SAN JOSE, Calif., May 6, 2014 (GLOBE NEWSWIRE) -- Intermolecular, Inc. (Nasdaq:IMI) -accelerating research and development (R&D) for semiconductor and clean energy industries-today announced results for its first quarter ended March 31, 2014.
Revenue for the first quarter of 2014 was $15.9 million, a decline of 9% on a year-over-year basis from $17.4 million in the year-ago period, but up slightly from the prior quarter's revenue of $15.6 million. Collaborative development program (CDP) revenue was $8.9 million for the quarter, compared to $10.9 million in the prior year period. Licensing and royalty revenue was $7.0 million, compared to $3.4 million for the same period a year ago, which included an accelerated payment from GLOBALFOUNDRIES in connection with the suspension of the collaborative development program and activities with them. There was no reported revenue from product sales, compared to product revenue of $3.1 million in the year-ago period.
Gross margin in the first quarter of 2014 was 58.7% as compared to 46.0% in the fourth quarter of 2013. This sequential increase of over 10 percentage points in gross margin was primarily a result of the elevated mix of licensing and royalty revenue, which comprised 44% of total revenue compared to 25% in the fourth quarter of 2013, due to the accelerated payment from GLOBALFOUNDRIES discussed above.
For the first quarter of 2014, the Company reported a net loss of $(3.9) million, or $(0.08) per share, which included $1.1 million in restructuring related costs, compared to a net loss of $(1.5) million, or $(0.03) per share for the first quarter of 2013 and a net loss of $(4.4) million, or $(0.10) per share in the prior quarter.
Intermolecular reports revenue, costs of revenue, gross margin, operating income (loss), net income (loss) and earnings (loss) per share in accordance with GAAP and additionally on a non-GAAP basis. A reconciliation of the non-GAAP financial measures with the most directly comparable GAAP measure, as well as a description of the items excluded from the non-GAAP measures, is included in the financial statements portion of this press release.
On a non-GAAP basis, the Company reported a net loss of $(1.3) million, or $(0.03) per share, compared to a net loss of $(86) thousand, or $(0.00) per share in the first quarter of 2013, and compared to a net loss of $(3.0) million, or $(0.07) per share in the fourth quarter of 2013.
"Two recent events highlight the broad applicability of our HPC platform and our team's R&D execution, and represent critical next steps in commercializing Intermolecular's developed technology in advanced memory and light-emitting devices (LEDs)," stated David Lazovsky, President and CEO of Intermolecular. "I am pleased that Micron's first advanced memory products, post its acquisition of Elpida, incorporating our developed technology are slated for volume production later this year. Additionally, Epistar has recently stated that they are in the process of implementing our CDP technology in production. I am proud of our technical team for reaching these milestones, which, we believe, affirm the value of our HPC platform across diverse markets."
Cash flows from operations for the first quarter of 2014 were $2.0 million. The Company invested $1.5 million in capital expenditures in the first quarter, and ended the quarter with cash and investments of $72.3 million.
Outlook for Second Quarter 2014
The following statements are based on current expectations for the second quarter of 2014.
- The Company projects revenue in the range of $8.0 to $9.0 million. This revenue projection includes approximately $8 million from reported backlog as of March 31, 2014.
- Non-GAAP net loss, excluding stock-based compensation expense, is projected between a non-GAAP net loss of $(8.0) million and $(7.0) million, or between $(0.17) per share to $(0.15) per share, on approximately 47 million basic shares outstanding.
Conference Call Today
Intermolecular will hold a conference call at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time today with David Lazovsky, President and Chief Executive Officer, and Rick Neely, Chief Financial Officer, to discuss first quarter 2014 results and other business developments.
The call can be accessed by dialing (877) 251-1860; international callers should dial (224) 357-2386. Please dial-in ten minutes prior to the scheduled conference call time. A live and archived webcast of the call will be available on Intermolecular's Website at http://ir.intermolecular.com for up to 30 days after the call.
About Intermolecular, Inc.
Intermolecular® has pioneered a proprietary approach to accelerate research and development, innovation, and time-to-market for the semiconductor and clean-energy industries. The approach consists of the Company's proprietary High Productivity Combinatorial (HPC™) platform, coupled with its multi-disciplinary team. Through paid collaborative development programs (CDPs) with its customers, Intermolecular develops proprietary technology and intellectual property for its customers focused on advanced materials, processes, integration and device architectures. Founded in 2004, Intermolecular is based in San Jose, California. "Intermolecular" and the Intermolecular logo are registered trademarks; and "HPC" is a trademark of Intermolecular, Inc.; all rights reserved. Learn more at www.intermolecular.com.
Forward-Looking Statements
Statements made in this press release and the earnings call referencing the press release that are not statements of historical fact are forward-looking statements. Forward-looking statements are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to, but are not limited to, the effects of our reduction in force and recent efforts to streamline our operations; expectations regarding our future revenue and non-GAAP net income; our revenue mix as a result of the ramping of our licensing and royalty revenues; our net income; our backlog and our expectations that it will convert to revenue; our prospects for increased licensing and royalty revenue, and in particular, volume-based royalties from multiple customers; the ability of our business model to generate long-term shareholder returns; the extent to which the IP we have generated will generate royalties in the future; technical progress under our collaborative development programs with our customers and the extent to which such programs remain and will continue to remain on the critical path and have significant value for such customers and the industry as a whole; the strength of our intellectual property and patent portfolio; expectations of customers with respect to their business and technology in 2014 and beyond, including but not limited to implementation of their technology roadmaps (including timing), performance relative to the competitors in their respective fields, and successful volume manufacturing and commercialization of products that incorporate our technology; the scalability of our financial model and future earnings leverage; and anticipated growth in our current markets through expansion of existing customer CDPs and the entry into CDPs with new customers. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to: our ability to execute on our strategy, prove our business model and remain technologically competitive in rapidly evolving industry conditions; commercial acceptance of our HPC platform and methodology as effective R&D tools; our ability to achieve and sustain profitability; the ability of our customers to achieve their announced product roadmaps in a timely manner; the extent to which we are able to successfully extend and expand relationships with existing customers; our ability to manage the growth of our business; the rapid technology changes and volatility in the semiconductor industry; the early stage of development of the clean energy industry; our potential need for future capital to finance our operations; and other risks described in our 2013 Form 10-K and our quarterly reports on Form 10-Q, each as filed with the SEC and available at www.sec.gov, particularly in the sections titled "Risk Factors." Forward-looking statements speak only as of the date the statements are made and are based on information available to us at the time those statements are made and/or management's good faith belief as of that time with respect to future events. We assume no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. Accordingly, investors should not place undue reliance on any forward-looking statements.
| Intermolecular, Inc. | ||
| Condensed Consolidated Statements of Operations | ||
| (In thousands, except per share amounts, Unaudited) | ||
| Three Months Ended March 31, | ||
| 2014 | 2013 | |
| Revenue: | ||
| Collaborative development program and services revenue | $ 8,886 | $ 10,903 |
| Product revenue | — | 3,104 |
| Licensing and royalty revenue | 7,019 | 3,426 |
| Total revenue | 15,905 | 17,433 |
| Cost of revenue | 6,568 | 7,843 |
| Gross profit | 9,337 | 9,590 |
| Operating expenses: | ||
| Research and development | 6,956 | 6,172 |
| Sales and marketing | 1,648 | 1,637 |
| General and administrative | 3,313 | 2,992 |
| Restructuring charges | 1,068 | — |
| Total operating expenses | 12,985 | 10,801 |
| Operating loss | (3,648) | (1,211) |
| Interest expense, net | (194) | (250) |
| Other expense, net | (5) | (19) |
| Loss before provision for income taxes | (3,847) | (1,480) |
| Income tax provision | 4 | 6 |
| Net loss | $ (3,851) | $ (1,486) |
| Basic and diluted net loss per common share | $ (0.08) | $ (0.03) |
| Shares used in basic and diluted net loss per common share | 46,338 | 44,139 |
| Intermolecular, Inc. | ||
| Condensed Consolidated Balance Sheets | ||
| (In thousands, Unaudited) | ||
|
As of March 31, 2014 |
As of December 31, 2013 |
|
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 72,322 | $ 72,083 |
| Accounts receivable, net | 4,907 | 7,022 |
| Prepaid expenses and other current assets | 2,045 | 2,247 |
| Total current assets | 79,274 | 81,352 |
| Inventory | 7,545 | 6,510 |
| Property and equipment, net | 26,709 | 28,485 |
| Intangible assets, net | 8,148 | 7,855 |
| Other assets | 275 | 280 |
| Total assets | $ 121,951 | $ 124,482 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 615 | $ 2,157 |
| Accrued compensation and employee benefits | 3,289 | 3,655 |
| Deferred revenue | 2,022 | 2,472 |
| Accrued liabilities | 3,431 | 3,672 |
| Note payable | 2,000 | 2,000 |
| Total current liabilities | 11,357 | 13,956 |
| Note payable, net of current portion | 22,500 | 23,000 |
| Deferred revenue, net of current portion | 2,360 | 830 |
| Other long-term liabilities | 2,406 | 1,844 |
| Total liabilities | 38,623 | 39,630 |
| Stockholders' equity: | ||
| Common stock | 47 | 46 |
| Additional paid-in capital | 197,256 | 194,930 |
| Accumulated deficit | (113,975) | (110,124) |
| Total stockholders' equity | 83,328 | 84,852 |
| Total liabilities and stockholders' equity | $ 121,951 | $ 124,482 |
| Intermolecular, Inc. | ||
| Condensed Consolidated Statements of Cash Flows | ||
| (In thousands, Unaudited) | ||
| Three Months Ended March 31, | ||
| 2014 | 2013 | |
| Cash flows from operating activities: | ||
| Net loss | $ (3,851) | $ (1,486) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||
| Depreciation and amortization | 2,450 | 2,201 |
| Stock-based compensation | 1,488 | 1,400 |
| Changes in operating assets and liabilities: | ||
| Prepaid expenses and other assets | 207 | (10) |
| Inventory | (711) | (671) |
| Accounts receivable | 2,115 | 771 |
| Accounts payable | (833) | 9 |
| Accrued and other liabilities | 102 | (525) |
| Deferred revenue | 1,080 | 2,151 |
| Net cash provided by operating activities | 2,047 | 3,840 |
| Cash flows from investing activities: | ||
| Purchase of short-term investments | — | (1,001) |
| Purchase of property and equipment | (1,490) | (1,423) |
| Capitalized intangible assets | (657) | (108) |
| Net cash used in investing activities | (2,147) | (2,532) |
| Cash flows from financing activities: | ||
| Payment of debt | (500) | (238) |
| Proceeds from exercise of common stock options | 839 | 628 |
| Net cash provided by financing activities | 339 | 390 |
| Net increase in cash and cash equivalents | 239 | 1,698 |
| Cash and cash equivalents at beginning of period | 72,083 | 78,283 |
| Cash and cash equivalents at end of period | $ 72,322 | $ 79,981 |
Non-GAAP Financial Measures
To supplement the financial data presented on a GAAP basis, we also disclose certain non-GAAP financial measures, which exclude the effect of stock-based compensation and restructuring related charges. These non-GAAP financial measures are not prepared in accordance with GAAP, do not serve as an alternative to GAAP and may be calculated differently than non-GAAP financial information disclosed by other companies. These results should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. We believe that our non-GAAP financial information provides useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations because the non-GAAP measures exclude charges that management considers to be outside of Intermolecular's core operating results. We believe that the non-GAAP measures of revenue, cost of revenue, gross margin, operating income (loss), net income (loss) and earnings (loss) per share, viewed in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective and a more meaningful understanding of our ongoing operating performance. In addition, management uses these non-GAAP measures to review and assess financial performance, to determine executive officer incentive compensation and to plan and forecast performance in future periods.
| Intermolecular, Inc. | ||
| Reconciliation of GAAP to Non-GAAP Financial Measures | ||
| (In thousands, except per share amounts and percentages, Unaudited) | ||
| Three Months Ended March 31, | ||
| 2014 | 2013 | |
| GAAP cost of net revenue | $ 6,568 | $ 7,843 |
| Stock-based compensation expense (a) | (305) | (374) |
| Non-GAAP cost of net revenue | $ 6,263 | $ 7,469 |
| GAAP gross profit | $ 9,337 | $ 9,590 |
| Stock-based compensation expense (a) | 305 | 374 |
| Non-GAAP gross profit | $ 9,642 | $ 9,964 |
| As a percentage of net revenue: | ||
| GAAP gross margin | 58.7 % | 55.0 % |
| Non-GAAP gross margin | 60.6 % | 57.2 % |
| GAAP operating loss | $ (3,648) | $ (1,211) |
| Stock-based compensation expense (a): | ||
| - Cost of net revenue | 305 | 374 |
| - Research and development | 323 | 395 |
| - Sales and marketing | 345 | 280 |
| - General and administrative | 515 | 351 |
| Restructuring charges (b) | 1,068 | — |
| Non-GAAP operating (loss) income | $ (1,092) | $ 189 |
| GAAP net loss | $ (3,851) | $ (1,486) |
| Stock-based compensation expense (a) | 1,488 | 1,400 |
| Restructuring charges (b) | 1,068 | — |
| Non-GAAP net loss | $ (1,295) | $ (86) |
| Shares used in computing Non-GAAP basic earnings per share | 46,338 | 44,139 |
| Non-GAAP earnings per share: | ||
| Basic net loss per common share | $ (0.03) | $ (0.00) |
(a) Stock-based compensation reflects expense recorded relating to stock-based awards. The Company excludes this item when it evaluates the continuing operational performance of the Company, as management believes this GAAP measure is not indicative of its core operating performance.
(b) Restructuring charges incurred in connection with a reduction in headcount, primarily comprised of employee severance and benefit costs.