Netlist Reports Second Quarter 2015 Results

Aug 11, 2015, 16:05 ET from Netlist, Inc.

IRVINE, Calif., Aug. 11, 2015 /PRNewswire/ -- Netlist, Inc. (NASDAQ: NLST), a leading provider of high performance memory solutions for the cloud computing and storage markets, today reported financial results for the second quarter ended June 27, 2015. 

Revenues for the three months ended June 27, 2015, were $1.4 million, compared to revenues of $4.9 million for the second quarter ended June 28, 2014.  Gross profit for the three months ended June 27, 2015, was $0.1 million compared to a gross profit of $1.0 million, for the second quarter ended June 28, 2014. 

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) was a loss of ($4.9) million for the second quarter ended June 27, 2015, compared to an adjusted EBITDA loss of ($2.3) million for the prior year period.

Net loss for the second quarter ended June 27, 2015, was ($4.4) million, or ($0.09) loss per share, compared to a net loss in the prior year period of ($3.5) million, or ($0.08) loss per share.  These results include stock-based compensation expense of $0.4 million for the second quarter of 2015 and $0.5 million for the second quarter of 2014. 

As of June 27, 2015, cash and cash equivalents and restricted cash were $18.1 million, total assets were $21.9 million, working capital was $9.5 million, total debt, net of debt discounts, was $8.6 million, and stockholders' equity was $5.4 million.

C.K. Hong, Netlist's Chief Executive Officer, stated, "Our second quarter financial results reflect the ongoing transition to our next generation hybrid memory technologies and the litigation expense to protect over a decade of investment in our seminal intellectual property. During the second quarter we introduced the EXPRESSvault3 (EV3) PCIe hybrid product line and garnered significant interest, with a growing number of customers now in the early stages of qualification. We continue to make progress in the development of HyperVault which is on track to achieve major milestones later in the year."

Conference Call Information C.K. Hong, Chief Executive Officer, and Gail Sasaki, Chief Financial Officer, will host an investor conference call today, August 11, 2015 at 5:00 p.m. Eastern Time to review the company's results for the second quarter ended June 27, 2015.  The dial-in number for the call is 1-412-858-4600.  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 (Earnings Before Interest, Taxes, Depreciation and Amortization), 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, provisions for income taxes, depreciation, amortization, stock-based compensation and net other  expense that would normally be included in the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles ("GAAP"). 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.

Adjusted EBITDA loss is a non-GAAP measure in which the net interest expense, provision for income taxes, depreciation, amortization, stock-based compensation and net other expense are added back to the GAAP basis loss. The non-GAAP measures are described above and are reconciled to the corresponding GAAP measure in the condensed consolidated financial statements portion of this release under the heading "Unaudited Schedule Reconciling GAAP Net Loss to Non-GAAP EBITDA and Adjusted EBITDA."

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 NVvault® and EXPRESSvault™, a family of hybrid memory products that significantly accelerate system performance and provide mission critical fault tolerance, as well as HyperVault, its next generation hybrid memory solution which is under development and greatly expands the performance and capacity of DRAM channel storage. The Company's product offering also includes a broad portfolio of industrial Flash and specialty memory subsystems including VLP (very low profile) DIMMs and Planar-X RDIMMs.  Netlist has steadily invested in and grown its worldwide IP portfolio, which now includes 88 issued and pending patents in the areas of high performance memory and hybrid memory technologies.

Netlist develops technology solutions for customer applications in which high-speed, high-capacity, small form factor and efficient heat dissipation are key requirements for system memory. These customers include OEMs and hyperscale datacenter operators that design and build servers, storage systems and 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 HyperVault™, EXPRESSvault™, NVvault®, HyperCloud® and VLP Planar-X RDIMM; the timing and magnitude of the decrease in sales to our key customer; our ability to leverage our NVvault® and EXPRESSvault™ technology in a more diverse customer base; the rapidly-changing nature of technology; risks associated with intellectual property, including risks associated with the inherent uncertainty of the litigation process, and we can provide no assurance that our efforts to mitigate the effects of the jury verdict will be successful, patent infringement litigation against us as well as the costs and unpredictability of litigation over infringement of our intellectual property and the possibility of our patents being reexamined 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 annual report on Form 10-K filed on March 27, 2015, 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)

For more information, please contact:

Brainerd Communicators, Inc.

Netlist, Inc.

Mike Smargiassi or Jenny Perales

Gail M. Sasaki

NLST@braincomm.com

Chief Financial Officer

(212) 986-6667

(949) 435-0025

 

Netlist, Inc.

Consolidated Balance Sheets

(in thousands)

(unaudited)

(audited)

June 27,

December 27,

2015

2014

ASSETS

Current assets:

Cash and cash equivalents

$

16,524

$

11,040

Restricted cash

1,600

700

Accounts receivable, net

665

1,091

Inventories

1,948

1,880

Prepaid expenses and other current assets

855

988

Total current assets

21,592

15,699

Property and equipment, net

196

393

Other assets

77

150

Total assets

$

21,865

$

16,242

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

6,237

$

3,957

Accrued payroll and related liabilities

667

710

Accrued expenses and other current liabilities

392

420

Accrued engineering charges

500

500

Current portion of long-term debt, net of debt discount

4,260

2,205

Total current liabilities

12,056

7,792

Long-term debt, net of current portion and debt discount

4,387

3,632

Long-term warranty liability

46

99

Total liabilities

16,489

11,523

Commitments and contingencies

Stockholders' equity:

Preferred stock

-

-

Common stock

50

41

Additional paid-in capital

129,007

117,546

Accumulated deficit

(123,681)

(112,868)

Total stockholders' equity

5,376

4,719

Total liabilities and stockholders' equity

$

21,865

$

16,242

 

Netlist, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

Three Months Ended

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2015

2014

2015

2014

Net sales

$

1,429

$

4,887

$

3,543

$

11,888

Cost of sales(1)

1,324

3,908

2,739

8,924

Gross profit

105

979

804

2,964

Operating expenses:

Research and development(1)

1,536

1,233

2,920

2,111

Intellectual property legal fees

2,238

1,069

5,780

2,166

Selling, general and administrative(1)

1,744

1,781

3,503

3,403

Total operating expenses

5,518

4,083

12,203

7,680

Operating loss

(5,413)

(3,104)

(11,399)

(4,716)

Other income (expense), net:

Interest expense, net

(489)

(393)

(969)

(788)

Other income (expense), net

1,548

6

1,556

(5)

Total other income (expense), net

1,059

(387)

587

(793)

Loss before provision for income tax

(4,354)

(3,491)

(10,812)

(5,509)

Provision for income taxes

-

2

1

2

Net loss

$

(4,354)

$

(3,493)

$

(10,813)

$

(5,511)

Net loss per common share:

Basic and diluted

$

(0.09)

$

(0.08)

$

(0.23)

$

(0.14)

Weighted-average common shares outstanding:

Basic and diluted

50,354

41,472

47,530

39,134

(1)  Amounts include stock-based compensation expense as follows:

Cost of sales

$

12

$

14

$

26

$

29

Research and development

148

181

338

369

Selling, general and administrative

248

320

555

648

 

Netlist, Inc.

Unaudited Schedule Reconciling GAAP Net Loss to Non-GAAP EBITDA and Adjusted EBITDA

(in thousands)

Three Months Ended

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2015

2014

2015

2014

GAAP net loss

$

(4,354)

$

(3,493)

$

(10,813)

$

(5,511)

Interest expense, net

489

393

969

788

Provision for income taxes

-

2

1

2

Depreciation and amortization

134

253

282

535

EBITDA (loss)

(3,731)

(2,845)

(9,561)

(4,186)

Stock-based compensation

408

515

919

1,046

Other expense ( income), net

(1,547)

(6)

(1,556)

5

Adjusted EBITDA (loss)

$

(4,870)

$

(2,336)

$

(10,198)

$

(3,135)

 

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SOURCE Netlist, Inc.



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