EZchip Announces Record Third Quarter 2013 Results PR Newswire YOKNEAM, Israel, Nov. 6, 2013 YOKNEAM, Israel, Nov. 6, 2013 /PRNewswire/ -- EZchip Semiconductor Ltd. (NASDAQ: EZCH), a leader in Ethernet network processors, today announced its results for the third quarter ended September 30, 2013. Third Quarter 2013 Highlights: oThird quarter revenues of $18.8 million oGross margin reached 84.4% on a GAAP basis and 84.8% on a non-GAAP basis oNet income, on a GAAP basis, was $6.5 million (35% of revenues) oNet income, on a non-GAAP basis, was $10.1 million (54% of revenues) oOperating cash flow of $10.3 million oNet cash at end of quarter was $190.6 million Third Quarter 2013 Results: Total revenues in the third quarter of 2013 were $18.8 million, an increase of 102% compared to $9.3 million in the third quarter of 2012, and an increase of 13% compared to $16.7 million in the second quarter of 2013. Net income, on a GAAP basis, for the third quarter of 2013 was $6.5 million, or $0.22 per share (diluted), compared to net income of $0.1 million, or $0.00 per share (diluted), in the third quarter of 2012, and net income of $5.1 million, or $0.18 per share (diluted), in the second quarter of 2013. Net income, on a non-GAAP basis, for the third quarter of 2013 was $10.1 million, or $0.33 per share (diluted), compared to non-GAAP net income of $3.1 million, or $0.10 per share (diluted), in the third quarter of 2012, and non-GAAP net income of $8.7 million, or $0.29 per share (diluted), in the second quarter of 2013. Cash, cash equivalents, marketable securities and deposits as of September30, 2013, totaled $190.6 million, compared to $181.9 million as of June 30, 2013. Cash generated from operations was $10.3 million, cash used in investing activities was $2.0 million and cash provided by financing activities (resulting from the exercise of options) was $0.4 million. First Nine Months 2013 Results Total revenues for the nine months ended September 30, 2013 were $50.8 million, a year-over-year increase of 28% compared to $39.5 million for the nine months ended September30, 2012. Net income on a GAAP basis for the nine months ended September 30, 2013 was $15.2 million, or $0.52 per share (diluted), compared to net income of $10.8 million, or $0.38 per share (diluted), for the nine months ended September 30, 2012. Net income on a non-GAAP basis for the nine months ended September30, 2013 was $25.5 million or $0.85 per share (diluted), compared with non-GAAP net income of $19.3 million, or $0.65 per share (diluted), for the nine months ended September30, 2012. Eli Fruchter, CEO of EZchip, commented, "We are pleased to report a record quarter in revenues and profits primarily driven by recent improvements in carriers capex towards edge routing. During the third quarter we continued the testing of the NP-5 samples that arrived last quarter and are pleased to report that testing is proceeding according to plan and we expect the NP-5 to move to production next year. "In its latest NPU market report published last month, The Linley Group discussed the NPS and emphasized that the evolutionary approach to NPU designs will be unable to keep pace with carriers' requirements and that a revolutionary approach is required, such as the bold move that EZchip made in developing the NPS. "Furthermore, based on the market share analysis provided in The Linley report and taking into account EZchip's sales to Cisco through Marvell, in 2012 EZchip became, for the first time, the overall NPU market share leader, with 23% of the market. With EZchip's current growth rate, we believe our market leadership position will likely strengthen in 2013 and beyond." Conference Call The Company will be hosting a conference call later today, November 6, 2013, at 10:00am ET, 7:00am PT, 3:00pm UK time and 5:00pm Israel time. On the call, management will review and discuss the results, and will be available to answer investor questions. To participate through the live webcast, please access the investor relations section of the Company's web site at:http://www.ezchip.com/investor_relations.htm, at least 10 minutes before the conference call commences. If you would like to ask a question on the call, please contact the investor relations team for the telephone dial in numbers. For those unable to listen to the live webcast, a replay of the webcast will be available the day after the call under the 'Investor Relations' section of the website. Use of Non-GAAP Financial Information In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which EZchip believes are the principal indicators of the operating and financial performance of its business. The non-GAAP financial measures exclude the effects of stock-based compensation expenses recorded in accordance with FASB ASC 718 and amortization of intangible assets. Management believes the non-GAAP financial measures provided are useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company. Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release. About EZchip EZchip is a fabless semiconductor company that provides Ethernet network processors for networking equipment. EZchip provides solutions that scale from a few to hundreds of Gigabits-per-second. EZchip's network processors provide great flexibility and high performance coupled with superior integration and power efficiency for a wide range of applications in carrier, cloud and data center network equipment. For more information on our company, visit the web site at http://www.ezchip.com. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that are not historical facts and may include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. These statements are only predictions based on EZchip's current expectations and projections about future events based on its current knowledge. There are important factors that could cause EZchip's actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Those factors include, but are not limited to, the impact of general economic conditions, competitive products (including in-house customer developed products), product demand and market acceptance risks, customer order cancellations, reliance on key strategic alliances, fluctuations in operating results, delays in development of highly-complex products and other factors indicated in EZchip's filings with the Securities and Exchange Commission (SEC). For more details, refer to EZchip's SEC filings and the amendments thereto, including its Annual Report on Form 20-F filed on March 21, 2013 and its Current Reports on Form 6-K. EZchip undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in our expectations, except as may be required by law. EZchip Semiconductor Ltd. Condensed Consolidated Statements of Operations (U.S. Dollars in thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30, 2013 2013 2012 2013 2012 Revenues $ $ $ $ $ 18,804 16,653 9,287 50,753 39,500 Cost of revenues 2,926 2,475 1,497 8,342 6,563 Gross profit 15,878 14,178 7,790 42,411 32,937 Operating expenses: Research and 6,527 6,267 5,182 18,892 14,556 development, net Selling, general 3,310 3,269 3,047 9,836 9,414 and administrative Total operating 9,837 9,536 8,229 28,728 23,970 expenses Operating income 6,041 4,642 (439) 13,683 8,967 (loss) Financial income, 487 505 566 1,502 1,845 net Net income $ $ $ $ $ 6,528 5,147 127 15,185 10,812 Net income per share: Basic $ $ $ $ $ 0.23 0.18 0.00 0.53 0.39 Diluted $ $ $ $ $ 0.22 0.18 0.00 0.52 0.38 Weighted average shares used in per share calculation: 28,717,575 28,571,954 28,119,713 28,562,581 27,896,611 Basic 29,151,003 28,917,717 28,748,784 29,092,293 28,762,602 Diluted EZchip Semiconductor Ltd. Reconciliation of GAAP to Non-GAAP Measures (U.S. Dollars in thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30, 2013 2013 2012 2013 2012 GAAP gross profit $ 15,878 $ 14,178 $ 7,790 $ 42,411 $ 32,937 Stock-based 73 73 73 219 224 compensation Non-GAAP gross $ 15,951 $ 14,251 $ 7,863 $ 42,630 $ 33,161 profit GAAP gross profit as percentage of 84.4% 85.1% 83.9% 83.6% 83.4% revenues Non-GAAP gross profit as 84.8% 85.6% 84.7% 84.0% 84.0% percentage of revenues GAAP operating $ 9,837 $ 9,536 $ 8,229 $ 28,728 $ 23,970 expenses Stock-based compensation: Research and (2,044) (2,049) (1,557) (5,918) (4,463) development Selling, general (1,425) (1,398) (1,249) (4,150) (3,609) and administrative Amortization of intangible assets Selling, general -- -- (51) -- (153) and administrative Non-GAAP operating $ 6,368 $ 6,089 $ 5,372 $ 18,660 $ 15,745 expenses GAAP operating $ 6,041 $ 4,642 $ (439) $ 13,683 $ 8,967 income (loss) Non-GAAP operating $ 9,583 $ 8,162 $ 2,491 $ 23,970 $ 17,416 income GAAP net income $ 6,528 $ 5,147 $ 127 $ 15,185 $ 10,812 Stock-based 3,542 3,520 2,879 10,287 8,296 compensation Amortization of purchased -- -- 51 -- 153 intangible assets Non-GAAP net $ 10,070 $ 8,667 $ 3,057 $ 25,472 $ 19,261 income Non-GAAP net income per share - $ 0.33 $ 0.29 $ 0.10 $ 0.85 $ 0.65 Diluted Non-GAAP weighted average shares - 30,164,874 30,086,653 29,588,230 30,032,150 29,421,692 Diluted* * In calculating diluted non-GAAP net income per share, the diluted weighted average number of shares outstanding excludes the effects of stock-based compensation expenses in accordance with FASB ASC 718. EZchip Semiconductor Ltd. Condensed Consolidated Balance Sheet (U.S. Dollars in thousands) September 30, December 31, 2013 2012 (Unaudited) (Audited) ASSETS CURRENT ASSETS: Cash, cash equivalents, marketable $ 190,630 $ 167,968 securities and deposits Trade receivables, net 6,073 4,813 Other receivables 5,676 4,305 Inventories 5,291 4,523 Total current assets 207,670 181,609 NON CURRENT ASSETS: Severance pay fund 7,101 6,066 Long term investment and others 364 358 Total non current assets 7,465 6,424 PROPERTY AND EQUIPMENT, NET 2,196 1,285 INTANGIBLE ASSETS, NET 2,419 1,000 GOODWILL 96,276 96,276 TOTAL ASSETS $ 316,026 $ 286,594 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 1,420 $ 571 Other payables and accrued expenses 6,491 5,401 Total current liabilities 7,911 5,972 ACCRUED SEVERANCE PAY 7,896 6,977 SHAREHOLDERS' EQUITY: Share capital 164 161 Additional paid-in capital 324,297 312,723 Accumulated other comprehensive income 599 787 Accumulated deficit (24,841) (40,026) Total shareholders' equity 300,219 273,645 TOTAL LIABILITIES AND SHAREHOLDERS' $ 316,026 $ 286,594 EQUITY EZchip Semiconductor Ltd. Selected Condensed Consolidated Cash Flow Data on a Non-GAAP Basis (U.S. Dollars in thousands) (Unaudited) Three Months Ended Nine Months Ended Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30, 2013 2013 2012 2013 2012 Cash flows from operating activities: Net income $ $ $ $ $ 6,528 5,147 127 15,185 10,812 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and 158 129 178 442 478 amortization Decrease (increase) in trade and other receivables, net (2,083) 859 3,181 (2,224) 4,183 Decrease (increase) in 584 (725) 521 (768) 317 inventory Increase (decrease) in trade payables and other accrued liabilities, net 1,605 (1,480) (585) 1,791 (1,538) Stock-based compensation 3,542 3,520 2,879 10,287 8,296 Net cash provided by 10,334 7,450 6,301 24,713 22,548 operating activities Cash flows from investing activities: Purchase of property and (846) (255) (95) (1,446) (769) equipment Purchase of technology (1,163) -- -- (1,294) (500) Net cash used in (2,009) (255) (95) (2,740) (1,269) investing activities Cash flows from financing activities: Proceeds from exercise of options 450 780 96 1,284 11,863 Net cash provided by 450 780 96 1,284 11,863 financing activities Cash adjustment of marketable securities, (20) (388) 15 (595) 169 net* Increase in cash, cash equivalents, marketable securities and deposits 8,755 7,587 6,317 22,662 33,311 Cash, cash equivalents, marketable securities and deposits at the 181,875 174,288 153,764 167,968 126,770 beginning of the period Cash, cash equivalents, marketable securities and deposits at the end $ $ $ $ $ of the period 190,630 181,875 160,081 190,630 160,081 * Including unrealized gain (loss) on marketable securities, accumulated interest accretion and amortization of discount and premium on marketable securities. Contact: Ehud Helft / Kenny Green CCG Investor Relations firstname.lastname@example.org Tel: (US) 1 646 201 9246 SOURCE EZchip Semiconductor Ltd. Website: http://www.ezchip.com
EZchip Announces Record Third Quarter 2013 Results
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