Fourth Quarter Revenue of $57.9 million, Annual
Revenue of $259.4 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, 2013.
Entropic reported fourth quarter net revenues of $57.9 million, up
3% compared with $56.4 million in the third quarter of 2013.
In accordance with U.S. generally accepted accounting principles
(GAAP), the Company's fourth quarter net loss was $11.9 million, or
$0.13 per share (basic and diluted). This compares with GAAP net
loss of $11.9 million, or $0.13 per share (basic and diluted) in
the third quarter of 2013.
Non-GAAP net loss in the fourth quarter was $5.6 million, or
$0.06 per share (diluted), compared to non-GAAP net loss of $5.6
million, or $0.06 per share (diluted) in the third quarter of
2013.
Net revenues for the year ended December 31, 2013 were $259.4
million, a decrease of 19% from the $321.7 million reported for the
year ended December 31, 2012. Net loss computed in accordance with
GAAP for the year ended December 31, 2013 was $66.2 million, or
$0.73 per share (basic and diluted), compared with GAAP net income
of $4.5 million, or $0.05 per share (diluted), for the year ended
December 31, 2012.
Non-GAAP net loss for the year ended ended December 31, 2013 was
$10.4 million, or $0.11 per share (diluted), compared to non-GAAP
net income of $33.8 million, or $0.37 per share (diluted) for the
year ended December 31, 2012.
"The fourth quarter played out largely as expected," said
Patrick Henry, president and chief executive officer, Entropic. "In
2014, we remain keenly focused on successfully executing the
transformation of the Company and ramping our pipeline of
design-wins to drive long-term growth for our shareholders."
|
|
|
|
Three Months
Ended |
Years
Ended |
|
|
|
|
|
|
(In millions, except per share
data) |
December 31,
2013 |
September 30,
2013 |
December 31,
2012 |
December 31,
2013 |
December 31,
2012 |
Net revenues |
$ 57.9 |
$ 56.4 |
$ 89.7 |
$ 259.4 |
$ 321.7 |
GAAP net (loss) income |
$ (11.9) |
$ (11.9) |
$ — |
$ (66.2) |
$ 4.5 |
GAAP net (loss) income per share
(basic and diluted) |
$ (0.13) |
$ (0.13) |
$ 0.00 |
$ (0.73) |
$ 0.05 |
Non-GAAP net (loss)
income1 |
$ (5.6) |
$ (5.6) |
$ 7.6 |
$ (10.4) |
$ 33.8 |
Non-GAAP net (loss) income per share1
(diluted) |
$ (0.06) |
$ (0.06) |
$ 0.08 |
$ (0.11) |
$ 0.37 |
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
Awards and Milestones
- Awards: Entropic Received Top Honors in the 2013 Fierce
Innovation Awards for its c.LINK® 1.1+ Broadband Access Technology
in the Last Mile/Edge/Access Category
- Multimedia over Coax Alliance (MoCA®) Milestones:
- Entropic was First to Announce Officially-Approved MoCA 2.0
Golden Nodes
- Wistron NeWeb Corporation (WNC) Announced it Shipped Over
10-Million Entropic-Based MoCA Units
Technology Innovation
- Entropic Unveiled its Fully-Integrated Set-Top Box Solutions
for Satellite Receivers and IP-Clients, which Integrates
High-Efficiency Video Codec (HEVC) Decoding, MoCA 2.0, Dual
DVB-S/S2 Demodulators using Full-Band Capture Satellite Tuning and
3D Graphics Acceleration
- Entropic Introduced its c.LINK Broadband Access Solution to
Operators in India to Deliver Greater Bandwidth and Improved
Channel Performance With Lower Overall System Costs
New Deployments
- DIRECTV: Entropic and WNC Announced the World's First Digital
Channel Stacking Switch (dCSS) Solution Deployed by DIRECTV to
Revolutionize Installation in Multi-Dwelling Units (MDUs) and
Hotels
- SKY: Entropic and Unitron Group Announced the Unitron Johansson
Multi-switch, Powered by Entropic's CSS Technology Gives Sky
Subscribers in UK and Ireland MDUs Full Access to Sky+
Services
- Major India Direct Broadcast Satellite Operator: Entropic and
Inverto Announced a Major Satellite Operator in India has Deployed
Inverto's Entropic-Based Unicable Multi-Switch for Support of MDU
Subscribers
New Designs
- Novabase Digital TV Technologies and Entropic Developed the
First HDMI IP-Set-Top Box (IP-STB) Stick with Broadcast Quality
Security
- Entropic and TVSTORM Unveiled an Android-Based IP-STB with
Miracast Functionality
- Entropic and Prime Electronics & Satellitics Inc.
Introduced the World's First Single-Chip CSS Low Noise Block
Solution
- Entropic and Asheridge Communications, a Member of the
International Teleste Group, Introduced the echoBox Wi-Fi Home
Networking Hub
New Reference Designs
- Entropic Unveiled the First MoCA 2.0 USB Bus-Powered Adapter
which is a Small Form Factor, Low Power MoCA 2.0 Solution for OEMs
to Design High Performance, Cost Competitive Products with Lower
Overall System Costs
- Entropic and Silicon Labs Developed the First MoCA/Silicon
Tuner Reference Design to Bring Broadband Directly to the TV via a
Single In-Home Coaxial Cable
New Partnerships
- Entropic Announced it will Embed NAGRA NOCS 3 Security Into Its
Portfolio of Advanced Platform Set-Top Box System-on-a-Chip (STB
SoC) Solutions
- Entropic Announced it Completed Integration of Cryptography
Research CryptoFirewall™ Security Cores into its STB SoC
Platform
For More Information
Entropic management will be holding a conference call today,
February 5, 2014 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
2013, and to provide guidance for the first quarter of 2014. You
may access the conference call via any of the following:
Teleconference: |
888-713-4215 |
Access Code: |
83494932 |
Web Broadcast: |
http://events.entropic.com/ |
Replay: |
888-286-8010 |
Replay Passcode: |
78808374 |
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,
please visit Entropic at: www.entropic.com, read our blog Entropic
Topics, or get social with us at @Entropic_News, or on Facebook,
Google+, YouTube and LinkedIn.
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, PLX Technology and Mobius
Semiconductor transactions, amortization of intangible assets,
the loss related to equity method investment, the impairment of
investment, the impact of fair value adjustments related to
contingent consideration payable in the acquisition of PLX
Technology assets, deferred tax asset valuation allowance, 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 the transformation of the Company, the ramping
and impact of design-wins, and our long term growth. 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 and, ultimately, service providers 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, PLX Technology and Mobius
Semiconductor 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, 2013. 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© 2014 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,
2013 |
September 30,
2013 |
December 31,
2012 |
December 31,
2013 |
December 31,
2012 |
|
(unaudited) |
(unaudited) |
(unaudited) |
|
|
|
|
|
|
|
|
Net revenues |
$ 57,931 |
$ 56,376 |
$ 89,698 |
$ 259,376 |
$ 321,678 |
Cost of net revenues |
30,137 |
28,863 |
45,789 |
134,974 |
157,675 |
Gross profit |
27,794 |
27,513 |
43,909 |
124,402 |
164,003 |
Operating expenses: |
|
|
|
|
|
Research and development |
29,622 |
28,510 |
29,139 |
114,536 |
98,353 |
Sales and marketing |
6,273 |
6,137 |
6,327 |
24,882 |
25,313 |
General and administrative |
5,125 |
5,751 |
5,882 |
22,415 |
25,474 |
Amortization of
intangibles |
444 |
443 |
930 |
2,312 |
2,575 |
Restructuring charges |
-- |
(69) |
897 |
1,694 |
897 |
Total operating expenses |
41,464 |
40,772 |
43,175 |
165,839 |
152,612 |
(Loss) income from operations |
(13,670) |
(13,259) |
734 |
(41,437) |
11,391 |
Loss related to equity method
investment |
-- |
-- |
(779) |
(1,115) |
(3,315) |
Impairment of investment |
-- |
-- |
-- |
(4,780) |
-- |
Other income, net |
435 |
464 |
34 |
1,582 |
601 |
(Loss) income before income taxes |
(13,235) |
(12,795) |
(11) |
(45,750) |
8,677 |
Income tax (benefit) provision |
(1,333) |
(860) |
(57) |
20,404 |
4,157 |
Net (loss) income |
$ (11,902) |
$ (11,935) |
$ 46 |
$ (66,154) |
$ 4,520 |
|
|
|
|
|
|
Net (loss) income per share - basic and
diluted |
$ (0.13) |
$ (0.13) |
$ 0.00 |
$ (0.73) |
$ 0.05 |
Net (loss) income per share - diluted |
$ (0.13) |
$ (0.13) |
$ 0.00 |
$ (0.73) |
$ 0.05 |
Weighted average number of shares used to
compute net (loss) income per share - basic |
91,293 |
91,069 |
88,912 |
90,494 |
88,164 |
Weighted average number of shares used to
compute net (loss) income per share - diluted |
91,293 |
91,069 |
91,710 |
90,494 |
90,364 |
|
ENTROPIC
COMMUNICATIONS, INC. |
GAAP Condensed
Consolidated Balance Sheets |
(In
thousands) |
|
|
|
|
|
December 31,
2013 |
September 30,
2013 |
December 31,
2012 |
|
(unaudited) |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 16,298 |
$ 27,901 |
$ 17,206 |
Marketable securities |
71,922 |
59,549 |
79,981 |
Accounts receivable |
30,204 |
40,797 |
41,847 |
Inventory |
13,503 |
15,116 |
26,395 |
Deferred tax assets, current |
51 |
13 |
7,157 |
Prepaid expenses and other current
assets |
18,739 |
17,405 |
11,988 |
Total current assets |
150,717 |
160,781 |
184,574 |
Property and equipment, net |
17,994 |
17,928 |
17,629 |
Long-term marketable securities |
69,534 |
73,894 |
71,748 |
Intangible assets, net |
47,326 |
50,487 |
46,997 |
Deferred tax assets, long-term |
-- |
-- |
19,255 |
Goodwill |
4,688 |
4,688 |
4,664 |
Other long-term assets |
5,001 |
6,356 |
8,683 |
Total assets |
$ 295,260 |
$ 314,134 |
$ 353,550 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 8,601 |
$ 14,956 |
$ 11,380 |
Accrued expenses and other current
liabilities |
6,318 |
7,158 |
8,067 |
Accrued payroll and benefits |
7,077 |
8,156 |
9,474 |
Total current liabilities |
21,996 |
30,270 |
28,921 |
Deferred rent |
1,751 |
2,178 |
683 |
Other long-term liabilities |
1,688 |
1,586 |
1,281 |
Stockholders' equity |
269,825 |
280,100 |
322,665 |
Total liabilities and stockholders'
equity |
$ 295,260 |
$ 314,134 |
$ 353,550 |
|
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,
2013 |
September 30,
2013 |
December 31,
2012 |
December 31,
2013 |
December 31,
2012 |
|
(unaudited) |
(unaudited) |
(unaudited) |
|
|
GAAP net (loss) income |
$ (11,902) |
$ (11,935) |
$ 46 |
$ (66,154) |
$ 4,520 |
Non-GAAP adjustments: |
|
|
|
|
|
Stock-based compensation: |
|
|
|
|
|
Cost of net revenues |
203 |
227 |
261 |
861 |
828 |
Research and development |
3,099 |
2,766 |
1,874 |
9,829 |
7,428 |
Sales and marketing |
561 |
510 |
609 |
1,885 |
2,288 |
General and administrative |
1,090 |
1,089 |
1,091 |
4,199 |
4,273 |
Total stock-based compensation |
4,953 |
4,592 |
3,835 |
16,774 |
14,817 |
Amortization of intangible assets: |
|
|
|
|
|
Cost of net revenues |
2,717 |
2,425 |
2,025 |
9,598 |
5,827 |
Operating expenses |
444 |
443 |
930 |
2,312 |
2,575 |
Transaction and integration costs |
-- |
-- |
61 |
244 |
4,545 |
Loss related to equity method
investment |
-- |
-- |
779 |
1,115 |
3,315 |
Impairment of investment |
-- |
-- |
-- |
4,780 |
-- |
Adjustments to the fair value of PLX
acquisition contingent consideration |
-- |
-- |
201 |
(131) |
431 |
Income tax effects of pre-tax
adjustments |
-- |
-- |
(3,055) |
-- |
(11,342) |
Cash tax difference (1) |
(1,814) |
(1,093) |
1,848 |
(7,278) |
8,204 |
Deferred tax asset valuation
allowance |
-- |
-- |
-- |
26,695 |
-- |
Restructuring charges (2) |
-- |
(69) |
897 |
1,694 |
897 |
Total of non-GAAP adjustments |
6,300 |
6,298 |
7,521 |
55,803 |
29,269 |
Non-GAAP net (loss)
income |
$ (5,602) |
$ (5,637) |
$ 7,567 |
$ (10,351) |
$ 33,789 |
|
|
|
|
|
|
Weighted average shares (basic) |
91,293 |
91,069 |
88,912 |
90,494 |
88,164 |
Adjustment for dilutive shares |
-- |
-- |
2,798 |
-- |
2,200 |
Weighted average shares (diluted) |
91,293 |
91,069 |
91,710 |
90,494 |
90,364 |
|
|
|
|
|
|
GAAP net (loss) income per share (basic) |
$ (0.13) |
$ (0.13) |
$ 0.00 |
$ (0.73) |
$ 0.05 |
Non-GAAP adjustments detailed above |
0.07 |
0.07 |
0.08 |
0.62 |
0.32 |
Non-GAAP net (loss) income per share
(diluted) |
$ (0.06) |
$ (0.06) |
$ 0.08 |
$ (0.11) |
$ 0.37 |
|
(1) The Company's non-GAAP net
(loss) income per share is calculated using the cash tax rate of
(9)%, (4)%, and 13% for the three month periods ended December 31,
2013, September 30, 2013, and December 31, 2012,
respectively. The Company's non-GAAP net (loss) income per
share is calculated using the cash tax rate of (11)% and 18% for
the years ended December 31,2013 and 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 valuation allowances,
the utilization of research and development tax credits, and the
utilization of loss carryforwards which have had 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 December 31, September 30, 2013, and December 31,
2012 was approximately 10%, 7%, and (NM), respectively. The
Company's effective tax rate used for the purposes of calculating
GAAP net (loss) income for the years ended December 31, 2013 and
2012 was approximately (45)% and 48%, respectively. |
|
|
|
|
|
|
|
|
|
|
(2) In June, 2013, we incurred a
restructuring charge of $1.8 million pursuant to a plan to
rebalance our operations in an attempt to leverage synergies from
our acquisitions and refine our business operations. This plan
resulted in a reduction of our personnel by 66 employees, or
approximately 10% of our workforce. 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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