SAN JOSE, Calif., Oct. 24, 2013 (GLOBE NEWSWIRE) -- Intermolecular, Inc. (Nasdaq:IMI) - accelerating research and development (R&D) for semiconductor and clean energy industries - today announced results for its third quarter ended September 30, 2013.
Revenue for the third quarter of 2013 was $17.7 million, representing year-over-year growth of 8% from $16.5 million in the third quarter of 2012. Collaborative development program (or CDP) revenue was $11.2 million for the quarter, compared to $12.5 million reported in the same period a year ago. Licensing and royalty revenue was $3.8 million, compared to $3.2 million for the third quarter of 2012. Product revenue was $2.7 million compared to $0.8 million reported in the same period a year ago.
Gross margin in the third quarter of 2013 was 48.9%, compared to 57.0% in the second quarter of 2013 and 56.3% in the third quarter of 2012. As projected in the Company's previous guidance, the decline in gross margin was primarily attributable to realignment of the Company's CDP with GLOBALFOUNDRIES, which resulted in a lower CDP revenue run rate in the third quarter, and a lag in the reduction of costs as well as investments in new customer micro-CDPs.
For the third quarter of 2013, the Company reported a net loss of $(2.2) million or $(0.05) per share, compared to a net loss of $(112) thousand, or $(0.00) per share for the third quarter of 2012.
Intermolecular reports revenue, costs of revenue, gross margin, operating income (loss), net income (loss) and earnings (loss) per share in accordance with GAAP and additionally on a non-GAAP basis. A reconciliation of the non-GAAP financial measures with the most directly comparable GAAP measure, 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.
On a non-GAAP basis, the Company reported a net loss of $(847) thousand or $(0.02) per share, compared to net income of $821 thousand, or $0.02 per share in the third quarter of 2012.
"We have made significant technical progress across multiple CDPs with semiconductor and clean energy customers. We continue to execute in these collaborations to drive the next wave of manufacturing implementation of our developed technology and IP," said David Lazovsky, President and CEO of Intermolecular. "We plan to sustain investments in internal R&D programs and in micro-CDPs with new customers to position the Company for accelerated growth. We are pleased with our technical execution, and look forward to its impact on licensing and royalty revenue in the years ahead."
Cash flow from operations for the third quarter of 2013 was $(4.1) million, and primarily reflects the timing of accounts receivables and the realignment of the Company's CDP with GLOBALFOUNDRIES. The Company invested $2.9 million in capital expenditures in the third quarter, and ended the quarter with cash and investments of $74.5 million.
Outlook for Fourth Quarter 2013
The following statements are based on current expectations for the fourth quarter of 2013.
- The Company projects revenue in the range of $15.0 to $16.0 million. This revenue projection includes approximately $15 million from backlog as of September 30, 2013.
- Non-GAAP net loss, which excludes stock-based compensation expense, is projected between $(3.5) million and $(2.5) million, or between $(0.08) per share to $(0.05) per share, on approximately 46 million basic shares outstanding.
Conference Call Today
Intermolecular will hold a conference call at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time today with David Lazovsky, President and Chief Executive Officer, and Rick Neely, Chief Financial Officer, to discuss third quarter 2013 results and other business developments.
The call can be accessed by dialing (877) 251-1860; international callers should dial (224) 357-2386. Please dial-in ten minutes prior to the scheduled conference call time. A live and archived webcast of the call will be available on Intermolecular's Website at http://ir.intermolecular.com for up to 30 days after the call.
About Intermolecular, Inc.
Intermolecular® has pioneered a proprietary approach to accelerate research and development, innovation, and time-to-market for the semiconductor and clean energy industries. The approach consists of the Company's proprietary High Productivity Combinatorial (HPC™) platform, coupled with its multi-disciplinary team. Through paid collaborative development programs (CDPs) with its customers, Intermolecular develops proprietary technology and intellectual property for its customers focused on advanced materials, processes, integration and device architectures. Founded in 2004, Intermolecular is based in San Jose, California. "Intermolecular" and the Intermolecular logo are registered trademarks; and "HPC" is a trademark of Intermolecular, Inc.; all rights reserved. Learn more at www.intermolecular.com.
Forward-Looking Statements
Statements made in this press release and the related earnings conference call 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: expectations regarding our future revenue and non-GAAP net income (loss) for the fourth quarter of 2013 and the coming quarters; the extent to which fourth quarter 2013 revenue will incorporate backlog from the end of the third quarter; the timing and potential value of our licensing and royalty revenue from products based on IP from our current CDPs; the opportunities with top tier display manufacturers; the effect (including timing) of investing in internal R&D and new micro-CDPs on future growth; the impact of the narrower scope of CDP activities with GLOBALFOUNDRIES; the relative importance and any benefits we may receive as a result of our agreements with Micron and Ulnanotech, including additional opportunities and the effect on our licensing and revenue streams. 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 revenue mix; the extent to which our backlog will convert to revenue; technical progress under our collaborative development programs with our customers; expectations of customers with respect to their business and technology in 2013 and beyond, including but not limited to implementation of their technology roadmaps (including timing), performance relative to the competitors in their respective fields, and successful volume manufacturing and commercialization of products that incorporate our technology; the scalability of our financial model and future earnings leverage; 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 in the semiconductor industry; the early stage of development of the clean energy industry; our potential need for future capital to finance our operations; and other risks described in our 2012 Form 10-K and our subsequent 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.
| Intermolecular, Inc. | ||||
| Condensed Consolidated Statements of Operations | ||||
| (In thousands, except per share amounts, Unaudited) | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2013 | 2012 | 2013 | 2012 | |
| Revenue: | ||||
| Collaborative development program and services revenue | $ 11,156 | $ 12,481 | $ 34,858 | $ 35,836 |
| Product revenue | 2,748 | 760 | 5,852 | 3,495 |
| Licensing and royalty revenue | 3,844 | 3,248 | 11,079 | 10,053 |
| Total revenue | 17,748 | 16,489 | 51,789 | 49,384 |
| Cost of revenue | 9,064 | 7,204 | 24,047 | 21,866 |
| Gross profit | 8,684 | 9,285 | 27,742 | 27,518 |
| Operating expenses: | ||||
| Research and development | 6,107 | 5,174 | 17,727 | 16,002 |
| Sales and marketing | 1,544 | 1,322 | 4,759 | 3,834 |
| General and administrative | 3,008 | 2,650 | 9,042 | 8,190 |
| Total operating expenses | 10,659 | 9,146 | 31,528 | 28,026 |
| Operating (loss) income | (1,975) | 139 | (3,786) | (508) |
| Interest expense, net | (168) | (255) | (649) | (754) |
| Other (expense) income, net | (2) | 10 | 66 | 16 |
| Loss before provision for income taxes | (2,145) | (106) | (4,369) | (1,246) |
| Income tax provision | 26 | 6 | 32 | 12 |
| Net loss | $ (2,171) | $ (112) | $ (4,401) | $ (1,258) |
| Basic and diluted net loss per common share | $ (0.05) | $ (0.00) | $ (0.10) | $ (0.03) |
| Shares used in basic and diluted net loss per common share | 45,192 | 43,279 | 44,658 | 42,725 |
| Intermolecular, Inc. | ||
| Condensed Consolidated Balance Sheets | ||
| (In thousands, Unaudited) | ||
| As of September 30, | As of December 31, | |
| 2013 | 2012 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 74,266 | $ 78,283 |
| Marketable securities | 250 | — |
| Total cash, cash equivalents and marketable securities | 74,516 | 78,283 |
| Accounts receivable, net | 10,382 | 8,330 |
| Inventory, current portion | 1,782 | 1,631 |
| Prepaid expenses and other current assets | 1,161 | 1,361 |
| Total current assets | 87,841 | 89,605 |
| Inventory, net of current portion | 5,096 | 3,160 |
| Property and equipment, net | 27,380 | 24,058 |
| Intangible assets, net | 7,311 | 6,671 |
| Other assets | 164 | 191 |
| Total assets | $ 127,792 | $ 123,685 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 3,780 | $ 971 |
| Accrued compensation and employee benefits | 3,742 | 3,397 |
| Deferred revenue | 2,708 | 3,130 |
| Accrued liabilities | 5,102 | 3,386 |
| Note payable | 25,000 | 26,514 |
| Total current liabilities | 40,332 | 37,398 |
| Other long-term liabilities | 304 | 770 |
| Total liabilities | 40,636 | 38,168 |
| Stockholders' equity: | ||
| Common stock | 46 | 44 |
| Additional paid-in capital | 192,816 | 186,778 |
| Accumulated deficit | (105,706) | (101,305) |
| Total stockholders' equity | 87,156 | 85,517 |
| Total liabilities and stockholders' equity | $ 127,792 | $ 123,685 |
| Intermolecular, Inc. | ||
| Condensed Consolidated Statements of Cash Flows | ||
| (In thousands, Unaudited) | ||
| Nine Months Ended September 30, | ||
| 2013 | 2012 | |
| Cash flows from operating activities: | ||
| Net loss | $ (4,401) | $ (1,258) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||
| Depreciation and amortization | 6,951 | 5,865 |
| Stock-based compensation | 4,088 | 2,687 |
| Impairment of long-lived assets | — | 949 |
| Loss on disposal of property and equipment | 9 | — |
| Changes in operating assets and liabilities: | ||
| Prepaid expenses and other assets | 244 | 912 |
| Inventory | (1,694) | (1,233) |
| Accounts receivable | (2,052) | 5,526 |
| Accounts payable | 2,057 | (364) |
| Accrued and other liabilities | 1,199 | (580) |
| Deferred revenue | (422) | (9,714) |
| Net cash provided by operating activities | 5,979 | 2,790 |
| Cash flows from investing activities: | ||
| Purchase of short-term investments | (1,001) | (2,201) |
| Redemption of short-term investments | 751 | 500 |
| Purchase of property and equipment | (9,054) | (3,760) |
| Capitalized intangible assets | (1,113) | (776) |
| Net cash used in investing activities | (10,417) | (6,237) |
| Cash flows from financing activities: | ||
| Proceeds from debt | 25,000 | — |
| Payment of debt | (26,514) | (573) |
| Proceeds from exercise of common stock options | 1,935 | 1,733 |
| Net cash provided by financing activities | 421 | 1,160 |
| Net decrease in cash and cash equivalents | (4,017) | (2,287) |
| Cash and cash equivalents at beginning of period | 78,283 | 81,002 |
| Cash and cash equivalents at end of period | $ 74,266 | $ 78,715 |
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. 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 revenue, gross margin, operating income (loss), net income (loss) and earnings (loss) 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. | ||||
| Reconciliation of GAAP to Non-GAAP Financial Measures | ||||
| (In thousands, except per share amounts and percentages, Unaudited) | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2013 | 2012 | 2013 | 2012 | |
| GAAP cost of net revenue | $ 9,064 | $ 7,204 | $ 24,047 | $ 21,866 |
| Stock-based compensation expense (a) | (379) | (250) | (1,151) | (780) |
| Non-GAAP cost of net revenue | $ 8,685 | $ 6,954 | $ 22,896 | $ 21,086 |
| GAAP gross profit | $ 8,684 | $ 9,285 | $ 27,742 | $ 27,518 |
| Stock-based compensation expense (a) | 379 | 250 | 1,151 | 780 |
| Non-GAAP gross profit | $ 9,063 | $ 9,535 | $ 28,893 | $ 28,298 |
| As a percentage of net revenue: | ||||
| GAAP gross margin | 48.9 % | 56.3 % | 53.6 % | 55.7 % |
| Non-GAAP gross margin | 51.1 % | 57.8 % | 55.8 % | 57.3 % |
| GAAP operating (loss) income | $ (1,975) | $ 139 | $ (3,786) | $ (508) |
| Stock-based compensation expense (a): | ||||
| - Cost of net revenue | 379 | 250 | 1,151 | 780 |
| - Research and development | 285 | 212 | 969 | 642 |
| - Sales and marketing | 302 | 199 | 859 | 550 |
| - General and administrative | 358 | 272 | 1,109 | 715 |
| Non-GAAP operating (loss) income | $ (651) | $ 1,072 | $ 302 | $ 2,179 |
| GAAP net loss | $ (2,171) | $ (112) | $ (4,401) | $ (1,258) |
| Stock-based compensation expense (a) | 1,324 | 933 | 4,088 | 2,687 |
| Non-GAAP net (loss) income | $ (847) | $ 821 | $ (313) | $ 1,429 |
| Shares used in computing Non-GAAP basic earnings per share | 45,192 | 43,279 | 44,658 | 42,725 |
| Shares used in computing Non-GAAP diluted earnings per share | 45,192 | 47,586 | 44,658 | 47,422 |
| Non-GAAP earnings per share: | ||||
| Basic net (loss) income per common share | $ (0.02) | $ 0.02 | $ (0.01) | $ 0.03 |
| Diluted net (loss) income per common share | $ (0.02) | $ 0.02 | $ (0.01) | $ 0.03 |
| (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 GAAP measure is not indicative of its core operating performance. | ||||