Pixelworks, Inc. (NASDAQ: PXLW), a leading provider of visual
processing solutions, today announced financial results for the
first quarter ended March 31, 2017.
First Quarter Highlights
- Revenue of $22.7 million, including
$9.2 million related to End of Life (EOL) products
- Achieved GAAP net income of $0.09 per
diluted share, non-GAAP net income of $0.12 per diluted share
- Recorded adjusted EBITDA of $5.0
million, and net cash balance of $19.6 million
For the first quarter 2017, revenue was $22.7 million, which
included $9.2 million of End of Life (EOL) product revenue, and
compares to $16.0 million in the prior quarter and $11.2 million in
the first quarter of 2016. Excluding EOL contribution, first
quarter 2017 revenue in the digital projection market reflected
typical seasonality and grew 42% year-on-year.
On a GAAP basis, gross profit margin in the first quarter of
2017 was 54.6%, compared to 53.2% in the fourth quarter of 2016 and
32.2% in the first quarter of 2016. First quarter 2017 GAAP
operating expenses were $9.0 million, compared to $8.1 million in
the previous quarter and $12.1 million in the first quarter of
2016.
For the first quarter of 2017, GAAP net income was $2.8 million,
or $0.09 per diluted share, compared to a GAAP net income of
$337,000, or $0.01 per diluted share, in the fourth quarter of 2016
and a GAAP net loss of $8.6 million, or ($0.31) per share, in the
first quarter of 2016, which included a restructuring charge of
$4.3 million, or $0.15 per share.
On a non-GAAP basis, first quarter 2017 gross profit margin was
54.8%, compared to 53.6% in the fourth quarter of 2016 and 48.0% in
the first quarter of 2016. First quarter 2017 gross profit margin
increased compared to the prior periods due to a decrease in direct
material cost as a percentage of revenue related to a more
favorable mix of products sold. First quarter 2017 operating
expenses on a non-GAAP basis were $8.3 million, compared to $7.3
million in the previous quarter and $9.2 million in the first
quarter of 2016.
For the first quarter of 2017, the Company recorded non-GAAP net
income of $3.8 million, or $0.12 per diluted share, compared to
non-GAAP net income of $1.2 million, or $0.04 per diluted share, in
the fourth quarter of 2016 and a non-GAAP net loss of $4.0 million,
or ($0.14) per share, in the first quarter of 2016. Adjusted EBITDA
in the first quarter of 2017 was a positive $5.0 million, compared
to a positive $2.1 million in the previous quarter and a negative
$2.9 million in the first quarter of 2016.
President and CEO of Pixelworks, Todd DeBonis, commented, “First
quarter revenue of $22.7 million was near the high-end of our
guidance, reflecting a combination of solid end market demand and
approximately $9 million related to EOL products. Combined with
gross margin being at the upper end of our guidance and operating
expenses being at the low end, we achieved strong bottom line
results and adjusted EBITDA of $5 million, which is a multi-year
high. Also notable in the quarter, we entered into an $8 million
co-development agreement with a large projector customer that we
believe will further solidify and extend our leadership position in
this market. We remain on track for year-over-year revenue growth
and continued profitability in 2017, even when excluding the
contribution from EOL products.”
Business Outlook for the Second Quarter of 2017
The Company’s expectations for the second quarter of 2017
include:
- Revenue to be between $20 million and
$21 million, including approximately $5.0 million of revenue
related to End of Life (EOL) products;
- Gross profit margin of approximately
53% to 55% on both a GAAP basis and non-GAAP basis; and
- Operating expenses of $8.5 million to
$9.5 million on a GAAP basis and $7.5 million to $8.5 million on a
non-GAAP basis.
The difference in estimated operating expenses on a GAAP basis,
versus a non-GAAP basis, is stock-based compensation expense, of
which a range between $0.5 million to $1.0 million is included on a
GAAP basis. Stock-based compensation expense is excluded from the
calculation of estimated operating expenses on a non-GAAP
basis.
Conference Call Information
Pixelworks will host a conference call today, April 27, at 2:00
p.m. Pacific Time, which can be accessed by calling 877-359-9508
and using passcode 3822948. A Web broadcast of the call can be
accessed by visiting the Company's investor page at
www.pixelworks.com. For those unable to listen to the live Web
broadcast, it will be archived for approximately 30 days. A replay
of the conference call will also be available through Thursday, May
4, 2017, and can be accessed by calling 855-859-2056 and using
passcode 3822948.
About Pixelworks, Inc.
Pixelworks creates, develops and markets video display
processing technology for digital video applications that demand
the very highest quality images. At design centers around the
world, Pixelworks engineers constantly push video performance to
keep manufacturers of consumer electronics and professional
displays worldwide on the leading edge. The Company is
headquartered in San Jose, CA.
For more information, please visit the company’s Web site at
www.pixelworks.com.
Note: Pixelworks and the Pixelworks logo are registered
trademarks of Pixelworks, Inc.
Non-GAAP Financial Measures
This earnings release makes reference to non-GAAP gross profit
margins, non-GAAP operating expenses, non-GAAP net income (loss)
and non-GAAP net income (loss) per share, which excludes
restructuring charges and stock-based compensation expense, which
are required under GAAP. The press release also reconciles GAAP net
income (loss) and adjusted EBITDA, which Pixelworks defines as GAAP
net income (loss) before interest expense and other, net, income
tax provision (benefit), depreciation and amortization, as well as
the specific items listed above. The Company believes these
non-GAAP measures provide a meaningful perspective on the Company's
core operating results and underlying cash flow dynamics, but
cautions investors to consider these measures in addition to, not
as a substitute for, its consolidated financial results as
presented in accordance with GAAP. A reconciliation between GAAP
and non-GAAP financial measures is included in this earnings
release which is available in the investor relations section of the
Company's website.
Safe Harbor Statement
This release contains forward-looking statements, including,
without limitation, statements with respect to the Company’s growth
opportunities, product shipments, product demand, customer
engagements, and the Company’s potential and position for the
future, statements made by Mr. DeBonis about the Company’s digital
projection and mobile businesses, and statements with respect to
the business outlook for the second quarter and the full year of
2017, including revenue, gross margin, operating expenses and
profitability, within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These statements may be identified by use
of terms such as “begin,” “continue,” “will,” “believe,” “expect”
and similar terms or the negative of such terms. All statements
other than statements of historical fact are forward-looking
statements for purposes of this release, including any projections
of revenue or other financial items or any statements regarding the
plans and objectives of management for future operations. Such
statements are based on management's current expectations,
estimates and projections about the Company's business. These
statements are not guarantees of future performance and involve
numerous risks, uncertainties and assumptions that are difficult to
predict. Actual results could vary materially from those contained
in forward-looking statements due to many factors, including,
without limitation: our ability to deliver new products in a timely
fashion; our new product yield rates; changes in estimated product
costs; product mix; supply of products from third-party foundries;
failure or difficulty in achieving design wins; timely customer
transition to new product designs; competitive factors, such as
rival chip architectures, introduction or traction by competing
designs, or pricing pressures; risks related to licensing our
intellectual property; the success of our products in expanded
markets; current global economic challenges; levels of inventory at
distributors and customers; changes in the digital display and
projection markets; changes in customer ordering patterns or lead
times; seasonality in the consumer electronics market; our efforts
to achieve profitability from operations; insufficient, excess or
obsolete inventory and variations in inventory valuation; the
outcome of any litigation related to our intellectual property
rights; our limited financial resources and our ability to attract
and retain key personnel; and risks related to our restructuring
plan, including whether the expected amount of the costs associated
with the restructuring program will differ from or exceed the
Company's forecasts and whether the Company will be able to realize
the full amount of estimated savings from the restructuring program
or in the timeframe expected. More information regarding potential
factors that could affect the Company's financial results and could
cause actual results to differ materially is included from time to
time in the Company's Securities and Exchange Commission filings,
including our Annual Report on Form 10-K for the year ended
December 31, 2016 as well as subsequent SEC filings.
The forward-looking statements contained in this release speak
as of the date of this release, and we do not undertake any
obligation to update any such statements, whether as a result of
new information, future events or otherwise.
PIXELWORKS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share
data) (Unaudited) Three Months
Ended March 31, December 31,
March 31, 2017
2016 2016 Revenue, net $ 22,710
$ 15,987 $ 11,167 Cost of revenue (1) 10,318
7,483 7,575 Gross profit 12,392 8,504 3,592
Operating expenses: Research and development (2) 4,906 4,415 5,675
Selling, general and administrative (3) 4,139 3,653 3,865
Restructuring — — 2,538
Total operating expenses 9,045 8,068
12,078 Income (loss) from operations 3,347 436 (8,486
) Interest expense and other, net (93 ) (101 )
(99 ) Income (loss) before income taxes 3,254 335 (8,585 )
Provision (benefit) for income taxes 433 (2 )
57 Net income (loss) $ 2,821 $ 337 $
(8,642 ) Net income (loss) per share: Basic $ 0.10 $ 0.01
$ (0.31 ) Diluted $ 0.09 $ 0.01 $ (0.31 )
Weighted average shares outstanding: Basic 29,283
28,684 27,936 Diluted 31,146
30,244 27,936
——————
(1) Includes: Stock-based compensation $ 53 $ 51 $ 44 Restructuring
— 7 1,723 (2) Includes stock-based compensation 314 378 429 (3)
Includes stock-based compensation 422 377 (107 )
PIXELWORKS, INC. RECONCILIATION OF GAAP AND NON-GAAP
FINANCIAL INFORMATION * (In thousands, except per share
data) (Unaudited) Three Months
Ended March 31, December 31,
March 31, 2017
2016 2016 Reconciliation of
GAAP and non-GAAP gross profit GAAP gross profit $ 12,392 $
8,504 $ 3,592 Stock-based compensation 53 51 44 Restructuring
— 7 1,723 Total
reconciling items included in cost of revenue 53
58 1,767 Non-GAAP gross profit $ 12,445
$ 8,562 $ 5,359 Non-GAAP gross profit margin
54.8 % 53.6 % 48.0 %
Reconciliation
of GAAP and non-GAAP operating expenses GAAP operating expenses
$ 9,045 $ 8,068 $ 12,078 Reconciling item included in research and
development: Stock-based compensation 314 378 429 Reconciling item
included in selling, general and administrative: Stock-based
compensation 422 377 (107 ) Restructuring — —
2,538 Total reconciling items included in
operating expenses 736 755 2,860
Non-GAAP operating expenses $ 8,309 $ 7,313 $
9,218
Reconciliation of GAAP and non-GAAP net
income (loss) GAAP net income (loss) $ 2,821 $ 337 $ (8,642 )
Reconciling items included in cost of revenue 53 58 1,767
Reconciling items included in operating expenses 736 755 2,860 Tax
effect of non-GAAP adjustments 155 8
(2 ) Non-GAAP net income (loss) $ 3,765 $ 1,158
$ (4,017 ) Non-GAAP net income (loss) per share: Basic $
0.13 $ 0.04 $ (0.14 ) Diluted $ 0.12 $ 0.04
$ (0.14 ) Non-GAAP weighted average shares outstanding:
Basic 29,283 28,684 27,936
Diluted 31,146 30,244
27,936
* Our non-GAAP gross profit, non-GAAP gross profit margin,
non-GAAP operating expenses, non-GAAP net income (loss) and
non-GAAP net income (loss) per share differs from GAAP gross
profit, GAAP operating expenses, GAAP net income (loss) and GAAP
net income (loss) per share due to the exclusion of restructuring
expenses and stock-based compensation expense. Pixelworks'
management believes the presentation of non-GAAP gross profit,
non-GAAP operating expenses, non-GAAP net income (loss) and
non-GAAP net income (loss) per share provides useful information to
investors regarding Pixelworks' results of operations which allows
investors an alternative evaluation of underlying cash flow
dynamics. Pixelworks' management also uses each of these non-GAAP
measures internally as an alternative evaluation of underlying cash
flow dynamics. Pixelworks, however, cautions investors to consider
these non-GAAP financial measures in addition to, and not as a
substitute for, our GAAP financial measures.
PIXELWORKS, INC. RECONCILIATION OF GAAP AND
NON-GAAP FINANCIAL INFORMATION * (In thousands)
(Unaudited) Three Months Ended
March 31, December 31,
March 31, 2017 2016 2016
Reconciliation of GAAP net income (loss) and adjusted EBITDA
GAAP net income (loss) $ 2,821 $ 337 $ (8,642 ) Stock-based
compensation 789 806 366 Restructuring — 7 4,261 Tax effect of
non-GAAP adjustments 155 8 (2 )
Non-GAAP net income (loss) $ 3,765 $ 1,158 $ (4,017 ) EBITDA
adjustments: Depreciation and amortization $ 839 $ 828 $ 990
Interest expense and other, net 93 101 99 Non-GAAP provision
(benefit) for income taxes 278 (10 ) 59
Adjusted EBITDA $ 4,975 $ 2,077 $ (2,869 )
* Adjusted EBITDA differs from GAAP net income (loss) due to the
exclusion of restructuring expenses, stock-based compensation
expense, interest expense and other, net, income tax provision
(benefit) and depreciation and amortization. Pixelworks' management
believes the presentation of adjusted EBITDA provides useful
information to investors regarding Pixelworks' results of
operations which allows investors an alternative evaluation of
underlying cash flow dynamics and core operating results and are
used by Pixelworks' management for these purposes. Pixelworks,
however, cautions investors to consider these non-GAAP financial
measures in addition to, and not as a substitute for, our GAAP
financial measures.
PIXELWORKS, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands) (Unaudited)
March 31, December 31,
2017 2016 ASSETS Current assets: Cash and cash
equivalents $ 19,640 $ 19,622 Accounts receivable, net 9,608 3,118
Inventories 2,478 2,803 Prepaid expenses and other current assets
5,258 736 Total current assets 36,984 26,279 Property
and equipment, net 5,528 3,793 Other assets, net 760
785 Total assets $ 43,272 $ 30,857
LIABILITIES AND SHAREHOLDERS’
EQUITY Current liabilities: Accounts payable $ 1,225 $ 1,734
Accrued liabilities and current portion of long-term liabilities
14,187 7,860 Current portion of income taxes payable 460
140 Total current liabilities 15,872 9,734 Long-term
liabilities, net of current portion 1,240 194 Income taxes payable,
net of current portion 1,844 1,880 Total liabilities
18,956 11,808 Shareholders’ equity 24,316 19,049
Total liabilities and shareholders’ equity $ 43,272 $ 30,857
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170427006510/en/
Investor ContactShelton GroupBrett Perry,
+1-214-272-0070bperry@sheltongroup.comorCompany ContactPixelworks,
Inc.Steven Moore, +1-408-200-9221smoore@pixelworks.com
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