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.

Contact:
Ehud Helft / Kenny Green
CCG Investor Relations
[email protected]
Tel: (US) 1 646 201 9246

SOURCE EZchip Semiconductor Ltd.