Harmonic Announces Fourth Quarter and Fiscal 2016 Results
SAN JOSE, Calif., Feb. 28, 2017 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT), the worldwide leader in video delivery infrastructure, announced today its unaudited results for the fourth quarter and fiscal year ended December 31, 2016.
GAAP net revenue for the fourth quarter of 2016 was $113.1 million, compared with $101.4 million for the third quarter of 2016 and $86.6 million for the fourth quarter of 2015. GAAP net revenue for fiscal 2016 was $405.9 million, compared with $377.0 million for 2015.
Non-GAAP net revenue for the fourth quarter of 2016 was $113.8 million, compared with $101.7 million for the third quarter of 2016 and $86.6 million for the fourth quarter of 2015. Non-GAAP net revenue for fiscal 2016 was $408.3 million, compared with $377.0 million for 2015.
Bookings for the fourth quarter of 2016 were $116.9 million, compared with $97.3 million for the third quarter of 2016 and $101.0 million for the fourth quarter of 2015.
The GAAP net loss for the fourth quarter of 2016 was $(10.4) million, or $(0.13) per diluted share, compared with a GAAP net loss for the third quarter of 2016 of $(16.0) million, or $(0.21) per diluted share, and a GAAP net loss for the fourth quarter of 2015 of $(7.2) million, or $(0.08) per diluted share. The GAAP net loss for fiscal 2016 was $(72.3) million, or $(0.93) per diluted share, compared to a GAAP net loss of $(15.7) million, or $(0.18) per diluted share, for 2015.
Non-GAAP net income for the fourth quarter of 2016 was $6.7 million, or $0.08 per diluted share, compared with a non-GAAP net loss for the third quarter of 2016 of $(1.1) million, or $(0.01) per diluted share, and non-GAAP net income for the fourth quarter of 2015 of $0.6 million, or $0.01 per diluted share. The Non-GAAP net loss for fiscal 2016 was $(2.8) million, or $(0.04) per diluted share, compared with non-GAAP net income of $9.1 million, or $0.10 per diluted share, for 2015. See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" provided below.
Total cash, cash equivalents and short-term investments were $62.6 million at the end of the fourth quarter of 2016, up $9.9 million from $52.7 million as of the end of the prior quarter. In the fourth quarter of 2016, the Company generated approximately $13.4 million of cash from operations.
"In 2016, we made significant progress with our Video operating segment as we continued our transition to software based products and services and completed the integration of Thomson Video Networks," said Patrick Harshman, CEO of Harmonic Inc. "We are targeting year-over-year revenue growth and double digit operating profit in 2017 for our Video business. For our Cable Edge operating segment, we look forward to a planned major roll-out of our new CableOS products and services in the second half of 2017 and the resultant operating profit."
Near record backlog and deferred revenue of $188.4 million
Record video segment revenue and operating margin driven by continued momentum in our software transition, aided by order timing
VOS software-as-a-service (SaaS) win with a leading North American media company
Global demand for our legacy EdgeQAM technology continued to decline and consequently the Cable Edge segment experienced its lowest revenue quarter on record
Declared general commercial availability for CableOS, the industry's first software-based CMTS core
First CableOS revenue shipments into live commercial deployments with a tier 1 service provider in Europe
Expanded CableOS field trial activity and pipeline
Completed the integration of Thomson Video Networks, realized annualized cost savings above our $20 million target
First Quarter 2017 GAAP Financial Guidance
For the first quarter of 2017, Harmonic anticipates:
Net revenue to be $86.5 million to $94.5 million, which includes Video revenue of $79.8 million to $85.8 million and Cable Edge revenue of $6.7 million to $8.7 million
Gross margin to be 49.0% to 50.0%
Operating expense to be $58.7 million to $59.7 million
Operating loss to be $(16.0) million to $(12.0) million
EPS to be $(0.24) to $(0.19)
Tax expense to be approximately $0.5 million
Share count for EPS calculation to be approximately 80 million shares of Harmonic common stock
Cash and short-term investments at quarter-end to be $60 million to $65 million
First Quarter 2017 Non-GAAP Financial Guidance
Operating loss to be $(6.0) million to $(2.0) million
Tax rate to be approximately 15%
See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.
Harmonic will host a conference call to discuss its financial results at 2:00 p.m. Pacific (5:00 p.m. Eastern) on Tuesday, February 28, 2017. A listen-only broadcast of the conference call can be accessed either from the Company's website at www.harmonicinc.com or by calling +1.574.990.1032 or +1.800.240.9147 (passcode 64276801). A replay of the conference call will be available after 4:30 p.m. Pacific at the same website address or by calling +1.404.537.3406 or +1.855.859.2056 (passcode 64276801).
About Harmonic Inc.
Harmonic (NASDAQ: HLIT) is the worldwide leader in video delivery infrastructure for emerging television and video services. The Company's production-ready innovation enables content and service providers to efficiently create, prepare, and deliver differentiated services for television and new media video platforms. More information is available at www.harmonicinc.com.
Legal Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements related to our expectations regarding: our final results for the fourth quarter and fiscal year ended December 31, 2016; GAAP net revenue, GAAP gross margins, GAAP operating expenses, GAAP operating income (loss), GAAP tax expense, GAAP EPS, non-GAAP revenue, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP EPS, and Non-GAAP tax rate for the first quarter of 2017, share count, as well as cash and short-term investments at the end of the first quarter of 2017. Our expectations regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, in no particular order, the following: anticipated business opportunities and operational efficiencies for the combined company do not fully materialize; the trends toward more high-definition, on-demand and anytime, anywhere video will not continue to develop at its current pace or will expire; a strong U.S. dollar may have a negative impact on our business in certain international markets; the possibility that our products will not generate sales that are commensurate with our expectations or that our cost of revenue or operating expenses may exceed our expectations; the mix of products and services sold in various geographies and the effect it has on gross margins; delays or decreases in capital spending in the cable, satellite and telco and broadcast and media industries; customer concentration and consolidation; the impact of general economic conditions on our sales and operations; our ability to develop new and enhanced products in a timely manner and market acceptance of our new or existing products; losses of one or more key customers; risks associated with our international operations, including in Ukraine; risks associated with our CableOS™ and VOS™ product initiatives; dependence on market acceptance of various types of broadband services, on the adoption of new broadband technologies and on broadband industry trends; inventory management; the lack of timely availability of parts or raw materials necessary to produce our products; the impact of fluctuations in the prices of raw materials and oil; the effect of competition, on both revenue and gross margins; difficulties associated with rapid technological changes in our markets; risks associated with unpredictable sales cycles; our dependence on contract manufacturers and sole or limited source suppliers; the effect on our business of natural disasters; and risks associated with our outstanding convertible notes. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in Harmonic's filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K for the year ended December 31, 2015, our recent Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. The forward-looking statements in this press release are based on information available to the Company as of the date hereof, and Harmonic disclaims any obligation to update any forward-looking statements.
Use of Non-GAAP Financial Measures
In establishing operating budgets, managing its business performance, and setting internal measurement targets, we exclude a number of items required by GAAP. Management believes that these accounting charges and credits, most of which are non-cash or non-recurring in nature, are not useful in managing its operations and business. Historically, the Company has also publicly presented these supplemental non-GAAP measures in order to assist the investment community to see the Company "through the eyes of management," and thereby enhance understanding of its operating performance. The non-GAAP measures presented here are: revenue, gross profit, operating expenses, income (loss) from operations, total non-operating income (expense), net and net income (loss), tax rate, and net income (loss) per diluted share. The presentation of non-GAAP information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP, and is not necessarily comparable to non-GAAP results published by other companies. A reconciliation of the historical non-GAAP financial measures discussed in this press release to the most directly comparable historical GAAP financial measures is included with the financial statements provided with this press release. The types of non-GAAP adjustments described below have historically been excluded from our GAAP financial measures: acquisition accounting impacts to TVN deferred revenue and TVN inventory valuation; TVN acquisition-and integration-related costs; Cable Edge inventory charge in connection with certain product lines; restructuring and related charges; and non-cash items, such as warrant amortization, impairment of long-term investment, stock-based compensation expense, amortization of intangibles and non-cash interest expenses related to convertible debt and adjustments that normalize the tax rate.
Harmonic Inc.
Preliminary Consolidated Balance Sheets
(Unaudited, in thousands, except per share data)
Short-term investments
Prepaid expenses and other current assets
Intangibles, net
Other long-term assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Other debts and capital lease obligations, current
Income taxes payable
Deferred revenues
Accrued and other current liabilities
Convertible notes, long-term
Other debts and capital lease obligations, long-term
Income taxes payable, long-term
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000 shares authorized; no shares issued or outstanding
Common stock, $0.001 par value, 150,000 shares authorized; 78,456 and 76,015 shares issued and outstanding at December 31, 2016 and 2015, respectively
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders' equity
Total liabilities and stockholders' equity
Preliminary Consolidated Statements of Operations
Cost of revenue:
Total cost of revenue
Total gross profit
Selling, general and administrative
Amortization of intangibles
Restructuring and related charges
Total operating expenses
Loss from operations
Other income (expense), net
Loss on impairment of long-term investment
Loss before income taxes
Provision for (benefit from) income taxes
Net loss per share:
Basic and diluted
Shares used in per share calculations:
Preliminary Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of discount on convertible debt
Provision for non-cash warrant
Restructuring, asset impairment and (gain) loss on retirement of fixed assets
Gain on pension curtailment
Deferred income taxes, net
Provision for doubtful accounts, returns and discounts
Provision for excess and obsolete inventories
Other non-cash adjustments, net
Changes in operating assets and liabilities, net of effects of acquisition:
Prepaid expenses and other assets
Accrued and other liabilities
Acquisition of business, net of cash acquired
Purchases of investments
Proceeds from maturities of investments
Purchases of property and equipment
Purchases of long-term investments
Restricted cash
Proceeds from convertible debt
Payment of convertible debt issuance cost
Proceeds from other debts and capital leases
Repayment of other debts and capital leases
Proceeds from common stock issued to employees
Payment of tax withholding obligations related to net share settlements of restricted stock units
Payments for repurchases of common stock
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Revenue Information
(Unaudited, in thousands, except percentages)
GAAP
Adjustment(1)
Non-GAAP
GAAP and Non-GAAP(2)
Cable Edge
Broadcast and Media
(1) Non-GAAP revenue for the three months ended December 31, 2016 and September 30, 2016, and for the twelve months ended December 31, 2016 include $0.2 million, $0.3 million and $2.0 million adjustments relating to TVN deferred revenue as a result of acquisition accounting, respectively. Non-GAAP revenue for the three and twelve months ended December 31, 2016 also includes $0.4 million adjustment related to the amortization of Comcast warrant.
(2) There is no revenue adjustment for the three and twelve months ended December 31, 2015.
Segment Revenue and Operating Income (Loss)
Adjustments(1)
Net revenue:
Total consolidated net revenue
Operating income (loss):
Total segment operating income (loss)
Unallocated corporate expenses
Income (loss) from operations
Non-operating (expense) income, net
Income (loss) before income taxes
(1) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.
GAAP to Non-GAAP Reconciliations (Unaudited)
(in thousands, except percentages and per share data)
Total Operating Expense
Total Non-operating expense, net
Net Income(Loss)
Cable Edge inventory charge
Acquisition accounting impact related to TVN deferred revenue
Accounting impact related to warrant amortization
Stock-based compensation in cost of revenue
Stock-based compensation in research and development
Stock-based compensation in selling, general and administrative
TVN acquisition-and integration-related costs
Non-cash interest expenses related to convertible notes
Discrete tax items and tax effect of non-GAAP adjustments
Total adjustments
As a % of revenue (GAAP)
As a % of revenue (Non-GAAP)
Diluted income (loss) per share:
Diluted net loss per share-GAAP
Diluted net income per share-Non-GAAP
Shares used to compute net income (loss) per share:
Diluted loss per share:
Diluted net loss per share-Non-GAAP
Shares used to compute diluted loss per share:
GAAP and Non-GAAP
TVN acquisition costs
Non-cash interest expenses related to convertible note
Shares used to compute diluted income (loss) per share:
Acquisition accounting impacts related to TVN fair value of inventory
GAAP to Non-GAAP Reconciliations on Business Outlook
(In millions, except percentages and per share data)
Q1-2017 Financial Guidance
$86.5 to
$(16.0) to
$(12.0)
$(2.7)
Stock-based compensation expense
Restructuring and related charges and TVN integration costs
Non-cash interest expense related to convertible notes
$87.0 to $95.0
$(6.0) to
(18)% to (14)%
(6)% to (3)%
$(0.24) to $(0.19)
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/harmonic-announces-fourth-quarter-and-fiscal-2016-results-300415260.html
SOURCE Harmonic Inc.
Harold Covert, Chief Financial Officer, Harmonic Inc., +1.408.542.2500; or Blair King, Investor Relations, +1.408.490.6172
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