Zoom Telephonics Reports 2018 First Quarter Financial Results Highlighted by a 62% Increase in Net Sales, Gross Margin Expansion, and Profitability

BOSTON--(BUSINESS WIRE)--Zoom Telephonics, Inc. (“Zoom”) (OTCQB: ZMTP) (the “Company”), a leading producer of cable modems and other communication products, today reported financial results for its 2018 first quarter ended March 31, 2018.

2018 First Quarter Financial Highlights (comparisons to prior year’s period)

• Net sales increased 62.0% to $8.3 million due to the strength of Zoom’s Motorola brand products;
• Gross margin improved to 39.4% from 33.7%; and
• Net income was approximately $359,000 or $0.02 per share, compared to a net loss of $1.1 million or $0.07 per share

Management Commentary

Frank Manning, Zoom’s President and CEO, commented on the quarter, “We were pleased to report dramatic organic growth, fueled primarily by increased sales of our Motorola brand cable modems and gateways products. Zoom is continuing to grow market share as a result of customers choosing our Motorola products based on strong retail sales channels, product quality, favorable customer reviews, and value. This year we will introduce exciting new Motorola cable modem/routers as well as launch new Motorola routers, DSL and MoCA products, cellular modems, and cellular sensors. Our balance sheet remains solid, and we are excited about our prospects and future growth in the US as well other countries.”

2018 First Quarter Financial Review

The Company reported an increase in net sales of 62.0% to $8.3 million for the first quarter ended March 31, 2018, up from $5.1 million for the first quarter ended March 31, 2017.

Gross profit was $3.3 million, or 39.4% of net sales, in the 2018 first quarter, as compared to $1.7 million, or 33.7% of net sales, for the same period of 2017. The increase in gross profit was primarily due to an increase in sales of Motorola brand cable modems and gateways, which are higher margin products for the Company.

Operating expenses were $2.9 million, or 34.9% of net sales, in the 2018 first quarter, compared to $2.8 million, or 54.1% of net sales, in the same period of 2017. Selling expenses increased approximately $208,000 to $2.1 million for the 2018 first quarter, primarily due to increases in Motorola trademark royalty costs and in advertising expenses. General and administrative expenses slightly increased for the 2018 first quarter to $448,000 attributable to additional sales tax expense, which was largely offset by decreases in stock compensation expense. Research and development expenses were $410,000 for the 2018 first quarter, compared to $508,000 in the same period of 2017, as a result of decreases in certification expenses and in contracted app development costs.

Zoom reported net income of $359,000, or $0.02 per share, for the 2018 first quarter compared to a net loss of $1.1 million, or $0.07 per share, in the same period of 2017. The significant improvement in profitability was due to higher sales, improved gross profit margin, and lower operating expenses as a percentage of sales.

Balance Sheet Highlights

At March 31, 2018, Zoom had $423,000 in cash, $50,000 drawn on a $3.0 million line of credit, working capital of $3.2 million, a current ratio of 1.5, and no long-term debt.

To access the call, please dial-in approximately five minutes before the start time and, when asked, provide the operator with the conference ID 1999214. An accompanying slide presentation will be available in .pdf format via the “Investor Relations” section of Zoom Telephonics’ website at www.zoomtel.com/SQ118 shortly before the call.

About Zoom Telephonics

Zoom Telephonics, Inc. designs, produces, markets, and supports cable modems and other communication products. The Company’s worldwide Motorola license agreement includes cable modems and gateways, DSL modems and gateways, cellular modems and routers and sensors, and other Internet and network products. For more information about Zoom and its products, please visit www.zoomtel.com/investor and www.motorolanetwork.com.

MOTOROLA and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license.

Forward Looking Statements

This release contains forward-looking information relating to Zoom’s plans, expectations, and intentions. Actual results may be materially different from expectations as a result of known and unknown risks, including: the potential need for additional funding which Zoom may be unable to obtain; declining demand for certain of Zoom’s products; delays, unanticipated costs, interruptions or other uncertainties associated with Zoom’s production and shipping; Zoom’s reliance on several key outsourcing partners; uncertainty of key customers’ plans and orders; risks relating to product certifications; Zoom’s dependence on key employees; uncertainty of new product development, including certification and overall project delays, budget overruns, and the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated; costs and senior management distractions due to patent-related matters; and other risks set forth in Zoom’s filings with the Securities and Exchange Commission. Zoom cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Zoom expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in Zoom’s expectations or any change in events, conditions or circumstance on which any such statement is based.