MaxLinear, Inc. Announces Fourth Quarter 2019 Financial Results

We believe that non-GAAP financial measures can provide useful information to both management and investors by excluding certain non-cash and other one-time expenses that are not indicative of our core operating results. Among other uses, our management uses non-GAAP measures to compare our performance relative to forecasts and strategic plans and to benchmark our performance externally against competitors. In addition, management’s incentive compensation will be determined in part using these non-GAAP measures because we believe non-GAAP measures better reflect our core operating performance.

The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:

Stock-based compensation expense relates to equity incentive awards granted to our employees, directors, and consultants. Our equity incentive plans are important components of our employee incentive compensation arrangements and are reflected as expenses in our GAAP results. Stock-based compensation expense has been and will continue to be a significant recurring expense for MaxLinear. While we include the dilutive impact of equity awards in weighted average shares outstanding, the expense associated with stock-based awards reflects a non-cash charge that we exclude from non-GAAP net income.

Bonuses under our executive and non-executive bonus programs have been excluded from our non-GAAP net income for all periods reported. Bonus payments for the 2018 performance periods were settled through the issuance of shares of common stock under our equity incentive plans in February 2019. We currently expect that bonus awards under our fiscal 2019 program will be settled in common stock in the first quarter of fiscal 2020.

Expenses incurred (gains recognized) in relation to acquisitions include amortization of purchased intangible assets, depreciation of step-up of property and equipment to fair value, and non-recurring gain on reversal of liability for an assumed indemnification obligation.

Restructuring charges incurred are related to our restructuring plans which eliminate redundancies and primarily include severance and restructuring costs related to exiting certain facilities.

Expenses incurred in relation to our intellectual property and commercial litigation include professional fees incurred.

Income tax benefits and expense adjustments are those that do not affect cash income taxes payable. Effects of the Tax Act were excluded from non-GAAP effective tax rate, as applicable.

Reconciliations of non-GAAP measures for the historic periods disclosed in this press release appear below. Because of the inherent uncertainty associated with our ability to project future charges, particularly related to stock-based compensation and its related tax effects as well as potential impairments, we have not provided a reconciliation for non-GAAP guidance provided for the first quarter 2020.

About MaxLinear, Inc.

MaxLinear, Inc. (NYSE: MXL) is a leading provider of radio frequency (RF), analog and mixed-signal integrated circuits for the connected home, wired and wireless infrastructure, and industrial and multi-market applications. MaxLinear is headquartered in Carlsbad, California. For more information, please visit www.maxlinear.com.

MXL is MaxLinear’s registered trademark. Other trademarks appearing herein are the property of their respective owners.

MAXLINEAR, INC.

UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

 

Three Months Ended

 

December 31, 2019

 

September 30, 2019

 

December 31, 2018

Net revenue

$

70,018

 

 

$

80,020

 

 

$

87,627

 

Cost of net revenue

33,394

 

 

38,116

 

 

41,727

 

Gross profit

36,624

 

 

41,904

 

 

45,900

 

Operating expenses:

 

 

 

 

 

Research and development

23,467

 

 

23,174

 

 

29,667

 

Selling, general and administrative

20,924

 

 

21,920

 

 

25,208

 

Restructuring charges

159

 

 

144

 

 

1,737

 

Total operating expenses

44,550

 

 

45,238

 

 

56,612

 

Loss from operations

(7,926

)

 

(3,334

)

 

(10,712

)

Interest income

222

 

 

214

 

 

24

 

Interest expense

(2,587

)

 

(2,718

)

 

(3,194

)

Other income (expense), net

(498

)

 

1,098

 

 

229

 

Total interest and other income (expense), net

(2,863

)

 

(1,406

)

 

(2,941

)

Loss before income taxes

(10,789

)

 

(4,740

)

 

(13,653

)

Income tax benefit

(2,685

)

 

(26

)

 

(13,964

)

Net income (loss)

$

(8,104

)

 

$

(4,714

)

 

$

311

 

Net income (loss) per share:

 

 

 

 

 

Basic

$

(0.11

)

 

$

(0.07

)

 

$

 

Diluted

$

(0.11

)

 

$

(0.07

)

 

$

 

Shares used to compute net income (loss) per share:

 

 

 

 

 

Basic

71,746

 

 

71,366

 

 

69,186

 

Diluted

71,746

 

 

71,366

 

 

71,267

 

MAXLINEAR, INC.

UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

Twelve Months Ended

 

December 31, 2019

 

December 31, 2018

Net revenue

$

317,180

 

 

$

384,997

 

Cost of net revenue

149,495

 

 

176,223

 

Gross profit

167,685

 

 

208,774

 

Operating expenses:

 

 

 

Research and development

98,344

 

 

120,046

 

Selling, general and administrative

88,762

 

 

101,789

 

Impairment losses

 

 

2,198

 

Restructuring charges

2,636

 

 

3,838

 

Total operating expenses

189,742

 

 

227,871

 

Loss from operations

(22,057

)

 

(19,097

)

Interest income

775

 

 

78

 

Interest expense

(11,133

)

 

(14,255

)

Other income (expense), net

(69

)

 

422

 

Total interest and other income (expense), net

(10,427

)

 

(13,755

)

Loss before income taxes

(32,484

)

 

(32,852

)

Income tax benefit

(12,586

)

 

(6,653

)

Net loss

$

(19,898

)

 

$

(26,199

)

Net loss per share:

 

 

 

Basic

$

(0.28

)

 

$

(0.38

)

Diluted

$

(0.28

)

 

$

(0.38

)

Shares used to compute net loss per share:

 

 

 

Basic

71,005

 

 

68,490

 

Diluted

71,005

 

 

68,490

 

MAXLINEAR, INC.

UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

Three Months Ended

 

December 31, 2019

 

September 30, 2019

 

December 31, 2018

Operating Activities

 

 

 

 

 

Net income (loss)

$

(8,104

)

 

$

(4,714

)

 

$

311

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

Amortization and depreciation

16,473

 

 

16,419

 

 

19,125

 

Amortization of debt issuance costs and accretion of discount on debt and leases

404

 

 

380

 

 

287

 

Stock-based compensation

7,747

 

 

8,359

 

 

7,999

 

Deferred income taxes

(3,238

)

 

(1,379

)

 

(8,827

)

Loss on disposal of property and equipment

 

 

 

 

430

 

Impairment of leasehold improvements

 

 

 

 

35

 

Impairment of leased right-of-use assets

7,058

 

 

 

 

 

Gain on extinguishment of lease liabilities

(7,557

)

 

 

 

 

(Gain) loss on foreign currency

430

 

 

(183

)

 

(268

)

Excess tax benefits on stock-based awards

(192

)

 

(61

)

 

(820

)

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

5,930

 

 

280

 

 

(867

)

Inventory

6,224

 

 

5,108

 

 

19

 

Prepaid expenses and other assets

2,889

 

 

960

 

 

(2,857

)

Leased right-of-use assets

109

 

 

1,309

 

 

 

Accounts payable, accrued expenses and other current liabilities

2,692

 

 

(6,313

)

 

5,410

 

Accrued compensation

607

 

 

730

 

 

2,387

 

Accrued price protection liability

(1,097

)

 

2,291

 

 

2,036

 

Lease liabilities

(1,655

)

 

(2,183

)

 

 

Other long-term liabilities

(613

)

 

749

 

 

(227

)

Net cash provided by operating activities

28,107

 

 

21,752

 

 

24,173

 

Investing Activities

 

 

 

 

 

Purchases of property and equipment

(2,989

)

 

(1,219

)

 

(1,412

)

Purchases of intangible assets

 

 

(86

)

 

 

Net cash used in investing activities

(2,989

)

 

(1,305

)

 

(1,412

)

Financing Activities

 

 

 

 

 

Repayment of debt

 

 

(20,000

)

 

(15,000

)

Net proceeds from issuance of common stock

2,382

 

 

288

 

 

2,732

 

Minimum tax withholding paid on behalf of employees for restricted stock units

(820

)

 

(1,339

)

 

(2,606

)

Net cash provided by (used in) financing activities

1,562

 

 

(21,051

)

 

(14,874

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(87

)

 

90

 

 

(1,939

)

Increase (decrease) in cash, cash equivalents and restricted cash

26,593

 

 

(514

)

 

5,948

 

Cash, cash equivalents and restricted cash at beginning of period

66,524

 

 

67,038

 

 

68,243

 

Cash, cash equivalents and restricted cash at end of period

$

93,117

 

 

$

66,524

 

 

$

74,191

 

MAXLINEAR, INC.

UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

Twelve Months Ended

 

December 31, 2019

 

December 31, 2018

Operating Activities

 

 

 

Net loss

$

(19,898

)

 

$

(26,199

)

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

 

 

 

Amortization and depreciation

66,401

 

 

79,027

 

Impairment losses

 

 

2,198

 

Amortization of debt issuance costs and accretion of discount on debt and leases

1,577

 

 

1,148

 

Stock-based compensation

32,060

 

 

31,721

 

Deferred income taxes

(15,693

)

 

(12,144

)

Loss on disposal of property and equipment

46

 

 

430

 

Impairment of leasehold improvements

1,442

 

 

735

 

Impairment of long-lived assets

9,240

 

 

 

Gain on extinguishment of lease liabilities

(10,437

)

 

 

(Gain) loss on foreign currency

760

 

 

(809

)

Excess tax benefits on stock-based awards

(4,064

)

 

(2,028

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

9,090

 

 

6,595

 

Inventory

10,195

 

 

11,696

 

Prepaid expenses and other assets

3,805

 

 

1,071

 

Leased right-of-use assets

3,044

 

 

 

Accounts payable, accrued expenses and other current liabilities

1,261

 

 

5,923

 

Accrued compensation

2,021

 

 

8,961

 

Deferred revenue and deferred profit

 

 

(138

)

Accrued price protection liability

(3,966

)

 

(5,117

)

Lease liabilities

(8,142

)

 

 

Other long-term liabilities

(394

)

 

(381

)

Net cash provided by operating activities

78,348

 

 

102,689

 

Investing Activities

 

 

 

Purchases of property and equipment

(6,887

)

 

(7,825

)

Purchases of intangible assets

(86

)

 

 

Net cash used in investing activities

(6,973

)

 

(7,825

)

Financing Activities

 

 

 

Repayment of debt

(50,000

)

 

(93,000

)

Net proceeds from issuance of common stock

8,603

 

 

6,839

 

Minimum tax withholding paid on behalf of employees for restricted stock units

(11,986

)

 

(7,623

)

Net cash used in financing activities

(53,383

)

 

(93,784

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

934

 

 

(1,301

)

Increase (decrease) in cash, cash equivalents and restricted cash

18,926

 

 

(221

)

Cash, cash equivalents and restricted cash at beginning of period

74,191

 

 

74,412

 

Cash, cash equivalents and restricted cash at end of period

$

93,117

 

 

$

74,191

 

MAXLINEAR, INC.

UNAUDITED GAAP CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

 

 

 

 

December 31, 2019

 

September 30, 2019

 

December 31, 2018 (1)

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

92,708

 

 

$

66,115

 

 

$

73,142

 

Short-term restricted cash

349

 

 

345

 

 

645

 

Accounts receivable, net

50,411

 

 

56,339

 

 

59,491

 

Inventory

31,510

 

 

37,642

 

 

41,738

 

Prepaid expenses and other current assets

6,792

 

 

4,679

 

 

10,357

 

Total current assets

181,770

 

 

165,120

 

 

185,373

 

Long-term restricted cash

60

 

 

64

 

 

404

 

Property and equipment, net

16,613

 

 

15,204

 

 

18,404

 

Leased right-of-use assets

10,978

 

 

18,719

 

 

 

Intangible assets, net

187,971

 

 

202,217

 

 

244,900

 

Goodwill

238,330

 

 

238,330

 

 

238,330

 

Deferred tax assets

67,284

 

 

64,046

 

 

51,518

 

Other long-term assets

2,785

 

 

3,065

 

 

4,664

 

Total assets

$

705,791

 

 

$

706,765

 

 

$

743,593

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities

$

66,562

 

 

$

63,119

 

 

$

75,329

 

Long-term lease liabilities

9,335

 

 

14,995

 

 

4,097

 

Long-term debt

206,909

 

 

206,622

 

 

255,757

 

Other long-term liabilities

8,065

 

 

8,678

 

 

8,474

 

Stockholders’ equity

414,920

 

 

413,351

 

 

399,936

 

Total liabilities and stockholders’ equity

$

705,791

 

 

$

706,765

 

 

$

743,593

 


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