DTS trades on the NASDAQ under the symbol DTSI.
For more information visit: www.dts.com
Unedited press release follows:
DTS REPORTS SECOND QUARTER 2012 RESULTS
Network-Connected Revenue Increases 81% in Challenging Macro Environment
CALABASAS, Calif. (August 6, 2012) – DTS, Inc. (Nasdaq: DTSI) today announced financial results for the second quarter ended June 30, 2012.
Revenue for the second quarter was $21.8 million, including 81% year-over-year growth from the network-connected markets and $120,000 in royalty recoveries. This compares to revenue of $20.6 million in the second quarter of 2011, which included $348,000 in royalty recoveries. Excluding royalty recoveries, the 7% year-to-year growth in total revenue resulted primarily from significant growth in the network-connected markets, offset by softness in Blu-ray as well as declines in DVD-based products and broadcast.
Reflecting a year-over-year increase in investment in the fast-growing network-connected space, non-GAAP net income was $3.5 million, or $0.21 per diluted share net of tax, compared to non-GAAP net income of $4.2 million, or $0.24 per diluted share net of tax, in the second quarter of 2011. Non-GAAP operating margin in the second quarter of 2012 was 26%, compared to 34% in the second quarter of 2011. GAAP net loss was $755,000, or a loss of $0.05 per diluted share, compared to net income of $2.6 million, or $0.14 per diluted share, in the second quarter of 2011. GAAP net loss for the second quarter of 2012 includes $2.9 million, or $0.11 per diluted share net of tax, in stock-based compensation expense; $2.3 million, or $0.14 per diluted share, in non-deductible costs related to the recently completed acquisition of SRS Labs, Inc.; and $274,000, or $0.01 per diluted share net of tax, in amortization of intangibles.
The GAAP and non-GAAP reconciling items for the second quarters of 2011 and 2012 can be found in the “Non-GAAP Financial Metrics” schedule attached to this press release and on the investor relations portion of our website at www.DTS.com.
The Company generated $3.8 million in cash flow from operations during the second quarter of 2012, compared to $6.7 million during the second quarter of 2011, and closed the quarter with cash and investments of $103.2 million.
“Our growth in the second quarter was impacted by weakness in consumer electronics spending with regard to Blu-ray,” said Jon Kirchner, chairman and CEO of DTS, Inc. “However, our strategy is squarely focused on the network-connected markets, in which we posted year over year growth of 81%. These markets were the largest contributors to our revenues this quarter, and we expect them to represent the majority of our business going forward. As we complete the integration of SRS Labs, including combining product and technology roadmaps, DTS is in an even better position to continue to seize the market opportunities presented by cloud-based entertainment and the proliferation of connected devices. We expect to realize annual synergies of at least $8 million beginning in 2013.”
DTS management will provide details of its full fiscal year outlook and expectations for the combined company through 2013 on the conference call set to take place today, Monday, August 6, 2012, starting at 1:30 p.m. Pacific Time. The outlook is based on a number of assumptions that the Company believes are reasonable at the time of this press release. Information regarding potential risks that could cause the actual results to differ from these forward-looking statements is set forth below and in the Company’s filings with the Securities and Exchange Commission.
Use of Non-GAAP Financial Information
Included within this press release are non-GAAP financial measures that supplement the Company’s Consolidated Statements of Income prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company’s actual results prepared under GAAP to exclude charges and the related income tax effect for stock-based compensation, the amortization of intangible assets, and certain acquisition-related charges. Reconciliation of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Consolidated Statements of Income. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company’s management believes that this information can assist investors in evaluating the company’s operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate DTS’ financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarding as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures.
Conference Call Information for Monday, August 6, 2012
DTS will broadcast a conference call today, Monday, August 6, 2012, starting at 1:30 p.m. Pacific Time, to discuss its second quarter financial results. To access the conference call, dial 1-877-941-0843 or 1-480-629-9819 (outside the U.S. and Canada). A live webcast of the call will be available from the Investor Relations section of the Company’s corporate website at www.DTS.com and via replay beginning two hours after the completion of the call. An audio replay of the call will also be available to investors beginning at 11:59 p.m. Pacific Time, August 6, 2012 through 11:59 p.m. Pacific Time, August 13, 2012, by dialing 1-800-406-7325 or 1-303-590-3030 (outside the U.S. and Canada) and entering pass code 4555947#.
About DTS, Inc.
DTS, Inc. (NASDAQ:DTSI) is dedicated to making digital entertainment exciting, engaging and effortless by providing state-of-the-art audio technology to over a billion consumer electronics products worldwide. From a renowned legacy as a pioneer in high definition multi-channel audio, DTS became a mandatory audio format in the Blu-ray™ Disc standard and is now increasingly deployed in enabling digital delivery of compelling movies, music, games and other forms of digital entertainment to a growing array of network-connected consumer devices. With the acquisition of SRS Labs, DTS strengthens its position as a leader in providing end-to-end audio solutions to the rapidly growing network entertainment sector. DTS technology is in car audio systems, digital media players, DVD players, game consoles, home theaters, PCs, set-top boxes, smart phones, surround music content and every device capable of playing Blu-ray™ discs. Founded in 1993, DTS’ corporate headquarters are located in Calabasas, California with its licensing operations headquartered in Limerick, Ireland. DTS also has offices in Los Gatos and Santa Ana, California, Washington, China, France, Hong Kong, Japan, Singapore, South Korea, Taiwan and the United Kingdom.