SOURCE: Calix, Inc.

February 11, 2014 16:02 ET

Calix Reports Fourth Quarter and Fiscal Year 2013 Results

PETALUMA, CA--(Marketwired - Feb 11, 2014) - Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the fourth quarter and fiscal year ended December 31, 2013. Revenue for the fourth quarter of 2013 was $94.0 million, an increase of 3% compared to $91.4 million for the fourth quarter of 2012 and in line with the company's preliminary results announced on January 8, 2014.

"During 2013 we took important steps to expand our customer footprint and strengthen our business," said Carl Russo, president and CEO of Calix. "Our 16 percent revenue growth and improved margins in 2013 continue to reflect the increasing value Calix customers place on transforming their access networks. The alignment of the Calix Unified Access portfolio with the strategic goals of our customers is strong, and we look forward to embracing this opportunity in 2014."

Non-GAAP net income for the fourth quarter of 2013 was $1.5 million, or $0.03 per fully diluted share, in line with the company's preliminary results announced on January 8, 2014. Non-GAAP net income was $2.9 million, or $0.06 per fully diluted share, for the fourth quarter of 2012. A reconciliation of GAAP and non-GAAP results is included as part of this release.

GAAP net loss for the fourth quarter of 2013 was $6.5 million, or $(0.13) per basic and diluted share, compared to a GAAP net loss of $6.6 million, or $(0.14) per basic and diluted share for the fourth quarter of 2012. A reconciliation of our fourth quarter 2013 operating results from non-GAAP to GAAP is provided below:

Calix, Inc.  
(Unaudited, in thousands, except per share data)  
Three Months Ended December 31, 2013  
                               
    Non-GAAP     Utilization of Inventory Credit     Stock-Based Compensation     Amortization of Intangible Assets     GAAP  
Revenue   $ 94,003     $ --     $ --     $ --     $ 94,003  
Cost of revenue     51,490       --       378       2,088       53,956  
Gross profit     42,513       --       (378 )     (2,088 )     40,047  
Gross margin     45.2 %     -- %     -0.4 %     -2.2 %     42.6 %
Operating expenses     40,973       --       4,578       2,552       48,103  
Operating income (loss)     1,540       --       (4,956 )     (4,640 )     (8,056 )
Interest and other income (expense), net     (69 )     1,651       --       --       1,582  
Income (loss) before benefit from income taxes     1,471       1,651       (4,956 )     (4,640 )     (6,474 )
Benefit from income taxes     (21 )     --       --       --       (21 )
Net income (loss)   $ 1,492     $ 1,651     $ (4,956 )   $ (4,640 )   $ (6,453 )
Weighted average shares used to compute                                        
net income (loss) per common share:                                        
  Basic     49,892       49,892       49,892       49,892       49,892  
  Diluted     51,068       51,068       51,068       51,068       49,892  
Net income (loss) per common share:                                        
  Basic   $ 0.03     $ 0.03     $ (0.10 )   $ (0.09 )   $ (0.13 )
  Diluted   $ 0.03     $ 0.03     $ (0.10 )   $ (0.09 )   $ (0.13 )
                                         
                                         
                                         

Conference Call

In conjunction with this announcement, Calix will host a conference call at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) today to discuss its fourth quarter 2013 financial results. A live audio webcast and replay of the call will be available in the Investor Relations section of the Calix web site at http://investor-relations.calix.com/.

Live call access information: Dial-in number: (877) 407-4019 (U.S.) or (201) 689-8337 (outside the U.S.)

The conference call and webcast will include forward-looking information.

About Calix

Calix (NYSE: CALX) is a global leader in access innovation. Its Unified Access portfolio of broadband communications access systems and software enables communications service providers worldwide to transform their copper- and fiber-based networks and become the broadband provider of choice to their subscribers. For more information, visit the Calix website at www.calix.com.

Use of Non-GAAP Financial Information

The Company uses certain non-GAAP financial measures in this press release to supplement its consolidated financial statements, which are presented in accordance with GAAP. These non-GAAP measures include non-GAAP net income and non-GAAP basic and diluted income per share. These non-GAAP measures are provided to enhance the reader's understanding of the Company's operating performance as they exclude certain non-cash or non-recurring charges for stock-based compensation, amortization of acquisition-related intangible assets, utilization of inventory credit, gain from bargain purchase of Ericsson's fiber access assets, and acquisition-related expenses, which the Company believes are not indicative of its core operating results. Management believes that the non-GAAP measures used in this press release provide investors with important perspectives into the Company's ongoing business performance and management uses these non-GAAP measures to evaluate financial results and to establish operational goals. The presentation of these non-GAAP measures is not meant to be a substitute for results presented in accordance with GAAP, but rather should be evaluated in conjunction with those GAAP results. A reconciliation of the non-GAAP results to the most directly comparable GAAP results is provided in this press release. The diluted weighted average shares used to compute non-GAAP net income per share include the dilutive effect of outstanding stock options, restricted stock units, performance restricted stock units, and ESPP, which have been calculated under the treasury stock method. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

Calix, Inc.  
Condensed Consolidated Statements of Operations  
(Unaudited, in thousands, except per share data)  
                         
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,     December 31,     December 31,  
    2013     2012     2013     2012  
Revenue   $ 94,003     $ 91,424     $ 382,618     $ 330,218  
Cost of revenue:                                
  Products and services (1)     51,868       52,306       203,191       185,103  
  Amortization of intangible assets     2,088       2,088       8,353       7,539  
    Total cost of revenue     53,956       54,394       211,544       192,642  
Gross profit     40,047       37,030       171,074       137,576  
Operating expenses:                                
  Research and development (1)     19,316       17,144       79,299       66,748  
  Sales and marketing (1)     18,583       17,249       68,075       62,129  
  General and administrative (1)     7,652       6,432       31,945       26,114  
  Amortization of intangible assets     2,552       2,552       10,208       10,208  
  Acquisition-related expenses     --       1,401       --       1,401  
    Total operating expenses     48,103       44,778       189,527       166,600  
Loss from operations     (8,056 )     (7,748 )     (18,453 )     (29,024 )
Interest and other income (expense), net:                                
Interest income     3       1       7       15  
  Interest expense     (73 )     (45 )     (167 )     (185 )
  Utilization of inventory credit     1,651       --       1,651       --  
  Gain on bargain purchase     --       1,029       --       1,029  
  Other income (expense), net     1       67       (317 )     (3 )
    Total interest and other income (expense), net     1,582       1,052       1,174       856  
Loss before provision for (benefit from) income taxes     (6,474 )     (6,696 )     (17,279 )     (28,168 )
Provision for (benefit from) income taxes     (21 )     (122 )     (14 )     158  
Net loss   $ (6,453 )   $ (6,574 )   $ (17,265 )   $ (28,326 )
Net loss per common share:                                
  Basic and diluted   $ (0.13 )   $ (0.14 )   $ (0.35 )   $ (0.59 )
Weighted average shares used to compute net loss per common share:                                
  Basic and diluted     49,892       48,538       49,419       48,180  
                                 
                                 
(1) Includes stock-based compensation as follows:                 
  Cost of revenue   $ 378     $ 344     $ 1,468     $ 1,433  
  Research and development     1,231       1,098       4,896       4,227  
  Sales and marketing     1,439       1,320       5,577       5,160  
  General and administrative     1,908       1,714       7,980       6,617  
    $ 4,956     $ 4,476     $ 19,921     $ 17,437  
                                 
                                 
                                 
Calix, Inc.  
Reconciliation of GAAP to Non-GAAP Results  
(Unaudited, in thousands, except per share data)  
                         
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,     December 31,     December 31,  
    2013     2012     2013     2012  
GAAP net loss   $ (6,453 )   $ (6,574 )   $ (17,265 )   $ (28,326 )
Adjustments to reconcile GAAP net loss to non-GAAP net income:                                
  Stock-based compensation     4,956       4,476       19,921       17,437  
  Amortization of intangible assets     4,640       4,640       18,561       17,747  
  Utilization of inventory credit     (1,651 )     --       (1,651 )     --  
  Acquisition-related expenses     --       1,401       --       1,401  
  Gain on bargain purchase     --       (1,029 )     --       (1,029 )
Non-GAAP net income   $ 1,492     $ 2,914     $ 19,566     $ 7,230  
Non-GAAP net income per common share:                                
  Basic   $ 0.03     $ 0.06     $ 0.40     $ 0.15  
  Diluted   $ 0.03     $ 0.06     $ 0.39     $ 0.15  
Weighted average shares used to compute non-GAAP net income per common share:                                
  Basic     49,892       48,538       49,419       48,180  
  Diluted     51,068       48,836       50,437       48,367  
                                   
                                   
                                   
Calix, Inc.  
Condensed Consolidated Balance Sheets  
(Unaudited, in thousands)  
         
  December 31,   December 31,  
  2013   2012  
ASSETS        
Current assets:        
  Cash and cash equivalents $ 82,747   $ 46,995  
  Restricted cash   295     --  
  Accounts receivable, net   43,520     59,519  
  Inventory   51,071     43,282  
  Deferred cost of revenue   21,076     21,077  
  Prepaid expenses and other current assets   5,757     5,677  
    Total current assets   204,466     176,550  
 Property and equipment, net   17,473     21,083  
 Goodwill   116,175     116,175  
 Intangible assets, net   43,740     62,301  
 Other assets   1,745     1,788  
    Total assets $ 383,599   $ 377,897  
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:            
  Accounts payable $ 23,163   $ 16,804  
  Accrued liabilities   32,075     36,176  
  Deferred revenue   34,862     39,315  
    Total current liabilities   90,100     92,295  
Long-term portion of deferred revenue   18,431     15,782  
Other long-term liabilities   1,145     745  
    Total liabilities   109,676     108,822  
Stockholders' equity:            
  Common stock   1,256     1,222  
  Additional paid-in capital   782,253     760,232  
  Accumulated other comprehensive income   190     132  
  Accumulated deficit   (509,776 )   (492,511 )
    Total stockholders' equity   273,923     269,075  
    Total liabilities and stockholders' equity $ 383,599   $ 377,897  
                 
                 
                 
Calix, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited, in thousands)  
             
    Twelve Months Ended  
    December 31,     December 31,  
    2013     2012  
Operating activities:            
Net loss   $ (17,265 )   $ (28,326 )
Adjustments to reconcile net loss to net cash provided by operating activities:                
  Depreciation and amortization     10,181       8,562  
  Loss on retirement of property and equipment     569       262  
  Amortization of intangible assets     18,561       17,747  
  Stock-based compensation     19,921       17,437  
  Utilization of inventory credit     (1,651 )     --  
  Gain on bargain purchase     --       (1,029 )
Changes in operating assets and liabilities:                
  Restricted cash     (295 )     754  
  Accounts receivable, net     15,999       (13,011 )
  Inventory     (6,138 )     11,308  
  Deferred cost of revenue     1       (13,379 )
  Prepaid expenses and other assets     535       47  
  Accounts payable     6,359       2,554  
  Accrued liabilities     (4,217 )     (869 )
  Deferred revenue     (1,804 )     26,403  
  Other long-term liabilities     62       (782 )
    Net cash provided by operating activities     40,818       27,678  
Investing activities:                
  Purchase of property and equipment     (6,987 )     (10,179 )
  Acquisition, net of cash acquired     --       (12,000 )
    Net cash used in investing activities     (6,987 )     (22,179 )
Financing activities:                
  Proceeds from exercise of stock options     747       194  
  Proceeds from employee stock purchase plan     4,828       4,063  
  Taxes withheld upon vesting of restricted stock units and restricted stock awards     (3,441 )     (1,744 )
  Payments for debt issuance costs     (316 )     --  
    Net cash provided by financing activities     1,818       2,513  
Effect of exchange rate changes on cash and cash equivalents     103       45  
Net increase in cash and cash equivalents     35,752       8,057  
Cash and cash equivalents at beginning of period     46,995       38,938  
Cash and cash equivalents at end of period   $ 82,747     $ 46,995  

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