Entropic Reports First Quarter 2013 Results
April 30 2013 - 4:05PM
Entropic (Nasdaq:ENTR), a world leader in semiconductor solutions
for the connected home, today reported its first quarter results
for the period ended March 31, 2013. Entropic reported first
quarter net revenues of $74.5 million. This compares to net
revenues of $89.7 million in the fourth quarter of 2012, and $59.1
million in the first quarter of 2012.
In accordance with U.S. generally accepted accounting principles
(GAAP), the Company's first quarter net loss was $2.4 million, or
($0.03) per share (basic and diluted). This compares with GAAP net
income of $0.0 million, or $0.00 per share (diluted) in the fourth
quarter of 2012, and $3.9 million, or $0.04 per share (diluted) in
the first quarter of 2012.
Non-GAAP net income in the first quarter was $0.3 million, or
$0.00 per share (diluted), compared to non-GAAP net income of $7.6
million, or $0.08 per share (diluted) in the fourth quarter of
2012, and $10.6 million, or $0.12 per share (diluted) in the first
quarter of 2012.
"2013 is a transitional year for Entropic; we are working to
develop and bring new and integrated products to market, improve
our gross margins and target key designs at Tier-1 operators," said
Patrick Henry, president and CEO, Entropic. "We've already made
significant progress towards these goals and continue on our
pursuit to be a leading global silicon supplier in the
multi-billion dollar connected home entertainment market."
|
Three
Months Ended |
(In millions, except per share
data) |
Mar. 31, 2013 |
Dec. 31, 2012 |
Mar. 31, 2012 |
Net revenues |
$74.5 |
$89.7 |
$59.1 |
GAAP net (loss)
income |
$(2.4) |
$0.0 |
$3.9 |
GAAP net (loss) income per share
(basic and diluted) |
$(0.03) |
$0.00 |
$0.04 |
|
|
|
|
Non-GAAP net income1 |
$0.3 |
$7.6 |
$10.6 |
Non-GAAP net income per
share1 (diluted) |
$0.00 |
$0.08 |
$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
Industry Accolades
- Finalist, 2013 Network Products Guide Award: Entropic was named
a finalist in the 8th Annual 2013 Network Products Guide "Hot
Companies and Best Products" Award.
Product Innovations
- Entropic Unveiled a Cost-Optimized Set-top Box (STB)
System-on-a-Chip (SoC) Solution for the Digital Transport Adapter
(DTA), Zapper, and IP-Client Markets: Entropic's new EN71xy family
leverages the ARM® architecture, and offers an increased focus on
security to meet operator demands while meeting stringent bill of
material (BOM) cost requirements.
- Entropic Brings the Highest Performance Ethernet-Over-Coax
(EoC) Broadband Access Solution to China: Entropic's latest c.LINK®
EoC solution (EN3681 Network Controller and EN3690 Customer Premise
Equipment) delivers the industry's highest performance, highest
density EoC solution in the smallest form factor. The technology
employs the first-ever multiple-channel EoC system; giving MSOs a
cost-effective architecture that enables the delivery of higher
data rates for more High-Definition (HD) video viewing experiences
across the multiscreen environment.
New Design Wins
- Coship: China's leading STB supplier Coship announced their
selection of Entropic's c.LINK 1.1 EoC solution for its two-way HD
cable STBs. By integrating c.LINK into its STB solutions, operators
can seamlessly roll-out advanced services as part of their Next
Generation Broadcasting (NGB) cable TV transformation plans.
- JiangSu Yinhe Electronics Co., Ltd. (Yinhe): Yinhe, a leading
manufacturer of digital television multimedia receivers, announced
they have integrated Entropic's c.LINK 1.1 Broadband Access
solution into its next-generation HD STBs. With Yinhe's
c.LINK-embedded EoC solution, China MSOs can roll out new
value-added video on demand (VOD) services via a cost-optimized
single-box solution.
- Geniatech: Geniatech, a leading original equipment manufacturer
(OEM) / original device manufacturer (ODM), plans to develop a USB
bus-powered Multimedia over Coax Alliance (MoCA®) adapter solution
for TVs and consumer electronics (CE) devices. Geniatech's new USB
bus-powered MoCA-to-Ethernet adapter will easily connect service
provider or CE devices to the MoCA backbone providing
Ethernet-grade connectivity without the need for a separate power
supply or the need to pull new CAT-5 (category 5) wiring throughout
the home.
- Telepath Technologies Co., Ltd.: Telepath, a fabless integrated
circuit (IC) solution provider in the multimedia broadcasting
market, announced the first Audio Video Coding Standard (AVS+) HD
STB platform for China Satellite, Cable/IP and Terrestrial
markets. The platform, integrated with Entropic's
latest STB SoC, the EN71xy family, offers a high performance,
cost-optimized solution that supports AVS-P16 (AVS+) and includes
advanced security components to ensure enhanced TV viewing
experiences.
- GlobalSat: GlobalSat, a leading Chinese manufacturer of
satellite and terrestrial products, announced its latest high
performance STB, the GOOSAT S1-50HD, would include Entropic's
latest STB SoC, the EN71xy family, to enable GlobalSat to deliver a
Linux-based HD zapper solution that can meet the complex needs of
today's Free-to-Air satellite service providers.
For More Information
Entropic management will be holding a conference call today,
April 30, 2013, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to
discuss the Company's results for the first quarter of fiscal 2013,
and to provide guidance for the second quarter. You may access the
conference call via any of the following:
Teleconference: |
888-713-4213 |
|
|
Access Code: |
71010368 |
|
|
Web Broadcast: |
http://events.entropic.com/ |
|
|
Replay: |
888-286-8010 |
|
|
Replay Passcode: |
88743931 |
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 progress toward 2013 goals and our pursuit
to be a leading global silicon supplier, 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 Annual Report on Form 10-K for the year ended December
31, 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 |
|
March 31, 2013 |
December 31,
2012 |
March 31, 2012 |
|
(unaudited) |
(unaudited) |
(unaudited) |
|
|
|
|
Net revenues |
$ 74,457 |
$ 89,698 |
$ 59,103 |
Cost of net revenues |
39,618 |
45,789 |
25,911 |
Gross profit |
34,839 |
43,909 |
33,192 |
Operating expenses: |
|
|
|
Research and development |
26,644 |
29,139 |
15,471 |
Sales and marketing |
7,881 |
6,327 |
5,045 |
General and administrative |
6,083 |
5,882 |
5,290 |
Amortization of
intangibles |
930 |
930 |
-- |
Restructuring charges |
-- |
897 |
-- |
Total operating expenses |
41,538 |
43,175 |
25,806 |
(Loss) income from operations |
(6,699) |
734 |
7,386 |
Loss related to equity method
investment |
(780) |
(779) |
(832) |
Other income, net |
428 |
34 |
290 |
(Loss) income before income taxes |
(7,051) |
(11) |
6,844 |
Income tax (benefit) provision |
(4,647) |
(57) |
2,951 |
Net (loss) income |
$ (2,404) |
$ 46 |
$ 3,893 |
|
|
|
|
Net (loss) income per share - basic and
diluted |
$ (0.03) |
$ 0.00 |
$ 0.04 |
Weighted average number of shares used to
compute net (loss) income per share - basic |
89,304 |
88,912 |
87,342 |
Weighted average number of shares used to
compute net (loss) income per share - diluted |
89,304 |
91,710 |
89,337 |
|
ENTROPIC
COMMUNICATIONS, INC. |
GAAP Condensed
Consolidated Balance Sheets |
(In
thousands) |
|
|
|
|
|
March 31, |
December 31, |
March 31, |
|
2013 |
2012 |
2012 |
|
(unaudited) |
|
(unaudited) |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 22,546 |
$ 17,206 |
$ 106,615 |
Marketable securities |
69,696 |
79,981 |
90,122 |
Accounts receivable |
45,055 |
41,847 |
25,776 |
Inventory |
17,358 |
26,395 |
20,217 |
Deferred tax assets,
current |
8,581 |
7,157 |
13,927 |
Prepaid expenses and other
current assets |
14,158 |
11,988 |
7,475 |
Total current assets |
177,394 |
184,574 |
264,132 |
Property and equipment, net |
19,483 |
17,629 |
10,637 |
Long-term marketable securities |
85,326 |
71,748 |
37,657 |
Intangible assets, net |
43,839 |
46,997 |
-- |
Deferred tax assets, long-term |
23,550 |
19,255 |
9,600 |
Goodwill |
3,937 |
4,664 |
-- |
Other long-term assets |
8,723 |
8,683 |
10,159 |
Total assets |
$ 362,252 |
$ 353,550 |
$ 332,185 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 19,161 |
$ 11,380 |
$ 13,972 |
Accrued expenses and other
current liabilities |
7,640 |
8,067 |
5,191 |
Accrued payroll and
benefits |
8,605 |
9,474 |
5,459 |
Total current liabilities |
35,406 |
28,921 |
24,622 |
Deferred rent |
1,289 |
683 |
971 |
Other long-term liabilities |
1,552 |
1,281 |
200 |
Stockholders' equity |
324,005 |
322,665 |
306,392 |
Total liabilities and stockholders'
equity |
$ 362,252 |
$ 353,550 |
$ 332,185 |
|
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 |
|
March 31, 2013 |
December 31,
2012 |
March 31, 2012 |
|
(unaudited) |
(unaudited) |
(unaudited) |
GAAP net (loss) income |
$ (2,404) |
$ 46 |
$ 3,893 |
Non-GAAP adjustments: |
|
|
|
Stock-based compensation: |
|
|
|
Cost of net revenues |
201 |
261 |
171 |
Research and development |
1,760 |
1,874 |
1,630 |
Sales and marketing |
527 |
609 |
419 |
General and administrative |
966 |
1,091 |
922 |
Total stock-based
compensation |
3,454 |
3,835 |
3,142 |
Amortization of intangible
assets: |
|
|
|
Cost of net revenues |
2,228 |
2,025 |
-- |
Operating expenses |
930 |
930 |
-- |
Transaction and integration
costs |
-- |
61 |
1,547 |
Loss related to equity method
investment |
780 |
779 |
832 |
Adjustments to the fair value
of PLX acquisition contingent consideration |
12 |
201 |
-- |
Income tax effects of pre-tax
adjustments |
(2,591) |
(2,741) |
(1,932) |
Cash tax difference (1) |
(2,097) |
1,534 |
3,156 |
Restructuring charges (2) |
-- |
897 |
-- |
Total of non-GAAP
adjustments |
2,716 |
7,521 |
6,745 |
Non-GAAP net income |
$ 312 |
$ 7,567 |
$ 10,638 |
|
|
|
|
Weighted average shares (basic) |
89,304 |
88,912 |
87,342 |
Adjustment for dilutive
shares |
2,874 |
2,798 |
1,995 |
Weighted average shares (diluted) |
92,178 |
91,710 |
89,337 |
|
|
|
|
GAAP net (loss) income per share (basic) |
$ (0.03) |
$ 0.00 |
$ 0.04 |
Non-GAAP adjustments detailed
above |
0.03 |
0.08 |
0.08 |
Non-GAAP net income per share
(diluted) |
$ 0.00 |
$ 0.08 |
$ 0.12 |
|
|
|
|
(1) The Company's non-GAAP net
income per share is calculated using the cash tax rate of 12%, 13%,
and 14% for the three month periods ended March 31, 2013, December
31, 2012, and March 31, 2012, 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 (loss) income for the three month
periods ended March 31, 2013, December 31, 2012, and March 31, 2012
was approximately 66%, (NM) and 43%, 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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