Company Achieves Year-Over-Year Revenue Growth in Excess of 25% SAN
JOSE, Calif., Feb. 7 /PRNewswire-FirstCall/ -- Endwave Corporation
(NASDAQ:ENWV), a leading provider of high frequency RF modules for
telecommunications networks, defense electronics and homeland
security systems, today reported financial results for its fourth
quarter and full year ended December 31, 2006. Revenues were $13.3
million for the fourth quarter of 2006, compared with $13.1 million
for the fourth quarter of 2005 and $18.8 million for the third
quarter of 2006. Net loss, calculated in accordance with accounting
principles generally accepted in the United States (GAAP), for the
fourth quarter of 2006 was $870,000, or $0.08 per share, compared
with net loss for the fourth quarter of 2005 of $152,000, or $0.01
per share, and net income for the third quarter of 2006 of
$911,000, or $0.06 per diluted share. Non-GAAP net income for the
fourth quarter of 2006 was $229,000, or $0.02 per diluted share,
compared with non-GAAP net income for the fourth quarter of 2005 of
$78,000, or $0.01 per diluted share, and non-GAAP net income for
the third quarter of 2006 of $2.0 million, or $0.14 per diluted
share. For the fourth quarter of 2006, non-GAAP net income was
calculated by excluding non- cash stock-based compensation expense
of $748,000 incurred as a result of the Company's adoption of SFAS
123( R ), the expensing of $200,000 of capitalized transaction
costs and amortization of intangible assets of $151,000. For the
full year, total revenues were $62.2 million, compared with $48.7
million for 2005. GAAP net loss for the year ended December 31,
2006 was $1.3 million, or $0.12 per share, compared with GAAP net
loss for 2005 of $874,000, or $0.08 per share. Non-GAAP net income
for the year ended December 31, 2006 was $2.9 million, or $0.21 per
diluted share, compared with a non-GAAP net income for the year
ended December 31, 2005 of $562,000, or $0.05 per diluted share.
For 2006, non-GAAP net income was calculated by excluding non-cash
stock-based compensation expense of $3.3 million incurred as a
result of the Company's adoption of SFAS 123( R ), the expensing of
$200,000 of capitalized transaction costs, amortization of
intangible assets of $605,000 and loss on sale of assets of
$84,000. As of December 31, 2006, cash, cash equivalents and
short-term investments had increased by approximately $900,000 to
$67.6 million from a balance of $66.7 million at September 30,
2006. "We are pleased to report that despite a disappointing fourth
quarter, we experienced substantial revenue growth during 2006.
This growth was driven by Endwave's ability to exploit outsourcing
trends and increase our available market through innovative
technology and manufacturing leadership," said Ed Keible, Endwave's
CEO and President. "Taking the year as a whole, demand for our
telecommunications products remained particularly strong as we
posted the second consecutive year of telecom revenue growth in
excess of 30 percent. In the defense and homeland security markets,
we continue to build our presence and see major opportunities for
deploying our technologies into emerging programs and
applications." 2006 Financial Highlights: -- Annual revenues were
$62.2 million, 28% higher than 2005. -- Revenues attributable to
customers in telecom markets were $52.3 million; revenues
attributable to customers in defense electronics, homeland security
and other non-telecom markets were $9.9 million. -- For the year,
GAAP gross margin was 29% and non-GAAP gross margin was 30%.
Non-GAAP gross margin was adjusted for amortization of intangible
assets and non-cash stock-based compensation expense. -- Endwave
achieved the first full year of non-GAAP operating profitability in
Company history. -- Non-GAAP net income for fiscal 2006 was $2.9
million, or $0.21 cents per diluted share, representing more than a
four-fold annual increase in earnings per share compared to 2005.
-- Cash, cash equivalents and short-term investments increased by
$45.2 million during 2006 as the Company raised $43 million through
an investment by Oak Partners and generated cash from operations.
-- Endwave achieved significant revenue growth from each of its
top-three customers in 2006: Nera, Nokia, and Siemens. Fourth
Quarter 2006 Business Highlights: -- Endwave was selected by a
major wireless telecom OEM to design microwave radio transceivers
for a new software defined radio platform. -- The Company was
awarded two development contracts from a new customer for the
design of microwave subsystems for advanced test and measurement
equipment. -- Endwave secured another product development award for
70/80 GHz transceivers -- the Company's fourth customer for E-Band
products. Conference Call Endwave Corporation will hold a
conference call to discuss the Company's financial results today,
at 1:30 p.m. Pacific Time. Investors are invited to participate in
the conference call by dialing 913-981-5543 (Pass code: Endwave) by
1:20 p.m. PT on Feb. 7. Starting approximately one hour after the
completion of the live call, a replay will also be available until
Feb. 10. To access the recording, dial (719) 457-0820 (Pass code:
8145448). Investors are also invited to listen to a live and/or
archived webcast of Endwave's quarterly conference call on the
investor relations section of the Company's Web site. The webcast
replay will be available for 90 days. About Endwave Endwave
Corporation designs, manufactures and markets RF modules that
enable the transmission, reception and processing of high-frequency
signals in telecommunications networks, defense electronics and
homeland security systems. These RF modules include high-frequency
integrated transceivers, amplifiers, synthesizers, oscillators, up
and down converters, frequency multipliers and microwave switch
arrays. Endwave has 42 issued patents covering its core
technologies including semiconductor and proprietary circuit
designs. Endwave Corporation is headquartered in San Jose, CA, with
operations in Diamond Springs, CA; Andover, MA; and Chiang Mai,
Thailand. Additional information about the Company can be accessed
from the Company's web site at http://www.endwave.com/. Use of
Non-GAAP Financial Information To supplement the Company's
condensed consolidated financial statements presented in accordance
with accounting principles generally accepted in the United States
(GAAP), Endwave uses certain measures of financial performance that
are non-GAAP financial measures within the meaning of Regulation G
promulgated by the Securities and Exchange Commission. These
non-GAAP measures include gross margin, net income (loss) and net
income (loss) per share data that are adjusted from results based
on GAAP to exclude certain expenses, gains and losses. These
non-GAAP measures are provided to enhance investors' overall
understanding of the Company's current financial performance and
the Company's prospects for the future. Specifically, Endwave
believes the non-GAAP measures provide useful information to both
management and investors by excluding certain expenses that may not
be indicative of its core operating results. These measures should
be considered in addition to results prepared in accordance with
GAAP, but should not be considered a substitute for, or superior
to, GAAP results. These non-GAAP measures included in this press
release have been reconciled to the GAAP results in the attached
tables. "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: This press release and the
conference call referred to in this press release may contain
forward-looking statements within the meaning of the Federal
securities laws and is subject to the safe harbor created thereby.
Any statements contained in this press release or on the conference
call that are not statements of historical fact may be deemed to be
forward-looking statements. Words such as "plans," "intends,"
"expects," "believes" and similar expressions are intended to
identify these forward-looking statements. Information contained in
forward-looking statements is based on current expectations and is
subject to change. Actual results could differ materially from the
forward-looking statements due to many factors, including the
following: our ability to achieve revenue growth and maintain
profitability; our customer and market concentration; our
suppliers' abilities to deliver raw materials to our specifications
and on time; our successful implementation of next-generation
programs, including inventory transitions; our ability to penetrate
new markets; fluctuations in our operating results from quarter to
quarter; our reliance on third-party manufacturers and
semiconductor foundries; acquiring businesses and integrating them
with our own; component, design or manufacturing defects in our
products; our dependence on key personnel; and fluctuations in the
price of our common stock. Forward-looking statements contained in
this press release and on our conference call should be considered
in light of these factors and those factors discussed from time to
time in Endwave's public reports filed with the Securities and
Exchange Commission, such as those discussed under "Risk Factors"
in Endwave's most recent Annual Report on Form 10-K, and
subsequently-filed reports on Form 10-Q. Endwave does not undertake
any obligation to update such forward- looking statements. Contact:
Mary McGowan Summit IR Group Inc. Phone: 408-404-5401 CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) December 31,
December 31, 2006 2005 Assets Current assets Cash and cash
equivalents $27,181 $8,456 Short-term investments 40,406 13,959
Accounts receivables, net 8,713 10,487 Inventories 17,127 13,448
Other current assets 640 560 Total current assets 94,067 46,910
Property and equipment, net 2,024 1,321 Other assets 110 97
Restricted cash 261 25 Goodwill and intangible assets, net 4,191
4,796 Total assets $100,653 $53,149 Liabilities and stockholders'
equity Current liabilities: Accounts payable $4,280 $2,954 Warranty
accrual 2,928 3,257 Accrued compensation 2,652 2,494 Other accrued
liabilities 1,164 976 Total current liabilities 11,024 9,681 Other
long-term liabilities 231 385 Total stockholders' equity 89,398
43,083 Total liabilities and stockholders' equity $100,653 $53,149
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands,
except share and per share amounts) (unaudited) Three months ended
Twelve months ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2006 2005
2006 2005 Total revenues $13,318 $13,073 $62,226 $48,735 Costs and
expenses: Cost of product revenues 9,526 9,331 43,771 33,134 Cost
of product revenues, amortization of intangible assets 112 113 449
452 Research and development 2,277 1,669 8,856 6,488 Selling,
general and administrative 2,844 2,208 12,689 9,327 Transaction
costs 200 78 200 851 Amortization of intangible assets 39 39 156
179 Restructuring charges, net - - - (46) Total costs and expenses
14,998 13,438 66,121 50,385 Loss from operations (1,680) (365)
(3,895) (1,650) Interest and other income, net 907 213 2,648 776
Loss before provision for income taxes (773) (152) (1,247) (874)
Provision for income taxes 97 - 97 - Net income loss $(870) $(152)
$(1,344) $(874) Basic and diluted net loss per share $(0.08)
$(0.01) $(0.12) $(0.08) Weighted shares used in basic and diluted
per share calculation 11,508,255 11,307,102 11,429,860 10,891,431
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) (in
thousands, except share and per share amounts) (unaudited) Three
months ended Twelve months ended Dec. 31, Dec. 31, Dec. 31, Dec.
31, 2006 2005 2006 2005 Total revenues $13,318 $13,073 $62,226
$48,735 Costs and expenses: Cost of product revenues 9,425 9,331
43,336 33,134 Research and development 2,146 1,669 8,316 6,488
Sales, general and administrative 2,328 2,208 10,352 9,327 Total
costs and expenses 13,899 13,208 62,004 48,949 Income (loss) from
operations (581) (135) 222 (214) Interest and other income, net 907
213 2,732 776 Income before provision for income taxes 326 78 2,954
562 Provision for income taxes 97 - 97 - Net income $229 $78 $2,857
$562 Basic net income per share $0.02 $0.01 $0.25 $0.05 Diluted net
income per share $0.02 $0.01 $0.21 $0.05 Weighted average shares
used in basic per share calculation 11,508,255 11,307,102
11,429,860 10,891,431 Weighted average shares used in diluted per
share calculation 14,804,635 11,629,104 13,837,555 11,676,805 Basis
of presentation: 1. Non-GAAP operating results exclude amortization
of intangible assets, loss on sale of fixed assets related to the
relocation of our corporate headquarters, transaction costs,
restructuring charges, and non-cash stock compensation expense.
GAAP TO NON-GAAP NET LOSS RECONCILIATION (in thousands) (unaudited)
Three months Twelve months ended ended Dec. 31, Dec. 31, Dec. 31,
Dec. 31, 2006 2005 2006 2005 GAAP net loss $(870) $(152) $(1,344)
$(874) Cost of product revenues, amortization of intangible assets
112 113 449 452 Cost of product revenues, stock-based compensation
expense 101 - 435 - Amortization of intangible assets 39 39 156 179
Restructuring charges, net - - - (46) Loss on sale of assets - - 84
- Transaction costs 200 78 200 851 Research and development,
stock-based compensation expense 131 - 540 - Selling, general and
administrative, stock-based compensation expense 516 - 2,337 -
Non-GAAP net income $229 $78 $2,857 $562 DATASOURCE: Endwave
Corporation CONTACT: Mary McGowan of Summit IR Group Inc.,
+1-408-404-5401, or , for Endwave Corporation Web site:
http://www.endwave.com/
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