Intermolecular, Inc.
May 7, 2015

Intermolecular Announces First Quarter 2015 Results

SAN JOSE, Calif.--(BUSINESS WIRE)-- Intermolecular, Inc. (NASDAQ:IMI)—accelerating research and development (R&D) for semiconductor and clean energy industries—today announced results for its first quarter ended March 31, 2015.

First Quarter Fiscal 2015 Results

Revenue for the first quarter of 2015 was $9.8 million, compared to $15.9 million in the same period a year ago. CDP and services revenue was $7.1 million for the quarter, compared to $8.9 million in the prior year. Licensing and royalty revenue was $2.7 million, compared to $7.0 million in the prior year.

As reported under GAAP, the Company reported a net loss of $(7.0) million, or $(0.15) per share, for the first quarter of 2015, compared to a net loss of $(3.9) million, or $(0.08) per share, for the first quarter of 2014.

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.

Non-GAAP net loss for the quarter ended March 31, 2015 was $(5.1) million, or $(0.11) per share. This compared with non-GAAP net loss of $(1.3) million, or $(0.03) per share, for the first quarter of 2014.

"Our first quarter results show we are making excellent progress. We are seeing positive traction with our new engagements, and I believe IMI is in a good position to develop a stronger market presence and deliver improved financial results as we move through this year," stated Bruce McWilliams, President and CEO of Intermolecular.

Outlook for Second Quarter 2015

The following statements are based on current expectations for the second quarter of 2015. The Company does not plan to update, nor does it undertake any obligation to update this outlook in the future.

Conference Call Today

Intermolecular will hold a conference call at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time today with Bruce McWilliams, President and Chief Executive Officer, and Rick Neely, Chief Financial Officer, to discuss the business.

The call can be accessed by dialing (877) 251-1860; international callers should dial (224) 357-2386. Please dial-in ten minutes prior to the scheduled conference call time. A live and archived webcast (audio only) of the call will be available on Intermolecular's Website at http://ir.intermolecular.com for up to 30 days after the call.

About Intermolecular, Inc.

Intermolecular® provides thin film solutions to advanced technological problems using its proprietary approach to accelerate research and development. The approach consists of its proprietary High Productivity Combinatorial (HPC™) platform, application-specific workflows and its multi-disciplinary team. By collaborating with its customers, Intermolecular develops proprietary technology and intellectual property for its customers focused on advanced materials, processes, integration and device architectures. Founded in 2004, Intermolecular is based in San Jose, California. "Intermolecular" and the Intermolecular logo are registered trademarks; and "HPC" is a trademark of Intermolecular, Inc.; all rights reserved. Learn more at www.intermolecular.com.

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 relate to, but are not limited to, recent efforts to expand our product offerings to a broader customer base, including our ability to realize cost savings as well as make the necessary investments in new technology capabilities; the effects of our engagement with our key markets and customers and our focus on customers that are semiconductor companies; our ability to productize our workflows with existing and future customers; our ability to serve a variety of customers in the fragmented clean energy markets; expectations regarding our future revenue, cash flow and GAAP and non-GAAP net income or loss; our backlog and our expectations that it will convert to revenue; the ability of our business model to generate long-term shareholder returns; the extent to which the IP we have generated will generate revenue in the future, whether through royalties or sale of such assets; 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; the strength of our intellectual property and patent portfolio; expectations of customers with respect to their business and technology in the second quarter of 2015 and beyond, including but not limited to implementation of their technology roadmaps (including timing), performance relative to the competitors in their respective fields, and successful volume manufacturing and commercialization of products that incorporate our technology; the scalability of our financial model and future earnings leverage; and anticipated growth in our current markets through expansion of existing customer CDPs and the entry into CDPs and other engagements with new customers and sale of our assets. 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 in the semiconductor industry; the early stage of development of the clean energy industry; our potential need for future capital to finance our operations; and other risks described in our 2014 Form 10-K as filed with the SEC and available at www.sec.gov, particularly in the section titled "Risk Factors." Forward-looking statements speak only as of the date the statements are made and are based on information available to us at the time those statements are made and/or management's good faith belief as of that time with respect to future events. We assume no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. Accordingly, investors should not place undue reliance on any forward-looking statements.

 

Intermolecular, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts, Unaudited)

 
    Three Months Ended March 31,
2015   2014
Revenue:
Collaborative development program and services revenue $ 7,098 $ 8,886
Licensing and royalty revenue   2,747     7,019  
Total revenue 9,845 15,905
Cost of revenue   5,487     6,568  
Gross profit 4,358 9,337
 
Operating expenses:
Research and development 6,500 6,956
Sales and marketing 1,309 1,648
General and administrative 3,410 3,313
Restructuring charges       1,068  
Total operating expenses   11,219     12,985  
 
Operating loss (6,861 ) (3,648 )
Interest expense, net (134 ) (194 )

Other income (expense), net

  5     (5 )

Loss before provision for income taxes

(6,990 ) (3,847 )

Income tax provision

  3     4  
Net loss $ (6,993 ) $ (3,851 )
 
Basic and diluted net loss per common share $ (0.15 ) $ (0.08 )
 
Shares used in basic and diluted net loss per common share   47,598     46,338  
 

Intermolecular, Inc.

Condensed Consolidated Balance Sheets

(In thousands, Unaudited)

 
   

  As of March 31,  

    As of December 31,
2015 2014
ASSETS
Current assets:
Cash and cash equivalents $ 25,633 $ 21,765
Marketable securities   36,606     43,304  
Total cash, cash equivalents and marketable securities 62,239 65,069
Accounts receivable, net 4,896 5,321
Inventory, current portion 34 34
Prepaid expenses and other current assets   1,752     1,784  
Total current assets 68,921 72,208
 
Inventory, net of current portion 5,449 5,894
Property and equipment, net 17,990 19,106
Intangible assets, net 7,773 7,941
Other assets   307     288  
Total assets $ 100,440   $ 105,437  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 617 $ 862
Accrued compensation and employee benefits 2,645 1,628
Deferred revenue 2,592 3,540
Accrued liabilities 2,584 2,101
Note payable   2,000     2,000  
Total current liabilities 10,438 10,131
 
Note payable, net of current portion 20,500 21,000
Deferred revenue, net of current portion 674 1,103
Other long-term liabilities   3,093     2,938  
Total liabilities 34,705 35,172
 
Stockholders' equity:
Common stock 48 48
Additional paid-in capital 204,572 202,139
Accumulated other comprehensive loss (7 ) (37 )
Accumulated deficit   (138,878 )   (131,885 )
Total stockholders' equity   65,735     70,265  
Total liabilities and stockholders' equity $ 100,440   $ 105,437  
 

Intermolecular, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands, Unaudited)

 
    Three Months Ended March 31,
2015   2014
Cash flows from operating activities:
Net loss $ (6,993 ) $ (3,851 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization 2,481 2,450
Stock-based compensation 1,896 1,488
Changes in operating assets and liabilities:
Prepaid expenses and other assets (202 ) 207
Inventory 445 (711 )
Accounts receivable 425 2,115
Accounts payable (284 ) (833 )
Accrued and other liabilities 1,789 102
Deferred revenue   (1,377 )   1,080  
Net cash (used in) provided by operating activities   (1,820 )   2,047  
Cash flows from investing activities:
Purchase of short-term investments (9,850 )
Redemption of short-term investments 16,541
Purchase of property and equipment (927 ) (1,490 )
Capitalized intangible assets   (113 )   (657 )
Net cash provided by (used in) investing activities   5,651     (2,147 )
Cash flows from financing activities:
Payment of debt (500 ) (500 )
Proceeds from exercise of common stock options   537     839  
Net cash provided by financing activities   37     339  

Net increase in cash and cash equivalents

3,868 239
Cash and cash equivalents at beginning of period   21,765     72,083  
Cash and cash equivalents at end of period $ 25,633   $ 72,322  
 

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 and restructuring related charges. 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.

Reconciliation of GAAP to Non-GAAP Financial Measures

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

 
    Three Months Ended March 31,
2015 2014
 
GAAP cost of net revenue $ 5,487 $ 6,568
Stock-based compensation expense (a)   (472 )   (305 )
Non-GAAP cost of net revenue $ 5,015   $ 6,263  
 
GAAP gross profit $ 4,358 $ 9,337
Stock-based compensation expense (a)   472     305  
Non-GAAP gross profit $ 4,830   $ 9,642  
 
As a percentage of net revenue:
GAAP gross margin   44.3   %   58.7   %
Non-GAAP gross margin   49.1   %   60.6   %
 
GAAP operating loss $ (6,861 ) $ (3,648 )
Stock-based compensation expense (a):
- Cost of net revenue 472 305
- Research and development 507 323
- Sales and marketing 211 345
- General and administrative 706 515
Restructuring charges (b)       1,068  
Non-GAAP operating loss $ (4,965 ) $ (1,092 )
.
GAAP net loss $ (6,993 ) $ (3,851 )
Stock-based compensation expense (a) 1,896 1,488
Restructuring charges (b)       1,068  
Non-GAAP net loss $ (5,097 ) $ (1,295 )
 
Shares used in computing Non-GAAP basic and diluted earnings per share 47,598 46,338
 
Non-GAAP earnings per share:
Basic and diluted net loss per common share $ (0.11 ) $ (0.03 )
(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 GAAP measure is not indicative 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.
Rick Neely, +1-408-582-5430
Sr. Vice President and Chief Financial Officer
rick.neely@intermolecular.com

Source: Intermolecular, Inc.

News Provided by Acquire Media