SOURCE: Calix, Inc.

Calix, Inc.

July 28, 2015 16:03 ET

Calix Reports Second Quarter 2015 Financial Results

PETALUMA, CA--(Marketwired - July 28, 2015) - Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the second quarter ended June 27, 2015. Revenue for the second quarter of 2015 was $99.1 million, an increase of 1.1% compared to $98.0 million for the second quarter of 2014.

"Our second quarter results were above our guidance, reflecting better than expected overall operating performance," said Carl Russo, Calix President and CEO. "Led by the GigaCenter, which at quarter-end surpassed the 300 service provider customer mark, this performance contributed to revenues in the first half of 2015 increasing 3.5% compared to the first half of 2014. In addition, first half non-GAAP gross margins improved to 50.1% compared to 46.9% in the same period last year," added Russo.

"During the second quarter, Calix announced a number of innovative new product offerings, including our G.fast solutions for multiple dwelling unit and high density single family unit applications, and our new NG-PON2 cards. These introduce the next generation of standards-based fiber access technology into our E-Series portfolio and give our customers the ability to deliver a multi-gigabit experience to their subscribers. These new solutions demonstrate our continued drive towards our Unified Access vision and strengthened our leadership in the broadband access market," added Russo.

The company's non-GAAP net income for the second quarter of 2015 was $3.3 million, or $0.06 per fully diluted share, compared to a non-GAAP net income of $5.1 million, or $0.10 per fully diluted share, for the second quarter of 2014. A reconciliation of GAAP and non-GAAP results is included as part of this release.

"During the quarter, we returned $3.4 million to shareholders via our previously announced $40 million stock buyback authorization," said William Atkins, Executive Vice President and CFO. "We remain committed to returning capital to shareholders, while at the same time investing in the company to build a strong foundation for future growth," added Atkins.

The GAAP net loss for the second quarter of 2015 was $5.8 million, or $(0.11) per basic and diluted share, compared to a GAAP net loss of $4.0 million, or $(0.08) per basic and diluted share, for the second quarter of 2014. A reconciliation of our second quarter 2015 operating results from non-GAAP to GAAP is provided below:

 
Calix, Inc.
(Unaudited, in thousands, except per share data)
Three Months Ended June 27, 2015
                
   Non-GAAP  Stock-Based Compensation  Amortization of Intangible Assets  Acquisition-Related Costs  GAAP
Revenue  $ 99,129    $ -    $ -    $ -    $ 99,129  
Cost of revenue   48,541     211     2,088     -     50,840  
Gross profit   50,588     (211 )   (2,088 )   -     48,289  
Gross margin   51.0 %   (0.2 )%   (2.1 )%   - %   48.7 %
Operating expenses   47,320     4,130     2,552     52     54,054  
Operating income (loss)   3,268     (4,341 )   (4,640 )   (52 )   (5,765 )
Interest and other income (expense), net   88     -     -     -     88  
Income (loss) before taxes   3,356     (4,341 )   (4,640 )   (52 )   (5,677 )
Provision for income taxes   102     -     -     -     102  
Net income (loss)  $ 3,254    $ (4,341 )  $ (4,640 )  $ (52 )  $ (5,779 )
Weighted average diluted shares used to compute non-GAAP net income (loss) per common share   52,455     52,455     52,455     52,455      
Non-GAAP net income (loss) per diluted share  $ 0.06    $ (0.08 )  $ (0.09 )  $ -      
Weighted average basic and diluted shares used to compute GAAP net loss per common share:                   51,950  
GAAP net loss per share                  $ (0.11 )
                 

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 second quarter 2015 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. For more information about gigabit networks, visit www.calix.com/gigabit/.

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 (loss) and non-GAAP basic and diluted income (loss) per share. These non-GAAP measures are provided to enhance the reader's understanding of the Company's operating performance as they primarily exclude certain non-cash charges for stock-based compensation and amortization of acquisition-related intangible assets, and non-recurring acquisition-related costs, which the Company believes are not indicative of its core operating results. Acquisition-related costs include legal fees and associated expenses incurred under a pre-existing contract between Occam and its retained advisor in connection with the Occam acquisition. 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 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.

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 execution of a stock repurchase program. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to the risks described in our 2014 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.

 
Calix, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
               
     Three Months Ended  Six Months Ended
     June 27,  June 28,  June 27,  June 28,
     2015  2014  2015  2014
Revenue  $ 99,129    $ 98,005    $ 190,167    $ 183,825  
Cost of revenue:                
 Products and services (1)   48,752     51,575     95,212     98,381  
 Amortization of intangible assets   2,088     2,088     4,176     4,176  
  Total cost of revenue   50,840     53,663     99,388     102,557  
Gross profit   48,289     44,342     90,779     81,268  
Operating expenses:                
 Research and development (1)   22,851     19,544     44,765     39,174  
 Sales and marketing (1)   19,215     18,455     38,974     35,845  
 General and administrative (1)   9,436     7,681     19,588     14,932  
 Amortization of intangible assets   2,552     2,552     5,104     5,104  
  Total operating expenses   54,054     48,232     108,431     95,055  
Loss from operations   (5,765 )   (3,890 )   (17,652 )   (13,787 )
Interest and other income (expense), net:                
 Interest income   338     30     717     34  
 Interest expense   (279 )   (58 )   (658 )   (115 )
 Other income (expense), net   29     70     77     103  
  Total interest and other income (expense), net   88     42     136     22  
Loss before provision for income taxes   (5,677 )   (3,848 )   (17,516 )   (13,765 )
Provision for income taxes   102     103     193     213  
Net loss  $ (5,779 )  $ (3,951 )  $ (17,709 )  $ (13,978 )
Net loss per common share:                
  Basic and diluted  $ (0.11 )  $ (0.08 )  $ (0.34 )  $ (0.28 )
Weighted average number of shares used to compute net loss per common share:                
  Basic and diluted   51,950     50,573     51,843     50,425  
                   
(1)Includes stock-based compensation as follows:                 
  Cost of revenue  $ 211    $ 354    $ 386    $ 708  
  Research and development   1,483     1,306     2,695     2,486  
  Sales and marketing   1,656     1,462     3,081     2,830  
  General and administrative   991     1,282     1,841     2,282  
     $ 4,341    $ 4,404    $ 8,003    $ 8,306  
                  
                  
 
Calix, Inc.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands, except per share data)
             
   Three Months Ended  Six Months Ended
   June 27,  June 28,  June 27,  June 28,
   2015  2014  2015  2014
GAAP net loss  $ (5,779 )  $ (3,951 )  $ (17,709 )  $ (13,978 )
Adjustments to reconcile GAAP net loss to non-GAAP net income (loss):                
 Stock-based compensation   4,341     4,404     8,003     8,306  
 Amortization of intangible assets   4,640     4,640     9,280     9,280  
 Acquisition-related costs   52     -     242     -  
Non-GAAP net income (loss)  $ 3,254    $ 5,093    $ (184 )  $ 3,608  
Non-GAAP net income (loss) per common share:                
 Basic  $ 0.06    $ 0.10    $ -    $ 0.07  
 Diluted  $ 0.06    $ 0.10    $ -    $ 0.07  
Weighted average shares used to compute non-GAAP net income (loss) per common share:                
  Basic   51,950     50,573     51,843     50,425  
  Diluted (1)   52,455     50,961     51,843     50,904  
(1) Includes the dilutive effect of outstanding stock options, restricted stock units and ESPP.
 
 
Calix, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
       
   June 27,  December 31,
   2015  2014
ASSETS        
Current assets:        
 Cash and cash equivalents  $ 39,672    $ 48,829  
 Marketable securities   59,785     62,850  
 Restricted cash   -     295  
 Accounts receivable, net   41,985     30,744  
 Inventory   40,710     46,753  
 Deferred cost of revenue   1,284     5,080  
 Prepaid expenses and other current assets   11,457     12,936  
  Total current assets   194,893     207,487  
 Property and equipment, net   18,790     20,144  
 Goodwill   116,175     116,175  
 Intangible assets, net   15,899     25,179  
 Other assets   1,241     1,236  
  Total assets  $ 346,998    $ 370,221  
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
 Accounts payable  $ 18,538    $ 23,629  
 Accrued liabilities   36,545     39,443  
 Deferred revenue   9,132     12,722  
  Total current liabilities   64,215     75,794  
 Long-term portion of deferred revenue   19,371     19,393  
 Other long-term liabilities   1,903     2,443  
  Total liabilities   85,489     97,630  
Stockholders' equity:        
 Common stock   1,313     1,291  
 Additional paid-in capital   811,737     801,810  
 Accumulated other comprehensive income   135     80  
 Accumulated deficit   (548,299 )   (530,590 )
 Treasury stock   (3,377 )   -  
  Total stockholders' equity   261,509     272,591  
  Total liabilities and stockholders' equity  $ 346,998    $ 370,221  
         
         
 
Calix, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
       
   Six Months Ended
   June 27,  June 28,
   2015  2014
Operating activities:        
 Net loss  $ (17,709 )  $ (13,978 )
 Adjustments to reconcile net loss to net cash used in operating activities:        
  Depreciation and amortization   4,978     4,522  
  Loss on retirement of property and equipment   5     -  
  Amortization of intangible assets   9,280     9,280  
  Amortization of premiums related to available-for-sale securities   541     108  
  Stock-based compensation   8,003     8,306  
  Changes in operating assets and liabilities:        
   Restricted cash   295     -  
   Accounts receivable, net   (11,240 )   (3,809 )
   Inventory   6,042     5,183  
   Deferred cost of revenue   3,796     5,119  
   Prepaid expenses and other assets   1,065     960  
   Accounts payable   (5,091 )   (10,313 )
   Accrued liabilities   (2,889 )   2,601  
   Deferred revenue   (3,612 )   (8,307 )
   Other long-term liabilities   (135 )   (188 )
    Net cash used in operating activities   (6,671 )   (516 )
Investing activities:        
 Purchases of property and equipment   (3,618 )   (4,328 )
 Purchases of marketable securities   (25,271 )   (46,572 )
 Maturities of marketable securities   27,832     -  
    Net cash used in investing activities   (1,057 )   (50,900 )
Financing activities:        
 Proceeds from exercise of stock options   590     139  
 Proceeds from employee stock purchase plan   2,865     2,453  
 Purchases of treasury stock   (3,377 )   -  
 Taxes paid for awards vested under equity incentive plans   (1,510 )   (1,377 )
    Net cash provided by (used in) financing activities   (1,432 )   1,215  
Effect of exchange rate changes on cash and cash equivalents   3     (3 )
Net decrease in cash and cash equivalents   (9,157 )   (50,204 )
Cash and cash equivalents at beginning of period   48,829     82,747  
Cash and cash equivalents at end of period  $ 39,672    $ 32,543  
         
         

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