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Intermolecular Reports Fourth Quarter and Full Year 2017 Financial Results

2018-02-14 05:15

SAN JOSE, Calif., Feb. 14, 2018 /PRNewswire/ -- Intermolecular, Inc. (NASDAQ: IMI), the trusted partner for advanced materials innovation, today reported results for its fourth quarter and full year ended December 31, 2017.

Results Highlights:

  • Fourth quarter total revenue of $10.5 million, an increase of 22% over prior quarter and 1% over the same period last year; 2017 fiscal year revenue of $37.2 million.
  • Fourth quarter net income of $0.1 million compared to net loss of $(3.0) million in the same period last year.
  • Fourth quarter Adjusted EBITDA of $2.1 million, or 20% of revenue.

"The fourth quarter of 2017 marked Intermolecular's first GAAP profitable quarter in five years, driven by a 22% increase in revenue and a 10% decrease in operating expense as compared to the prior quarter," said company president and CEO, Chris Kramer. "From an operational standpoint, we added three new programs during the fourth quarter and we also formed an important strategic alliance with the Shanghai Industrial Technology Research Institute (SITRI), which we believe will drive future revenue opportunities for Intermolecular in the second half of 2018 and beyond."

Fourth Quarter Fiscal 2017 Results

Revenue for the fourth quarter of 2017 was $10.5 million, up 22% compared to $8.6 million in the third quarter of 2017, and up 1% compared to $10.5 million in the same period a year ago.

Net income for the fourth quarter of 2017 was $0.1 million, or $0.00 per share, compared to net loss of $(1.8) million, or $(0.04) per share, in the third quarter of 2017 and net loss of $(3.0) million, or $(0.06) per share, in the same period a year ago.

Non-GAAP net income for the fourth quarter of 2017 was $0.4 million, or $0.01 per share, compared to non-GAAP net loss of $(1.6) million, or $(0.03) per share, in the prior quarter and non-GAAP net loss of $(2.3) million, or $(0.05) per share, in the same period a year ago. 

Adjusted EBITDA for the fourth quarter of 2017 was $2.1 million, compared to $0.1 million in the prior quarter and Adjusted EBITDA loss of $(0.5) million in the same period a year ago. 

Cash and investments were $25.8 million at the end of fourth quarter of 2017, a decrease of $1.3 million compared to $27.1 million at the end of third quarter of 2017.   

Full Year Fiscal 2017 Results

Revenue for the full year ended December 31, 2017 was $37.2 million, down 21% compared to $47.3 million in 2016. The decrease in revenue was primarily due to the strategic transition of the company's business model in 2017 from a royalty and services model to a services-based program model.

Net loss for the full year ended December 31, 2017 was $(10.4) million, or $(0.21) per share, compared with $(15.4) million, or $(0.31) per share, for 2016.

Non-GAAP net loss for 2017 was $(8.9) million, or $(0.18) per share, compared to $(11.8) million, or $(0.24) per share, for 2016.

Cash and investments were $25.8 million at the end of 2017, compared to $27.8 million at the end of 2016.

First Quarter of 2018 Outlook

The following statements are based on Intermolecular's current expectations for the first quarter ending March 31, 2018. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under "Forward-Looking Statements" below. Intermolecular does not plan to update, nor does it undertake any obligation to update, this outlook in the future.

  • Revenue is projected to be in the range of $9.6 million to $9.9 million;
  • Net loss is projected to be between $(1.0) million and $(1.3) million, or between $(0.02) to $(0.03) per share, based on approximately 49.6 million shares expected to be outstanding;
  • Non-GAAP net loss, excluding stock-based compensation expense, is projected to be between $(0.7) million and $(1.0) million, or between $(0.01) to $(0.02) per share based on 49.6 million shares expected to be outstanding; and,
  • Adjusted EBITDA is projected to be between $0.4 million and $0.7 million.

Intermolecular reports revenue, cost of revenue, gross margin, operating income (loss), net income (loss) and earnings (loss) per share in accordance with U.S. generally accepted accounting principles (GAAP) and additionally on a non-GAAP basis. A reconciliation of the non-GAAP financial measures with the most directly comparable GAAP measures, 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. Please refer to "Reconciliation of GAAP to Non-GAAP Financial Measures" and "Reconciliation of GAAP Net Loss to Non-GAAP Net Loss" below.

Conference Call

Intermolecular will host a conference call and simultaneous audio-only webcast today (February 13, 2018) at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss these results. The call will be hosted by Intermolecular President and CEO Chris Kramer and CFO Bill Roeschlein.

U.S. dial-in number: (877) 251-1860
International dial-in number: (244) 357-2386
Conference ID: 5955988

Please call the conference telephone number five to ten minutes prior to start time. An operator will register your name and organization. If you have difficulty connecting with the conference call, please contact Liolios Group at (949) 574-2386

A live and archived webcast (audio only) of the call will be available on Intermolecular's website for up to 30 days after the call.

About Intermolecular, Inc.

Intermolecular® is the trusted partner for advanced materials innovation. Advanced materials are at the core of innovation in the 21st century for a wide range of industries including semiconductors, consumer electronics, automotive and aerospace. With its substantial materials expertise; accelerated learning and experimentation platform; and information and analytics infrastructure, Intermolecular has a ten-year track record helping leading companies accelerate and de-risk materials innovation.

"Intermolecular" and the Intermolecular logo are registered trademarks; 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 are commonly identified by words such as "would," "may," "expects," "believes," "plans," "intends," "projects" and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this document are based on current beliefs, assumptions and expectations, speak only as of the date of this document and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Such statements are subject to certain known and unknown risks and uncertainties, many of which are difficult to predict and generally beyond Intermolecular's control, that could cause actual results and other future events to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: our ability to productize our workflows with existing and future customers; expectations regarding our future revenue, cash flow and GAAP and non-GAAP net income or loss; financial condition; the ability of our new business model to generate profits and long-term shareholder returns; the extent to which technology developed in collaboration with our customers will continue to remain on the critical path and have significant value for such customers and us as well as the industry as a whole; and anticipated growth in our current markets through expansion of existing customer programs and the entry into other engagements 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 of the customers and industries we serve; our potential need for future capital to finance our operations; and other risks described in our most recent annual report on Form 10-K as updated by our quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission available at www.sec.gov, particularly in the sections titled "Risk Factors." All forward-looking statements are based on management's current estimates, projections and assumptions, and we assume no obligation to update them.

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 expense. 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 net revenue, gross profit, gross margin, operating (loss) income, net (loss) income, earnings per share and net (loss) income 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.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts, Unaudited)



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2017


2016


2017


2016

Revenue:












Program revenue

$

8,850


$

8,833


$

29,010


$

39,690

Licensing and royalty revenue


1,698



1,644



8,193



7,608

Total revenue


10,548



10,477



37,203



47,298

Cost of revenue:












Cost of program revenue


3,353



3,421



11,449



15,705

Cost of licensing and royalty revenue


344



25



656



125

Total cost of revenue


3,697



3,446



12,105



15,830

Gross profit


6,851



7,031



25,098



31,468

Operating expenses:












Research and development


4,206



5,847



21,535



28,126

Sales and marketing


734



1,518



4,019



7,383

General and administrative


1,974



2,777



9,198



10,713

Restructuring charges




(6)



1,351



1,114

Total operating expenses


6,914



10,136



36,103



47,336

Loss from operations


(63)



(3,105)



(11,005)



(15,868)

Other income (expense):












Interest income (expense), net


84



50



266



173

Other income (expense), net


95



63



337



265

Total other income (expense), net


179



113



603



438

Income (loss) before provision for income taxes


116



(2,992)



(10,402)



(15,430)

Provision for income taxes


-



-



1



7

Net income (loss)

$

116


$

(2,992)


$

(10,403)


$

(15,437)













Basic net income (loss) per common share

$

0.00


$

(0.06)


$

(0.21)


$

(0.31)

Diluted net income (loss) per common share

$

0.00


$

(0.06)


$

(0.21)


$

(0.31)













Shares used in basic net income (loss) per common share


49,559



49,486



49,547



49,396

Shares used in diluted net income (loss) per common share


49,765



49,486



49,547



49,396

 

Intermolecular, Inc.

Condensed Consolidated Balance Sheets

(In thousands, Unaudited)



As of December 31,
2017


As of December 31,
2016

ASSETS






Current assets:






Cash and cash equivalents

$

6,090


$

5,759

Short-term investments


18,060



20,035

Total cash, cash equivalents and short-term investments


24,150



25,794

Accounts receivable


5,519



5,063

Prepaid expenses and other current assets


1,069



1,397

Total current assets


30,738



32,254

Long-term investments


1,657



1,995

Materials inventory


2,781



3,357

Property and equipment, net


5,913



10,964

Intangible assets, net


2,620



4,001

Other assets


600



597

Total assets

$

44,309


$

53,168







LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Accounts payable

$

928


$

309

Accrued liabilities


865



1,451

Accrued compensation and employee benefits


2,535



1,663

Deferred revenue


941



1,533

Total current liabilities


5,269



4,956

Other long-term liabilities


2,967



3,216

Total liabilities


8,236



8,172

Stockholders' equity:






Common stock


50



50

Additional paid-in capital


214,796



213,313

Accumulated other comprehensive loss


(36)



(32)

Accumulated deficit


(178,737)



(168,335)

Total stockholders' equity


36,073



44,996

Total liabilities and stockholders' equity

$

44,309


$

53,168

 

Intermolecular, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands, Unaudited)



Twelve Months Ended December 31,


2017


2016

Cash flows from operating activities:






Net loss

$

(10,403)


$

(15,437)

Adjustments to reconcile net loss to net cash used in operating activities:






Depreciation, amortization and accretion


7,194



9,537

Stock-based compensation


1,472



3,627

(Gain) loss on disposal of property and equipment


68



(12)

Changes in operating assets and liabilities:






Accounts receivable


(456)



1,051

Prepaid expenses and other assets


585



122

Materials inventory


557



333

Accounts payable


592



(493)

Accrued and other liabilities


110



(3,069)

Deferred revenue


(592)



(1,063)

Net cash used in operating activities


(873)



(5,404)

Cash flows from investing activities:






Purchase of investments


(20,888)



(23,486)

Redemption of investments


22,861



24,676

Purchase of property and equipment


(777)



(2,381)

Proceeds from sale of equipment


14



22

Purchased and capitalized intangible assets




(45)

Net cash (used in) provided by investing activities


1,210



(1,214)

Cash flows from financing activities:






Payment of capital leases


(13)



(13)

Proceeds from exercise of common stock options


7



714

Net cash (used in) provided by financing activities


(6)



701

Net increase (decrease) in cash and cash equivalents


331



(5,917)

Cash and cash equivalents at beginning of period


5,759



11,676

Cash and cash equivalents at end of period

$

6,090


$

5,759

 

Intermolecular, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share amounts and percentages, Unaudited)



Three Months Ended
December 31,



Twelve Months Ended
December 31,



2017



2016



2017



2016


GAAP cost of net revenue

$

3,697



$

3,446



$

12,105



$

15,830


Stock-based compensation expense (a)


(47)




(102)




(191)




(510)


Non-GAAP cost of net revenue

$

3,650



$

3,344



$

11,914



$

15,320


GAAP gross profit

$

6,851



$

7,031



$

25,098



$

31,468


Stock-based compensation expense (a)


47




102




191




510


Non-GAAP gross profit

$

6,898



$

7,133



$

25,289



$

31,978


As a percentage of net revenue:
















GAAP gross margin


65.0

%



67.1

%



67.5

%



66.5

%

Non-GAAP gross margin


65.4

%



68.1

%



68.0

%



67.6

%

GAAP operating loss

$

(63)



$

(3,105)



$

(11,005)



$

(15,868)


Stock-based compensation expense (a):
















- Cost of net revenue


47




102




191




510


- Research and development


66




189




373




949


- Sales and marketing


23




(40)




119




527


- General and administrative


115




440




789




1,641


Non-GAAP operating income (loss)

$

188



$

(2,414)



$

(9,533)



$

(12,241)


















GAAP net income (loss)

$

116



$

(2,992)



$

(10,403)



$

(15,437)


Stock-based compensation expense (a)


251




691




1,472




3,627


Non-GAAP net income (loss)

$

367



$

(2,301)



$

(8,931)



$

(11,810)


















GAAP net income (loss)

$

116



$

(2,992)



$

(10,403)



$

(15,437)


Interest (income) expense, net


(84)




(50)




(266)




(173)


Provision for taxes








1




7


Depreciation, amortization, impairment and accretion


1,824




1,829




7,194




9,537


Restructuring charges (b)





(6)




1,351




1,114


Stock based compensation expense (a)


251




691




1,472




3,627


Adjusted EBITDA

$

2,107



$

(528)



$

(651)



$

(1,325)


















Shares used in computing earnings per share:
















Basic


49,559




49,486




49,547




49,396


Diluted


49,765




49,486




49,547




49,396


GAAP earnings (loss) per share:
















Basic

$

0.00



$

(0.06)



$

(0.21)



$

(0.31)


Diluted

$

0.00



$

(0.06)



$

(0.21)



$

(0.31)


Non-GAAP earnings (loss) per share:
















Basic

$

0.01



$

(0.05)



$

(0.18)



$

(0.24)


Diluted

$

0.01



$

(0.05)



$

(0.18)



$

(0.24)




(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 provides it a meaningful understanding of its core operating performance.



(b)

Restructuring charges incurred in connection with a reduction in headcount primarily comprised of employee severance and benefit costs.

 

Intermolecular, Inc.

First Quarter 2018 Outlook

Reconciliation of GAAP Net Loss to Non-GAAP Net Loss

(In thousands, except per share amounts, Unaudited)


GAAP net loss range

$(1,000)

-

$(1,300)

Stock-based compensation

$300

-

$300

Non-GAAP net loss range

$(700)

-

$(1,000)





GAAP and Non-GAAP diluted shares

49,600

GAAP net loss per share range

$(0.02)

-

$(0.03)

Non-GAAP net loss per share range

$(0.01)

-

$(0.02)

Corporate Contact:
Bill Roeschlein
Intermolecular, Inc.
Chief Financial Officer
bill.roeschlein@intermolecular.com
(408) 582-5415

Investor Contact:
Matt Glover or Najim Mostamand, CFA
Liolios Group, Inc.
IMI@liolios.com
(949) 574-3860

 

Source: Intermolecular, Inc.

Related stocks: NASDAQ-NMS:IMI

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