Company Delivers Fourth Quarter 2016 Revenue of $87.1 Million,
Operating Cash Flow of $27.6 Million and GAAP Diluted Earnings per Share of $0.12
CARLSBAD, Calif., Feb. 08, 2017 (GLOBE NEWSWIRE) -- MaxLinear, Inc. (NYSE:MXL), a leading provider of radio frequency (RF) and mixed-signal integrated circuits for cable and satellite broadband communications, the connected home, data center, metro, long-haul fiber networks, and wireless infrastructure, today announced financial results for the fourth quarter ended December 31, 2016, and announced that it has signed a definitive agreement to acquire all of the stock in Marvell’s Spain entity, along with acquiring certain other assets and liabilities related to Marvell’s G.hn business for $21 million in cash. The acquisition is currently expected to close in the second quarter 2017.
“We are pleased to announce fourth quarter 2016 revenue of $87.1 million, consistent with prior guidance highlighted by strong sequential growth in our cable front-end, MoCA, wireless infrastructure and high-speed optical interconnect businesses. We were also able to deliver sequential improvement in both GAAP and non-GAAP gross margins to 57.8 percent and 63.9 percent, respectively, and grow net cash provided by operating activities sequentially from $18.4 million to $27.6 million. The results close out another successful year in which we grew our annual revenue by 29 percent to $387.8 million, expanded our GAAP and non-GAAP gross margins by 760 and 490 basis points, respectively, and more than doubled our annual cash flow from operations to over $117 million,” commented Kishore Seendripu, Ph.D., Chairman and CEO.
“As we enter 2017, we are really excited about the expansion of our leading technology into some of the most complex analog and mixed-signal technology platforms across broadband and infrastructure markets. Today, we also announced that we are acquiring Marvell’s G.hn connectivity business. Combined with our MoCA connectivity portfolio, this acquisition positions MaxLinear as the undisputed technology leader in the wired whole-home broadband connectivity market, be it over coaxial cable, power line, or twisted pair. We are committed to aggressively pursuing new opportunities to both diversify and accelerate the penetration of our technology platform across the range of broadband operator and wired and wireless infrastructure target markets through our organic roadmap initiatives and via acquisitions,” Seendripu continued.
Generally Accepted Accounting Principles (GAAP) Results
Net revenue for the fourth quarter 2016 was $87.1 million, a decrease of 10 percent compared to the third quarter 2016, and a decrease of 12 percent compared to the fourth quarter 2015. Gross margin for the fourth quarter 2016 was 57.8 percent of revenue, compared to 57.6 percent for the third quarter 2016, and 56.4 percent for the fourth quarter 2015.
Operating expenses were $42.1 million, $44.8 million and $64.5 million for the fourth quarter 2016, third quarter 2016 and fourth quarter 2015, respectively. Operating expenses decreased 6 percent compared to the third quarter 2016, and decreased 35 percent compared to the fourth quarter 2015. Operating expenses as a percentage of revenue were 48 percent for the fourth quarter 2016, 47 percent for the third quarter 2016 and 65 percent for the fourth quarter 2015. Operating margins were 10 percent, 11 percent and (9) percent for the fourth quarter 2016, third quarter 2016 and fourth quarter 2015, respectively.
Net income for the fourth quarter 2016 was $8.3 million, or $0.12 per share (diluted). These results compare to net income of $9.7 million, or $0.14 per share (diluted), for the third quarter 2016, and a net loss of $8.5 million, or $0.14 per share (basic and diluted), for the fourth quarter 2015.
Gross margin, operating margin and net income for the year ended December 31, 2016 includes purchase accounting expenses and charges related to our acquisitions of the wireless infrastructure backhaul business in July 2016 and wireless infrastructure access business in April 2016.
Cash flow provided by operations for the fourth quarter 2016 totaled $27.6 million, compared to $18.4 million for the third quarter 2016, and $24.6 million for the fourth quarter 2015.
Cash, cash equivalents and investments totaled $136.8 million at December 31, 2016, compared to $110.2 million at September 30, 2016, and $130.5 million at December 31, 2015.
Non-GAAP gross margin for the fourth quarter 2016 was 63.9 percent of revenue, compared to 63.1 percent for the third quarter 2016, and 58.1 percent for the fourth quarter 2015.
Non-GAAP operating expenses were $30.1 million, $31.5 million and $27.4 million for the fourth quarter 2016, third quarter 2016 and fourth quarter 2015, respectively. Non-GAAP operating expenses decreased 5 percent when compared to the third quarter 2016, and increased 10 percent when compared to fourth quarter 2015. Non-GAAP operating expenses as a percentage of revenue were 35 percent, 33 percent and 28 percent for the fourth quarter 2016, third quarter 2016 and fourth quarter 2015, respectively. Non-GAAP operating margins were 29 percent, 30 percent and 30 percent for the fourth quarter 2016, third quarter 2016 and fourth quarter 2015, respectively.
Non-GAAP net income for the fourth quarter 2016 was $25.7 million, or $0.38 per share (diluted), compared to $28.8 million, or $0.43 per share (diluted), for the third quarter 2016, and $29.9 million, or $0.46 per share (diluted), for the fourth quarter 2015.
First Quarter 2017 Revenue and Gross Margin Guidance
The company expects revenue in the first quarter 2017 to be between $86 million and $90 million, GAAP gross margin to be approximately 59 percent of revenue, and non-GAAP gross margin to be approximately 62 percent of revenue. Its estimates of forward-looking non-GAAP gross margins exclude estimates for amortization of inventory step-up, stock-based compensation expense, stock-based bonus accruals, acquisition related expenses, and restructuring charges, each of which is described in more detail below under the caption “Use of Non-GAAP Financial Measures.” The timing and amounts of these material amounts needed to estimate non-GAAP financial measures are inherently unpredictable or outside the company’s control to predict. Accordingly, it cannot provide a quantitative reconciliation of non-GAAP gross margin without unreasonable effort. Material changes to any of these items could have a significant effect on MaxLinear guidance and future GAAP results.
Conference Call Details
MaxLinear will host its fourth quarter financial results conference call today, February 8, 2017 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). To access this call, dial US toll free: 1-877-407-3109 / International: 1-201-493-6798. A live webcast of the conference call will be accessible from the investor relations section of the MaxLinear website at http://investors.maxlinear.com, and will be archived and available after the call at http://investors.maxlinear.com until February 22, 2017. A replay of the conference call will also be available until February 22, 2017 by dialing US toll free: 1-877-660-6853 / International: 1-201-612-7415 and Conference ID#: 13653123.
Cautionary Note Concerning Forward-Looking Statements
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 include, among others, statements concerning our future financial performance (including our current guidance for first quarter 2017 revenue and gross margin). These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any future results expressed or implied by the forward-looking statements. Forward-looking statements are based on management’s current, preliminary expectations and are subject to various risks and uncertainties. The closing of recent acquisitions of wireless infrastructure assets from Microsemi and Broadcom present particular risks associated with our ability to integrate the acquired businesses, and maintain relationships with employees, customers, and vendors. In addition, our current expectations with respect to the size of the available market and growth opportunities in future years are subject to substantial management assumptions that are themselves subject to material risks and uncertainties. Additional risks and uncertainties that could affect our assumptions and expectations with respect to the completed acquisitions that also generally affect our business, operating results, financial condition, and stock price, include, intense competition in our industry; our dependence on a limited number of customers for a substantial portion of our revenues; uncertainties concerning how end user markets for our products will develop; potential uncertainties arising from continued consolidation among cable television and satellite operators in our target markets and continued consolidation among competitors within the semiconductor industry generally; our ability to develop and introduce new and enhanced products on a timely basis and achieve market acceptance of those products, particularly as we seek to expand outside of our historic markets; potential decreases in average selling prices for our products; risks relating to intellectual property protection and the prevalence of intellectual property litigation in our industry, including pending litigation against us by third parties in the United States District Court in Delaware and Superior Court of California; our reliance on a limited number of third party manufacturers; and our lack of long-term supply contracts and dependence on limited sources of supply. In addition to these risks and uncertainties, investors should review the risks and uncertainties contained in our filings with the Securities and Exchange Commission (SEC), including our most recent Annual Report on Form 10-K for the year ended December 31, 2015 as amended by Amendment No. 1 filed with the SEC on April 28, 2016; our subsequent Quarterly Reports on Form 10-Q; and our Current Reports on Form 8-K. In addition, when available, investors should review the information to be set forth under the caption “Risk Factors” in MaxLinear’s Annual Report on Form 10-K for the year ended December 31, 2016, which MaxLinear expects to file with the SEC later today. All forward-looking statements are based on the estimates, projections and assumptions of management as of February 8, 2017, and MaxLinear is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.