- Revenue of $7.3 million, up 7 percent
sequentially and above guidance provided on August 5, 2013
- Non-GAAP gross margin of 62
percent
- GAAP net income of $3.5 million, or
$0.16 per diluted share, due to the $7.25 million one-time
litigation settlement
- Cash and cash equivalent balance at
September 29, 2013 of $15.3 million
- Non-GAAP net loss of $0.7 million, or
($0.03) per share, due to an additional $0.6 million in R&D
wafer tape-out related expenses associated with the Company’s joint
development programs (JDP)
- Revenue expected to increase
approximately 5 percent in Q4 FY 13; non-GAAP bottom line results
and Adjusted EBITDA expected to improve
GigOptix, Inc. (NYSE MKT: GIG), a leading supplier of advanced
semiconductor communications components for use in Cloud
connectivity, data centers, and high-speed optical and wireless
networks, today announced financial results for its third quarter
of fiscal year 2013, which ended September 29, 2013.
Third Quarter Fiscal 2013 GAAP
Results
Total revenue in the third quarter of fiscal 2013 was $7.3
million. This compares with revenue of $10.1 million in the third
quarter of fiscal 2012 and $6.8 million in the second quarter of
fiscal 2013.
Gross margin was 59 percent in the third quarter of fiscal 2013,
compared with 52 percent in the third quarter of fiscal 2012, and
62 percent in the second quarter of fiscal 2013.
Net income was $3.5 million, or net income of $0.16 per diluted
share, in the third quarter of fiscal 2013. The third quarter GAAP
results were positively impacted by a net gain of approximately
$5.7 million pertaining to a litigation settlement partially offset
by an additional approximately $0.6 million in R&D wafer
tape-out related expenses associated with the Company’s JDP. The
third quarter results compare with a net loss of $1.5 million, or a
net loss of ($0.07) per share, in the third quarter of fiscal 2012,
and a net loss of $1.4 million, or a net loss of ($0.06) per share,
in the second quarter of fiscal 2013.
Cash and cash equivalents at September 29, 2013 were $15.3
million, compared with $9.5 million at June 30, 2013.
Third Quarter Fiscal 2013 Non-GAAP
Results1
Non-GAAP net loss in the third quarter of fiscal 2013 was $0.7
million, or ($0.03) per share, and was impacted by an additional
approximately $0.6 million in R&D wafer tape-out related
expenses associated with the Company’s JDP. Non-GAAP net loss
excludes approximately $0.7 million in stock-based compensation,
$0.2 million in amortization of intangible assets, income of
approximately $5.7 million from special litigation-related proceeds
and $0.5 million in litigation-related compensation expense. The
third quarter results compare with non-GAAP net income of $0.6
million, or $0.02 per diluted share in the third quarter of fiscal
2012, and non-GAAP net income of $0.1 million, or $0.00 per diluted
share in the second quarter of fiscal 2013.
Non-GAAP gross margin was 62 percent, compared with 54 percent
in the third quarter of fiscal 2012 and 65 percent in the second
quarter of fiscal 2013.
Adjusted EBITDA for the third quarter of 2013 was $0.1 million,
and was impacted by approximately $0.6 million in R&D wafer
tape-out related expenses associated with the Company’s JDP. This
compares with Adjusted EBITDA of $1.3 million in the third quarter
of fiscal 2012, and Adjusted EBITDA of $0.7 million in the second
quarter of fiscal 2013.
“Our third quarter revenue growth of 7 percent was above the
prior guidance we provided in August of approximately 5 percent
sequential growth, and marks an upturn in our business after
several slow and challenging quarters,” said Dr. Avi Katz, Chairman
and Chief Executive Officer of GigOptix, Inc. “Driving this growth
was a meaningful increase of 14 percent in our High Speed
Communications business, due primarily to higher demand of our
products for the fast growing 100 Gbps coherent telecom segment. As
we have noted previously, GigOptix commands a roughly 50 percent
share of the 100 Gbps coherent optical communications device
market, through our dominant position in the TIA and driver product
areas. In addition, we saw continued interest in commercialization
of our products for the datacom market where we maintain a sole
merchant provider status and leadership position in optical engines
for the 40 Gbps QSFP+ devices for Active Optical Cables and
transceivers in newly installed datacenters.
“On September 19, 2013, we announced a global settlement of all
pending lawsuits between GigOptix and M/A-COM Technology Solutions,
Inc. (MACOM) and its affiliates, including our lawsuit for alleged
misappropriation of trade secrets and breach of contract, and
subsequently on September 24, 2013 received a payment of $7.25
million,” said Dr. Katz. “We are satisfied with the confidential
civil court settlement reached between the parties. With this civil
court litigation now behind us we have strengthened our balance
sheet, and most importantly, we can now focus all of our efforts on
continuing to build our business through new product introductions
and enhancing our strategic expansion plans as we execute on our
long-term business plan. Combined, these efforts should lead to
more revenue opportunities in the next year and expansion into new,
large and promising markets.
“We believe the third quarter was an inflection point in our
business. After several challenging quarters for our industry, we
are more confident that revenue growth will continue over the
longer-term based on the current backlog for the fourth quarter of
2013 and beyond, positive comments from our customers, and other
favorable indicators in the markets we serve,” said Dr. Katz. “In
particular, we are seeing demand rebound in the 40 Gbps and 100
Gbps telecom and datacom markets where we have a strong presence
with several key technologies. We are also factoring into our
growth forecast the expected new product introductions in 2014 for
our Industrial business and new product introductions in the
consumer electronics market. Given these factors, we are
comfortable about having a solid platform to build upon as we move
into the fourth quarter and into 2014.”
Financial Outlook
“In light of the better market conditions and improving demand
environment, we currently believe revenue in the fourth quarter
will continue to improve, with an increase of approximately 5
percent sequentially. This expected growth should provide a strong
foundation entering 2014,” said Curt Sacks, Senior Vice President
and Chief Financial Officer of GigOptix, Inc. “Our non-GAAP bottom
line performance and Adjusted EBITDA should also improve in the
fourth quarter as R&D expenses, which increased approximately
$0.6 million in the third quarter to support new JDP product
tape-outs, will decline to the quarterly levels we recorded in the
first half of fiscal 2013.”
Financial Results Webcast / Conference Call
GigOptix will host a conference call and webcast with investors
today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss
the third quarter fiscal 2013 financial results, and the business
outlook. Investors and other interested parties may access the call
by dialing (480) 629-9664. No passcode is needed for the live call.
The replay dial-in number is (858) 384-5517, and the passcode is
4644138. Additionally, this conference call will be broadcast live
over the Internet and can be accessed by all interested parties on
the Investor Relations section of the Company's website at
http://www.gigoptix.com.
1 Non-GAAP Measures - GigOptix reports revenue,
gross margin, operating expense, operating income and net loss on a
Generally Accepted Accounting Principles (GAAP) and non-GAAP basis.
In addition, it reports Adjusted EBITDA. These non-GAAP measures
are provided to enhance investors’ overall understanding of
GigOptix financial performance. 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. A
reconciliation of these GAAP to non-GAAP measurements and Adjusted
EBITDA for the three and nine months ended September 29, 2013 and
September 30, 2012 can be found in the “Reconciliation of GAAP to
Non-GAAP Financial Information” table attached to this press
release.
About GigOptix, Inc.
GigOptix is a leading fabless supplier of high speed
semiconductor components that enable end-to-end information
streaming over the network and address emerging high-growth
opportunities for Cloud connectivity, datacenters and high-speed
optical and wireless networks, and the industrial, defense and
avionics industries. GigOptix offers a unique broad portfolio of
Drivers, TIAs and TFPSTM optical modulators for 40G, 100G and 400G
fiber-optic telecommunications and data-communications networks,
and high performance MMIC solutions that enable next generation
wireless microwave systems up to 90GHz. GigOptix also offers a wide
range of digital and mixed-signal ASIC solutions and enables
product lifetime extension through its GigOptix Sunset Rescue
Program.
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, including the bringing of products to market with full
documentation. Such statements contain words such as "will," and
"expect," or the negative thereof or comparable terminology, and
include (without limitation) statements regarding growth,
opportunities, continued traction, contracts, improvements and our
statements under the heading "Financial Outlook." Forward-looking
statements involve certain risks and uncertainties, and actual
results may differ materially from those discussed in any such
statement. These risks include, but are not limited to: the ability
to extend product offerings into new areas or products, the ability
to commercialize licensed technology, unexpected occurrences that
deter the full documentation and "bring to market" plan for
products that were developed this year and last year, trends and
fluctuations in the industry, changes in demand and purchasing
volume of customers, unpredictability of suppliers, our ability to
control our costs of goods sold, our ability to attract and retain
qualified personnel, the ability to move product sales to
production levels, the ability to compete for client design-in
opportunities, the ability to cross-sell to new clients and to
diversify, the success of product sales in new markets or of
recently produced product offerings, including bundled product
solutions, the amount of cost savings, the ability to improve
productivity, the ability to pursue and attract other merger and
acquisition opportunities, our ability to enforce intellectual
property rights, and the ability to maintain and continue
relationships with government agencies. Additional factors that
could cause actual results to differ are discussed under the
heading "Risk Factors" and in other sections of the Company's
filings with the SEC, and in the Company's other current and
periodic reports filed or furnished from time to time with the SEC.
All forward-looking statements in this press release are made as of
the date hereof, based on information available to the Company as
of the date hereof, and the Company assumes no obligation to update
any forward-looking statement.
GIGOPTIX, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands) (Unaudited)
September 29,
December 31, Net Change 2013
2012 $ %
ASSETS Current
assets: Cash and cash equivalents $ 15,260 $ 10,147 $ 5,113 50 %
Accounts receivable, net 7,129 5,056 2,073 41 % Inventories 4,548
4,111 437 11 % Prepaid and other current assets 427
295 132 45 % Total current assets
27,364 19,609 7,755 40 % Property and equipment, net 3,292 4,579
(1,287 ) (28 %) Intangible assets, net 3,524 4,270 (746 ) (17 %)
Goodwill 9,860 9,860 - 0 % Restricted cash 282 282 - 0 % Other
assets 206 228 (22 ) (10 %)
Total assets $ 44,528 $ 38,828 $ 5,700 15 %
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 3,544 $ 3,174 $ 370 12 % Accrued
compensation 1,521 846 675 80 % Line of credit 6,000 3,600 2,400 67
% Other current liabilities 2,861 3,080
(219 ) (7 %) Total current liabilities 13,926 10,700 3,226
30 % Other long-term liabilities 802 1,128
(326 ) (29 %) Total liabilities 14,728
11,828 2,900 25 % Stockholders'
Equity Common stock 22 22 - 0 % Additional paid-in capital 126,534
123,386 3,148 3 %
Treasury stock, at cost; 701,754 shares as
of September 29, 2013 and December 31, 2012, respectively.
(2,209 ) (2,209 ) - 0 % Accumulated other comprehensive income 374
298 76 26 % Accumulated deficit (94,921 ) (94,497 )
(424 ) 0 % Total stockholders' equity 29,800
27,000 2,800 10 % Total liabilities and
stockholders' equity $ 44,528 $ 38,828 $ 5,700
15 %
GIGOPTIX, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share
amounts) (Unaudited)
Three months ended
Nine months ended September 29,
September 30,
September 29,
September 30,
2013
%
2012
%
2013
%
2012
%
Total revenue $ 7,336 100 % 10,054 100 % 21,088 100 % 28,793 100 %
Total cost of revenue 2,985 41 % 4,853
48 % 8,199 39 % 13,568 47 % Gross
profit 4,351 59 % 5,201 52 %
12,889 61 % 15,225 53 % Research and
development expense 3,984 54 % 3,395 34 % 10,397 49 % 10,223 36 %
Selling, general and administrative expense 2,483 34 % 2,816 28 %
6,877 33 % 8,775 30 % Restructuring expense, net - 0 % - 0 % 950 5
% 93 0 % Special litigation-related expense (income) (5,673
) -77 % 576 6 % (4,786 ) -23 % 929
3 % Total operating expenses 794 11 %
6,787 68 % 13,438 64 % 20,020 70
% Income (loss) from operations 3,557 48 % (1,586 ) -16 % (549 ) -3
% (4,795 ) -17 % Interest expense, net (27 ) 0 % (38 ) 0 % (106 )
-1 % (231 ) -1 % Other income (expense), net 3 0 %
183 2 % 259 1 % 240 1 %
Income (loss) before provision for income taxes 3,533 48 % (1,441 )
-14 % (396 ) -2 % (4,786 ) -17 % Provision for income taxes
1 0 % 65 1 % 28 0 % 99
0 % Net income (loss) $ 3,532 48 % $ (1,506 ) -15 % $
(424 ) -2 % $ (4,885 ) -17 %
Basic net income (loss) per share
$ 0.16 $ (0.07 ) $ (0.02 ) $ (0.23 )
Diluted net income (loss) per share
$ 0.16 $ (0.07 ) $ (0.02 ) $ (0.23 ) Weighted average number
of shares used in basic per share calculation 21,656 21,276 21,610
21,445 Weighted average number of shares used in diluted per share
calculation 22,359 21,276 21,610 21,445
GIGOPTIX,
INC. NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share amounts)
(Unaudited)
Three months ended Nine months ended
September 29, September 30, September 29,
September 30, 2013 %
2012
%
2013 %
2012 %
Total revenue $ 7,336 100 % $ 10,054 100 % 21,088 100 % 28,793 100
% Total cost of revenue 2,806 38 % 4,645
46 % 7,637 36 % 13,058 45 %
Gross profit 4,530 62 % 5,409 54 %
13,451 64 % 15,735 55 % Research and
development expense 3,616 49 % 3,071 31 % 9,475 45 % 8,997 31 %
Selling, general and administrative expense 1,570 21
% 1,855 18 % 4,551 22 % 6,109
21 % Total operating expenses 5,186 71 %
4,926 49 % 14,026 67 % 15,106
52 % Income (loss) from operations (656 ) -9 % 483 5 %
(575
) -3 % 629 2 % Interest expense, net (27 ) 0 % (38 ) 0 % (106 ) -1
% (231 ) -1 % Other income (expense), net 3 0 %
183 2 % 259 1 % 240 1 %
Income (loss) before provision for income taxes (680 ) -9 % 628 6 %
(422 ) -2 % 638 2 % Provision for income taxes 1 0 %
65 1 % 28 0 % 99 0 % Net
income (loss) $ (681 ) -9 % $ 563 6 % $ (450 ) -2 % $ 539
2 % Basic net income (loss) per share $ (0.03 ) $
0.03 $ (0.02 ) $ 0.03 Diluted net income (loss) per share $ (0.03 )
$ 0.02 $ (0.02 ) $ 0.02 Weighted average number of shares
used in basic per share calculation 21,656 21,276 21,610 21,445
Weighted average number of shares used in diluted per share
calculation 21,656 22,576 21,610 22,891
GIGOPTIX,
INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION (In thousands) (Unaudited)
Three months ended,
Nine months ended, September 29, September 30,
September 29, September 30, 2013
2012 2013
2012 GAAP Total cost of revenue $ 2,985 $ 4,853 $
8,199 $ 13,568 Stock-based compensation (57 ) (85 ) (196 ) (143 )
Amortization of intangible assets (122 ) (123 )
(366 ) (367 ) Non-GAAP Total cost of revenue $ 2,806
$ 4,645 $ 7,637 $ 13,058 GAAP
Gross profit $ 4,351 $ 5,201 $ 12,889 $ 15,225 Stock-based
compensation 57 85 196 143 Amortization of intangible assets
122 123 366 367
Non-GAAP Gross profit $ 4,530 $ 5,409 $ 13,451
$ 15,735 GAAP - Operating expenses $ 794 $
6,787 $ 13,438 $ 20,020 Stock-based compensation (690 ) (1,155 )
(2,397 ) (3,501 ) Amortization of intangible assets (120 ) (130 )
(380 ) (391 ) Restructuring expense, net - - (950 ) (93 ) Special
litigation-related income (expense) 5,673 (576 ) 4,786 (929 )
Special litigation-related bonuses (471 ) -
(471 ) - Non-GAAP Operating expenses $ 5,186
$ 4,926 $ 14,026 $ 15,106 GAAP
Income (loss) from operations $ 3,557 $ (1,586 ) $ (549 ) $ (4,795
) Stock-based compensation 747 1,240 2,593 3,644 Amortization of
intangible assets 242 253 746 758 Restructuring expense, net - -
950 93 Special litigation-related expense (income) (5,673 ) 576
(4,786 ) 929 Special litigation-related bonuses 471
- 471 - Non-GAAP Income
(loss) from operations $ (656 ) $ 483 $ (575 ) $ 629
GAAP - Net Income (loss) $ 3,532 $ (1,506 ) $ (424 ) $
(4,885 ) Stock-based compensation 747 1,240 2,593 3,644
Amortization of intangible assets 242 253 746 758 Restructuring
expense, net - - 950 93 Special litigation-related expense (income)
(5,673 ) 576 (4,786 ) 929 Special litigation-related bonuses
471 - 471 -
Non-GAAP Net Income (loss) $ (681 ) $ 563 $ (450 ) $ 539
Adjusted EBITDA reconciliation: Income (loss) from
operations $ 3,557 $ (1,586 ) $ (549 ) $ (4,795 ) Restructuring
expense, net - - 950 93 Depreciation and amortization 962 1,031
2,843 3,085 Stock-based compensation 747 1,240 2,593 3,644 Special
litigation-related expense (income) (5,673 ) 576 (4,786 ) 929
Special litigation-related bonuses 471 -
471 - Adjusted EBITDA $ 64
$ 1,261 $ 1,522 $ 2,956
Darrow Associates, Inc.Jim Fanucchi, 408-404-5400
(Investors)ir@gigoptix.com
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