Delaware | 000-29748 | 77-0203595 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition |
Item 9.01. | Financial Statements and Exhibits |
Exhibit Number | Description | |
99.1 | Press Release dated February 9, 2017, of Echelon Corporation. |
ECHELON CORPORATION | ||||||
By: | /s/ C. Michael Marszewski | |||||
C. Michael Marszewski Vice President and Chief Financial Officer | ||||||
Date: February 9, 2017 |
Exhibit Number | Description | |
99.1 | Press Release dated February 9, 2017, of Echelon Corporation. |
2901 Patrick Henry Drive Santa Clara, CA 95054 Phone: +1-408-938-5200 Fax: +1-408-790-3800 info@echelon.com www.echelon.com |
• | Revenues: $7.5 million |
• | GAAP Operating expenses $5.8 million; Non-GAAP Operating expenses $5.1 million |
• | GAAP Net Loss: $1.2 million; GAAP Net Loss per Share: $0.28 |
• | Non-GAAP Net Loss: $0.5 million; Non-GAAP Net Loss per Share: $0.11 |
• | Cash & investments: $23.0 million |
• | At a Pacific Northwest military base, we shipped and installed approximately 2,400 outdoor lighting fixtures with LEDs, including Lumewave by Echelon® wireless controllers and approximately 400 Lumewave by Echelon motion sensors. |
• | We received orders for 12 pilot projects for outdoor lighting with cities and municipalities. These projects extend across countries including Zimbabwe, the U.S., Mexico, Guyana, French Polynesia, Oman, Vietnam, Indonesia, U.A.E. and Colombia. |
• | We rolled out new deployments at seven automotive dealerships and continue to focus on national, independent, and large automotive dealerships. Automotive dealerships are a promising vertical for Echelon, with an estimated $350M market opportunity in the US alone. |
• | In our embedded business, Echelon’s next-generation transceiver technology was selected by Efficient Building Automation Corporation (EBAC) for use in two of its new Circon® controllers. These controllers enable customers to enhance their building automation systems with advanced functionality including Echelon’s internet-centric approach and flexibility to use the protocol of choice. For example, the software built into the new controllers will allow schools to automatically adjust the lights and HVAC systems depending on whether the students are in class, or whether the school is being occupied after hours. |
• | In White Bear Lake, a suburb of Minneapolis, Minnesota, what we believe is the world’s first “white tunable” connected streetlighting has been successfully deployed. The latest Lumewave by Echelon solution dynamically regulates the amount of potentially unhealthy blue light emitted and remotely adjusts streetlight color to soothing warm yellow based on activity levels, time of day, weather and events. With the American Medical Association policy statement last year about the potentially harmful effects of outdoor, high-intensity lighting, Echelon’s technology is paving the way for cities to increase public health and safety, quality of life and environmental comfort, as well as reduce energy consumption and maintenance costs. This is just one example of how our streetlighting infrastructure serves as a platform to allow smart cities to integrate IoT applications. |
• | Echelon is collaborating with IBM Watson® IoT to bring new intelligence to our adaptive streetlight control platform. IBM Watson IoT is a cognitive system that learns from and infuses intelligence into the physical world. By combining IBM Watson IoT data with Echelon’s connected streetlighting platform, municipalities can transform into smarter, safer and more sustainable cities. |
• | Echelon is partnering with the University of California, Davis California Lighting Technology Center (CLTC) to develop advancements in building energy efficiency. As an expert on intelligent lighting and building automation solutions to help optimize efficiency through a single, unified platform, Echelon is participating on the CLTC’s Technical Advisory Committee. This research initiative is part of the California Energy Commission's Electric Program Investment Charge (EPIC) that fosters clean energy research and development projects. |
• | In our embedded business, chipmaker MegaChips introduced a single-chip, fully-compliant IEEE 1901 HD-PLC (Power Line Communications) product that supports multi-hopping, enabling communication over long distances required for many industrial and commercial applications. MegaChips recently joined the LonMark® International global membership organization that was created to promote and advance the business of efficient and effective integration of open, multi-vendor control systems utilizing ISO/IEC 14908-1 and related standards. MegaChips is actively working with other LonMark members to port this popular protocol to its hardware. |
• | During the quarter, we continued to grow our sales team with the addition of two regional sales directors that have more than 40 years combined experience. They are specifically focused on outdoor lighting within municipalities and are already pursuing new projects where Echelon’s lighting and control solutions can provide significant value. |
• | Our newly-expanded, lighting-focused sales team identified several dozen new opportunities in cities, towns and municipalities in the quarter, primarily in the Americas. Over one-third of these have already been qualified and are in various stages of engagement with our sales team. |
• | As an industrial IoT pioneer, Echelon was invited to present at the 2017 International Air-Conditioning, Heating, Refrigerating (AHR) Exposition held in Las Vegas. Product Manager Rich Blomseth, presented the advantages of the new LonTalk/IP standard which combines the benefits of LonTalk protocol with IP connectivity to provide the best of breed solution for IOT communications. The show took place in late January and hosted more than 2,000 exhibitors, attracting crowds of 60,000 industry professionals from every state in America and 150 countries worldwide. |
• | Echelon has been selected to present at Strategies in Light (The LED Show) in Anaheim in late February. The event showcases the latest in innovative technologies, products and services and is relied upon by the industry for information on the future of lighting. Several leaders from Echelon will be speaking including CEO Ron Sege at the investor Forum on February 28th, CTO Sohrab Modi at a session on March 1st on “Beyond Dimming: How Intelligent Lighting can Become the Backbone for Smart City Infrastructure,” and Marketing Director Rita Renner, March 2 on “Oracle Corporation’s Outdoor Lighting: from Experiment to Renaissance.” |
• | LED Magazine recently announced that Echelon’s PL-RF Gateway was chosen as a finalist by the independent Sapphire Awards panel that ranks submissions based on their unique technology or application, innovation, ease of use, efficiency, reliability, and contribution to profitability. |
• | Total revenues are expected to be in a range of $7.2 million to $7.6 million |
• | GAAP gross margin is expected to be in a range of 53% to 55% |
• | Non-GAAP gross margin is expected to be in a range of 54% to 56% |
• | GAAP operating expenses are expected to be in a range of $5.7 million to $5.9 million |
• | Non-GAAP operating expenses are expected to be in a range of $5.2 million to $5.4 million |
• | GAAP loss per share is expected to be between $0.35 and $0.47, based on 4.4 million weighted average shares outstanding |
• | Excluding expected non-cash equity compensation charges of $0.13 per share, non-GAAP loss per share is expected to be between $0.22 and $0.34 |
December 31, 2016 | December 31, 2015 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 9,803 | $ | 7,691 | ||||
Restricted investments | 1,250 | 1,401 | ||||||
Short-term investments | 11,983 | 16,978 | ||||||
Accounts receivable, net | 3,015 | 4,030 | ||||||
Inventories | 2,570 | 2,893 | ||||||
Deferred cost of revenues | 1,104 | 1,122 | ||||||
Other current assets | 900 | 1,109 | ||||||
Total current assets | 30,625 | 35,224 | ||||||
Property and equipment, net | 445 | 595 | ||||||
Other long-term assets | 1,838 | 2,227 | ||||||
$ | 32,908 | $ | 38,046 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 1,697 | $ | 2,267 | ||||
Accrued liabilities | 2,174 | 2,885 | ||||||
Deferred revenues | 3,671 | 3,359 | ||||||
Total current liabilities | 7,542 | 8,511 | ||||||
Long-term liabilities | 688 | 614 | ||||||
Total stockholders’ equity | 24,678 | 28,921 | ||||||
$ | 32,908 | $ | 38,046 |
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | $ | 7,498 | $ | 9,590 | $ | 32,385 | $ | 38,804 | |||||||
Cost of revenues (1) | 3,375 | 4,093 | 14,302 | 16,528 | |||||||||||
Gross profit | 4,123 | 5,497 | 18,083 | 22,276 | |||||||||||
Operating expenses: | |||||||||||||||
Product development (1) | 2,119 | 2,341 | 8,260 | 9,747 | |||||||||||
Sales and marketing (1) | 1,638 | 1,602 | 6,189 | 7,832 | |||||||||||
General and administrative (1) | 1,782 | 1,694 | 8,077 | 9,249 | |||||||||||
Restructuring charges | 286 | — | 286 | — | |||||||||||
Goodwill impairment | — | 5,698 | — | 5,698 | |||||||||||
Lease termination charges | — | — | — | 3,337 | |||||||||||
Total operating expenses | 5,825 | 11,335 | 22,812 | 35,863 | |||||||||||
Loss from operations | (1,702 | ) | (5,838 | ) | (4,729 | ) | (13,587 | ) | |||||||
Interest and other income, net | 567 | 227 | 808 | 791 | |||||||||||
Interest expense on lease financing obligations | — | (2 | ) | — | (387 | ) | |||||||||
Loss before provision for income taxes | (1,135 | ) | (5,613 | ) | (3,921 | ) | (13,183 | ) | |||||||
Income tax expense (benefit) | 102 | (14 | ) | 182 | 50 | ||||||||||
Net loss | $ | (1,237 | ) | $ | (5,599 | ) | $ | (4,103 | ) | (13,233 | ) | ||||
Basic and diluted net loss per share | $ | (0.28 | ) | $ | (1.27 | ) | $ | (0.93 | ) | $ | (3.00 | ) | |||
Shares used in computing net loss per share: | |||||||||||||||
Basic and Diluted | 4,432 | 4,416 | 4,425 | 4,409 | |||||||||||
(1) Amounts include stock-based compensation costs as follows: | |||||||||||||||
Cost of revenues | $ | 51 | $ | 28 | $ | 48 | $ | (74 | ) | ||||||
Product development | 130 | 75 | 173 | 304 | |||||||||||
Sales and marketing | 86 | 17 | 57 | (92 | ) | ||||||||||
General and administrative | 189 | 64 | 468 | 155 | |||||||||||
Total stock-based compensation expenses | $ | 456 | $ | 184 | $ | 746 | $ | 293 |
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
GAAP net loss | $ | (1,237 | ) | $ | (5,599 | ) | $ | (4,103 | ) | $ | (13,233 | ) | |||
Stock-based compensation | 456 | 184 | 746 | 293 | |||||||||||
Restructuring charges | 286 | — | 286 | — | |||||||||||
Adjustment to contingent consideration | — | (577 | ) | (318 | ) | (577 | ) | ||||||||
Goodwill impairment | — | 5,698 | — | 5,698 | |||||||||||
Lease termination charges | — | — | — | 3,337 | |||||||||||
Total non-GAAP adjustments to earnings from operations | 742 | 5,305 | 714 | 8,751 | |||||||||||
Income tax effect of reconciling items | — | — | — | — | |||||||||||
Non-GAAP net loss | $ | (495 | ) | $ | (294 | ) | $ | (3,389 | ) | $ | (4,482 | ) | |||
Non-GAAP net loss per share: | |||||||||||||||
Diluted | $ | (0.11 | ) | $ | (0.07 | ) | $ | (0.77 | ) | $ | (1.02 | ) | |||
Shares used in computing net loss per share: | |||||||||||||||
Diluted | 4,432 | 4,416 | 4,425 | 4,409 |
Twelve Months Ended | |||||||
December 31, | |||||||
2016 | 2015 | ||||||
Cash flows provided by (used in) operating activities: | |||||||
Net loss | $ | (4,103 | ) | $ | (13,233 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 489 | 1,767 | |||||
Goodwill impairment charges | — | 5,698 | |||||
Increase (reduction) in allowance for doubtful accounts | 6 | (19 | ) | ||||
Lease termination charges | — | 3,337 | |||||
Loss on disposal of and write down of property, equipment, and other | 1 | 81 | |||||
Increase in accrued investment income | (43 | ) | (31 | ) | |||
Stock-based compensation | 746 | 293 | |||||
Adjustment to contingent consideration | (318 | ) | (650 | ) | |||
Change in operating assets and liabilities: | |||||||
Accounts receivable | 1,009 | (53 | ) | ||||
Inventories | 323 | 409 | |||||
Deferred cost of revenues | (20 | ) | 277 | ||||
Other current assets | 200 | 356 | |||||
Accounts payable | (558 | ) | (1,309 | ) | |||
Accrued liabilities | (1,176 | ) | (1,097 | ) | |||
Deferred revenues | 340 | (707 | ) | ||||
Deferred rent | 81 | (45 | ) | ||||
Net cash used in operating activities | (3,023 | ) | (4,926 | ) | |||
Cash flows provided by (used in) investing activities: | |||||||
Purchases of available‑for‑sale short‑term investments | (23,955 | ) | (16,974 | ) | |||
Proceeds from maturities and sales of available‑for‑sale short‑term investments | 29,155 | 28,852 | |||||
Change in other long‑term assets | 160 | (795 | ) | ||||
Capital expenditures | (117 | ) | (306 | ) | |||
Net cash provided by investing activities | 5,243 | 10,777 | |||||
Cash flows provided by (used in) financing activities: | |||||||
Principal payments of lease financing obligations | — | (11,278 | ) | ||||
Repurchase of common stock from employees for payment of taxes on vesting of restricted stock units and upon exercise of stock options | (43 | ) | (153 | ) | |||
Net cash used in financing activities | (43 | ) | (11,431 | ) | |||
Effect of exchange rates on cash: | (65 | ) | (69 | ) | |||
Net change in cash and cash equivalents | 2,112 | (5,649 | ) | ||||
Cash and cash equivalents: | |||||||
Beginning of period | 7,691 | 13,340 | |||||
End of period | $ | 9,803 | $ | 7,691 | |||