Entropic Communications Reports Third Quarter Results
October 24 2012 - 4:05PM
Entropic Communications, Inc. (Nasdaq:ENTR), a world leader in
semiconductor solutions for the connected home, today reported its
third quarter results for the period ended September 30, 2012.
Entropic reported third quarter net revenues of $89.8 million, an
increase of eight percent compared with $83.1 million in the second
quarter of 2012.
In accordance with U.S. generally accepted accounting principles
(GAAP), the Company's third quarter net income was $0.4 million, or
$0.00 per share (diluted). This compares with GAAP net income of
$0.2 million, or $0.00 per share (diluted) in the second quarter of
2012.
Non-GAAP net income in the third quarter of 2012 was consistent
with the second quarter at $7.8 million, or $0.09 per share
(diluted).
"Entropic delivered record quarterly revenue in Q3 with strength
across our entire product portfolio," said Patrick Henry,
Entropic's president and chief executive officer. "Momentum
continues to build around the connected home market and we saw
solid design-win traction during the quarter. We have a great
portfolio of products, an expanding addressable market and we're
benefitting from one of the most significant trends impacting the
industry: the transition to IP video delivery in the home."
|
Three
Months ended |
(In millions, except per share
data) |
September 30,
2012 |
June 30, 2012 |
September 30,
2011 |
Net revenues |
$89.8 |
$83.1 |
$51.5 |
GAAP net income |
$0.4 |
$0.2 |
$4.6 |
GAAP net income per share (basic and
diluted) |
$0.00 |
$0.00 |
$0.05 |
|
|
|
|
Non-GAAP net income1 |
$7.8 |
$7.8 |
$10.4 |
Non-GAAP net income per
share1 (diluted) |
$0.09 |
$0.09 |
$0.12 |
|
|
|
|
1. Please
refer to "Non-GAAP Financial Measures" below and the financial
statements portion of this press release for an explanation of the
non-GAAP financial measures contained in the table above and a
reconciliation of such measures to the comparable GAAP financial
measures. |
Recent Highlights
Corporate Leadership
- Mr. Vahid Manian joined Entropic as senior vice president of
Global Operations. Manian leads Entropic's technical and supply
management operations, worldwide.
- Mr. William G. Bock joined Entropic's Board of Directors. Bock
brings to Entropic's Board a wealth of semiconductor sector,
corporate leadership and board experience.
- Board Affiliation: The RVU Alliance announced
the election of Entropic to its Board of Directors. A member of the
RVU Alliance, Entropic has actively supported the marketing and
technical activities of the Alliance since its inception in August
2009, and has long-standing partnerships across the RVU Alliance
ecosystem.
Industry Accolades
- MoCA® (Multimedia over Coax Alliance)
Innovation: The DIRECTV Home Media Center (HMC), based on
the RVU protocol, was shortlisted as a finalist for the IBC Content
Delivery Innovation Award. DIRECTV's HMC uses Entropic's MoCA
silicon and software to enable the sharing and distribution of high
definition (HD) content into and around the home.
Product Innovations
- Entropic Demonstrated HTML5 Content Distribution with
its Open Standards Set-Top-Box (STB) Platform Over a MoCA 2.0 Home
Network: At both CableLabs Summer Conference 2012 and
IBC2012, Entropic demonstrated the ability to run next-generation
HTML5 consumer applications from an Entropic-based STB over an
Entropic-powered MoCA 2.0 home network.
Service Provider/OEM Activities
- EchoStar Now Shipping HD Satellite STBs Enabled by
Entropic's System-on-a-Chip (SoC) and Demodulator
Technology: Entropic announced the deployment of its STB
SoC and demodulator technology in three EchoStar models, currently
being deployed at Bell Canada, Dish Mexico and Telus. Entropic's
technology enables EchoStar to offer fully-functional HD satellite
STBs, which are PVR-ready via external hard drives. The devices
also support over-the-top (OTT) and interactive applications via an
Internet connection.
- EchoStar's Freeview+ HD Ultra Slim Box Features
Entropic's STB SoC: Entropic announced EchoStar's Ultra
Slim Box, an advanced HD digital TV recorder combining Freeview+ HD
and access to Smart TV entertainment, uses Entropic's
highly-integrated, low-power STB SoC, the PNX849x, to deliver
advanced performance and power management to execute heavyweight
applications.
- GlobalSat's Hybrid STB Powered by Entropic's SoC
Solutions: Entropic announced its PNX8471 SoC will power
GlobalSat's GOOSAT S1-44HD, an advanced hybrid STB. The device
leverages Entropic's ARM® Cortex™-A9-based SoC for enhanced
performance, security, and support for OTT video delivery.
- Inverto Delivers Latest Generation Low Noise Block
(LNB) Using Entropic's Channel Stacking Switch (CSS):
Entropic announced Inverto Digital Labs is deploying Entropic's
third-generation CSS silicon, the EN5288, in Inverto's latest LNB
solution for the Free-to-Air (FTA) and Pay-TV operator markets. The
first product to market with Entropic's EN5288, the Inverto LNB
allows consumers to upgrade and extend existing satellite
installations without the need to run additional in-home
cabling.
- Entropic Achieves CI+ Certification on IP4.tv Hybrid
STB: Entropic announced it achieved Common Interface Plus
(CI+) certification for IP4.tv's latest IP+DVB-S2 hybrid STB, which
enables Pay-TV operators to securely deliver HD premium broadcast
and IP content between a Conditional Access Module (CAM) and
IP4.tv's hybrid STB. This particular STB is aimed at the Pay-TV
operator market and was deployed with a major European operator in
August 2012.
- TiVo's Premiere 4 Uses Entropic's MoCA
Technology: Entropic announced its MoCA silicon and
software are powering the new TiVo® Premiere 4 DVR. The TiVo
Premiere 4 leverages Entropic's MoCA technology to transform the
home's coaxial infrastructure into a highly-efficient, robust and
reliable whole-home entertainment network.
- Entropic Seeds European Service Providers with MoCA
Ethernet-to-Coax Adapters (ECAs) and STBs: Entropic
announced multiple ECAs are using its MoCA silicon and software to
support service providers throughout Europe. New Entropic-powered
ECAs include devices from Asheridge Communications and Hirschmann
Multimedia BV, as well as the Entropic-enabled Samsung MoCA-based
gateway that is being deployed for a major European service
provider this year.
For More Information
Entropic management will be holding a conference call today,
October 24, 2012, at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time
to discuss the Company's results for the third quarter of fiscal
2012 and to provide guidance for the fourth quarter. You may access
the conference call via any of the following:
Teleconference: |
617-213-4860 |
|
|
Access Code: |
78027545 |
|
|
Web Broadcast: |
http://events.entropic.com/ |
|
|
Replay: |
617-801-6888 |
|
|
Replay Passcode: |
35589872 |
About Entropic Communications
Entropic Communications, Inc. (Nasdaq:ENTR) is a leading global
provider of silicon and software solutions to enable connected home
entertainment. The Company transforms how traditional HDTV
broadcast and streaming video content is seamlessly, reliably, and
securely delivered, processed, and distributed into and throughout
the home. Entropic's next-generation home connectivity and set-top
box system-on-a-chip (SoC) solutions enable Pay-TV service
providers to offer consumers a more captivating whole-home
entertainment experience by delivering new, high-performing ways to
connect, engage, and enjoy multimedia content. For more
information, visit Entropic at: www.entropic.com.
The Entropic Communications logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4255
Non-GAAP Financial Measures
This press release and the accompanying tables contain the
following non-GAAP financial measures: net income and net income
per share. These non-GAAP financial measures exclude the
effects on the Statement of Operations of all forms of stock-based
compensation, transaction and integration costs related to the
Trident Microsystems and the PLX Technology transactions,
amortization of intangible assets, the loss related to equity
method investment, the impact of contingent consideration fair
value adjustments related to the acquisition of PLX Technology
assets, and the cash tax difference.
Management uses these non-GAAP financial measures to manage the
Company's business, including setting operating budgets and
executive compensation plans. These non-GAAP measures are also used
to (i) supplement the financial results and forecasts reported to
the Company's board of directors, (ii) evaluate the Company's
operating performance, (iii) compare the Company's performance to
internal forecasts, and (iv) manage the Company's business and
benchmarking performance internally. The non-GAAP measures have
been made available to stockholders consistently in the past to
provide transparency on how management manages the Company's
operating performance. Management believes that these non-GAAP
operating measures are useful to investors, when used as a
supplement to GAAP measures, in evaluating the Company's ongoing
operational performance.
The non-GAAP financial measures disclosed by the Company should
not be considered in isolation or a substitute for, or superior to,
the financial information prepared and presented in accordance with
GAAP, and the financial results calculated in accordance with GAAP
and reconciliations to those financial statements should be
carefully evaluated. The non-GAAP financial measures used by the
Company may be calculated differently from, and therefore may not
be comparable to, similarly titled measures used by other
companies.
Forward-Looking Statements
Statements in this press release that are not strictly
historical in nature constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements include, but are not limited to,
statements regarding our expectations for Entropic's market
penetration and overall market expansion, continued and/or future
revenue, earnings and product sales growth and the factors that may
contribute to such growth including industry trends. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause Entropic's actual
results to be materially different from historical results or from
any results expressed or implied by such forward-looking
statements. These factors include, but are not limited to, our
dependence on a limited number of supply chain partners for the
manufacture of our products and other factors that could affect our
ability to meet customer demand; our dependence on a limited number
of customers for a substantial portion of our revenues; risks
associated with adverse U.S. and international economic conditions;
the ability of our customers or the service providers who purchase
their products to successfully compete and continue to grow in
their markets; the continued development of the market for HD video
and other multi-media content delivery and networking solutions;
risks associated with competing against larger and more established
companies and our ability to compete successfully in the connected
home entertainment market; risks associated with timely development
and introduction of new or enhanced products including those
associated with IP Video delivery; risks related to international
operations; risks related to intellectual property, including third
party licensing or patent infringement claims; risks associated
with the Trident Microsystems and PLX Technology acquisitions
including their integration into Entropic's existing operations;
and other factors discussed in the "Risk Factors" section of
Entropic's Quarterly Report on Form 10-Q for the quarter ended June
30, 2012. All forward-looking statements are qualified in
their entirety by this cautionary statement. Entropic is providing
this information as of the date of this release and does not
undertake any obligation to update any forward-looking statements
contained in this release as a result of new information, future
events or otherwise.
Entropic Communications® and the stylized Entropic "curve" logo
are either trademarks or registered trademarks of Entropic
Communications, Inc. in the United States and/or other
countries.
ENTROPIC
COMMUNICATIONS, INC. |
GAAP Condensed
Consolidated Statements of Operations |
(In thousands, except
for per share information) |
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 30,
2012 |
June 30, 2012 |
September 30,
2011 |
September 30,
2012 |
September 30,
2011 |
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
|
|
|
|
|
|
Net revenues |
$ 89,825 |
$ 83,052 |
$ 51,465 |
$ 231,980 |
$ 184,459 |
Cost of net revenues |
45,778 |
40,197 |
22,996 |
111,886 |
82,581 |
Gross profit |
44,047 |
42,855 |
28,469 |
120,094 |
101,878 |
Operating expenses: |
|
|
|
|
|
Research and development |
28,072 |
25,671 |
15,142 |
69,214 |
42,439 |
Sales and marketing |
6,966 |
6,975 |
4,073 |
18,986 |
13,196 |
General and administrative |
5,718 |
8,584 |
2,939 |
19,592 |
10,143 |
Amortization of
intangibles |
930 |
715 |
-- |
1,645 |
-- |
Total operating expenses |
41,686 |
41,945 |
22,154 |
109,437 |
65,778 |
Income from operations |
2,361 |
910 |
6,315 |
10,657 |
36,100 |
Loss related to equity method
investment |
(799) |
(905) |
(91) |
(2,536) |
(91) |
Other income, net |
31 |
246 |
224 |
567 |
626 |
Income before income taxes |
1,593 |
251 |
6,448 |
8,688 |
36,635 |
Income tax provision |
1,185 |
78 |
1,803 |
4,214 |
12,379 |
Net income |
$ 408 |
$ 173 |
$ 4,645 |
$ 4,474 |
$ 24,256 |
|
|
|
|
|
|
Net income per share - basic |
$ 0.00 |
$ 0.00 |
$ 0.05 |
$ 0.05 |
$ 0.28 |
Net income per share - diluted |
$ 0.00 |
$ 0.00 |
$ 0.05 |
$ 0.05 |
$ 0.27 |
Weighted average number of shares used to
compute net income per share - basic |
88,399 |
87,991 |
86,541 |
87,913 |
85,993 |
Weighted average number of shares used to
compute net income per share - diluted |
90,885 |
89,484 |
88,884 |
89,918 |
89,165 |
|
ENTROPIC
COMMUNICATIONS, INC. |
GAAP Condensed
Consolidated Balance Sheets |
(In
thousands) |
|
|
|
|
|
September 30, |
June 30, |
December 31, |
|
2012 |
2012 |
2011 |
|
(unaudited) |
(unaudited) |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 22,511 |
$ 22,435 |
$ 20,193 |
Marketable securities |
90,560 |
92,536 |
91,625 |
Accounts receivable |
36,104 |
41,491 |
25,896 |
Inventory |
39,532 |
38,172 |
20,253 |
Deferred tax assets,
current |
13,658 |
14,785 |
13,565 |
Prepaid expenses and other
current assets |
23,323 |
29,692 |
9,927 |
Total current assets |
225,688 |
239,111 |
181,459 |
Property and equipment, net |
14,969 |
13,078 |
11,250 |
Long-term marketable securities |
53,255 |
46,773 |
104,708 |
Intangible assets, net |
49,953 |
43,708 |
-- |
Deferred tax assets, long-term |
9,953 |
9,600 |
9,600 |
Goodwill |
4,664 |
4,013 |
-- |
Other long-term assets |
9,501 |
10,477 |
11,542 |
Total assets |
$ 367,983 |
$ 366,760 |
$ 318,559 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 20,083 |
$ 29,683 |
$ 11,559 |
Accrued expenses and other
current liabilities |
16,005 |
12,683 |
4,078 |
Accrued payroll and
benefits |
13,057 |
11,727 |
3,835 |
Total current liabilities |
49,145 |
54,093 |
19,472 |
Deferred rent |
727 |
849 |
1,098 |
Other long-term liabilities |
1,307 |
209 |
196 |
Stockholders' equity |
316,804 |
311,609 |
297,793 |
Total liabilities and
stockholders' equity |
$ 367,983 |
$ 366,760 |
$ 318,559 |
|
ENTROPIC
COMMUNICATIONS, INC. |
Unaudited
Reconciliation of Non-GAAP Adjustments |
(In thousands, except
for per share information) |
|
|
|
|
|
|
This press release contains the
following non-GAAP financial measures: net income and net income
per share. The presentation of such measures is not intended
to be considered in isolation or as a substitute for, or superior
to, the financial information prepared and presented in accordance
with GAAP. Our non-GAAP net income and net income per share
exclude the items listed below. |
|
|
|
|
|
|
The following table sets forth
such non-GAAP measures for the applicable periods as well as the
reconciliation of such measures to the directly comparable GAAP
measures for the periods shown. |
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 30,
2012 |
June 30, 2012 |
September 30,
2011 |
September 30,
2012 |
September 30,
2011 |
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
GAAP net income |
$ 408 |
$ 173 |
$ 4,645 |
$ 4,474 |
$ 24,256 |
Non-GAAP adjustments: |
|
|
|
|
|
Stock-based compensation: |
|
|
|
|
|
Cost of net revenues |
217 |
179 |
143 |
567 |
390 |
Research and development |
2,030 |
1,894 |
1,533 |
5,554 |
4,597 |
Sales and marketing |
675 |
585 |
517 |
1,679 |
1,445 |
General and administrative |
1,283 |
977 |
933 |
3,182 |
2,994 |
Total stock-based
compensation |
4,205 |
3,635 |
3,126 |
10,982 |
9,426 |
Acquisition-related items: |
|
|
|
|
|
Amortization of intangible
assets: |
|
|
|
|
|
Cost of net revenues |
2,025 |
1,777 |
-- |
3,802 |
-- |
Operating expenses |
930 |
715 |
-- |
1,645 |
-- |
Transaction and integration
costs |
183 |
2,754 |
-- |
4,484 |
-- |
Loss related to equity method
investment |
799 |
905 |
91 |
2,536 |
91 |
Adjustments to the fair value
of PLX acquisition contingent consideration |
230 |
-- |
-- |
230 |
-- |
Income tax effects of pre-tax
adjustments |
(2,930) |
(3,425) |
(1,126) |
(8,288) |
(3,331) |
Cash tax difference (1) |
1,899 |
1,301 |
3,653 |
6,357 |
14,607 |
Total of non-GAAP
adjustments |
7,341 |
7,662 |
5,744 |
21,748 |
20,793 |
Non-GAAP net income |
$ 7,749 |
$ 7,835 |
$ 10,389 |
$ 26,222 |
$ 45,049 |
|
|
|
|
|
|
Weighted average shares (basic) |
88,399 |
87,991 |
86,541 |
87,913 |
85,993 |
Adjustment for dilutive
shares |
2,486 |
1,493 |
2,343 |
2,005 |
3,172 |
Weighted average shares (diluted) |
90,885 |
89,484 |
88,884 |
89,918 |
89,165 |
|
|
|
|
|
|
GAAP net income per share (basic) |
$ 0.00 |
$ -- |
$ 0.05 |
$ 0.05 |
$ 0.28 |
Non-GAAP adjustments detailed
above |
0.09 |
0.09 |
0.07 |
0.24 |
0.23 |
Non-GAAP net income per share
(diluted) |
$ 0.09 |
$ 0.09 |
$ 0.12 |
$ 0.29 |
$ 0.51 |
|
|
|
|
|
|
(1) The Company's non-GAAP net
income per share is calculated using the cash tax rate of 22%, 22%,
and (7%) for the three month periods ended September 30, 2012, June
30, 2012, and September 30, 2011, respectively. The Company's
non-GAAP net income per share is calculated using the cash tax rate
of 19% and 2% for the nine month periods ended September 30, 2012,
and 2011, respectively. The estimated cash tax rate is the
estimated tax payable on the Company's projected tax returns as a
percentage of estimated annual non-GAAP pre-tax net
income. The Company uses an estimated cash tax rate to adjust
for the historical variation in the effective book tax rate
associated with the reversal of valuation allowances, the
utilization of research and development tax credits, and the
utilization of loss carryforwards which currently have an overall
effect of reducing taxes payable. The Company believes that
the cash tax rate provides a more transparent view of its operating
results. The Company's effective tax rate used for the
purposes of calculating GAAP net income for the three month periods
ended September 30, 2012, June 30, 2012, and September 30, 2011 was
approximately 74%, 31% and 28%, respectively. The Company's
effective tax rate used for the purposes of calculating GAAP net
income for the nine month periods ended September 30, 2012 and 2011
was approximately 49% and 34%, respectively. |
CONTACT: Investor Relations Contact:
Debra Hart
+1 858.768.3852
debra.hart@entropic.com
Media/Industry Analyst Contact:
Chris Fallon
+1 858.768.3827
chris.fallon@entropic.com
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