in the Q1 time frame is what we'd be looking at bringing out the new juice packs. So we see it as a real relevant category and one that we really want to capture in 2019.

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Michael Fawzy Malouf, Craig-Hallum Capital Group LLC, Research Division - Partner, Senior Research Analyst & Head of Boston Team [4]

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Okay. Great. And then just a comment on international. It looks like international for the quarter was only up a few percent. Can you give us a little bit of color on what's going on there?

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Chris Ahern, ZAGG Inc - CEO & Director [5]

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Yes. Sure. So firstly, we're still very happy with how international is performing. If you look at last year, in Q3, that was a bit of a -- quite a big load-in in terms of our project that we did for one of our partners, which we didn't have the project this year. But outside of that, the basis continues to grow at the pace that we expect, so we still feel strongly that international has further growth as we go into next year.

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Operator [6]

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And our next question coming from the line of Elliot Alper with D.A. Davidson.

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Elliot Alper, [7]

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Regarding the InvisibleShield with blue light, it seems natural to us that consumers would want the blue light protection beyond smartphone. How should we think about that in the future with products other than smartphone?

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Chris Ahern, ZAGG Inc - CEO & Director [8]

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Yes. Great question there, Elliot. So it's something that we're currently looking at with our product team. So we do see it as an opportunity to further leverage our full portfolio, so for instance, iPads and laptops. It's potentially -- it opens up a whole new revenue stream for us and channels. So we are actively looking at how do we further increase revenue and channels with -- using blue light. I can tell you it's been taken very, very positively from consumers. We couldn't be happier with the launch.

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Operator [9]

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And our next question coming from the line of Dave King with Roth Capital.

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David Michael King, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [10]

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First, on the power case follow-up there. On the guidance, how much revenue do you expect to generate from that segment in Q4 now that you have approval for the X? And then when we all talked in September, I think the thought was that the growth in wireless would be enough to offset the impact from the lack of MFi approval in cases. I guess, what changed on that front? And then how much of the Q4 '17 revenue in wireless was attributable to load-in just like a better...

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Chris Ahern, ZAGG Inc - CEO & Director [11]

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Yes. So Dave we don't -- yes, so on the first question, we don't breakout in terms of the revenue by products. But to the second part of your question, so back in September, we were fully expecting to have the MFi certification at that point in time, so it was more of a combination of having certification at that point in time, plus our wireless ecosystem where we were feeling confident that we could deliver on the guidance. However, with the slippage in the MFi certification, that negatively impacted us. So it was a combination of both where we were feeling comfortable.

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David Michael King, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [12]

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Okay. Since I know you don't want to give a number, do you expect to generate revenue in the fourth quarter than it sounds like from power cases?

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Chris Ahern, ZAGG Inc - CEO & Director [13]

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Yes.

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Bradley J. Holiday, ZAGG Inc - CFO [14]

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Yes. Dave, we had mentioned in our prepared comments that we expect to get product at retail in time for the holiday selling season. So -- but we -- because of the delay, we not only lost some sales in the Q3 time frame, but the sell-through kind of reorders, if you will, for that lost time. So the expectation now is that we'll get something out here in advance of the holiday selling season. But once again, I think we've kind of offset most of the downside that we've seen in juice packs this year, but that delay is just one that was about $20 million that we just don't have much more time for the remainder of the year to offset it that's why we called the estimate down. I would tell you that if you just think about guidance when we were in New York, we've been -- I think we're down $38 million year-to-date. When we were in New York, we were probably at the lower end of our sales guidance, but everything else was in line so we still felt comfortable with our guidance. So we're down about $20 million from that, which puts us down kind of in that $535 million range. That's the thinking behind it from New York when we were out there.

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David Michael King, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [15]

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Okay. Okay. That helps. And then switching gears to screen protectors, it looks like that business continues to have strong momentum. I think it's growing at kind of a mid- to high-teens pace. Assuming that some of that was selling related to VisionGuard this quarter, do you expect you'll be able to hold that kind of growth rate going forward? And then what sort of the right way of thinking about that segment now, is it more Q3 weighted due to device launch timing, load and et cetera? And then have you seen anything related to any slowing iPhone demand as it relates to that business?

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Chris Ahern, ZAGG Inc - CEO & Director [16]

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Yes. So Dave, I would tell you, you look at it from a perspective of innovation. So as we launch the blue light, I mentioned it earlier, we couldn't be any happier with how it's been accepted by consumers and our retailers. So Q3 aside, if we launch an innovative product in any of the quarters, it's going to be well accepted by your consumers and retailers, so we're continuously looking at how we continue to innovate and further drive our business and really differentiate ourselves from the competition. So when you look at it from a revenue perspective, yes, we feel strongly that we can continue this pace and growth and maintain our market share. To your later point around slowness in sales, we haven't seen -- when it comes to attach rate and in terms of our sell-in, it was very strong. We were happy with the launch. So no, we haven't seen anything different from normal launches to be fair.

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Bradley J. Holiday, ZAGG Inc - CFO [17]

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I would just add a couple of things, Dave. I think if you look at the last 12 months on screen protection, the whole category is up 13%, which I think supports what we've been saying, which as these phones get more expensive and as people are financing them, it appears that the overall growth of the screen protection business is going up. So we're, obviously, pleased with that trend. I think with regards to the VisionGuard, new process, it's a little more complicated to make. I would tell you that we're chasing demand a little bit right now and that -- so we got the initial load-in launch and we're working hard with our partner to continue to expand manufacturing, but we think that there's a lot of applications for that. One of the big areas -- channels that we can look at, hopefully, is in the educational area as more and more iPads and devices are put into the educational systems. I think there'll be opportunities for us to take the product there.

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Operator [18]

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And our next question coming from the line of Jeff Van Sinderen with B. Riley.

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Richard Frederick Magnusen, B. Riley FBR, Inc., Research Division - Associate Analyst [19]

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This is Richard Magnusen in for Jeff Van Sinderen. I was wondering if you can give us more color on what's happening with domestic and international screen business?

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Chris Ahern, ZAGG Inc - CEO & Director [20]

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Yes sure. So domestic, for us, I think we continue as we've just said. The marketplace is growing. It's a 30% growth. We still see opportunity for further attach rates as this newer device come out and are more expensive, it's an opportunity for us to really drive our attach rate and work with our partners and educating the consumer base more. So we still see opportunity there. In terms of international, it's primarily driven with ISoD, so the InvisibleShield On Demand system continues to grow. We continue to open more doors with that product. And again, it's something that if you look at the innovation around blue light, it's something that we could take the InvisibleShield On Demand. So we still see further runway for growth, both domestically and internationally, on screen protection.

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Richard Frederick Magnusen, B. Riley FBR, Inc., Research Division - Associate Analyst [21]

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Okay. And then screen protection still has the better margin, right? So what kind of margin improvement can we expect in the screen protection or power management in Q4 to maybe even more so as you progress through 2019?

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Bradley J. Holiday, ZAGG Inc - CFO [22]

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Well, I think on the screen protection, we're obviously always looking for ways that we can get our cost down, if you will. But certainly, the tariff is a bit of a headwind that we're trying to work with right now. So I think, right now, if we could just sort of maintain margins, I think I'd be have very happy with that just given the tariffs that are coming at us. But I think if you followed our company in the past, we have a culture here of always looking for ways to lower our costs, whether it's working on material cost or how we transport freight, et cetera, we're always looking at ways to try to expand it. So that's really one of the goals that we always have underlined, but right now I think tariff is a bit of a headwind there. I think with regards to the whole power management, once again, I would say it falls in the same category that we're always looking at ways that we can improve the cost of goods sold. The better we are at forecasting, products like that, then we have to rely less on air freight and we can go more ocean, which ends up driving higher cost of goods or higher margins for us. So just -- there's a lot of different things that we look at and we're always trying to figure out a way to manage our gross margins. I think if you look at where we are year-to-date, we're up 140 basis points year-to-date, so I think it's just representative of some of the things that we're doing.

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Richard Frederick Magnusen, B. Riley FBR, Inc., Research Division - Associate Analyst [23]

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Okay. And then one last one, where do you stand in terms of market share with the wireless charging?

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Chris Ahern, ZAGG Inc - CEO & Director [24]

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Yes. So on the wireless charging, we're -- the last time I look at it, we're around 22% market share.

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Bradley J. Holiday, ZAGG Inc - CFO [25]

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#2.

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Chris Ahern, ZAGG Inc - CEO & Director [26]

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#2, yes.

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Bradley J. Holiday, ZAGG Inc - CFO [27]

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Yes.

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Operator [28]

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And our last question coming from the line of Mr. Jon Hickman with Ladenburg.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [29]

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I just have a couple of questions. Could you clarify it for me, on the On Demand, is VisionGuard available in the On Demand system yet?

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Chris Ahern, ZAGG Inc - CEO & Director [30]

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So not yet. As Brad mentioned, we're kind of chasing demand on that product right now. But we fully intend to take that technology to InvisibleShield On Demand, yes.

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Bradley J. Holiday, ZAGG Inc - CFO [31]

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But it's mostly glass products.

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Chris Ahern, ZAGG Inc - CEO & Director [32]

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It's all glass products for now, but we will take it to our ISoD.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [33]

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And then how long does it going to take you that product out to the Cell Phone Repair to the 400?

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Chris Ahern, ZAGG Inc - CEO & Director [34]

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Difficult times right now, Jon, I tell you because we're really focusing on trying to get the demand for the set of devices on glass. We'll have a better picture as we get towards the end of the year. But I would tell you, we'd be confident in getting product out there early next year, for sure, in Q1.

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Bradley J. Holiday, ZAGG Inc - CFO [35]

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But we do sell our current product at the CPR location in packaged product. So not only do they have a ISoD, but they carry our current lineup of screen protection. So they have it now.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [36]

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Yes. That's what I meant, how -- do all of those outlets have ISoD now?

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Bradley J. Holiday, ZAGG Inc - CFO [37]

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No. Not yet, but I'm saying that we have packaged glass product throughout the addition. That's available. The film will not be available for a while. So they have a ISoD, but not for the VisionGuard for film.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [38]

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Yes. But they do have ISoD for just the glass? I mean do all of those outlets have ISoD?

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Bradley J. Holiday, ZAGG Inc - CFO [39]

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They have ISoD, but that is just for film. Just to be clear, you can only -- film. So they have the ISoD machines. We've rolled them out, I think, to a majority of their locations.

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Chris Ahern, ZAGG Inc - CEO & Director [40]

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Yes. And we'll be finished to all 400 locations by the end of the year.

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Bradley J. Holiday, ZAGG Inc - CFO [41]

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In addition to that, they make several SKUs of our packaged glass products on shelf.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [42]

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Okay. And what about internationally? What's happening -- can you break out Asia for us?

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Bradley J. Holiday, ZAGG Inc - CFO [43]

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No. We don't break it out sub-region like that. But I think as we commented on when we were in New York, the growth that we're seeing from Asia is very positive and encouraging. So we would expect that to be one of the growth drivers as we look at international. But one that you have to very selective in who your partners are, et cetera, but we're seeing nice growth over there. Anything you would add, Chris?

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [44]

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So those Asian countries are accepting -- I mean, can you give us an idea of what the attach rates are versus here in the United States?

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Chris Ahern, ZAGG Inc - CEO & Director [45]

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We don't have the attach rates. What I can tell you, in ANZ, the attach rates are good, so they would be comparable with some of our leading countries across Europe. But as you look at Asia as a whole, it's very difficult for us to do that. We're focused primarily on the high-end retailers. So we'll have a better picture as we go into next year, Jon, but I can tell you that we are ahead of our growth projections for Asia this year.

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Bradley J. Holiday, ZAGG Inc - CFO [46]

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And I would just add Jon, with Asia, the one thing that's kind of opened up Asia for us is when we launched the wireless charge pads because we have -- certainly, Apple has distribution points over there, and that's been pretty well received. So I think that foray into international, in particular China, has been more around power products.

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Chris Ahern, ZAGG Inc - CEO & Director [47]

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Yes.

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Operator [48]

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And at this time, I'm showing no further questions. I would like to turn the call back over to Mr. Chris Ahern for closing remarks.

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Chris Ahern, ZAGG Inc - CEO & Director [49]

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Okay. Thank you, all, for joining us on the Q3 call. We look forward to updating you, again, for the Q4. Thank you very much.

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Operator [50]

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Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Everyone, have a great day.