Netlist Reports First Quarter 2014 Results
IRVINE, CA--(Marketwired - May 13, 2014) - Netlist, Inc.
(NASDAQ: NLST), a leading provider of high performance memory
solutions for the cloud computing and storage markets, today
reported financial results for the first quarter ended March 29,
2014.
Revenues for the first quarter ended March 29, 2014, were $7.0
million, compared to revenues of $6.0 million for the first quarter
ended March 30, 2013. Gross profit for the first quarter ended
March 29, 2014, was $2.0 million, or 28.4 percent of revenues,
compared to a gross profit of $0.6 million, or 9.5 percent of
revenues, for the first quarter ended March 30, 2013.
The adjusted EBITDA loss was ($0.8) million for the first
quarter ended March 29, 2014, compared to an adjusted EBITDA loss
of ($2.2) million for the prior year period.
Net loss for the first quarter ended March 29, 2014, was ($2.0)
million, or ($0.05) loss per share, compared to a net loss in the
prior year period of ($3.2) million, or ($0.10) loss per
share. These results include stock-based compensation expense
of $0.5 million for the first quarter ended March 29, 2014,
compared to $0.4 million for the prior year period.
As of March 29, 2014, cash and cash equivalents and restricted
cash were $19.1 million, total assets were $27.7 million, working
capital was $20.5 million, total debt, net of debt discounts, was
$5.4 million, and stockholders' equity was $16.6 million.
"During the first quarter we made further progress in broadening
our target market opportunity and expanding our portfolio of
flagship products, specifically our NVvault™ and EVvault™ for the
growing enterprise storage market," said C.K. Hong, CEO of Netlist.
"We also secured highly favorable rulings at the United States
Patent and Trademark Office pertaining to our innovative patented
technologies covering LRDIMM and hybrid memory. We are pleased
with our financial results as well. We delivered year over
year growth in revenues and gross profits and we significantly
improved our cash position by effectively executing our public
offering in February 2014."
Conference Call
Information As previously announced, Netlist is conducting a
conference call today at 5:00 pm Eastern Time to discuss and to
review the financial results for the first quarter ended March 29,
2014. The dial-in number for the call is
1-412-858-4600. 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 (Earnings
Before Interest, Taxes, Depreciation and Amortization), may be
considered 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 net interest expense, provisions for income taxes,
depreciation, amortization, stock-based compensation and net
other expense that would normally be included in the most
directly comparable measures calculated and presented in accordance
with Generally Accepted Accounting Principles ("GAAP"). Netlist's
management uses these non-GAAP financial measures along with the
most directly comparable GAAP financial measures 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
compliance with GAAP, and non-financial measures as reported by
Netlist may not be comparable to similarly titled amounts reported
by other companies.
Adjusted EBITDA loss is a non-GAAP measure in which the net
interest expense, provision for income taxes, depreciation,
amortization, stock-based compensation and net other expense are
added back to the GAAP basis loss. The non-GAAP measures are
described above and are reconciled to the corresponding GAAP
measure in the condensed consolidated financial statements portion
of this release under the heading "Unaudited Schedule Reconciling
GAAP Net Loss to Non-GAAP EBITDA and Adjusted EBITDA."
About Netlist: Netlist, Inc. designs and manufactures
high-performance, logic-based memory subsystems for server and
storage applications for cloud computing. Netlist's flagship
products include HyperCloud®, a patented memory technology that
breaks traditional performance barriers, NVvault™ and EXPRESSvault™
family of products that significantly accelerate system performance
and provide mission critical fault tolerance, and a broad portfolio
of industrial Flash and specialty memory subsystems including VLP
(very low profile) DIMMs and Planar-X RDIMMs. Netlist has steadily
invested in and grown its IP portfolio, which now includes 43
issued patents and more than 30 U.S. and foreign pending patent
applications in the areas of high performance memory and hybrid
memory technologies.
Netlist develops technology solutions for customer applications
in which high-speed, high-capacity, small form factor and efficient
heat dissipation are key requirements for system memory. These
customers include OEMs that design and build tower, rack-mounted,
and blade servers, high-performance computing clusters, engineering
workstations and telecommunications equipment. Founded in 2000,
Netlist is headquartered in Irvine, CA with manufacturing
facilities in Suzhou, People's Republic of China. Learn more at
www.netlist.com.
Safe Harbor Statement: This news release contains
forward-looking statements regarding future events and the future
performance of Netlist. These forward-looking statements involve
risks and uncertainties that could cause actual results to differ
materially from those expected or projected. These risks and
uncertainties include, but are not limited to, risks associated
with the launch and commercial success of our products, programs
and technologies; the success of product partnerships; continuing
development, qualification and volume production of EXPRESSvault™,
NVvault™, HyperCloud® and VLP Planar-X RDIMM; the timing and
magnitude of the anticipated decrease in sales to our key customer;
our ability to leverage our NVvault™ technology in a more diverse
customer base; the rapidly-changing nature of technology; risks
associated with intellectual property, including patent
infringement litigation against us as well as the costs and
unpredictability of litigation over infringement of our
intellectual property and the possibility of our patents being
reexamined by the United States Patent and Trademark office;
volatility in the pricing of DRAM ICs and NAND; changes in and
uncertainty of customer acceptance of, and demand for, our existing
products and products under development, including uncertainty of
and/or delays in product orders and product qualifications; delays
in the Company's and its customers' product releases and
development; introductions of new products by competitors; changes
in end-user demand for technology solutions; the Company's ability
to attract and retain skilled personnel; the Company's reliance on
suppliers of critical components and vendors in the supply chain;
fluctuations in the market price of critical components; evolving
industry standards; and the political and regulatory environment in
the People's Republic of China. Other risks and uncertainties are
described in the Company's annual report on Form 10-K filed on
March 18, 2014, and subsequent filings with the U.S. Securities and
Exchange Commission made by the Company from time to time. Except
as required by law, Netlist undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
(Tables Follow)
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Netlist, Inc. and Subsidiaries |
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Condensed Consolidated Balance Sheets |
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(in thousands, except par value) |
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unaudited |
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audited |
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March 29, |
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December 28, |
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|
|
2014 |
|
|
2013 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
|
$ |
17,974 |
|
|
$ |
6,701 |
|
|
Restricted cash |
|
|
1,100 |
|
|
|
1,100 |
|
|
Accounts receivable, net |
|
|
4,219 |
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|
|
4,866 |
|
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Inventories |
|
|
2,428 |
|
|
|
2,620 |
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|
Prepaid expenses and other current assets |
|
|
811 |
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|
|
823 |
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Total current assets |
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|
26,532 |
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|
16,110 |
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Property and equipment, net |
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|
891 |
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|
1,143 |
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Other assets |
|
|
323 |
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|
|
422 |
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Total assets |
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$ |
27,746 |
|
|
$ |
17,675 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
|
$ |
3,881 |
|
|
$ |
3,795 |
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|
Accrued payroll and related liabilities |
|
|
771 |
|
|
|
635 |
|
|
Accrued expenses and other current liabilities |
|
|
543 |
|
|
|
533 |
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|
Accrued engineering charges |
|
|
500 |
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|
|
500 |
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Current portion of long-term debt and debt
discount |
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|
298 |
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|
|
- |
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Total
current liabilities |
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|
5,993 |
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|
|
5,463 |
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Long-term debt, net of current portion and debt
discount |
|
|
5,056 |
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|
|
5,099 |
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Other liabilities |
|
|
104 |
|
|
|
100 |
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Total
liabilities |
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|
11,153 |
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|
|
10,662 |
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Commitments and contingencies |
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Stockholders' equity: |
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Common stock, $0.001 par value - 90,000 shares
authorized; 41,480 (2014) and 31,776 (2013) shares issued and
outstanding |
|
|
41 |
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|
|
31 |
|
|
Additional paid-in capital |
|
|
116,057 |
|
|
|
104,469 |
|
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Accumulated deficit |
|
|
(99,505 |
) |
|
|
(97,487 |
) |
|
|
Total stockholders' equity |
|
|
16,593 |
|
|
|
7,013 |
|
|
|
Total liabilities and stockholders' equity |
|
$ |
27,746 |
|
|
$ |
17,675 |
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|
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|
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|
|
|
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|
|
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|
Netlist, Inc. and Subsidiaries |
|
Unaudited Condensed Consolidated Statements of
Operations |
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(in thousands, except per share amounts) |
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|
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Three Months Ended |
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|
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March 29, |
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March 30, |
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|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
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Net sales |
|
$ |
7,001 |
|
|
$ |
5,963 |
|
Cost of sales(1) |
|
|
5,016 |
|
|
|
5,397 |
|
Gross profit |
|
|
1,985 |
|
|
|
566 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Research and development(1) |
|
|
1,975 |
|
|
|
1,842 |
|
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Selling, general and administrative(1) |
|
|
1,622 |
|
|
|
1,756 |
|
|
|
Total operating expenses |
|
|
3,597 |
|
|
|
3,598 |
|
Operating loss |
|
|
(1,612 |
) |
|
|
(3,032 |
) |
Other expense, net: |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(395 |
) |
|
|
(130 |
) |
|
Other expense, net |
|
|
(11 |
) |
|
|
(6 |
) |
|
|
Total other expense, net |
|
|
(406 |
) |
|
|
(136 |
) |
Loss before provision for income taxes |
|
|
(2,018 |
) |
|
|
(3,168 |
) |
Provision for income taxes |
|
|
- |
|
|
|
2 |
|
Net loss |
|
$ |
(2,018 |
) |
|
$ |
(3,170 |
) |
Net loss per common share: |
|
|
|
|
|
|
|
|
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Basic and diluted |
|
$ |
(0.05 |
) |
|
$ |
(0.10 |
) |
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
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Basic and diluted |
|
|
36,881 |
|
|
|
30,205 |
|
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(1) Amounts include stock-based compensation expense as
follows: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
$ |
15 |
|
|
$ |
12 |
|
|
Research and development |
|
|
188 |
|
|
|
160 |
|
|
Selling, general and administrative |
|
|
328 |
|
|
|
262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Netlist, Inc. and Subsidiaries |
|
Unaudited Schedule Reconciling GAAP Net Loss to
Non-GAAP EBITDA and Adjusted EBITDA |
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 29, |
|
|
March 30, |
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
|
$ |
(2,018 |
) |
|
$ |
(3,170 |
) |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
395 |
|
|
|
130 |
|
Provision for income taxes |
|
|
- |
|
|
|
2 |
|
Depreciation and amortization |
|
|
282 |
|
|
|
418 |
|
EBITDA |
|
|
(1,341 |
) |
|
|
(2,620 |
) |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
531 |
|
|
|
434 |
|
Other expense, net |
|
|
11 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
(799 |
) |
|
$ |
(2,180 |
) |
For more information, please contact: Brainerd Communicators,
Inc. Mike Smargiassi or Corey Kinger NLST@braincomm.com (212)
986-6667 Netlist, Inc. Gail M. Sasaki Chief Financial Officer (949)
435-0025
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