Entropic Reports Fourth Quarter and Fiscal Year 2012 Results
Entropic Reports Fourth Quarter and Fiscal Year 2012 Results
Fourth Quarter Revenue of $89.7 Million, Record Annual Revenue of $321.7
Million
Conference Call to be Webcast Today at 1:30 p.m. Pacific Time
SAN DIEGO, Feb. 5, 2013 (GLOBE NEWSWIRE) -- Entropic (Nasdaq:ENTR), a world
leader in semiconductor solutions for the connected home, today reported its
fourth quarter and fiscal year results for the period ended December 31, 2012.
Entropic reported fourth quarter net revenues of $89.7 million, a slight
decrease compared with $89.8 million in the third quarter of 2012.
In accordance with U.S. generally accepted accounting principles (GAAP), the
Company's fourth quarter net income was $0.0 million, or $0.00 per share
(diluted). This compares with GAAP net income of $0.4 million, or $0.00 per
share (diluted) in the third quarter of 2012.
Non-GAAP net income in the fourth quarter was $7.6 million, or $0.08 per share
(diluted), compared to non-GAAP net income of $7.8 million, or $0.09 per share
(diluted) in the third quarter of 2012.
Net revenues for the year ended December 31, 2012 were $321.7 million, an
increase of 34 percent from the $240.6 million reported for the year ended
December 31, 2011. Net income computed in accordance with GAAP for the year
ended December 31, 2012 was $4.5 million, or $0.05 per share (diluted),
compared with GAAP net income of $26.6 million, or $0.30 per share (diluted),
for the year ended December 31, 2011.
Non-GAAP net income for the year ended December 31, 2012 was $33.8 million, or
$0.37 per share (diluted), compared to non-GAAP net income of $55.3 million,
or $0.62 per share (diluted) for the year ended December 31, 2011.
"Our transformation into a broad-based platform silicon company in connected
home entertainment is well underway following last year's acquisitions," said
Patrick Henry, president and CEO, Entropic. "We've already won significant
design-wins with Tier-1 operators which is an early sign our strategy is
playing out. We expect 2013 to be a key transitional year for the Company, as
we now have a strengthened product portfolio, clear integration roadmap, and
the right team focused on winning new designs globally."
Three Months ended Years ended Dec. 31,
(In millions, except per Dec. 31, Sept. 30, Dec. 31, 2012 2011
share data) 2012 2012 2011
Net revenues $89.7 $89.8 $56.2 $321.7 $240.6
GAAP net income $0.0 $0.4 $2.3 $4.5 $26.6
GAAP net income per share $0.00 $0.00 $0.03 $0.05 $0.31
(basic)
GAAP net income per share $0.00 $0.00 $0.03 $0.05 $0.30
(diluted)
Non-GAAP net income^1 $7.6 $7.8 $10.2 $33.8 $55.3
Non-GAAP net income per $0.08 $0.09 $0.12 $0.37 $0.62
share^1 (diluted)
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
Corporate Initiatives
* New Corporate Brand Identity: The Company updated its brand identity to
represent a significant shift in its overall vision, look and message
since making two transformative acquisitions in 2012.
* Achieved ISO 9001:2008 Certification: Entropic's Quality Management System
(QMS) was awarded ISO 9001:2008 re-certification by the International
Organization for Standardization (ISO); signifying the Company's
commitment to producing high quality products, services and solutions.
Industry Accolades
* Winner of 2012 Global Semiconductor Alliance (GSA) Award: Entropic was
awarded the 2012 GSA Award in the "Most Respected Public Semiconductor
Company Achieving $100 million to $250 million in Annual Sales" category.
Product Innovations
* Entropic Unveiled Three Innovative Multimedia over Coax Alliance
(MoCA^®)-Based Reference Designs to Extend Power, Performance and
WiFi-to-Coax Connectivity in the Home: At CES 2013, Entropic showed the
industry's first MoCA 2.0 multi-band adapter, MoCA 2.0 WiFi extender and
MoCA 1.1 USB reference design, which are designed to ensure whole-home
data coverage.
Service Provider Activities
* Tianjin Broadcast and TV Network Deployed Entropic's c.LINK^®
Ethernet-over-Coax (EoC) Solution: Entropic announced the deployment of
its latest c.LINK Broadband Access technology by Tianjin Broadcast and TV
Network Co., Ltd. to increase speed and quality of broadband service.
* InCablenet Deployed Entropic's Proven Set-top Box (STB) System-on-a-Chip
(SoC) Technology: Entropic announced its STB SoC technology, the CX2448x,
has been deployed by India's leading cable multi-system operator (MSO),
InCablenet, to assist with the 'Analog Sunset' transition.
* DIRECTV PanAmericana Selected Entropic's Silicon and Software to Roll-Out
Advanced TV Viewing Services:Entropic announced its analog Channel
Stacking Switch (CSS^®) and MoCA-based silicon and software have been
selected by DIRECTV PanAmericana to enhance the way content is delivered
into and connected throughout the home.
OEM Activities
* Technicolor and Entropic Partnered to Deliver a Powerful Client STB:
Entropic announced its technology is part of Technicolor's MediaPlay (Xi3)
client solution, which is based on hardware and software specifications
developed by Comcast. The Technicolor MediaPlay client is fully compliant
with the Comcast-developed X1 client-server architecture, and uses
Entropic's TSC188 STB SoC bundled with its MoCA 1.1 silicon and software
to bring the power of cloud-based applications to every screen in the
home.
* Humax and Entropic Announced Development of an IP-Client Device:Entropic
announced its TSC188 STB SoC bundled with its MoCA 1.1 silicon and
software are being used in Humax' Xi3 IP-Client device to enable the shift
from broadcast to IP-based services and applications in the home. The
device leverages the Comcast Reference Design Kit (RDK) to enable device
manufacturers to rapidly develop, optimize and deploy new broadcast and
IP-based solutions for richer consumer TV experiences.
* Entropic's MoCA 2.0 Utilized by ARRIS in New Advanced Headless Video
Gateway: Entropic announced its MoCA 2.0 silicon and software solution has
been selected by ARRIS Group, Inc. for use in the ARRIS MG2402 Video
Gateway that uses XG5 and Reference Design Kit (RDK) specifications
developed by Comcast. This is the first official product announcement of
MoCA 2.0 designed into a headless gateway and paves a path to economically
deliver more services to cable customers across a broader range of
devices.
Partner Activities
* Entropic and Cortina Systems Announced Development for an Advanced
Broadband Router/Headless Gateway Reference Platform: Entropic announced a
joint collaboration with Cortina to accelerate the development of high
performance customer premise equipment (CPE) including broadband routers
and headless gateways. The cooperation leverages Entropic's MoCA 2.0
solution with Cortina's CS7542 scalable digital home multi-service
platform.
* Entropic and MobileTREC Collaborate on Reverse Mass Notification Alert
Solution Leveraging the Consumer STB Platform: In cooperation with
MobileTREC, Entropic showed at CES 2013, how its latest generation of
high-performance STB SoC solutions, the TSC17x family, can be used to
develop a next generation Machine-to-Machine (M2M)-based reverse mass
notification alert solution for public safety agencies that leverages the
cable STB platform.
* Partnerships in Automatic Content Recognition (ACR) with Flingo and
Audible Magic: Entropic partnered with Flingo and Audible Magic to show
how its STB SoC platform, embedded with ACR software, can drive new
opportunities for service providers and advertisers to monetize the STB
platform by obtaining higher ARPU and finer granularity and insight into
viewership trends.
For More Information
Entropic management will be holding a conference call today, February 5, 2013,
at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time to discuss the Company's
results for the fourth quarter of fiscal 2012, and to provide guidance for the
first quarter of fiscal 2013. You may access the conference call via any of
the following:
Teleconference: 617-213-4855
Access Code: 89426579
Web Broadcast: http://events.entropic.com/
Replay: 617-801-6888
Replay Passcode: 58229857
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, visit Entropic at: www.entropic.com.
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, transaction and integration costs related
to the Trident Microsystems and the PLX Technology transactions, 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, the cash tax difference and the
restructuring charge.
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 expectations for Entropic's
transformation into a broad-based semiconductor company in Connected Home
Entertainment, the impact of new product design wins, market penetration,
continued and/or future revenue, earnings and product sales growth and gross
margin improvement, and the factors that may contribute to such growth and
improvement including industry trends. 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 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; risks associated with the Trident
Microsystems and PLX Technology 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 September 30, 2012. 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 © 2013 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 Year Ended
December 31, September December 31, December December
2012 30, 2012 2011 31, 2012 31, 2011
(unaudited) (unaudited) (unaudited)
Net revenues $ 89,698 $ 89,825 $ 56,169 $ 321,678 $ 240,628
Cost of net 45,789 45,778 25,341 157,675 107,922
revenues
Gross profit 43,909 44,047 30,828 164,003 132,706
Operating
expenses:
Research and 29,139 28,072 17,626 98,353 60,065
development
Sales and 6,327 6,966 4,373 25,313 17,569
marketing
General and 5,882 5,718 4,425 25,474 14,568
administrative
Amortization of 930 930 -- 2,575 --
intangibles
Restructuring 897 -- -- 897 --
charges
Total operating 43,175 41,686 26,424 152,612 92,202
expenses
Income from 734 2,361 4,404 11,391 40,504
operations
Loss related to
equity method (779) (799) (700) (3,315) (791)
investment
Other income, net 34 31 278 601 904
Income (loss)
before income (11) 1,593 3,982 8,677 40,617
taxes
Income tax
(benefit) (57) 1,185 1,674 4,157 14,053
provision
Net income $ 46 $ 408 $ 2,308 $ 4,520 $ 26,564
Net income per $ 0.00 $ 0.00 $ 0.03 $ 0.05 $ 0.31
share - basic
Net income per $ 0.00 $ 0.00 $ 0.03 $ 0.05 $ 0.30
share - diluted
Weighted average
number of shares
used to compute 88,912 88,399 87,017 88,164 86,258
net income per
share - basic
Weighted average
number of shares
used to compute 91,710 90,885 88,600 90,364 89,018
net income per
share - diluted
ENTROPIC COMMUNICATIONS, INC.
GAAP Condensed Consolidated Balance Sheets
(In thousands)
December 31 September 30 December 31,
2012 2012 2011
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 17,206 $ 22,511 $ 20,193
Marketable securities 79,981 90,560 91,625
Accounts receivable 41,847 36,104 25,896
Inventory 26,395 39,532 20,253
Deferred tax assets, current 7,157 13,658 13,565
Prepaid expenses and other current 11,988 23,323 9,927
assets
Total current assets 184,574 225,688 181,459
Property and equipment, net 17,629 14,969 11,250
Long-term marketable securities 71,748 53,255 104,708
Intangible assets, net 46,997 49,953 --
Deferred tax assets, long-term 19,255 9,953 9,600
Goodwill 4,664 4,664 --
Other long-term assets 8,683 9,501 11,542
Total assets $ 353,550 $ 367,983 $ 318,559
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,380 $ 20,083 $ 11,559
Accrued expenses and other current 8,067 16,005 4,078
liabilities
Accrued payroll and benefits 9,474 13,057 3,835
Total current liabilities 28,921 49,145 19,472
Deferred rent 683 727 1,098
Other long-term liabilities 1,281 1,307 196
Stockholders' equity 322,665 316,804 297,793
Total liabilities and stockholders' $ 353,550 $ 367,983 $ 318,559
equity
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 Year Ended
December 31, September 30, December 31, December 31, December 31,
2012 2012 2011 2012 2011
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
GAAP net income $ 46 $ 408 $ 2,308 $ 4,520 $ 26,564
Non-GAAP
adjustments:
Stock-based
compensation:
Cost of net 261 217 167 828 557
revenues
Research and 1,874 2,030 1,675 7,428 6,272
development
Sales and marketing 609 675 541 2,288 1,986
General and 1,091 1,283 938 4,273 3,932
administrative
Total stock-based 3,835 4,205 3,321 14,817 12,747
compensation
Acquisition-related
items:
Amortization of
intangible assets:
Cost of net 2,025 2,025 -- 5,827 --
revenues
Operating expenses 930 930 -- 2,575 --
Transaction and 61 183 1,415 4,545 1,415
integration costs
Loss related to
equity method 779 799 700 3,315 791
investment
Adjustments to the
fair value of PLX
acquisition 201 230 -- 431 --
contingent
consideration
Income tax effects
of pre-tax (2,741) (2,930) (1,903) (11,029) (5,234)
adjustments
Cash tax difference 1,534 1,899 4,368 7,891 18,975
^ (1)
Restructuring 897 -- -- 897 --
charges ^ (2)
Total of non-GAAP 7,521 7,341 7,901 29,269 28,694
adjustments
Non-GAAP net income $ 7,567 $ 7,749 $ 10,209 $ 33,789 $ 55,258
Weighted average 88,912 88,399 87,017 88,164 86,258
shares (basic)
Adjustment for 2,798 2,486 1,583 2,200 2,760
dilutive shares
Weighted average 91,710 90,885 88,600 90,364 89,018
shares (diluted)
GAAP net income per $ 0.00 $ -- $ 0.03 $ 0.05 $ 0.31
share (basic)
Non-GAAP
adjustments 0.08 0.09 0.09 0.32 0.31
detailed above
Non-GAAP net income
per share $ 0.08 $ 0.09 $ 0.12 $ 0.37 $ 0.62
(diluted)^
(1) The Company's non-GAAP net income per share is calculated using the cash tax rate of
13%, 22%, and (8%) for the three month periods ended December 31, 2012, September 30,
2012, and December 31, 2011, respectively. The Company's non-GAAP net income per share is
calculated using the cash tax rate of 18% and 1% for the years ended December 31, 2012,
and 2011, 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 reversal of valuation
allowances, the utilization of research and development tax credits, and the utilization
of loss carryforwards which currently have 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 income for the three month periods ended December 31, 2012,
September 30, 2012, and December 31, 2011 was approximately 518%, 74%, and 42%,
respectively. The Company's effective tax rate used for the purposes of calculating GAAP
net income for the years ended December 31, 2012 and 2011 was approximately 48% and 35%,
respectively.
(2) In November, 2012, we incurred a restructuring charge of $0.9 million pursuant to a
plan to rebalance our operations in an attempt to leverage synergies from our
acquisitions. This plan resulted in a reduction of our personnel by 40 employees or
approximately 6% of our workforce.
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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