Q1 2015 earnings announcement call live
on http://investor.pmcs.com at 1:30 p.m. PT
Conference call: 1 (888) 505-4375 or
1 (719) 325-2472 outside North America; passcode 6526275#
Replay available shortly after end of
conference call through May 27, 2015
PMC-Sierra, Inc. (PMC®) (Nasdaq: PMCS), the semiconductor and
software solutions innovator transforming networks that connect,
move and store big data, today reported results for the first
quarter ended March 28, 2015.
Net revenues in the first quarter of 2015 totaled $133.1
million, an increase of 5 percent compared to $126.5 million in the
first quarter of 2014, and a decrease of 3 percent from $136.9
million in the fourth quarter of 2014. Storage product revenues in
the first quarter of 2015 totaled $96.5 million, an increase of 11
percent from $87.0 million in the first quarter of 2014.
GAAP net income in the first quarter of 2015
totaled $4.7 million or $0.02 per diluted share, compared to GAAP
net loss in the first quarter of 2014 of $4.2 million or $0.02 per
share, and GAAP net income in the fourth quarter of 2014 of $2.3
million or $0.01 per diluted share.
Non-GAAP net income in the first quarter of 2015 totaled
$20.9 million or $0.10 per diluted share, compared to non-GAAP net
income in the first quarter of 2014 of $16.0 million or $0.08 per
diluted share, and to non-GAAP net income in the fourth quarter of
2014 of $22.7 million or $0.11 per diluted share.
“We experienced strong year-over-year growth in storage at
eleven percent, representing a solid start for the year,” said
Greg Lang, PMC president and chief executive officer. “And, with
our four key drivers firmly in place, we remain positive about top
and bottom line growth prospects for the balance of 2015.”
For a full reconciliation of each non-GAAP item used herein to
the most directly comparable GAAP financial measure, please refer
to the schedule included with this release. The Company believes
the additional non-GAAP measures are useful to investors for the
purpose of financial analysis. Management uses the non-GAAP
measures internally to evaluate its in-period operating performance
before gains, losses and other charges that are considered by
management to be outside of the Company’s core operating results.
In addition, the measures are used to plan for the Company’s future
periods. However, non-GAAP measures are neither stated in
accordance with, nor are they a substitute for, GAAP measures.
FIRST QUARTER HIGHLIGHTS
The Company announced the following in the first quarter of
2015:
- On Mar. 24, PMC announced an OTN-based
solution for fronthaul networking in Centralized Baseband RAN
(C-RAN) architectures used for LTE and LTE-Advanced systems. Until
now, C-RAN deployments have been stalled by complex fronthaul
latency and timing requirements. PMC’s solution meets the required
latency and beats jitter specifications with up to 75 percent
margin, enabling OTN to be used to implement carrier-grade
fronthaul.
- On Mar. 18, PMC introduced its latest
DIGI OTN processor, enabling the transition to 400G line cards in
OTN switched metro networks. The new DIGI-G4 is the industry’s
densest single-chip 4x100G OTN processor with 50 percent less power
per port than the previous generation. It addresses the needs of an
SDN-ready, encrypted transport infrastructure. DIGI-G4 delivers the
capacity, security and flexibility required for 400G line cards in
packet optical transport platforms (P-OTP), ROADM/WDM and optimized
data center interconnect platforms.
- On Mar. 18, PMC also received the
Lightwave Innovation Award for the DIGI-G4 OTN processor, earning
an impressive score of 4.5 out of 5, one of the highest scores
awarded by the judges. The 2015 Lightwave Innovation Awards judges
comprised a panel of industry experts, including service providers,
technology developers, industry analysts and journalists.
- On Feb. 9, PMC announced that its board
of directors authorized a new share repurchase program for up to
$75 million of its common stock. This new program increases the
total remaining repurchase authorization to $102 million, including
the $27 million that remains available for repurchases under the
$275 million 2012 share repurchase authorization. During Q1 2015,
PMC repurchased 6.1 million shares of common stock. Since PMC began
its first share repurchase program in 2011, PMC has repurchased and
retired 60.4 million shares at a total cost of $385.2 million.
First Quarter 2015 Conference Call
Management will review first quarter 2015 results and share its
outlook for the second quarter of 2015 during a conference call at
1:30 p.m. Pacific Time/4:30 p.m. Eastern Time on April 27, 2015.
The conference call webcast will be accessible under the Financial
News and Events section at http://investor.pmcs.com. To listen to
the conference call by telephone, dial 1 (888) 505-4375 or 1 (719)
325-2472 outside North America with passcode 6526275# approximately
ten minutes before the start time. A telephone playback will be
available until May 27, 2015, and can be accessed at 1 (888)
203-1112 or 1 (719) 457-0820 outside North America using passcode
6526275#.
Safe Harbor Statement
This release contains forward-looking statements that involve
risks and uncertainties. The Company’s SEC filings, including the
Company’s most recent reports on Form 10-K and Form 10-Q, describe
the risks associated with the Company’s business, including PMC’s
limited revenue visibility due to variable customer demands, market
segment growth or decline, orders with short delivery lead times,
customer concentration, changes in inventory, and other items such
as tax rates, foreign exchange rates and volatility in global
financial markets.
About PMC
PMC (Nasdaq:PMCS) is the semiconductor and
software solutions innovator transforming networks that connect,
move and store big data. Building on a track record of technology
leadership, the Company is driving innovation across storage,
optical and mobile networks. PMC’s highly integrated solutions
increase performance and enable next-generation services to
accelerate the network transformation. For more information, visit
www.pmcs.com. Follow PMC on Facebook, Twitter, LinkedIn and
RSS.
© Copyright PMC-Sierra, Inc. 2015. All rights reserved. PMC and
PMC-SIERRA are registered trademarks of PMC-Sierra, Inc. in the
United States and other countries, PMCS is a trademark of
PMC-Sierra, Inc. PMC disclaims any ownership rights in other
product and company names mentioned herein. PMC is the corporate
brand of PMC-Sierra, Inc.
PMC-Sierra, Inc. CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (in thousands, except for per share amounts)
(unaudited)
Three Months Ended March
28, December 27, March
29, 2015 2014 2014 Net revenues $
133,071 $ 136,851 $ 126,468 Cost of revenues 39,980
40,702 37,564 Gross profit 93,091
96,149 88,904 Research and development, net 48,866 50,942
50,148 Selling, general and administrative 30,051 29,411 29,340
Amortization of purchased intangible assets 9,317
10,994 12,329 Income (loss) from
operations 4,857 4,802 (2,913 ) Other income (expense): Gain
on investment securities and other investments 32 68 29
Amortization of debt issue costs (51 ) (51 ) (51 ) Amortization of
discount on short-term and long-term obligation (210 ) (350 ) -
Foreign exchange gain 2,594 2,866 532 Financial income, net
164 2 9 Income (loss) before
provision for income taxes 7,386 7,337 (2,394 ) Provision for
income taxes (2,731 ) (5,007 ) (1,847 ) Net
income (loss) $ 4,655 $ 2,330 $ (4,241 ) Net
income (loss) per common share - basic and diluted $ 0.02 $ 0.01 $
(0.02 ) Shares used in per share calculation - basic 200,249
198,625 195,188 Shares used in per share calculation - diluted
205,688 201,935 195,188
As a supplement to the Company's condensed
consolidated financial statements presented in accordance with
generally accepted accounting principles ("GAAP"), the Company
provides additional non-GAAP measures for cost of revenues, gross
profit, gross profit percentage, research and development expense,
net, selling, general and administrative expense, amortization of
purchased intangible assets, other income (expense), provision for
income taxes, operating expenses, operating income (loss),
operating margin, net income (loss), and net income per share -
basic and diluted.
A non-GAAP financial measure is a numerical
measure of a company's performance, financial position, or cash
flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with GAAP. The
Company believes that the additional non-GAAP measures are useful
to investors for the purpose of financial analysis. Management uses
these measures internally to evaluate the Company's in-period
operating performance before gains, losses and other charges that
are considered by management to be outside of the Company's core
operating results. In addition, the measures are used for planning
and forecasting of the Company's future periods. However, non-GAAP
measures are not in accordance with, nor are they a substitute for,
GAAP measures. Other companies may use different non-GAAP measures
and presentation of results.
PMC-Sierra, Inc.
Adjustments to GAAP Cost of Revenues,
Gross Profit, Gross Profit Percentage, Research and Development
Expense, net, Selling, General and Administrative Expense,
Amortization of Purchased Intangible Assets, Other Income
(Expense), Provision for Income Taxes, Operating Expenses,
Operating Income (Loss), Net Income (Loss), and Basic and Diluted
Net Income (Loss) Per Share
(in thousands, except for per share amounts) (unaudited)
Three Months Ended March 28,
December 27, March 29,
2015 2014 2014 GAAP cost of
revenues $ 39,980 $ 40,702 $ 37,564 Stock-based compensation
(271 ) (285 ) $ (241 ) Termination expense recoveries -
- $ 9
Non-GAAP cost of revenues
$ 39,709 $ 40,417 $ 37,332
GAAP
gross profit $ 93,091 $ 96,149 $ 88,904 Stock-based
compensation 271 285 241 Termination expense recoveries -
- (9 )
Non-GAAP gross profit $
93,362 $ 96,434 $ 89,136
Non-GAAP
gross profit % 70.2 % 70.5 % 70.5 %
GAAP research and
development expense, net $ 48,866 $ 50,942 $ 50,148 Stock-based
compensation (2,844 ) (2,880 ) (2,647 ) Acquisition-related costs
(106 ) (423 ) (800 ) Termination expense recoveries 38 8 58
Reversal of accruals - 342 - Lease exit recoveries -
29 -
Non-GAAP research and
development expense, net $ 45,954 $ 48,018 $
46,759
GAAP selling, general and administrative
expense $ 30,051 $ 29,411 $ 29,340 Stock-based compensation
(3,578 ) (3,682 ) (3,303 ) Acquisition-related costs (171 ) (261 )
(61 ) Lease exit recoveries (costs) 11 (5 ) (142 ) Termination and
separation costs (507 ) (645 ) (3 ) Asset impairments - - (477 )
Other expenses - - (58 )
Non-GAAP selling, general and administrative expense $
25,806 $ 24,818 $ 25,296
GAAP
amortization of purchased intangible assets $ 9,317 $ 10,994 $
12,329 Amortization of purchased intangible assets (9,317 )
(10,994 ) (12,329 )
Non-GAAP amortization of
purchased intangible assets $ - $ - $ -
GAAP other income $ 2,529 $ 2,535 $ 519 Foreign
exchange gain on foreign tax liabilities (2,179 ) (2,665 ) (879 )
Gain on disposal of investment - (26 ) - Amortization of discount
on short-term and long-term obligations 210
350 -
Non-GAAP other income (expense) $
560 $ 194 $ (360 )
GAAP provision for
income taxes $ 2,731 $ 5,007 $ 1,847 Provision for income tax
matters (1,516 ) (3,900 ) (1,111 )
Non-GAAP
provision for income taxes $ 1,215 $ 1,107 $ 736
GAAP operating expenses $ 88,234 $ 91,347 $
91,817 Stock-based compensation (6,422 ) (6,562 ) (5,950 )
Acquisition-related costs (277 ) (684 ) (861 ) Asset impairments -
- (477 ) Lease exit recoveries (costs) 11 24 (142 ) Termination and
separation (costs) recoveries (469 ) (637 ) 55 Amortization of
purchased intangible assets (9,317 ) (10,994 ) (12,329 ) Reversal
of accruals - 342 - Other expenses - -
(58 )
Non-GAAP operating expenses $ 71,760 $
72,836 $ 72,055
March 28,
December 27, March 29, 2015 2014
2014 GAAP operating income (loss) $ 4,857 $
4,802 $ (2,913 ) Stock-based compensation 6,693 6,847 6,191
Acquisition-related costs 277 684 861 Asset impairments - - 477
Lease exit (recoveries) costs (11 ) (24 ) 142 Termination and
separation costs (recoveries) 469 637 (64 ) Amortization of
purchased intangible assets 9,317 10,994 12,329 Reversal of
accruals - (342 ) - Other expenses - -
58
Non-GAAP operating income $ 21,602 $
23,598 $ 17,081
Non-GAAP operating
margin 16.2 % 17.2 % 13.5 %
GAAP net income
(loss) $ 4,655 $ 2,330 $ (4,241 ) Stock-based compensation
6,693 6,847 6,191 Acquisition-related costs 277 684 861 Termination
and separation costs (recoveries) 469 637 (64 ) Reversal of
accruals - (342 ) - Asset impairments - - 477 Lease exit
(recoveries) costs (11 ) (24 ) 142 Amortization of purchased
intangible assets 9,317 10,994 12,329 Other expenses - - 58 Foreign
exchange gain on foreign tax liabilities (2,179 ) (2,665 ) (879 )
Amortization of discount on short-term and long-term obligations
210 350 - Gain on disposal of investments - (26 ) - Provision for
income taxes 1,516 3,900 1,111
Non-GAAP net income $ 20,947 $ 22,685 $
15,985
Non-GAAP net income per share - basic and
diluted $ 0.10 $ 0.11 $ 0.08 Shares used to
calculate non-GAAP net income per share - basic 200,249 198,625
195,188 Shares used to calculate non-GAAP net income per share -
diluted 205,688 201,935 198,306
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
(unaudited)
March 28,
December 27, 2015 2014 ASSETS:
Current assets: Cash and cash equivalents $ 64,548 $ 112,570
Short-term investments 45,580 45,885
Cash, cash equivalents and short-term investments 110,128 158,455
Accounts receivable, net 62,156 55,414 Inventories, net 35,685
37,949 Prepaid expenses and other current assets 14,348 16,473
Income taxes receivable 1,966 1,968 Prepaid tax expense - 51
Deferred tax assets 5,255 5,442 Total
current assets 229,538 275,752 Investment securities 120,052
107,509 Investments and other assets 7,332 7,683 Prepaid tax
expense 93 42 Property and equipment, net 37,370 37,311 Goodwill
283,239 283,239 Intangible assets, net 133,344 143,680 Deferred tax
assets 13,123 13,412 Long-term income tax receivable 465
457 $ 824,556 $ 869,085
LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts
payable $ 20,357 $ 23,360 Accrued liabilities 53,788 74,135 Credit
facility 10,000 - Income taxes payable 1,109 1,062 Liability for
unrecognized tax benefit 14,820 16,076 Deferred tax liabilities
7,644 7,644 Deferred income 3,944 4,530
Total current liabilities 111,662 126,807 Long-term
obligations 25,008 36,305 Deferred tax liabilities 54,209 53,493
Liability for unrecognized tax benefit 25,768 25,244
PMC special shares convertible into 205
(2014 - 278) shares of common stock
480 745 Stockholders' equity: Common stock and additional paid in
capital 1,603,586 1,595,809 Accumulated other comprehensive loss
(2,185 ) (2,355 ) Accumulated deficit (993,972 )
(966,963 ) Total stockholders' equity 607,429
626,491 $ 824,556 $ 869,085
PMC-Sierra, Inc. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (in thousands) (unaudited)
Three Months Ended March 28,
December 27, March 29, 2015
2014 2014 Cash flows from operating
activities: Net income (loss) $ 4,655 $ 2,330 $ (4,241 )
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation and amortization 14,988 16,742
17,911 Stock-based compensation 6,693 6,847 6,191 Unrealized
foreign exchange gain, net (4,495 ) (3,474 ) (1,725 ) Net
amortization of premiums and accrued interest of investments 256 90
275 Asset impairments - - 770 Gain on investment securities and
other (32 ) (45 ) (29 ) Amortization of discount on short-term and
long-term obligations 210 350 - Amortization of debt issue costs 51
51 51 Changes in operating assets and liabilities: Accounts
receivable, net (6,741 ) 1,600 (546 ) Inventories, net 2,264 (3,361
) 864 Prepaid expenses and other current assets 834 (2,998 ) 2,324
Accounts payable and accrued liabilities (12,726 ) 7,577 (11,689 )
Deferred taxes and income taxes payable 2,664 4,365 2,374 Deferred
income (586 ) (971 ) (1,921 ) Net cash
provided by operating activities 8,035 29,103
10,609
Cash flows from investing
activities: Cash paid in connection with business acquisition
(18,000 ) - - Purchases of property and equipment (4,414 ) (2,770 )
(3,732 ) Purchase of intangible assets (441 ) (270 ) (481 )
Redemption of short-term investments 7,926 750 1,800 Disposals of
investment securities and other investments 15,429 23,759 14,064
Purchases of investment securities and other investments
(35,329 ) (38,349 ) (17,790 ) Net cash used in
investing activities (34,829 ) (16,880 )
(6,139 )
Cash flows from financing activities:
Proceeds from credit facility 30,000 - 30,000 Repayment of credit
facility (20,000 ) - (55,000 ) Proceeds from issuance of common
stock 26,759 11,251 9,348 Repurchases of common stock
(57,222 ) - (11,496 ) Net cash (used in)
provided by financing activities (20,463 ) 11,251
(27,148 ) Effect of exchange rate changes on
cash and cash equivalents (765 ) (844 ) (432 )
Net (decrease) increase in cash and cash equivalents (48,022 )
22,630 (23,110 ) Cash and cash equivalents, beginning of the period
112,570 89,940 100,038
Cash and cash equivalents, end of the period $ 64,548 $
112,570 $ 76,928
PMC-Sierra, Inc.Joel AchramowiczDirector, Investor
Relations1-408-239-8630Joel.Achramowicz@pmcs.comorKim
MasonManager, Corporate
Communications1-604-415-6239Kim.Mason@pmcs.com
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