EZchip Announces Record First Quarter 2014 Results - WAFB 9 News Baton Rouge, Louisiana News, Weather, Sports

EZchip Announces Record First Quarter 2014 Results

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SOURCE EZchip Semiconductor Ltd.

YOKNEAM, Israel, May 14, 2014 /PRNewswire/ -- EZchip Semiconductor Ltd. (NASDAQ: EZCH), a leader in Ethernet network processors, today announced its results for the first quarter ended March 31, 2014.  

First Quarter 2014 Highlights:

  • First quarter revenues of $20.3 million
  • Gross margin reached 81.3% on a GAAP basis and 81.7% on a non-GAAP basis
  • Net income, on a GAAP basis, was $6.1 million (30% of revenues)
  • Net income, on a non-GAAP basis, was $10.0 million (49% of revenues)
  • Operating cash flow of $8.6 million
  • Net cash at end of quarter was $210.0 million

First Quarter 2014 Results:

Total revenues in the first quarter of 2014 were $20.3 million, an increase of 33% compared to $15.3 million in the first quarter of 2013, and an increase of 1% compared to $20.1 million in the fourth quarter of 2013.

Net income, on a GAAP basis, for the first quarter of 2014 was $6.1 million, or $0.21 per share (diluted), compared to net income of $3.5 million, or $0.12 per share (diluted), in the first quarter of 2013, and net income of $6.5 million, or $0.22 per share (diluted), in the fourth quarter of 2013.

Net income, on a non-GAAP basis, for the first quarter of 2014 was $10.0 million, or $0.33 per share (diluted), compared to non-GAAP net income of $6.7 million, or $0.23 per share (diluted), in the first quarter of 2013, and non-GAAP net income of $10.1 million, or $0.34 per share (diluted), in the fourth quarter of 2013.

Cash, cash equivalents, marketable securities and deposits as of March 31, 2014, totaled $210.0 million, compared to $202.9 million as of December 31, 2013. Cash generated from operations was $8.6 million, cash used in investing activities was $1.6 million, cash provided by financing activities (resulting from the exercise of options) was $0.2 million and a decrease of $0.1 million resulted from cash adjustment of marketable securities, net.

Eli Fruchter, CEO of EZchip, commented, "This has been a record quarter for EZchip in revenues, up 33% compared to the first quarter last year. During the quarter we continued the testing of the NP-5 and expect the NP-5 to move to production in the second half of the year, in line with the typical three year gap we have seen between NP generations, starting with the NP-1 in 2002. Our upcoming NPS will double the throughput of its NP-5 predecessor and is expected to arrive sooner than the typical three year gap we have had with previous chip generations. This provides our routing customers with enough time to make their silicon choices into next year and still have ample time to migrate their software to the NPS and be ready with next gen line cards in the 2016/17 time frame. The NPS is receiving very positive feedback from our current customers as well as from vendors outside of the routing arena. Such vendors include data center network appliance and switch vendors as well as the large carriers and data center operators that are innovating in-house networking solutions including the adoption of the white box concept."

Conference Call

The Company will be hosting a conference call later today, May 14, 2014, 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. 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 27, 2014 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



March 31,


December 31,


March 31,



2014


2013


2013








Revenues


$       20,288


$       20,097


$       15,296

Cost of revenues


3,788


3,680


2,941

Gross profit


16,500

 


16,417

 


12,355

 








Operating expenses:







Research and development, net


7,102


6,923


6,098

Selling, general and administrative


3,772


3,527


3,257

Total operating expenses


10,874


10,450


9,355








Operating income


5,626

 


5,967

 


3,000

 

Financial income, net


460


546


510

Net income


$        6,086


$        6,513


$        3,510








Net income per share:







Basic


$          0.21


$          0.23


$          0.12

Diluted


$          0.21


$          0.22


$          0.12

Weighted average shares used in per share calculation:







Basic


28,978,411


28,825,291


28,394,665

Diluted


29,338,690


29,171,552


28,881,145








 

EZchip Semiconductor Ltd.
Reconciliation of GAAP to Non-GAAP Measures
(U.S. Dollars in thousands, except per share amounts)
(Unaudited)






Three Months Ended



March 31,


December 31,


March 31,



2014


2013


2013








GAAP gross profit


$      16,500


$      16,417


$      12,355

Stock-based compensation


74


73


73

Non-GAAP gross profit


$      16,574


$      16,490


$      12,428








GAAP gross profit as percentage of revenues


81.3%


81.7%


80.8%


Non-GAAP gross profit as percentage of revenues


81.7%


82.1%


81.3%















GAAP operating expenses


$     10,874


$      10,450


$       9,355

Stock-based compensation:







Research and development


(2,267)


(2,045)


(1,825)

Selling, general and administrative


(1,584)


(1,515)


(1,327)

Non-GAAP operating expenses


$       7,023


$        6,890


$       6,203















GAAP operating income


$       5,626


$        5,967


$       3,000








Non-GAAP operating income


$       9,551


$        9,600


$       6,225








GAAP net income


$       6,086


$        6,513


$       3,510

Stock-based compensation


3,925


3,633


3,225








Non-GAAP net income


$     10,011


$      10,146


$       6,735








Non-GAAP net income per share - Diluted


$        0.33


$          0.34


$        0.23

Non-GAAP weighted average shares - Diluted*


30,507,804


30,213,501


29,868,370

* 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)









March 31,


December 31,




2014


2013




(Unaudited)


(Audited)


ASSETS






CURRENT ASSETS:






Cash, cash equivalents, marketable securities and deposits


$      209,972


$      202,865


Trade receivables, net


7,388


7,416


Other receivables


4,487


3,153


Inventories


6,071


5,969


Total current assets


227,918


219,403








NON CURRENT ASSETS:






Severance pay fund


7,432


7,416


Long term investment and others


368


364


Total non current assets


7,800


7,780








PROPERTY AND EQUIPMENT, NET


2,109


2,114








INTANGIBLE ASSETS, NET


4,175


4,127








GOODWILL


96,276


96,276








TOTAL ASSETS


$      338,278


$      329,700







LIABILITIES AND SHAREHOLDERS' EQUITY






CURRENT LIABILITIES:






Trade payables


$          3,135


$          3,951


Other payables and accrued expenses


6,475


7,309


Total current liabilities


9,610


11,260








ACCRUED SEVERANCE PAY


8,333


8,164








SHAREHOLDERS' EQUITY:






Share capital


166


164


Additional paid-in capital


332,142


328,003


Accumulated other comprehensive income


269


437


Accumulated deficit


(12,242)


(18,328)


Total shareholders' equity


320,335


310,276








TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$        338,278


$        329,700














 

EZchip Semiconductor Ltd.

Selected Condensed Consolidated Cash Flow Data on a Non-GAAP Basis

(U.S. Dollars in thousands)

(Unaudited)



Three Months Ended



March 31,


December 31,


March 31,



2014


2013


2013

Cash flows from operating activities:







Net income


$       6,086


$       6,513


$       3,510

Adjustments to reconcile net income to net cash provided by operating activities:







Depreciation


168


161


155

Decrease (increase) in trade and other receivables, net


 

(1,353)


 

1,026


 

(1,174)

Increase in inventory


(102)


(678)


(627)

Increase (decrease) in trade payables and other accrued liabilities, net


 

(164)


 

2,199


 

1,666

Stock-based compensation

 


3,925


3,633


3,225

Net cash provided by operating activities


8,560


12,854


6,755








Cash flows from investing activities:







Purchase of property and equipment


(196)


(151)


(345)

Purchase of technology

 


(1,348)


(533)


(131)

Net cash used in investing activities


(1,544)


(684)


(476)








Cash flows from financing activities:







Proceeds from exercise of options

 


216


79


54

Net cash provided by financing activities


216


79


54








Cash adjustment of marketable securities, net*


(125)


(14)


(13)








Increase in cash, cash equivalents, marketable securities and deposits

 


 

7,107


 

12,235


 

6,320

Cash, cash equivalents, marketable securities and deposits at the beginning of the period


 

202,865


 

190,630


 

167,968

 

Cash, cash equivalents, marketable securities and deposits at the end of the period


 

 

$      209,972


 

 

$      202,865


 

$     174,288

* Including unrealized gain (loss) on marketable securities, accumulated interest accretion and amortization of discount and premium on marketable securities.

 

Contact:
Ehud Helft / Kenny Green
GK Investor & Public Relations
ezchip@gkir.com
Tel: (US) 1 646 201 9246

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