Intermolecular Reports Fourth Quarter and Full Year 2018 Financial Results
SAN JOSE, Calif., Feb. 12, 2019 /PRNewswire/ -- Intermolecular, Inc. (Nasdaq: IMI), the trusted partner for advanced materials innovation, today reported results for the fourth quarter and full year ended December 31, 2018.
Q4 2018 Financial and Operational Highlights
-- Revenue of $6.3 million, which exceeded the company's guidance.
-- Program revenue totaled $6.0 million or 95% of total revenue.
-- Gross profit totaled $4.6 million or 73% of total revenue.
-- Adjusted EBITDA loss totaled $(1.5) million, which exceeded the
company's guidance.
-- Net loss totaled $(2.6) million.
-- Secured two program contracts during the period, including a major new
program service agreement with a leading global semiconductor
manufacturer. Management expects a material revenue contribution from
this customer in 2019.
Full Year 2018 Financial and Operational Highlights
-- Revenue was $33.7 million.
-- Program revenue increased 10% to $32.0 million or 95% of total revenue.
-- Gross profit totaled $23.7 million or 70% of total revenue.
-- Total operating expenses decreased 22% to $28.0 million.
-- Adjusted EBITDA improved to $1.8 million compared to a loss of $(0.7)
million in 2017.
-- Net loss improved to $(3.4) million compared to net loss of $(10.4)
million in 2017.
-- Operating cash flow of $5.9 million in 2018.
-- Cash and investments at December 31, 2018 was $30.4 million (or $0.61
per share), an improvement from $25.8 million (or $0.52 per share) at
the end of the prior fiscal year. The company continues to have no debt.
Management Commentary
"Our performance in 2018 reflected the successful execution of our plan - with $5.9 million of operating cash flow generated with the combination of strong performance with existing customers, commencement of major contracts with new customers, higher gross margins, a reduced cost structure and better working capital management," said Intermolecular President and CEO Chris Kramer. "While we concluded certain programs to our customers' satisfaction in 2018 which resulted in a short-term dip in our revenues which will continue in the first quarter of 2019, we retain excellent relationships with each of these customers, and we have secured major new customer programs that position us well for growth going forward.
"We entered 2019 on solid footing with a strong balance sheet and a robust pipeline of business. Following the major new customer we won in late 2018, we secured another contract with a new top tier leading global semiconductor company in the first quarter. With our lower cost structure and higher gross margins, our high throughput services platform now has strong operating leverage which will drive our profitability as we continue to scale our business."
Fourth Quarter of 2018 Financial Results
Revenue for the fourth quarter of 2018 was $6.3 million, a decrease of 20% from $7.9 million in the third quarter of 2018, and a decrease of 40% from $10.6 million in the same period a year ago. Program revenue was $6.0 million, an 18% decrease from $7.4 million in the third quarter of 2018, and a 32% decrease from $8.9 million in the same period a year ago.
Gross profit for the fourth quarter of 2018 was $4.6 million (73% of total revenue), a 21% decrease from $5.8 million (74% of total revenue) in the third quarter of 2018, and a 33% decrease from $6.9 million (65% of total revenue) in the same period a year ago.
Total operating expenses for the fourth quarter of 2018 were $7.5 million, an 11% increase from $6.7 million in the third quarter of 2018, and an increase of 8% compared to $6.9 million in the same period a year ago.
Net loss for the fourth quarter of 2018 totaled $(2.6) million or $(0.05) per basic and diluted share, compared to net loss of $(0.7) million or $(0.01) per basic and diluted share in the third quarter of 2018, and compared to net income of $0.1 million or $0.00 per basic and diluted share in the same period a year ago.
Non-GAAP net loss, which excludes stock-based compensation expense, for the fourth quarter of 2018 totaled $(2.2) million, or $(0.04) per basic and diluted share, compared to non-GAAP net loss of $(0.5) million, or $(0.01) per basic and diluted share in the third quarter of 2018, and compared to non-GAAP net income of $0.4 million, or $0.01 per basic and diluted share in the same period a year ago.
Adjusted EBITDA loss for the fourth quarter of 2018 totaled $(1.5) million, compared to an adjusted EBITDA of $0.5 million in the third quarter of 2018 and $2.1 million in the same period a year ago.
Cash and investments totaled $30.4 million at the end of fourth quarter of 2018, a decrease of $0.2 million compared to $30.6 million at the end of third quarter of 2018. The company had no debt at quarter end.
Full Year 2018 Financial Results
Revenue for 2018 was $33.7 million, a decrease of 10% from $37.2 million in the same period a year ago. Program revenue totaled $32.0 million, an increase of 10% from $29.0 million in 2017.
Gross profit for 2018 was $23.7 million (70% of total revenue), a 6% decrease from $25.1 million (67% of total revenue) in 2017.
Total operating expenses for 2018 was $28.0 million, a decrease of 22% compared to $36.1 million in 2017.
Net loss for 2018 totaled $(3.4) million or $(0.07) per basic and diluted share, an improvement from a net loss of $(10.4) million or $(0.21) per basic and diluted share in 2017.
Non-GAAP net loss for 2018 totaled $(2.4) million or $(0.05) per basic and diluted share, an improvement from a non-GAAP net loss of $(8.9) million or $(0.18) per basic and diluted share in 2017.
Adjusted EBITDA for 2018 totaled $1.8 million, an improvement from an adjusted EBITDA loss of $(0.7) million in 2017.
First Quarter 2019 Financial Outlook
The following statements are based on Intermolecular's current expectations for the first quarter ending March 31, 2019. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under "Forward-Looking Statements" below. Intermolecular does not plan to update, nor does it undertake any obligation to update, this outlook in the future.
-- Revenue is projected to be in the range of $6.1 million to $6.5 million;
-- Net loss is projected to be between $(2.3) million and $(3.0) million,
or between $(0.05) and (0.06) per share (based on approximately 49.8
million shares expected to be outstanding);
-- Non-GAAP net loss is projected to be between $(1.9) million and $(2.5)
million, or between $(0.04) and $(0.05) per share, respectively (based
on approximately 49.8 million shares expected to be outstanding); and,
-- Adjusted EBITDA loss is projected to be between $(1.4) million and
$(2.0) million.
Intermolecular reports revenue, cost of revenue, gross margin, operating income (loss), net income (loss) and earnings (loss) per share in accordance with U.S. generally accepted accounting principles (GAAP) and additionally on a non-GAAP basis. A reconciliation of the non-GAAP financial measures with the most directly comparable GAAP measures, as well as a description of the items excluded from the non-GAAP measures, is included in the financial statements portion of this press release. Please refer to "Reconciliation of GAAP to Non-GAAP Financial Measures" and "Reconciliation of GAAP Net Loss to Non-GAAP Net Loss" below.
Conference Call
Intermolecular will host a conference call and simultaneous audio-only webcast today (February 12, 2019) at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss these results. The call will be hosted by Intermolecular President and CEO Chris Kramer and CFO Bill Roeschlein.
U.S. dial-in number: (877) 251-1860
International dial-in number: (224) 357-2386
Conference ID: 4880935
Please call the conference telephone number five to ten minutes prior to start time. An operator will register your name and organization. If you have difficulty connecting with the conference call, please contact Intermolecular's IR team at (949) 574-3860. A live and archived webcast (audio only) of the call will be available on Intermolecular's website for up to 30 days after the call.
About Intermolecular, Inc.
Intermolecular® is the trusted partner for advanced materials innovation. Advanced materials are at the core of innovation in the 21(st) century for a wide range of industries including semiconductors, consumer electronics, automotive and aerospace. With its substantial materials expertise, accelerated learning and experimentation platform, and information and analytics infrastructure, Intermolecular has a ten-year track record helping leading companies accelerate and de-risk materials innovation. Learn more at www.intermolecular.com.
"Intermolecular" and the Intermolecular logo are registered trademarks; all rights reserved.
Forward-Looking Statements
Statements made in this press release and the earnings call referencing the press release that are not statements of historical fact are forward-looking statements. Forward-looking statements are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as "would," "may," "expects," "believes," "plans," "intends," "projects" and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this document are based on current beliefs, assumptions and expectations, speak only as of the date of this document and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Such statements are subject to certain known and unknown risks and uncertainties, many of which are difficult to predict and generally beyond Intermolecular's control, that could cause actual results and other future events to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: our ability to productize our workflows with existing and future customers; expectations regarding our future revenue, cash flow and GAAP and non-GAAP net income or loss; financial condition; the ability of our new business model to generate profits and long-term shareholder returns; the extent to which technology developed in collaboration with our customers will continue to remain on the critical path and have significant value for such customers and us as well as the industry as a whole; and anticipated growth in our current markets through expansion of existing customer programs and the entry into other engagements with new customers. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to: our ability to execute on our strategy, prove our business model and remain technologically competitive in rapidly evolving industry conditions; commercial acceptance of our HPC platform and methodology as effective R&D tools; our ability to achieve and sustain profitability; the ability of our customers to achieve their announced product roadmaps in a timely manner; the extent to which we are able to successfully extend and expand relationships with existing customers; our ability to manage the growth of our business; the rapid technology changes and volatility of the customers and industries we serve; our potential need for future capital to finance our operations; and other risks described in our most recent annual report on Form 10-K as updated by our quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission available at www.sec.gov, particularly in the sections titled "Risk Factors." All forward-looking statements are based on management's current estimates, projections and assumptions, and we assume no obligation to update them.
Non-GAAP Financial Measures
To supplement the financial data presented on a GAAP basis, we also disclose certain non-GAAP financial measures, which exclude the effect of stock-based compensation expense. These non-GAAP financial measures are not prepared in accordance with GAAP, do not serve as an alternative to GAAP and may be calculated differently than non-GAAP financial information disclosed by other companies. These results should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. We believe that our non-GAAP financial information provides useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations because the non-GAAP measures exclude charges that management considers to be outside of Intermolecular's core operating results. We believe that the non-GAAP measures of revenue, cost of net revenue, gross profit, gross margin, operating (loss) income, net (loss) income, earnings per share and net (loss) income per share, viewed in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective and a more meaningful understanding of our ongoing operating performance. In addition, management uses these non-GAAP measures to review and assess financial performance, to determine executive officer incentive compensation and to plan and forecast performance in future periods.
Corporate Contact
Bill Roeschlein
Intermolecular, Inc.
Chief Financial Officer
bill.roeschlein@intermolecular.com
(408) 582-5415
Investor Contact
Matt Glover or Najim Mostamand, CFA
Liolios
IMI@liolios.com
(949) 574-3860
Intermolecular, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts, Unaudited)
Three Months Ended December 31, Twelve Months Ended December 31,
2018 2017 2018 2017
Revenue:
Program revenue $6,009 $8,850 $31,984 $29,010
Licensing and royalty revenue 312 1,698 1,676 8,193
Total revenue 6,321 10,548 33,660 37,203
Cost of revenue:
Cost of program revenue 1,713 3,353 9,999 11,449
Cost of licensing and royalty
revenue 1 344 9 656
Total cost of revenue 1,714 3,697 10,008 12,105
Gross profit 4,607 6,851 23,652 25,098
Operating expenses:
Research and development 4,677 4,206 17,228 21,535
Sales and marketing 910 734 3,256 4,019
General and administrative 1,901 1,974 7,516 9,198
Restructuring charges 1,351
Total operating expenses 7,488 6,914 28,000 36,103
Loss from operations (2,881) (63) (4,348) (11,005)
Other income (expense):
Interest income (expense), net 180 84 594 266
Other income (expense), net 104 95 344 337
Total other income (expense), net 284 179 938 603
Income (loss) before provision for
income taxes (2,597) 116 (3,410) (10,402)
Provision for income taxes 1 1
Net income (loss) $(2,597) $116 $(3,411) $(10,403)
Basic net income (loss) per common
share $(0.05) $0.00 $(0.07) $(0.21)
Diluted net income (loss) per common
share $(0.05) $0.00 $(0.07) $(0.21)
Shares used in basic net income
(loss) per common share 49,751 49,559 49,689 49,547
Shares used in diluted net income
(loss) per common share 49,751 49,765 49,689 49,547
Intermolecular, Inc.
Condensed Consolidated Balance Sheets
(In thousands, Unaudited)
As of December 31, 2018 As of December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents $
8,351 $
6,090
Short-term investments 22,098 18,060
Total cash, cash equivalents and short-
term investments 30,449 24,150
Accounts receivable 3,349 5,519
Prepaid expenses and other current
assets 936 1,069
Total current assets 34,734 30,738
Long-term investments 1,657
Materials inventory 2,638 2,781
Property and equipment, net 3,432 5,913
Intangible assets, net 2,075 2,620
Other assets 514 600
Total assets $
43,393 $
44,309
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $
760 $
928
Accrued liabilities 1,234 865
Accrued compensation and employee
benefits 3,431 2,535
Deferred revenue 917 941
Total current liabilities 6,342 5,269
Other long-term liabilities 2,667 2,967
Total liabilities 9,009 8,236
Stockholders' equity:
Common stock 50 50
Additional paid-in capital 216,034 214,796
Accumulated other comprehensive loss (27) (35)
Accumulated deficit (181,673) (178,738)
Total stockholders' equity 34,384 36,073
Total liabilities and stockholders'
equity $
43,393 $
44,309
Intermolecular, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands, Unaudited)
Twelve Months Ended December 31,
2018 2017
Cash flows from operating activities:
Net loss $
(3,411) $
(10,403)
Adjustments to reconcile net loss to net
cash used in operating
activities:
Depreciation, amortization and accretion 4,717 7,194
Stock-based compensation 1,053 1,472
(Gain) loss on disposal of property and
equipment (9) 68
Changes in operating assets and
liabilities:
Accounts receivable 2,646 (456)
Prepaid expenses and other assets 219 585
Materials inventory 50 557
Accounts payable (197) 592
Accrued and other liabilities 894 110
Deferred revenue (24) (592)
Net cash (used in) provided by operating
activities 5,938 (873)
Cash flows from investing activities:
Purchase of investments (27,362) (20,888)
Redemption of investments 24,775 22,861
Purchase of property and equipment (1,287) (777)
Proceeds from sale of equipment 10 14
Net cash (used in) provided by investing
activities (3,864) 1,210
Cash flows from financing activities:
Payment of capital leases (17)
Proceeds from exercise of common stock
options 187 11
Net cash (used in) provided by financing
activities 187 (6)
Net increase in cash and cash equivalents 2,261 331
Cash and cash equivalents at beginning of
period 6,090 5,759
Cash and cash equivalents at end of period $
8,351 $
6,090
Intermolecular, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts and percentages, Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
GAAP cost of net revenue $
1,714 $
3,697 $
10,008 $
12,105
Stock-based compensation expense (a) (45) (47) (170) (191)
Non-GAAP cost of net revenue $
1,669 $
3,650 $
9,838 $
11,914
GAAP gross profit $
4,607 $
6,851 $
23,652 $
25,098
Stock-based compensation expense (a) 45 47 170 191
Non-GAAP gross profit $
4,652 $
6,898 $
23,822 $
25,289
As a percentage of net revenue:
GAAP gross margin 72.9 65.0 70.3 67.5
% % % %
Non-GAAP gross margin 73.6 65.4 70.8 68.0
% % % %
GAAP operating loss $
(2,881) $
(63) $
(4,348) $
(11,005)
Stock-based compensation expense (a):
- Cost of net revenue 45 47 170 191
- Research and development 114 66 297 373
- Sales and marketing 47 23 121 119
- General and administrative 222 115 465 789
Non-GAAP operating income (loss) $
(2,453) $
188 $
(3,295) $
(9,533)
GAAP net income (loss) $
(2,597) $
116 $
(3,411) $
(10,403)
Stock-based compensation expense (a) 428 251 1,053 1,472
Non-GAAP net income (loss) $
(2,169) $
367 $
(2,358) $
(8,931)
GAAP net income (loss) $
(2,597) $
116 $
(3,411) $
(10,403)
Interest (income) expense, net (180) (84) (594) (266)
Provision for taxes 1 1
Depreciation, amortization, impairment and
accretion 813 1,824 4,717 7,194
Restructuring charges (b) 1,351
Stock based compensation expense (a) 428 251 1,053 1,472
Adjusted EBITDA $
(1,536) $
2,107 $
1,766 $
(651)
Shares used in computing earnings per share:
Basic 49,751 49,559 49,689 49,547
Diluted 49,751 49,765 49,689 49,547
GAAP earnings (loss) per share:
Basic $
(0.05) $
0.00 $
(0.07) $
(0.21)
Diluted $
(0.05) $
0.00 $
(0.07) $
(0.21)
Non-GAAP earnings (loss) per share:
Basic $
(0.04) $
0.01 $
(0.05) $
(0.18)
Diluted $
(0.04) $
0.01 $
(0.05) $
(0.18)
(a) Stock-based compensation reflects
expense recorded relating to
stock-based awards. The Company
excludes this item when it
evaluates the continuing
operational performance of the
Company, as management believes
this provides it a meaningful
understanding of its core
operating performance.
(b) Restructuring charges incurred in
connection with a reduction in
headcount primarily comprised of
employee severance and benefit
costs.
Intermolecular, Inc.
First Quarter 2019 Outlook
Reconciliation of GAAP Net Loss to Non-GAAP Net Loss
(In thousands, except per share amounts, Unaudited)
GAAP net loss range
$(2,300) - $(3,000)
Stock-based compensation
$400 - $500
Non-GAAP net loss range
$(1,900) - $(2,500)
GAAP and Non-GAAP
diluted shares 49,800
GAAP net loss per share
range
$(0.05) - $(0.06)
Non-GAAP net loss per
share range
$(0.04) - $(0.05)
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SOURCE Intermolecular, Inc.
