Form 8-K CONTROL4 CORP For: Jul 30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 28,  2015 

 

 

Control4 Corporation

(Exact name of registrant as specified in its charter)

 

 

 

 

(801) 523-3100

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

 

 

 

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Item 2.02 Results of Operations and Financial Condition.

On July 30, 2015, Control4 Corporation (the “Company”) issued a press release announcing unaudited financial results for its quarter ended June 30, 2015. A copy of the press release is attached as Exhibit 99.1.

In accordance with General Instruction B.2 on Form 8-K, the information contained in this Item 2.02 and Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”) or otherwise subject to the liability of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in such filing.

 

Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Departure of a Director

 

On July 28, 2015,  Christopher Paisley provided notice to the Company of his intention to resign as a member of its Board of Directors (the “Board”) and all committees thereof effective August 31, 2015.  Mr. Paisley indicated that he has decided to limit his board participation to companies headquartered in the San Francisco Bay Area, in order to better accommodate his teaching schedule and other commitments at Santa Clara University.   Prior to announcing his decision, Mr. Paisley was filling the roles of Audit Committee Chairperson and Lead Independent Director. Following Mr. Paisley’s announcement, the Board elected to reduce the number of directors on the Board from eight to seven effective as of August 31, 2015. Mr. Paisley’s departure is not due to any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices, and the composition of the Company’s Audit Committee continues to meet all independence and other requirements pursuant to applicable NASDAQ and SEC rules.

 

New Board Committee Leadership Assignments

lThe Board has appointed current Board member, Mark Jensen, to serve as Audit Committee Chairperson and current Board member, David Habiger, to serve as Lead Independent Director.  The Board made these changes in assignments effective immediately following Mr. Paisley’s announcement. 

Mr. Jensen is currently serving on the Company’s Audit Committee and is a natural fit to step in as its Chairperson. Mr. Jensen has over 30 years of significant transactional, operational, and leadership experience, including providing accounting and advisory services on numerous IPOs, M&A transactions, and corporate financings and reorganizations.  Mr. Jensen  previously served as U.S. Managing Partner-Audit and Enterprise Risk Services, Technology Industry at Deloitte & Touche for more than 10 years, and prior to his employment with Deloitte & Touche, Mr. Jensen spent more than 20 years at Arthur Andersen LLP and was the Managing Partner of its Silicon Valley office. Mr. Jensen will act as the the Audit Committee’s “audit committee financial expert” as defined under applicable SEC rules.    

Mr. Habiger brings a depth of experience to the role of Lead Independent Director.  Mr. Habiger has served as a member of Control4’s Board since 2012, and currently serves as the Compensation Committee Chairperson and as a member of the Nominating and Governance Committee. Mr. Habiger is a senior advisor to Silver Lake Partners and a venture partner at the Pritzker Group. Prior to that, Mr. Habiger served as the chief executive officer of several technology companies including NDS Group Ltd., a provider of video software and content security solutions, and Sonic Solutions, a provider of software for digital media.  In his role as Lead Independent Director, Mr. Habinger will, among other responsibilities, preside at all Board meetings at which the Chairman of the Board is not present, including executive sessions of the independent directors, serve as a liaison between the Chairman of the Board and the independent directors, review and approve Board meeting agendas and serve as a point of contact for Company stockholders wishing to communicate with the Company’s independent directors.

Messrs. Jensen and Habiger will each continue to receive compensation for his service on the respective committees of the Board in accordance with the Company’s director compensation policy, which is described in the Company’s most

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recent Proxy Statement filed on April 2, 2015.  In addition, the Company will provide an annual cash retainer of $6,000 for the Board’s Lead Independent Director.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 30, 2015

 

 

 

 

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EXHIBIT INDEX

 

 

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Control4 Announces Financial Results for Second Quarter 2015

Record Revenue Quarter; 22% Year-over-Year Revenue Growth

 

 

SALT LAKE CITY — July 30, 2015 — Control4 Corporation (NASDAQ: CTRL), a leading provider of automation and control solutions for the connected home, today announced financial results for its second quarter ended June 30,  2015.

 

Revenue for the second quarter of 2015 was $44.6 million, compared to revenue of $36.7 million for the second quarter of 2014, representing a  year-over-year growth rate of 22%.   Revenue for the first half of 2015 grew 12% year-over-year, from $68.5 million to $76.7 million.

 

Net income for the second quarter of 2015 was $2.0 million, or $0.08 per diluted share, consistent with the net income of $2.0 million, or $0.08 per diluted share, in the second quarter of 2014.  Net loss for the first half of 2015 was $2.2 million, or $0.09 per diluted share, compared to net income of $1.5 million, or $0.06 per diluted share, for the first half of 2014.    

 

Non-GAAP net income for the second quarter of 2015 was  $4.1 million, or $0.16 per diluted share, compared to non-GAAP net income of $3.6 million, or $0.14 per diluted share, in the second quarter of 2014.  Non-GAAP net income for the first half of 2015 was $3.0 million, or $0.12 per diluted share, compared  to non-GAAP income of $4.4 million, or $0.17 per diluted share, in the first half of 2014.  A reconciliation of GAAP to non-GAAP financial information is contained in the attached tables. 

 

“Our double-digit growth rate resumed in March and then continued in the second quarter, resulting in our highest revenue quarter ever,” said Martin Plaehn, chairman and chief executive officer of Control4.    “We are confident in the competitiveness and value proposition of our core automation solutions – intelligent lighting, multi-room audio and video, family-room entertainment, and safety and security offerings, all powered by the Control4 platform.”

 

Commenting on the company’s financial results for the second quarter, Dan Strong, chief financial officer of Control4, added: “Our revenue growth in the quarter was propelled by strong fundamental demand across multiple geographies and across all aspects of our product portfolio.  Our core revenue increased 22% compared to the second quarter of 2014, and 39% sequentially from the first quarter of this year.”

 

Guidance

 

For the third quarter of 2015, the company expects revenue to be between $44 million and $47 million, and expects non-GAAP net income to be between $2.5 million and $4.0 million, or between $0.10 and $0.16 per diluted share. The company expects revenue growth for the second half of 2015 to be between 12% and 18%, which when combined with the revenue growth for the first half of 2015, represents revenue growth for the year to be between 12% and 15%.

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Q2 2015 Operational Metrics    

 

 

 

 

Conference Call

 

On July 30, 2015, Control4 Corporation (NASDAQ: CTRL) will host an investor conference call and will webcast the event beginning at 3:00 p.m. Mountain Time (5:00 p.m. Eastern Time). To access the conference call, dial 913-312-0971 or 888-219-1456 (toll free) and enter passcode 7695130.  The webcast and replay will be accessible on Control4’s investor relations website at http://investor.control4.com/. 

 

A replay of the conference call will be available within two hours of the conclusion of the conference through August 13, 2015.  To access the replay, please dial 719-457-0820 or 888-203-1112 and enter passcode 7695130.

 

 

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About Control4 Corporation (NASDAQ: CTRL):

 

Control4 [NASDAQ: CTRL] is a leading provider of automation systems for homes and businesses, offering personalized control of lighting, audio, video, temperature, security, communications and similar functionalities into a unified home-automation solution that enhances the daily lives of its customers. Control4 unlocks the potential of connected devices, making entertainment systems easier to use, homes more comfortable and energy efficient, and families more secure. More than 75% of Control4's consumers have integrated two or more functionalities with Control4's solution, which is available through more than 3,400 dealers, retail outlets, and distributors in over 90 countries. By delivering insightfully simple control solutions that enhance the lives of individuals and families, Control4 is the automation platform of choice for consumers, major consumer electronics companies, hotels, and businesses around the world.

 

Forward-Looking Statements

 

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding Control4’s future financial performance on both a GAAP and non-GAAP basis, expectations relating to the market awareness and proliferation of smart home devices and home automation, and the competitiveness and value proposition of the Company’s solutions. All statements other than statements of historical fact contained in this press release are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These forward-looking statements are made as of the date they were first issued and are based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Control4’s control. Control4’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Control4’s risk factors discussed in filings with the U.S. Securities and Exchange Commission (“SEC”), including but not limited to Control4’s Annual Report on Form 10-K for the year ended December 31, 2014,  as well as other documents that may be filed by the Company from time to time with the SEC. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the ability of Control4 to remain competitive and maintain its position in the market; Control4’s ability to increase market awareness of its solution and brand, including through direct-to-consumer marketing efforts; the ability of dealers and distributors to sell Control4 solutions; unexpected fluctuations in quarterly operating results; the ability of Control4 to develop new solutions and develop and expand its network of dealers and distributors; the ability of Control4 to realize the intended benefits of its strategic relationships; the compatibility of Control4 solutions with third-party products and applications; the ability of Control4 to adapt to technological changes; changes in the demand for Control4’s solutions may develop more slowly than expected; the loss of key employees; increased demands on employees and costs associated with operating as a public company; general political or destabilizing events, including war, conflict, acts of terrorism or cyber attacks; and other risks and uncertainties. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Control4’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Control4 undertakes no intention or obligation to

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update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. These forward-looking statements should not be relied upon as representing Control4’s views as of any date subsequent to the date of this press release.

 

Non-GAAP Financial Measures

 

Control4’s stated results include certain non-GAAP financial measures, including non-GAAP gross margin, non-GAAP gross margin percentage, non-GAAP income from operations, non-GAAP operating income percentage, non-GAAP net income, non-GAAP net income per diluted share, and net investments.  Non-GAAP gross margin, non-GAAP income from operations, and non-GAAP net income exclude non-cash expenses related to stock based compensation, amortization of intangible assets, acquisition-related costs, as well as expenses related to litigation settlements.  

 

Management believes that it is useful to exclude stock-based compensation expense because the amount of such expense in any specific period may not directly correlate to the underlying performance of the business operations.

 

The Company has recently completed acquisitions which resulted in operating expenses that would not have otherwise been incurred. Management has provided supplementary non-GAAP financial measures, which exclude acquisition-related expense items resulting from acquisitions, to allow more accurate comparisons of the financial results to historical operations, forward-looking guidance and the financial results of less acquisitive peer companies. Management considers these types of costs and adjustments, to a great extent, to be unpredictable and dependent on a significant number of factors that are outside of the Company’s control. Furthermore, the Company does not consider these acquisition-related costs and adjustments to be related to the organic continuing operations of the acquired businesses and are generally not relevant to assessing or estimating the long-term performance of the acquired assets. In addition, the size, complexity and/or volume of past acquisitions, which often drives the magnitude of acquisition-related costs, may not be indicative of the size, complexity and/or volume of future acquisitions. By excluding acquisition-related costs and adjustments from the non-GAAP measures, management is better able to evaluate the ability to utilize its existing assets and estimate the long-term value that acquired assets will generate. The Company believes that providing a supplemental non-GAAP measure which excludes these items allows management and investors to consider the ongoing operations of the business both with, and without, such expenses.

 

These acquisition-related costs are included in the following categories: (i) professional service fees, recorded in operating expenses, which include third party costs related to the acquisition, and legal and other professional service fees associated with diligence, entity formation and corporate structuring, disputes and regulatory matters related to acquired entities; and (ii) acquisition-related adjustments which include adjustments to acquisition-related items such as being required to record Nexus inventory at its fair value, resulting in a step-up in the inventory value. The step-up is recorded through cost of goods sold when the inventory is sold, resulting in a negative impact to our gross margin. Although these expenses are not recurring with respect to past acquisitions, the Company will generally incur these expenses in connection with any future acquisitions.

 

The Company excludes the amortization of acquired intangible assets from non-GAAP measures. These amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. Providing a supplemental measure which excludes these charges allows management and investors to evaluate results “as-if” the acquired intangible assets had been developed internally

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rather than acquired. Although the Company excludes amortization of acquired intangible assets from non-GAAP measures, management believes that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Future acquisitions may result in the amortization of additional intangible assets.

 

Furthermore, we believe it is useful to exclude expenses related to litigation settlements because of the variable and unpredictable nature of these expenses which are not indicative of past or future operating performance. We believe that past and future periods are more comparable if we exclude those expenses.

 

Management provides a non-GAAP measure representing the fair market value of the available-for-sale investments. We account for purchases and sales of investments on a trade-date basis. This is a non-GAAP measure representing the fair market value of our available-for-sale investments on a settlement date basis because from time to time, the investment trade date and the investment settlement date will cross a reporting period. We believe presentation of our investments on a settlement date basis is relevant to readers of our financial statements.

 

Management believes these adjustments provide useful comparative information to investors. Non-GAAP results are presented for supplemental informational purposes only for understanding the operating results. The non-GAAP results should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies. The non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the industry, as other companies in the industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. Management urges investors to review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate the business.

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CONTROL4 CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

 

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CONTROL4 CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

 

 

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CONTROL4 CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

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CONTROL4 CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except percentages and per share data)

(unaudited)

 

 

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CONTACTS:

 

 

 

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Source: Control4

 

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