Oregon | 0-26844 | 93-0945232 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
5435 NE Dawson Creek Drive | |
Hillsboro, Oregon | 97124 |
(Address of Principal Executive Offices) | (Zip Code) |
Emerging growth company | [ ] | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ] |
Exhibit Number | Description | |
99.1 | Second Quarter 2017 Earnings Release, dated August 1, 2017 |
RADISYS CORPORATION | ||||
Date: | August 1, 2017 | By: | /s/ Jonathan Wilson | |
Jonathan Wilson | ||||
Chief Financial Officer and Vice President of Finance (Principal Financial and Accounting Officer) |
Exhibit Number | Description | |
99.1 | Second Quarter 2017 Earnings Release, dated August 1, 2017 |
Company Contact | Investor Contact | |
Jon Wilson | Brett L. Perry | |
Chief Financial Officer | Shelton Group | |
503-615-1685 | 214-272-0070 | |
jon.wilson@radisys.com | bperry@sheltongroup.com |
• | Consolidated revenue of $35.1 million, consistent with the Company’s preliminary revenue estimate of $35 million; |
• | GAAP loss per share was $0.19, with a non-GAAP loss of $0.06 per share improving from a loss of $0.14 per share sequentially; |
• | Cash flow from operations was $10.3 million; |
• | Successfully launched the FlowEngine TDE-2000 and secured the first commercial program award. Additionally, TDE-2000 is already in five active proof-of-concepts and trials; and |
• | Converted initial CORD lab system order from a new Tier 1 U.S. service provider while also being named the systems integrator by a Southern European service provider for CORD trials beginning in 2018. |
• | Revenue is expected between $26 to $30 million, which represents approximately flat Software-Systems revenue sequentially and a reduction in Hardware-Solutions revenue tied to an expected decline in legacy embedded products revenue as well as no expected new product orders from the Company’s top DCEngine customer. |
• | GAAP gross margin is expected to approximate 3% and GAAP R&D and SG&A expenses are expected to be approximately $13.8 million. Non-GAAP gross margin is expected between 6% and 15% of sales, which includes the impact of a potential $6.5 million non-cash inventory write-down at the midpoint given remaining exposures tied to final product end-of-life transitions within the Company’s legacy embedded products portfolio which are expected to be finalized during the third quarter. Excluding the impact of this inventory write-down, non-GAAP gross margin is expected to be between 33% and 35% of sales, largely consistent with the second quarter. |
• | GAAP loss is expected to be in a range of $0.40 to $0.33 per share. Non-GAAP loss is expected to range from $0.31 to $0.24 per share. Excluding the impact of the non-cash inventory write-down, non-GAAP loss is expected between $0.13 and $0.09 cents per share. |
• | Revenue is now expected between $130 million to $140 million. The revised revenue range is based on the limited visibility provided by the Company’s largest customer, and does not include any new DCEngine orders from this customer for the remainder of the year. Additionally, any material commercial revenue from the existing proof-of-concepts and trials ongoing across the Company’s strategic product lines would represent additional revenue not reflected in the revised guidance range. |
• | GAAP gross margin is expected to approximate 24% and GAAP R&D and SG&A expenses are expected to be approximately $56.5 million. Non-GAAP gross margin is expected to approximate 28% to 30% of sales, and excluding the impact of the non-cash inventory write-down in the third quarter, non-GAAP gross margin is expected to approximate 34% of sales. Total non-GAAP R&D and SG&A expenses are expected to approximate $54.5 million. |
• | GAAP loss is expected to be in a range of $0.87 to $0.77 per share. Non-GAAP loss is expected to range from $0.50 to $0.39 per share. Excluding the impact of the non-cash inventory write-down in the third quarter, non-GAAP loss is expected between $0.32 and $0.24 cents per share. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | |||||||||||||||
Product | $ | 26,340 | $ | 51,629 | $ | 55,039 | $ | 98,947 | |||||||
Service | 8,753 | 9,659 | 17,664 | 17,487 | |||||||||||
Total revenues | 35,093 | 61,288 | 72,703 | 116,434 | |||||||||||
Cost of sales: | |||||||||||||||
Product | 17,913 | 38,208 | 40,089 | 73,940 | |||||||||||
Service | 5,245 | 5,708 | 10,530 | 10,411 | |||||||||||
Amortization of purchased technology | 1,927 | 1,927 | 3,854 | 3,854 | |||||||||||
Total cost of sales | 25,085 | 45,843 | 54,473 | 88,205 | |||||||||||
Gross margin | 10,008 | 15,445 | 18,230 | 28,229 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 5,994 | 6,298 | 12,474 | 11,951 | |||||||||||
Selling, general and administrative | 8,214 | 8,554 | 17,596 | 16,193 | |||||||||||
Intangible assets amortization | 1,260 | 1,260 | 2,520 | 2,520 | |||||||||||
Restructuring and other charges, net | 1,235 | 265 | 1,470 | 947 | |||||||||||
Loss from operations | (6,695 | ) | (932 | ) | (15,830 | ) | (3,382 | ) | |||||||
Interest expense | (224 | ) | (159 | ) | (496 | ) | (276 | ) | |||||||
Other income (expense), net | (130 | ) | 1,069 | (427 | ) | 1,208 | |||||||||
Loss before income tax expense | (7,049 | ) | (22 | ) | (16,753 | ) | (2,450 | ) | |||||||
Income tax expense | 505 | 569 | 809 | 1,106 | |||||||||||
Net loss | $ | (7,554 | ) | $ | (591 | ) | $ | (17,562 | ) | $ | (3,556 | ) | |||
Net loss per share: | |||||||||||||||
Basic | $ | (0.19 | ) | $ | (0.02 | ) | $ | (0.45 | ) | $ | (0.10 | ) | |||
Diluted | $ | (0.19 | ) | $ | (0.02 | ) | $ | (0.45 | ) | $ | (0.10 | ) | |||
Weighted average shares outstanding | |||||||||||||||
Basic | 38,966 | 37,143 | 38,840 | 37,075 | |||||||||||
Diluted | 38,966 | 37,143 | 38,840 | 37,075 |
June 30, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 46,248 | $ | 33,087 | |||
Accounts receivable, net | 43,586 | 38,378 | |||||
Inventories, net | 14,748 | 20,021 | |||||
Other current assets | 7,311 | 7,151 | |||||
Total current assets | 111,893 | 98,637 | |||||
Property and equipment, net | 7,253 | 6,713 | |||||
Intangible assets, net | 11,202 | 17,575 | |||||
Other assets, net | 2,936 | 5,260 | |||||
Total assets | $ | 133,284 | $ | 128,185 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 23,862 | $ | 20,805 | |||
Deferred revenue | 6,917 | 5,715 | |||||
Other accrued liabilities | 11,652 | 14,143 | |||||
Line of credit | 45,000 | 25,000 | |||||
Total current liabilities | 87,431 | 65,663 | |||||
Other long-term liabilities | 5,532 | 5,966 | |||||
Total liabilities | 92,963 | 71,629 | |||||
Shareholders' equity: | |||||||
Common stock | 341,579 | 339,715 | |||||
Accumulated deficit | (301,140 | ) | (281,600 | ) | |||
Accumulated other comprehensive income | (118 | ) | (1,559 | ) | |||
Total shareholders’ equity | 40,321 | 56,556 | |||||
Total liabilities and shareholders’ equity | $ | 133,284 | $ | 128,185 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net loss | $ | (7,554 | ) | $ | (591 | ) | $ | (17,562 | ) | $ | (3,556 | ) | |||
Adjustments to reconcile net loss to net cash | |||||||||||||||
provided by (used in) operating activities: | |||||||||||||||
Depreciation and amortization | 4,487 | 4,248 | 8,845 | 8,593 | |||||||||||
Stock-based compensation expense | 538 | 1,192 | 1,692 | 1,880 | |||||||||||
Other | 318 | (309 | ) | 1,030 | 621 | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | 6,340 | (4,205 | ) | (5,207 | ) | 17,929 | |||||||||
Inventories and deferred cost of sales | (3,878 | ) | 4,525 | 4,803 | 5,103 | ||||||||||
Other receivables | (824 | ) | (1,247 | ) | (83 | ) | 7,007 | ||||||||
Accounts payable | 10,193 | (6,549 | ) | 3,155 | (18,704 | ) | |||||||||
Deferred revenue | 332 | (666 | ) | 1,910 | (17,359 | ) | |||||||||
Other operating assets and liabilities | 377 | 2,543 | (2,765 | ) | (891 | ) | |||||||||
Net cash provided by (used in) operating activities | 10,329 | (1,059 | ) | (4,182 | ) | 623 | |||||||||
Cash flows from investing activities: | |||||||||||||||
Capital expenditures | (1,355 | ) | (708 | ) | (3,158 | ) | (1,130 | ) | |||||||
Net cash used in investing activities | (1,355 | ) | (708 | ) | (3,158 | ) | (1,130 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Borrowings on line of credit, net | 5,000 | 10,000 | 20,000 | 10,000 | |||||||||||
Other financing activities, net | 170 | 374 | 86 | 479 | |||||||||||
Net cash provided by financing activities | 5,170 | 10,374 | 20,086 | 10,479 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | 79 | (64 | ) | 415 | 190 | ||||||||||
Net increase in cash and cash equivalents | 14,223 | 8,543 | 13,161 | 10,162 | |||||||||||
Cash and cash equivalents, beginning of period | 32,025 | 22,383 | 33,087 | 20,764 | |||||||||||
Cash and cash equivalents, end of period | $ | 46,248 | $ | 30,926 | $ | 46,248 | $ | 30,926 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenue | ||||||||||||||||
Software-Systems | $ | 11,488 | $ | 14,601 | $ | 21,637 | $ | 28,660 | ||||||||
Hardware Solutions | 23,605 | 46,687 | 51,066 | 87,774 | ||||||||||||
Total revenues | $ | 35,093 | $ | 61,288 | $ | 72,703 | $ | 116,434 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Gross margin | ||||||||||||||||
Software-Systems | $ | 6,243 | $ | 9,172 | $ | 11,708 | $ | 17,960 | ||||||||
Hardware Solutions | 5,732 | 8,331 | 10,513 | 14,300 | ||||||||||||
Corporate and other | (1,967 | ) | (2,058 | ) | (3,991 | ) | (4,031 | ) | ||||||||
Total gross margin | $ | 10,008 | $ | 15,445 | $ | 18,230 | $ | 28,229 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Income (loss) from operations | ||||||||||||||||
Software-Systems | $ | (1,943 | ) | $ | 31 | $ | (5,216 | ) | $ | 811 | ||||||
Hardware Solutions | 208 | 3,681 | (1,078 | ) | 5,008 | |||||||||||
Corporate and other | (4,960 | ) | (4,644 | ) | (9,536 | ) | (9,201 | ) | ||||||||
Total loss from operations | $ | (6,695 | ) | $ | (932 | ) | $ | (15,830 | ) | $ | (3,382 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||
North America | $ | 15,191 | 43.3 | % | $ | 44,314 | 72.3 | % | $ | 38,362 | 52.7 | % | $ | 82,157 | 70.6 | % | |||||||
Asia Pacific | 6,697 | 19.1 | 6,461 | 10.5 | 12,116 | 16.7 | 14,079 | 12.1 | |||||||||||||||
Europe, the Middle East and Africa | 13,205 | 37.6 | 10,513 | 17.2 | 22,225 | 30.6 | 20,198 | 17.3 | |||||||||||||||
Total | $ | 35,093 | 100.0 | % | $ | 61,288 | 100.0 | % | $ | 72,703 | 100.0 | % | $ | 116,434 | 100.0 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||
GROSS MARGIN: | |||||||||||||||||||||||
GAAP gross margin | $ | 10,008 | 28.5 | % | $ | 15,445 | 25.2 | % | $ | 18,230 | 25.1 | % | $ | 28,229 | 24.2 | % | |||||||
(a) Amortization of acquired intangible assets | 1,927 | 1,927 | 3,854 | 3,854 | |||||||||||||||||||
(b) Stock-based compensation | 40 | 131 | 137 | 177 | |||||||||||||||||||
Non-GAAP gross margin | $ | 11,975 | 34.1 | % | $ | 17,503 | 28.6 | % | $ | 22,221 | 30.6 | % | $ | 32,260 | 27.7 | % | |||||||
RESEARCH AND DEVELOPMENT: | |||||||||||||||||||||||
GAAP research and development | $ | 5,994 | 17.1 | % | $ | 6,298 | 10.3 | % | $ | 12,474 | 17.2 | % | $ | 11,951 | 10.3 | % | |||||||
(b) Stock-based compensation | 113 | 285 | 343 | 438 | |||||||||||||||||||
Non-GAAP research and development | $ | 5,881 | 16.8 | % | $ | 6,013 | 9.8 | % | $ | 12,131 | 16.7 | % | $ | 11,513 | 9.9 | % | |||||||
SELLING, GENERAL AND ADMINISTRATIVE: | |||||||||||||||||||||||
GAAP selling, general and administrative | $ | 8,214 | 23.4 | % | $ | 8,554 | 14.0 | % | $ | 17,596 | 24.2 | % | $ | 16,193 | 13.9 | % | |||||||
(b) Stock-based compensation | 385 | 776 | 1,212 | 1,265 | |||||||||||||||||||
Non-GAAP selling, general and administrative | $ | 7,829 | 22.3 | % | $ | 7,778 | 12.7 | % | $ | 16,384 | 22.5 | % | $ | 14,928 | 12.8 | % | |||||||
INCOME (LOSS) FROM OPERATIONS: | |||||||||||||||||||||||
GAAP loss from operations | $ | (6,695 | ) | (19.1 | )% | $ | (932 | ) | (1.5 | )% | $ | (15,830 | ) | (21.8 | )% | $ | (3,382 | ) | (2.9 | )% | |||
(a) Amortization of acquired intangible assets | 3,187 | 3,187 | 6,374 | 6,374 | |||||||||||||||||||
(b) Stock-based compensation | 538 | 1,192 | 1,692 | 1,880 | |||||||||||||||||||
(c) Restructuring and other charges, net | 1,235 | 265 | 1,470 | 947 | |||||||||||||||||||
Non-GAAP income (loss) from operations | $ | (1,735 | ) | (4.9 | )% | $ | 3,712 | 6.1 | % | $ | (6,294 | ) | (8.7 | )% | $ | 5,819 | 5.0 | % | |||||
NET INCOME (LOSS): | |||||||||||||||||||||||
GAAP net loss | $ | (7,554 | ) | (21.5 | )% | $ | (591 | ) | (1.0 | )% | $ | (17,562 | ) | (24.2 | )% | $ | (3,556 | ) | (3.1 | )% | |||
(a) Amortization of acquired intangible assets | 3,187 | 3,187 | 6,374 | 6,374 | |||||||||||||||||||
(b) Stock-based compensation | 538 | 1,192 | 1,692 | 1,880 | |||||||||||||||||||
(c) Restructuring and other charges, net | 1,235 | 265 | 1,470 | 947 | |||||||||||||||||||
(d) Income taxes | 347 | 109 | 233 | 278 | |||||||||||||||||||
(e) Gain on the liquidation of foreign subsidiaries | $ | — | $ | (421 | ) | $ | — | $ | (421 | ) | |||||||||||||
Non-GAAP net income (loss) | $ | (2,247 | ) | (6.4 | )% | $ | 3,741 | 6.1 | % | $ | (7,793 | ) | (10.7 | )% | $ | 5,502 | 4.7 | % | |||||
GAAP weighted average diluted shares | 38,966 | 37,143 | 38,840 | 37,075 | |||||||||||||||||||
Dilutive equity awards included in | |||||||||||||||||||||||
non-GAAP earnings per share | — | 2,012 | — | 1,090 | |||||||||||||||||||
Non-GAAP weighted average diluted shares | 38,966 | 39,155 | 38,840 | 38,165 | |||||||||||||||||||
GAAP net loss per share (diluted) | $ | (0.19 | ) | $ | (0.02 | ) | $ | (0.45 | ) | $ | (0.10 | ) | |||||||||||
Non-GAAP adjustments detailed above | 0.13 | 0.12 | 0.25 | 0.24 | |||||||||||||||||||
Non-GAAP net income (loss) per share (diluted) | $ | (0.06 | ) | $ | 0.10 | $ | (0.20 | ) | $ | 0.14 |
Three Months Ended | For the year Ended | |||||||||||||||
September 30, 2017 | December 31, 2017 | |||||||||||||||
Low End | High End | Low End | High End | |||||||||||||
GAAP net loss | (15.5 | ) | (12.9 | ) | (34.0 | ) | (29.9 | ) | ||||||||
(a) Amortization of acquired intangible assets | 2.2 | 2.2 | 10.7 | 10.7 | ||||||||||||
(b) Stock-based compensation | 0.5 | 0.5 | 2.2 | 2.2 | ||||||||||||
(c) Restructuring and acquisition-related charges, net | 0.5 | 0.5 | 1.0 | 1.0 | ||||||||||||
(f) Income taxes | 0.2 | 0.2 | 0.6 | 0.8 | ||||||||||||
Total adjustments | 3.4 | 3.4 | 14.5 | 14.7 | ||||||||||||
Non-GAAP net loss | (12.1 | ) | (9.5 | ) | (19.5 | ) | (15.2 | ) | ||||||||
(f) Inventory write-down | 7.0 | 6.0 | 7.0 | 6.0 | ||||||||||||
Non-GAAP net loss excluding inventory write-down | $ | (5.1 | ) | $ | (3.5 | ) | $ | (12.5 | ) | $ | (9.2 | ) | ||||
GAAP weighted average shares | 39,000 | 39,000 | 39,000 | 39,000 | ||||||||||||
Non-GAAP adjustments | — | — | — | — | ||||||||||||
Non-GAAP weighted average shares | 39,000 | 39,000 | 39,000 | 39,000 | ||||||||||||
GAAP net loss per share | (0.40 | ) | (0.33 | ) | (0.87 | ) | (0.77 | ) | ||||||||
Non-GAAP adjustments detailed above | 0.09 | 0.09 | 0.37 | 0.38 | ||||||||||||
Non-GAAP net loss per share | (0.31 | ) | (0.24 | ) | (0.50 | ) | (0.39 | ) | ||||||||
(f) Inventory write-down | 0.18 | 0.15 | 0.18 | 0.15 | ||||||||||||
Non-GAAP net loss per share excluding inventory write-down | $ | (0.13 | ) | $ | (0.09 | ) | $ | (0.32 | ) | $ | (0.24 | ) |
Estimates at the midpoint of the guidance range | |||||
Three Months Ended | For the Year Ended | ||||
September 30, 2017 | December 31, 2017 | ||||
GAAP | 3.4 | % | 23.5 | % | |
(a) Amortization of acquired intangible assets | 6.9 | 5.7 | |||
(b) Stock-based compensation | 0.1 | 0.1 | |||
Non-GAAP | 10.4 | 29.3 | |||
(f) Inventory write-down | 23.2 | 4.9 | |||
Non-GAAP excluding inventory write-down | 33.6 | % | 34.2 | % |
Estimates at the midpoint of the guidance range | |||||||
Three Months Ended | For the Year Ended | ||||||
September 30, 2017 | December 31, 2017 | ||||||
GAAP | $ | 13.8 | $ | 56.5 | |||
(b) Stock-based compensation | 0.5 | 2.0 | |||||
Non-GAAP | $ | 13.3 | $ | 54.5 |
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