MaxLinear, Inc. Announces Fourth Quarter 2017 Financial Results

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CARLSBAD, Calif., Feb. 13, 2018 (GLOBE NEWSWIRE) -- MaxLinear, Inc. (NYSE:MXL), a leading provider of radio-frequency, mixed-signal and high-performance analog integrated circuits for the connected home, wired and wireless infrastructure, and industrial and multi-market applications, today announced financial results for the fourth quarter ended December 31, 2017.

“We are pleased to announce the financial results of fourth quarter 2017, which brings to close a very eventful 2017. In the fourth quarter, we delivered GAAP net revenue of $113.7 million and generated $21.7 million of net cash flow from operating activities.  These strong cash flows enabled a further $20.0 million in debt repayment in the quarter. As a result, our 2017 total debt repayment stands at $70.0 million since the closing of the Exar acquisition in May 2017, which is consistent with our stated objective of using net cash generation to aggressively deleverage. Our ability to find efficiencies in our combined operations has enabled MaxLinear to maintain its aggressive pace of new technology platform innovations that will yield benefits to MaxLinear shareholders well into the future.

“In 2017, we recorded another year of record revenue with total GAAP net revenue of $420.3 million, or 8% sequential growth, in the face of legacy Entropic product declines in analog channel-stacking solutions and video SoCs, and persistent China macro optical fiber headwinds. We were able to weather these challenges due to revenue strength in our broadband franchise, revenue contributions from our Exar acquisition and the acquisition of Marvell’s G.hn business, as well as contributions from our expanding portfolio of network infrastructure solutions.

“Most excitingly, 2017 was undoubtedly the most significant year for the company from an engineering execution and market expansion perspective. In 2017, we started mass production of the industry’s first 28nm CMOS RF transceiver spanning the 5-45Ghz frequency for the wireless backhaul market. We also completed the tape-out of the industry’s first 400Gbps PAM-4 SerDes device for the hyperscale data-center market. For the cable infrastructure market, we completed the tape-out of the industry's first Full-Duplex (FDX) DOCSIS cable fiber node infrastructure remote PHY system-on-chip device. We also successfully integrated two strategic technology platform acquisitions in the form of Exar Corporation and Marvell's G.hn home networking business. We are very excited by our expanding technology footprint, which addresses some of the most complex analog and mixed-signal communications platforms in the industry. As a result, we continue to expand our existing TAM and solidify our position as one of the industry’s leading providers of CMOS mixed-signal ICs,” commented Kishore Seendripu, Ph.D., Chairman and CEO.

GAAP basis:

The fourth quarter 2017 results continue to be influenced by the acquisitions and related purchase price accounting impacts of Marvell’s G.hn business in April 2017 and Exar in May 2017, and interest on the term loan related to the Exar transaction.

Non-GAAP basis:

To supplement our unaudited consolidated financial statements presented on a basis consistent with GAAP, we disclose certain non-GAAP financial measures, including non-GAAP gross margin, operating expenses, operating expenses as a percentage of revenue, income from operations as percentage of revenue, pre-tax margins, effective tax rate, net income and diluted earnings per share. These supplemental measures include the gross margin impact of Exar's deferred profit eliminated in purchase price accounting and exclude the effects of (i) stock-based compensation expense; (ii) an accrual related to our performance based bonus plan for 2017, which we currently intend to settle in shares of our common stock; (iii) accruals related to our performance based bonus plan for 2016, which we settled in shares of our class A common stock in 2016 and 2017; (iv) amortization of purchased intangible assets and inventory step up; (v) depreciation of fixed assets step-up; (vi) restricted merger proceeds and contingent consideration and incentive award; (vii) acquisition and integration costs related to our recently completed acquisitions; (viii) professional fees and settlement costs related to our previously disclosed IP and commercial litigation matters; (ix) IPR&D impairment losses; (x) severance and other restructuring charges; and (xi) non-cash income tax benefits and expenses and effects of the Tax Act. These non-GAAP measures are not in accordance with and do not serve as an alternative for GAAP. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our GAAP results of operations. These non-GAAP measures should only be viewed in conjunction with corresponding GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

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.

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 first and second half of the 2016 performance periods were settled through the issuance of shares of Class A common stock under our equity incentive plans in August 2016 and February 2017, respectively. We currently expect that bonus awards under our fiscal 2017 program will be settled in common stock in the first quarter of fiscal 2018. 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.

Expenses incurred in relation to acquisitions include amortization of purchased intangible assets and step-up of inventory to fair value, depreciation of step-up of property and equipment to fair value, acquisition and integration costs primarily consisting of professional and consulting fees, incentive awards, and restricted merger proceeds which represent the change in fair value of contingent consideration related to a 2014 acquisition and one-time impact on gross margin from elimination of Exar's deferred profit in purchase price accounting.

IPR&D impairment losses relate to our abandonment of IPR&D technology assets.

Restructuring charges incurred are related to our restructuring plans which address issues primarily relating to the integration of the Company and acquired businesses or internal operations 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.

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 2018.

MaxLinear, Inc. (NYSE:MXL) is a leading provider of radio frequency (RF) and mixed-signal and high-performance analog 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.

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Globe Newswire: 21:05 GMT Tuesday 13th February 2018

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