InterDigital, Inc. (NASDAQ:IDCC), a mobile and video technology
research and development company, today announced results for the
fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Financial Highlights
- Recurring revenue was $89.1 million,
compared to $77.5 million in fourth quarter 2019, a 15%
year-over-year increase, which was driven by six new patent license
agreements signed during 2020. Total revenue was $90.8 million,
compared to $102.2 million in fourth quarter 2019, which is
attributable to past sales from deals signed in fourth quarter
2019.
- Operating expenses were $87.7
million, compared to $76.9 million in fourth quarter 2019, due to
one-time charges of approximately $10.0 million, primarily related
to a non-cash charge for on-going patent portfolio management.
- Operating income was $3.1 million,
compared to $25.3 million in fourth quarter 2019.
- Net loss1 was $1.4 million, or
$(0.04) per diluted share compared to net income1 of $13.8 million,
or $0.44 per diluted share, in fourth quarter 2019.
- The company recorded $19.3 million
of cash provided by operating activities, compared to $17.5 million
in the same quarter last year.
- The company generated $10.4 million
of free cash flow in fourth quarter 2020, compared to free cash
flow2 of $8.7 million generated in fourth quarter 2019. The
increase was primarily driven by timing of collections under
fixed-fee agreements. Ending cash and short-term investments
totaled $926.6 million.
Full Year 2020 Financial Highlights
- Recurring revenue was $336.8
million, compared to $298.2 million for full year 2019, a 13%
year-over-year increase. This increase was driven by new licensing
activity. Total revenue was $359.0 million, compared to $318.9
million for full year 2019, a 13% year-over-year increase.
- Operating expenses were $303.8
million, compared to $281.1 million for full year 2019. Full year
2020 operating expenses included one-time charges incurred in
initiatives designed to drive ongoing cost savings.
- Operating income was $55.2 million,
compared to $37.8 million in full year 2019, a 46% increase year-
over- year.
- The current year tax benefit was
driven by discrete benefits of $20.9 million that primarily relate
to the expected amendment of a prior year tax return, as well as
the reversal of a tax reserve.
- Net income1 was $44.8 million
compared to $20.9 million, an increase of 114% year-over-year.
Earnings per share was $1.44 per diluted share compared to $0.66
per diluted share, an increase of 118% year-over-year.
- The company recorded $163.5 million
of cash provided by operating activities, compared to $89.4 million
provided by operating activities for full year 2019. The company
generated $121.1 million of free cash flow2 in full year 2020,
compared to $51.4 million for full year 2019. In each period, free
cash flow was largely driven by cash receipts from patent license
agreements, a portion of which relates to future periods.
“Despite uncertain macroeconomic conditions, we successfully
executed on our strategy and signed numerous license agreements,
which delivered very strong year-over-year growth for revenue and
earnings, noted William J. Merritt, President and CEO of
InterDigital. “We enter 2021 with strong licensing momentum and
remain confident in our long-term opportunities as we diligently
pursue agreements with remaining unlicensed companies in the
handset and consumer electronics business.”
“Our performance continues to show the incredible operating
leverage in our model, which saw a 13% increase year-over-year in
total revenue drive a 46% increase in year-over-year operating
income, and a 118% year-over-year increase in earnings per share,”
said Richard Brezski, CFO of InterDigital.
Conference Call Information
InterDigital will host a conference call on Thursday, February
18th, 2021 at 10:00 a.m. ET to discuss its fourth quarter and full
year 2020 financial performance and other company matters.
For a live Internet webcast of the conference call, visit
http://www.interdigital.com and click on the link to the live
webcast on the Investors page. The company encourages participants
to take advantage of the Internet option.
For telephone access to the conference call, dial +1 (800)
367-2403 within the United States and Canada or +1 (334) 777-6978
from outside the United States. Please call by 9:50 a.m. ET on
February 18th and give the operator conference ID number
5906102.
An Internet replay of the conference call will be available on
InterDigital’s website in the Investors section. In addition, a
telephone replay will be available from 1:00 p.m. ET February
18th through 1:00 p.m. ET February 23rd. To access the
recorded replay call, dial +1 (888) 203-1112 or +1 (719) 457-0820
and use the replay code 5906102.
About InterDigital®
InterDigital develops mobile and video technologies that are at
the core of devices, networks, and services worldwide. We solve
many of the industry’s most critical and complex technical
challenges, inventing solutions for more efficient broadband
networks, better video delivery, and richer multimedia experiences
years ahead of market deployment. InterDigital has licenses and
strategic relationships with many of the world’s leading technology
companies. Founded in 1972, InterDigital is listed on NASDAQ and is
included in the S&P MidCap 400® index.
InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit the InterDigital website:
www.interdigital.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended. Such statements include information regarding our
current beliefs, plans and expectations, including, without
limitation, our belief that we will continue to be able to execute
strongly on our business during the ongoing COVID-19 pandemic.
Words such as “believe,” “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” “forecast,” “goal,” “see,” and
variations of any such words or similar expressions are intended to
identify such forward-looking statements.
Forward-looking statements are subject to risks and
uncertainties. Actual outcomes could differ materially from those
expressed in or anticipated by such forward-looking statements due
to a variety of factors, including, without limitation, those
identified in this press release, as well as the following: (i)
unanticipated delays, difficulties or accelerations in the
execution of patent license agreements; (ii) our ability to
leverage our strategic relationships and secure new patent license
agreements on acceptable terms; (iii) our ability to enter into
sales and/or licensing partnering arrangements for certain of our
patent assets; (iv) our ability to enter into partnerships with
leading inventors and research organizations and identify and
acquire technology and patent portfolios that align with our
roadmap; (v) our ability to commercialize our technologies and
enter into customer agreements; (vi) the failure of the markets for
our current or new technologies and products to materialize to the
extent or at the rate that we expect; (vii) unexpected delays or
difficulties related to the development of our technologies and
products; (viii) changes in our interpretations of, and assumptions
and calculations with respect to the impact on us of, the Tax
Reform Act, as well as further guidance that may be issued
regarding the Tax Reform Act; (ix) failure to accurately forecast
the long-term value and costs of the Technicolor business or of
certain assets acquired in the transaction; (x) the resolution of
current legal or regulatory proceedings, including any awards or
judgments relating to such proceedings, additional legal or
regulatory proceedings, changes in the schedules or costs
associated with legal or regulatory proceedings or adverse rulings
in such legal or regulatory proceedings; (xi) changes or
inaccuracies in market projections; (xii) the potential effects
that the ongoing COVID-19 pandemic and/or corresponding
macroeconomic uncertainty could have on our financial position,
results of operations and cash flows; and (xiii) changes in our
business strategy.We undertake no duty to update publicly any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as may be required by applicable
law, regulation or other competent legal authority.
Footnotes
1 Throughout this
press release, net income (loss) and diluted earnings per share
(“EPS”) are attributable to InterDigital, Inc. (e.g., after
adjustments for non-controlling interests), unless otherwise
stated.
2 Free cash flow
is a supplemental non-GAAP financial measure that InterDigital
believes is helpful in evaluating the company’s ability to invest
in its business, make strategic acquisitions and fund share
repurchases, among other things. A limitation of the utility of
free cash flow as a measure of financial performance is that it
does not represent the total increase or decrease in the company’s
cash balance for the period. InterDigital defines “free cash flow”
as net cash provided by operating activities less purchases of
property and equipment, technology licenses and investments in
patents. InterDigital’s computation of free cash flow might not be
comparable to free cash flow reported by other companies. The
presentation of this financial information, which is not prepared
under any comprehensive set of accounting rules or principles, is
not intended to be considered in isolation or as a substitute for
the financial information prepared and presented in accordance with
GAAP. A detailed reconciliation of free cash flow to net cash
provided by operating activities, the most directly comparable GAAP
financial measure, is provided at the end of this press
release.
SUMMARY CONSOLIDATED STATEMENTS OF
INCOME(dollars in thousands except per share
data)(unaudited)
|
For the Three Months Ended December 31, |
|
For the Twelve Months Ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
REVENUES: |
|
|
|
|
|
|
|
Variable patent royalty revenue |
$ |
8,667 |
|
|
$ |
7,871 |
|
|
$ |
26,587 |
|
|
$ |
30,428 |
|
Fixed-fee royalty revenue |
77,438 |
|
|
66,876 |
|
|
298,461 |
|
|
257,221 |
|
Current patent royalties |
86,105 |
|
|
74,747 |
|
|
325,048 |
|
|
287,649 |
|
Non-current patent royalties |
1,121 |
|
|
24,690 |
|
|
21,582 |
|
|
19,782 |
|
Total patent royalties |
87,226 |
|
|
99,437 |
|
|
346,630 |
|
|
307,431 |
|
Patent sales |
600 |
|
|
— |
|
|
600 |
|
|
975 |
|
Current technology solutions revenue |
2,964 |
|
|
2,724 |
|
|
11,761 |
|
|
10,518 |
|
|
$ |
90,790 |
|
|
$ |
102,161 |
|
|
$ |
358,991 |
|
|
$ |
318,924 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
Patent administration and licensing |
51,011 |
|
|
46,744 |
|
|
170,178 |
|
|
154,940 |
|
Development |
22,891 |
|
|
18,832 |
|
|
84,646 |
|
|
74,860 |
|
Selling, general and administrative |
13,748 |
|
|
11,289 |
|
|
48,999 |
|
|
51,289 |
|
|
87,650 |
|
|
76,865 |
|
|
303,823 |
|
|
281,089 |
|
Income from operations |
3,140 |
|
|
25,296 |
|
|
55,168 |
|
|
37,835 |
|
INTEREST EXPENSE |
(9,918 |
) |
|
(10,650 |
) |
|
(40,799 |
) |
|
(40,955 |
) |
OTHER INCOME, NET |
3,118 |
|
|
5,290 |
|
|
16,924 |
|
|
29,062 |
|
Income (loss) before income taxes |
(3,660 |
) |
|
19,936 |
|
|
31,293 |
|
|
25,942 |
|
INCOME TAX PROVISION
(BENEFIT) |
769 |
|
|
(7,984 |
) |
|
6,648 |
|
|
(10,991 |
) |
NET INCOME (LOSS) |
$ |
(2,891 |
) |
|
$ |
11,952 |
|
|
$ |
37,941 |
|
|
$ |
14,951 |
|
Net loss attributable to noncontrolling interest |
(1,541 |
) |
|
(1,802 |
) |
|
(6,860 |
) |
|
(5,977 |
) |
NET INCOME (LOSS) ATTRIBUTABLE
TO INTERDIGITAL, INC. |
$ |
(1,350 |
) |
|
$ |
13,754 |
|
|
$ |
44,801 |
|
|
$ |
20,928 |
|
NET INCOME (LOSS) PER COMMON
SHARE — BASIC |
$ |
(0.04 |
) |
|
$ |
0.44 |
|
|
$ |
1.46 |
|
|
$ |
0.66 |
|
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING — BASIC |
30,808 |
|
|
30,919 |
|
|
30,776 |
|
|
31,546 |
|
NET INCOME (LOSS) PER COMMON
SHARE — DILUTED |
$ |
(0.04 |
) |
|
$ |
0.44 |
|
|
$ |
1.44 |
|
|
$ |
0.66 |
|
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING — DILUTED |
30,808 |
|
|
31,118 |
|
|
31,058 |
|
|
31,785 |
|
CASH DIVIDENDS DECLARED PER
COMMON SHARE |
$ |
0.35 |
|
|
$ |
0.35 |
|
|
$ |
1.40 |
|
|
$ |
1.40 |
|
SUMMARY CONSOLIDATED CASH
FLOWS(dollars in thousands)(unaudited)
|
For the Three Months Ended December 31, |
|
For the Twelve Months Ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Income (loss) before income
taxes |
$ |
(3,660 |
) |
|
$ |
19,936 |
|
|
$ |
31,293 |
|
|
$ |
25,942 |
|
Taxes paid |
(8,022 |
) |
|
(7,746 |
) |
|
(26,233 |
) |
|
(24,229 |
) |
Non-cash expenses |
34,900 |
|
|
26,896 |
|
|
111,527 |
|
|
113,035 |
|
Change in deferred
revenue |
(28,669 |
) |
|
(8,624 |
) |
|
24,397 |
|
|
(7,749 |
) |
Increase (decrease) in
operating working capital, deferred charges and other |
24,706 |
|
|
(13,005 |
) |
|
22,483 |
|
|
(17,566 |
) |
Capital spending and
capitalized patent costs |
(8,807 |
) |
|
(8,805 |
) |
|
(42,408 |
) |
|
(37,990 |
) |
FREE CASH FLOW |
10,448 |
|
|
8,652 |
|
|
121,059 |
|
|
51,443 |
|
|
|
|
|
|
|
|
|
Net proceeds from change in
long-term investments |
25 |
|
|
(350 |
) |
|
4,285 |
|
|
(350 |
) |
Proceeds from noncontrolling
interests |
5,333 |
|
|
5,333 |
|
|
5,333 |
|
|
15,666 |
|
Proceeds from sale of
business |
910 |
|
|
— |
|
|
910 |
|
|
10,000 |
|
Dividends paid |
(10,782 |
) |
|
(10,897 |
) |
|
(43,072 |
) |
|
(44,580 |
) |
Taxes withheld upon vesting of
restricted stock units |
(216 |
) |
|
(52 |
) |
|
(1,751 |
) |
|
(4,368 |
) |
Repurchase of common
stock |
— |
|
|
(25,000 |
) |
|
(349 |
) |
|
(196,269 |
) |
Net proceeds from exercise of
stock options |
100 |
|
|
— |
|
|
1,892 |
|
|
2 |
|
Payments on long-term
debt |
— |
|
|
— |
|
|
(94,909 |
) |
|
(221,091 |
) |
Proceeds from issuance of
convertible senior notes |
— |
|
|
— |
|
|
— |
|
|
400,000 |
|
Purchase of convertible bond
hedge |
— |
|
|
— |
|
|
— |
|
|
(72,000 |
) |
Payment for warrant
unwind |
— |
|
|
— |
|
|
— |
|
|
(4,184 |
) |
Prepayment penalty on
long-term debt |
— |
|
|
— |
|
|
— |
|
|
(10,763 |
) |
Proceeds from hedge
unwind |
— |
|
|
— |
|
|
— |
|
|
9,038 |
|
Proceeds from issuance of
warrants |
— |
|
|
— |
|
|
— |
|
|
47,600 |
|
Payments of debt issuance
costs |
— |
|
|
— |
|
|
— |
|
|
(8,375 |
) |
Unrealized gain on short-term
investments |
153 |
|
|
684 |
|
|
1,136 |
|
|
5,076 |
|
NET INCREASE (DECREASE) IN
CASH, RESTRICTED CASH AND SHORT-TERM INVESTMENTS |
$ |
5,971 |
|
|
$ |
(21,630 |
) |
|
$ |
(5,466 |
) |
|
$ |
(23,155 |
) |
CONDENSED CONSOLIDATED BALANCE
SHEETS(dollars in thousands)(unaudited)
|
DECEMBER 31,2020 |
|
DECEMBER 31,2019 |
ASSETS |
|
|
|
Cash & short-term investments |
$ |
926,647 |
|
|
$ |
924,695 |
|
Accounts receivable (net) |
16,008 |
|
|
28,272 |
|
Other current assets |
84,224 |
|
|
63,365 |
|
Property & equipment and
patents (net) |
434,973 |
|
|
446,556 |
|
Other long-term assets
(net) |
154,423 |
|
|
149,194 |
|
TOTAL ASSETS |
$ |
1,616,275 |
|
|
$ |
1,612,082 |
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current portion of long-term debt |
$ |
— |
|
|
$ |
94,170 |
|
Accounts payable, accrued liabilities, taxes payable &
dividends payable |
75,827 |
|
|
64,734 |
|
Current deferred revenue |
219,935 |
|
|
146,654 |
|
Long-term deferred revenue |
108,069 |
|
|
123,653 |
|
Long-term debt & other long-term liabilities |
415,878 |
|
|
396,590 |
|
TOTAL LIABILITIES |
819,709 |
|
|
825,801 |
|
TOTAL INTERDIGITAL, INC.
SHAREHOLDERS' EQUITY |
773,369 |
|
|
761,557 |
|
Noncontrolling interest |
23,197 |
|
|
24,724 |
|
TOTAL EQUITY |
796,566 |
|
|
786,281 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
$ |
1,616,275 |
|
|
$ |
1,612,082 |
|
RECONCILIATION OF FREE CASH FLOW TO NET
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
In the summary consolidated cash flows and throughout this
release, the company refers to free cash flow. The table below
presents a reconciliation of this non-GAAP financial measure to net
cash provided by operating activities, the most directly comparable
GAAP financial measure.
|
|
For the Three Months Ended December 31, |
|
For the Twelve Months Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net cash provided by operating
activities |
|
$ |
19,255 |
|
|
$ |
17,457 |
|
|
$ |
163,467 |
|
|
$ |
89,433 |
|
Purchases of property,
equipment, & technology licenses |
|
(1,918 |
) |
|
(1,447 |
) |
|
(11,793 |
) |
|
(4,509 |
) |
Capitalized patent costs |
|
(6,889 |
) |
|
(7,358 |
) |
|
(30,615 |
) |
|
(33,481 |
) |
Free cash flow |
|
$ |
10,448 |
|
|
$ |
8,652 |
|
|
$ |
121,059 |
|
|
$ |
51,443 |
|
CONTACT: |
InterDigital, Inc.: |
|
Tiziana Figliolia |
|
tiziana.figliolia@interdigital.com |
|
+1 (302) 300-1857 |
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