Intermolecular, Inc.
Feb 4, 2016

Intermolecular Reports Fourth Quarter 2015 and Full Year 2015 Financial Results

Results Highlights:
- Positive fourth quarter operating cash flow
- Fourth quarter revenue of $13.5 million, 17% quarter-on-quarter growth

SAN JOSE, Calif., Feb. 4, 2016 /PRNewswire/ -- Intermolecular, Inc. (NASDAQ: IMI) today reported results for its fourth quarter and full year ended December 31, 2015.

Fourth Quarter 2015 Results

Revenue was $13.5 million, up 17% compared to $11.5 million in the prior quarter. Program revenue was $10.5 million, up 21% compared to $8.7 million in the prior quarter. Licensing and royalty revenue was $3.0 million, up 4% compared to $2.8 million in the prior quarter.

Non-GAAP net loss for the fourth quarter was $(1.1) million, or $(0.02) per share. This compared with non-GAAP net loss of $(4.7) million, or $(0.10) per share in the prior quarter.  GAAP net loss for the fourth quarter was $(1.9) million, or $(0.04) per share, compared to net loss of $(5.8) million, or $(0.12) per share in the prior quarter.

"Reaching positive operating cash flow and achieving sequential revenue growth are strong indications that our changes to the business model, team and operations are paying off," said Bruce McWilliams, President and CEO of Intermolecular.  "Our turnaround strategy is working.  In 2016 we look forward to further expanding our market opportunity within the semiconductor industry and other large markets where access to the IMI platform for materials discovery and understanding can offer a substantial competitive advantage to customers."

Full Year 2015 Results

For the year ended December 31, 2015, revenue was $45.8 million compared to revenue of $47.7 million in 2014. Net loss for 2015 was $(20.4) million, or $(0.42) per share, compared with a net loss of $(21.8) million, or $(0.47) per share, for 2014.

Non-GAAP net loss for the year ended December 31, 2015 was $(14.8) million, or $(0.31) per share. This compared with non-GAAP net loss of $(14.4) million, or $(0.31) per share, for 2014.

Outlook for First Quarter 2016 based on current expectations:

  • Intermolecular projects revenue in the range of $13.7 million to $14.2 million.
  • Non-GAAP net loss, which excludes stock-based compensation expense, is projected between $(2.0) million and $(3.0) million, or between $(0.04) to $(0.06) per share, on approximately 49 million shares outstanding.

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.

Conference Call Information

Intermolecular will host a conference call and simultaneous audio-only webcast 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, senior vice president and chief financial officer, for Intermolecular.

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 audio webcast 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 is a leading source for advanced materials discovery and understanding. We work closely with our customers using our High Productivity Combinatorial (HPC) platform to discover, develop and characterize engineered materials for next generation high-technology products. The company's products and services consist of information products and materials experiments that enable customers' R&D teams to efficiently evaluate, select and integrate materials that are critical to their next generation products. Intermolecular's solutions and services create significant economic value for its customers by enabling then to rapidly discover and create new options for mission-critical materials decisions.

"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, 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; the ability of our new business model to generate 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 Form 10-K and our quarterly reports on Form 10-Q, each as filed with the SEC and 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.

 


Intermolecular, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts, Unaudited)

 



Three Months Ended December 31,


Twelve Months Ended December 31,




2015


2014


2015


2014


Revenue:














Program revenue


$

10,493


$

7,090


$

33,451


$

30,540


Product revenue



-



84



75



84


Licensing and royalty revenue



2,962



3,827



12,296



17,071


Total revenue



13,455



11,001



45,822



47,695


Cost of revenue



4,281



6,280



19,436



24,651


Gross profit



9,174



4,721



26,386



23,044
















Operating expenses:














Research and development



7,301



6,129



28,383



24,320


Sales and marketing



1,349



1,422



5,884



5,770


General and administrative



2,462



3,092



12,229



12,636


Restructuring charges



-



-



-



1,361


Total operating expenses



11,112



10,643



46,496



44,087
















Operating loss



(1,938)



(5,922)



(20,110)



(21,043)


Interest expense, net



40



(150)



(267)



(682)


Other income (expense), net



(1)



(16)



(12)



(29)


Loss before provision for income taxes



(1,899)



(6,088)



(20,389)



(21,754)


Income tax provision



1



-



8



7


Net loss


$

(1,900)


$

(6,088)


$

(20,397)


$

(21,761)
















Basic and diluted net loss per common share


$

(0.04)


$

(0.13)


$

(0.42)


$

(0.47)
















Shares used in basic and diluted net loss per common share



48,681



46,906



48,158



46,718


 


 

Intermolecular, Inc.

Condensed Consolidated Balance Sheets

(In thousands, Unaudited)

 



As of December 31,


As of December 31,




2015


2014


ASSETS








Current assets:








Cash and cash equivalents


$

11,676


$

21,765


Marketable securities



23,656



43,304


Total cash, cash equivalents and marketable securities



35,332



65,069


Accounts receivable, net



6,614



5,321


Inventory, current portion



-



34


Prepaid expenses and other current assets



1,608



1,784


Total current assets



43,554



72,208










Inventory, net of current portion



4,413



5,894


Property and equipment, net



15,735



19,106


Intangible assets, net



5,969



7,941


Other assets



506



288


Total assets


$

70,177


$

105,437










LIABILITIES AND STOCKHOLDERS' EQUITY








Current liabilities:








Accounts payable


$

848


$

862


Accrued compensation and employee benefits



4,416



1,628


Deferred revenue



2,595



3,540


Accrued liabilities



2,385



2,101


Note payable



-



2,000


Total current liabilities



10,244



10,131










Note payable, net of current portion



-



21,000


Deferred revenue, net of current portion



-



1,103


Other long-term liabilities



3,334



2,938


Total liabilities



13,578



35,172










Stockholders' equity:








Common stock



49



48


Additional paid-in capital



208,856



202,139


Accumulated other comprehensive loss



(24)



(37)


Accumulated deficit



(152,282)



(131,885)


Total stockholders' equity



56,599



70,265


Total liabilities and stockholders' equity


$

70,177


$

105,437


 


 

Intermolecular, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands, Unaudited)

 



Twelve Months Ended December 31,




2015


2014


Cash flows from operating activities:








Net loss


$

(20,397)


$

(21,761)


Adjustments to reconcile net loss to net cash (used in) provided by operating activities:








Depreciation and amortization



10,728



10,948


Stock-based compensation



5,557



6,021


Impairment of long-lived assets



18



629


Realized loss/(gain) from investments



8



-


Changes in operating assets and liabilities:








Prepaid expenses and other assets



(42)



94


Inventory



(319)



1,581


Accounts receivable



(1,293)



1,701


Accounts payable



(24)



(635)


Accrued and other liabilities



2,985



(1,769)


Deferred revenue



(2,048)



1,341


Net cash (used in) provided by operating activities



(4,827)



(1,850)


Cash flows from investing activities:








Purchase of short-term investments



(32,577)



(48,451)


Redemption of short-term investments



51,410



4,802


Purchase of property and equipment



(1,452)



(2,815)


Capitalized intangible assets



(803)



(1,194)


Net cash (used in) provided by investing activities



16,578



(47,658)


Cash flows from financing activities:








Payment of debt



(23,000)



(2,000)


Proceeds from exercise of common stock options



1,160



1,190


Net cash (used in) provided by financing activities



(21,840)



(810)


Net (decrease) increase in cash and cash equivalents



(10,089)



(50,318)


Cash and cash equivalents at beginning of period



21,765



72,083


Cash and cash equivalents at end of period


$

11,676


$

21,765


 


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 December 31,


Twelve Months Ended December 31,




2015


2014


2015


2014
















GAAP cost of net revenue


$

4,281


$

6,280


$

19,436


$

24,651


Stock-based compensation expense (a)



(152)



(360)



(1,108)



(1,315)


Non-GAAP cost of net revenue


$

4,129


$

5,920


$

18,328


$

23,336
















GAAP gross profit


$

9,174


$

4,721


$

26,386


$

23,044


Stock-based compensation expense (a)



152



360



1,108



1,315


Non-GAAP gross profit


$

9,326


$

5,081


$

27,494


$

24,359
















As a percentage of net revenue:














GAAP gross margin



68.2

%


42.9

%


57.6

%


48.3

%

Non-GAAP gross margin



69.3

%


46.2

%


60.0

%


51.1

%















GAAP operating loss


$

(1,938)


$

(5,922)


$

(20,110)


$

(21,043)


Stock-based compensation expense (a):














 - Cost of net revenue



152



360



1,108



1,315


 - Research and development



276



358



1,614



1,234


 - Sales and marketing



(26)



398



654



1,470


 - General and administrative



367



376



2,181



2,002


Restructuring charges (b)



-



-



-



1,361


Non-GAAP operating loss


$

(1,169)


$

(4,430)


$

(14,553)


$

(13,661)
















GAAP net loss


$

(1,900)


$

(6,088)


$

(20,397)


$

(21,761)


Stock-based compensation expense (a)



769



1,492



5,557



6,021


Restructuring charges (b)



-



-



-



1,361


Non-GAAP net loss


$

(1,131)


$

(4,596)


$

(14,840)


$

(14,379)
















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



48,681



46,906



48,158



46,718
















Non-GAAP earnings per share:














Basic and diluted net loss per common share


$

(0.02)


$

(0.10)


$

(0.31)


$

(0.31)


 







(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.

 

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SOURCE Intermolecular, Inc.

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