SOURCE: PLX Technology

PLX Technology

January 28, 2013 17:29 ET

PLX Technology, Inc. Reports Fourth Quarter, Fiscal Year 2012 Financial Results

SUNNYVALE, CA--(Marketwire - Jan 28, 2013) - PLX Technology, Inc. Reports Fourth Quarter, Fiscal Year 2012 Financial Results

PLX Technology, Inc. (NASDAQ: PLXT)

  • Terminated IDT Merger Transaction, Divested 10GBase-T Ethernet Business
  • Record Annual PCI Express Revenues, Now Nearly 70 Percent of PLX Sales
  • 18 PCIe Gen3 Switches Including World's Largest Gen3 PCIe Switch at 96 Lanes
  • Market Share of PCI Express Switches Now More Than 70 Percent
  • David K. Raun Named President, CEO and Director

PLX Technology, Inc. (NASDAQ: PLXT), the global leader in PCI Express® (PCIe®) silicon and software connectivity solutions enabling emerging data center architectures, today announced fourth quarter revenues of $23.4 million and a GAAP loss from continuing operations of $0.2 million, or $0.00 per share (diluted). For 2012, PLX reported revenue from continuing operations of $100.2 million and a GAAP loss from continuing operations of $5.2 million or $0.12 per share (diluted), which reflects $6.9 million of non-recurring costs associated with the terminated IDT transaction and divested businesses.

"Our continuing steps to focus efforts on our successful PCI Express product line have allowed us to dramatically reduce expenses and achieve bottom line results that are just short of GAAP breakeven," said David Raun, PLX® president and CEO. "As we look out to 2013, we see healthy growth potential, driven by the rapid adoption of our Gen3 technology, solid PCI Express market share gains and a record number of PCI Express design wins using products from our portfolio. We believe that our continued growth and tight expense control position us well for GAAP profitability this year. Further, our employees are energized by the termination of the acquisition process and the uncertainty that it caused, and are firmly committed to our PCI Express product roadmap and the opportunity to proceed as a focused, growing and profitable company."

                                           
Non-GAAP Financial Comparison                                          
(in millions, except per share amounts)                                          
    Quarterly Results   Year to Date
    Q4 2012     Q3 2012     Q4 2011   2012     2011   2010
Net revenues   $ 23.4     $ 26.9     $ 24.9   $ 100.2     $ 111.2   $ 115.5
Operating expense   $ 11.5     $ 14.6     $ 12.8   $ 53.7     $ 54.6   $ 56.1
Operating income from continuing operations   $ 2.2     $ 1.5     $ 2.6   $ 5.2     $ 10.0   $ 11.8
Income from continuing operations, net of tax   $ 2.4     $ 0.5     $ 1.6   $ 4.8     $ 7.1   $ 9.6
Income per share (diluted) from continuing operations   $ 0.06     $ 0.01     $ 0.04   $ 0.10     $ 0.16   $ 0.25
                                           

The above non-GAAP financial information (other than net revenues, which are presented on a GAAP basis) excludes share-based compensation, acquisition, restructuring and impairment charges, amortization of acquired intangibles and discontinued operations. See "Use of Non-GAAP Financial Information" below.

 
GAAP Financial Comparison
(in millions, except per share amounts)
 
    Quarterly Results   Year to Date
    Q4 2012     Q3 2012     Q4 2011   2012     2011   2010
Net revenues   $ 23.4     $ 26.9     $ 24.9   $ 100.2     $ 111.2   $ 115.5
Operating expense   $ 14.1     $ 18.4     $ 13.2   $ 63.6     $ 58.5   $ 61.0
Operating income (loss) from continuing operations   $ (0.4 )   $ (2.3 )   $ 2.2   $ (4.8 )   $ 6.0   $ 6.8
Income (loss) from continuing operations, net of tax   $ (0.2 )   $ (3.3 )   $ 1.2   $ (5.2 )   $ 3.1   $ 4.6
Income (loss) per share (diluted) from continuing operations   $ -     $ (0.07 )   $ 0.03   $ (0.12 )   $ 0.07   $ 0.12
                                           

"Although PCI Express demand was up at most of our market leading enterprise storage customers, we saw softer demand for some of the other markets we serve including high-end consumer motherboards and graphics products," said Raun. "Our guidance for Q1 takes into consideration continued softness in some of these areas but growth in our larger enterprise storage and communications markets."

Products: 2012 Year in Review

"The company now offers an industry-leading 18 PCI Express Gen3 switches, 11 of which are in production, with the remaining readily sampling to key customers," said Raun. "Many more PCI Express products are in development with planned releases later this year. The developing products offer new features to support emerging designs including SSD storage applications as well as the enablement of the ExpressFabric® where PCI Express will be used outside the box and expand the total available market for PLX significantly in the coming years."

In July, PLX announced a new trio of ultra-high-lane-count PCIe Gen3 switches developed for cutting-edge markets like storage systems, high-end graphics, and communications platforms. The high-performance ExpressLane™ PCIe Gen3 switches include the PEX8796 (96 lanes, 24 ports), PEX8780 (80 lanes, 20 ports) and PEX8764 (64 lanes, 16 ports). To illustrate the potential of PCIe, designers choosing the PEX8796 switch -- touting bandwidth of 8 Gigatransfers per second, per lane, in full duplex mode -- are rewarded with amazing throughput of 1,536 gigabits per second (192 gigabytes/s), delivering performance that challenges all other interconnect technologies.

During 2012, PLX delivered several key industry event presentations on its ExpressFabric initiative. ExpressFabric is a PLX-engineered solution for extending the PCIe standard from its current dominant presence inside servers, switches and storage appliances to a central position as a fabric. An ExpressFabric based on PCIe Gen3 and, eventually, Gen4 is complementary to InfiniBand and Ethernet in next-generation cloud-driven data centers. PCIe does not replace the existing network itself, but instead extends the benefits of PCIe outside the box by moving network interface cards to the top of the rack -- or edge of the cluster -- thereby reducing cost and power while maintaining features offered by other legacy network fabrics. When fully developed, ExpressFabric will be the lowest-power, lowest-cost solution, and will negate the cumbersome need to translate multiple interconnects, thus resulting in lower latency and higher performance.

PLX presented on and demonstrated ExpressFabric technology to broad audiences at important annual events such as the Linley Tech Data Center Conference, multiple PCI-SIG Developers Conferences, the Intel Developers Forum, the SC12 Supercomputing Conference, and the Server Design Summit.

Merger and Acquisition Update

IDT acquisition transaction terminated.

In April 2012, Integrated Device Technology (IDT) and PLX entered into a definitive agreement pursuant to which IDT was to acquire PLX in order to broaden IDT's solutions for data center interconnects in cloud computing. In December, after nearly eight months of review, the Federal Trade Commission (FTC) issued an administrative complaint seeking to block the proposed merger between PLX and IDT, and was authorized to pursue a preliminary injunction in federal district court or other relief necessary to stop the deal pending a full administrative trial. In December, IDT and PLX mutually agreed to terminate their merger agreement due to the FTC decision, scaling legal costs, and the absence of a clear path for the parties to complete the proposed transaction.

While reducing overall expenses associated with the divested networking and satellite products, PLX's core research and development center in its Sunnyvale headquarters have remained focused on the expanding opportunities in the fast-growing data center and cloud services markets with its industry-leading PCIe portfolio.

Business Outlook

The following statements are based on current expectations. The company does not intend to update, confirm or change this guidance until its first quarter 2013 earnings release, although it may provide additional details regarding its guidance during today's scheduled conference call.

  • Net revenues for the first quarter ending March 31, 2013, are expected to be between $25 million and $27 million
  • Gross margins are expected to be approximately 58 percent
  • Operating expenses are expected to be approximately $13.9 million. Included in operating expenses are share-based compensation and acquisition and restructuring related charges of approximately $0.9 million. For the year, operating expenses net of share-based compensation and acquisition and restructuring related charges are expected to be about $52 million.

Conference Call

PLX management plans to conduct a conference call and webcast today at 2:00 p.m. (PT) to discuss its fourth quarter and fiscal year 2012 financial results, as well as its first quarter 2013 outlook. A live webcast of the conference call will be available through the Investor Relations section of the PLX Website at www.plxtech.com/investors, which also can be heard live via telephone at (800) 901-5231, using access code 70223785. International callers may dial +1 (617) 786-2961. A recorded replay of this webcast will be available on the PLX Website beginning 4:00 p.m. (PT) on January 28, 2013, through 11:59 p.m. (PT) on February 4, 2013. To listen to the replay via telephone, call (888) 286-8010 and use access code 69730946. International callers may dial +1 (617) 801-6888.

About PLX

PLX Technology, Inc. (NASDAQ: PLXT), based in Sunnyvale, Calif., USA, is the industry-leading global provider of semiconductor-based PCI Express connectivity solutions primarily targeting enterprise data center markets. The company develops innovative software-enriched silicon that enables product differentiation, reliable interoperability and superior performance. Visit PLX on plxtech.com, LinkedIn, Facebook, Twitter and YouTube.

Use of Non-GAAP Financial Information

To supplement PLX's financial statements presented on a GAAP basis, PLX has provided non-GAAP financial information, including non-GAAP income (loss), non-GAAP earnings (loss) per share (diluted), non-GAAP operating income (loss) and non-GAAP operating expenses. These non-GAAP results exclude share-based compensation, including ESOP expenses, acquisition, restructuring and impairment related charges, amortization of acquired intangibles and discontinued operations. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to PLX investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by PLX may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement

This press release includes statements that qualify as forward-looking statements under the Private Securities Litigation Reform Act of 1995. These include statements about the company's estimated net revenues, estimated operating expenses and estimated gross margins, which are set forth under the caption "Business Outlook," and statements regarding PLX's growth potential and GAAP profitability this year, our expectations for data center, cloud services and storage solution markets and the growth in solid-state storage solutions that use PLX PCI Express Gen3 products. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in the statements. Factors that could cause actual results to differ materially include risks and uncertainties, such as reduced demand for products of electronic equipment manufacturers that use the company's products, adverse economic conditions in general or those specifically affecting the company's markets, technical difficulties and delays in the development process, errors in the products, reduced backlog for the company's customers and unexpected expenses. Please refer to the documents filed by the company with the SEC from time to time, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2011, and PLX's quarterly reports on Forms 10-Q for the quarters ended March 31, 2012, June 30, 2012, and September 30, 2012, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements are made as of today, and the company assumes no obligation to update such statements.

PLX, the PLX logo, ExpressLane, and ExpressFabric are trademarks of PLX Technology, Inc., which may be registered in some jurisdictions. All other product names that appear in this material are for identification purposes only and are acknowledged to be trademarks or registered trademarks of their respective companies.

   
   
PLX TECHNOLOGY, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
(in thousands, except per share amounts)  
                   
    Three Months Ended  
    December 31     September 30     December 31  
    2012     2012     2011  
                         
Net revenues   $ 23,413     $ 26,866     $ 24,896  
Cost of revenues     9,729       10,808       9,562  
Gross margin     13,684       16,058       15,334  
Operating expenses:                        
  Research and development     6,170       8,823       5,289  
  Selling, general and administrative     6,163       6,654       7,634  
  Acquisition and restructuring related costs     1,719       2,830       (1,397 )
  Amortization of purchased intangible assets     22       64       1,657  
Total operating expenses     14,074       18,371       13,183  
Income (loss) from operations     (390 )     (2,313 )     2,151  
Interest income (expense) and other, net     (30 )     (60 )     61  
Income (loss) from continuing operations before provision for income taxes     (420 )     (2,373 )     2,212  
Provision (benefit) for income taxes     (230 )     931       984  
Income (loss) from continuing operations, net of tax     (190 )     (3,304 )     1,228  
Loss from discontinued operations (including gain on disposal of $1,353 and $2,097), net of tax     (423 )     (3,013 )     (6,681 )
Net loss   $ (613 )   $ (6,317 )   $ (5,453 )
                         
Basic net income (loss) per share:                        
  Income (loss) from continuing operations   $ -     $ (0.07 )   $ 0.03  
  Loss from discontinued operations   $ (0.01 )   $ (0.07 )   $ (0.15 )
  Net loss   $ (0.01 )   $ (0.14 )   $ (0.12 )
                         
Diluted net loss per share:                        
  Income (loss) from continuing operations   $ -     $ (0.07 )   $ 0.03  
  Loss from discontinued operations   $ (0.01 )   $ (0.07 )   $ (0.15 )
  Net loss   $ (0.01 )   $ (0.14 )   $ (0.12 )
                         
Shares used to compute per share amounts:                        
  Basic     45,053       44,946       44,660  
  Diluted     45,053       44,946       44,990  
                         
                         
                         
PLX TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
 
    Twelve Months Ended  
    December 31,  
    2012     2011     2010  
                         
Net revenues   $ 100,248     $ 111,152     $ 115,540  
Cost of revenues     41,462       46,600       47,753  
Gross margin     58,786       64,552       67,787  
Operating expenses:                        
  Research and development     27,532       28,218       30,799  
  Selling, general and administrative     28,927       28,037       26,720  
  Acquisition and restructuring related costs     6,898       (507 )     855  
  Amortization of purchased intangible assets     245       2,801       2,593  
Total operating expenses     63,602       58,549       60,967  
Income (loss) from operations     (4,816 )     6,003       6,820  
Interest income (expense) and other, net     (149 )     (148 )     57  
Income (loss) from continuing operations before provision for income taxes     (4,965 )     5,855       6,877  
Provision for income taxes     236       2,751       2,235  
Income (loss) from continuing operations, net of tax     (5,201 )     3,104       4,642  
Loss from discontinued operations (including gain on disposal of $3,450), net of tax     (27,388 )     (27,927 )     (7,931 )
Net loss   $ (32,589 )   $ (24,823 )   $ (3,289 )
                         
Basic net income (loss) per share:                        
  Income (loss) from continuing operations   $ (0.12 )   $ 0.07     $ 0.12  
  Loss from discontinued operations   $ (0.61 )   $ (0.63 )   $ (0.20 )
  Net loss   $ (0.73 )   $ (0.56 )   $ (0.08 )
                         
Diluted net loss per share:                        
  Income (loss) from continuing operations   $ (0.12 )   $ 0.07     $ 0.12  
  Loss from discontinued operations   $ (0.61 )   $ (0.62 )   $ (0.20 )
  Net loss   $ (0.73 )   $ (0.55 )   $ (0.08 )
                         
Shares used to compute per share amounts:                        
  Basic     44,882       44,559       38,942  
  Diluted     44,882       45,016       39,625  
                         
                         
                         
                         
PLX TECHNOLOGY, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited)  
(in thousands)  
             
    December 31     December 31  
    2012     2011  
ASSETS                
                 
  Cash and investments   $ 16,711     $ 19,752  
  Accounts receivable, net     10,635       11,074  
  Inventories     10,560       8,896  
  Property and equipment, net     11,267       12,291  
  Goodwill     20,461       21,338  
  Other intangible assets     -       20,845  
  Other assets     3,345       2,622  
Total assets   $ 72,979     $ 96,818  
                 
LIABILITIES                
                 
  Accounts payable   $ 10,738     $ 7,134  
  Accrued compensation and benefits     4,493       3,586  
  Accrued commissions     817       632  
  Other accrued expenses     2,259       3,132  
  Short term note payable & capital lease obligations     -       5,115  
  Short term borrowings against line of credit     8,000       -  
  Long term borrowings against line of credit     -       2,000  
Total liabilities     26,307       21,599  
                 
STOCKHOLDERS' EQUITY                
                 
  Common stock, par value     45       45  
  Additional paid-in capital     189,444       185,323  
  Accumulated other comprehensive loss     (226 )     (147 )
  Accumulated deficit     (142,591 )     (110,002 )
Total stockholders' equity     46,672       75,219  
Total liabilities and stockholders' equity   $ 72,979     $ 96,818  
                 
                 
                 
PLX TECHNOLOGY, INC.
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION 1
(unaudited, in thousands, except for per share data)
(not prepared in accordance with GAAP)
                                   
        Twelve Months Ended  
  Three Months Ended      December 31,  
   December 31 2012     September 30 2012     December 31 2011     2012     2011     2010  
Income (Loss) From Continuing Operations Reconciliation                                              
  GAAP Income (Loss) $ (190 )   $ (3,304 )   $ 1,228     $ (5,201 )   $ 3,104     $ 4,642  
  Acquisition and restructuring related costs   1,719       2,830       (1,397 )     6,898       (507 )     855  
  Share-based compensation   887       914       153       2,893       1,670       1,498  
  Amortization of purchased intangible assets   22       64       1,657       245       2,801       2,593  
  Non-GAAP Income (Loss) $ 2,438     $ 504     $ 1,641     $ 4,835     $ 7,068     $ 9,588  
                                               
Loss Per Share From Continuing Operations Reconciliation                                              
  GAAP Diluted Income (Loss) Per Share $ -     $ (0.07 )   $ 0.03     $ (0.12 )   $ 0.07     $ 0.12  
  Effect of acquisition and restructuring related costs   0.04       0.06       (0.03 )     0.15       (0.01 )     0.02  
  Effect of share-based compensation   0.02       0.02       -       0.06       0.04       0.04  
  Effect of amortization of purchased intangible assets   -       -       0.04       0.01       0.06       0.07  
  Non-GAAP Diluted Income Per Share $ 0.06     $ 0.01     $ 0.04     $ 0.10     $ 0.16     $ 0.25  
                                               
Operating Income (Loss) From Continuing Operations Reconciliation                                              
  GAAP Operating Income (Loss) $ (390 )   $ (2,313 )   $ 2,151     $ (4,816 )   $ 6,003     $ 6,820  
  Share-based compensation - COGS   49       49       13       147       47       33  
  Share-based compensation - R&D   288       349       (103 )     1,007       485       602  
  Share-based compensation - SG&A   550       516       243       1,739       1,138       863  
  Acquisition and restructuring related costs   1,719       2,830       (1,397 )     6,898       (507 )     855  
  Amortization of purchased intangible assets   22       64       1,657       245       2,801       2,593  
  Non-GAAP Operating Income (Loss) $ 2,238     $ 1,495     $ 2,564     $ 5,220     $ 9,967     $ 11,766  
                                               
Operating Expense From Continuing Operations Reconciliation                                              
  GAAP Operating Expenses $ 14,074     $ 18,371     $ 13,183     $ 63,602     $ 58,549     $ 60,967  
  Share-based compensation - R&D   (288 )     (349 )     103       (1,007 )     (485 )     (602 )
  Share-based compensation - SG&A   (550 )     (516 )     (243 )     (1,739 )     (1,138 )     (863 )
  Acquisition and restructuring related costs   (1,719 )     (2,830 )     1,397       (6,898 )     507       (855 )
  Amortization of purchased intangible assets   (22 )     (64 )     (1,657 )     (245 )     (2,801 )     (2,593 )
  Non-GAAP Operating Expenses $ 11,495     $ 14,612     $ 12,783     $ 53,713     $ 54,632     $ 56,054  
                                               
1 Refer to " Use of Non-GAAP Financial Information" in the press release for a discussion of management's use of non-GAAP financial measures.  
                                               
                                               
                                               
                                           
PLX TECHNOLOGY, INC.  
SUPPLEMENTAL DATA (Unaudited)  
                               
          Twelve Months Ended  
    Three Months Ended     December 31  
    December 31 2012     September 30 2012     December 31 2011     2012     2011  
Net Revenues by Geography                              
Americas   15 %   18 %   30 %   16 %   20 %
Asia Pacific   70 %   72 %   61 %   71 %   68 %
Europe   15 %   10 %   9 %   13 %   12 %
                               
                               
          Twelve Months Ended  
    Three Months Ended     December 31  
    December 31 2012     September 30 2012     December 31 2011     2012     2011  
Net Revenues by Type                              
PCI Express Revenue   69 %   65 %   57 %   67 %   55 %
Connectivity Revenue   31 %   35 %   43 %   33 %   45 %