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 |
|
