Fourth Quarter Revenue of $89.7 Million,
Record Annual Revenue of $321.7 Million
Conference Call to be Webcast Today at
1:30 p.m. Pacific Time
Entropic (Nasdaq:ENTR), a world leader in semiconductor solutions
for the connected home, today reported its fourth quarter and
fiscal year results for the period ended December 31, 2012.
Entropic reported fourth quarter net revenues of $89.7 million, a
slight decrease compared with $89.8 million in the third quarter of
2012.
In accordance with U.S. generally accepted accounting principles
(GAAP), the Company's fourth quarter net income was $0.0 million,
or $0.00 per share (diluted). This compares with GAAP net income of
$0.4 million, or $0.00 per share (diluted) in the third quarter of
2012.
Non-GAAP net income in the fourth quarter was $7.6 million, or
$0.08 per share (diluted), compared to non-GAAP net income of $7.8
million, or $0.09 per share (diluted) in the third quarter of
2012.
Net revenues for the year ended December 31, 2012 were $321.7
million, an increase of 34 percent from the $240.6 million reported
for the year ended December 31, 2011. Net income computed in
accordance with GAAP for the year ended December 31, 2012 was $4.5
million, or $0.05 per share (diluted), compared with GAAP net
income of $26.6 million, or $0.30 per share (diluted), for the year
ended December 31, 2011.
Non-GAAP net income for the year ended December 31, 2012 was
$33.8 million, or $0.37 per share (diluted), compared to non-GAAP
net income of $55.3 million, or $0.62 per share (diluted) for the
year ended December 31, 2011.
"Our transformation into a broad-based platform silicon company
in connected home entertainment is well underway following last
year's acquisitions," said Patrick Henry, president and CEO,
Entropic. "We've already won significant design-wins with
Tier-1 operators which is an early sign our strategy is playing
out. We expect 2013 to be a key transitional year for the Company,
as we now have a strengthened product portfolio, clear integration
roadmap, and the right team focused on winning new designs
globally."
| |
Three Months
ended |
Years ended Dec.
31, |
| (In millions, except per share
data) |
Dec. 31, 2012 |
Sept. 30, 2012 |
Dec. 31, 2011 |
2012 |
2011 |
| Net revenues |
$89.7 |
$89.8 |
$56.2 |
$321.7 |
$240.6 |
| GAAP net income |
$0.0 |
$0.4 |
$2.3 |
$4.5 |
$26.6 |
| GAAP net income per share
(basic) |
$0.00 |
$0.00 |
$0.03 |
$0.05 |
$0.31 |
| GAAP net income per share
(diluted) |
$0.00 |
$0.00 |
$0.03 |
$0.05 |
$0.30 |
| |
|
|
|
|
|
| Non-GAAP net income1 |
$7.6 |
$7.8 |
$10.2 |
$33.8 |
$55.3 |
| Non-GAAP net income per
share1 (diluted) |
$0.08 |
$0.09 |
$0.12 |
$0.37 |
$0.62 |
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 Initiatives
- New Corporate Brand Identity: The Company
updated its brand identity to represent a significant shift in its
overall vision, look and message since making two transformative
acquisitions in 2012.
- Achieved ISO 9001:2008 Certification:
Entropic's Quality Management System (QMS) was awarded ISO
9001:2008 re-certification by the International Organization for
Standardization (ISO); signifying the Company's commitment to
producing high quality products, services and solutions.
Industry Accolades
- Winner of 2012 Global Semiconductor Alliance (GSA)
Award: Entropic was awarded the 2012 GSA Award in the
"Most Respected Public Semiconductor Company Achieving $100 million
to $250 million in Annual Sales" category.
Product Innovations
- Entropic Unveiled Three Innovative Multimedia over Coax
Alliance (MoCA®)-Based Reference Designs to Extend Power,
Performance and WiFi-to-Coax Connectivity in the Home: At
CES 2013, Entropic showed the industry's first MoCA 2.0 multi-band
adapter, MoCA 2.0 WiFi extender and MoCA 1.1 USB reference design,
which are designed to ensure whole-home data coverage.
Service Provider Activities
- Tianjin Broadcast and TV Network Deployed Entropic's
c.LINK® Ethernet-over-Coax (EoC)
Solution: Entropic announced the deployment of its latest
c.LINK Broadband Access technology by Tianjin Broadcast and TV
Network Co., Ltd. to increase speed and quality of broadband
service.
- InCablenet Deployed Entropic's Proven Set-top Box (STB)
System-on-a-Chip (SoC) Technology: Entropic announced its
STB SoC technology, the CX2448x, has been deployed by India's
leading cable multi-system operator (MSO), InCablenet, to assist
with the 'Analog Sunset' transition.
- DIRECTV PanAmericana Selected Entropic's Silicon and
Software to Roll-Out Advanced TV Viewing Services:Entropic
announced its analog Channel Stacking Switch (CSS®) and MoCA-based
silicon and software have been selected by DIRECTV PanAmericana to
enhance the way content is delivered into and connected throughout
the home.
OEM Activities
- Technicolor and Entropic Partnered to Deliver a
Powerful Client STB: Entropic announced its technology is
part of Technicolor's MediaPlay (Xi3) client solution, which is
based on hardware and software specifications developed by Comcast.
The Technicolor MediaPlay client is fully compliant with the
Comcast-developed X1 client-server architecture, and uses
Entropic's TSC188 STB SoC bundled with its MoCA 1.1 silicon and
software to bring the power of cloud-based applications to every
screen in the home.
- Humax and Entropic Announced Development of an
IP-Client Device:Entropic announced its TSC188 STB SoC
bundled with its MoCA 1.1 silicon and software are being used in
Humax' Xi3 IP-Client device to enable the shift from broadcast to
IP-based services and applications in the home. The device
leverages the Comcast Reference Design Kit (RDK) to enable device
manufacturers to rapidly develop, optimize and deploy new broadcast
and IP-based solutions for richer consumer TV experiences.
- Entropic's MoCA 2.0 Utilized by ARRIS in New Advanced
Headless Video Gateway: Entropic announced its MoCA 2.0
silicon and software solution has been selected by ARRIS Group,
Inc. for use in the ARRIS MG2402 Video Gateway that uses XG5 and
Reference Design Kit (RDK) specifications developed by Comcast.
This is the first official product announcement of MoCA 2.0
designed into a headless gateway and paves a path to economically
deliver more services to cable customers across a broader range of
devices.
Partner Activities
- Entropic and Cortina Systems Announced Development for
an Advanced Broadband Router/Headless Gateway Reference
Platform: Entropic announced a joint collaboration with
Cortina to accelerate the development of high performance customer
premise equipment (CPE) including broadband routers and headless
gateways. The cooperation leverages Entropic's MoCA 2.0 solution
with Cortina's CS7542 scalable digital home multi-service
platform.
- Entropic and MobileTREC Collaborate on Reverse Mass
Notification Alert Solution Leveraging the Consumer STB
Platform: In cooperation with MobileTREC, Entropic showed
at CES 2013, how its latest generation of high-performance STB SoC
solutions, the TSC17x family, can be used to develop a next
generation Machine-to-Machine (M2M)-based reverse mass notification
alert solution for public safety agencies that leverages the cable
STB platform.
- Partnerships in Automatic Content Recognition (ACR)
with Flingo and Audible Magic: Entropic partnered with
Flingo and Audible Magic to show how its STB SoC platform, embedded
with ACR software, can drive new opportunities for service
providers and advertisers to monetize the STB platform by obtaining
higher ARPU and finer granularity and insight into viewership
trends.
For More Information
Entropic management will be holding a conference call today,
February 5, 2013, at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time
to discuss the Company's results for the fourth quarter of fiscal
2012, and to provide guidance for the first quarter of fiscal 2013.
You may access the conference call via any of the following:
| Teleconference: |
617-213-4855 |
| |
|
| Access Code: |
89426579 |
| |
|
| Web Broadcast: |
http://events.entropic.com/ |
| |
|
| Replay: |
617-801-6888 |
| |
|
| Replay Passcode: |
58229857 |
About Entropic
Entropic (Nasdaq:ENTR) is a world leader in semiconductor
solutions for the connected home. The Company transforms how
traditional HDTV broadcast and IP-based streaming video content is
seamlessly, reliably, and securely delivered, processed, and
distributed into and throughout the home. Entropic's
next-generation Set-top Box (STB) System-on-a-Chip (SoC) and
Connectivity solutions enable Pay-TV operators to offer consumers
more captivating whole-home entertainment experiences by
transforming the way digital entertainment is delivered, connected
and consumed – in the home and on the go. For more information,
visit Entropic at: www.entropic.com.
The Entropic 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 fair value adjustments related to
contingent consideration payable in the acquisition of PLX
Technology assets, the cash tax difference and the restructuring
charge.
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 transformation
into a broad-based semiconductor company in Connected Home
Entertainment, the impact of new product design wins, market
penetration, continued and/or future revenue, earnings and product
sales growth and gross margin improvement, and the factors that may
contribute to such growth and improvement 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 High Definition (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 September 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.
Copyright © 2013 Entropic. All rights reserved. All other
product or company names mentioned are used for identification
purposes only and may be trademarks of their respective owners.
| |
| ENTROPIC
COMMUNICATIONS, INC. |
| GAAP Condensed
Consolidated Statements of Operations |
| (In thousands, except
for per share information) |
| |
|
|
|
|
|
| |
Three Months
Ended |
Year
Ended |
| |
December 31,
2012 |
September 30,
2012 |
December 31,
2011 |
December 31,
2012 |
December 31,
2011 |
| |
(unaudited) |
(unaudited) |
(unaudited) |
|
|
| |
|
|
|
|
|
| Net revenues |
$ 89,698 |
$ 89,825 |
$ 56,169 |
$ 321,678 |
$ 240,628 |
| Cost of net revenues |
45,789 |
45,778 |
25,341 |
157,675 |
107,922 |
| Gross profit |
43,909 |
44,047 |
30,828 |
164,003 |
132,706 |
| Operating expenses: |
|
|
|
|
|
| Research and development |
29,139 |
28,072 |
17,626 |
98,353 |
60,065 |
| Sales and marketing |
6,327 |
6,966 |
4,373 |
25,313 |
17,569 |
| General and administrative |
5,882 |
5,718 |
4,425 |
25,474 |
14,568 |
| Amortization of intangibles |
930 |
930 |
-- |
2,575 |
-- |
| Restructuring charges |
897 |
-- |
-- |
897 |
-- |
| Total operating expenses |
43,175 |
41,686 |
26,424 |
152,612 |
92,202 |
| Income from operations |
734 |
2,361 |
4,404 |
11,391 |
40,504 |
| Loss related to equity method
investment |
(779) |
(799) |
(700) |
(3,315) |
(791) |
| Other income, net |
34 |
31 |
278 |
601 |
904 |
| Income (loss) before income taxes |
(11) |
1,593 |
3,982 |
8,677 |
40,617 |
| Income tax (benefit) provision |
(57) |
1,185 |
1,674 |
4,157 |
14,053 |
| Net income |
$ 46 |
$ 408 |
$ 2,308 |
$ 4,520 |
$ 26,564 |
| |
|
|
|
|
|
| Net income per share - basic |
$ 0.00 |
$ 0.00 |
$ 0.03 |
$ 0.05 |
$ 0.31 |
| Net income per share - diluted |
$ 0.00 |
$ 0.00 |
$ 0.03 |
$ 0.05 |
$ 0.30 |
| Weighted average number of shares used to
compute net income per share - basic |
88,912 |
88,399 |
87,017 |
88,164 |
86,258 |
| Weighted average number of shares used to
compute net income per share - diluted |
91,710 |
90,885 |
88,600 |
90,364 |
89,018 |
| |
| ENTROPIC
COMMUNICATIONS, INC. |
| GAAP Condensed
Consolidated Balance Sheets |
| (In
thousands) |
| |
|
|
|
| |
December 31 |
September 30 |
December 31, |
| |
2012 |
2012 |
2011 |
| |
|
(unaudited) |
|
| ASSETS |
|
|
|
| Current assets: |
|
|
|
| Cash and cash equivalents |
$ 17,206 |
$ 22,511 |
$ 20,193 |
| Marketable securities |
79,981 |
90,560 |
91,625 |
| Accounts receivable |
41,847 |
36,104 |
25,896 |
| Inventory |
26,395 |
39,532 |
20,253 |
| Deferred tax assets, current |
7,157 |
13,658 |
13,565 |
| Prepaid expenses and other current
assets |
11,988 |
23,323 |
9,927 |
| Total current assets |
184,574 |
225,688 |
181,459 |
| Property and equipment, net |
17,629 |
14,969 |
11,250 |
| Long-term marketable securities |
71,748 |
53,255 |
104,708 |
| Intangible assets, net |
46,997 |
49,953 |
-- |
| Deferred tax assets, long-term |
19,255 |
9,953 |
9,600 |
| Goodwill |
4,664 |
4,664 |
-- |
| Other long-term assets |
8,683 |
9,501 |
11,542 |
| Total assets |
$ 353,550 |
$ 367,983 |
$ 318,559 |
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
| Current liabilities: |
|
|
|
| Accounts payable |
$ 11,380 |
$ 20,083 |
$ 11,559 |
| Accrued expenses and other current
liabilities |
8,067 |
16,005 |
4,078 |
| Accrued payroll and benefits |
9,474 |
13,057 |
3,835 |
| Total current liabilities |
28,921 |
49,145 |
19,472 |
| Deferred rent |
683 |
727 |
1,098 |
| Other long-term liabilities |
1,281 |
1,307 |
196 |
| Stockholders' equity |
322,665 |
316,804 |
297,793 |
| Total liabilities and stockholders'
equity |
$ 353,550 |
$ 367,983 |
$ 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 |
Year
Ended |
| |
December 31,
2012 |
September 30,
2012 |
December 31,
2011 |
December 31,
2012 |
December 31,
2011 |
| |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
| GAAP net income |
$ 46 |
$ 408 |
$ 2,308 |
$ 4,520 |
$ 26,564 |
| Non-GAAP adjustments: |
|
|
|
|
|
| Stock-based compensation: |
|
|
|
|
|
| Cost of net revenues |
261 |
217 |
167 |
828 |
557 |
| Research and development |
1,874 |
2,030 |
1,675 |
7,428 |
6,272 |
| Sales and marketing |
609 |
675 |
541 |
2,288 |
1,986 |
| General and administrative |
1,091 |
1,283 |
938 |
4,273 |
3,932 |
| Total stock-based compensation |
3,835 |
4,205 |
3,321 |
14,817 |
12,747 |
| Acquisition-related items: |
|
|
|
|
|
| Amortization of intangible assets: |
|
|
|
|
|
| Cost of net revenues |
2,025 |
2,025 |
-- |
5,827 |
-- |
| Operating expenses |
930 |
930 |
-- |
2,575 |
-- |
| Transaction and integration costs |
61 |
183 |
1,415 |
4,545 |
1,415 |
| Loss related to equity method
investment |
779 |
799 |
700 |
3,315 |
791 |
| Adjustments to the fair value of PLX
acquisition contingent consideration |
201 |
230 |
-- |
431 |
-- |
| Income tax effects of pre-tax
adjustments |
(2,741) |
(2,930) |
(1,903) |
(11,029) |
(5,234) |
| Cash tax difference (1) |
1,534 |
1,899 |
4,368 |
7,891 |
18,975 |
| Restructuring charges (2) |
897 |
-- |
-- |
897 |
-- |
| Total of non-GAAP adjustments |
7,521 |
7,341 |
7,901 |
29,269 |
28,694 |
| Non-GAAP net income |
$ 7,567 |
$ 7,749 |
$ 10,209 |
$ 33,789 |
$ 55,258 |
| |
|
|
|
|
|
| Weighted average shares (basic) |
88,912 |
88,399 |
87,017 |
88,164 |
86,258 |
| Adjustment for dilutive shares |
2,798 |
2,486 |
1,583 |
2,200 |
2,760 |
| Weighted average shares (diluted) |
91,710 |
90,885 |
88,600 |
90,364 |
89,018 |
| |
|
|
|
|
|
| GAAP net income per share (basic) |
$ 0.00 |
$ -- |
$ 0.03 |
$ 0.05 |
$ 0.31 |
| Non-GAAP adjustments detailed above |
0.08 |
0.09 |
0.09 |
0.32 |
0.31 |
| Non-GAAP net income per share
(diluted) |
$ 0.08 |
$ 0.09 |
$ 0.12 |
$ 0.37 |
$ 0.62 |
| |
|
|
|
|
|
| (1) The Company's non-GAAP net
income per share is calculated using the cash tax rate of 13%, 22%,
and (8%) for the three month periods ended December 31, 2012,
September 30, 2012, and December 31, 2011, respectively. The
Company's non-GAAP net income per share is calculated using the
cash tax rate of 18% and 1% for the years ended December 31, 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
December 31, 2012, September 30, 2012, and December 31, 2011 was
approximately 518%, 74%, and 42%, respectively. The Company's
effective tax rate used for the purposes of calculating GAAP net
income for the years ended December 31, 2012 and 2011 was
approximately 48% and 35%, respectively. |
| |
|
|
|
|
|
| (2) In November, 2012, we
incurred a restructuring charge of $0.9 million pursuant to a plan
to rebalance our operations in an attempt to leverage synergies
from our acquisitions. This plan resulted in a reduction of our
personnel by 40 employees or approximately 6% of our
workforce. |
CONTACT: Investor 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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