Netlist Reports Fourth Quarter and Full Year 2013 Results
IRVINE, CA--(Marketwired - Feb 3, 2014) - Netlist, Inc.
(NASDAQ: NLST), a leading provider of high performance and hybrid
memory solutions for the cloud computing and storage markets, today
reported financial results for the fourth quarter and full year
ended December 28, 2013.
Revenues for the fourth quarter ended December 28, 2013, were
$7.7 million, compared to revenues of $6.0 million for the fourth
quarter ended December 29, 2012. Gross profit for the fourth
quarter ended December 28, 2013, was $1.9 million, or 24.6 percent
of revenues, compared to a gross profit of $0.8 million, or 14.0
percent of revenues, for the fourth quarter ended December 29,
2012.
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation
and Amortization) loss is a non-GAAP measure in which the net
interest expense, benefit of income taxes, depreciation,
amortization, stock-based compensation and net other income are
added back to the GAAP basis net income (loss). The non-GAAP
measures are described below and are reconciled to the
corresponding GAAP measure in the consolidated financial statements
portion of this release under the heading "Unaudited Schedule
Reconciling GAAP Net Loss to Non-GAAP EBITDA and Adjusted
EBITDA." The adjusted EBITDA loss was ($0.5) million for the
fourth quarter ended December 28, 2013, compared to an adjusted
EBITDA loss of ($3.1) million for the prior year period.
Net loss for the fourth quarter ended December 28, 2013, was
($1.6) million, or ($0.05) loss per share, compared to a net loss
in the prior year period of ($4.1) million, or ($0.14) loss per
share. These results include stock-based compensation expense
of $0.4 million for both the fourth quarter ended December 28, 2013
and December 29, 2012.
As of December 28, 2013, cash and cash equivalents and
restricted cash were $7.8 million, total assets were $16.1 million,
working capital was $10.6 million, total debt, net of debt
discounts, was $5.1 million, and stockholders' equity was $7.0
million.
"Our 2013 results reflect substantial progress in the strategic
transition of our business," said C.K. Hong, CEO of Netlist. "We
gained increasing traction in introducing our flagship product
lines, HyperCloud and Vault, while ramping down legacy
projects. We also took important steps towards further
strengthening our intellectual property position, including a major
victory in the US Patent Trial and Appeals Board with regard to our
seminal patents covering LRDIMM and allowances by the USPTO of
critical hybrid memory patents. In the fourth quarter we
posted a significant improvement in year-over-year results,
primarily due to sizeable increases in demand for our NVvault
family of products combined with our ongoing efforts to control our
costs. As we look out into 2014, we believe market
requirements will accelerate for both our products and our IP."
Revenues for the twelve months ended December 28, 2013, were
$23.0 million, compared to revenues of $36.9 million for the twelve
months ended December 29, 2012. Gross profit for the twelve
months ended December 28, 2013, was $3.1 million, or 13.5 percent
of revenues, compared to a gross profit of $9.4 million, or 25.5
percent of revenues, for the twelve months ended December 29,
2012.
Adjusted EBITDA loss was ($6.7) million for the twelve month
period ended December 28, 2013, compared to an adjusted EBITDA loss
of ($9.6) million for the prior year period.
Net loss for the twelve months ended December 28, 2013, was
($10.8) million, or ($0.35) loss per share, compared to a net loss
in the prior year period of ($14.0) million, or ($0.50) loss per
share. These results include stock-based compensation expense
of $1.7 million for 2013, compared to $1.9 million for
2012.
Conference Call
Information As previously announced, Netlist is conducting a
conference call today to be broadcast live over the Internet at
5:00 pm Eastern Time to discuss and to review the financial results
for the fourth quarter and full year ended December 28,
2013. The dial-in number for the call is
1-412-858-4600. The live webcast and archived replay of the
call can be accessed in the Investors section of Netlist's website
at www.netlist.com.
Note Regarding Use of
Non-GAAP Financial Measures Certain of the information set
forth herein, including EBITDA and adjusted EBITDA, may be
considered non-GAAP financial measures. Netlist believes this
information is useful to investors because it provides a basis for
measuring Netlist's available capital resources, the operating
performance of Netlist's business and Netlist's cash flow,
excluding net interest expense, provisions for income taxes,
depreciation, amortization, share-based compensation and
non-operating net income and expense that would normally be
included in the most directly comparable measures calculated and
presented in accordance with Generally Accepted Accounting
Principles ("GAAP"). Netlist's management uses these non-GAAP
financial measures along with the most directly comparable GAAP
financial measures in evaluating Netlist's operating performance,
capital resources and cash flow. Non-GAAP financial measures should
not be considered in isolation from, or as a substitute for,
financial information presented in compliance with GAAP, and
non-financial measures as reported by Netlist may not be comparable
to similarly titled amounts reported by other companies.
About Netlist:
Netlist, Inc. designs and manufactures high-performance,
logic-based memory subsystems for server and storage applications
for cloud computing. Netlist's flagship products include
HyperCloud®, a patented memory technology that breaks traditional
performance barriers, NVvault™ and EXPRESSvault™, the pioneering
family of hybrid memory products utilizing both DRAM and NAND Flash
that significantly accelerates system performance and provides
mission critical fault tolerance, and a broad portfolio of
industrial flash and specialty memory subsystems including VLP
(very low profile) DIMMs and Planar-X RDIMMs. Netlist has steadily
invested in and grown its IP portfolio, which now includes 41
issued patents and more than 29 US and foreign pending patent
applications in the areas of high performance memory and hybrid
memory technologies.
Netlist develops technology solutions for customer applications
in which high-speed, high-capacity, small form factor and efficient
heat dissipation are key requirements for system memory. These
customers include OEMs that design and build tower, rack-mounted,
and blade servers, storage hardware, high-performance computing
clusters, engineering workstations and telecommunications
equipment. Founded in 2000, Netlist is headquartered in Irvine, CA
with manufacturing facilities in Suzhou, People's Republic of
China. Learn more at www.netlist.com.
Safe Harbor
Statement: This news release contains forward-looking
statements regarding future events and the future performance of
Netlist. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expected or projected. These risks and uncertainties
include, but are not limited to, risks associated with the launch
and commercial success of our products, programs and technologies;
the success of product partnerships; continuing development,
qualification and volume production of EXPRESSvault™, NVvault™,
HyperCloud® and VLP Planar-X RDIMM; the timing and magnitude of the
anticipated decrease in sales to our key customer; our ability to
leverage our NVvault™ technology in a more diverse customer base;
the rapidly-changing nature of technology; risks associated with
intellectual property, including patent infringement litigation
against us as well as the costs and unpredictability of litigation
over infringement of our intellectual property and the possibility
of our patents being reexamined by the United States Patent and
Trademark office; volatility in the pricing of DRAM ICs and NAND;
changes in and uncertainty of customer acceptance of, and demand
for, our existing products and products under development,
including uncertainty of and/or delays in product orders and
product qualifications; delays in the Company's and its customers'
product releases and development; introductions of new products by
competitors; changes in end-user demand for technology solutions;
the Company's ability to attract and retain skilled personnel; the
Company's reliance on suppliers of critical components and vendors
in the supply chain; fluctuations in the market price of critical
components; evolving industry standards; and the political and
regulatory environment in the People's Republic of China. Other
risks and uncertainties are described in the Company's annual
report on Form 10-K filed on March 29, 2013, and subsequent filings
with the U.S. Securities and Exchange Commission made by the
Company from time to time. Except as required by law, Netlist
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
|
Netlist, Inc. |
Consolidated Balance Sheets |
(in thousands) |
|
|
|
December 28, 2013 |
|
|
December 29, 2012 |
|
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
6,701 |
|
|
$ |
7,755 |
|
|
Restricted cash |
|
|
1,100 |
|
|
|
- |
|
|
Investment in marketable securities |
|
|
- |
|
|
|
415 |
|
|
Accounts receivable, net |
|
|
4,866 |
|
|
|
3,434 |
|
|
Inventories |
|
|
2,620 |
|
|
|
7,380 |
|
|
Prepaid expenses and other current assets |
|
|
823 |
|
|
|
723 |
|
|
|
Total
current assets |
|
|
16,110 |
|
|
|
19,707 |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
1,143 |
|
|
|
2,560 |
|
|
Other assets |
|
|
422 |
|
|
|
130 |
|
|
|
Total
assets |
|
$ |
17,675 |
|
|
$ |
22,397 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,795 |
|
|
$ |
3,367 |
|
|
Accrued payroll and related liabilities |
|
|
635 |
|
|
|
784 |
|
|
Accrued expenses and other current liabilities |
|
|
533 |
|
|
|
497 |
|
|
Accrued engineering charges |
|
|
500 |
|
|
|
450 |
|
|
Current portion of long-term debt |
|
|
- |
|
|
|
3,493 |
|
|
|
Total
current liabilities |
|
|
5,463 |
|
|
|
8,591 |
|
Long-term debt, net of current portion and debt
discount |
|
|
5,099 |
|
|
|
- |
|
Other liabilities |
|
|
100 |
|
|
|
94 |
|
|
|
Total
liabilities |
|
|
10,662 |
|
|
|
8,685 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
Preferred stock |
|
|
- |
|
|
|
- |
|
|
Common stock |
|
|
31 |
|
|
|
30 |
|
|
Additional paid-in capital |
|
|
104,469 |
|
|
|
100,403 |
|
|
Accumulated deficit |
|
|
(97,487 |
) |
|
|
(86,721 |
) |
|
|
Total
stockholders' equity |
|
|
7,013 |
|
|
|
13,712 |
|
|
|
Total
liabilities and stockholders' equity |
|
$ |
17,675 |
|
|
$ |
22,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Netlist, Inc. and Subsidiaries |
Unaudited Condensed Consolidated Statements of
Operations |
(in thousands, except per share amounts) |
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 28, 2013 |
|
|
December 29, 2012 |
|
|
December 28, 2013 |
|
|
December 29, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
7,730 |
|
|
$ |
5,963 |
|
|
$ |
23,048 |
|
|
$ |
36,873 |
|
Cost of sales(1) |
|
|
5,831 |
|
|
|
5,126 |
|
|
|
19,943 |
|
|
|
27,474 |
|
Gross profit |
|
|
1,899 |
|
|
|
837 |
|
|
|
3,105 |
|
|
|
9,399 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development(1) |
|
|
1,742 |
|
|
|
2,618 |
|
|
|
6,683 |
|
|
|
12,845 |
|
|
Selling, general and administrative(1) |
|
|
1,387 |
|
|
|
2,098 |
|
|
|
6,267 |
|
|
|
10,075 |
|
|
|
Total
operating expenses |
|
|
3,129 |
|
|
|
4,716 |
|
|
|
12,950 |
|
|
|
22,920 |
|
Operating loss |
|
|
(1,230 |
) |
|
|
(3,879 |
) |
|
|
(9,845 |
) |
|
|
(13,521 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(390 |
) |
|
|
(90 |
) |
|
|
(932 |
) |
|
|
(338 |
) |
|
Other income (expense), net |
|
|
28 |
|
|
|
(146 |
) |
|
|
20 |
|
|
|
(134 |
) |
|
|
Total
other expense, net |
|
|
(362 |
) |
|
|
(236 |
) |
|
|
(912 |
) |
|
|
(472 |
) |
Loss before provision for income taxes |
|
|
(1,592 |
) |
|
|
(4,115 |
) |
|
|
(10,757 |
) |
|
|
(13,993 |
) |
Provision (benefit) for income taxes |
|
|
- |
|
|
|
(17 |
) |
|
|
9 |
|
|
|
(12 |
) |
Net loss |
|
$ |
(1,592 |
) |
|
$ |
(4,098 |
) |
|
$ |
(10,766 |
) |
|
$ |
(13,981 |
) |
Net loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.05 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
31,752 |
|
|
|
28,279 |
|
|
|
30,881 |
|
|
|
27,853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts include stock-based compensation expense as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
$ |
12 |
|
|
$ |
9 |
|
|
$ |
49 |
|
|
$ |
114 |
|
|
Research and development |
|
|
148 |
|
|
|
129 |
|
|
|
588 |
|
|
|
667 |
|
|
Selling, general and administrative |
|
|
263 |
|
|
|
233 |
|
|
|
1,032 |
|
|
|
1,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Netlist, Inc. |
Unaudited Schedule Reconciling GAAP Net Loss to
Non-GAAP EBITDA and Adjusted EBITDA |
(in thousands) |
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 28, 2013 |
|
|
December 29, 2012 |
|
|
December 28, 2013 |
|
|
December 29, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
net loss |
|
$ |
(1,592 |
) |
|
$ |
(4,098 |
) |
|
$ |
(10,766 |
) |
|
$ |
(13,981 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
390 |
|
|
|
90 |
|
|
|
932 |
|
|
|
338 |
|
Provision (benefit) of income taxes |
|
|
- |
|
|
|
(17 |
) |
|
|
9 |
|
|
|
(12 |
) |
Depreciation and amortization |
|
|
310 |
|
|
|
446 |
|
|
|
1,476 |
|
|
|
1,987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (loss) |
|
|
(892 |
) |
|
|
(3,579 |
) |
|
|
(8,349 |
) |
|
|
(11,668 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
423 |
|
|
|
371 |
|
|
|
1,669 |
|
|
|
1,891 |
|
Other
(income) expense, net |
|
|
(28 |
) |
|
|
146 |
|
|
|
20 |
|
|
|
134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (loss) |
|
$ |
(497 |
) |
|
$ |
(3,062 |
) |
|
$ |
(6,660 |
) |
|
$ |
(9,643 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For more information, please contact: Brainerd Communicators,
Inc. Mike Smargiassi or Corey Kinger NLST@braincomm.com (212)
986-6667 Netlist, Inc. Gail M. Sasaki Chief Financial Officer (949)
435-0025
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