Acacia Communications, Inc. (NASDAQ: ACIA) ("Acacia Communications"
or "Company"), a leading provider of high-speed coherent optical
interconnect products, today announced certain preliminary
unaudited financial results for its fourth fiscal quarter and
fiscal year ended December 31, 2020.
Preliminary Results for the Fourth Quarter of
2020
- Revenue of $160.0 million to $164.0 million
- GAAP net income of $31.7 million to
$35.4 million
- Non-GAAP net income* of $38.3 million to
$42.2 million
- GAAP diluted EPS of $0.73 to $0.82
- Non-GAAP diluted EPS* of $0.88 to $0.97
Preliminary Results for the Full Year 2020
- Revenue of $579.3 million to $583.3 million
- GAAP net income of $87.7 million to
$91.4 million
- Non-GAAP net income* of $123.5 million to
$127.4 million
- GAAP diluted EPS of $2.03 to $2.11
- Non-GAAP diluted EPS* of $2.86 to $2.95
These preliminary unaudited financial results are based on
preliminary unaudited information and management's estimates, and
are inherently uncertain and subject to revision in connection with
the Company's financial closing procedures and finalization of the
Company’s financial statements for its fourth fiscal quarter and
fiscal year ended December 31, 2020, and any adjustments identified
by the Company’s auditors in the course of their review and audit,
as applicable, of such financial statements. Actual results and
other disclosures for the fourth fiscal quarter and fiscal year
ended December 31, 2020 may differ materially from these
preliminary unaudited financial results. These preliminary
unaudited financial results were not prepared with a view toward
complying with the guidelines established by the American Institute
of Certified Public Accountants with respect to projected financial
information, but, in the view of the Company’s management, were
prepared on a reasonable basis, reflect management’s best currently
available estimates and judgments, and present, to the best of
management’s knowledge and belief, the Company’s expectations for
the fourth fiscal quarter and fiscal year ended December 31, 2020.
Neither the Company’s independent auditors, nor any other
independent accountants, have compiled, examined, or performed any
procedures with respect to these unaudited preliminary financial
results, nor have they expressed any opinion or any other form of
assurance on such results, and assume no responsibility for, and
disclaim any association with, these preliminary unaudited
financial results. These preliminary unaudited financial results
should not be viewed as a substitute for full financial statements
prepared in accordance with generally accepted accounting
principles (“GAAP”).
*Non-GAAP net income and non-GAAP diluted earnings per share
(EPS) are non-GAAP financial measures that are not prepared in
accordance with GAAP. Please refer below to Use of Non-GAAP
Financial Information for descriptions of these non-GAAP financial
measures and to the Reconciliation of GAAP Measures to Non-GAAP
Measures, attached as Schedule A, for reconciliations of the most
directly comparable GAAP financial measures to these non-GAAP
financial measures.
Conference CallAcacia Communications plans to
host a conference call and live audio webcast to discuss recent
developments, these preliminary unaudited financial results for its
fourth fiscal quarter and fiscal year ended December 31, 2020, and
the Company's outlook and strategy at 5:00 p.m. Eastern Time today.
This call will not include a question and answer session. The live
audio webcast of the call, along with the Company's press release
and corporate presentation, can be accessed at the Acacia
Communications Investor Relations website at
http://ir.acacia-inc.com. The U.S. dial-in for the call is (877)
407-8293 (or (201) 689-8349 for non-U.S. callers). Please ask to be
joined to the Acacia Communications call. A replay of the
conference call will be available until January 18, 2021, at 11:59
p.m. Eastern Time, while an archived version of the webcast will be
available on the Acacia Communications Investor Relations website
for 90 days. The U.S. dial-in for the conference call replay is
(877) 660-6853 (or (201) 612-7415 for non-U.S. callers). The replay
access code is 13714805.
Use of Non-GAAP Financial InformationThis press
release includes non-GAAP financial measures that are not prepared
in accordance with, nor an alternative to, GAAP. In addition, these
non-GAAP financial measures are not based on any standardized
methodology prescribed by GAAP and are not necessarily comparable
to similarly-titled measures presented by other companies.
Schedule A of this press release provides reconciliations of
Acacia Communications’ most comparable preliminary GAAP financial
measures to preliminary non-GAAP net income and preliminary
non-GAAP diluted EPS for its fourth fiscal quarter and fiscal year
ended December 31, 2020.
Acacia Communications believes that providing these non-GAAP
financial measures to investors, in addition to providing the most
directly comparable GAAP measures, provides investors the benefit
of viewing the Company’s performance using the same financial
metrics that its management team uses in making many key decisions
and evaluating how its results of operations may look in the
future. Acacia Communications’ management does not believe that
items not involving cash expenditures, such as non-cash
compensation related to equity awards, are part of its critical
decision making process. Also, Acacia Communications' management
does not believe that items such as warranty and other charges
arising from a manufacturing process quality issue, certain
litigation related costs and settlement reserves outside the normal
course of the Company’s business, acquisition related costs or
certain adjustments to its valuation allowance against deferred tax
assets are reflective of the Company’s underlying operating
performance. Further, in connection with the seven-year denial of
export privileges imposed on April 15, 2018 by the U.S. Department
of Commerce against ZTE, which was subsequently lifted on July 13,
2018, the Company recorded inventory write-offs. Acacia
Communications’ management does not believe these write-offs, and
any subsequent adjustments as a result of management’s ongoing
evaluation of the ZTE inventory, are reflective of the Company’s
underlying operating performance. Therefore, Acacia
Communications excludes those items, as applicable, from
non-GAAP net income and non-GAAP diluted EPS.
Acacia Communications’ non-GAAP financial measures reflect
adjustments based on the metrics described below, as well as the
related income tax effects. The income tax effect of these non-GAAP
adjustments is determined by recalculating income tax expense
excluding these adjustments.
Non-GAAP net income and non-GAAP diluted EPS. Acacia
Communications defines non-GAAP net income as net income as
reported on the Company’s consolidated statements of operations,
excluding the impact of stock-based compensation which is a
non-cash charge, as well as warranty and other charges arising from
a manufacturing process quality issue, ZTE-related inventory
write-offs and subsequent adjustments, certain litigation related
costs and settlement reserves, acquisition related costs, the tax
effects of those excluded items and certain valuation allowance
adjustments against deferred tax assets.
Acacia Communications has presented non-GAAP net income and
non-GAAP diluted EPS because the Company believes that the
exclusion of the items discussed above facilitates comparisons of
its results of operations to other companies in its industry and
more accurately reflects the underlying performance of the
Company's continuing business operations.
Acacia Communications uses these non-GAAP financial
measures to evaluate its operating performance and trends, and make
planning decisions. Acacia Communications believes that each
of these non-GAAP financial measures helps identify underlying
trends in its business that could otherwise be masked by the effect
of the items that the Company excludes. Accordingly, Acacia
Communications believes that these financial measures provide
useful information to investors and others in understanding and
evaluating its operating results, enhancing the overall
understanding of the Company’s past performance and future
prospects, and allowing for greater transparency with respect to
key financial metrics used by its management in its financial and
operational decision-making.
Acacia Communications’ non-GAAP financial measures are not
prepared in accordance with GAAP, and should not be considered in
isolation of, or as an alternative to, measures prepared in
accordance with GAAP. There are a number of limitations related to
the use of these non-GAAP financial measures rather than net income
or diluted EPS, which are the most directly comparable GAAP
measures. Some of these limitations are:
- Acacia Communications excludes
stock-based compensation expense from each of its non-GAAP
financial measures, although it has recently been, and will
continue to be for the foreseeable future, a significant recurring
expense for its business and an important part of the Company’s
compensation strategy;
- Acacia Communications excludes the
tax benefits generated from the exercise of non-qualified stock
options, the disqualifying disposition of incentive stock options
and ESPP shares, and the vesting of restricted stock units,
including any excess tax benefits and shortfalls recognized by the
Company in the year of the taxable transaction, in calculating its
non-GAAP net income and non-GAAP diluted EPS. The Company believes
that excluding these tax benefits enables investors to see the full
effect that excluding stock-based compensation expense had on the
operating results. These benefits are tied to the exercise or
vesting of underlying employee equity awards and the price of the
Company's common stock at the time of exercise or vesting, which
factors may vary from period to period independent of the operating
performance of the Company’s business. Similar to stock-based
compensation expense, the Company believes that excluding these tax
benefits provides investors and management with greater visibility
to the underlying performance of its business operations and
facilitates comparison with other periods as well as the results of
other companies in its industry;
- Acacia Communications excludes
warranty and other charges arising from a manufacturing process
quality issue from its non-GAAP net income and non-GAAP diluted
EPS, as management does not believe the charges are reflective of
the Company’s underlying operating performance;
- Acacia Communications excludes
certain adjustments to its valuation allowance against deferred tax
assets from its non-GAAP net income and non-GAAP diluted EPS
measures, as management does not believe the charges are reflective
of the Company’s underlying operating performance;
- Acacia Communications excludes
ZTE-related inventory write-offs and subsequent adjustments from
its non-GAAP net income and non-GAAP diluted EPS, as management
believes the activity is not related to the Company’s normal course
of business and is not reflective of the Company’s underlying
operating performance;
- Acacia Communications excludes
certain litigation related costs and settlement reserves from its
non-GAAP net income and non-GAAP diluted EPS, if management
believes the activity is not related to the Company’s normal course
of business and is not reflective of the Company’s underlying
operating performance. These expenses may continue in the future;
and
- Acacia Communications excludes
acquisition related costs from its non-GAAP net income and non-GAAP
diluted EPS, as management believes the activity is not related to
the Company’s normal course of business and is not reflective of
the Company’s underlying operating performance.
Because of these limitations, non-GAAP financial measures should
be considered along with other operating and financial performance
measures presented in accordance with GAAP.
Acacia Communications’ use of non-GAAP financial measures, and
the underlying methodology when excluding certain items, is not
necessarily an indication of the results of operations that may be
expected in the future, or that Acacia Communications will not, in
fact, record such items in future periods.
Investors should consider Acacia Communications’ non-GAAP
financial measures in conjunction with the corresponding GAAP
financial measures.
About Acacia CommunicationsAcacia
Communications develops, manufactures and sells high-speed
coherent optical interconnect products that are designed to
transform communications networks through improvements in
performance, capacity and cost. By implementing optical
interconnect technology in a silicon-based platform, a process
Acacia Communications refers to as the “siliconization of optical
interconnect,” Acacia Communications is able to offer products at
higher speeds and density with lower power consumption, that meet
the needs of cloud and service providers and can be easily
integrated in a cost-effective manner with existing network
equipment. www.acacia-inc.com.
Forward Looking StatementsThis press release
includes statements concerning Acacia Communications and
its future expectations, plans and prospects that constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements
regarding preliminary unaudited financial results for its fourth
fiscal quarter and fiscal year ended December 31, 2020. For this
purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words “may,” “should,” “would,”
“expects,” “plans,” “anticipates,” “could,” “intends,” “target,”
“projects,” “contemplates,” “believes,” “estimates,” “predicts,”
“potential” “will” or “continue” or the negative of these terms or
other similar expressions are intended to help you identify
forward-looking statements. The forward-looking statements in this
press release are only predictions. The events and circumstances
reflected in the forward-looking statements may not be achieved or
occur and actual results could differ materially from those
projected in the forward looking statements. Acacia Communications
has based these forward-looking statements largely on its current
expectations and projections about future events and trends that
the Company believes may affect its business, financial condition
and results of operations. These forward-looking statements speak
only as of the date of this press release and are subject to a
number of risks, uncertainties and assumptions including, without
limitation the finalization of the Company's financial closing
procedures and financial statements for the fourth fiscal quarter
and fiscal year ended December 31, 2020, and any adjustments
identified by the Company’s auditors in the course of their review
and audit, as applicable, of such financial statements; the
potential impacts on the Company’s business, reputation,
relationships, results of operations, cash flows and financial
condition as a result of the proposed acquisition (the “Merger”) of
the Company by Cisco Systems, Inc. (“Cisco”) pursuant to the
agreement and plan of merger (the “Merger Agreement”) by and among
the Company, Cisco and Amarone Acquisition Corp., termination of
the Merger, uncertainty with respect to the Merger or litigation
relating to the Merger; pending or potential litigation against the
Company or its directors or officers related to the Merger, the
Merger Agreement or termination thereof, including the litigation
instituted by Cisco against the Company, and any adverse outcome of
such litigation; the effects of announcements relating to the
Merger and the Merger Agreement, including with respect to the
termination thereof and challenges to the termination thereof; the
costs, fees, expenses and other charges related to the Merger,
including with respect to related litigation; risks that the Merger
and litigation relating to the Merger may divert management’s
attention from the Company’s ongoing business operations, disrupt
the Company’s operations and result in potential difficulties in
the Company’s ability to attract and retain employees; the
Company’s ability to maintain its listing on the Nasdaq Global
Select Market; uncertainty regarding the extent to which the
coronavirus disease, COVID-19, pandemic and related response
measures will adversely affect the Company’s business, results of
operations, cash flows and financial condition, or the business and
financial condition of the Company's customers and suppliers; the
Company’s ability to sustain or increase revenue from its larger
customers, generate revenues from new customers, or offset the
discontinuation of concentrated purchases by its larger customers
with purchases by new or existing customers; the Company’s ability
to anticipate the timing and scale of demand for its products,
including from its largest customers; the adverse impact of
negative economic conditions created or exacerbated by the ongoing
COVID-19 pandemic; the Company’s expectations regarding expenses
and revenue, its ability to maintain and expand gross profit, the
sufficiency of the Company’s cash resources and needs for
additional financing; the Company’s ability to produce products
free of problems, defects, errors and vulnerabilities; the
Company’s anticipated growth strategies, its expectations regarding
competition, the anticipated trends and challenges in the Company’s
business and the markets in which it operates; the Company’s
expectations regarding, and the capacity and stability of, its
supply chain and manufacturing; the size and growth of the
potential markets for the Company’s products and the ability to
serve those markets; the scope, progress, expansion and costs of
developing and commercializing the Company's products; the timing,
rate and degree of introducing any of its products into the market
and the market acceptance of any of its products; the Company’s
ability to establish and maintain development partnerships; the
Company's ability to attract or retain key personnel; the Company’s
expectations regarding federal, state and foreign regulatory
requirements, including export controls, tax law changes and
interpretations, economic sanctions and anti-corruption
regulations; regulatory or legislative developments in the United
States and foreign countries, including trade policy and tariffs
and export control laws or regulations that could impede its
ability to sell its products to its customer ZTE Kangxun Telecom
Co. Ltd. or any of its affiliates or that could impede its ability
to sell its products to other customers in certain foreign
jurisdictions, particularly in China, or that could impede sales by
such customers in the United States; the Company’s ability to
obtain and maintain intellectual property protection for its
products; and other risks set forth under the caption “Risk
Factors” in the Company’s public reports filed with the SEC,
including the Company’s Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2020 and in other filings that
the Company may make with the SEC from time to time. Because
forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified, you
should not rely on these forward-looking statements as indicative
of future events. Acacia Communications assumes no obligation to
update any forward-looking statements contained in this press
release as a result of new information, future events or
otherwise.
SCHEDULE AACACIA
COMMUNICATIONS, INC. RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES (in thousands, except per
share data)(unaudited)
|
|
Quarter Ended December 31,
2020 |
|
Full Year Ended December 31,
2020 |
|
|
Low Endof Range |
|
High Endof Range |
|
Low Endof Range |
|
High Endof Range |
Non-GAAP Net
Income |
|
|
|
|
|
|
|
|
GAAP net income |
|
$ |
31,678 |
|
|
|
$ |
35,363 |
|
|
|
$ |
87,693 |
|
|
|
$ |
91,378 |
|
|
Stock-based compensation |
|
7,390 |
|
|
|
7,570 |
|
|
|
33,606 |
|
|
|
33,786 |
|
|
Warranty and other charges due to manufacturing process quality
issue |
|
(265 |
) |
|
|
(295 |
) |
|
|
(1,003 |
) |
|
|
(1,033 |
) |
|
Litigation related costs and settlement reserves |
|
— |
|
|
|
— |
|
|
|
8,000 |
|
|
|
8,000 |
|
|
Inventory write-offs |
|
— |
|
|
|
— |
|
|
|
(132 |
) |
|
|
(132 |
) |
|
Acquisition related costs |
|
500 |
|
|
|
600 |
|
|
|
2,133 |
|
|
|
2,233 |
|
|
Tax effect of excluded items |
|
(676 |
) |
|
|
(720 |
) |
|
|
(5,960 |
) |
|
|
(6,005 |
) |
|
Valuation allowance adjustments |
|
(336 |
) |
|
|
(336 |
) |
|
|
(854 |
) |
|
|
(854 |
) |
|
Non-GAAP net income |
|
$ |
38,291 |
|
|
|
$ |
42,182 |
|
|
|
$ |
123,483 |
|
|
|
$ |
127,373 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted
EPS |
|
|
|
|
|
|
|
|
GAAP diluted EPS |
|
$ |
0.73 |
|
|
|
$ |
0.82 |
|
|
|
$ |
2.03 |
|
|
|
$ |
2.11 |
|
|
Stock-based compensation |
|
0.17 |
|
|
|
0.18 |
|
|
|
0.78 |
|
|
|
0.78 |
|
|
Warranty and other charges due to manufacturing process quality
issue |
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
(0.02 |
) |
|
Litigation related costs and settlement reserves |
|
— |
|
|
|
— |
|
|
|
0.18 |
|
|
|
0.19 |
|
|
Inventory write-offs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Acquisition related costs |
|
0.01 |
|
|
|
0.01 |
|
|
|
0.05 |
|
|
|
0.05 |
|
|
Tax effect of excluded items |
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
(0.14 |
) |
|
|
(0.14 |
) |
|
Valuation allowance adjustments |
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
(0.02 |
) |
|
Non-GAAP diluted EPS |
|
$ |
0.88 |
|
|
|
$ |
0.97 |
|
|
|
$ |
2.86 |
|
|
|
$ |
2.95 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used
to compute GAAP and non-GAAP diluted EPS |
|
43,340 |
|
|
|
43,340 |
|
|
|
43,233 |
|
|
|
43,233 |
|
|
SOURCE Acacia Communications, Inc.
For further information:
Investor Relations Contact: Monica GouldOffice: (212)
871-3927Email: IR@acacia-inc.com
Lindsay SavareseOffice: (212) 331-8417Email:
IR@acacia-inc.com
Public Relations Contact: Kelly KarrOffice: (408) 718-9350Email:
PR@acacia-inc.com
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