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PLX Technology, Inc. Reports Third Quarter 2013 Financial Results


PLX Technology, Inc. Reports Third Quarter 2013 Financial Results

Third Consecutive Profitable Quarter, Record Year-to-Date Profit, Record Design Wins

SUNNYVALE, CA -- (Marketwired) -- 10/21/13 -- PLX Technology, Inc. (PLX(R)) (NASDAQ: PLXT), the global leader in PCI Express(R) (PCIe(R)) silicon and software connectivity solutions enabling emerging data center architectures, today announced third quarter revenues of $25.7 million and net income of $2.0 million, or $0.04 per share (diluted).

"Our focus on key cost control measures has resulted in three consecutive profitable quarters and record profits year-to-date allowing us to build our cash position and pay down debt," said David Raun, PLX president and CEO. "Record PCI Express design wins dominated by higher ASP Gen3 products signal a healthy pipeline. Market share gains in PCI Express, no significant design win losses over the past two quarters, and production of new higher lane count parts in Q4 highlights additional opportunities for the company."


 
                                                                            
Non-GAAP Financial Comparison                                               
(in millions, except per                                                    
 share amounts)                                                             
                                   Quarterly Results         Year to Date   
                               Q3 2013  Q2 2013  Q3 2012     2013     2012  
                              -------- -------- --------  -------- -------- 
Net revenues                  $   25.7 $   26.9 $   26.9  $   78.8 $   76.8 
Gross Margin                  $   14.7 $   15.1 $   16.1  $   45.3 $   45.2 
Operating expense             $   11.8 $   11.8 $   14.6  $   35.2 $   42.2 
Operating income from                                                       
 continuing operations        $    2.9 $    3.3 $    1.5  $   10.1 $    3.0 
Income from continuing                                                      
 operations                   $    2.8 $    3.1 $    0.5  $    9.7 $    2.4 
Income per share (diluted)                                                  
 from continuing operations   $   0.06 $   0.07 $   0.01  $   0.22 $   0.05 

The above non-GAAP financial information (other than net revenues, which are presented on a GAAP basis) excludes lawsuit verdict contingency accrual expense, share-based compensation, acquisition, restructuring and impairment charges, amortization of acquired intangibles and discontinued operations. See "Use of Non-GAAP Financial Information" below.


 
                                                                            
GAAP Financial Comparison                                                   
(in millions, except per share amounts)                                     
                                   Quarterly Results         Year to Date   
                               Q3 2013  Q2 2013  Q3 2012    2013     2012   
                              -------- -------- --------  -------- -------- 
Net revenues                  $   25.7 $   26.9 $   26.9  $   78.8 $   76.8 
Gross Margin                  $   14.5 $   15.1 $   16.1  $   45.1 $   45.1 
Operating expense             $   12.4 $   13.3 $   18.4  $   38.4 $   49.5 
Operating income (loss) from                                                
 continuing operations        $    2.0 $    1.8 $   (2.3) $    6.7 $   (4.4)
Income (loss) from continuing                                               
 operations                   $    2.0 $    1.7 $   (3.3) $    6.4 $   (5.0)
Income (loss) per share                                                     
 (diluted) from continuing                                                  
 operations                   $   0.04 $   0.04 $  (0.07) $   0.14 $  (0.11)

"Enterprise storage and networking markets continue to dominate design win activity, and our market-leading technology backed by strong customer relationships position us for continued design win success," said Raun. "We also garnered significant industry interest in the quarter with the company's first public demonstration of PLX's ExpressFabric(R) technology housed in a data center rack at the Intel Developer Forum (IDF).

"Our overall design activity pipe which measures the potential annual revenue for each program is in the hundreds of millions of dollars and is greater than three times the size that it was four years ago when our main focus was Gen2. All five of our PCI Express end market segments produced greater design wins than last quarter, and we are confident about our growth potential for years to come."

About ExpressFabric

PCIe is well-established as a standard that is already native on nearly all mainstream data center appliances. Facilitated by PLX's next generation PCIe Gen3 fabric-enabling switch devices, ExpressFabric eliminates a large number of expensive "bridging" devices like adapter cards that translate PCIe to InfiniBand, Ethernet or Fibre Channel. This subsequently provides a high-performance, low-latency solution, while offering significantly lower cost and power, with a reduced bill of materials.

ExpressFabric technology is focused on small to medium (20-1000 nodes) high performance clusters that are cost and power sensitive, and the fabric seamlessly works with Ethernet and InfiniBand for larger scale out. PLX developed a market-seeding PCIe-based top-of-rack (ToR) switch box to demonstrate rack-level consolidation and convergence into a single interconnect technology. To help prime this market, PLX has been selling internally developed PCI Express-based server cards that appear to the software like Ethernet Network Interface Cards, and in Q3 we began shipping our PCI Express top of rack switch boxes to early customers.

Business Outlook

The following statements are based on current expectations. The company does not intend to update, confirm or change this guidance until its fourth quarter 2013 earnings release, although it may provide additional details regarding its guidance during today's scheduled conference call.


 
--  Net revenues for the fourth quarter ending Dec. 31, 2013 are expected
    to be between $25.0 million and $27.0 million;
--  Non-GAAP gross margins are expected to be approximately 56 percent
    with GAAP margins at approximately 55 percent;
--  Operating expenses are expected to be approximately $13.8 million.
    Included in operating expenses are share-based compensation related
    charges of approximately $0.8 million

Conference Call

PLX management plans to conduct a conference call and webcast today at 2:00 p.m. (PT) to discuss its third quarter results, as well as its fourth quarter 2013 outlook. A live webcast of the conference call will be available through the Investor Relations section of the PLX Website at www.plxtech.com/investors, which also can be heard live via telephone at (877) 474-9506, using access code 30249077. International callers may dial +1 (857) 244-7559. A recorded replay of this webcast will be available on the PLX Website beginning 6:00 p.m. (PT) on Oct. 21, 2013, through 11:59 p.m. (PT) on Oct. 28, 2013. To listen to the replay via telephone, call (888) 286-8010 and use access code 34140578. International callers may dial +1 (617) 801-6888.

Use of Non-GAAP Financial Information

To sup plement PLX's financial statements presented on a GAAP basis, PLX has provided non-GAAP financial information, including non-GAAP income (loss), non-GAAP earnings (loss) per share (diluted), non-GAAP operating income (loss) and non-GAAP operating expenses. These non-GAAP results exclude lawsuit verdict contingency accrual expense, share-based compensation, including ESOP expenses, acquisition, restructuring and impairment related charges, amortization of acquired intangibles and discontinued operations. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to PLX investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by PLX may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement

This press release includes statements that qualify as forward-looking statements under the Private Securities Litigation Reform Act of 1995. These include statements about the company's estimated net revenues, estimated operating expenses and estimated gross margins, which are set forth under the caption "Business Outlook," and statements regarding PLX's growth potential, design wins, and expected revenue related to design wins. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in the statements. Factors that could cause actual results to differ materially include risks and uncertainties, such as reduced demand for products of electronic equipment manufacturers that use the company's products, adverse economic conditions in general or those specifically affecting the company's markets, technical difficulties and delays in the development process, errors in the products, reduced backlog for the company's customers and unexpected expenses. Please refer to the documents filed by the company with the SEC from time to time, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2012, and PLX's quarterly report on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013, which identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements are made as of today, and the company assumes no obligation to update such statements.

About PLX

PLX Technology, Inc. (NASDAQ: PLXT), based in Sunnyvale, Calif., USA, is the industry-leading global provider of semiconductor-based PCI Express connectivity solutions primarily targeting enterprise data center markets. The company develops innovative software-enriched silicon that enables product differentiation, reliable interoperability and superior performance. Visit PLX on plxtech.com, LinkedIn, Facebook, Twitter and YouTube.

PLX, the PLX logo, ExpressLane, and ExpressFabric are trademarks of PLX Technology, Inc., which may be registered in some jurisdictions. All other product names that appear in this material are for identification purposes only and are acknowledged to be trademarks or registered trademarks of their respective organizations.


 
                                                                            
                                                                            
                            PLX TECHNOLOGY, INC.                            
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                                (Unaudited)                                 
                  (in thousands, except per share amounts)                  
                                                                            
                            Three Months Ended            Nine Months Ended 
                   September 30   June 30  September 30     September 30    
                                                         ------------------ 
                       2013        2013        2012        2013      2012   
                   ------------  --------  ------------  --------  -------- 
                                                                            
Net revenues       $     25,725  $ 26,850  $     26,866  $ 78,793  $ 76,834 
Cost of revenues         11,265    11,777        10,808    33,735    31,732 
                   ------------  --------  ------------  --------  -------- 
Gross margin             14,460    15,073        16,058    45,058    45,102 
                   ------------  --------  ------------  --------  -------- 
Operating                                                                   
 expenses:                                                                  
  Research and                                                              
   development            6,107     6,480         8,823    18,548    21,362 
  Selling, general                                                          
   and                                                                      
   administrative         6,309     6,804         6,654    19,532    22,764 
  Acquisition and                                                           
   restructuring                                                            
   related costs              -         -         2,830       291     5,179 
  Amortization of                                                           
   purchased                                                                
   intangible                                                               
   assets                     -         -            64         -       223 
                   ------------  --------  ------------  --------  -------- 
Total operating                                                             
 expenses                12,416    13,284        18,371    38,371    49,528 
                   ------------  --------  ------------  --------  -------- 
Income (loss) from                                                          
 operations               2,044     1,789        (2,313)    6,687    (4,426)
Interest income                                                             
 (expense) and                                                              
 other, net                  (2)      (55)          (60)     (128)     (119)
                   ------------  --------  ------------  --------  -------- 
Income (loss) from                                                          
 continuing                                                                 
 operations before                                                          
 provision for                                                              
 income taxes             2,042     1,734        (2,373)    6,559    (4,545)
Provision for                                                               
 income taxes                57        61           931       202       466 
                   ------------  --------  ------------  --------  -------- 
Income (loss) from                    
                                      
 continuing                                                                 
 operations, net                                                            
 of tax                   1,985     1,673        (3,304)    6,357    (5,011)
Loss from                                                                   
 discontinued                                                               
 operations, net                                                            
 of tax (1)                   -         -        (3,013)      (57)  (26,965)
                   ------------  --------  ------------  --------  -------- 
Net income (loss)  $      1,985  $  1,673  $     (6,317) $  6,300  $(31,976)
                   ============  ========  ============  ========  ======== 
                                                                            
Basic net income                                                            
 (loss) per share:                                                          
  Income (loss)                                                             
   from continuing                                                          
   operations      $       0.04  $   0.04  $      (0.07) $   0.14  $  (0.11)
                   ============  ========  ============  ========  ======== 
  Loss from                                                                 
   discontinued                                                             
   operations      $          -  $      -  $      (0.07) $      -  $  (0.60)
                   ============  ========  ============  ========  ======== 
  Net income                                                                
   (loss)          $       0.04  $   0.04  $      (0.14) $   0.14  $  (0.71)
                   ============  ========  ============  ========  ======== 
                                                                            
Diluted net loss                                                            
 per share:                                                                 
  Income (loss)                                                             
   from continuing                                                          
   operations      $       0.04  $   0.04  $      (0.07) $   0.14  $  (0.11)
                   ============  ========  ============  ========  ======== 
  Loss from                                                                 
   discontinued                                                             
   operations      $          -  $      -  $      (0.07) $      -  $  (0.60)
                   ============  ========  ============  ========  ======== 
  Net income                                                                
   (loss)          $       0.04  $   0.04  $      (0.14) $   0.14  $  (0.71)
                   ============  ========  ============  ========  ======== 
                                                                            
Shares used to                                                              
 compute per share                                                          
 amounts:                                                                   
  Basic                  45,682    45,611        44,946    45,553    44,824 
                   ============  ========  ============  ========  ======== 
  Diluted                46,692    46,299        44,946    46,332    44,824 
                   ============  ========  ============  ========  ======== 
                                                                            
(1) Loss from discontinued operations includes gain on disposal of $2,097   
for the three and nine months ended September 30, 2012                      
                                                                            
                                                                            
                                                                            
                                                                            
                            PLX TECHNOLOGY, INC.                            
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                                (Unaudited)                                 
                               (in thousands)                               
                                                                            
                                              September 30     December 31  
                                                  2013            2012      
                                             --------------  -------------- 
ASSETS                                                                      
                                                                            
  Cash and investments                       $       17,985  $       16,711 
  Accounts receivable, net                           12,014          10,635 
  Inventories                                        10,070          10,560 
  Property and equipment, net                        10,390          11,267 
  Goodwill                                           20,461          20,461 
  Other assets                                        3,806           3,345 
                                             --------------  -------------- 
Total assets                                 $       74,726  $       72,979 
                                             ==============  ============== 
                                                                            
LIABILITIES                                                                 
                                                                            
  Accounts payable                           $        5,697  $       10,738 
  Accrued compensation and benefits                   3,744           4,493 
  Accrued commissions                                   500             817 
  Other accrued expenses                              3,060           2,259 
  Short term borrowings against line of                                     
   credit                                                 -           8,000 
  Long term borrowings against line of                                      
   credit                                             6,000               - 
                                             --------------  -------------- 
Total liabilities                                    19,001          26,307 
                                                                            
STOCKHOLDERS' EQUITY                                                        
                                                                            
  Common stock, par value                                46              45 
  Additional paid-in capital                        192,237         189,444 
  Accumulated other comprehensive loss                 (267)           (226)
  Accumulated deficit         
                     (136,291)       (142,591)
                                             --------------  -------------- 
Total stockholders' equity                           55,725          46,672 
                                             --------------  -------------- 
Total liabilities and stockholders' equity   $       74,726  $       72,979 
                                             ==============  ============== 
                                                                            
                                                                            
                                                                            
                                                                            
                            PLX TECHNOLOGY, INC.                            
     RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION (1)     
            (unaudited, in thousands, except for per share data)            
                   (not prepared in accordance with GAAP)                   
                                                                            
                                                                            
                                                              Nine Months   
                              Three Months Ended                 Ended      
                     September 30   June 30  September 30    September 30   
                                                           ---------------- 
                         2013        2013        2012        2013     2012  
                     ------------  --------  ------------  -------  ------- 
Income From                                                                 
 Continuing                                                                 
 Operations                                                                 
 Reconciliation                                                             
  GAAP Income (Loss) $      1,985  $  1,673  $     (3,304) $ 6,357  $(5,011)
  Acquisition and                                                           
   restructuring                                                            
   related costs                -         -         2,830      291    5,179 
  Share-based                                                               
   compensation               545       567           914    1,877    2,006 
  Lawsuit verdict                                                           
   contingency                                                              
   accrual                    293       903             -    1,196        - 
  Amortization of                                                           
   purchased                                                                
   intangible assets            -         -            64        -      223 
                     ------------  --------  ------------  -------  ------- 
  Non-GAAP Income    $      2,823  $  3,143  $        504  $ 9,721  $ 2,397 
                     ============  ========  ============  =======  ======= 
                                                                            
Income Per Share                                                            
 From Continuing                                                            
 Operations                                                                 
 Reconciliation                                                             
  GAAP Diluted                                                              
   Income (Loss) Per                                                        
   Share             $       0.04  $   0.04  $      (0.07) $  0.14  $ (0.11)
  Effect of                                                                 
   acquisition and                                                          
   restructuring                                                            
   related costs                -         -          0.06     0.01     0.12 
  Effect of share-                                                          
   based                                                                    
   compensation              0.01      0.01          0.02     0.04     0.04 
  Effect of lawsuit                                                         
   verdict                                                                  
   contingency                                                              
   accrual                   0.01      0.02             -     0.03        - 
  Effect of                                                                 
   amortization of                                                          
   purchased                                                                
   intangible assets            -         -             -        -        - 
                     ------------  --------  ------------  -------  ------- 
  Non-GAAP Diluted                                                          
   Income Per Share  $       0.06  $   0.07  $       0.01  $  0.22  $  0.05 
                     ============  ========  ============  =======  ======= 
                                                                            
Operating Income                                                            
 From Continuing                                                            
 Operations                                                                 
 Reconciliation                                                             
  GAAP Operating                                                            
   Income (Loss)     $      2,044  $  1,789  $     (2,313) $ 6,687  $(4,426)
  Share-based                                                               
   compensation -                                                           
   COGS                         9        14            49        -       98 
  Share-based                                                               
   compensation -                                                           
   R&D                        193       191           349      609      719 
  Share-based                                                               
   compensation -                                                           
   SG&A                       343       362           516    1,268    1,189 
  Lawsuit verdict                                                           
   contingency                                                              
   accrual                    293       903             -    1,196        - 
  Acquisition and                                                           
   restructuring                                                            
   related costs                -         -         2,830      291    5,179 
  Amortization of                                                           
   purchased                                                                
   intangible assets            -         -            64        -      223 
                     ------------  --------  ------------  -------  ------- 
  Non-GAAP Operating                                                        
   Income            $      2,882  $  3,259  $      1,495  $10,051  $ 2,982 
                     ============  ========  ============  =======  ======= 
                                                                            
Gross Margin From                                                           
 Continuing                                                                 
 Operations                                                                 
 Reconciliation                                                             
  GAAP Gross Margin  $     14,460  $ 15,073  $     16,058  $45,058  $45,102 
  Share-based                                                               
   compensation -                                                           
   COGS                         9        14            49        -       98 
  Lawsuit verdict                                                           
   contingency                                                              
   accrual                    235         -             -      235        - 
                     ------------  --------  ------------  -------  ------- 
  Non-GAAP Gross                                                            
   Margin            $     14,704  $ 15,087  $     16,107  $45,293  $45,200 
                     ============  ========  ============  =======  ======= 
                                                                            
Operating Expense                                                           
 From Continuing                                                            
 Operations                                                                 
 Reconciliation                                                             
  GAAP Operating                          
                                  
   Expenses          $     12,416  $ 13,284  $     18,371  $38,371  $49,528 
  Share-based                                                               
   compensation -                                                           
   R&D                       (193)     (191)         (349)    (609)    (719)
  Share-based                                                               
   compensation -                                                           
   SG&A                      (343)     (362)         (516)  (1,268)  (1,189)
  Lawsuit verdict                                                           
   contingency                                                              
   accrual                    (58)     (903)            -     (961)       - 
  Acquisition and                                                           
   restructuring                                                            
   related costs                -         -        (2,830)    (291)  (5,179)
  Amortization of                                                           
   purchased                                                                
   intangible assets            -         -           (64)       -     (223)
                     ------------  --------  ------------  -------  ------- 
  Non-GAAP Operating                                                        
   Expenses          $     11,822  $ 11,828  $     14,612  $35,242  $42,218 
                     ============  ========  ============  =======  ======= 
                                                                            
(1) Refer to " Use of Non-GAAP Financial Information" in the press release  
 for a discussion of management's use of non-GAAP financial measures.       
                                                                            

 
                                                                            
                                                                            
                            PLX TECHNOLOGY, INC.                            
                        SUPPLEMENTAL DATA (Unaudited)                       
                                                                            
                               Three Months Ended         Nine Months Ended 
                       September 30 June 30 September 30     September 30   
                                                         -------------------
                           2013       2013      2012        2013      2012  
                       ------------ ------- ------------ --------- ---------
Net Revenues by                                                             
 Geography                                                                  
Americas                    20%       19%        18%        20%       16%   
Asia Pacific                71%       71%        72%        70%       71%   
Europe                      9%        10%        10%        10%       13%   
                                                                            
                                                                            
                                                                            
                               Three Months Ended         Nine Months Ended 
                       September 30 June 30 September 30     September 30   
                                                         -------------------
                           2013       2013      2012        2013      2012  
                       ------------ ------- ------------ --------- ---------
Net Revenues by Type                                                        
PCI Express Revenue         71%       75%        65%        72%       66%   
Connectivity Revenue        29%       25%        35%        28%       34%   

Investor Relations Contact: Leslie Green Green Communications Consulting, LLC (for PLX) Tel: (650) 312-9060 leslie@greencommunicationsllc.com

Editorial Contact: David Hurd Sr. Director, Corporate Communication Tel: (408) 328-3594 dhurd@plxtech.com

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