EZchip Announces Record Second Quarter 2014 Results: Q2 Revenues Increase 33% Year-Over-Year To $22.1 Million - KYTX CBS 19 Tyler Longview News Weather Sports

EZchip Announces Record Second Quarter 2014 Results: Q2 Revenues Increase 33% Year-Over-Year To $22.1 Million

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SOURCE EZchip Semiconductor Ltd.

YOKNEAM, Israel, Aug. 13, 2014 /PRNewswire/ -- EZchip Semiconductor Ltd. (NASDAQ: EZCH), a leader in Ethernet network processors, today announced its results for the second quarter ended June 30, 2014.  

Second Quarter 2014 Highlights:

  • Second quarter revenues of $22.1 million
  • Gross margin reached 80.5% on a GAAP basis and 80.9% on a non-GAAP basis
  • Net income, on a GAAP basis, was $6.2 million (28% of revenues)
  • Net income, on a non-GAAP basis, was $11.0 million (50% of revenues)
  • Operating cash flow of $10.2 million
  • Net cash at end of quarter was $219.2 million

Second Quarter 2014 Results:

Total revenues in the second quarter of 2014 were $22.1 million, an increase of 33% compared to $16.7 million in the second quarter of 2013, and an increase of 9% compared to $20.3 million in the first quarter of 2014.

Net income, on a GAAP basis, for the second quarter of 2014 was $6.2 million, or $0.21 per share (diluted), compared to net income of $5.1 million, or $0.18 per share (diluted), in the second quarter of 2013, and net income of $6.1 million, or $0.21 per share (diluted), in the first quarter of 2014.

Net income, on a non-GAAP basis, for the second quarter of 2014 was $11.0 million, or $0.36 per share (diluted), compared to non-GAAP net income of $8.7 million, or $0.29 per share (diluted), in the second quarter of 2013, and non-GAAP net income of $10.0 million, or $0.33 per share (diluted), in the first quarter of 2014.

Cash, cash equivalents, marketable securities and deposits as of June 30, 2014, totaled $219.2 million, compared to $210.0 million as of March 31, 2014. Cash generated from operations was $10.2 million, cash used in investing activities was $1.1 million, cash provided by financing activities (resulting from the exercise of options) was $0.2 million and a decrease of $0.1 million resulted from cash adjustment of marketable securities, net.

First Six Months 2014 Results

Total revenues for the six months ended June 30, 2014 were $42.4 million, a year-over-year increase of 33% compared to $31.9 million for the six months ended June 30, 2013. Net income on a GAAP basis for the six months ended June 30, 2014 was $12.3 million, or $0.42 per share (diluted), compared to net income of $8.7 million, or $0.30 per share (diluted), for the six months ended June 30, 2013. Net income on a non-GAAP basis for the six months ended June 30, 2014 was $21.0 million or $0.69 per share (diluted), compared with non-GAAP net income of $15.4 million, or $0.51 per share (diluted), for the six months ended June 30, 2013.

Eli Fruchter, CEO of EZchip, commented, "This has been another record quarter for EZchip in revenues and profits, with revenues up 33% compared to the second quarter last year. During the quarter we announced the signing of a definitive agreement to acquire Tilera Corporation.  The acquisition leapfrogs EZchip into the fast-growing multi-core CPU market, and combined with NPS, is expected to increase EZchip's total available market (TAM) by six fold to over $2 billion. NP-5 is nearing production, NPS is receiving excellent feedback and we are pleased to announce that we have recently received our first NPS design wins for data center applications."

Conference Call

The Company will be hosting a conference call later today, August 13, 2014, at 10:00am ET, 7:00am PT, 3:00pm UK time and 5:00pm Israel time. On the call, management will review and discuss the results, and will be available to answer investor questions.

To participate through the live webcast, please access the investor relations section of the Company's web site at: http://www.ezchip.com/investor_relations.htm, at least 10 minutes before the conference call commences. If you would like to ask a question on the call, please contact the investor relations team for the telephone dial-in numbers.

For those unable to listen to the live webcast, a replay of the webcast will be available the day after the call under the 'Investor Relations' section of the website.

Use of Non-GAAP Financial Information

In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which EZchip believes are the principal indicators of the operating and financial performance of its business. The non-GAAP financial measures exclude the effects of stock-based compensation expenses recorded in accordance with FASB ASC 718 and acquisition related costs. Management believes the non-GAAP financial measures provided are useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company.  Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance.  However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP.  Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release.

ABOUT EZCHIP

EZchip is a fabless semiconductor company that provides Ethernet network processors for networking equipment. EZchip provides solutions that scale from a few to hundreds of Gigabits-per-second. EZchip's network processors provide great flexibility and high performance coupled with superior integration and power efficiency for a wide range of applications in carrier, cloud and data center network equipment.  For more information on our company, visit the web site at http://www.ezchip.com.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements are statements that are not historical facts and may include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance.  These statements are only predictions based on EZchip's current expectations and projections about future events based on its current knowledge.  There are important factors that could cause EZchip's actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements.  Those factors include, but are not limited to, the impact of general economic conditions, competitive products (including in-house customer developed products), product demand and market acceptance risks, customer order cancellations, reliance on key strategic alliances, fluctuations in operating results, delays in development of highly-complex products, the consummation of the Tilera acquisition and other factors indicated in EZchip's filings with the Securities and Exchange Commission (SEC).  For more details, refer to EZchip's SEC filings and the amendments thereto, including its Annual Report on Form 20-F filed on March 27, 2014 and its Current Reports on Form 6-K. EZchip undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in our expectations, except as may be required by law.

Contact:

Ehud Helft / Kenny Green
GK Investor & Public Relations
ezchip@gkir.com 
Tel: (US) 1 646 201 9246

-- tables to follow -- 

EZchip Semiconductor Ltd.
Condensed Consolidated Statements of Operations
(U.S. Dollars in thousands, except per share amounts)
(Unaudited)




Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,


June 30,


June 30,



2014


2014


2013


2014


2013












Revenues


$ 22,102


$ 20,288


$ 16,653


$ 42,390


$ 31,949

Cost of revenues


4,300


3,788


2,475


8,088


5,416

Gross profit


17,802


16,500


14,178


34,302


26,533












Operating expenses:











Research and development, net


7,394


7,102


6,267


14,496


12,365

Selling, general and administrative


4,478


3,772


3,269


8,250


6,526

Total operating expenses


11,872


10,874


9,536


22,746


18,891












Operating income


5,930


5,626


4,642


11,556


7,642

Financial income, net


284


460


505


744


1,015

Net income


$ 6,214


$ 6,086


$ 5,147


$ 12,300


$ 8,657












Net income per share:











Basic


$ 0.21


$ 0.21


$ 0.18


$ 0.42


$ 0.30

Diluted


$ 0.21


$ 0.21


$ 0.18


$ 0.42


$ 0.30

Weighted average shares used in per
share calculation:











Basic


29,157,533


28,978,411


28,571,954


29,068,467


28,483,800

Diluted


29,473,870


29,338,690


28,917,717


29,464,673


28,946,460























 

EZchip Semiconductor Ltd.
Reconciliation of GAAP to Non-GAAP Measures
(U.S. Dollars in thousands, except per share amounts)
(Unaudited)




Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,


June 30,


June 30,



2014


2014


2013


2014


2013












GAAP gross profit


$ 17,802


$ 16,500


$ 14,178


$ 34,302


$ 26,533

Stock-based compensation


76


74


73


150


146

Non-GAAP gross profit


$ 17,878


$ 16,574


$ 14,251


$ 34,452


$ 26,679












GAAP gross profit as percentage of
revenues


80.5%


81.3%


85.1%


80.9%


83.0%

Non-GAAP gross profit as
percentage of revenues


80.9%


81.7%


85.6%


81.3%


83.5%























GAAP operating expenses


$ 11,872


$ 10,874


$ 9,536


$ 22,746


$ 18,891

Stock-based compensation:











      Research and development


(2,421)


(2,267)


(2,049)


(4,688)


(3,874)

      Selling, general and administrative


(1,652)


(1,584)


(1,398)


(3,236)


(2,725)

Acquisition related costs











      Selling, general and administrative


(660)


--


--


(660)


--












Non-GAAP operating expenses


$ 7,139


$ 7,023


$ 6,089


$ 14,162


$ 12,292























GAAP operating income


$ 5,930


$ 5,626


$ 4,642


$ 11,556


$ 7,642












Non-GAAP operating income


$ 10,739


$ 9,551


$ 8,162


$ 20,290


$ 14,387












GAAP net income


$ 6,214


$ 6,086


$ 5,147


$ 12,300


$ 8,657

Stock-based compensation


4,149


3,925


3,520


8,074


6,745

Acquisition related costs


660


--


--


660


--












Non-GAAP net income


$ 11,023


$ 10,011


$ 8,667


$ 21,034


$ 15,402












Non-GAAP net income per share -
Diluted


$ 0.36


$ 0.33


$ 0.29


$ 0.69


$ 0.51

Non-GAAP weighted average shares
- Diluted*


30,774,136


30,507,804


30,086,653


30,637,994


29,965,981



* In calculating diluted non-GAAP net income per share, the diluted weighted average number of shares outstanding excludes the effects of stock-based compensation expenses in accordance with FASB ASC 718.

 

EZchip Semiconductor Ltd.

Condensed Consolidated Balance Sheet

(U.S. Dollars in thousands)









June 30,


December 31,




2014


2013




(Unaudited)


(Audited)


ASSETS






CURRENT ASSETS:






Cash, cash equivalents, marketable securities and deposits


$ 219,219


$ 202,865


Trade receivables, net


9,673


7,416


Other receivables


2,355


3,153


Inventories


5,974


5,969


Total current assets


237,221


219,403








NON CURRENT ASSETS:






Severance pay fund


7,594


7,416


Long term investment and others


350


364


Total non current assets


7,944


7,780








PROPERTY AND EQUIPMENT, NET


1,963


2,114








INTANGIBLE ASSETS, NET


5,242


4,127








GOODWILL


96,276


96,276








TOTAL ASSETS


$ 348,646


$ 329,700







LIABILITIES AND SHAREHOLDERS' EQUITY






CURRENT LIABILITIES:






Trade payables


$ 1,177


$ 3,951


Other payables and accrued expenses


8,188


7,309


Total current liabilities


9,365


11,260








ACCRUED SEVERANCE PAY


8,470


8,164








SHAREHOLDERS' EQUITY:






Share capital


166


164


Additional paid-in capital


336,479


328,003


Accumulated other comprehensive income


194


437


Accumulated deficit


(6,028)


(18,328)


Total shareholders' equity


330,811


310,276








TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$ 348,646


$ 329,700














 

EZchip Semiconductor Ltd.

Selected Condensed Consolidated Cash Flow Data on a Non-GAAP Basis

(U.S. Dollars in thousands)

(Unaudited)




Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,


June 30,


June 30,



2014


2014


2013


2014


2013












Cash flows from operating activities:











Net income


$ 6,214


$ 6,086


$ 5,147


$ 12,300


$ 8,657

Adjustments to reconcile net income to net
cash provided by operating activities:











Depreciation


166


168


129


334


284

Decrease (increase) in trade and other
receivables, net


(97)


(1,471)


859


(1,568)


(141)

Decrease (increase) in inventory


97


(102)


(725)


(5)


(1,352)

Increase (decrease) in trade payables and
other accrued liabilities, net


(266)


(164)


(1,480)


(430)


186

Stock-based compensation


4,149


3,925


3,520


8,074


6,745

Net cash provided by operating activities


10,263


8,442


7,450


18,705


14,379












Cash flows from investing activities:











Purchase of property and equipment


(24)


(196)


(255)


(220)


(600)

Purchase of technology


(1,067)


(1,348)


--


(2,415)


(131)












Net cash used in investing activities


(1,091)


(1,544)


(255)


(2,635)


(731)












Cash flows from financing activities:











Proceeds from exercise of options


188


216


780


404


834

Net cash provided by financing activities


188


216


780


404


834












Cash adjustment of marketable securities,
net*


(113)


(7)


(388)


(120)


(575)












Increase in cash, cash equivalents,
marketable securities and deposits


9,247


7,107


7,587


16,354


13,907












Cash, cash equivalents, marketable securities
and deposits at the beginning of the period


209,972


202,865


174,288


202,865


167,968












Cash, cash equivalents, marketable securities
and deposits at the end of the period


$ 219,219


$ 209,972


$ 181,875


$ 219,219


$ 181,875



* Including unrealized gain (loss) on marketable securities, accumulated interest accretion and amortization of discount and premium on marketable securities.

 

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