ZAGG INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(Unaudited)

						As of December 31,
						2018						2017
ASSETS
Current assets:
			Cash and cash equivalents			$	15,793					$	24,989
			Accounts receivable, net of allowances of $885 and $734			156,667						123,220
			Income tax receivable			375						—
			Inventories			82,919						75,046
			Prepaid expenses and other current assets			5,473						4,547
Total current assets									261,227						227,802
Property and equipment, net of accumulated depreciation of $11,844 and $12,540									16,118						13,444
Intangible assets, net of accumulated amortization of $78,627 and $66,639									52,054						39,244
Deferred income tax assets									19,403						24,403
Goodwill									27,638						12,272
Other assets									1,571						3,426
Total assets									$	378,011					$	320,591
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
			Accounts payable			$	80,908					$	96,472
			Income tax payable			—						2,052
			Sales returns liability			54,432						34,536
			Accrued wages and wage related expenses			6,624						5,652
			Accrued liabilities			13,723						8,168
			Deferred revenue			—						315
			Line of credit			—						23,475
			Current portion of long-term debt, net of deferred loan costs of $0 and $141			—						13,922
Total current liabilities									155,687						184,592
Line of credit									58,363						—
Other long-term liabilities									5,470						—
Total liabilities									219,520						184,592
Commitments and contingencies
Stockholders' equity:
			Common stock, $0.001 par value; 100,000 shares authorized; 34,457 and 34,104 shares issued			34						34
			Treasury stock, 6,983 and 6,065 common shares, at cost			(49,733)						(37,637)
			Additional paid-in capital			96,486						96,145
			Accumulated other comprehensive loss			(1,410)						(348)
			Retained earnings			113,114						77,805
Total stockholders' equity									158,491						135,999
Total liabilities and stockholders' equity									$	378,011					$	320,591

¹   Income tax effect cal culated using the 2018 statutory rate of 27.04%

March 12, 2019

ZAGG Reports Fourth Quarter and Full Year 2018 Results

Board of Directors Approves New $20 Million Share Repurchase Authorization

SALT LAKE CITY, March 12, 2019 (GLOBE NEWSWIRE) – ZAGG Inc (Nasdaq: ZAGG), a leading global mobile lifestyle company, today announced financial results for the fourth quarter and year ended December 31, 2018 .

Fourth Quarter   2018 Highlights (Comparisons versus Fourth Quarter   2017 )

• Net sales of $166.5 million compared to $176.9 million

• Gross profit of 35% compared to 32%

• Net income of $14.3 million compared to $8.1 million

• Diluted earnings per share of $0.52   compared to $0.28

• Adjusted EBITDA of $28.1 million compared to $35.8 million

2018   Full Year Highlights (Comparisons versus Full Year   2017 )

• Net sales of $538.2 million   compared to $519.5 million

• Gross profit of 35% compared to 33%

• Net income of $39.2 million compared to $15.1 million

• Diluted earnings per share of $1.38 compared to $0.53

• Adjusted EBITDA of $76.4 million compared to $73.0 million

• Acquired BRAVEN Audio and Gear4

Chris Ahern, c hief e xecutive o fficer, commented, “ Our fourth quarter performance was shaped by results from our core business that were generally in-line with our expectations coupled with incremental revenue, expenses and transaction costs associated with our acquisition of Gear4. While soft demand for smartphone devices has created some headwinds for our business, we were able to increase screen protection sales double digits through new product innovation, strong international growth and some domestic retailer requests for early deliveries ahead of a potential tariff increase. As expected, fourth quarter power sales were down as we lapped the launch and sell-in of our initial wireless charge pad a year ago combined with the impact on juice pack demand from the previously discussed delay in made for iPhone certification. ”

“ Despite certain challenges, we delivered record sales and profitability in 2018,” continued Mr. Ahern. “We also executed three strategic acquisitions that diversify our business and represent compelling growth vehicles for the future. With our expanding portfolio of authentic brands, robust product innovation teams, and network of leading retail partners, we have created a powerful platform to capture additional share of the multi-billion dollar mobile accessories market. In 2019, we plan to invest in additional programs to ensure the Company is best positioned to capitalize on the numerous opportunities we believe exist for ZAGG, including investment to drive growth from our recent acquisitions. I am confident in the course we have set for achieving our long-term goal of $1 billion in annual sales and mid-teens Adjusted EBITDA margins . ”

Fourth Quarter 2018 Results ( in millions, except per share amounts)

¹   “Diluted operating earnings per share” excludes the impact of transaction-related expenses incurred for the BRAVEN and Gear4 acquisitions in 2018 and HALO acquis ition in 2019 , including the following charges: transaction costs, inventory step-up, and amortization expense. See further discussion below under “About Non-GAAP Financial Information”.

Net sales   decrease d 6% to $166.5 million, compared to $176.9 million. The decrease in net sales was primarily attributable to (1) decreased sales of wireless charging accessories due to challenging sell-in comparisons from the initial product launch last year, and (2) a decrease in sales of power cases. These decreases were partially offset by increased sales of screen protection products driven by the new iPhone® launch as well as the introduction of the Glass + VisionGuard® screen protection products.

Gross profit was $58.5 million ( 35% of net sales) compared to $56.2 million ( 32% of net sales). The increase in gross profit margin was primarily attributable to the mix of screen protection products, our highest margin product category, which increased to 57% of net sales during the three months ended December 31, 2017 compared to 39% of net sales in the same period last year.

Operating expenses   increase d 45% to $38.1 million ( 23% of net sales) compared to $26.2 million ( 15% of net sales). The increase in operating expenses was primarily attributable to (1) a $7.0 million gain recorded in the year ago period associated with the settlement of litigation related to the disputed mophie purchase price, ( 2) additional selling, general and administrative expense associated with the newly acquired BRAVEN and Gear4 businesses, ( 3) transaction costs incurred in connection with the acquisition of Gear4   in November 20 18 and HALO in January 2019 , and ( 4) higher amortization of long-lived intangibles related to the BRAVEN and Gear4 acquisition s . These increases were partially offset by a decrease in depreciation expense resulting from lower carrying amounts of property and equipment during the three months ended December 31, 2018.

Net income increased 78% to $14.3 million compared to $8.1 million. Diluted earnings per share increase d 86% to $0.52 (on   28.3 million shares) compared to $0.28 (on 28.8 million shares). The fourth quarter of 2017   included a primarily non-cash charge of $12.4 million to income tax expense to reflect (1) the re-measurement of deferred tax assets utilizing the lower federal income tax rate and (2) the tax on mandatory deemed repatriation of foreign earnings following the passage of the Tax Cuts and Jobs Act in December 2017. Excluding the impact of tax reform, fourth quarter 2017 net income was $20.5 million and diluted earnings per share was $0.71.

Adjusted EBITDA was $28.1 million compared to $35.8 million.

Full Year 2018 Resul ts   (in millions, except per share amounts)

¹ “Diluted operating earnings per share” excludes the impact of transaction-related expenses incurred for the BRAVEN and Gear4 acquisitions in 2018 and HALO acquisition in 2019 , including the following charges: transaction costs, inventory step-up, and amortization expense. See further discussion below under “About Non-GAAP Financial Information”.

Net sales   increase d 4% to $538.2 million, compared to $519.5 million. The increase in net sales was primarily attributable to (1) increases in screen protection products driven by the new iPhone launch as well as the introduction of the Glass + VisionGuard screen protection products, and (2) the increase in sales of our power management products, specifically related to wireless charging accessories. These increases were partially offset by a decrease in sales of power cases .

Gross profit increase d 10% to $185.9 million ( 35% of net sales) compared to $169.0 million ( 33% of net sales). The increase in gross profit margin was primarily attributable to the mix of screen protection products, our highest margin product category, which increased to approximately 57% of net sales for the year ended December 31, 2018 compared to approximately 48% of net sales for the year ended December 31, 2017.

Operating expenses increase d 8% to $134.2 million ( 25% of net sales) compared to $124.3 million ( 24% of net sales). The increase was primarily attributable to (1) a $7.0 million gain recorded in the year ago period associated with the settlement of litigation related to the disputed mophie purchase price, (2) increases in headcount to support additional growth of the Company, (3) additional selling, general and administrative expense associated with the newly acquired BRAVEN and Gear4 businesses, and (4) transaction costs incurred in connection with the acquisition of BRAVEN and Gear4 in 2018, and HALO in January 2019 . These increases were partially offset by (1) a decrease in depreciation expense, (2) a $2.0 million charge in 2017 related to the impairment of a patent that did not recur in 2018, and (3) operating expense synergies realized related to the mophie integration.

Net income increase d 160% to $39.2 million compared to net income of $15.1 million. Diluted earnings per share increase d 160% to $1.38 (on 28.5 million shares) compared to $0.53 (on 28.4 million shares). The fourth quarter of 2017 included a primarily non-cash charge of $12.4 million to income tax expense to reflect (1) the re-measurement of deferred tax assets utilizing the lower federal income tax rate and (2) the tax on mandatory deemed repatriation of foreign earnings following the passage of the Tax Cuts and Jobs Act in December 2017. Excluding the impact of tax reform, 2017 net income was $27.5 million and diluted earnings per share was $0.97 .

Adjusted EBITDA increase d 5%   to $76.4 million compared to $73.0 million.

Acquisitions

During 2018 and e arly January 2 019, the Company   acquired three additiona l brands to str en g th en its   leadership position in mobile li festyle :

• I n July 2018, the Company purchased BRAVEN , t he creat or of the rugged B luetooth aud io categor y , for cash cons ideration of approximately $4. 5 million.

• In November 2018, the Company purchased Gear4, the U.K.'s nu mber one smartphone ca se brand, for a combination of cash and stock consideration valued at appro ximately $ 3 9.8   million.

• In Janua ry 2019, the Company purchased HALO, a leadin g dire ct -to-consumer access ories c ompany with a strong relationship with QVC, for a combination of cash and stock consideration totaling approximately $ 43.0 million.

The a ddition of these three brands pro vide s the Company with increased   diversification and   an innovative   p roduct portfolio in the growing product categorie s of Bluetooth audio, rugged ca ses, and portable power . The Co mpany   expect s to grow sales and profitability over the next several years by taking these brands to its   current retail distribution network and further investing in the di rect -to-consumer chan n el .

Share Repurchase Authorization

On March 11, 2019, the Board of Directors approved a new $20 .0 million share repurchase authorization. This authorization replaces the $20 .0 million share repurchase authorization the Board approved during the fourth quarter of 2015, which had approximately $5 . 5 million remaining at the end of 2018.

2019 Business Out look

For the full year 2019, the Company currently expects the following:

• Net sales of $610 to $630 million

• Gross profit margin as a percentage of net sales in the mid 30's range

• Adjusted EBITDA of $82 to $86 million

• Diluted Operating Earni ngs Per Share of $1. 4 7 to $1.6 0

Impact of 2017 Tax Reform Bill

During the fourth quarter of 2017, the United States Government passed the Tax Cuts and Jobs Act (the “Act”), which enacted significant changes to the United   States’ federal tax code, including a reduction in the federal income tax rate for corporations from 35% to 21%. As of December 31, 2017, Management recorded   a primarily non-cash charge of $12.4 million to income tax expense primarily to reflect (1) the re-measurement of deferred tax assets utilizing the lower federal   income tax rate and (2) the tax on mandatory deemed repatriation of foreign earnings.

The impact of this $12.4 million charge on the income tax rate, net income, and earnings per share for the three and twelve months ended December 31, 2017, is   illustrated in the table below (amounts in millions, except per share data):

Conference Call

A conference call will be held today, March 12, 2019 , at 5:00 p.m. Eastern to review these results. Interested parties may access via the Internet on the Company's website at: investors.zagg.com (the URLs are included here in this exhibit as inactive textual references and information contained on, or accessible through, our websites is not a part of, and is not incorporated by reference into, this report).

About Non-GAAP Financial Information

This press release includes   Adjusted EBITDA ,   Diluted Operating Earnings Per Share , and 2017 net income and diluted ea rn ings per share before impact of tax r eform , all of which are non-GAAP financial measure s . Readers are cautioned that (1) Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization , stock-based compensation expense , other expense , transaction costs , mophie restructuring charges, mophie employee retention bonus , consulting fee to former CEO , inventory step-up amount in conjunction with the BRAVEN and Gear4 acquisitions , CEO signing bonus, CFO retention bonus , and i mpairment of intangible asset ) , (2) Diluted Operating Earnings Per Share ( diluted earnings per share excluding the impact of transaction costs, inventory step-up, and amortization expense – all in conjunction with the BRAVEN , Gear4 and HALO acquisitions) , and (3) 2017 net i ncome and diluted earnings per share   before impact of tax reform ( 2017 net income and diluted e a rnings per sh are excluding t he impact of 2017 income tax refor m) are not financial measure under U.S. generally accepted accounting principles ( “ GAAP ” ). In addition, this financial information should not be construed as an alternative to any other measure of performance determined in accordance with GAAP, or as an indicator of operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that it fails to address. As such, it should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. We present Adjusted EBITDA ,   Diluted Operating Earnings Per Share , and 2017 net income and diluted earn ings per share before the impact of tax reform because we believe that these measures are helpful to some investors as a measure of performance and to normalize the impact of acquisitions or 2017 tax reform . We caution readers that non-GAAP financial information, by its nature, departs from traditional accounting conventions. Accordingly, its use can make it difficult to compare current results with results from other reporting periods and with the financial results of other companies. We have provided a reconciliation of Adjusted EBITDA and Diluted Operating Earnings Per Share to the most directly comparable GAAP measures in the supplemental financial information attached to this press release. T he rec onciliation of 2017   net income and diluted earnings per share before the impact of tax reform is provided in th is pr ess release.

Cautionary Note Regarding Forward-Looking Statements

This press release contains (and oral communications made by us may contain) “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “predict,” “project,” “target,” “future,” “seek,” “likely,” “strategy,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our outlook for the Company and statements that estimate or project future results of operations or the performance of the Company.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control.

Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

a the a bility to design, produce, and distribute the creative product solutions required to retain existing customers and to attract new customers;

b building and maintaining marketing and distribution functions sufficient to gain meaningful international market share for our products;

c the ability to respond quickly with appropriate products after the adoption and introduction of new mobile devices by major manufacturers like Apple®, Samsung®, and Google®;

d changes or delays in announced launch schedules for (or recalls or withdrawals of) new mobile devices by major manufacturers like Apple, Samsung, and Google;

e the ability to successfully integrate new operations or acquisitions;

f the impacts of inconsistent quality or reliability of new product offerings;

g the impacts of lower profit margins in certain new and existing product categories , including certain mophie products ;

h the impacts of changes in economic conditions, including on customer demand;

i managing inventory in light of constantly shifting consumer demand;

j the failure of information systems or technology solutions or the failure to secure information system data, failure to comply with privacy laws, security breaches, or the effect on the Company from cyber-attacks, terrorist incidents or the threat of terrorist incidents;

k changes in US and international trade policy an tariffs, including the possible effect of recent US tariff proposals on select materials used in the manufacture of products sold by the Company which are sourced from China ;

l adoption of or changes in accounting policies, principles, or estimates; and

m changes in the law, economic and financial conditions, including the effect of enactment of US tax reform or other tax law changes .

Any forward-looking statement made by us in this press release speaks only as of the date on which such statement is made. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Readers should also review the risks and uncertainties listed in our most recent Annual Report on Form 10-K and other reports we file with the U.S. Securities and Exchange Commission, including (but not limited to) Item 1A - “Risk Factors” in the Form 10-K and Management's Discussion and Analysis of Financial Condition and Results of Operations and the risks described therein from time to time. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. The forward-looking statements contained in this press release are intended to qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

About ZAGG Inc

ZAGG Inc (NASDAQ:ZAGG) is a global leader in accessories and technologies that empower mobile lifestyles. The Company has an award-winning product portfolio that includes screen protection, mobile keyboards, power management solutions, social tech, and personal audio sold under the ZAGG®, mophie®, InvisibleShield®, IFROGZ® , BRAVEN® , Gear4 ® and HALO ® brands. ZAGG has operations in the United States, Ireland, and China. ZAGG products are available worldwide, and can be found at leading retailers including Best Buy, Verizon, AT&T, Sprint, Walmart, Target, Walgreens and Amazon.com. For more information, please visit the Company’s websites at www. ZAGG .com ,   www.mophie.com ,   www. G ear4.com , and www. HALO .com and follow us on Facebook, Twitter and Instagram.

# # #

CONTACT:

Investor Relations:

ICR Inc.

Brendon Frey

203-682-8216

brendon.frey@icrinc.com

Company:

ZAGG Inc

Jeff DuBois

801-506-7336

jeff.dubois@ZAGG.com

March 12, 2019

ZAGG Supplemental Financial Information - CFO Commentary

Document reference information

The commentary in this document can be referenced in the financial information found in the press release announcing the results of operations for the years ended   December 31, 2018 and 2017 , including certain supplemental financial information, issued earlier today. The release can be found at investors.ZAGG.com , or in the Form 8-K furnished to the Securities and Exchange Commission website at sec.gov (the URLs are included here in this exhibit as inactive textual references and information contained on, or accessible through, our websites is not a part of, and is not incorporated by reference into, this report).

Th ree Months Ended   December 31, 2018 and 2017 Su mmary Results

( In millions, except per share amounts)

2018   Fourth Quarter Results Discussion

(All comparisons are 2018 consolidated versus 2017 consolidated, unless otherwise noted)

Net sales

Net sales for the three months ended   December 31, 2018 , were $166.5 million , compared to net sales of $176.9 million for the three months ended   December 31, 2017 , a   decrease   $10.4   million , or approximately 6% . The $10.4   million   decrease in net sales was primarily attributable to (1) decreased sales of wireless charging accessories due to challenging sell-in comparisons from the initial product launch last year, and (2) a decrease in sales of power cases . These decreases were partially offset by increased sales of screen protection products driven by the new iPhone® launch as well as the introduction of the Glass + VisionGuard® screen protection product .

Gross profit

Gross profit for the three months ended   December 31, 2018 , was $58.5 million , or approximately 35%   of net sales , an   increase of $2.3 million or 4% , compared to gross profit of $56.2 million , or approximately 32% of net sales for the three months ended   December 31, 2017 . The increase in gross profit margin was primarily attributable to the mix of screen protection products, our highest margin product category, which increased to approximately 57% of net sales compared to approximately 39% of net sales during the three months ended   December 31, 2017 .

Operating expenses

Operating expenses for the three months ended   December 31, 2018 , were $38.1 million , compared to operating expenses of $26.2 million for the three months ended   December 31, 2017 , an   increase of $11.9 million , or approximately 45% . The $11.9 million   increase was primarily attributable to (1) a $7.0 million gain recorded in the year ago period associated with the settlement of litigation related to the disputed mophie purchase price , (2) additional selling, general & administrative expense associated with the newly acquired BRAVEN and Gear4 businesses,   ( 3) transaction costs incurred in connection with the acquisition of Gear4 in November 2018 and HALO in January 2019 , and ( 4) higher amortization of long-lived intangibles related to the B RAVEN and Gear4 acquisition s . These increases were partially offset by a decrease in depreciation expense resulting from lower carrying amounts of property and equipment during the three months ended December 31, 2018.

Net income

As a result of the factors noted above, we reported net income of $14.3 million , or diluted earnings per share of $0.52 , for the three months ended   December 31, 2018 , compared to net income of $8.1 million , or diluted earnings per share of $0.28 , for the three months ended   December 31, 2017 .

Adjusted EBITDA

A djusted EBITDA decreased   22% to $28.1 million compared to $35.8 million .

Years Ended December 31, 2018 and 2017 Summary Results

( In millions, except per share amounts)

2018 Year-to-Date Results Discussion

(All comparisons are 2018 consolidated versus 2017 consolidated, unless otherwise noted)

Net sales

Net sales for the year ended   December 31, 2018 , were $538.2 million , compared to net sales of $519.5 million for the year ended   December 31, 2017 , an   increase of $18.7 million , or approximately 4% . The $18.7 million   increase in net sales was primarily attributable to (1) increases in screen protection products driven by the new iPhone launch as well as the introduction of the Glass + VisionGuard screen protection products, and (2) the increase in sales of our power management products, specifically related to wireless charging accessories. These increases were partially offset by a decrease in sales of power cases .

Gross profit

Gross profit for the year ended   December 31, 2018 , was $185.9 million , or approximately 35% of net sales , an   increase of $16.9   million or 10% , compared to gross profit of $169.0 million , or approximately 33% of net sales for the year ended   December 31, 2017 . The increase in gross profit margin was primarily attributable to   the mix of screen protection products, our highest margin product category, which increased to approximately 57% of net sales for the year ended December 31, 2018 compared to approximately 48% of net sales for the year ended December 31, 2017.

Operating expenses

Operating expenses for the year e nded   December 31, 2018 , were $134.2 million , compared to operating expenses of $124.3 million for the year ended   December 31, 2017 , an   increase of   $9.9 million , or approximately 8% . The $9.9 million   increase was primarily attributable to (1) a $7.0 million gain recorded in the year ago period associated with the settlement of litigation related to the disputed mophie purchase price, (2) increases in headcount to support additional growth of the Company, (3) additional selling, general and   administrative expense associated with the newly acquired BRAVEN and Gear4 businesses, and (4) transaction costs incurred in connection with the acquisition s of BRAVEN and Gear4 in 2018, and HALO in January 2019 . These increases were partially offset by (1) a decrease in depreciation expense, (2) a $2.0 million charge in 2017 related to the impairment of a patent that did not recur in 2018, and (3) operating expense synergies realized related to the mophie integration.

Net income

As a result of the factors noted above, we reported net income of $39.2 million , or diluted earnings per share of $1.38 , for the year ended   December 31, 2018 , compared to net income of $15.1 million , or diluted earnings per share of $0.53 , for the   year e nded December 31, 2017 .

Adjusted EBITDA

Adjusted EBITDA increased   5% to $76.4 million compared to $73.0 million .

Balance Sheet Highlights (as of December 31, 2018 and 2017 )

¹   Inventory turns defined as trailing 12-month sales divided by period-end inventory.   For year-over-year compar ison purposes,   December 31, 2018 inventory turns excludes year-end B RAVEN and Gear4 inventory , and 2018 net sales of $ 5.0 million and $ 5.0 million, respectively.

Market Share Information

Screen Protection

We continue to maintain cellphone screen protection dollar market share above 50% . From the first quarter of 2014 to the fourth quarter of 2018 , InvisibleShield cellphone screen protection quarterly dollar market share has increased from 29% to 51%.

(Source: The NPD Group / Retail Tracking Service for each quarterly period; NPD data refers to dollar share and pertains only to U.S. retail sales)

Power Management

During January 2019, we added the HALO brand to the already market-leading mophie brand within portable power. The combination of the two complimentary power brands have grown combin ed portable power dollar market share from 19% in the fourth quarter 2016 to 35% in the fourth quarter 2018.

(Source: The NPD Group / Retail Tracking Service for each quarterly period; NPD data refers to dollar share and pertains only to U.S. retail sales)

Battery Cases

Since the fourth quarter of 2016   to fourth quarter 2018 , mophie branded battery cases dollar market share has increased from 44%   to 67 % .

(Source: The NPD Group / Retail Tracking Service for each quarterly period; NPD data refers to dollar share and pertains only to U.S. retail sales)

Acq uisitions

Duri ng 2018 and early January 2019, the Company acquired three additional brands to strengthen its leadership position in mobile lifestyle:

• In July 2018, the Company purchased BRAVEN, the creator of the rugged Bluetooth audio category, for cash consideration of approximately $4. 5 million.

• In November 2018, the Company purchased Gear4, the U.K.'s number one smartphone case brand, for a combination of cash and stock consideration valued at approximately $3 9.8   million.

• In January 2019, the Company purchased HALO, a leading direct-to-consumer accessories company with a strong relationship with QVC, for a combination of cash and stock consideration totaling approximately $43.0 million.

The addition of these three brands provides the Company with increased diversification and an innovative product portfolio in the growing product categories of Bluetooth audio, rugged cases, and portable power. The Company expects to grow sales and profitability over the next several years by taking these brands to its current retail distribution network and further investing in the direct-to-consumer channel.

Share Repurchase Authorization

On March 11, 2019, the Board of Directors approved a new $20.0 million share repurchase authorization. This authorization replaces the $20.0 million share repurchase authorization the Board approved during the fourth quarter of 2015, which had approximately $5.5 million remaining at the end of 2018.

2019 Business Outlook

For the full year 2019 , the Company currently expects the following :

• Net sales of $610 to $630 million

• Gross profit margin as a percentage of net sales in the mid 30's range

• Adjusted EBITDA of $82 to $86 million

• Diluted Operating E arni ngs P er S hare of $1. 4 7 to $1.6 0

* Represents the midpoint of 2019 net sale s guidance

Impact of 2017 Tax Reform Bill

During the fourth quarter of 2017, the United States Government passed the Tax Cuts and Jobs Act (the “Act”), which enacted significant changes to the United States’ federal tax code, including a reduction in the federal income tax rate for corporations from 35% to 21%. As of December 31, 2017, Management recorded a primarily non-cash charge of $12.4 million to income tax expense primarily to reflect (1) the re-measurement of deferred tax assets utilizing the lower federal income tax rate and (2) the tax on mandatory deemed repatriation of foreign earnings.

The impact of this $12.4 million charge on the income tax rate, net income, and earnings per share for the three and twelve months ended December 31, 2017, is illustrated in the table below (amounts in millions, except per share data):

About Non-GAAP Financial Information

This suppl emental fina ncial information - CFO commentary includes Adjusted EBITDA ,   D iluted O perating E arnings P er S hare, and 2017 net income and diluted earnings per share before impact of tax reform, all of which are non-GAAP financial measure s . Readers are cautioned that (1) Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, other expense, transaction costs, mophie restructuring charges, mophie employee retention bonus, consulting fee to former CEO, inventory step-up amount in conjunction with the BRAVEN and Gear4 acquisitions, CEO signing bonus, CFO retention bonus,

and impairment of intangible asset) , (2) D iluted O perating E arnings P er S hare ( D iluted Operating E arnings P er S hare excluding the impact of transaction costs, inventory step-up, and amortization expense – all in conjunction with the BRAVEN, Gear4 and HALO acquisitions) , and   (3) 2017 net income and diluted earnings per share before impact of tax reform (2017 net income and diluted earnings per share excluding the impact of 2017 income tax reform) are not financial measure under U.S. generally accepted accounting principles (“GAAP”). In addition, this financial information should not be construed as an alternative to any other measure of performance determined in accordance with GAAP, or as an indicator of operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that it fails to address. As such, it should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. We present Adjusted EBITDA ,   D iluted O perating E arnings P er S hare , and 2017 net income and diluted earnings per share before the impact of tax reform because we believe that these measures are helpful to some investors as a measure of performance and to normalize the impact of acquisitions or 2017 tax reform . We caution readers that non-GAAP financial information, by its nature, departs from traditional accounting conventions. Accordingly, its use can make it difficult to compare current results with results from other reporting periods and with the financial results of other companies. We have provided a reconciliation of Adjusted EBITDA and D iluted O perating E arnings P er S hare to the m ost directly comparable GAAP measures in the supplemental financial information attached to th e press release accompanying this s upplemental financial information - CFO commentary .   The reconciliation of 2017 net income and diluted earnings per share before the impact of tax reform is provided in this   supplemental financial information - CFO commentary .

Cautionary Note Regarding Forward-Looking Statements

This CFO Commentary contains (and oral communications made by us may contain) “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “predict,” “project,” “target,” “future,” “seek,” “likely,” “strategy,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our outlook for the Company and statements that estimate or project future results of operations or the performance of the Company.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

a the ability to design, produce, and distribute the creative product solutions required to retain existing customers and to attract new customers;

b building and maintaining marketing and distribution functions sufficient to gain meaningful international market share for our products;

c the ability to respond quickly with appropriate products after the adoption and introduction of new mobile devices by major manufacturers like Apple®, Samsung®, and Google®;

d changes or delays in announced launch schedules for (or recalls or withdrawals of) new mobile devices by major manufacturers like Apple, Samsung, and Google;

e the ability to successfully integrate new operations or acquisitions;

f t he impacts of inconsistent quality or reliability of new product offerings;

g the impacts of lower profit margins in certain new and existing product categories , including certain mophie products ;

h the impacts of changes in economic conditions, including on customer demand;

i managing inventory in light of constantly shifting consumer demand;

j the failure of information systems or technology solutions or the failure to secure information system data, failure to comply with privacy laws, security breaches, or the effect on the Company from cyber-attacks, terrorist incidents or the threat of terrorist incidents;

k changes in US and international trade policy an tariffs, including the possible effect of recent US tariff proposals on select materials used in the manufacture of products sold by the Company which are sourced from China ;

l adoption of or changes in accounting policies, principles, or estimates; and

m changes in the law, economic and financial conditions, including the effect of enactment of US tax reform or other tax law changes .

Any forward-lookin g statement made by us in this CFO Commentary speaks only as of the date on which such statement is made. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Readers should also review the risks and uncertainties listed in our most recent

Annual Report on Form 10-K and other reports we file with the U.S. Securities and Exchange Commission, including (but not limited to) Item 1A - “Risk Factors” in the Form 10-K and Management's Discussion and Analysis of Financial Condition and Results of Operations and the risks described therein from time to time. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. The forward-looking statements contained in this CFO Commentary are intended to qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

ZAGG Announces CFO Transition

SALT LAKE CITY, March 12, 2019 (GLOBE NEWSWIRE) - -   ZAGG Inc (Nasdaq: ZAGG), a leading global mobile lifestyle company, announced today that Brad Holiday intends to step down as Chief Financial Officer and transition to the role of Senior Vice President, Finance and Strategic Projects of ZAGG effective March 31, 2019. Taylor Smith, currently Vice President, Finance & Accounting of ZAGG, has been appointed Mr. Holiday’s successor.

Prior to his promotion to Vice President, Finance &   Accounting in January 2013, Mr. Smith served as Director of SEC Reporting of ZAGG. Before joining ZAGG in July 2011, Mr. Smith served in various roles at KPMG LLP starting in August 2004, including senior manager, manager, senior associate, and associate within the audit group. Mr. Smith is a licensed certified public accountant and holds a B.S. and a master's degree in a ccountancy from Brigham Young University.

Chris Ahern, Chief Executive Officer said, “Brad has provided ZAGG with tremendous leadership, initially as a Board member and then as Chief Financial Officer over the past 3 years. During his tenure, the Company has evolved considerably through a combination of organic growth and strategic acquisitions. Brad’s contributions are immeasurable and, on behalf of the entire ZAGG team, I want to thank him for his dedication and commitment. I am confident we’ll continue to benefit from his experience and insights in his new position with the Company.”

“Since joining ZAGG in 2012, Taylor’s strong financial acumen and strategic thinking has been incredibly valuable to our success, making him the ideal person to be the Company’s next CFO,” continued Ahern. “Taylor will assume leadership of a very experienced finance team that he and Brad assembled over the past few years.”

Mr. Holiday said, “I have truly enjoyed my time as Chief Financial Officer of ZAGG, especially interacting with all the great people that make up this organization. I look forward to further collaborating with this talented management team to help execute our well thought out long-term growth strategy while also being able to spend more time with my family.”

About ZAGG Inc:   ZAGG Inc (NASDAQ:ZAGG) is a global leader in accessories and technologies that empower mobile lifestyles. The Company has an award-winning product portfolio that includes screen protection, power management solutions, mobile keyboards, and personal audio sold under the InvisibleShield®, mophie®, ZAGG®, BRAVEN®, IFROGZ®, Gear4® and HALO ® brands. ZAGG Inc has operations in the United States, Ireland, the U.K., and China. For more information, please visit the company’s websites at www.zagg.com ,   www.mophie.com ,   www . Gear4 .com ,   a nd www. HALO.com .

Contact:

Investor Relations:

ICR, Inc.

Brendon Frey

203-682-8216

brendon.frey@icrinc.com

Company:

Jeff Dubois

801-506-7336

jeff.dubois@ZAGG.com