IRVINE, Calif., Aug. 10, 2017 /PRNewswire/ -- Netlist, Inc.
(NASDAQ: NLST) today reported financial results for the second
quarter ended July 1, 2017.
Revenues for the second quarter ended July 1, 2017, were $11.4
million, compared to revenues of $6.9
million for the quarter ended July 2,
2016, an increase of 65%. Gross profit for the quarter
ended July 1, 2017, was $0.6 million, or 5.6% of revenues, compared to a
gross profit of $3.7 million, or
52.8% of revenues, for the quarter ended July 2, 2016. The decrease in gross profit
between periods was primarily due to $3.4
million in non-recurring engineering revenues and gross
profit recognized in the 2016 period for completion of Phase 1 of
the company's five -year joint development with Samsung
Electronics, as well as increased sales of lower margin products in
the 2017 period.
Net loss for the second quarter ended July 1, 2017, was ($3.8)
million, or ($0.06) loss per
share, compared to a net loss in the prior year period of
($1.5) million, or ($0.03) loss per share. These results
include stock-based compensation expense of $0.4 million and $0.3
million for the three month periods ended July 1, 2017 and July 2,
2016, respectively.
As of July 1, 2017, cash and cash
equivalents and restricted cash were $7.6
million, total assets were $16.8
million, working capital was $7.0
million, total debt, net of debt discount and accrued
interest, was $14.7 million, and
stockholders' deficit was ($6.9)
million.
"During the quarter product revenues more than tripled from the
same period a year ago and also grew 21% consecutively, marking the
fourth quarter of consecutive product revenue growth," said
C.K. Hong, Netlist's Chief Executive
Officer. "At the Flash Memory Summit this week, Netlist announced
the operation of real world databases exhibiting both block storage
and persistent memory running concurrently in the memory channel,
which we believe is a breakthrough for our HybriDIMM™ storage class
memory product. We also recently received a positive ruling
from the U.S. Federal Circuit Court of Appeals regarding our load
reduction patents, and look forward to the ruling in October by the
Administrative Law Judge at the U.S. International Trade Commission
in our patent infringement case against SK hynix."
EBITDA and adjusted EBITDA are non-GAAP financial measures.
These non-GAAP financial measures are described below under the
heading "Note Regarding Use of Non-GAAP Financial Measures" and are
reconciled to the most directly comparable GAAP financial measure
net income (loss) below under the heading "Unaudited Schedule
Reconciling GAAP Net Loss to Non-GAAP EBITDA and Adjusted EBITDA."
Adjusted EBITDA (loss) was ($3.3)
million for the quarter ended July 1,
2017, compared to adjusted EBITDA (loss) of ($1.0) million for the prior year period.
Conference Call Information
C.K. Hong, Chief Executive Officer,
and Gail Sasaki, Chief Financial
Officer, will host an investor conference call today, August 10, 2017 at 5:00
p.m. Eastern Time to review the company's results for the
second quarter ended July 1,
2017. The dial-in number for the call is
1-412-317-5443. The live webcast and archived replay of the
call can be accessed in the Investors section of Netlist's website
at www.netlist.com.
Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including EBITDA and
adjusted EBITDA are non-GAAP financial measures. Netlist believes
this information is useful to investors because it provides a basis
for measuring Netlist's available capital resources, the operating
performance of Netlist's business and Netlist's cash flow,
excluding certain items that it believes are not attributable to or
reflective of its core operating results. Netlist defines
EBITDA as net income (loss) calculated and presented in accordance
with accounting principles generally accepted in the United States of America ("GAAP"), plus
interest expense, net, plus provisions for income taxes, and plus
depreciation and amortization, and Netlist defines adjusted EBITDA
as EBITDA plus stock-based compensation expense and plus (minus)
other expense (income), net. Netlist expects to continue to incur
expenses similar to the line items added to or subtracted from net
income (loss) to calculate EBITDA and adjusted EBITDA; accordingly,
the exclusion of these items in the presentation of these non-GAAP
financial measures should not be construed as an inference that
these items are unusual, infrequent or non-recurring. Netlist's
management uses these non-GAAP financial measures along with the
most directly comparable GAAP financial measure net income (loss)
in evaluating Netlist's operating performance, capital resources
and cash flow. Non-GAAP financial measures should not be considered
in isolation from, or as a substitute for, financial information
presented in conformity with GAAP, and non-GAAP financial measures
as reported by Netlist may not be comparable to similarly titled
amounts reported by other companies.
About Netlist, Inc.
Netlist is a leading provider of
high-performance modular memory subsystems serving customers in
diverse industries that require superior memory performance to
empower critical business decisions. Flagship products NVvault® and
EXPRESSvault® enable customers to accelerate data running through
their servers and storage and reliably protect enterprise-level
cache, metadata and log data by providing near instantaneous
recovery in the event of a system failure or power outage.
HybriDIMM™, Netlist's next-generation storage class memory product,
addresses the growing need for real-time analytics in Big Data
applications and in-memory databases. Netlist holds a portfolio of
patents, many seminal, in the areas of hybrid memory, storage class
memory, rank multiplication and load reduction. Netlist is part of
the Russell Microcap® Index. To learn more, visit
www.netlist.com.
Safe Harbor Statement
This news release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are statements other than historical facts and often
address future events or the future performance of Netlist.
Forward-looking statements contained in this news release include
statements about Netlist's future performance, including revenue
trends; Netlist's pending legal proceedings and their progress;
perceptions about the performance and potential commercial success
of Netlist's products and technologies; and Netlist's ability to
execute on its strategic initiatives. All forward-looking
statements reflect management's present expectations regarding
future events and are subject to known and unknown risks,
uncertainties and other factors that could cause actual results to
differ materially from those expressed in or implied by any
forward-looking statements. These risks, uncertainties and other
factors include, among others: risks associated with Netlist's
product sales, including the market and demand for products sold or
resold by Netlist and its ability to successfully develop, launch
and stimulate customer demand for new products that are attractive
to the market; risks associated with patent infringement litigation
initiated by Netlist, such as its ongoing proceedings against SK
hynix Inc., or by others against Netlist, as well as the costs and
unpredictability of any such litigation; risks related to Netlist's
plans for its intellectual property, including its strategies for
monetizing, licensing, expanding, and defending its patent
portfolio; the success of product, joint development and
licensing partnerships, including its relationship with Samsung
Electronics Co., Ltd.; the competitive landscape of Netlist's
industry; and general economic, political and market
conditions. These and other risks and uncertainties are
described in Netlist's annual report on Form 10-K for its most
recently completed fiscal year and other filings it makes with the
U.S. Securities and Exchange Commission from time to time,
including its subsequently filed quarterly and current reports.
Given these risks, uncertainties and other important factors, undue
reliance should not be placed on any forward-looking statements.
Forward-looking statements represent Netlist's estimates and
assumptions only as of the date made, and except as required by
law, Netlist undertakes no obligation to revise or update any
forward-looking statements for any reason.
(Tables Follow)
For more information,
please contact:
|
|
|
|
Brainerd
Communicators, Inc.
|
Netlist,
Inc.
|
Mike Smargiassi /
William Metzger
|
Gail M.
Sasaki
|
NLST@braincomm.com
|
Chief Financial
Officer
|
(212)
986-6667
|
(949)
435-0025
|
Netlist, Inc. and
Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
1,
|
|
December
31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
4,496
|
|
$
|
9,476
|
|
Restricted
cash
|
|
|
3,100
|
|
|
3,100
|
|
Accounts receivable,
net
|
|
|
1,819
|
|
|
1,751
|
|
Inventories
|
|
|
4,908
|
|
|
3,160
|
|
Prepaid expenses and
other current assets
|
|
|
1,851
|
|
|
1,766
|
|
Total current
assets
|
|
|
16,174
|
|
|
19,253
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
554
|
|
|
645
|
|
Other
assets
|
|
|
83
|
|
|
70
|
|
Total
assets
|
|
$
|
16,811
|
|
$
|
19,968
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
6,648
|
|
$
|
4,028
|
|
Revolving line of
credit
|
|
|
1,332
|
|
|
676
|
|
Accrued payroll and
related liabilities
|
|
|
789
|
|
|
1,085
|
|
Accrued expenses and
other current liabilities
|
|
|
263
|
|
|
270
|
|
Notes payable and
capital lease obligation, current
|
|
|
141
|
|
|
151
|
|
Total current
liabilities
|
|
|
9,173
|
|
|
6,210
|
|
Convertible
promissory note, net of debt discount, and accrued
interest
|
|
|
14,509
|
|
|
14,251
|
|
Long-term warranty
liability
|
|
|
45
|
|
|
36
|
|
Total
liabilities
|
|
|
23,727
|
|
|
20,497
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit:
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
-
|
|
|
-
|
|
Common
stock
|
|
|
62
|
|
|
62
|
|
Additional paid-in
capital
|
|
|
144,837
|
|
|
144,035
|
|
Accumulated
deficit
|
|
|
(151,815)
|
|
|
(144,626)
|
|
Total
stockholders' deficit
|
|
|
(6,916)
|
|
|
(529)
|
|
Total
liabilities and stockholders' deficit
|
|
$
|
16,811
|
|
$
|
19,968
|
|
Netlist, Inc. and
Subsidiaries
|
Unaudited
Condensed Consolidated Statements of Operations
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
July
1,
|
|
July
2,
|
|
July
1,
|
|
July
2,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Net product
revenue
|
|
$ 11,404
|
|
$
3,500
|
|
$ 20,830
|
|
$
4,671
|
|
Non-recurring
engineering revenues
|
|
-
|
|
3,428
|
|
-
|
|
6,857
|
|
Total net
revenues
|
|
11,404
|
|
6,928
|
|
20,830
|
|
11,528
|
|
Cost of
sales(1)
|
|
10,760
|
|
3,267
|
|
19,506
|
|
4,416
|
|
Gross
profit
|
|
644
|
|
3,661
|
|
1,324
|
|
7,112
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research and
development(1)
|
|
1,487
|
|
1,831
|
|
2,983
|
|
3,477
|
|
Intellectual
property legal fees
|
|
915
|
|
1,023
|
|
1,381
|
|
1,846
|
|
Selling,
general and administrative(1)
|
|
1,951
|
|
2,159
|
|
3,865
|
|
4,424
|
|
Total operating expenses
|
|
4,353
|
|
5,013
|
|
8,229
|
|
9,747
|
|
Operating
loss
|
|
(3,709)
|
|
(1,352)
|
|
(6,905)
|
|
(2,635)
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
Interest
expense, net
|
|
(138)
|
|
(132)
|
|
(286)
|
|
(269)
|
|
Other income
(expense), net
|
|
-
|
|
(10)
|
|
2
|
|
(2)
|
|
Total other expense, net
|
|
(138)
|
|
(142)
|
|
(284)
|
|
(271)
|
|
Loss before provision
for income taxes
|
|
(3,847)
|
|
(1,494)
|
|
(7,189)
|
|
(2,906)
|
|
Provision for
income taxes
|
|
-
|
|
-
|
|
-
|
|
1
|
|
Net loss
|
|
$ (3,847)
|
|
$ (1,494)
|
|
$ (7,189)
|
|
$ (2,907)
|
|
Net loss per common
share:
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
(0.06)
|
|
$
(0.03)
|
|
$
(0.12)
|
|
$
(0.06)
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
61,844
|
|
51,080
|
|
61,763
|
|
50,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts
include stock-based compensation expense as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
$
13
|
|
$
13
|
|
$
29
|
|
$
28
|
|
Research and
development
|
|
114
|
|
55
|
|
180
|
|
190
|
|
Selling, general and
administrative
|
|
254
|
|
235
|
|
436
|
|
543
|
|
Total stock-based
compensation
|
|
$
381
|
|
$
303
|
|
$
645
|
|
$
761
|
|
Netlist, Inc.
and Subsidiaries
|
Unaudited Schedule
Reconciling GAAP Net Loss to Non-GAAP EBITDA and Adjusted
EBITDA
|
(in
thousands)
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
July
1,
|
|
July
2,
|
|
July
1,
|
|
July
2,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
|
$
|
(3,847)
|
|
$
|
(1,494)
|
|
$
|
(7,189)
|
|
$
|
(2,907)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
138
|
|
|
132
|
|
|
286
|
|
|
269
|
Provision for income
taxes
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1
|
Depreciation and
amortization
|
|
|
71
|
|
|
72
|
|
|
144
|
|
|
126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(loss)
|
|
|
(3,638)
|
|
|
(1,290)
|
|
|
(6,759)
|
|
|
(2,511)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
381
|
|
|
303
|
|
|
645
|
|
|
761
|
Other expense
(income), net
|
|
|
-
|
|
|
10
|
|
|
(2)
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(loss)
|
|
$
|
(3,257)
|
|
$
|
(977)
|
|
$
|
(6,116)
|
|
$
|
(1,748)
|
View original
content:http://www.prnewswire.com/news-releases/netlist-reports-second-quarter-2017-results-300502884.html
SOURCE Netlist, Inc.