Entropic Reports First Quarter 2014 Results
May 01 2014 - 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, 2014. Entropic reported first
quarter net revenues of $55.7 million. This compares to net
revenues of $57.9 million in the fourth quarter of 2013, and $74.5
million in the first quarter of 2013.
In accordance with U.S. generally accepted accounting principles
(GAAP), the Company's first quarter net loss was $23.3 million, or
$(0.26) 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 fourth quarter of 2013, and net loss of $2.4 million, or
$(0.03) per share (basic and diluted) in the first quarter of
2013.
Non-GAAP net loss in the first quarter was $15.3 million, or
$(0.17) per share (basic and diluted), compared to non-GAAP net
loss of $5.6 million, or $(0.06) per share (basic and diluted) in
the fourth quarter of 2013, and non-GAAP net income of $0.3
million, or $0.00 (basic and diluted), in the first quarter of
2013.
"During the first quarter, we extended our technology leadership
and commitment to the connected home entertainment market by
demonstrating several new products including our integrated SoC
plus MoCA with HEVC decoding and full band capture front end
capabilities, our second-generation single-chip MoCA 2.0 system
solution, and our second-generation digital channel stacking switch
solution," said Patrick Henry, president and chief executive
officer, Entropic. "We remain focused on operational and
engineering execution, driving our next set of service provider
deployments, and assisting our OEM and service provider partners
with the implementation of their IP video strategies."
|
|
|
Three Months
Ended |
(In millions, except per share
data) |
March 31,
2014 |
December 31,
2013 |
March 31,
2013 |
Net revenues |
$ 55.7 |
$ 57.9 |
$ 74.5 |
GAAP net loss |
$ (23.3) |
$ (11.9) |
$ (2.4) |
GAAP net loss per share (basic and
diluted) |
$ (0.26) |
$ (0.13) |
$ (0.03) |
Non-GAAP net (loss)
income1 |
$ (15.3) |
$ (5.6) |
$ 0.3 |
Non-GAAP net (loss) income per share1
(diluted) |
$ (0.17) |
$ (0.06) |
$ 0.00 |
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
Executive News
- Entropic Announced Changes to its Engineering and Technology
Management Teams with Vahid Manian Being Named Senior Vice
President of Global Engineering and Operations and Dr. Michael
Farese Assuming the Role of Chief Technology Officer
Awards and Milestones
- Entropic Reached a Major Multimedia over Coax Alliance (MoCA®)
2.0 Milestone, with the NETGEAR® WM2500RP MoCA-to-WiFi® Extender,
Powered by Entropic's EN2710 MoCA 2.0 Solution, Being the First
MoCA 2.0 Certified Product Available in the Market
- Entropic Announced it Shipped More Than Five Million Set-Top
Box (STB) System-on-a-Chip (SoC) Solutions for North American Cable
Operator HD-DTAs (High-Definition Digital Transport Adapters)
Technology Innovation
- Entropic Introduced its EN7305, A Fully-Integrated,
Cost-Optimized IP-Client System-on-a-Chip (SoC) that Enables
Highest Quality Video Delivery and Playback with HEVC and MoCA
2.0
- Entropic Brought MoCA Home Networking into the China Market
with the Introduction of the EN231x
- Entropic Announced Availability of Its Open RDK Platform,
Leveraging the OpenEmbedded Technology and the Yocto Project™
Development Environment, to Enable Operators to Minimize Software
Diversity in their Reference Design Kit (RDK) STB
Implementations
New Deployments
- Entropic and MTI Deployed Advanced Channel Stacking Switch
Solutions into the Middle East Satellite Market
New Designs
- Eagle Kingdom Technologies Selected Entropic's SoC for the
World's First Hybrid PowerPlug STB
- BigWhite Network Chose Entropic's MoCA Technology for Reliable
Home Networking in China
- China OEMs, Jetnet, Guangda and Yitong, Announced Adoption of
Entropic's c.LINK 1.1+ Broadband Access Ethernet-over-Coax (EoC)
Solution
New
Partnerships
- Entropic Completed Conax Certification for its Advanced STB SoC
Solutions
- Entropic and UpdateLogic Leveraged Entropic's Open RDK Platform
to Integrate Device Management Services on STBs in Record Time
- Entropic and Opera Collaborated on the OpenEmbedded Technology
to Bring Blink-Based Opera Software Development Kit (SDK) to RDK
Implementations on Any STB
For More Information
Entropic management will be holding a conference call today,
May 1, 2014 at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time
to discuss the Company's results for the first quarter of fiscal
2014, and to provide guidance for the second quarter. You may
access the conference call via any of the following:
Teleconference: |
888-679-8035 |
Access Code: |
44264831 |
Web Broadcast: |
http://events.entropic.com/ |
Replay: |
|
888-286-8010 |
Replay Passcode: |
94915340 |
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, 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 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 technology leadership, our operational and
engineering execution and our ability to drive service provider
deployments. 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; and other factors
discussed in the "Risk Factors" section of Entropic's Annual Report
on Form 10-K for the year ended December 31, 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 |
|
March 31, 2014 |
December 31,
2013 |
March 31, 2013 |
|
(unaudited) |
(unaudited) |
(unaudited) |
|
|
|
|
Net revenues |
$ 55,655 |
$ 57,931 |
$ 74,457 |
Cost of net revenues |
29,593 |
30,137 |
39,618 |
Gross profit |
26,062 |
27,794 |
34,839 |
Operating expenses: |
|
|
|
Research and development |
35,266 |
29,622 |
28,070 |
Sales and marketing |
7,445 |
6,273 |
6,455 |
General and administrative |
6,132 |
5,125 |
6,083 |
Amortization of
intangibles |
443 |
444 |
930 |
Total operating expenses |
49,286 |
41,464 |
41,538 |
Loss from operations |
(23,224) |
(13,670) |
(6,699) |
Loss related to equity method
investment |
-- |
-- |
(780) |
Other income, net |
81 |
435 |
428 |
Loss before income taxes |
(23,143) |
(13,235) |
(7,051) |
Income tax provision (benefit) |
110 |
(1,333) |
(4,647) |
Net loss |
$ (23,253) |
$ (11,902) |
$ (2,404) |
|
|
|
|
Net loss per share - basic and diluted |
$ (0.26) |
$ (0.13) |
$ (0.03) |
Weighted average number of shares used to
compute net loss per share - basic and diluted |
89,705 |
91,293 |
89,304 |
|
ENTROPIC
COMMUNICATIONS, INC. |
GAAP Condensed
Consolidated Balance Sheets |
(In
thousands) |
|
|
|
|
|
March 31, 2014 |
December 31,
2013 |
March 31, 2013 |
|
(unaudited) |
(unaudited) |
(unaudited) |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 11,453 |
$ 16,298 |
$ 22,546 |
Marketable securities |
94,821 |
71,922 |
69,696 |
Accounts receivable |
33,726 |
30,204 |
45,055 |
Inventory |
14,479 |
13,503 |
17,358 |
Deferred tax assets,
current |
51 |
51 |
8,581 |
Prepaid expenses and other
current assets |
18,706 |
18,739 |
14,158 |
Total current assets |
173,236 |
150,717 |
177,394 |
Property and equipment, net |
18,174 |
17,994 |
19,483 |
Long-term marketable securities |
30,740 |
69,534 |
85,326 |
Intangible assets, net |
44,166 |
47,326 |
43,839 |
Deferred tax assets, long-term |
-- |
-- |
23,550 |
Goodwill |
4,688 |
4,688 |
3,937 |
Other long-term assets |
4,767 |
5,001 |
8,723 |
Total assets |
$ 275,771 |
$ 295,260 |
$ 362,252 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 15,225 |
$ 8,601 |
$ 19,161 |
Accrued expenses and other
current liabilities |
5,711 |
6,318 |
7,640 |
Accrued payroll and
benefits |
8,489 |
7,077 |
8,605 |
Total current liabilities |
29,425 |
21,996 |
35,406 |
Deferred rent |
1,858 |
1,751 |
1,289 |
Other long-term liabilities |
1,848 |
1,688 |
1,552 |
Stockholders' equity |
242,640 |
269,825 |
324,005 |
Total liabilities and
stockholders' equity |
$ 275,771 |
$ 295,260 |
$ 362,252 |
|
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, 2014 |
December 31,
2013 |
March 31, 2013 |
|
(unaudited) |
(unaudited) |
(unaudited) |
GAAP net loss |
$ (23,253) |
$ (11,902) |
$ (2,404) |
Non-GAAP adjustments: |
|
|
|
Stock-based compensation: |
|
|
|
Cost of net revenues |
167 |
203 |
201 |
Research and development |
3,202 |
3,099 |
1,989 |
Sales and marketing |
562 |
561 |
298 |
General and administrative |
937 |
1,090 |
966 |
Total stock-based
compensation |
4,868 |
4,953 |
3,454 |
Amortization of intangible
assets: |
|
|
|
Cost of net revenues |
2,717 |
2,717 |
2,228 |
Operating expenses |
443 |
444 |
930 |
Loss related to equity method
investment |
-- |
-- |
780 |
Adjustments to the fair value
of PLX acquisition contingent consideration |
-- |
-- |
12 |
Income tax effects of pre-tax
adjustments |
-- |
-- |
(2,591) |
Cash tax difference (1) |
(113) |
(1,814) |
(2,097) |
Total of non-GAAP
adjustments |
7,915 |
6,300 |
2,716 |
Non-GAAP net (loss)
income |
$ (15,338) |
$ (5,602) |
$ 312 |
|
|
|
|
Weighted average shares (basic) |
89,705 |
91,293 |
89,304 |
Adjustment for dilutive
shares |
-- |
-- |
2,875 |
Weighted average shares (diluted) |
89,705 |
91,293 |
92,179 |
|
|
|
|
GAAP net loss per share (basic) |
$ (0.26) |
$ (0.13) |
$ (0.03) |
Non-GAAP adjustments detailed
above |
0.09 |
0.07 |
0.03 |
Non-GAAP net (loss) income per share
(diluted) |
$ (0.17) |
$ (0.06) |
$ -- |
|
|
|
|
(1) The Company's non-GAAP net
(loss) income per share is calculated using the cash tax rate of
(1)%, (9)% and 12% for the three month periods ended March 31,
2014, December 31, 2013 and March 31, 2013, 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 for the three month periods
ended March 31, 2014, December 31, 2013 and March 31, 2013 was
approximately 0%, 10% and 66%, respectively. |
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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