Restructuring Plan Designed to Accelerate Path to
Profitability; Annualized Cost Savings of Approximately $24
Million
Company Lowers Guidance Range for Q2 2014
Conference Call to be Webcast Today at 2:00 p.m.
PT/ 5:00 p.m. ET
Entropic (Nasdaq:ENTR), a world leader in semiconductor solutions
for the connected home, today announced a plan designed to sharpen
its engineering and research and development (R&D) focus and
increase the efficiency of its global operations. The initiative
calls for a closing and consolidation of several global facilities
impacting approximately 23 percent of Entropic's global headcount.
Through these efforts, Entropic will seek to align its cost
structure around providing more focused engineering, R&D and
product development programs, deliver improved performance through
a stronger operating profile and create value for its
shareholders.
Today's actions, which are expected to be substantially
completed by the fourth quarter of 2014, will place a higher
concentration of engineering, R&D and product development
efforts in San Diego, Irvine and San Jose, California, with
specialized and local efforts maintained in Shanghai and Shenzhen,
China and Belfast, Northern Ireland. Entropic will close major
engineering sites in Austin, Texas; Israel; India; and Taiwan. By
consolidating sites, Entropic anticipates it will be able to reduce
product development complexity, create immediate operational
efficiencies, and lower structural overhead costs. Entropic offered
approximately 30 percent of the staff in the facilities closing an
opportunity to relocate to one of its California sites and expects
to have approximately 500 employees at year's end. Entropic is
offering transition assistance to those impacted by the
restructuring.
"Our actions today, while difficult to make as they affect our
team of dedicated, talented employees, will enable Entropic to
better target resources, improve short-term performance and
accelerate our path to profitability while maintaining the proper
level of investment in product development, the commercialization
of new products, and general customer and design-win support," said
Patrick Henry, president and chief executive officer, Entropic. "We
believe our restructuring and site consolidation plan will enable a
stronger Entropic that will be more focused on innovating silicon
and software solutions with greater speed and efficiency."
Beginning in the fourth quarter of 2014, Entropic expects to
realize approximately $6 million in quarterly savings, primarily in
operating expenses mainly related to personnel and facilities
expenses, with annualized savings in those same areas projected at
$24 million.
The Company expects to incur a total pre-tax restructuring
charge of approximately $5 million, of which roughly 75 percent is
expected to be cash expenditures.
Today, Entropic also announced it lowered its previously
announced financial guidance for the second quarter of 2014.
Entropic now expects revenue for the second quarter to be in the
range of $50 million to $51 million. The Company also lowered its
prior guidance for non-GAAP loss per share to approximately $0.13
for the same period, and lowered its guidance for GAAP loss per
share to approximately $0.23 for the same period.
For More Information
Entropic management will be holding a conference call today,
June 9, 2014 at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to
discuss the restructuring plan. You may access the conference call
via any of the following:
Teleconference: |
800-295-4740 |
Access Code: |
84474297 |
Web Broadcast: |
http://events.entropic.com/ |
Replay: |
888-286-8010 |
Replay Passcode: |
55968561 |
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
Management uses 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 Entropic's ongoing
operational performance. Non-GAAP earnings per share can be
reconciled to GAAP earnings per share by excluding the effects of
all forms of stock-based compensation, transaction and integration
costs related to the Company's prior acquisitions, amortization of
intangible assets, the loss related to equity method investment,
the impact of fair value adjustments related to contingent
consideration payable in the Company's acquisition of PLX
Technology assets, the cash tax difference and restructuring
charges.
The non-GAAP financial measures disclosed by Entropic should not
be considered in isolation or as 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
Entropic 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 expected costs of the restructuring plan, the goals
and expected benefits of the restructuring plan, including the
operating expense reductions and engineering efficiencies,
Entropic's ability to make strategic investments and continue
product development, Entropic's growth opportunities and
expectations for future revenue and earnings per share. 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, risks
and uncertainties associated with estimating revenues and earnings
per share prior to Entropic closing its books and verifying such
information; Entropic's ability to successfully implement its
restructuring plan to leverage synergies and optimize its
resources; the impact of the restructuring plan on Entropic's
business, including a potential adverse effect on revenues and
Entropic's other financial results; unanticipated charges not
currently contemplated that may occur as a result of the
restructuring plan, Entropic's ability to continue to attract and
retain key engineering and management employees, Entropic's
dependence on a limited number of supply chain partners for the
manufacture of its products and other factors that could affect its
ability to meet customer demand; Entropic's dependence on a limited
number of customers for a substantial portion of its revenues;
risks associated with adverse U.S. and international economic
conditions; the ability of Entropic's 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 Entropic's
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 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
March 31, 2014. 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.
CONTACT: Entropic Investor Contact:
Debra Hart
+1 858-768-3852
debra.hart@entropic.com
Entropic Media/Industry Analyst Contact:
Chris Fallon
+1 858-768-3827
chris.fallon@entropic.com
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