Netlist Reports Fourth Quarter and Full Year 2011 Results
IRVINE, CA -- (Marketwire) -- 02/28/12 -- Netlist, Inc. (NASDAQ: NLST), a leading provider of cloud computing memory subsystems, today reported financial results for the fourth quarter and full year ended December 31, 2011.
Revenues for the 12 months ended December 31, 2011, were $60.7 million, up 60 percent from revenues of $37.9 million for the 12 months ended January 1, 2011. Gross profit for the 12 months ended December 31, 2011, was $20.3 million, or 33 percent of revenues, compared to a gross profit of $9.9 million, or 26 percent of revenues, for the 12 months ended January 1, 2011, an increase of 104 percent for the period.
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) loss after adding back net interest expense, benefit of income taxes, depreciation, amortization, stock-based compensation and net non-operating expense (income) was $1.5 million for the 12 month period ended December 31, 2011, compared to an adjusted EBITDA loss of $12.1 million for the prior year period.
Net loss for the 12 months ended December 31, 2011, was $5.6 million, or $0.22 loss per share, compared to a net loss in the prior year period of $15.1 million, or $0.64 loss per share. These results include stock-based compensation expense of $1.6 million for 2011, compared to $1.5 million for 2010.
"In the past year we made great progress in strategically advancing our position in the high performance memory market while improving our financial results," said C.K. Hong, Chief Executive Officer of Netlist. "Revenues increased by over 60%, driving a 100% increase in our gross profit without an increase in operating expenses -- highlighting the improving operating leverage in our model. Ongoing investments in new technologies as well as partnerships culminated in successful qualifications of HyperCloud and VLP memory at major OEMs in recent months. We expect these efforts to lead to significant growth of our business in the second half of the year."
Revenues for the fourth quarter ended December 31, 2011, were $16.4 million, up 62 percent from revenues of $10.1 million for the fourth quarter ended January 1, 2011. Gross profit for the fourth quarter ended December 31, 2011, was $6.0 million, or 37 percent of revenues, compared to a gross profit of $3.3 million, or 33 percent of revenues, for the fourth quarter ended January 1, 2011, an increase of 82 percent.
Adjusted EBITDA after adding back net interest expense, benefit of income taxes, depreciation, amortization, stock-based compensation and net non-operating income was $718,000 for the fourth quarter ended December 31, 2011, compared to an adjusted EBITDA loss of $2.3 million for the prior year period.
Net loss for the fourth quarter ended December 31, 2011, was $227,000 or $0.01 loss per share, compared to the net loss in the prior year period of $3.2 million, or $0.13 loss per share. These results include stock-based compensation expense in the fourth quarter ended December 31, 2011, of $397,000 compared with $261,000 in the year-earlier period.
As of December 31, 2011, cash, cash equivalents, and investments in marketable securities were $11 million, total assets were $32 million, working capital was $18 million, total debt was $3 million, and stockholders' equity was $20 million.
Conference Call Information
As previously announced, Netlist is conducting a conference call today
to be broadcast live over the Internet at 5:00 pm Eastern Time to
discuss and review the financial results for the fourth quarter and full
year ended December 31, 2011. The dial-in number for the call is
1-800-860-2442. The live webcast and archived replay of the call can be
accessed in the Investors section of Netlist's website at www.netlist.com.
Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including EBITDA and
adjusted EBITDA, may be considered non-GAAP financial measures. Netlist
believes this information is useful to investors because it provides a
basis for measuring Netlist's available capital resources, the operating
performance of Netlist's business and Netlist's cash flow, excluding
net interest expense, benefit of income taxes, depreciation,
amortization, share-based compensation and non-operating net income and
expense that would normally be included in the most directly comparable
measures calculated and presented in accordance with Generally Accepted
Accounting Principles. Netlist's management uses these non-GAAP
financial measures along with the most directly comparable GAAP
financial measures in evaluating Netlist's operating performance,
capital resources and cash flow. Non-GAAP financial measures should not
be considered in isolation from, or as a substitute for, financial
information presented in compliance with GAAP, and non-financial
measures as reported by Netlist may not be comparable to similarly
titled amounts reported by other companies.
About Netlist:
Netlist,
Inc. designs and manufactures high-performance, logic-based memory
subsystems for server and storage applications for cloud computing.
Netlist's flagship products include HyperCloud?, a patented memory
technology that breaks traditional memory barriers, NVvault? family of
products that enables data retention during power interruption,
EXPRESSvault?, a PCI Express backup/recovery solution for cache data
protection and a robust portfolio of high performance and specialty
memory subsystems including VLP (very low profile) DIMMs and Planar-X
RDIMMs.
Netlist develops technology solutions for customer applications in which high-speed, high-capacity, small form factor and heat dissipation are key requirements for system memory. These customers include OEMs that design and build tower servers, rack-mounted servers, blade servers, high-performance computing clusters, engineering workstations and telecommunications equipment. Founded in 2000, Netlist is headquartered in Irvine, CA with manufacturing facilities in Suzhou, People's Republic of China. Learn more at www.netlist.com.
Safe Harbor Statement:
This
news release contains forward-looking statements regarding future
events and the future performance of Netlist. These forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from those expected or projected. These
risks and uncertainties include, but are not limited to, risks
associated with the launch and commercial success of our products,
programs and technologies; the success of product partnerships;
continuing development, qualification and volume production of
EXPRESSvault?, NVvault?, HyperCloud? and VLP Planar-X RDIMM; the
rapidly-changing nature of technology; risks associated with
intellectual property, including the costs and unpredictability of
litigation over infringement of our intellectual property and the
possibility of the Company's patents being re-examined by the United
States Patent and Trademark office; volatility in the pricing of DRAM
ICs and NAND; changes in and uncertainty of customer acceptance of, and
demand for, our existing products and products under development,
including uncertainty of and/or delays in product orders and product
qualifications; delays in the Company's and its customers' product
releases and development; introductions of new products by competitors;
changes in end-user demand for technology solutions; the Company's
ability to attract and retain skilled personnel; the Company's reliance
on suppliers of critical components and vendors in the supply chain;
fluctuations in the market price of critical components; evolving
industry standards; and the political and regulatory environment in the
People's Republic of China. Other risks and uncertainties are described
in the Company's quarterly report on Form 10-Q filed on November 15,
2011, and subsequent filings with the U.S. Securities and Exchange
Commission made by the Company from time to time. Except as required by
law, Netlist undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
(Tables Follow)
Netlist, Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended Year Ended
-------------------------- --------------------------
December 31, January 1, December 31, January 1,
2011 2011 2011 2011
------------ ------------ ------------ ------------
Net sales $ 16,381 $ 10,096 $ 60,729 $ 37,855
Cost of sales(1) 10,389 6,807 40,468 27,910
------------ ------------ ------------ ------------
Gross profit 5,992 3,289 20,261 9,945
------------ ------------ ------------ ------------
Operating expenses:
Research and
development(1) 3,502 3,606 14,924 14,762
Selling, general
and
administrative(1) 2,694 2,878 10,705 11,041
------------ ------------ ------------ ------------
Total operating
expenses 6,196 6,484 25,629 25,803
------------ ------------ ------------ ------------
Operating loss (204) (3,195) (5,368) (15,858)
------------ ------------ ------------ ------------
Other income
(expense):
Interest expense,
net (81) (43) (228) (42)
Other (expense)
income, net 2 - (56) 71
------------ ------------ ------------ ------------
Total other
income
(expense), net (79) (43) (284) 29
------------ ------------ ------------ ------------
Loss before tax
benefit (283) (3,238) (5,652) (15,829)
Income tax benefit (56) (1) (53) (714)
------------ ------------ ------------ ------------
Net loss $ (227) $ (3,237) $ (5,599) $ (15,115)
============ ============ ============ ============
Net loss per common
share:
Basic and diluted $ (0.01) $ (0.13) $ (0.22) $ (0.64)
Weighted-average
common shares
outstanding:
Basic and diluted 28,306 25,188 25,086 23,779
(1) Amounts include stock-based compensation expense as follows:
Cost of sales $ 28 $ 9 $ 79 $ 42
Research and
development 134 60 600 357
Selling, general
and
administrative 235 192 941 1,083
Netlist, Inc.
Consolidated Balance Sheets
(in thousands)
December 31, January 1,
2011 2011
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 10,535 $ 14,210
Investments in marketable securities - 824
Accounts receivable, net 11,399 6,451
Inventories 6,057 4,509
Prepaid expenses and other current assets 806 1,396
------------ ------------
Total current assets 28,797 27,390
Property and equipment, net 2,771 4,077
Long-term investments in marketable securities 444 890
Other assets 161 337
------------ ------------
Total assets $ 32,173 $ 32,694
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,155 $ 6,256
Accrued payroll and related liabilities 1,813 1,762
Accrued expenses and other current liabilities 460 369
Accrued engineering charges 450 638
Current portion of long-term debt 2,144 674
------------ ------------
Total current liabilities 11,022 9,699
Long-term debt, net of current portion 1,118 1,063
Other liabilities 94 85
------------ ------------
Total liabilities 12,234 10,847
Commitments and contingencies
Stockholders' equity:
Common stock 26 25
Additional paid-in capital 92,709 89,074
Accumulated deficit (72,740) (67,141)
Accumulated other comprehensive loss (56) (111)
------------ ------------
Total stockholders' equity 19,939 21,847
------------ ------------
Total liabilities and stockholders' equity $ 32,173 $ 32,694
============ ============
Netlist, Inc.
Schedule Reconciling GAAP Net Loss to Non-GAAP EBITDA and Adjusted EBITDA
(in thousands, except per share amounts)
Three Months Ended Year Ended
-------------------------- --------------------------
December 31, January 1, December 31, January 1,
2011 2011 2011 2011
------------ ------------ ------------ ------------
GAAP net loss $ (227) $ (3,237) $ (5,599) $ (15,115)
Interest expense,
net 81 43 228 42
Benefit of income
taxes (56) (1) (53) (714)
Depreciation and
amortization 525 596 2,242 2,287
------------ ------------ ------------ ------------
EBITDA 323 (2,599) (3,182) (13,500)
Stock-based
compensation 397 261 1,620 1,482
Other (income)
expense, net (2) - 56 (71)
------------ ------------ ------------ ------------
Adjusted EBITDA $ 718 $ (2,338) $ (1,506) $ (12,089)
============ ============ ============ ============
The table above reconciles net loss to EBITDA and Adjusted EBITDA. EBITDA is defined as net loss before net interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA before net non-operating expense (income) and stock-based compensation expense. Although EBITDA and Adjusted EBITDA are not measures of performance calculated in accordance with GAAP, management believes that it is useful to Netlist, Inc. and to an investor in evaluating the Company because it is a widely used measure to evaluate a company's operating performance.
For more information, please contact:
Brainerd Communicators, Inc.
Corey Kinger (investors)
kinger@braincomm.com
Sharon Oh (media)
oh@braincomm.com
(212) 986-6667
Gail M. Sasaki
Chief Financial Officer
Netlist, Inc.
(949) 435-0025
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