Quantcast
Last updated on April 24, 2014 at 5:00 EDT

EZchip Announces First Quarter 2013 Results

May 8, 2013

YOKNEAM, Israel, May 8, 2013 /PRNewswire/ — EZchip Semiconductor Ltd. (NASDAQ: EZCH), a leader in Ethernet network processors, today announced its results for the first quarter ended March 31, 2013.

First Quarter 2013 Highlights:

  • First quarter revenues of $15.3 million
  • Gross margin reached 80.8% on a GAAP basis and 81.3% on a non-GAAP basis
  • Net income, on a GAAP basis, was $3.5 million (23% of revenues)
  • Net income, on a non-GAAP basis, was $6.7 million (44% of revenues)
  • Non-GAAP operating cash flow of $6.8 million
  • Net cash at end of quarter was $174.3 million

First Quarter 2013 Results:

Total revenues in the first quarter of 2013 were $15.3 million, an increase of 6% compared to $14.4 million in the first quarter of 2012, and an increase of 1% compared to $15.2 million in the fourth quarter of 2012.

Net income, on a GAAP basis, for the first quarter of 2013 was $3.5 million, or $0.12 per share (diluted), compared to net income of $5.1 million, or $0.18 per share (diluted), in the first quarter of 2012, and net income of $4.8 million, or $0.17 per share (diluted), in the fourth quarter of 2012.

Net income, on a non-GAAP basis, for the first quarter of 2013 was $6.7 million, or $0.23 per share (diluted), compared to non-GAAP net income of $7.8 million, or $0.27 per share (diluted), in the first quarter of 2012, and non-GAAP net income of $7.8 million, or $0.26 per share (diluted), in the fourth quarter of 2012.

Cash, cash equivalents, marketable securities and deposits as of March 31, 2013, totaled $174.3 million, compared to $168.0 million as of December 31, 2012. Cash generated from operations was $6.8 million, cash used in investing activities was $0.5 million, and cash provided by financing activities (resulting from the exercise of options) was $0.05 million.

Eli Fruchter, CEO of EZchip, commented, “We are pleased to report that all our NP-4 customers are now in production and have begun placing production orders. Additional platforms are in final development stages and we believe that by the end of the year substantially all NP-4 based platforms at all customers will be in production. NP-4 revenues are ramping and are now at a run rate that exceeds the NP-3 by far and we believe the ramping will continue to increase significantly in the next few years.

We are also excited to report that NP-5 taped out last month after two years of extensive development. This is a major milestone for the company. We expect samples in June and are on target to move the NP-5 to production next year and believe that substantially all NP-4 customers will adopt the NP-5.

During the quarter we continued to get strong customer feedback on the NPS, our Network Processor for Smart networks, which our customers report will be a game changer. There is strong interest from both carrier and data center customers to use the NPS in their next generation platforms and we believe that we will sign a selected number of tier one customers before the part samples. We have selected TSMC’s 28nm process for the NPS and we intend to sell the NPS directly to all customers, thereby shifting from the business model we applied for the NP-3, NP-4 and NP-5 where we used a royalty-based model for a certain customer.”

Conference Call
The Company will be hosting a conference call later today, May 8, 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. 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, 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.

– tables to follow –

                                                       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,

                                               2013                                             2012               2012
                                               ----                                             ----               ----

    Revenues                                $15,296                                          $15,207            $14,415

    Cost of revenues                          2,941                                            2,555              2,179

    Gross profit                             12,355                                           12,652             12,236

    Operating expenses:

    Research and development,
     net                                      6,098                                            5,180              4,534

    Selling, general and
     administrative                           3,257                                            3,220              3,167
                                              -----                                            -----              -----

    Total operating expenses                  9,355                                            8,400              7,701

    Operating income                          3,000                                            4,252              4,535

    Financial income, net                       510                                              587                597
                                                ---                                              ---                ---

    Net income                               $3,510                                           $4,839             $5,132
                                             ======                                           ======             ======

    Net income per share:

    Basic                                     $0.12                                            $0.17              $0.19

    Diluted                                   $0.12                                            $0.17              $0.18

    Weighted average shares
     used in per share
     calculation:

    Basic                                28,394,665                                       28,233,299         27,525,386

    Diluted                              28,881,145                                       28,869,499         28,517,609

                                                                  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,

                                                   2013                                                 2012                  2012
                                                   ----                                                 ----                  ----

    GAAP gross profit                           $12,355                                              $12,652               $12,236

    Stock-based compensation                         73                                                   74                    77

    Non-GAAP gross profit                       $12,428                                              $12,726               $12,313
                                                -------                                              -------               -------

    GAAP gross profit as
     percentage of revenues                        80.8%                                                83.2%                 84.9%
                                                   ----                                                 ----                  ----

    Non-GAAP gross profit as
     percentage of revenues                        81.3%                                                83.7%                 85.4%
                                                   ----                                                 ----                  ----

    GAAP operating expenses                      $9,355                                               $8,400                $7,701

    Stock-based compensation:

        Research and development                 (1,825)                                              (1,563)               (1,361)

        Selling, general and
         administrative                          (1,327)                                              (1,265)               (1,144)

    Amortization of intangible
     assets

        Selling, general and
         administrative                              --                                                  (51)                  (51)

    Non-GAAP operating expenses                  $6,203                                               $5,521                $5,145
                                                 ------                                               ------                ------

    GAAP operating income                        $3,000                                               $4,252                $4,535

    Non-GAAP operating income                    $6,225                                               $7,205                $7,168
                                                 ------                                               ------                ------

    GAAP net income                              $3,510                                               $4,839                $5,132

    Stock-based compensation                      3,225                                                2,902                 2,582

    Amortization of purchased
     intangible assets                               --                                                   51                    51

    Non-GAAP net income                          $6,735                                               $7,792                $7,765
                                                 ------                                               ------                ------

    Non-GAAP net income per share
     - Diluted                                    $0.23                                                $0.26                 $0.27

    Non-GAAP weighted average
     shares - Diluted*                       29,868,370                                           29,634,765            29,144,661

    * 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,

                                                                                                                                                         2013             2012

                                                                                                                                                  (Unaudited)       (Audited)

    ASSETS

    CURRENT ASSETS:

    Cash, cash equivalents, marketable securities and deposits                                                                                       $174,288         $167,968

    Trade receivables, net                                                                                                                              6,057            4,813

    Other receivables                                                                                                                                   4,325            4,305

    Inventories                                                                                                                                         5,150            4,523

    Total current assets                                                                                                                              189,820          181,609

    NON CURRENT ASSETS:

    Severance pay fund                                                                                                                                  6,416            6,066

    Long term investment and others                                                                                                                       353              358

    Total non current assets                                                                                                                            6,769            6,424

    PROPERTY AND EQUIPMENT, NET                                                                                                                         1,433            1,285

    INTANGIBLE ASSETS, NET                                                                                                                              1,131            1,000

    GOODWILL                                                                                                                                           96,276           96,276

    TOTAL ASSETS                                                                                                                                     $295,429         $286,594

    LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:

    Trade payables                                                                                                                                     $1,330             $571

    Other payables and accrued expenses                                                                                                                 6,259            5,401

    Total current liabilities                                                                                                                           7,589            5,972

    ACCRUED SEVERANCE PAY                                                                                                                               7,334            6,977

    SHAREHOLDERS' EQUITY:

    Share capital                                                                                                                                         161              161

    Additional paid-in capital                                                                                                                        316,002          312,723

    Accumulated other comprehensive income                                                                                                                859              787

    Accumulated deficit                                                                                                                               (36,516)         (40,026)

    Total shareholders' equity                                                                                                                        280,506          273,645

    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                       $295,429         $286,594
                                                         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,

                                               2013                                             2012                  2012

    Cash flows from operating
     activities:

    Net income                               $3,510                                           $4,839                $5,132

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

    Depreciation and
     amortization                               155                                              183                   143

    Decrease (increase) in
     trade and other
     receivables, net

                                             (1,174)                                          (1,878)                  681

    Decrease (increase) in
     inventory                                 (627)                                             948                (1,178)

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

                                              1,666                                              138                  (463)

    Stock-based compensation                  3,225                                            2,902                 2,582

    Net cash provided by
     operating activities                     6,755                                            7,132                 6,897

    Cash flows from investing
     activities:

    Purchase of property and
     equipment                                 (345)                                            (239)                 (336)

    Purchase of technology                     (131)                                              --                    --

    Net cash used in investing
     activities                                (476)                                            (239)                 (336)

    Cash flows from financing
     activities:

    Proceeds from exercise of
     options                                     54                                            1,027                11,415

    Net cash provided by
     financing activities                        54                                            1,027                11,415

    Unrealized gain (loss) on
     marketable securities,
     net                                        (13)                                             (33)                  478

    Increase in cash, cash
     equivalents, marketable
     securities and deposits

                                              6,320                                            7,887                18,454

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

                                            167,968                                          160,081               126,770

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

                                           $174,288                                         $167,968              $145,224

Contact:
Ehud Helft / Kenny Green
CCG Investor Relations
ezchip@ccgisrael.com
Tel: (US) 1 646 201 9246

SOURCE EZchip Semiconductor Ltd.


Source: PR Newswire