imi-8k_20180508.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

CURRENT REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):  May 8, 2018

 

Intermolecular, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware

001-35348

20-1616267

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

 

 

3011 N. First Street

San Jose, California

 

95134

(Address of Principal Executive Offices)

 

(Zip Code)

 

(408) 582-5700

(Registrant’s Telephone Number, Including Area Code)

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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. 

 

 


 

ITEM 2.02.        RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 8, 2018, Intermolecular, Inc. issued a press release announcing its financial results for the first quarter ended March 31, 2018. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information furnished in Item 2.02 of this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except expressly set forth by specific reference in such filing.

ITEM 9.01.        FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

The following exhibit relating to Item 2.02 shall be deemed to be furnished and not filed:

99.1 Press Release dated May 8, 2018, entitled “Intermolecular Reports First Quarter 2018 Financial Results

 

 

 


 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

INTERMOLECULAR, INC.

 

Date:  May 8, 2018

By:

 

/s/ Bill Roeschlein

 

 

 

Bill Roeschlein

 

 

 

Chief Financial Officer

 

 

 

imi-ex991_6.htm

 

Exhibit 99.1

Intermolecular Reports First Quarter 2018 Financial Results

Company Achieves Third Consecutive Quarter of Positive Adjusted EBITDA

SAN JOSE, Calif., May 8, 2018 -- Intermolecular, Inc. (NASDAQ: IMI), the trusted partner for advanced materials innovation, today reported results for its first quarter ended March 31, 2018.

 

Q1 2018 Financial and Operational Highlights

 

Total revenue of $9.7 million, a decrease of 8% over the prior quarter and 3% over the same period last year.

 

Program revenues grew 5% sequentially and 36% over the same period last year.

 

First quarter adjusted EBITDA of $1.0 million (10% of revenue), compared with an adjusted EBITDA loss of $(1.9) million in the same period last year.

 

Total cash and investments increased $1.4 million sequentially to $27.2 million.

 

Secured two new contracts during the quarter.

Management Commentary

“The first quarter of 2018 marked Intermolecular’s third consecutive period of positive adjusted EBITDA, a consistency not seen since 2013,” said company president and CEO, Chris Kramer. “Our improved financial performance is the result of the actions we have taken over the past year to both increase customer engagements and reduce our cost structure.  Specifically, on a year-over-year basis, we increased program services revenue by $2.4 million, or 36% in the quarter, while reducing operating expenses by $4.5 million.  This combination has more than offset the planned expiration of royalties from legacy programs and is key for sustainable profitability.  Our engagements with both existing and new customers continue to expand and we remain confident in our ability to continue to grow and scale our business profitably.”

 

First Quarter Fiscal 2018 Results

Revenue for the first quarter of 2018 was $9.7 million, down 8% compared to $10.5 million in the fourth quarter of 2017, and down 3% compared to $9.9 million in the same period a year ago. Program revenues of $9.3 million grew 5% sequentially and 36% over the same period a year ago.

Net loss for the first quarter of 2018 was $(0.6) million, or $(0.01) per share, compared to net income of $0.1 million, or $0.00 per share, in the fourth quarter of 2017, and net loss of $(5.8) million, or $(0.12) per share, in the same period a year ago.

Non-GAAP net loss for the first quarter of 2018 was $(0.4) million, or $(0.01) per share, compared to non-GAAP net income of $0.4 million, or $0.01 per share, in the prior quarter, and non-GAAP net loss of $(5.2) million, or $(0.10) per share, in the same period a year ago.  

Adjusted EBITDA for the first quarter of 2018 was $1.0 million, compared to $2.1 million in the prior quarter, and an adjusted EBITDA loss of $(1.9) million in the same period a year ago.  

Cash and investments were $27.2 million at the end of first quarter of 2018, an increase of $1.4 million compared to $25.8 million at the end of fourth quarter of 2017. The company had no debt at quarter end.    

 

Second Quarter of 2018 Outlook

The following statements are based on Intermolecular’s current expectations for the second quarter ending June 30, 2018. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set


 

forth under “Forward-Looking Statements” below. Intermolecular does not plan to update, nor does it undertake any obligation to update, this outlook in the future.

 

 

Revenue is projected to be in the range of $9.8 million to $10.2 million;

 

Net income is projected to be between a loss of $(0.3) million, or $(0.01) per share, and a profit of  $0.3 million, or $0.01 per share, based on approximately 49.6 million shares expected to be outstanding;

 

Non-GAAP net income, excluding stock-based compensation expense, is projected to be between breakeven and $0.6 million, or between $0.00 to $0.01 per share based on 49.6 million shares expected to be outstanding; and,

 

Adjusted EBITDA is projected to be between $1.2 million and $1.7 million.

 

Intermolecular reports revenue, cost of revenue, gross margin, operating income (loss), net income (loss) and earnings (loss) per share in accordance with U.S. generally accepted accounting principles (GAAP) and additionally on a non-GAAP basis. A reconciliation of the non-GAAP financial measures with the most directly comparable GAAP measures, as well as a description of the items excluded from the non-GAAP measures, is included in the financial statements portion of this press release. Please refer to “Reconciliation of GAAP to Non-GAAP Financial Measures” and “Reconciliation of GAAP Net Income/Loss to Non-GAAP Net Income” below.

 

Conference Call

Intermolecular will host a conference call and simultaneous audio-only webcast today (May 8, 2018) at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss these results. The call will be hosted by Intermolecular President and CEO Chris Kramer and CFO Bill Roeschlein.

 

U.S. dial-in number: (877) 251-1860

International dial-in number: (224) 357-2386

Conference ID: 2183689

 

Please call the conference telephone number five to ten minutes prior to start time. An operator will register your name and organization. If you have difficulty connecting with the conference call, please contact Liolios Group at (949) 574-2386

A live and archived webcast (audio only) of the call will be available on Intermolecular’s website for up to 30 days after the call.

 

About Intermolecular, Inc.

 

Intermolecular® is the trusted partner for advanced materials innovation. Advanced materials are at the core of innovation in the 21st century for a wide range of industries including semiconductors, consumer electronics, automotive and aerospace. With its substantial materials expertise; accelerated learning and experimentation platform; and information and analytics infrastructure, Intermolecular has a ten-year track record helping leading companies accelerate and de-risk materials innovation. Learn more at www.intermolecular.com.  

“Intermolecular” and the Intermolecular logo are registered trademarks; all rights reserved.

 

Forward-Looking Statements

Statements made in this press release and the earnings call referencing the press release that are not statements of historical fact are forward-looking statements. Forward-looking statements are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as “would,” “may,” “expects,” “believes,” “plans,” “intends,” “projects” and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this document are based on current beliefs, assumptions and expectations, speak only as of the date of this document and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Such statements are subject to certain known and unknown risks and uncertainties, many of which are difficult to predict and generally beyond Intermolecular’s control, that


 

could cause actual results and other future events to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: our ability to productize our workflows with existing and future customers; expectations regarding our future revenue, cash flow and GAAP and non-GAAP net income or loss; financial condition; the ability of our new business model to generate profits and long-term shareholder returns; the extent to which technology developed in collaboration with our customers will continue to remain on the critical path and have significant value for such customers and us as well as the industry as a whole; and anticipated growth in our current markets through expansion of existing customer programs and the entry into other engagements with new customers. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to: our ability to execute on our strategy, prove our business model and remain technologically competitive in rapidly evolving industry conditions; commercial acceptance of our HPC platform and methodology as effective R&D tools; our ability to achieve and sustain profitability; the ability of our customers to achieve their announced product roadmaps in a timely manner; the extent to which we are able to successfully extend and expand relationships with existing customers; our ability to manage the growth of our business; the rapid technology changes and volatility of the customers and industries we serve; our potential need for future capital to finance our operations; and other risks described in our most recent annual report on Form 10-K as updated by our quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission available at www.sec.gov, particularly in the sections titled "Risk Factors." All forward-looking statements are based on management’s current estimates, projections and assumptions, and we assume no obligation to update them.

 

Non-GAAP Financial Measures

 

To supplement the financial data presented on a GAAP basis, we also disclose certain non-GAAP financial measures, which exclude the effect of stock-based compensation expense. These non-GAAP financial measures are not prepared in accordance with GAAP, do not serve as an alternative to GAAP and may be calculated differently than non-GAAP financial information disclosed by other companies. These results should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. We believe that our non-GAAP financial information provides useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations because the non-GAAP measures exclude charges that management considers to be outside of Intermolecular's core operating results. We believe that the non-GAAP measures of revenue, cost of net revenue, gross profit, gross margin, operating (loss) income, net (loss) income, earnings per share and net (loss) income per share, viewed in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective and a more meaningful understanding of our ongoing operating performance. In addition, management uses these non-GAAP measures to review and assess financial performance, to determine executive officer incentive compensation and to plan and forecast performance in future periods.


 

Intermolecular, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts, Unaudited)

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

Revenue:

 

 

 

 

 

 

 

 

Program revenue

 

$

9,256

 

 

$

6,812

 

Licensing and royalty revenue

 

 

419

 

 

 

3,133

 

Total revenue

 

 

9,675

 

 

 

9,945

 

Cost of revenue:

 

 

 

 

 

 

 

 

Cost of program revenue

 

 

3,375

 

 

 

2,697

 

Cost of licensing and royalty revenue

 

 

1

 

 

 

290

 

Total cost of revenue

 

 

3,376

 

 

 

2,987

 

Gross profit

 

 

6,299

 

 

 

6,958

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

4,032

 

 

 

7,108

 

Sales and marketing

 

 

796

 

 

 

1,481

 

General and administrative

 

 

2,286

 

 

 

3,008

 

Restructuring charges

 

 

 

 

 

1,348

 

Total operating expenses

 

 

7,114

 

 

 

12,945

 

Loss from operations

 

 

(815

)

 

 

(5,987

)

Other income (expense):

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

106

 

 

 

55

 

Other income (expense), net

 

 

87

 

 

 

97

 

Total other income (expense), net

 

 

193

 

 

 

152

 

Loss before provision for income taxes

 

 

(622

)

 

 

(5,835

)

Provision for income taxes

 

 

1

 

 

 

1

 

Net loss

 

$

(623

)

 

$

(5,836

)

Net loss per share, basic and diluted

 

$

(0.01

)

 

$

(0.12

)

Weighted-average number of shares used in computing net loss

   per share, basic and diluted

 

 

49,581,927

 

 

 

49,519,251

 


 

Intermolecular, Inc.

Condensed Consolidated Balance Sheets

(In thousands, Unaudited)

 

As of March 31, 2018

 

 

As of December 31, 2017

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,421

 

 

$

6,090

 

Short-term investments

 

 

22,822

 

 

 

18,060

 

Total cash, cash equivalents and short-term investments

 

 

27,243

 

 

 

24,150

 

Accounts receivable

 

 

4,199

 

 

 

5,519

 

Prepaid expenses and other current assets

 

 

959

 

 

 

1,069

 

Total current assets

 

 

32,401

 

 

 

30,738

 

Long-term investments

 

 

 

 

 

1,657

 

Materials inventory

 

 

2,814

 

 

 

2,781

 

Property and equipment, net

 

 

4,940

 

 

 

5,913

 

Intangible assets, net

 

 

2,485

 

 

 

2,620

 

Other assets

 

 

589

 

 

 

600

 

Total assets

 

$

43,229

 

 

$

44,309

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

399

 

 

$

928

 

Accrued liabilities

 

 

958

 

 

 

865

 

Accrued compensation and employee benefits

 

 

1,781

 

 

 

2,535

 

Deferred revenue

 

 

997

 

 

 

941

 

Total current liabilities

 

 

4,135

 

 

 

5,269

 

Other long-term liabilities

 

 

2,906

 

 

 

2,967

 

Total liabilities

 

 

7,041

 

 

 

8,236

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock

 

 

50

 

 

 

50

 

Additional paid-in capital

 

 

215,082

 

 

 

214,796

 

Accumulated other comprehensive loss

 

 

(59

)

 

 

(35

)

Accumulated deficit

 

 

(178,885

)

 

 

(178,738

)

Total stockholders’ equity

 

 

36,188

 

 

 

36,073

 

Total liabilities and stockholders’ equity

 

$

43,229

 

 

$

44,309

 


 

Intermolecular, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands, Unaudited)

 

Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(623

)

 

$

(5,836

)

Adjustments to reconcile net loss to net cash used in operating

   activities:

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

 

1,423

 

 

 

1,977

 

Stock-based compensation

 

 

270

 

 

 

656

 

(Gain) loss on disposal of property and equipment

 

 

 

 

 

(4

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

1,796

 

 

 

1,248

 

Prepaid expenses and other assets

 

 

121

 

 

 

476

 

Materials inventory

 

 

(69

)

 

 

78

 

Accounts payable

 

 

(554

)

 

 

381

 

Accrued and other liabilities

 

 

(730

)

 

 

1,394

 

Deferred revenue

 

 

56

 

 

 

183

 

Net cash provided by operating activities

 

 

1,690

 

 

 

553

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of investments

 

 

(6,252

)

 

 

(2,827

)

Redemption of investments

 

 

3,070

 

 

 

4,408

 

Purchase of property and equipment

 

 

(194

)

 

 

(264

)

Proceeds from sale of equipment

 

 

 

 

 

7

 

Net cash (used in) provided by investing activities

 

 

(3,376

)

 

 

1,324

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payment of capital leases

 

 

 

 

 

(5

)

Proceeds from exercise of common stock options

 

 

17

 

 

 

 

Net cash (used in) provided by financing activities

 

 

17

 

 

 

(5

)

Net increase (decrease) in cash and cash equivalents

 

 

(1,669

)

 

 

1,872

 

Cash and cash equivalents at beginning of period

 

 

6,090

 

 

 

5,759

 

Cash and cash equivalents at end of period

 

$

4,421

 

 

$

7,631

 


 

Intermolecular, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share amounts and percentages, Unaudited)

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

GAAP cost of net revenue

 

$

3,376

 

 

$

2,987

 

Stock-based compensation expense (a)

 

 

(53

)

 

 

(65

)

Non-GAAP cost of net revenue

 

$

3,323

 

 

$

2,922

 

GAAP gross profit

 

$

6,299

 

 

$

6,958

 

Stock-based compensation expense (a)

 

 

53

 

 

 

65

 

Non-GAAP gross profit

 

$

6,352

 

 

$

7,023

 

As a percentage of net revenue:

 

 

 

 

 

 

 

 

GAAP gross margin

 

 

65.1

%

 

 

70.0

%

Non-GAAP gross margin

 

 

65.7

%

 

 

70.6

%

GAAP operating loss

 

$

(815

)

 

$

(5,987

)

Stock-based compensation expense (a):

 

 

 

 

 

 

 

 

- Cost of net revenue

 

 

53

 

 

 

65

 

- Research and development

 

 

55

 

 

 

182

 

- Sales and marketing

 

 

30

 

 

 

59

 

- General and administrative

 

 

132

 

 

 

350

 

Non-GAAP operating loss

 

$

(545

)

 

$

(5,331

)

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(623

)

 

$

(5,836

)

Stock-based compensation expense (a)

 

 

270

 

 

 

656

 

Non-GAAP net loss

 

$

(353

)

 

$

(5,180

)

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(623

)

 

$

(5,836

)

Interest income (expense), net

 

 

106

 

 

 

55

 

Provision for taxes

 

 

1

 

 

 

1

 

Depreciation, amortization, impairments and accretion

 

 

1,423

 

 

 

1,977

 

Restructuring charges (b)

 

 

 

 

 

1,348

 

Stock-based compensation expense (a)

 

 

270

 

 

 

656

 

Adjusted EBITDA

 

$

965

 

 

$

(1,909

)

 

 

 

 

 

 

 

 

 

Shares used in computing GAAP basic and diluted earnings per share

 

 

49,582

 

 

 

49,519

 

GAAP earnings per share:

 

 

 

 

 

 

 

 

Basic and diluted net loss per share

 

$

(0.01

)

 

$

(0.12

)

Shares used in computing Non-GAAP basic and diluted earnings per share

 

 

49,582

 

 

 

49,519

 

Non-GAAP earnings per share:

 

 

 

 

 

 

 

 

Basic and diluted net loss per share

 

$

(0.01

)

 

$

(0.10

)

 

 

(a)

Stock-based compensation reflects expense recorded relating to stock-based awards. The Company excludes this item when it evaluates the continuing operational performance of the Company, as management believes this provides it a meaningful understanding of its core operating performance.

 

 

(b)

Restructuring charges incurred in connection with a reduction in headcount primarily comprised of employee severance and benefit costs.



 

Intermolecular, Inc.

Second Quarter 2018 Outlook

Reconciliation of GAAP Net Income/Loss to Non-GAAP Net Income

(In thousands, except per share amounts, Unaudited)

 

GAAP net income/loss range

 

$(300) -   $300

Stock-based compensation

 

$300 -   $300

Non-GAAP net income range

 

$0 -   $600

 

 

 

GAAP and Non-GAAP diluted shares

 

49,600

GAAP net income/loss per share range

 

$(0.01) -   $0.01

Non-GAAP net income per share range

 

$0.00 -   $0.01

 


 

 

Corporate Contact:

Bill Roeschlein

Intermolecular, Inc.

Chief Financial Officer

bill.roeschlein@intermolecular.com

(408) 582-5415

 

Investor Contact:

Matt Glover or Najim Mostamand, CFA

Liolios Group, Inc.

IMI@liolios.com

(949) 574-3860