SOURCE: Calix, Inc.

Calix, Inc.

October 29, 2014 16:02 ET

Calix Reports Third Quarter 2014 Financial Results

PETALUMA, CA--(Marketwired - Oct 29, 2014) - Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the third quarter ended September 27, 2014. Revenue for the third quarter of 2014 was $105.8 million, an increase of 2.1% compared to $103.6 million for the third quarter of 2013.

"In addition to achieving record revenues in the quarter, we continued to innovate and expand our product line and our customer base by launching two entirely new solutions," said Carl Russo, Calix president and CEO.

"We launched our new GigaCenters, the industry's first fiber-based products to unleash the power of Carrier-Class Wi-Fi in the home; and the Compass Open Link Cable software solution, allowing cable operators to deliver gigabit services over fiber while continuing to use traditional back office and DOCSIS command and control procedures. These ground-breaking offerings enable our customers to extend the gigabit experience to their subscribers at an accelerated pace and in a cost-effective manner."

The company's non-GAAP net income for the third quarter of 2014 was $4.6 million, or $0.09 per fully diluted share, compared to a non-GAAP net income of $10.2 million, or $0.20 per fully diluted share, for the third quarter of 2013. A reconciliation of GAAP and non-GAAP results is included as part of this release.

The GAAP net loss for the third quarter of 2014 was $3.8 million, or $(0.08) per basic and diluted share, compared to a GAAP net income of $0.5 million, or $0.01 per basic and diluted share, for the third quarter of 2013. A reconciliation of our third quarter 2014 operating results from non-GAAP to GAAP is provided below:

   
Calix, Inc.  
(Unaudited, in thousands, except per share data)  
Three Months Ended September 27, 2014  
                         
    Non-GAAP     Stock-Based Compensation     Amortization of Intangible Assets     GAAP  
Revenue   $ 105,769     $ --     $ --     $ 105,769  
Cost of revenue     58,394       206       2,089       60,689  
Gross profit     47,375       (206 )     (2,089 )     45,080  
Gross margin     44.8 %     --       --       42.6 %
Operating expenses     42,665       3,607       2,552       48,824  
Operating income (loss)     4,710       (3,813 )     (4,641 )     (3,744 )
Interest and other income (expense), net     11       --       --       11  
Income (loss) before taxes     4,721       (3,813 )     (4,641 )     (3,733 )
Provision for income taxes     115       --       --       115  
Net income (loss)   $ 4,606     $ (3,813 )   $ (4,641 )   $ (3,848 )
Weighted average diluted shares used to compute non-GAAP net income (loss) per common share     51,552        51,552        51,552           
Non-GAAP net income (loss) per diluted share   $ 0.09     $ (0.07 )   $ (0.09 )        
Weighted average basic and diluted shares used to compute GAAP net loss per common share                             51,048  
GAAP net loss per share                           $ (0.08 )
                                 

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 third quarter 2014 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 and other 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 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     Nine Months Ended  
 
 
 
 
September 27,
2014
 
 
 
 
September 28,
2013
 
 
 
 
September 27,
2014
 
 
 
 
September 28,
2013
 
 
Revenue   $ 105,769     $ 103,628     $ 289,594     $ 288,615  
Cost of revenue:                                
  Products and services (1)     58,600       54,132       156,981       151,323  
  Amortization of intangible assets     2,089       2,089       6,265       6,265  
    Total cost of revenue     60,689       56,221       163,246       157,588  
Gross profit     45,080       47,407       126,348       131,027  
Operating expenses:                                
  Research and development (1)     19,930       19,777       59,104       59,983  
  Sales and marketing (1)     18,717       16,612       54,562       49,492  
  General and administrative (1)     7,625       8,478       22,557       24,293  
  Amortization of intangible assets     2,552       2,552       7,656       7,656  
    Total operating expenses     48,824       47,419       143,879       141,424  
Loss from operations     (3,744 )     (12 )     (17,531 )     (10,397 )
  Interest and other income (expense), net:                                
  Interest income     52       2       86       4  
  Interest expense     (59 )     (24 )     (174 )     (94 )
  Other income (expense), net     18       4       121       (318 )
Loss before provision for income taxes     (3,733 )     (30 )     (17,498 )     (10,805 )
Provision for (benefit from) income taxes     115       (574 )     328       7  
Net (loss) income   $ (3,848 )   $ 544     $ (17,826 )   $ (10,812 )
Net (loss) income per common share:                                
    Basic   $ (0.08 )   $ 0.01     $ (0.35 )   $ (0.22 )
    Diluted   $ (0.08 )   $ 0.01     $ (0.35 )   $ (0.22 )
Weighted average number of shares used to compute                                
net (loss) income per common share:                                
    Basic     51,048       49,694       50,635       49,255  
    Diluted     51,048       51,142       50,635       49,255  
                                 
(1) Includes stock-based compensation as follows:                                
  Cost of revenue   $ 206     $ 362     $ 914     $ 1,090  
  Research and development     1,207       1,179       3,693       3,665  
  Sales and marketing     1,316       1,395       4,146       4,138  
  General and administrative     1,084       2,035       3,366       6,072  
    $ 3,813     $ 4,971     $ 12,119     $ 14,965  
                                 
                                 
   
Calix, Inc.  
Reconciliation of GAAP to Non-GAAP Results  
(Unaudited, in thousands, except per share data)  
   
    Three Months Ended   Nine Months Ended  
    September 27,     September 28,   September 27,     September 28,  
    2014     2013   2014     2013  
GAAP net (loss) income   $ (3,848 )   $ 544   $ (17,826 )   $ (10,812 )
Adjustments to reconcile GAAP net (loss) income to                              
non-GAAP net income:                              
  Stock-based compensation     3,813       4,971     12,119       14,965  
  Amortization of intangible assets     4,641       4,641     13,921       13,921  
Non-GAAP net income   $ 4,606       10,156     8,214       18,074  
Non-GAAP net income per common share:                              
  Basic   $ 0.09     $ 0.20   $ 0.16     $ 0.37  
  Diluted   $ 0.09     $ 0.20   $ 0.16     $ 0.36  
Weighted average shares used to compute non-GAAPnet income per common share - basic    
51,048
     
49,694
   
50,635
     
49,255
 
Weighted average shares used to compute non-GAAPnet income per common share - diluted (1)    
51,552
     
51,142
   
51,122
     
50,218
 
                               
(1) Includes the dilutive effect of outstanding stock options, restricted stock units and ESPP.  
   
   
   
Calix, Inc.  
Condensed Consolidated Balance Sheets  
(Unaudited, in thousands)  
             
    September 27,     December 31,  
    2014     2013  
ASSETS                
  Current assets:                
  Cash and cash equivalents   $ 39,399     $ 82,747  
  Marketable securities     48,400       --  
  Restricted cash     295       295  
  Accounts receivable, net     42,781       43,520  
  Inventory     43,845       51,071  
  Deferred cost of revenue     11,334       21,076  
  Prepaid expenses and other current assets     6,469       5,757  
    Total current assets     192,523       204,466  
  Property and equipment, net     20,159       17,473  
  Goodwill     116,175       116,175  
  Intangible assets, net     29,820       43,740  
  Other assets     1,346       1,745  
    Total assets   $ 360,023     $ 383,599  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 13,258     $ 23,163  
  Accrued liabilities     37,579       32,075  
  Deferred revenue     20,095       34,862  
    Total current liabilities     70,932       90,100  
  Long-term portion of deferred revenue     18,807       18,431  
  Other long-term liabilities     1,743       1,145  
    Total liabilities     91,482       109,676  
Stockholders' equity:                
  Common stock     1,280       1,256  
  Additional paid-in capital     794,724       782,253  
  Accumulated other comprehensive income     139       190  
  Accumulated deficit     (527,602 )     (509,776 )
    Total stockholders' equity     268,541       273,923  
    Total liabilities and stockholders' equity   $ 360,023     $ 383,599  
                     
                     
   
Calix, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited, in thousands)  
   
    Nine Months Ended  
    September 27,     September 28,  
    2014     2013  
Operating activities:                
Net loss   $ (17,826 )   $ (10,812 )
 Adjustments to reconcile net loss to net cash provided by operating activities:                
  Depreciation and amortization     6,772       7,767  
  Loss on retirement of property and equipment     41       564  
  Amortization of intangible assets     13,921       13,921  
  Amortization of premiums related to available-for-sale securities     302       --  
  Gain on sale of available-for-sale securities     (1 )     --  
  Stock-based compensation     12,119       14,965  
  Changes in operating assets and liabilities:                
    Restricted cash     --       (972 )
    Accounts receivable, net     739       5,098  
    Inventory     7,226       3,906  
    Deferred cost of revenue     9,742       (5,749 )
    Prepaid expenses and other assets     (315 )     (466 )
    Accounts payable     (9,904 )     1,269  
    Accrued liabilities     5,520       (1,224 )
    Deferred revenue     (14,391 )     8,302  
    Other long-term liabilities     597       238  
      Net cash provided by operating activities     14,542       36,807  
Investing activities:                
  Purchase of property and equipment     (9,481 )     (5,475 )
  Purchase of marketable securities     (49,356 )     --  
  Proceeds from sale of marketable securities     615       --  
      Net cash used in investing activities     (58,222 )     (5,475 )
Financing activities:                
  Proceeds from exercise of stock options     429       671  
  Proceeds from employee stock purchase plan     2,453       2,464  
  Taxes paid for awards vested under equity incentive plans     (2,505 )     (2,102 )
  Payments for debt issuance costs     --       (301 )
      Net cash provided by financing activities     377       732  
Effect of exchange rate changes on cash and cash equivalents     (45 )     65  
Net (decrease) increase in cash and cash equivalents     (43,348 )     32,129  
Cash and cash equivalents at beginning of period     82,747       46,995  
Cash and cash equivalents at end of period   $ 39,399     $ 79,124  
                 
                 

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