LOS ALTOS, Calif., May 1, 2014 (GLOBE NEWSWIRE) -- DSP Group®, Inc. (Nasdaq:DSPG), a leading global provider of wireless chipset solutions for converged communications, announced today its results for the first quarter ended March 31, 2014.
Financial Results Highlights:
- Non-GAAP diluted EPS of $0.03 and GAAP diluted LPS of $0.04, exceeding guidance
- First quarter revenues of approximately $32.9 million, above mid-point of guidance
- Gross margins of 39.6%, at the high end of guidance
- Maintained positive non-GAAP operating income for the sixth consecutive quarter
- Non-GAAP net income of $0.8 million, representing eighth consecutive quarter of non-GAAP net income
- Repurchased 596,000 shares for a total consideration of $5.3 million
- Net cash and cash equivalents of $117 million
Management Comments:
Commenting on the results, Ofer Elyakim, CEO of DSP Group, stated, "We are pleased with our financial results for the first quarter, which exceeded our guidance in almost every financial metric. Moreover, we believe that the excess inventory depletion cycle which negatively impacted revenues in the first quarter, as originally expected, is now behind us and we are well positioned for sequential revenue growth in the second quarter."
Mr. Elyakim added, "During the quarter we successfully met key milestones in our business plan, which will enable us to more meaningfully expand our reach beyond cordless telephony with new product offerings. One of our most important achievements was a major design win with a tier 1 OEM for VoIP products that will significantly expand our market footprint and revenue growth in the Office segment. We are well positioned to meet all the milestones we have set forth in our plan for this year and consequently achieve an inflection point in our business in 2015."
Products and Market Highlights:
- Secured a major IP phone design win with a tier 1 OEM based on DSP Group's DVF99 SoC
- Grandstream launched three new enterprise grade VoIP phones based on DSP Group's DVF99 SoC
- Sercomm began shipments of its new home gateway to a tier 1 service provider based on our DECT CAT-iq SoC
- ProSyst, Rockethome and DSP Group partner to offer end-to-end ULE-based home automation and security platform
- Leading security service provider and a tier 1 OEM customer selected our DECT-ULE SoC to power their wireless security and safety offerings
2014 First Quarter Results
GAAP Results:
Revenues for the first quarter of 2014 were $32,886,000, a decrease of 17% from revenues of $39,650,000 for the first quarter of 2013. Net loss for the first quarter of 2014 was $988,000, as compared to net income of $1,172,000 for the first quarter of 2013. Loss per share for the first quarter of 2014 was $0.04, as compared to a basic and diluted income per share of $0.05 for the first quarter of 2013.
Non-GAAP Results:
Non-GAAP net income and diluted earnings per share for the first quarter of 2014 were $755,000 and $0.03, respectively, as compared to non-GAAP net income and diluted earnings per share of $2,536,000 and $0.11, respectively, for the first quarter of 2013. Non-GAAP net income and earnings per share for the first quarter of 2014 excluded the impact of amortization of acquired intangible assets in the amount of $397,000, associated with the acquisitions of NXP's CIPT business and BoneTone Communications, equity-based compensation expenses of $1,443,000 and amortization of deferred tax liability related to intangible assets acquired in the BoneTone acquisition in the amount of $97,000.
Non-GAAP net income and earnings per share for the first quarter of 2013 excluded the impact of amortization of acquired intangible assets in the amount of $418,000, associated with the acquisitions of NXP's CIPT business and BoneTone, equity-based compensation expenses of $1,043,000 and amortization of deferred tax liability related to intangible assets acquired in the BoneTone acquisition in the amount of $97,000.
Earnings Conference Call Details:
DSP Group will discuss its first quarter financial results, along with its outlook and guidance for the second quarter of 2014, on its conference call at 8:30 a.m. ET today, and invites you to listen via our conference call or a live broadcast over the Internet.
Investors may access the conference call by dialing +1 877 280 1254 (domestic US) or +1 646 254 3388 (international) approximately 10 minutes prior to the starting time. The password is DSP Group. The broadcast via the Internet can be accessed by all interested parties through the Investor Relations section of DSP Group's website at www.dspg.com or link to: http://www.media-server.com/m/p/a9gsrudj
A replay of the conference call will be available for a week following the call. To listen to the session, please dial +1 347 366 9565 (domestic US) or +44 203 427 0598 (international) and enter the company access code: 2226079#
Presentation on Non-GAAP Net Income Calculation
The Company believes that the non-GAAP presentation of net income and diluted EPS presented in this press release is useful to investors in comparing results for the quarter ended March 31, 2014 to the same period in 2013 because the exclusion of the above noted expenses may provide a more meaningful analysis of the Company's core operating results. Further, the Company believes it is useful to investors to understand how the expenses associated with equity-based compensation expenses are reflected on its statements of income.
Forward Looking Statements
This press release contains statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including Mr. Elyakim's statement that the excess inventory depletion cycle experienced by DSP Group concluded in the first quarter of 2014 and that the company is well positioned for sequential revenue growth in the second quarter of 2014, as well as his statement that DSP Group is well positioned to meet all the milestones set forth in its business plan and the successful execution of such milestones will enable DSP Group to more meaningfully expand its reach beyond cordless telephony to new product offerings and consequently enable DSP Group to achieve an inflection point in its business in 2015. In addition, the events described in these forward-looking statements may not actually arise as a result of various factors, including the timing and ability of the consumer electronics market to recover and the corresponding recovery of DSP Group's customers; unexpected delays in the commercial launch of new products; slower than expected change in the nature of residential communications domain; DSP Group's ability to manage costs, DSP Group's ability to develop and produce new products at competitive costs and in a timely manner or the ability of such products to achieve broad market acceptance; and general market demand for products that incorporate DSP Group's technology in the market. These factors and other factors which may affect future operating results or DSP Group's stock price are discussed under "RISK FACTORS" in the Form 10-K for fiscal 2013, as well as other reports DSP Group has filed with the Securities and Exchange Commission and which are available on DSP Group's website (www.dspg.com) under Investor Relations. DSP Group assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
About DSP Group
DSP Group®, Inc. (Nasdaq:DSPG) is a leading global provider of wireless chipset solutions for converged communications. Delivering semiconductor system solutions with software and reference designs, DSP Group enables OEMs/ODMs, consumer electronics (CE) manufacturers and service providers to cost-effectively develop new revenue-generating products with fast time to market.
At the forefront of semiconductor innovation and operational excellence for over two decades, DSP Group provides a broad portfolio of wireless chipsets integrating DECT/CAT-iq, ULE, Wi-Fi, PSTN, HDClear™, video and VoIP technologies.
DSP Group enables converged voice, audio, video and data connectivity across diverse mobile, consumer and enterprise products – from mobile devices, connected multimedia screens, and home automation & security to cordless phones, VoIP systems, and home gateways. Leveraging industry-leading experience and expertise, DSP Group partners with CE manufacturers and service providers to shape the future of converged communications at home, office and on the go.
For more information, visit www.dspg.com.
| DSP GROUP, INC. | ||
| CONSOLIDATED STATEMENTS OF INCOME | ||
| (In thousands, except per share amounts) | ||
| Three Months Ended | ||
| March 31, | ||
| 2014 | 2013 | |
| Unaudited | Unaudited | |
| Revenues | $ 32,886 | $ 39,650 |
| Cost of revenues | 19,872 | 23,944 |
| Gross profit | 13,014 | 15,706 |
| Operating expenses: | ||
| Research and development, net | 8,205 | 9,151 |
| Sales and marketing | 3,086 | 3,051 |
| General and administrative | 2,717 | 2,622 |
| Amortization of intangible assets | 397 | 418 |
| Total operating expenses | 14,405 | 15,242 |
| Operating income (loss) | (1,391) | 464 |
| Other income : | ||
| Financial income, net | 412 | 570 |
| Income (loss) before taxes on income | (979) | 1,034 |
| Taxes on income (income tax benefit) | 9 | (138) |
| Net income (loss) | $ (988) | $ 1,172 |
|
Net earnings (loss) per share: |
||
| Basic | $ (0.04) | $ 0.05 |
| Diluted | $ (0.04) | $ 0.05 |
| Weighted average number of shares used in per share computations of net income (loss) per share | ||
| Basic | 22,378 | 21,897 |
| Diluted | 22,378 | 22,246 |
| DSP GROUP, INC. | ||
| CONSOLIDATED STATEMENTS OF OPERATIONS (NON-GAAP) | ||
| (In thousands, except per share amounts) | ||
| Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures | ||
| (In thousands, except per share amounts) | ||
| Three Months Ended | ||
| March 31, | ||
| 2014 | 2013 | |
| Unaudited | Unaudited | |
| GAAP net income (loss) | $(988) | $1,172 |
| Equity-based compensation expense included in cost of revenues | 82 | 63 |
| Equity-based compensation expense included in research and development , net | 644 | 468 |
| Equity-based compensation expense included in sales and marketing | 162 | 135 |
| Equity-based compensation expense included in general and administrative | 555 | 377 |
| Amortization of intangible assets | 397 | 418 |
| Amortization of deferred tax liability related to intangible assets acquired in BoneTone acquisition | (97) | (97) |
| Non-GAAP net income | $ 755 | $ 2,536 |
| Weighted-average number of common stock used in computation of GAAP diluted net income (loss) per share (in thousands) | 22,378 | 22,246 |
| Weighted-average number of shares related to outstanding options, stock appreciation rights and restricted stock units (in thousands) | 1,631 | 373 |
| Weighted-average number of common stock used in computation of non-GAAP diluted net income (loss) per share (in thousands), | 24,009 | 22,619 |
| GAAP diluted net income (loss) per share | $ (0.04) | $ 0.05 |
| Equity-based compensation expense | 0.06 | 0.05 |
| Amortization of intangible assets | 0.02 | 0.02 |
| Amortization of deferred tax liability related to intangible assets acquired in BoneTone acquisition | (0.01) | (0.01) |
| Non-GAAP diluted net income per share | $ 0.03 | $ 0.11 |
| DSP GROUP, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (In thousands) | ||
| March 31, | December 31, | |
| 2014 | 2013 | |
| (Unaudited) | (Audited) | |
| Assets | ||
| Current assets: | ||
|
Cash and cash equivalents Restricted deposits |
$ 14,464 67 |
$ 23,578 77 |
| Marketable securities and short term deposits | 13,458 | 13,895 |
| Trade receivables, net | 22,569 | 21,195 |
| Inventories | 12,193 | 12,334 |
| Other accounts receivable and prepaid expenses | 3,071 | 2,641 |
| Deferred income taxes | 90 | 92 |
| Total current assets | 65,912 | 73,812 |
| Property and equipment, net | 2,863 | 2,837 |
|
Long term marketable securities and deposits |
89,220 |
90,162 |
| Severance pay fund | 11,493 | 11,168 |
| Intangible assets, net | 11,589 | 11,986 |
| Investment in other companies | 2,200 | 2,200 |
| Long term prepaid expenses and lease deposits | 103 | 100 |
| 114,605 | 115,616 | |
| Total assets | $ 183,380 | $ 192,265 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Trade payables | $ 12,634 | $ 14,149 |
| Other current liabilities | 13,427 | 17,362 |
| Total current liabilities | 26,061 | 31,511 |
| Accrued severance pay | 11,517 | 11,179 |
| Accrued pensions | 988 | 981 |
| Deferred income taxes | 1,087 | 1,183 |
| Total long term liabilities | 13,592 | 13,343 |
| Stockholders' equity: | ||
| Common stock | 22 | 22 |
| Additional paid-in capital | 351,937 | 350,494 |
| Accumulated other comprehensive income | (943) | (821) |
| Less – Cost of treasury stock | (120,360) | (118,749) |
| Accumulated deficit | (86,929) | (83,535) |
| Total stockholders' equity | 143,727 | 147,411 |
| Total liabilities and stockholders' equity | $ 183,380 | $ 192,265 |