EZchip Announces Second Quarter 2013 Results

YOKNEAM, Israel, Aug. 7, 2013 /PRNewswire/ -- EZchip Semiconductor Ltd. (NASDAQ: EZCH), a leader in Ethernet network processors, today announced its results for the second quarter ended June 30, 2013.  

Second Quarter 2013 Highlights:

  • Second quarter revenues of $16.7 million
  • Gross margin reached 85.1% on a GAAP basis and 85.6% on a non-GAAP basis
  • Net income, on a GAAP basis, was $5.1 million (31% of revenues)
  • Net income, on a non-GAAP basis, was $8.7 million (52% of revenues)
  • Operating cash flow of $7.5 million
  • Net cash at end of quarter was $181.9 million 

Second Quarter 2013 Results:

Total revenues in the second quarter of 2013 were $16.7 million, an increase of 5% compared to $15.8 million in the second quarter of 2012, and an increase of 9% compared to $15.3 million in the first quarter of 2013.

Net income, on a GAAP basis, for the second quarter of 2013 was $5.1 million, or $0.18 per share (diluted), compared to net income of $5.6 million, or $0.19 per share (diluted), in the second quarter of 2012, and net income of $3.5 million, or $0.12 per share (diluted), in the first quarter of 2013.

Net income, on a non-GAAP basis, for the second quarter of 2013 was $8.7 million, or $0.29 per share (diluted), compared to non-GAAP net income of $8.4 million, or $0.29 per share (diluted), in the second quarter of 2012, and non-GAAP net income of $6.7 million, or $0.23 per share (diluted), in the first quarter of 2013.

Cash, cash equivalents, marketable securities and deposits as of June 30, 2013, totaled $181.9 million, compared to $174.3 million as of March 31, 2013. Cash generated from operations was $7.5 million, cash used in investing activities was $0.3 million, cash provided by financing activities (resulting from the exercise of options) was $0.8 million and a decrease of $0.4 million resulted from cash adjustment of marketable securities, net.

First Six Months 2013 Results

Total revenues for the six months ended June 30, 2013 were $31.9 million, a year-over-year increase of 6% compared to $30.2 million for the six months ended June 30, 2012. Net income on a GAAP basis for the six months ended June 30, 2013 was $8.7 million, or $0.30 per share (diluted), compared to net income of $10.7 million, or $0.37 per share (diluted), for the six months ended June 30, 2012. Net income on a non-GAAP basis for the six months ended June 30, 2013 was $15.4 million or $0.51 per share (diluted), compared with non-GAAP net income of $16.2 million, or $0.55 per share (diluted), for the six months ended June 30, 2012.

Eli Fruchter, CEO of EZchip, commented, "We are pleased to report that samples of the NP-5 network processor have arrived and are now being tested in our labs. We expect to move the NP-5 to production next year and believe that substantially all NP-4 customers will adopt the NP-5 for their next generation platforms. With the forecasted growth in edge routing, the recent improvement in carriers' capex and the significant platforms that are projected to use the NP-4 and NP-5, we expect our customers will sell their platforms successfully, grow their market share and continue to drive growth for us in the coming years.

"During the quarter we continued to receive strong customer feedback on the NPS, our Network Processor for Smart networks, and believe that the NPS will expand our target markets to include SDN (Software Define Networks) and NFV (Network Function Virtualization) as those technologies mature. NPS was designed to perform data plane processing at extremely high speeds, separate from general purpose CPUs that are used for the control plane, a design that perfectly matches the SDN and NFV network architectures."

Conference Call
The Company will be hosting a conference call later today, August 7, 2013, 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 amortization of intangible assets. 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.  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, 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 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 21, 2013 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.

 

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,



2013


2013


2012


2013


2012












Revenues


$ 16,653


$ 15,296


$ 15,798


$ 31,949


$ 30,213

Cost of revenues


2,475


2,941


2,887


5,416


5,066

Gross profit


14,178


12,355


12,911


26,533


25,147












Operating expenses:











Research and development, net


6,267


6,098


4,840


12,365


9,374

Selling, general and administrative


3,269


3,257


3,200


6,526


6,367

Total operating expenses


9,536


9,355


8,040


18,891


15,741












Operating income


4,642


3,000


4,871


7,642


9,406

Financial income, net


505


510


682


1,015


1,279

Net income


$ 5,147


$ 3,510


$ 5,553


$ 8,657


$ 10,685












Net income per share:











Basic


$ 0.18


$ 0.12


$ 0.20


$ 0.30


$ 0.38

Diluted


$ 0.18


$ 0.12


$ 0.19


$ 0.30


$ 0.37

Weighted average shares used in per share calculation:











Basic


28,571,954


28,394,665


28,042,283


28,483,800


27,783,834

Diluted


28,917,717


28,881,145


28,823,804


28,946,460


28,700,836























 

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,



2013


2013


2012


2013


2012












GAAP gross profit


$ 14,178


$ 12,355


$ 12,911


$ 26,533


$ 25,147

Stock-based compensation


73


73


74


146


151

Non-GAAP gross profit


$ 14,251


$ 12,428


$ 12,985


$ 26,679


$ 25,298












GAAP gross profit as percentage of revenues


85.1%


80.8%


81.7%


83.0%


83.2%

Non-GAAP gross profit as percentage of revenues


 

85.6%


 

81.3%


 

82.2%


 

83.5%


 

83.7%























GAAP operating expenses


$ 9,536


$ 9,355


$ 8,040


$ 18,891


$ 15,741

Stock-based compensation:











Research and development


(2,049)


(1,825)


(1,545)


(3,874)


(2,906)

Selling, general and administrative


(1,398)


(1,327)


(1,216)


(2,725)


(2,360)

Amortization of intangible assets











Selling, general and administrative


--


--


(51)


--


(102)












Non-GAAP operating expenses


$ 6,089


$ 6,203


$ 5,228


$ 12,292


$ 10,373























GAAP operating income


$ 4,642


$ 3,000


$ 4,871


$ 7,642


$ 9,406












Non-GAAP operating income


$ 8,162


$ 6,225


$ 7,757


$ 14,387


$ 14,925












GAAP net income


$ 5,147


$ 3,510


$ 5,553


$ 8,657


$ 10,685

Stock-based compensation


3,520


3,225


2,835


6,745


5,417

Amortization of purchased intangible assets


--


--


51


--


102












Non-GAAP net income


$ 8,667


$ 6,735


$ 8,439


$ 15,402


$ 16,204












Non-GAAP net income per share - Diluted


$ 0.29


$ 0.23


$ 0.29


$ 0.51


$ 0.55

Non-GAAP weighted average shares
- Diluted*


30,086,653


29,868,370


29,540,537


29,965,981


29,343,540


* 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,



2013


2012



(Unaudited)


(Audited)

ASSETS





CURRENT ASSETS:





Cash, cash equivalents, marketable securities and deposits


$ 181,875


$ 167,968

Trade receivables, net


4,893


4,813

Other receivables


4,812


4,305

Inventories


5,875


4,523

Total current assets


197,455


181,609






NON CURRENT ASSETS:





Severance pay fund


6,670


6,066

Long term investment and others


367


358

Total non current assets


7,037


6,424






PROPERTY AND EQUIPMENT, NET


2,307


1,285






INTANGIBLE ASSETS, NET


1,131


1,000






GOODWILL


96,276


96,276






TOTAL ASSETS


$ 304,206


$ 286,594





LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Trade payables


$ 1,356


$ 571

Other payables and accrued expenses


5,543


5,401

Total current liabilities


6,899


5,972











ACCRUED SEVERANCE PAY


7,546


6,977






SHAREHOLDERS' EQUITY:





Share capital


163


161

Additional paid-in capital


320,368


312,723

Accumulated other comprehensive income


599


787

Accumulated deficit


(31,369)


(40,026)

Total shareholders' equity


289,761


273,645






TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$ 304,206


$ 286,594

















 

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,



2013


2013


2012


2013


2012

Cash flows from operating activities:











Net income


$ 5,147


$ 3,510


$ 5,553


$ 8,657


$ 10,685

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











Depreciation and amortization


129


155


157


284


300

Decrease (increase) in trade and other receivables, net


 

859


 

(1,000)


 

174


 

(141)


 

1,002

Decrease (increase) in inventory


(725)


(627)


974


(1,352)


(204)

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


 

(1,480)


 

1,666


 

(490)


 

186


 

(953)

Stock-based compensation


3,520


3,225


2,835


6,745


5,417

Net cash provided by operating activities


7,450


6,929


9,203


14,379


16,247












Cash flows from investing activities:











Purchase of property and equipment


(255)


(345)


(338)


(600)


(674)

Purchase of technology


--


(131)


(500)


(131)


(500)

Net cash used in investing activities


(255)


(476)


(838)


(731)


(1,174)












Cash flows from financing activities:











Proceeds from exercise of options


780


54


352


834


11,767

Net cash provided by financing activities


780


54


352


834


11,767












Cash adjustment of marketable securities, net*


(388)


(187)


(177)


(575)


154












Increase in cash, cash equivalents, marketable securities and deposits


7,587


6,320


8,540


13,907


26,994

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


 

174,288


 

167,968


 

145,224


 

167,968


 

126,770

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


 

 

$ 181,875


 

 

$ 174,288


 

 

$ 153,764


 

 

$ 181,875


 

 

$ 153,764


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

 

Contact:
Ehud Helft / Kenny Green
CCG Investor Relations
ezchip@ccgisrael.com
Tel: (US) 1 646 201 9246

SOURCE EZchip Semiconductor Ltd.



RELATED LINKS
http://www.ezchip.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.