Company Exceeds Guidance Ranges for Revenue and
Profitability in the First Quarter
Novatel Wireless, Inc. (NASDAQ:MIFI), a leading provider of
solutions for the Internet of Things (“IoT”), including
software-as-a-service (“SaaS”) solutions for the fleet telematics
market, announced financial results for the first quarter ended
March 31, 2016.
“In the first quarter, Novatel Wireless gained traction in its
evolution from being primarily a hardware manufacturer to a
provider of comprehensive IoT solutions, with higher-margin SaaS,
software and service offerings. Our Ctrack fleet management
and other telematics solutions continued to generate strong
subscriber growth during the first quarter, driving Novatel
Wireless back toward profitability, with the Company achieving its
highest adjusted EBITDA since 2014,” said Sue Swenson, Chair and
CEO of Novatel Wireless. “The Company’s business transformation is
well underway, with SaaS, software and services achieving non-GAAP
gross margins of more than 71% in the first quarter, while our MiFi
business continued to generate strong revenues with solid gross
margins. When combining the Ctrack, FW and Novatel Wireless
offerings with our strengthened expense management and discipline,
I believe the Company will reach $7 million in quarterly adjusted
EBITDA in the fourth quarter of this year.”
First Quarter 2016 Financial Highlights
The Company announced the following U.S. GAAP (“GAAP”) financial
results for the first quarter of 2016:
- Revenue increased by 25.0% to $66.9 million in the first
quarter of 2016, compared to $53.5 million in the first
quarter of 2015. Revenue from SaaS, software and services
increased to $12.8 million in the first quarter of 2016, from only
$0.5 million in the first quarter of 2015, due to the Company’s
focus on growing revenue from SaaS, software and services with
solutions focused on IoT, which included the acquisitions of
DigiCore Holdings Limited, with its Ctrack® telematics solutions
(“Ctrack”), and Feeney Wireless (“FW”) during 2015. Revenue from
Ctrack solutions was $15.0 million in the first quarter of
2016, driving revenue from SaaS, software and services to 19.1% of
the Company’s total revenue in the first quarter of 2016, compared
to less than 1% of total revenue in the first quarter of 2015.
Revenue from hardware products was $54.1 million in the first
quarter of 2016, an increase of 2.1%, from $53.0 million in
the first quarter of 2015.
- Net loss was ($11.9 million), or ($0.22) per share, in the
first quarter of 2016, compared to a net loss of
($7.8 million), or ($0.17) per share, in the first quarter of
2015. The net loss for the first quarter of 2016 included a
$2.1 million charge for amortization of the debt discount and
debt issuance costs associated with the Company’s convertible notes
issued in June 2015, $1.1 million in share-based compensation
expense, $0.6 million of restructuring charges, and
$2.4 million in acquisition- and divestiture-related expenses,
including $1.8 million related to the amortization of the
step-up to fair value of Ctrack’s finished goods.
- As of March 31, 2016, the Company had cash and cash
equivalents of $8.3 million, with $3.4 million drawn down on its
$48 million revolving credit facility with Wells Fargo Bank.
On April 11, 2016, the Company closed a sale with Telit
Technologies (Cyprus) Limited and Telit Wireless Solutions, Inc.
(collectively, “Telit”) for certain hardware modules and related
assets for approximately $14.75 million, of which $9.0 million
in cash was received by the Company on the closing date, plus
potential earn-out payments. As a result, the Company currently has
no amounts drawn down on its revolving credit facility with Wells
Fargo Bank, along with higher cash balances than at March 31,
2016.
The Company also announced the following non-GAAP financial
results for the first quarter of 2016. A reconciliation of
these non-GAAP financial measures to the Company’s GAAP financial
results is included in the tables accompanying this news
release:
- Non-GAAP gross profit increased by 77.4% to $23.6 million in
the first quarter of 2016, from $13.3 million in the first
quarter of 2015, driven by a combination of increased total
revenues and non-GAAP gross margins from the Company’s Ctrack and
FW-branded SaaS, software and services. Overall non-GAAP gross
margin increased to 35.2% in the first quarter of 2016, compared to
24.8% in the first quarter of 2015, as the Company continued its
transition toward an improved mix of higher-margin IoT solutions
with significant SaaS and recurring revenue components. Non-GAAP
gross margin on SaaS, software and services was 71.5% in the first
quarter of 2016, primarily driven by revenues from high-margin SaaS
and software solutions delivered by Ctrack and FW. Non-GAAP
gross margin on hardware products increased to 26.6% in the first
quarter of 2016, compared to 24.2% in the first quarter of 2015,
primarily as a result of reduced sales of legacy mobile computing
products. The Company’s Ctrack telematics solutions acquired
in October 2015, which include a mix of hardware, SaaS and
services, generated non-GAAP gross margins of 63.7% in the first
quarter of 2016.
- Non-GAAP operating expenses were $24.4 million in the first
quarter of 2016, compared to $13.8 million in the first
quarter of 2015, an increase of 76.8%, due to the acquisitions and
integration of Ctrack and FW in 2015. The Company has undertaken
cost containment measures since August 2015 to partially offset
this increase in non-GAAP operating expenses, including two
reductions-in-force and a closure of the Company’s Richardson, TX,
facility, that, among other cost saving initiatives, have
eliminated 88 full- and part-time employee and contractor positions
across the Company. The Company has also announced plans to cease
its manufacturing operations in Durban, South Africa, related to
certain legacy Ctrack hardware products, resulting in the
elimination of 44 additional positions.
- Adjusted EBITDA increased to $1.3 million in the first quarter
of 2016, compared sequentially to ($0.1 million) in the fourth
quarter of 2015, and also compared to $0.6 million in the first
quarter of 2015. In the first quarter of 2016, adjusted EBITDA
returned to profitability as the Company benefited from its
emphasis on growing SaaS, software and services revenue, while also
rationalizing the costs associated with its hardware business, in
an effort to generate improved performance across multiple areas of
the Company. Adjusted EBITDA contributed by Ctrack’s
telematics solutions was $2.2 million in the first quarter of
2016.
- Non-GAAP net loss for the first quarter of 2016 was ($4.3
million), or ($0.08) per share, compared to
($0.6 million), or ($0.01) per share, in the first quarter of
2015, as the Company continues to integrate its two acquisitions
from 2015.
Other Key Metrics
|
|
Q1-2016 |
|
Q4-2015 |
|
Q1-2015 |
Revenue |
|
|
|
|
|
|
SaaS, Software and
Services Revenue |
|
$12.8 million |
|
|
$12.6 million |
|
|
$0.5 million |
|
Non-GAAP Gross Margin |
|
71.5 |
% |
|
|
|
63.6 |
% |
|
n/a |
|
Hardware Revenue |
|
$54.1 million |
|
|
$48.9 million |
|
|
$53.0 million |
|
Non-GAAP Gross Margin |
|
26.6 |
% |
|
|
|
25.7 |
% |
|
|
|
24.2 |
% |
IoT Revenue(1) |
|
$27.0 million |
|
|
$31.8 million |
|
|
$8.9 million |
|
Non-GAAP Gross Margin |
|
49.6 |
% |
|
|
|
44.2 |
% |
|
|
|
26.2 |
% |
MiFi Revenue(1) |
|
$39.9 million |
|
|
$29.7 million |
|
|
$44.6 million |
|
Non-GAAP Gross Margin |
|
25.4 |
% |
|
|
|
21.9 |
% |
|
|
|
24.5 |
% |
Subscribers |
|
|
|
|
|
|
Ctrack Fleet
Subscribers |
|
164,000 |
|
|
|
|
157,850 |
|
|
n/a |
|
Ctrack Non-Fleet
Subscribers |
|
206,000 |
|
|
200,200 |
|
|
n/a |
|
FW Subscribers(2) |
|
164,000 |
|
|
162,170 |
|
|
|
|
150,500 |
|
Total Consolidated
Subscribers |
|
534,000 |
|
|
520,220 |
|
|
|
|
150,000 |
|
_______________________ |
(1)
The Company currently places primary emphasis on its mix of SaaS,
software and services revenues as compared to its hardware
revenues. However, since the Company has historically reported its
mix of MiFi (or mobile computing) revenues as compared to its IoT
(or M2M) revenues, these metrics are presented as well. |
(2)
Q1-2015 subscriber metrics include FW subscribers even though the
Company had limited revenue associated with FW in Q1-2015 due to
the closing of the acquisition on March 27, 2015. |
Second Quarter Business Outlook
The following statements are forward-looking and actual results
may differ materially. Please see the section titled “Cautionary
Note Regarding Forward-Looking Statements” at the end of this news
release. A more detailed description of risks related to our
business is included in the reports filed by the Company with the
Securities and Exchange Commission (the “SEC”).
Our guidance for the second quarter of 2016 reflects current
business indicators and expectations as of the date of this news
release, including current exchange rates for foreign currencies,
as well as the sale to Telit of certain hardware modules and
related assets which closed on April 11, 2016.
|
Second Quarter
2016 Outlook |
Revenue |
$57 million - $63
million |
Non-GAAP Gross
Margin |
34.5% - 37.5% |
Non-GAAP Operating
Expenses |
$22.5 million - $25.5
million |
Adjusted EBITDA |
$1.0 million - $2.0
million |
Non-GAAP Net Loss Per
Share |
$(0.08) - $(0.05) |
Weighted-Average Shares
Outstanding |
approximately 54
million |
Our consolidated second quarter outlook above is inclusive of
the following anticipated contribution from Ctrack:
Revenue |
$14.0 million - $16.0
million |
Non-GAAP Gross Margin
|
60% - 65% |
Adjusted EBITDA |
$1.5 million - $2.5
million |
Conference Call Information
Novatel Wireless will host a conference call and live webcast
for analysts and investors today at 5:00 p.m. ET. To access
the conference call:
- In the United States, call 1-844-881-0135
- International parties can access the call at
1-412-317-6727
Novatel Wireless will offer a live audio webcast of the
conference call, which will be accessible from the “Investors”
section of the Company's website at www.novatelwireless.com. An
audio replay of the conference call will also be available
beginning one hour after the call, through May 23, 2016. To hear
the replay, parties in the United States may call 1-877-344-7529
and enter access code 10083559#. International parties may call
1-412-317-0088 and enter the same code.
ABOUT NOVATEL WIRELESS
Novatel Wireless, Inc. (Nasdaq:MIFI) is a leading global
provider of solutions for the Internet of Things (IoT), including
software-as-a-service (SaaS) solutions for the fleet telematics
market. Our innovative products and solutions provide
anywhere, anytime communications and analytics for consumers and
businesses of all sizes, with approximately 164,000 subscribed
fleet vehicles for Ctrack among the Company’s 534,000 global
subscribers. Novatel Wireless, Inc. is headquartered
in San Diego, California. www.novatelwireless.com. @MIFI
(Twitter)
Cautionary Note Regarding Forward-Looking
Statements
Some of the information presented in this news release may
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. In this context,
forward-looking statements often address expected future business
and financial performance and often contain words such as “may,”
“estimate,” “anticipate,” “believe,” “expect,” “intend,” “plan,”
“project,” “will” and similar words and phrases indicating future
results. The information presented in this news release related to
our outlook for the second quarter ending June 30, 2016,
future demand for our products, the expected impact of acquisition
activity, statements made by Sue Swenson, as well as other
statements that are not purely statements of historical fact, are
forward-looking in nature. These forward-looking statements are
made on the basis of management's current expectations,
assumptions, estimates and projections and are subject to
significant risks and uncertainties that could cause actual results
to differ materially from those anticipated in such forward-looking
statements. We therefore cannot guarantee future results,
performance or achievements. Actual results could differ materially
from our expectations.
Factors that could cause actual results to differ materially
from the Company’s expectations are set forth as risk factors in
the Company's SEC reports and filings and include (1) the
future demand for wireless broadband access to data and fleet
management software and services, (2) the growth of wireless
wide-area networking and fleet management software and services,
(3) customer and end-user acceptance of the Company's current
product and service offerings and market demand for the Company's
anticipated new product and service offerings, (4) increased
competition and pricing pressure from participants in the markets
in which the Company is engaged, (5) dependence on third party
manufacturers and key component suppliers worldwide, (6) the
success of the Company’s corporate development activities,
including integration of Ctrack and FW and divestitures of lines of
business that are not essential to the Company’s strategy,
(7) unexpected liabilities or expenses, (8) the Company's
ability to introduce new products and services in a timely manner,
(9) litigation, regulatory and IP developments related to our
products or components of our products, (10) dependence on a
small number of customers for a significant portion of the
Company’s revenues and (11) the Company's plans and
expectations relating to acquisitions, divestitures, strategic
relationships, international expansion, software and hardware
developments, personnel matters and cost containment
initiatives.
These factors, as well as other factors described in the reports
filed by the Company with the SEC (available at www.sec.gov), could
cause actual results to differ materially from those expressed in
the Company’s forward-looking statements. The Company assumes no
obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or other
events occur in the future, except as otherwise required pursuant
to applicable law and our on-going reporting obligations under the
Securities Exchange Act of 1934, as amended.
Non-GAAP Financial Measures
Novatel Wireless, Inc. has provided financial information in
this news release that has not been prepared in accordance with
GAAP. Non-GAAP gross profit, gross margin, operating expenses,
adjusted EBITDA, net loss and net loss per share exclude
restructuring charges, share-based compensation expense, charges
related to the Company’s one-time all-employee 2014 retention bonus
plan, amortization of the debt discount and debt issuance costs
associated with the Company’s convertible notes, and charges
related to the Company’s acquisition and divestiture activities,
including the amortization of the step-up to fair value of Ctrack’s
and FW’s finished goods and other compensation expense related to
the acquisitions. Adjusted EBITDA also excludes interest, taxes,
depreciation and amortization (unrelated to acquisitions and the
convertible notes), and foreign currency gains or losses.
Non-GAAP gross profit, gross margin, operating expenses,
adjusted EBITDA, net loss and net loss per share are supplemental
measures of our performance that are not required by, or presented
in accordance with, GAAP. These non-GAAP financial measures are not
intended to be used in isolation and, moreover, they should not be
considered as a substitute for gross profit, gross margin,
operating expenses, net loss, net loss per share or any other
performance measure determined in accordance with GAAP. We present
non-GAAP gross profit, gross margin, operating expenses, adjusted
EBITDA, net loss and net loss per share because we consider each to
be an important supplemental measure of our performance.
Management uses these non-GAAP financial measures to make
operational decisions, evaluate the Company's performance, prepare
forecasts and determine compensation. Further, management believes
that both management and investors benefit from referring to these
non-GAAP financial measures in assessing the Company's performance
when planning, forecasting and analyzing future periods.
Share-based compensation expenses are expected to vary depending on
the number of new grants issued to both current and new employees
and changes in the Company's stock price, stock market volatility,
expected option term and risk-free interest rates, all of which are
difficult to estimate. In calculating non-GAAP gross profit, gross
margin, operating expenses, adjusted EBITDA, net loss and net loss
per share, management excludes certain non-cash and one-time items
in order to facilitate comparability of the Company's operating
performance on a period-to-period basis because such expenses are
not, in management's view, related to the Company's ongoing
operating performance. Management uses this view of the Company’s
operating performance for purposes of comparison with its business
plan and individual operating budgets and in the allocation of
resources.
The Company further believes that these non-GAAP financial
measures are useful to investors in providing greater transparency
to the information used by management in its operational
decision-making. The Company believes that the use of non-GAAP
gross profit, gross margin, operating expenses, adjusted EBITDA,
net loss and net loss per share also facilitates a comparison of
our underlying operating performance with that of other companies
in our industry, which use similar non-GAAP financial measures to
supplement their GAAP results.
Calculations of non-GAAP gross profit, gross margin, operating
expenses, adjusted EBITDA, net loss and net loss per share have
limitations as an analytical tool and you should not consider these
measures in isolation or as substitutes for GAAP metrics. In the
future, the Company expects to continue to incur expenses similar
to the non-GAAP adjustments described above, and exclusion of these
items in the presentation of our non-GAAP financial measures should
not be construed as an inference that these costs are unusual,
infrequent or non-recurring. Investors and potential investors are
cautioned that there are material limitations associated with the
use of non-GAAP financial measures as an analytical tool. The
limitations of relying on non-GAAP financial measures include, but
are not limited to, the fact that other companies, including other
companies in our industry, may calculate non-GAAP financial
measures differently than we do, limiting their usefulness as a
comparative tool.
Investors and potential investors are encouraged to review the
reconciliation of our non-GAAP financial measures contained within
this news release with our GAAP financial results.
(C) 2016 Novatel Wireless, Inc. All rights reserved. The Novatel
Wireless, Ctrack and FW names and logos are trademarks of Novatel
Wireless, Inc.
NOVATEL WIRELESS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands, except per share data) |
(Unaudited) |
|
|
Three Months Ended March 31, |
|
2016 |
|
2015 |
Net revenues: |
|
|
|
Hardware |
$ |
54,161 |
|
|
$ |
53,011 |
|
SaaS,
software and services |
12,783 |
|
|
483 |
|
Cost of net
revenues: |
|
|
|
Hardware |
40,869 |
|
|
40,823 |
|
SaaS,
software and services |
4,892 |
|
|
37 |
|
Gross
profit |
21,183 |
|
|
12,634 |
|
Operating costs and
expenses: |
|
|
|
Research
and development |
8,025 |
|
|
10,758 |
|
Sales and
marketing |
7,753 |
|
|
4,224 |
|
General
and administrative |
10,199 |
|
|
5,364 |
|
Amortization of purchased intangible assets |
928 |
|
|
167 |
|
Restructuring charges |
622 |
|
|
(164 |
) |
Total
operating costs and expenses |
27,527 |
|
|
20,349 |
|
Operating loss |
(6,344 |
) |
|
(7,715 |
) |
Other income
(expense): |
|
|
|
Interest
expense, net |
(3,928 |
) |
|
(74 |
) |
Other
expense, net |
(1,296 |
) |
|
(17 |
) |
Loss before income
taxes |
(11,568 |
) |
|
(7,806 |
) |
Income tax
provision |
331 |
|
|
20 |
|
Net loss |
(11,899 |
) |
|
(7,826 |
) |
Less: Net income
attributable to noncontrolling interests |
(5 |
) |
|
— |
|
Net loss attributable
to Novatel Wireless, Inc. |
$ |
(11,904 |
) |
|
$ |
(7,826 |
) |
|
|
|
|
Per share data: |
|
|
|
Net loss per
share: |
|
|
|
Basic and
diluted |
$ |
(0.22 |
) |
|
$ |
(0.17 |
) |
Weighted-average shares
used in computation of net loss per share: |
|
|
|
Basic and
diluted |
53,251 |
|
|
46,262 |
|
NOVATEL WIRELESS, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands) |
|
|
March 31, 2016 |
|
December 31, 2015 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
8,261 |
|
|
$ |
12,570 |
|
Accounts receivable, net |
34,813 |
|
|
35,263 |
|
Short-term investments |
1,100 |
|
|
1,267 |
|
Inventories |
48,335 |
|
|
55,837 |
|
Prepaid expenses and other |
7,141 |
|
|
6,039 |
|
Total current assets |
99,650 |
|
|
110,976 |
|
Property, plant and equipment, net |
8,543 |
|
|
8,812 |
|
Rental assets, net |
6,318 |
|
|
6,155 |
|
Intangible assets, net |
43,383 |
|
|
43,089 |
|
Goodwill |
30,947 |
|
|
29,520 |
|
Other assets |
21 |
|
|
201 |
|
Total assets |
$ |
188,862 |
|
|
$ |
198,753 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
25,851 |
|
|
$ |
35,286 |
|
Accrued expenses and other current
liabilities |
32,462 |
|
|
25,613 |
|
DigiCore bank facilities |
3,305 |
|
|
3,313 |
|
Total current liabilities |
61,618 |
|
|
64,212 |
|
Long-term liabilities: |
|
|
|
Convertible senior notes, net |
84,573 |
|
|
82,461 |
|
Revolving credit facility |
3,400 |
|
|
— |
|
Deferred tax liabilities, net |
3,563 |
|
|
3,475 |
|
Other long-term liabilities |
13,792 |
|
|
18,142 |
|
Total liabilities |
166,946 |
|
|
168,290 |
|
Stockholders’ equity: |
|
|
|
Common stock |
53 |
|
|
53 |
|
Additional paid-in capital |
503,395 |
|
|
502,337 |
|
Accumulated other comprehensive
loss |
(6,229 |
) |
|
(8,507 |
) |
Accumulated deficit |
(475,353 |
) |
|
(463,451 |
) |
Total stockholders’ equity
attributable to Novatel Wireless, Inc. |
21,866 |
|
|
30,432 |
|
Noncontrolling interests |
50 |
|
|
31 |
|
Total stockholders’ equity |
21,916 |
|
|
30,463 |
|
Total liabilities and
stockholders’ equity |
$ |
188,862 |
|
|
$ |
198,753 |
|
NOVATEL WIRELESS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands) |
(Unaudited) |
|
|
Three Months Ended March 31, |
|
2016 |
|
2015 |
Cash flows from operating activities: |
|
|
|
Net loss |
$ |
(11,899 |
) |
|
$ |
(7,826 |
) |
Adjustments to reconcile net loss
to net cash used in operating activities: |
|
|
|
Depreciation and amortization |
3,598 |
|
|
1,196 |
|
Amortization of acquisition-related
inventory step-up |
1,829 |
|
|
51 |
|
Provision for bad debts, net of
recoveries |
(111 |
) |
|
(41 |
) |
Provision for excess and obsolete
inventory |
1,311 |
|
|
206 |
|
Share-based compensation
expense |
1,066 |
|
|
790 |
|
Amortization of debt discount and
debt issuance costs |
2,112 |
|
|
— |
|
Deferred income taxes |
88 |
|
|
— |
|
Unrealized foreign currency
transaction loss, net |
1,171 |
|
|
— |
|
Other |
445 |
|
|
— |
|
Changes in assets and liabilities,
net of effects from acquisitions: |
|
|
|
Accounts receivable |
378 |
|
|
(6,111 |
) |
Inventories |
3,649 |
|
|
1,449 |
|
Prepaid expenses and other
assets |
(922 |
) |
|
1,152 |
|
Accounts payable |
(10,063 |
) |
|
(3,601 |
) |
Accrued expenses, income taxes, and
other |
1,010 |
|
|
5,602 |
|
Net cash used in
operating activities |
(6,338 |
) |
|
(7,133 |
) |
Cash flows from investing activities: |
|
|
|
Acquisitions, net of cash
acquired |
— |
|
|
(9,063 |
) |
Purchases of property, plant and
equipment |
(448 |
) |
|
(111 |
) |
Proceeds from the sale of property,
plant and equipment |
115 |
|
|
— |
|
Purchases of intangible assets |
(656 |
) |
|
(224 |
) |
Net cash used in
investing activities |
(989 |
) |
|
(9,398 |
) |
Cash flows from financing activities: |
|
|
|
Proceeds
from the exercise of warrant to purchase common stock |
— |
|
|
8,644 |
|
Net
repayments on DigiCore bank facilities |
(156 |
) |
|
— |
|
Net
borrowings on revolving credit facility |
3,400 |
|
|
2,000 |
|
Payoff of
acquisition-related assumed liabilities |
— |
|
|
(2,633 |
) |
Principal
payments under capital lease obligations |
(273 |
) |
|
— |
|
Principal
payments on mortgage bond |
(54 |
) |
|
— |
|
Taxes
paid on vested restricted stock units, net of proceeds from stock
option exercises |
(9 |
) |
|
66 |
|
Net cash provided by financing activities |
2,908 |
|
|
8,077 |
|
Effect of exchange rates on cash and cash
equivalents |
110 |
|
|
(29 |
) |
Net decrease in cash
and cash equivalents |
(4,309 |
) |
|
(8,483 |
) |
Cash and cash equivalents, beginning of
period |
12,570 |
|
|
17,853 |
|
Cash and cash equivalents, end of period |
$ |
8,261 |
|
|
$ |
9,370 |
|
NOVATEL WIRELESS, INC. |
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income
(Loss) |
(In thousands, except per share data) |
(Unaudited) |
|
|
Three Months Ended March 31,
2016 |
|
Net Income (Loss) |
|
Income (Loss) Per Share |
GAAP net loss |
$ |
(11,899 |
) |
|
$ |
(0.22 |
) |
Adjustments: |
|
|
|
Share-based compensation expense
(a) |
1,066 |
|
|
0.02 |
|
Purchased intangibles amortization
(b) |
1,429 |
|
|
0.03 |
|
Acquisition- and
divestiture-related charges (c) |
2,353 |
|
|
0.04 |
|
Convertible senior notes discount
and issuance costs amortization (d) |
2,112 |
|
|
0.04 |
|
Restructuring charges (e) |
622 |
|
|
0.01 |
|
Non-GAAP net loss |
$ |
(4,317 |
) |
|
$ |
(0.08 |
) |
|
(a) Adjustments
reflect share-based compensation expense recorded under ASC Topic
718. |
(b) Adjustments
reflect amortization of purchased intangibles for
acquisitions. |
(c) Adjustments
reflect professional fees, including legal, due diligence and other
related charges for acquisitions and divestitures, as well as the
amortization of the step-up to fair value of Ctrack’s acquired
finished goods. |
(d) Adjustments
reflect the amortization of the debt discount and debt issuance
costs related to convertible senior notes. |
(e) Adjustments
reflect restructuring charges, including employee severance and
facility exit related costs. |
|
See “Non-GAAP
Financial Measures” for information regarding our use of Non-GAAP
financial measures. |
NOVATEL WIRELESS, INC. |
Reconciliation of GAAP Operating Costs and Expenses to
Non-GAAP Operating Costs and Expenses |
Three Months Ended March 31, 2016 |
(In thousands) |
(Unaudited) |
|
|
GAAP |
|
Share-based compensation expense
(a) |
|
Purchased intangibles amortization
(b) |
|
Restructuring charges (c) |
|
Acquisition- and divestiture-related charges
(d) |
|
Non-GAAP |
Cost of net
revenues |
$ |
45,761 |
|
|
$ |
52 |
|
|
$ |
501 |
|
|
$ |
— |
|
|
$ |
1,829 |
|
|
$ |
43,379 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research
and development |
8,025 |
|
|
249 |
|
|
— |
|
|
— |
|
|
— |
|
|
7,776 |
|
Sales and
marketing |
7,753 |
|
|
210 |
|
|
— |
|
|
— |
|
|
— |
|
|
7,543 |
|
General
and administrative |
10,199 |
|
|
555 |
|
|
— |
|
|
— |
|
|
524 |
|
|
9,120 |
|
Amortization of purchased intangibles assets |
928 |
|
|
— |
|
|
928 |
|
|
— |
|
|
— |
|
|
— |
|
Restructuring charges |
622 |
|
|
— |
|
|
— |
|
|
622 |
|
|
— |
|
|
— |
|
Total
operating costs and expenses |
$ |
27,527 |
|
|
1,014 |
|
|
928 |
|
|
622 |
|
|
524 |
|
|
$ |
24,439 |
|
Total |
|
|
$ |
1,066 |
|
|
$ |
1,429 |
|
|
$ |
622 |
|
|
$ |
2,353 |
|
|
|
|
(a) Adjustments reflect share-based compensation expense
recorded under ASC Topic 718. |
(b) Adjustments reflect amortization of purchased
intangibles for acquisitions. |
(c) Adjustments reflect restructuring charges, including
employee severance and facility exit related costs. |
(d) Adjustments reflect professional fees, including
legal, due diligence and other related charges for acquisitions and
divestitures, as well as the amortization of the step-up to fair
value of Ctrack’s acquired finished goods. |
|
See “Non-GAAP Financial Measures” for information
regarding our use of Non-GAAP financial measures. |
NOVATEL WIRELESS, INC. |
Reconciliation of GAAP Loss before Income Taxes to Adjusted
EBITDA |
(In thousands) |
(Unaudited) |
|
|
Three Months Ended March 31,
2016 |
Loss before income taxes |
$ |
(11,568 |
) |
Depreciation and amortization (a) |
3,598 |
|
Share-based compensation expense (b) |
1,066 |
|
Restructuring charges (c) |
622 |
|
Acquisition- and divestiture-related charges (d)
|
2,353 |
|
Interest expense (e) |
3,928 |
|
Other expense (f) |
1,296 |
|
Adjusted EBITDA |
$ |
1,295 |
|
|
(a) Adjustments
reflect depreciation and amortization charges, including
amortization of purchased intangibles for acquisitions. |
(b) Adjustments
reflect share-based compensation expense recorded under ASC Topic
718. |
(c) Adjustments
reflect restructuring charges, including employee severance and
facility exit related costs. |
(d) Adjustments
reflect professional fees, including legal, due diligence and other
related charges for acquisitions and divestitures, as well as the
amortization of the step-up to fair value of Ctrack’s acquired
finished goods. |
(e) Adjustments
reflect interest expense, which includes the amortization of the
debt discount and debt issuance costs related to convertible senior
notes. |
(f) Adjustments
reflect other expense, including an unrealized foreign currency
loss on an outstanding intercompany loan between Ctrack and one of
its wholly-owned foreign subsidiaries, which is re-measured at each
reporting period. |
|
See “Non-GAAP
Financial Measures” for information regarding our use of Non-GAAP
financial measures. |
Investor Relations Contact:
Michael Sklansky
(858) 431-0792
msklansky@nvtl.com
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