Second Quarter 2017 GAAP Revenue of $104.2
million, net of a $5.2 million revenue elimination under purchase
accountingGAAP Diluted Earnings per Share of $0.16 and
Non-GAAP Diluted Earnings per Share of $0.35
MaxLinear, Inc. (NYSE:MXL), a leading provider of radio-frequency,
mixed-signal and high-performance analog integrated circuits for
the connected home, wired and wireless infrastructure, and
industrial and multi-market applications, today announced financial
results for the second quarter ended June 30, 2017.
Management Commentary
“We are pleased to announce the financial results of a very
exciting second quarter in 2017. In the second quarter, we
delivered record GAAP revenue of $104.2 million, even after a $5.2
million revenue elimination under acquisition-related purchase
price accounting. Our strong revenue results were driven by
sequential growth in both our network infrastructure and connected
home applications, and included initial contributions from our
recent acquisitions of Marvell's G.hn wireless connectivity
business, and Exar Corporation, or Exar. With the addition of the
G.hn wireline connectivity assets acquired from Marvell, we are
better positioned to address the needs of our connected home
partners, while significantly expanding our served addressable
market for connectivity solutions beyond MoCA. Exar's
high-performance analog product portfolio, consisting of power
management and interface solutions, is highly complementary to
MaxLinear's organically developed broadband RF and mixed-signal
digital SoC platform capabilities. As a result, we are uniquely
positioned to address the analog and mixed-signal needs of an
increasingly diverse tier-1 customer base with technology
platforms spanning consumer, broadband, industrial, automotive, and
network infrastructure markets. We are also pleased to have made
our first prepayment of $30.0 million against our term loan of
$425.0 million in July 2017,” commented Kishore Seendripu, Ph.D.,
Chairman and CEO.
Second Quarter Financial Highlights
GAAP basis:
The second quarter 2017 results were uniquely influenced by the
acquisitions and related purchase price accounting impacts of
Marvell’s G.hn business in April 2017 and Exar in May 2017, the
$425.0 million term loan issuance to fund the Exar transaction, and
a large non-cash income tax benefit resulting from release of the
valuation allowance against our U.S. federal deferred tax assets
during the three months ended June 30, 2017.
- Net revenue increased to $104.2 million, which was impacted by
elimination of Exar's deferred revenue of $5.2 million under
acquisition accounting, and which was up 17% sequentially and 2%
year-on-year.
- GAAP gross margin was 49.1%, which was impacted by elimination
of Exar's deferred profit of $3.9 million under acquisition
accounting as well as amortization of inventory step-ups to fair
value and acquired intangibles totaling $11.9 million, compared to
59.6% in the prior quarter, and 61.9% in the year ago quarter.
- GAAP operating expenses, inclusive of partial quarter
contributions from the Marvell G.hn and Exar acquisitions and
related purchase price accounting impacts, were $66.9 million in
the second quarter 2017, or 64% of revenue, compared to $42.5
million in the prior quarter, and $40.5 million in the year ago
quarter.
- GAAP pre-tax losses were 17.8% of revenue, compared to income
that was 11.8% of revenue in the prior quarter, and income that was
22.3% of revenue in the year ago quarter.
- GAAP tax benefit was $29.5 million or 159.1% of pre-tax loss,
and was impacted by $50.1 million of reversal of a valuation
allowance against certain of our deferred tax assets (with $45.3
million of discrete benefit in the quarter).
- GAAP net income was $11.0 million, compared to $8.5 million in
the prior quarter, and $22.6 million in the year ago quarter.
- GAAP diluted earnings per share were $0.16, compared to $0.12
in the prior quarter, and $0.33 in the year ago quarter.
Non-GAAP basis:
- Non-GAAP gross margin was 64.4%, when calculated on GAAP
revenue of $104.2 million, or 61.3% when calculated to adjust for
the $5.2 million of deferred revenue eliminated under Exar
acquisition accounting, which was the basis for prior guidance.
This compares to 62.7% in the prior quarter, and 63.8% in the year
ago quarter.
- Non-GAAP operating expenses were $36.9 million, or 35.4% of
revenue, compared to $30.1 million or 33.8% of revenue in the prior
quarter, and $30.6 million and 30.1% of revenue in the year ago
quarter.
- Non-GAAP pre-tax margin was 26.4% of revenue, compared to 28.9%
in the prior quarter, and 34.1% in the year ago quarter.
- Non-GAAP effective tax rate was 10.1% of non-GAAP pre-tax
income and reflects the tax rate on expected cash taxes, compared
to 9.9% in the prior quarter, and 2.2% in the year ago quarter
- Non-GAAP net income was $24.7 million, compared to $23.2
million in the prior quarter, and $33.9 million in the year ago
quarter.
- Non-GAAP diluted earnings per share were $0.35, compared to
$0.33 in the prior quarter, and $0.50 in the year ago quarter.
Second Quarter 2017 Business Highlights
- Completed the acquisition of G.hn Business from Marvell in
April 2017 for $21.0 million cash, expanding portfolio of connected
home wireline backbone solutions.
- Completed the acquisition of Exar Corporation in May 2017 for
$452.3 million, net of Exar's $235.8 million of cash at close, plus
$4.6 million in assumed vested stock-based awards for total
consideration of $692.7 million, funded with a $425.0 million term
loan facility.
- Wave-2 G.hn Technology chosen by Comtrend for new powerline
adapter with data rates up to 2 Gbps.
- Commenced production shipments of our technology leading highly
integrated 28nm CMOS Microwave backhaul RF solution addressing 5 to
45Ghz frequencies.
- Commenced production shipments of EXAR force-touch solution
into HTC's flagship u11 smartphone.
- Commenced production shipments of EXAR's point-of-load ("POL")
power management solutions into tier-1 server platforms.
- Commenced shipments of technology leading MOCA 2.5 products
with data rates up to 3 Gbps.
- Commenced production ramp of 1st DOCSIS 3.1 platform for major
US cable operator.
- Commenced production ramp of G.Now solution with a major Asian
telco.
- Achieved milestone of shipping 7M digital channel stacking
components.
- Initial sampling of industry’s first integrated tuner + ATSC
demod for the US, Mexican, and South Korean markets.
- Commenced volume shipments of mmWave backhaul modem solution to
a tier-1 Chinese OEM customer.
Third Quarter 2017 Business OutlookThe company
expects revenue in the third quarter to be in the range of $114
million to $118 million, and also estimates the following:
- GAAP and non-GAAP gross margin of approximately 45% and 61%,
respectively.
- GAAP and non-GAAP operating expenses of approximately $62
million and $41 million, respectively.
- GAAP and non-GAAP cash tax rates of approximately 36.5% and
10%, respectively.
Webcast and Conference CallMaxLinear will host
its second quarter financial results conference call today,
August 8, 2017 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern
Time). To access this call, dial US toll free: 1-877-407-3109 /
International: 1-201-493-6798. A live webcast of the conference
call will be accessible from the investor relations section of the
MaxLinear website at http://investors.maxlinear.com, and will be
archived and available after the call at
http://investors.maxlinear.com until August 22, 2017. A replay of
the conference call will also be available until August 22, 2017 by
dialing US toll free: 1-877-660-6853 / International:
1-201-612-7415 and Conference ID#: 13653123.
Cautionary Note Concerning Forward-Looking
Statements
This press release contains forward-looking statements 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. Forward-looking statements include, among others,
statements concerning our future financial performance (including
our current guidance for third quarter 2017 revenue and gross
margin). These forward-looking statements involve known and unknown
risks, uncertainties, and other factors that may cause actual
results to be materially different from any future results
expressed or implied by the forward-looking statements.
Forward-looking statements are based on management’s current,
preliminary expectations and are subject to various risks and
uncertainties. In particular, our future operating results are
substantially dependent on our assumptions about market trends and
conditions and our expectations with respect to recently completed
acquisitions. With respect to recently completed
acquisitions, we face particular risks associated with our ability
to integrate the acquired businesses and maintain relationships
with employees, customers, and vendors. Exar’s target markets
and business operations differ substantially from those of
MaxLinear, and we may be unable to realize anticipated strategic,
financial, and operating synergies to the same relative extent as
we were able to achieve in other recent acquisitions. In
addition, our decisions with respect to all our acquisitions were
based on management’s current expectations with respect to the size
of the available markets and growth opportunities presented by
these acquisitions, all of which are subject to material risks and
uncertainties. In connection with the acquisition of Exar, we
incurred substantial acquisition-related indebtedness, which
materially changed our financial profile and presents specific
risks relating to our ability to service interest and principal
payments and limitations on our operating flexibility based on
operating covenants in the applicable term loan agreements,
including (without limitation) debt covenant restrictions that
limit our ability to obtain additional financing, issue guarantees,
create liens, make certain restricted payments or repay certain
obligations or to pursue future acquisitions. Additional
risks and uncertainties arising from our operations generally and
our recently completed acquisitions include intense competition in
our industry; our dependence on a limited number of customers for a
substantial portion of our revenues; uncertainties concerning how
end user markets for our products will develop; potential
uncertainties arising from continued consolidation among cable
television and satellite operators in our target markets and
continued consolidation among competitors within the semiconductor
industry generally; our ability to develop and introduce new and
enhanced products on a timely basis and achieve market acceptance
of those products, particularly as we seek to expand outside of our
historic markets; potential decreases in average selling prices for
our products; risks relating to intellectual property protection
and the prevalence of intellectual property litigation in our
industry; indemnification obligations of Exar arising from a recent
divestiture; the impact on our financial condition of the incurred
acquisition indebtedness and cash usage arising from the Exar
transaction; our reliance on a limited number of third party
manufacturers; and our lack of long-term supply contracts and
dependence on limited sources of supply. In addition to these risks
and uncertainties, investors should review the risks and
uncertainties contained in our filings with the Securities and
Exchange Commission (SEC), including our most recent Annual Report
on Form 10-K for the year ended December 31, 2016 filed with the
SEC on February 9, 2017, our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2017, and our Current Reports on Form 8-K,
as well as the information to be set forth under the caption “Risk
Factors” in MaxLinear’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2017, which we expect to file shortly. All
forward-looking statements are based on the estimates, projections
and assumptions of management as of August 8, 2017, and
MaxLinear is under no obligation (and expressly disclaims any such
obligation) to update or revise any forward-looking statements
whether as a result of new information, future events, or
otherwise.
Use of Non-GAAP Financial Measures
To supplement our unaudited consolidated financial statements
presented on a basis consistent with GAAP, we disclose certain
non-GAAP financial measures, including non-GAAP gross margin,
operating expenses, operating expenses as a percentage of revenue,
pre-tax margins, effective tax rate, net income and diluted
earnings per share. These supplemental measures include the gross
margin impact of Exar's deferred profit eliminated in purchase
price accounting and exclude the effects of (i) stock-based
compensation expense; (ii) an accrual related to our
performance based bonus plan for 2017, which we currently intend to
settle in shares of our common stock; (iii) accruals related
to our performance based bonus plan for 2016, which we settled in
shares of our class A common stock in 2016 and 2017; (iv)
amortization of purchased intangible assets and inventory step up;
(v) depreciation of fixed assets step-up; (vi) restricted merger
proceeds and contingent consideration and incentive award; (vii)
acquisition and integration costs related to our recently completed
acquisitions; (viii) professional fees and settlement costs related
to our previously disclosed IP and commercial litigation matters;
(ix) severance and other restructuring charges; and (x) non-cash
income tax benefits and expenses. These non-GAAP measures are not
in accordance with and do not serve as an alternative for GAAP. We
believe that these non-GAAP measures have limitations in that they
do not reflect all of the amounts associated with our GAAP results
of operations. These non-GAAP measures should only be viewed in
conjunction with corresponding GAAP measures. We compensate for the
limitations of non-GAAP financial measures by relying upon GAAP
results to gain a complete picture of our performance.
We believe that non-GAAP financial measures can provide useful
information to both management and investors by excluding certain
non-cash and other one-time expenses that are not indicative of our
core operating results. Among other uses, our management uses
non-GAAP measures to compare our performance relative to forecasts
and strategic plans and to benchmark our performance externally
against competitors. In addition, management’s incentive
compensation will be determined in part using these non-GAAP
measures because we believe non-GAAP measures better reflect our
core operating performance.
The following are explanations of each type of adjustment that
we incorporate into non-GAAP financial measures:
Stock-based compensation expense relates to equity incentive
awards granted to our employees, directors, and consultants. Our
equity incentive plans are important components of our employee
incentive compensation arrangements and are reflected as expenses
in our GAAP results. Stock-based compensation expense has been and
will continue to be a significant recurring expense for
MaxLinear.
Bonuses under our executive and non-executive bonus programs
have been excluded from our non-GAAP net income for all periods
reported. Bonus payments for the first and second half of the 2016
performance periods were settled through the issuance of shares of
Class A common stock under our equity incentive plans in
August 2016 and February 2017, respectively. We currently expect
that bonus awards under our fiscal 2017 program will be settled in
common stock in the first quarter of fiscal 2018. While we include
the dilutive impact of equity awards in weighted average shares
outstanding, the expense associated with stock-based awards
reflects a non-cash charge that we exclude from non-GAAP net
income.
Expenses incurred in relation to acquisitions include
amortization of purchased intangible assets and step-up of
inventory to fair value, depreciation of step-up of property and
equipment to fair value, acquisition and integration costs
primarily consisting of professional and consulting fees, incentive
awards, and restricted merger proceeds which represent the change
in fair value of contingent consideration related to a 2014
acquisition and one-time impact on gross margin from elimination of
Exar's deferred profit in purchase price accounting.
Restructuring charges incurred are related to our restructuring
plans which address issues primarily relating to the integration of
the Company and acquired businesses or internal operations and
primarily include severance and restructuring costs related to
exiting certain facilities.
Expenses incurred in relation to our intellectual property and
commercial litigation include professional fees incurred.
Income tax benefits and expenses that do not affect cash income
taxes payable.
Reconciliations of non-GAAP measures for the historic periods
disclosed in this press release appear below. Because of the
inherent uncertainty associated with our ability to project future
charges, particularly related to stock-based compensation and its
related tax effects as well as potential impairments, we have not
provided a reconciliation for non-GAAP guidance provided for the
third quarter 2017.
About MaxLinear, Inc.
MaxLinear, Inc. (NYSE:MXL) is a leading provider of radio
frequency (RF) and mixed-signal and high-performance analog
integrated circuits for the connected home, wired and wireless
infrastructure, and industrial and multi-market applications.
MaxLinear is headquartered in Carlsbad, California. For more
information, please visit www.maxlinear.com.
MXL is MaxLinear’s registered trademark. Other trademarks
appearing herein are the property of their respective owners.
MAXLINEAR, INC.UNAUDITED GAAP
CONSOLIDATED STATEMENTS OF INCOME(in
thousands, except per share data) |
|
|
Three Months Ended |
|
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
Net revenue |
$ |
104,175 |
|
|
$ |
88,841 |
|
|
$ |
101,687 |
|
Cost of net
revenue |
53,071 |
|
|
35,917 |
|
|
38,774 |
|
Gross profit |
51,104 |
|
|
52,924 |
|
|
62,913 |
|
Operating
expenses: |
|
|
|
|
|
Research
and development |
29,015 |
|
|
23,878 |
|
|
24,037 |
|
Selling,
general and administrative |
31,338 |
|
|
18,613 |
|
|
16,505 |
|
Restructuring charges |
6,546 |
|
|
— |
|
|
— |
|
Total operating
expenses |
66,899 |
|
|
42,491 |
|
|
40,542 |
|
Income (loss) from
operations |
(15,795 |
) |
|
10,433 |
|
|
22,371 |
|
Interest income |
64 |
|
|
195 |
|
|
167 |
|
Interest expense |
(2,201 |
) |
|
— |
|
|
— |
|
Other income (expense),
net |
(618 |
) |
|
(144 |
) |
|
124 |
|
Total interest and
other income (expense), net |
(2,755 |
) |
|
51 |
|
|
291 |
|
Income (loss) before
income taxes |
(18,550 |
) |
|
10,484 |
|
|
22,662 |
|
Income tax provision
(benefit) |
(29,515 |
) |
|
2,021 |
|
|
78 |
|
Net income |
$ |
10,965 |
|
|
$ |
8,463 |
|
|
$ |
22,584 |
|
Net income per
share: |
|
|
|
|
|
Basic |
$ |
0.17 |
|
|
$ |
0.13 |
|
|
$ |
0.36 |
|
Diluted |
$ |
0.16 |
|
|
$ |
0.12 |
|
|
$ |
0.33 |
|
Shares used to compute
net income per share: |
|
|
|
|
|
Basic |
65,889 |
|
|
65,238 |
|
|
63,470 |
|
Diluted |
69,645 |
|
|
69,149 |
|
|
67,520 |
|
MAXLINEAR, INC.UNAUDITED GAAP
CONSOLIDATED STATEMENTS OF INCOME(in thousands,
except per share data) |
|
|
Six Months Ended |
|
June 30, 2017 |
|
June 30, 2016 |
Net revenue |
$ |
193,016 |
|
|
$ |
204,372 |
|
Cost of net
revenue |
88,988 |
|
|
80,289 |
|
Gross profit |
104,028 |
|
|
124,083 |
|
Operating
expenses: |
|
|
|
Research
and development |
52,893 |
|
|
47,789 |
|
Selling,
general and administrative |
49,951 |
|
|
30,115 |
|
Restructuring charges |
6,546 |
|
|
2,106 |
|
Total operating
expenses |
109,390 |
|
|
80,010 |
|
Income (loss) from
operations |
(5,362 |
) |
|
44,073 |
|
Interest income |
259 |
|
|
337 |
|
Interest expense |
(2,201 |
) |
|
— |
|
Other expense, net |
(762 |
) |
|
(74 |
) |
Total interest and
other income (expense), net |
(2,704 |
) |
|
263 |
|
Income (loss) before
income taxes |
(8,066 |
) |
|
44,336 |
|
Income tax provision
(benefit) |
(27,494 |
) |
|
1,071 |
|
Net income |
$ |
19,428 |
|
|
$ |
43,265 |
|
Net income per
share: |
|
|
|
Basic |
$ |
0.30 |
|
|
$ |
0.69 |
|
Diluted |
$ |
0.28 |
|
|
$ |
0.64 |
|
Shares used to compute
net income per share: |
|
|
|
Basic |
65,564 |
|
|
63,056 |
|
Diluted |
69,398 |
|
|
67,110 |
|
MAXLINEAR, INC.UNAUDITED GAAP
CONSOLIDATED STATEMENTS OF CASH FLOWS(in
thousands) |
|
|
Three Months Ended |
|
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
Operating
Activities |
|
|
|
|
|
Net income |
$ |
10,965 |
|
|
8,463 |
|
|
$ |
22,584 |
|
Adjustments to
reconcile net income to cash provided by (used in) operating
activities: |
|
|
|
|
|
Amortization and depreciation |
18,261 |
|
|
6,899 |
|
|
4,163 |
|
Provision
for losses on accounts receivable |
— |
|
|
87 |
|
|
— |
|
Amortization (accretion) of investment premiums (discount),
net |
(107 |
) |
|
47 |
|
|
(66 |
) |
Amortization of inventory step-up |
5,635 |
|
|
— |
|
|
336 |
|
Amortization of debt issuance costs |
175 |
|
|
— |
|
|
— |
|
Stock-based compensation |
11,628 |
|
|
5,474 |
|
|
5,102 |
|
Deferred
income taxes |
(53,297 |
) |
|
155 |
|
|
(100 |
) |
(Gain)
loss on disposal of property and equipment |
3 |
|
|
(88 |
) |
|
48 |
|
(Gain)
loss on sale of available-for-sale securities |
38 |
|
|
— |
|
|
(50 |
) |
(Gain)
loss on foreign currency |
898 |
|
|
(216 |
) |
|
(170 |
) |
Excess
tax benefits on stock-based awards |
(2,376 |
) |
|
(914 |
) |
|
(3,549 |
) |
Change in
fair value of contingent consideration |
— |
|
|
— |
|
|
24 |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
Accounts
receivable |
(13,496 |
) |
|
(7,436 |
) |
|
(3,300 |
) |
Inventory |
(2,289 |
) |
|
(5,102 |
) |
|
4,396 |
|
Prepaid
expenses and other assets |
4,385 |
|
|
825 |
|
|
1,611 |
|
Accounts
payable, accrued expenses and other current liabilities |
7,610 |
|
|
7,952 |
|
|
1,887 |
|
Accrued
compensation |
(1,664 |
) |
|
382 |
|
|
309 |
|
Deferred
revenue and deferred profit |
7,633 |
|
|
(307 |
) |
|
(725 |
) |
Accrued
price protection liability |
2,676 |
|
|
6,771 |
|
|
(173 |
) |
Other
long-term liabilities |
(3,768 |
) |
|
(320 |
) |
|
18 |
|
Net cash provided by
(used in) operating activities (1) |
(7,090 |
) |
|
22,672 |
|
|
32,345 |
|
Investing
Activities |
|
|
|
|
|
Purchases of property
and equipment |
(1,155 |
) |
|
(743 |
) |
|
(1,488 |
) |
Purchases of intangible
assets |
(5,205 |
) |
|
(120 |
) |
|
(390 |
) |
Cash used in
acquisition, net of cash acquired |
(473,304 |
) |
|
— |
|
|
(21,000 |
) |
Purchases of
available-for-sale securities |
— |
|
|
(30,577 |
) |
|
(9,504 |
) |
Maturities of
available-for-sale securities |
63,761 |
|
|
20,785 |
|
|
70,711 |
|
Net cash provided by
(used in) investing activities |
(415,903 |
) |
|
(10,655 |
) |
|
38,329 |
|
Financing
Activities |
|
|
|
|
|
Repurchases of common
stock |
— |
|
|
(334 |
) |
|
— |
|
Net proceeds from
issuance of common stock |
7,657 |
|
|
361 |
|
|
2,558 |
|
Minimum tax withholding
paid on behalf of employees for restricted stock units |
(3,496 |
) |
|
(4,903 |
) |
|
(2,501 |
) |
Proceeds from issuance
of debt |
416,846 |
|
|
— |
|
|
— |
|
Net cash provided by
(used in) financing activities |
421,007 |
|
|
(4,876 |
) |
|
57 |
|
Effect of exchange rate
changes on cash and cash equivalents |
839 |
|
|
1,201 |
|
|
11 |
|
Increase (decrease) in
cash, cash equivalents and restricted cash |
(1,147 |
) |
|
8,342 |
|
|
70,742 |
|
Cash, cash equivalents
and restricted cash at beginning of period |
91,238 |
|
|
82,896 |
|
|
76,840 |
|
Cash, cash equivalents
and restricted cash at end of period |
$ |
90,091 |
|
|
$ |
91,238 |
|
|
$ |
147,582 |
|
_______________(1) Net cash used in operating activities for the
three months ended June 30, 2017 of $7.1 million includes the
impact of payments of $18.0 million in assumed Exar pre-close
liabilities and $7.6 million in aggregate transaction and cash
restructuring costs.
MAXLINEAR, INC.UNAUDITED GAAP
CONSOLIDATED STATEMENTS OF CASH FLOWS(in
thousands) |
|
|
Six Months Ended |
|
June 30, 2017 |
|
June 30, 2016 |
Operating
Activities |
|
|
|
Net income |
$ |
19,428 |
|
|
$ |
43,265 |
|
Adjustments to
reconcile net income to cash provided by operating activities: |
|
|
|
Amortization and depreciation |
25,160 |
|
|
9,935 |
|
Provision
for losses on accounts receivable |
87 |
|
|
— |
|
Amortization (accretion) of investment premiums (discount),
net |
(60 |
) |
|
83 |
|
Amortization of inventory step-up |
5,635 |
|
|
336 |
|
Amortization of debt issuance costs |
175 |
|
|
— |
|
Stock-based compensation |
17,102 |
|
|
10,211 |
|
Deferred
income taxes |
(53,142 |
) |
|
133 |
|
(Gain)
loss on disposal of property and equipment |
(85 |
) |
|
48 |
|
(Gain)
loss on sale of available-for-sale securities |
38 |
|
|
(50 |
) |
(Gain)
loss on foreign currency |
682 |
|
|
(46 |
) |
Excess
tax benefits on stock-based awards |
(3,290 |
) |
|
(5,114 |
) |
Change in
fair value of contingent consideration |
— |
|
|
110 |
|
Changes
in operating assets and liabilities: |
|
|
|
Accounts
receivable |
(20,932 |
) |
|
(1,941 |
) |
Inventory |
(7,391 |
) |
|
7,418 |
|
Prepaid
expenses and other assets |
5,210 |
|
|
(805 |
) |
Accounts
payable, accrued expenses and other current liabilities |
15,562 |
|
|
4,967 |
|
Accrued
compensation |
(1,282 |
) |
|
3,540 |
|
Deferred
revenue and deferred profit |
7,326 |
|
|
1,732 |
|
Accrued
price protection liability |
9,447 |
|
|
(1,756 |
) |
Other
long-term liabilities |
(4,088 |
) |
|
(767 |
) |
Net cash provided by
operating activities |
15,582 |
|
|
71,299 |
|
Investing
Activities |
|
|
|
Purchases of property
and equipment |
(1,898 |
) |
|
(4,710 |
) |
Purchases of intangible
assets |
(5,325 |
) |
|
(390 |
) |
Cash used in
acquisition, net of cash acquired |
(473,304 |
) |
|
(21,000 |
) |
Purchases of
available-for-sale securities |
(30,577 |
) |
|
(47,277 |
) |
Maturities of
available-for-sale securities |
84,546 |
|
|
81,011 |
|
Net cash provided by
(used in) investing activities |
(426,558 |
) |
|
7,634 |
|
Financing
Activities |
|
|
|
Repurchases of common
stock |
(334 |
) |
|
(3 |
) |
Net proceeds from
issuance of common stock |
8,018 |
|
|
4,285 |
|
Minimum tax withholding
paid on behalf of employees for restricted stock units |
(8,399 |
) |
|
(3,593 |
) |
Proceeds from issuance
of debt |
416,846 |
|
|
— |
|
Net cash provided by
financing activities |
416,131 |
|
|
689 |
|
Effect of exchange rate
changes on cash and cash equivalents |
2,040 |
|
|
4 |
|
Increase in cash, cash
equivalents and restricted cash |
7,195 |
|
|
79,626 |
|
Cash, cash equivalents
and restricted cash at beginning of period |
82,896 |
|
|
67,956 |
|
Cash, cash equivalents
and restricted cash at end of period |
$ |
90,091 |
|
|
$ |
147,582 |
|
MAXLINEAR, INC.UNAUDITED GAAP
CONDENSED CONSOLIDATED BALANCE SHEETS(in
thousands) |
|
|
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents(1) |
$ |
87,568 |
|
|
$ |
89,121 |
|
|
$ |
145,804 |
|
Short-term restricted cash(1) |
615 |
|
|
615 |
|
|
— |
|
Short-term investments, available-for-sale |
— |
|
|
63,637 |
|
|
28,899 |
|
Accounts
receivable, net |
82,695 |
|
|
57,836 |
|
|
44,340 |
|
Inventory |
77,559 |
|
|
31,685 |
|
|
25,604 |
|
Prepaid
expenses and other current assets |
9,732 |
|
|
5,535 |
|
|
4,982 |
|
Total current
assets |
258,169 |
|
|
248,429 |
|
|
249,629 |
|
Long-term restricted
cash(1) |
1,908 |
|
|
1,502 |
|
|
1,778 |
|
Property and equipment,
net |
24,469 |
|
|
19,162 |
|
|
21,134 |
|
Long-term investments,
available-for-sale |
— |
|
|
— |
|
|
— |
|
Intangible assets,
net |
353,524 |
|
|
99,679 |
|
|
60,675 |
|
Goodwill |
238,838 |
|
|
75,673 |
|
|
56,714 |
|
Deferred tax
assets |
53,878 |
|
|
118 |
|
|
96 |
|
Other long-term
assets |
6,841 |
|
|
1,534 |
|
|
1,886 |
|
Total assets |
$ |
937,627 |
|
|
$ |
446,097 |
|
|
$ |
391,912 |
|
|
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
|
|
Current
liabilities |
$ |
110,197 |
|
|
$ |
64,555 |
|
|
$ |
55,620 |
|
Long-term debt |
415,032 |
|
|
— |
|
|
— |
|
Other long-term
liabilities |
14,491 |
|
|
15,529 |
|
|
15,104 |
|
Total stockholders’
equity |
397,907 |
|
|
366,013 |
|
|
321,188 |
|
Total liabilities and
stockholders’ equity |
$ |
937,627 |
|
|
$ |
446,097 |
|
|
$ |
391,912 |
|
___________________________________________(1) Certain
reclassifications for cash restricted in connection with guarantees
for certain office leases have been made to prior periods to
conform to the current period presentation.
MAXLINEAR, INC.UNAUDITED
RECONCILIATION OF NON-GAAP ADJUSTMENTS(in
thousands, except per share data) |
|
|
Three Months Ended |
|
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
GAAP gross profit |
$ |
51,104 |
|
|
$ |
52,924 |
|
|
$ |
62,913 |
|
Stock-based compensation |
79 |
|
|
59 |
|
|
51 |
|
Performance based equity |
28 |
|
|
42 |
|
|
(165 |
) |
Amortization of inventory step-up |
5,635 |
|
|
— |
|
|
336 |
|
Amortization of purchased intangible assets |
6,260 |
|
|
2,684 |
|
|
1,787 |
|
Depreciation of fixed asset step-up |
112 |
|
|
— |
|
|
— |
|
Deferred
profit eliminated in purchase price accounting |
3,872 |
|
|
— |
|
|
— |
|
Non-GAAP gross
profit |
67,090 |
|
|
55,709 |
|
|
64,922 |
|
|
|
|
|
|
|
GAAP R&D
expenses |
29,015 |
|
|
23,878 |
|
|
24,037 |
|
Stock-based compensation |
(4,011 |
) |
|
(3,493 |
) |
|
(3,136 |
) |
Incentive
award compensation |
— |
|
|
— |
|
|
(168 |
) |
Performance based equity |
(1,055 |
) |
|
(954 |
) |
|
(1,555 |
) |
Amortization of purchased intangible assets |
(97 |
) |
|
(96 |
) |
|
(148 |
) |
Depreciation of fixed asset step-up |
(760 |
) |
|
— |
|
|
— |
|
Restricted merger proceeds and contingent consideration |
— |
|
|
— |
|
|
(208 |
) |
Non-GAAP
R&D expenses |
23,092 |
|
|
19,335 |
|
|
18,822 |
|
|
|
|
|
|
|
GAAP SG&A
expenses |
31,338 |
|
|
18,613 |
|
|
16,505 |
|
Stock-based compensation |
(3,024 |
) |
|
(1,922 |
) |
|
(1,696 |
) |
Incentive
award compensation |
— |
|
|
— |
|
|
(51 |
) |
Performance based equity |
(482 |
) |
|
(578 |
) |
|
(787 |
) |
Amortization of purchased intangible assets |
(8,262 |
) |
|
(1,881 |
) |
|
(662 |
) |
Depreciation of fixed asset step-up |
(56 |
) |
|
— |
|
|
— |
|
Acquisition and integration costs |
(5,609 |
) |
|
(3,394 |
) |
|
(1,338 |
) |
Restricted merger proceeds and contingent consideration |
— |
|
|
— |
|
|
(24 |
) |
IP
litigation costs, net |
(125 |
) |
|
(105 |
) |
|
(197 |
) |
Non-GAAP
SG&A expenses |
13,780 |
|
|
10,733 |
|
|
11,750 |
|
|
|
|
|
|
|
GAAP restructuring
expenses |
6,546 |
|
|
— |
|
|
— |
|
Restructuring charges |
(6,546 |
) |
|
— |
|
|
— |
|
Non-GAAP
restructuring expenses |
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
GAAP and non-GAAP
interest and other income (expense), net |
(2,755 |
) |
|
51 |
|
|
291 |
|
|
|
|
|
|
|
GAAP income (loss)
before income taxes |
(18,550 |
) |
|
10,484 |
|
|
22,662 |
|
Total
non-GAAP adjustments |
46,013 |
|
|
15,208 |
|
|
11,979 |
|
Non-GAAP
income before income taxes |
27,463 |
|
|
25,692 |
|
|
34,641 |
|
|
|
|
|
|
|
GAAP income tax
provision (benefit) |
(29,515 |
) |
|
2,021 |
|
|
78 |
|
Adjustment for non-cash tax benefits/expenses |
32,300 |
|
|
510 |
|
|
670 |
|
Non-GAAP
income tax provision |
2,785 |
|
|
2,531 |
|
|
748 |
|
|
|
|
|
|
|
GAAP net income |
10,965 |
|
|
8,463 |
|
|
22,584 |
|
Total
non-GAAP adjustments before income taxes |
46,013 |
|
|
15,208 |
|
|
11,979 |
|
Less:
total tax adjustments |
32,300 |
|
|
510 |
|
|
670 |
|
Non-GAAP
net income |
$ |
24,678 |
|
|
$ |
23,161 |
|
|
$ |
33,893 |
|
|
|
|
|
|
|
Shares used in
computing non-GAAP basic net income per share |
65,889 |
|
|
65,238 |
|
|
63,470 |
|
Shares used in
computing non-GAAP diluted net income per share |
69,645 |
|
|
69,149 |
|
|
67,520 |
|
Non-GAAP basic net
income per share |
$ |
0.37 |
|
|
$ |
0.36 |
|
|
$ |
0.53 |
|
Non-GAAP diluted net
income per share |
$ |
0.35 |
|
|
$ |
0.33 |
|
|
$ |
0.50 |
|
MAXLINEAR, INC.UNAUDITED
RECONCILIATION OF NON-GAAP ADJUSTMENTS(in
thousands, except per share data) |
|
|
Six Months Ended |
|
June 30, 2017 |
|
June 30, 2016 |
GAAP gross profit |
$ |
104,028 |
|
|
$ |
124,083 |
|
Stock-based compensation |
138 |
|
|
94 |
|
Performance based equity |
70 |
|
|
(64 |
) |
Amortization of inventory step-up |
5,635 |
|
|
336 |
|
Amortization of purchased intangible assets |
8,944 |
|
|
3,369 |
|
Depreciation of fixed asset step-up |
112 |
|
|
— |
|
Deferred
profit eliminated in purchase price accounting |
3,872 |
|
|
— |
|
Non-GAAP gross
profit |
122,799 |
|
|
127,818 |
|
|
|
|
|
GAAP R&D
expenses |
52,893 |
|
|
47,789 |
|
Stock-based compensation |
(7,504 |
) |
|
(6,199 |
) |
Incentive
award compensation |
— |
|
|
(384 |
) |
Performance based equity |
(2,009 |
) |
|
(2,736 |
) |
Amortization of purchased intangible assets |
(193 |
) |
|
(244 |
) |
Depreciation of fixed asset step-up |
(760 |
) |
|
— |
|
Restricted merger proceeds and contingent consideration |
— |
|
|
(416 |
) |
Non-GAAP
R&D expenses |
42,427 |
|
|
37,810 |
|
|
|
|
|
GAAP SG&A
expenses |
49,951 |
|
|
30,115 |
|
Stock-based compensation |
(4,946 |
) |
|
(3,433 |
) |
Incentive
award compensation |
— |
|
|
(101 |
) |
Performance based equity |
(1,060 |
) |
|
(1,382 |
) |
Amortization of purchased intangible assets |
(10,143 |
) |
|
(958 |
) |
Depreciation of fixed asset step-up |
(56 |
) |
|
— |
|
Acquisition and integration costs |
(9,003 |
) |
|
(1,262 |
) |
Restricted merger proceeds and contingent consideration |
— |
|
|
(110 |
) |
IP
litigation costs, net |
(230 |
) |
|
(659 |
) |
Non-GAAP
SG&A expenses |
24,513 |
|
|
22,210 |
|
|
|
|
|
GAAP restructuring
expenses |
6,546 |
|
|
2,106 |
|
Restructuring charges |
(6,546 |
) |
|
(2,106 |
) |
Non-GAAP
restructuring expenses |
— |
|
|
— |
|
|
|
|
|
GAAP and non-GAAP
interest and other income (expense), net |
(2,704 |
) |
|
263 |
|
|
|
|
|
GAAP income (loss)
before income taxes |
(8,066 |
) |
|
44,336 |
|
Total
non-GAAP adjustments |
61,221 |
|
|
23,725 |
|
Non-GAAP
income before income taxes |
53,155 |
|
|
68,061 |
|
|
|
|
|
GAAP income tax
provision (benefit) |
(27,494 |
) |
|
1,071 |
|
Adjustment for non-cash tax benefits/expenses |
32,810 |
|
|
399 |
|
Non-GAAP
income tax provision |
5,316 |
|
|
1,470 |
|
|
|
|
|
GAAP net income |
19,428 |
|
|
43,265 |
|
Total
non-GAAP adjustments before income taxes |
61,221 |
|
|
23,725 |
|
Less:
total tax adjustments |
32,810 |
|
|
399 |
|
Non-GAAP
net income |
$ |
47,839 |
|
|
$ |
66,591 |
|
|
|
|
|
Shares used in
computing non-GAAP basic net income per share |
65,564 |
|
|
63,056 |
|
Shares used in
computing non-GAAP diluted net income per share |
69,398 |
|
|
67,110 |
|
Non-GAAP basic net
income per share |
$ |
0.73 |
|
|
$ |
1.06 |
|
Non-GAAP diluted net
income per share |
$ |
0.69 |
|
|
$ |
0.99 |
|
MAXLINEAR, INC.UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
|
|
Three Months Ended |
|
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
GAAP gross profit |
49.1 |
% |
|
59.6 |
% |
|
61.9 |
% |
Stock-based compensation |
0.1 |
% |
|
0.1 |
% |
|
0.1 |
% |
Performance based equity |
— |
% |
|
— |
% |
|
(0.2 |
)% |
Amortization of inventory step-up |
5.4 |
% |
|
— |
% |
|
0.3 |
% |
Amortization of purchased intangible assets |
6.0 |
% |
|
3.0 |
% |
|
1.8 |
% |
Depreciation of fixed asset step-up |
0.1 |
% |
|
— |
% |
|
— |
% |
Deferred
profit eliminated in purchase price accounting |
3.7 |
% |
|
— |
% |
|
— |
% |
Non-GAAP gross
profit |
64.4 |
% |
|
62.7 |
% |
|
63.8 |
% |
|
|
|
|
|
|
|
|
|
GAAP R&D
expenses |
27.9 |
% |
|
26.9 |
% |
|
23.6 |
% |
Stock-based compensation |
(3.9 |
)% |
|
(3.9 |
)% |
|
(3.1 |
)% |
Incentive
award compensation |
— |
% |
|
— |
% |
|
(0.2 |
)% |
Performance based equity |
(1.0 |
)% |
|
(1.1 |
)% |
|
(1.5 |
)% |
Amortization of purchased intangible assets |
(0.1 |
)% |
|
(0.1 |
)% |
|
(0.1 |
)% |
Depreciation of fixed asset step-up |
(0.7 |
)% |
|
— |
% |
|
— |
% |
Restricted merger proceeds and contingent consideration |
— |
% |
|
— |
% |
|
(0.2 |
)% |
Non-GAAP R&D
expenses |
22.2 |
% |
|
21.8 |
% |
|
18.5 |
% |
|
|
|
|
|
|
GAAP SG&A
expenses |
30.1 |
% |
|
21.0 |
% |
|
16.2 |
% |
Stock-based compensation |
(2.9 |
)% |
|
(2.2 |
)% |
|
(1.7 |
)% |
Incentive
award compensation |
— |
% |
|
— |
% |
|
— |
% |
Performance based equity |
(0.5 |
)% |
|
(0.7 |
)% |
|
(0.8 |
)% |
Amortization of purchased intangible assets |
(7.9 |
)% |
|
(2.1 |
)% |
|
(0.6 |
)% |
Depreciation of fixed asset step-up |
(0.1 |
)% |
|
— |
% |
|
— |
% |
Acquisition and integration costs |
(5.4 |
)% |
|
(3.8 |
)% |
|
(1.3 |
)% |
Restricted merger proceeds and contingent consideration |
— |
% |
|
— |
% |
|
— |
% |
IP
litigation costs, net |
(0.1 |
)% |
|
(0.1 |
)% |
|
(0.2 |
)% |
Non-GAAP SG&A
expenses |
13.2 |
% |
|
12.1 |
% |
|
11.6 |
% |
|
|
|
|
|
|
GAAP restructuring
expenses |
6.3 |
% |
|
— |
% |
|
— |
% |
Restructuring charges |
(6.3 |
)% |
|
— |
% |
|
— |
% |
Non-GAAP restructuring
expenses |
— |
% |
|
— |
% |
|
— |
% |
|
|
|
|
|
|
GAAP and non-GAAP
interest and other income (expense), net |
(2.6 |
)% |
|
0.1 |
% |
|
0.3 |
% |
|
|
|
|
|
|
GAAP income (loss)
before income taxes |
(17.8 |
)% |
|
11.8 |
% |
|
22.3 |
% |
Total non-GAAP
adjustments before income taxes |
44.1 |
% |
|
17.1 |
% |
|
11.8 |
% |
Non-GAAP income before
income taxes |
26.4 |
% |
|
28.9 |
% |
|
34.1 |
% |
|
|
|
|
|
|
|
|
|
GAAP income tax
provision (benefit) |
(28.3 |
)% |
|
2.3 |
% |
|
0.1 |
% |
Adjustment for non-cash tax benefits/expenses |
30.9 |
% |
|
0.5 |
% |
|
0.7 |
% |
Non-GAAP income tax
provision |
2.7 |
% |
|
2.8 |
% |
|
0.8 |
% |
|
|
|
|
|
|
|
|
|
GAAP net income |
10.5 |
% |
|
9.5 |
% |
|
22.2 |
% |
Total
non-GAAP adjustments before income taxes |
44.1 |
% |
|
17.1 |
% |
|
11.8 |
% |
Less:
total tax adjustments |
30.9 |
% |
|
0.5 |
% |
|
0.7 |
% |
Non-GAAP
net income |
23.7 |
% |
|
26.1 |
% |
|
33.3 |
% |
MAXLINEAR, INC.UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
|
|
Six Months Ended |
|
June 30, 2017 |
|
June 30, 2016 |
GAAP gross profit |
53.9 |
% |
|
60.7 |
% |
Stock-based compensation |
0.1 |
% |
|
— |
% |
Performance based equity |
— |
% |
|
— |
% |
Amortization of inventory step-up |
2.9 |
% |
|
0.2 |
% |
Amortization of purchased intangible assets |
4.6 |
% |
|
1.6 |
% |
Depreciation of fixed asset step-up |
0.1 |
% |
|
— |
% |
Deferred
profit eliminated in purchase price accounting |
2.0 |
% |
|
— |
% |
Non-GAAP gross
profit |
63.6 |
% |
|
62.5 |
% |
|
|
|
|
|
|
GAAP R&D
expenses |
27.4 |
% |
|
23.3 |
% |
Stock-based compensation |
(3.9 |
)% |
|
(3.0 |
)% |
Incentive
award compensation |
— |
% |
|
(0.2 |
)% |
Performance based equity |
(1.0 |
)% |
|
(1.3 |
)% |
Amortization of purchased intangible assets |
(0.1 |
)% |
|
(0.1 |
)% |
Depreciation of fixed asset step-up |
(0.4 |
)% |
|
— |
% |
Restricted merger proceeds and contingent consideration |
— |
% |
|
(0.2 |
)% |
Non-GAAP R&D
expenses |
22.0 |
% |
|
18.5 |
% |
|
|
|
|
GAAP SG&A
expenses |
25.9 |
% |
|
14.7 |
% |
Stock-based compensation |
(2.6 |
)% |
|
(1.7 |
)% |
Performance based equity |
(0.5 |
)% |
|
(0.7 |
)% |
Amortization of purchased intangible assets |
(5.2 |
)% |
|
(0.4 |
)% |
Depreciation of fixed asset step-up |
(0.1 |
)% |
|
— |
% |
Acquisition and integration costs |
(4.7 |
)% |
|
(0.6 |
)% |
Restricted merger proceeds and contingent consideration |
— |
% |
|
(0.1 |
)% |
IP
litigation costs, net |
(0.1 |
)% |
|
(0.3 |
)% |
Non-GAAP SG&A
expenses |
12.7 |
% |
|
10.9 |
% |
|
|
|
|
GAAP restructuring
expenses |
3.4 |
% |
|
1.0 |
% |
Restructuring charges |
(3.4 |
)% |
|
(1.0 |
)% |
Non-GAAP restructuring
expenses |
— |
% |
|
— |
% |
|
|
|
|
|
|
GAAP and non-GAAP
interest and other income (expense), net |
(1.4 |
)% |
|
0.1 |
% |
|
|
|
|
|
|
GAAP income (loss)
before income taxes |
(4.2 |
)% |
|
21.7 |
% |
Total non-GAAP
adjustments before income taxes |
31.7 |
% |
|
11.6 |
% |
Non-GAAP income before
income taxes |
27.5 |
% |
|
33.3 |
% |
|
|
|
|
|
|
GAAP income tax
provision (benefit) |
(14.2 |
)% |
|
0.5 |
% |
Adjustment for non-cash tax benefits/expenses |
16.9 |
% |
|
0.2 |
% |
Non-GAAP income tax
provision |
2.8 |
% |
|
0.7 |
% |
|
|
|
|
|
|
GAAP net income |
10.0 |
% |
|
21.2 |
% |
Total
non-GAAP adjustments before income taxes |
31.7 |
% |
|
11.6 |
% |
Less:
total tax adjustments |
16.9 |
% |
|
0.2 |
% |
Non-GAAP
net income |
24.8 |
% |
|
32.6 |
% |
MaxLinear, Inc. Investor Relations Contact:
Gideon Massey
Investor Relations Specialist
Tel: 949-333-0056
gmassey@maxlinear.com
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