Release Details

Calix Reports First Quarter 2016 Financial Results

May 3, 2016
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PETALUMA, CA -- (Marketwired) -- 05/03/16 -- Calix, Inc.(NYSE: CALX) today announced unaudited financial results for the first quarter ended March 26, 2016. Revenue for the first quarter of 2016 was $98.4 million, an increase of 8.1% compared to $91.0 million for the first quarter of 2015.

"During the first quarter, we experienced solid demand across our customers, products and regions," said Carl Russo, Calix, Inc. President and CEO. "As communications service providers worldwide increasingly seek to improve the subscriber experience, we believe our AXOS platform, along with our Unified Access portfolio of broadband access software, systems, and services led by Compass and next generation copper and fiber technologies, positions Calix customers to deliver an unmatched broadband experience to their subscribers," added Russo.

The company's non-GAAP net loss for the first quarter of 2016 was $4.4 million, or $(0.09) per basic and fully diluted share, compared to a non-GAAP net loss of $3.4 million, or $(0.07) per basic and fully diluted share, for the first quarter of 2015. A reconciliation of GAAP and non-GAAP results is included as part of this release.

"During the quarter, we repurchased a total of $12.8 million of stock, thereby completing our $40 million stock repurchase program, previously authorized by our Board in April 2015. Under the program, we repurchased a total of 5.3 million shares of common stock in 2015 and 2016," said William Atkins, Calix, Inc. Executive Vice President and CFO.

The GAAP net loss for the first quarter of 2016 was $10.7 million, or $(0.22) per basic and fully diluted share, compared to a GAAP net loss of $11.9 million, or $(0.23) per basic and fully diluted share, for the first quarter of 2015. A reconciliation of our first quarter 2016 operating results from non-GAAP to GAAP is provided on the next page.

As described in more detail in our Form 8-K filed April 18, 2016 with the SEC, Calix has entered into a memorandum of understanding of a settlement in principle of the litigation related to its 2011 acquisition of Occam Networks, Inc. Under the terms of the settlement, Calix would not be responsible for contributing any portion of the settlement consideration. In addition, as part of the settlement, Calix will receive payment of $4.5 million in partial recovery of certain out-of-pocket expenses.

 
Calix, Inc.
(Unaudited, in thousands, except per share data)
Three Months Ended March 26, 2016
                     
    Non-GAAP   Stock-Based Compensation   Amortization of Intangible Assets   Acquisition-Related Costs   GAAP
Revenue   $ 98,375     $ -     $ -     $ -     $ 98,375  
Cost of revenue     51,103       127       1,663       -       52,893  
Gross profit     47,272       (127)       (1,663)       -       45,482  
Gross margin     48.1%       (0.1)%       (1.7)%       - %     46.2%  
Operating expenses     51,650       2,594       1,701       275       56,220  
Operating loss     (4,378)       (2,721)       (3,364)       (275)       (10,738)  
Interest and other income (expense), net     130       -       -       -       130  
Loss before provision for income taxes     (4,248)       (2,721)       (3,364)       (275)       (10,608)  
Provision for income taxes     121       -       -       -       121  
Net loss   $ (4,369)     $ (2,721)     $ (3,364)     $ (275)     $ (10,729)  
Weighted average number of shares used to compute net loss per common share:                                        
    Basic and diluted     48,591       48,591       48,591       48,591       48,591  
Net loss per common share:                                        
  Basic and diluted   $ (0.09)     $ (0.06)     $ (0.07)     $ (0.01)     $ (0.22)  
                                         

Conference Call

In conjunction with this announcement, Calix will host a conference call at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) today to discuss its first quarter 2016 financial results. A live audio webcast and replay of the call will be available in the Investor Relations section of the Calix website at http://investor-relations.calix.com.

Live call access information: Dial-in number: (877) 407-4019 (U.S.) or (201) 689-8337 (outside the U.S.)

The conference call and webcast will include forward-looking information.

About Calix

Calix, Inc.(NYSE: CALX) is a global leader in access innovation. Its Unified Access portfolio of broadband communications access software, systems, and services enables communications service providers worldwide to transform their networks and become the broadband provider of choice to their subscribers. For more information, visit the Calix website at www.calix.com.

Use of Non-GAAP Financial Information

The Company uses certain non-GAAP financial measures in this press release to supplement its consolidated financial statements, which are presented in accordance with GAAP. These non-GAAP measures include non-GAAP net income (loss) and non-GAAP basic and diluted income (loss) per share. These non-GAAP measures are provided to enhance the reader's understanding of the Company's operating performance as they primarily exclude certain non-cash charges for stock-based compensation and amortization of acquisition-related intangible assets, and non-recurring acquisition-related costs, which the Company believes are not indicative of its core operating results. Acquisition-related costs include legal fees and associated expenses incurred under a pre-existing contract between Occam and its retained advisor in connection with the Occam acquisition. Management believes that the non-GAAP measures used in this press release provide investors with important perspectives into the Company's ongoing business performance and management uses these non-GAAP measures to evaluate financial results and to establish operational goals. The presentation of these non-GAAP measures is not meant to be a substitute for results presented in accordance with GAAP, but rather should be evaluated in conjunction with those GAAP results. A reconciliation of the non-GAAP results to the most directly comparable GAAP results is provided in this press release. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

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, the execution of a stock repurchase program. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to the risks described in our 2015 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." 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.

Calix, Inc.  
Condensed Consolidated Statements of Operations  
(Unaudited, in thousands, except per share data)  
             
    Three Months Ended  
    March 26,     March 28,  
    2016     2015  
Revenue   $ 98,375     $ 91,038  
Cost of revenue:                
  Products and services (1)     51,230       46,460  
  Amortization of intangible assets     1,663       2,088  
    Total cost of revenue     52,893       48,548  
Gross profit     45,482       42,490  
Operating expenses:                
  Research and development (1)     22,773       21,914  
  Sales and marketing (1)     19,062       19,759  
  General and administrative (1)     12,684       10,152  
  Amortization of intangible assets     1,701       2,552  
    Total operating expenses     56,220       54,377  
Loss from operations     (10,738)       (11,887)  
Interest and other income (expense), net:                
  Interest income     211       379  
  Interest expense     (164)       (379)  
  Other income (expense), net     83       48  
    Total interest and other income (expense), net     130       48  
Loss before provision for income taxes     (10,608)       (11,839)  
Provision for income taxes     121       91  
Net loss   $ (10,729)     $ (11,930)  
Net loss per common share:                
    Basic and diluted   $ (0.22)     $ (0.23)  
Weighted average number of shares used to compute net loss per common share:                
    Basic and diluted     48,591       51,732  
                 
(1) Includes stock-based compensation as follows:                
  Cost of revenue   $ 127     $ 175  
  Research and development     1,047       1,212  
  Sales and marketing     822       1,425  
  General and administrative     725       850  
    $ 2,721     $ 3,662  
                 
                 
                 
Calix, Inc.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands, except per share data)
         
    Three Months Ended
    March 26,   March 28,
    2016   2015
GAAP net loss   $ (10,729)     $ (11,930)  
Adjustments to reconcile GAAP net loss to non-GAAP net loss:                
  Stock-based compensation     2,721       3,662  
  Amortization of intangible assets     3,364       4,640  
  Acquisition-related costs     275       190  
Non-GAAP net loss   $ (4,369)     $ (3,438)  
Non-GAAP net loss per common share:                
  Basic and diluted   $ (0.09)     $ (0.07)  
Weighted average number of shares used to compute non-GAAP net loss per common share:                
  Basic and diluted     48,591       51,732  
                 
                 
                 
Calix, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
         
    March 26,   December 31,
    2016   2015
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 21,365     $ 23,626  
  Marketable securities     42,895       49,964  
  Accounts receivable, net     43,804       47,155  
  Inventory     41,127       47,667  
  Deferred cost of revenue     4,108       4,918  
  Prepaid expenses and other current assets     9,972       9,470  
    Total current assets     163,271       182,800  
  Property and equipment, net     16,515       17,149  
  Goodwill     116,175       116,175  
  Intangible assets, net     3,254       6,618  
  Other assets     1,202       1,144  
    Total assets   $ 300,417     $ 323,886  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 11,144     $ 19,603  
  Accrued liabilities     43,801       35,512  
  Deferred revenue     9,802       12,124  
    Total current liabilities     64,747       67,239  
  Long-term portion of deferred revenue     19,696       19,569  
  Other long-term liabilities     1,196       1,293  
    Total liabilities     85,639       88,101  
Stockholders' equity:                
  Common stock     1,328       1,326  
  Additional paid-in capital     821,236       818,754  
  Accumulated other comprehensive loss     (148)       (195)  
  Accumulated deficit     (567,652)       (556,923)  
  Treasury stock     (39,986)       (27,177)  
    Total stockholders' equity     214,778       235,785  
    Total liabilities and stockholders' equity   $ 300,417     $ 323,886  
                     
                     
                     
Calix, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
         
    Three Months Ended
    March 26,   March 28,
    2016   2015
Operating activities:                
  Net loss   $ (10,729)     $ (11,930)  
  Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
    Depreciation and amortization     1,955       2,480  
    Loss on retirement of property and equipment     -       10  
    Amortization of intangible assets     3,364       4,640  
    Amortization of premiums relating to available-for-sale securities     114       287  
    Stock-based compensation     2,721       3,662  
    Changes in operating assets and liabilities:                
      Restricted cash     -       295  
      Accounts receivable, net     3,351       (8,256)  
      Inventory     6,540       6,115  
      Deferred cost of revenue     810       3,318  
      Prepaid expenses and other assets     (576)       1,974  
      Accounts payable     (8,459)       (10,836)  
      Accrued liabilities     8,471       54  
      Deferred revenue     (2,195)       (3,651)  
      Other long-term liabilities     (98)       (59)  
        Net cash provided by (used in) operating activities     5,269       (11,897)  
Investing activities:                
  Purchases of property and equipment     (1,453) )     (1,742)  
  Purchases of marketable securities     -       (17,004)  
  Maturities of marketable securities     7,020       11,450  
        Net cash provided by (used in) investing activities     5,567       (7,296)  
Financing activities:                
  Proceeds from exercise of stock options     14       564  
  Payments for repurchases of common stock     (12,809)       -  
  Taxes paid for awards vested under equity incentive plans     (251)       (506)  
        Net cash provided by (used in) financing activities     (13,046)       58  
Effect of exchange rate changes on cash and cash equivalents     (51)       (76)  
Net decrease in cash and cash equivalents     (2,261)       (19,211)  
Cash and cash equivalents at beginning of period     23,626       48,829  
Cash and cash equivalents at end of period   $ 21,365     $ 29,618  
                 

Investor Inquiries:
Thomas J. Dinges, CFA
408-474-0080
Tom.Dinges@calix.com

Source: Calix, Inc.