Mobileye Announces First Quarter 2017 Financial Results

JERUSALEM, June 1, 2017 /PRNewswire/ --

First Quarter 2017 Highlights:

    --  Total revenue of $124.7 million, an increase of 66% over the same
        quarter last year
    --  GAAP Net Income of $33.5 million; Non-GAAP Net Income of $60.0 million -
        an increase of 53% and 73% over the same quarter last year, respectively
    --  GAAP fully diluted EPS of $0.14; Non-GAAP fully diluted EPS of $0.25
    --  Generated GAAP net cash from operating activities of $56.6 million;
        Non-GAAP free cash flow of $41.2 million

(NYSE: MBLY) - Mobileye N.V., the global leader in Advanced Driver Assistance Systems ("ADAS") and autonomous driving technologies, today announced financial results for the first quarter ended March 31, 2017.

"Mobileye delivered solid first quarter results, growing both revenue and net income by over 50% on a year over year basis while generating cash at a high conversion rate," said Ziv Aviram, co-founder, president and chief executive officer of Mobileye. "Strategically, we added revenue visibility with new ADAS design wins, bolstered alliances with existing and new partners, and took a major step forward with our proprietary high-definition mapping product (REM(TM)) by signing definitive collaboration agreements with several major automakers."

"The pending acquisition of Mobileye by Intel will combine best-in-class technologies from both companies and accelerate delivery of a comprehensive value proposition for the automotive industry, while delivering compelling cash value to our shareholders," Mr. Aviram noted.

First Quarter 2017 Financial Highlights

    --  Revenue:  Total revenue for the first quarter of 2017 was $124.7
        million, compared to $75.2 million in the prior-year period,
        representing a 66% increase.  Within total revenue, original equipment
        manufacturing (OEM) revenue was $94.5 million, compared to $61.4 million
        in the prior-year period representing a 54% increase.  EyeQ chip volume
        increased to 2,032 thousand EyeQ units, compared to 1,322 thousand units
        in the prior-year period.  EyeQ Average Selling Price (ASP) per unit for
        the first quarter of 2017 was $45.1, up from $44.2 during the same
        period last year.  The increase in OEM revenues is the result of new
        launches and the roll-out of Mobileye technology to more models within
        existing programs compared to the same quarter last year.  After market
        (AM) revenue contributed the remaining $30.2 million of total revenue
        for the first quarter of 2017 compared to $13.8 million in the
        prior-year period representing a 188% increase. The increase in
        Aftermarket revenues is primarily the year-over-year effect of
        sequential revenue increases we experienced over the course of 2016.




    --  Net Income and Earnings per Share: GAAP net income for the first quarter
        of 2017 was $33.5 million, or $0.14 per diluted share. This compares to
        GAAP net income of $21.9 million, or $0.09 per diluted share for the
        prior-year period. GAAP net income for the first quarter of 2017
        represents 26.9% of revenue compared to 29.1% for the prior-year period.
        GAAP results include share-based compensation expense, net of tax, of
        $19.9 million for the first quarter of 2017 compared to $12.8 million
        for the prior-year period. In addition, GAAP net income during the first
        quarter of 2017 included $6.5 million in expenses associated with the
        pending Intel transaction. The decline in profit margin is mainly the
        result of the incurrence of Intel transaction related expenses.Non-GAAP
        net income for the first quarter of 2017 was $60.0 million, or $0.25 per
        share based on 238.9 million weighted average diluted shares
        outstanding.  This compares to non-GAAP net income of $34.7 million, or
        $0.15 per share based on 236.9 million weighted average diluted shares
        outstanding during the prior-year period.  Non-GAAP net income for the
        first quarter of 2017 represents 48.1% of revenue, an increase in
        profitability compared to 46.2% for the prior-year period, which is the
        result of better gross margins and lower operating expenses as
        percentage of revenues.  Non-GAAP net income excludes share-based
        compensation expense, expenses associated with the pending Intel
        transaction during the first quarter of 2017, and the applicable income
        tax effect.  See the reconciliation information below for a more
        detailed discussion of this non-GAAP measure.


    --  Cash and Cash Flow: As of March 31, 2017, Mobileye had cash and cash
        equivalents, restricted bank deposits, and marketable securities of
        $677.2 million, compared to $633.4 million as of December 31, 2016.
        Mobileye generated $56.6 million in net cash from operating activities
        for the first quarter of 2017 compared to $32.5 million for the
        prior-year period.  Mobileye generated $41.2 million in non-GAAP free
        cash flow for the first quarter of 2017 compared to $30.4 million for
        the prior-year period.  Free cash flow generation during this quarter
        reflects the payment of the $12.9 million purchase price of the land for
        our new headquarters, as well as $6.1 million of transaction related
        expenses incurred in connection with the Intel transaction.  Non-GAAP
        free cash flow represents GAAP net cash provided by operating activities
        minus capital expenditures.  See the reconciliation information below
        for a more detailed discussion of this non-GAAP measure.

A reconciliation of the non-GAAP financial measures to GAAP measures has been provided in the financial tables included in this press release. An explanation of the non-GAAP financial measures and how they are calculated is included below under the heading "Non-GAAP Financial Measures." Mobileye has updated its reconciliation of GAAP to non-GAAP net income taking into account the Securities and Exchange Commission ("SEC") Staff guidance and added to the reconciliation the applicable tax effect on share-based compensation expense for all periods presented.

Acquisition of Land

In March 2017, Mobileye closed its purchase of land in Jerusalem, which we intend to use for the construction of a new R&D and innovation center (the "Mobileye Campus") that also will host our headquarters. As a result of this transaction, Mobileye now owns 74% of the equity of a company called Azorei Kisalon ("Kisalon") formed to own the land. This equity interest, together with a long-term lease agreement, and an agreement with the minority shareholders of Kisalon will enable us to build the Mobileye Campus. Subject to receipt of the necessary regulatory approvals, we intend to begin construction, and intend to invest approximately $195 million in the development of the Mobileye Campus.

Suspension of Conference Calls and Guidance

As announced on March 13, 2017, we entered into a purchase agreement with Intel Corporation ("Intel") and Cyclops Holdings, Inc., a wholly owned subsidiary of Intel (the "Purchaser") pursuant to which the Purchaser will offer to purchase all of the issued and outstanding ordinary shares of the Company, par value EUR 0.01 per share, for cash consideration (without interest and less applicable withholding taxes) of $63.54 per ordinary share (the "Offer"), as further detailed in the Tender Offer Statement and amendments filed by Intel with the Securities and Exchange Commission, the Schedule 14D-9 filed by the Company and the Company's Notice of Annual General Meeting ("AGM"). The Company will hold the AGM on June 13, 2017.

In light of the pending transaction, the Company will not host an earnings conference call and will not provide guidance relating to its expected financial results for future periods.

About Mobileye

Mobileye N.V. is the global leader in the development of computer vision and machine learning, data analysis, localization and mapping for Advanced Driver Assistance Systems and autonomous driving. The Company's technology keeps passengers safer on the roads, reduces the risks of traffic accidents, saves lives and has the potential to revolutionize the driving experience by enabling autonomous driving. The Company's proprietary software algorithms and EyeQ® chips perform detailed interpretations of the visual field in order to anticipate possible collisions with other vehicles, pedestrians, cyclists, animals, debris and other obstacles. The Company's products are also able to detect roadway markings such as lanes, road boundaries, barriers and similar items; identify and read traffic signs, directional signs and traffic lights; create a Roadbook(TM) of localized drivable paths and visual landmarks using REM(TM); and provide mapping for autonomous driving. The Company's products are or will be integrated into car models from more than 25 global automakers. The Company's products are also available in the aftermarket.

Forward-Looking Statements

This press release contains certain forward-looking statements. Words such as "believes," "intends," "expects," "projects," "anticipates," and "future" or similar expressions are intended to identify forward-looking statements. These statements are only predictions based on the Company's current expectations and projections about future events. You should not place undue reliance on these statements. Many factors may cause the Company's actual results to differ materially from any forward-looking statement, including the risk factors and other matters set forth in the Company's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 20-F for the year ended December 31, 2016. The Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.

Non-GAAP Financial Measures

In this release, we provide financial information that has not been prepared in accordance with GAAP. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors as a supplement to GAAP measures. We believe that these non-GAAP financial measures also provide additional tools for investors to use in evaluating our ongoing operating results and trends and in comparing our financial results with those of other companies in our industry, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures should not be considered in isolation from, or considered as an alternative to, operating income, net income, earnings per share or any other measure of financial performance calculated and presented in accordance with GAAP. Our non-GAAP measure may not be comparable to similarly titled measures of other organizations because other organizations may not calculate non-GAAP measures in the same manner. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

Non-GAAP net income. To arrive at our non-GAAP net income, we exclude share-based compensation, expenses associated with the pending Intel transaction during the first quarter of 2017 and the applicable income tax effect from our GAAP net income. We believe that this non-GAAP measure is useful to investors in evaluating our operating performance for the following reasons:

    --  We believe that elimination of expenses associated with the pending
        Intel transaction and share-based compensation and the applicable income
        tax effect is appropriate because the uniqueness of the expenses
        associated with the pending Intel transaction and treatment of
        share-based compensation expense item may vary for reasons unrelated to
        our overall operating performance. These items are mostly non-deductible
        expense.;
    --  We use this non-GAAP measure in conjunction with our GAAP financial
        measure for planning purposes, including the preparation of our annual
        operating budget, as a measure of operating performance and the
        effectiveness of our business strategies and in communications with our
        board of directors concerning our financial performance; and
    --  We believe that this non-GAAP measure provides better comparability with
        our past financial performance, facilitates better period-to-period
        comparisons of operating results and may facilitate comparisons with
        similar companies, many of which may also use similar non-GAAP financial
        measures to supplement their GAAP reporting.

Non-GAAP free cash flow. We define non-GAAP free cash flow as GAAP net cash provided by operating activities minus capital expenditures. Non-GAAP free cash flow is important to reflect the cash that can allow us to pursue business strategies and opportunities and fulfill our goals. A limitation of using non-GAAP free cash flow versus the GAAP measure of net cash provided by operating activities as a means of evaluating our company is that non-GAAP free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Management compensates for this limitation by providing information about our capital expenditures on the face of the cash flow statement.

Company Contact:
Dan Galves
CCO / SVP
Dan.Galves@mobileye.com


                                              MOBILEYE N.V.

                            CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                                  (in thousands, except per share data)


                                                  For the three  months ended
                                                  ---------------------------

                                                         March 31,
                                                         ---------

                                                     2017                    2016
                                                     ----                    ----

    Revenue                                                  $124,673                $75,207

    Cost of revenue                                          30,255                 18,548
                                                             ------                 ------


    Gross profit                                             94,418                 56,659


    Operating costs and
     expenses


    Research and
     development, net                                        25,580                 14,979

    Sales and marketing                                       6,936                  3,731

    General and
     administrative                                          24,933                 14,254



    Total operating
     expenses                                                57,449                 32,964
                                                             ------                 ------


    Operating profit                                         36,969                 23,695


    Interest income                                           1,625                  1,171

    Financial income, net                                       392                    161
                                                                ---                    ---


    Profit before taxes on
     income                                                  38,986                 25,027


    Taxes on income                                         (5,476)               (3,110)
                                                             ------                 ------


    Net income
     for the
     period                                                   $33,510                 21,917
                                                              =======                 ======


    Basic and diluted
     income per share:

    Basic                                                       $0.15                  $0.10
                                                                =====                  =====

    Diluted                                                     $0.14                  $0.09
                                                                =====                  =====


    Weighted average number
     of ordinary shares (in
     thousands)

    Basic                                                   221,924                218,962
                                                            =======                =======

    Diluted                                                 238,920                236,938
                                                            =======                =======


                                                            MOBILEYE N.V.

                                            RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
                                                             (UNAUDITED)

                                                (in thousands, except per share data)

                                                    For the three months ended
                                                    --------------------------

                                                            March 31,
                                                            ---------

                                                                          2017                      2016
                                                                          ----                      ----


                                                                                                             21,917

    GAAP net income as reported                                                             $33,510       $


    Non-GAAP adjustment:

    Expenses recorded for share based
     compensation and expenses associated
     with the pending Intel transaction (1)

    Cost of revenues                                                                           31                  7

    Research and development                                                                5,264              2,341

    Sales and marketing                                                                       397                 54

    General and administrative                                                             21,438             10,703
                                                                                                             ------

                                                                                           27,130             13,105

    Adjustment before income tax effect

                                                                                            (674)             (276)

    Income tax effect


                                                                                                             12,829

    Total Non-GAAP adjustment                                                              26,456
                                                                                           ------


                                                                                                             34,746

    Non-GAAP net income                                                                    59,966


    Non-GAAP net income per share

                                                                                             0.27               0.16

    Basic                                                                    $                           $

                                                                                             0.25               0.15

    Diluted                                                                  $                           $


    Weighted average number of shares (in
     thousands)

                                                                                                            218,962

    Basic                                                                                 221,924

                                                                                                            236,938

    Diluted                                                                               238,920



    (1) Expenses associated with the
     pending Intel transaction at the
     amount of $6.5 million were
     recorded during the first
     quarter of 2017 as part of
     general and administrative
     expenses.


                                                    MOBILEYE N.V.

                                  CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

                                             (U.S. dollars in thousands)


                                                                      March 31,              December 31,

                                                                            2017                      2016
                                                                            ----                      ----

                                Assets

    Current assets

    Cash and cash equivalents                                                       $301,347                                  $277,996

    Marketable securities                                                          144,428                                   121,534

    Trade account receivables, net                                                  51,704                                    43,324

    Inventories                                                                     55,524                                    57,016

    Other current assets                                                            17,968                                    15,998
                                                                                    ------                                    ------

    Total current assets                                                           570,971                                   515,868


    Long-term assets

    Marketable securities                                                          228,249                                   230,696

    Property, plant and equipment, net                                              32,176                                    18,333

    Severance pay fund                                                              13,861                                    12,606

    Other assets                                                                     3,696                                     2,877
                                                                                     -----                                     -----

    Total long-term assets                                                         277,982                                   264,512

                                                                               $                                 $

    Total assets                                                         848,953                            780,380
                                                                         -------                            -------  -------



                 Liabilities and shareholders' equity

    Current liabilities

    Accounts payable and accrued expenses                                            $45,168                                   $39,415

    Employee related accrued expenses                                                8,429                                     6,860

    Other current liabilities                                                       12,907                                    12,374
                                                                                    ------                                    ------

    Total current liabilities                                                       66,504                                    58,649


    Long-term liabilities

    Accrued severance pay                                                           18,027                                    16,228

    Long-term tax liabilities                                                        7,589                                     7,091
                                                                                     -----                                     -----

    Total long-term liabilities                                                     25,616                                    23,319


    Total liabilities                                                               92,120                                    81,968
                                                                                    ------                                    ------


    Shareholders' equity

    Share capital                                                                    2,597                                     2,590

    Additional paid-in capital                                                     675,192                                   650,697

    Accumulated other comprehensive loss                                             (315)                                    (724)

    Accumulated Surplus                                                             79,359                                    45,849
                                                                                    ------                                    ------

    Total shareholders' equity                                                     756,833                                   698,412
                                                                                   -------                                   -------


                                                                               $

    Total liabilities and shareholders' equity                           848,953                           $780,380
                                                                         -------                           -------- --------


                                                                               MOBILEYE N.V.

                                                             CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                                               (in thousands)


                                                                                                             For the three months ended
                                                                                                             --------------------------

                                                                                                                    March 31,
                                                                                                                    ---------

                                                                                                                       2017             2016
                                                                                                                       ----             ----

    Cash flows from operating activities

    Net income for the period                                                                                                   $33,510          $21,917

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

    Depreciation                                                                                                                1,206              870

    Exchange rate differences                                                                                                   (717)           (571)

    Accrued severance pay                                                                                                       1,799            1,262

    Loss (gain) from marketable securities                                                                                         87             (35)

    Loss from sale of property and equipment                                                                                       43                -

    Share-based compensation                                                                                                   20,601           13,105

    Changes in asset and liabilities:

    Trade accounts receivables, net                                                                                           (8,380)         (9,506)

    Other current assets                                                                                                        (815)           2,174

    Inventories                                                                                                                 1,492            2,298

    Other long-term assets                                                                                                      (819)           (257)

    Account payables and accrued expenses                                                                                       6,004              247

    Employee-related accrued expenses                                                                                           1,569            1,007

    Other current-liabilities                                                                                                     533            (285)

    Long-term liabilities                                                                                                         498              235
                                                                                                                                  ---              ---

    Net cash provided by operating activities                                                                                  56,611           32,461

    Cash flows from investing activities

    Change in restricted and short-term deposits                                                                                  (6)               -

    Proceeds from maturities / sales of marketable securities                                                                  43,697           23,423

    Purchase of marketable securities                                                                                        (63,822)        (24,113)

    Severance pay fund                                                                                                          (537)           (571)

    Proceeds from sale of property, plant and equipment                                                                            88                -

    Purchase of property and equipment                                                                                       (15,431)         (2,050)
                                                                                                                              -------           ------

    Net cash used in investing  activities                                                                                   (36,011)         (3,311)

    Cash flows from financing activities

    Exercise of options                                                                                                         2,752            1,998
                                                                                                                                -----            -----

    Net cash provided by financing activities                                                                                   2,752            1,998


    Increase in cash and cash equivalents                                                                                      23,352           31,148


    Balance of cash and cash equivalents at the beginning of the period                                                       277,996          152,692
                                                                                                                              -------          -------

    Exchange rate differences on cash and cash equivalents                                                                        (1)             189
                                                                                                                                  ---              ---

    Balance of cash and cash equivalents at the end of the period                                                              $301,347         $184,029
                                                                                                                               ========         ========


                                                                                           MOBILEYE N.V.

                                                     RECONCILIATION OF GAAP NET CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOWS (UNAUDITED)

                                                                                          (in thousands)


                                                                                                                         For the three months ended
                                                                                                                         --------------------------

                                                                                                                               March 31,
                                                                                                                               ---------

                                                                                                                        2017                        2016
                                                                                                                        ----                        ----


    GAAP net cash from operating activities as reported                                                                                $56,611              $32,461


    Capital Expenditures                                                                                                            (15,431)             (2,050)
                                                                                                                                     -------               ------

    Free Cash Flow                                                                                                                    41,180               30,411
                                                                                                                                      ------               ------




                                                                                        MOBILEYE N.V.

                                                                            SUPPLEMENTAL INFORMATION (UNAUDITED)

                                                                                       (in thousands)


                                                                                                                       For the three months ended
                                                                                                                       --------------------------

                                                                                                                               March 31,
                                                                                                                               ---------

                                                                                                                        2017                        2016
                                                                                                                        ----                        ----


    OEM Revenue                                                                                                                        $94,466              $61,440

    Aftermarket Revenue                                                                                                               30,207               13,767
                                                                                                                                      ------               ------

    Total Revenue                                                                                                                     $124,673              $75,207
                                                                                                                                      --------              -------



    Number of EyeQ units (in thousands)                                                                                                2,032                1,322

    EyeQ average selling price per unit                                                                                                  $45.1                $44.2
                                                                                                                                         -----                -----

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SOURCE Mobileye N.V.