Release Details

Calix Reports Fourth Quarter 2015 Financial Results

February 9, 2016
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PETALUMA, CA -- (Marketwired) -- 02/09/16 -- Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the fourth quarter ended December 31, 2015. Revenue for the fourth quarter of 2015 was $105.0 million, a decrease of 5.9% compared to $111.6 million for the fourth quarter of 2014.

"Our fourth quarter results were at the upper end of guidance as customer shipments were within expectations," said Carl Russo, Calix, Inc. President and CEO. "Looking back over the quarter and the year, Calix, Inc. introduced AXOS, our new Software Defined Access platform, as well as announced our new products that leverage next generation technology standards such as G.fast and NG-PON2. In 2015 our customers utilized our latest solutions to create a superior broadband experience for their subscribers. We are excited to see this interest strengthen as we move into 2016," added Russo.

The company's non-GAAP net loss for the fourth quarter of 2015 was $1.7 million, or $(0.03) per fully diluted share, compared to a non-GAAP net income of $6.5 million, or $0.13 per fully diluted share, for the fourth quarter of 2014. A reconciliation of GAAP and non-GAAP results is included as part of this release.

"During the quarter, we repurchased $16.1 million worth of common stock via our previously announced $40 million stock buyback authorization," said William Atkins, Calix, Inc. Executive Vice President and CFO. "Given our long-term outlook for the company, we continue to view share repurchases as an attractive investment at current levels," added Atkins.

The GAAP net loss for the fourth quarter of 2015 was $9.5 million, or $(0.19) per basic and diluted share, compared to a GAAP net loss of $3.0 million, or $(0.06) per basic and diluted share, for the fourth quarter of 2014. A reconciliation of our fourth quarter 2015 operating results from non-GAAP to GAAP is provided below:

   
   
Calix, Inc.  
(Unaudited, in thousands, except per share data)  
Three Months Ended December 31, 2015  
                               
    Non-GAAP     Stock-Based Compensation     Amortization of Intangible Assets     Acquisition-Related Costs     GAAP  
Revenue   $ 104,999     $ -     $ -     $ -     $ 104,999  
Cost of revenue     56,213       160       2,089       -       58,462  
Gross profit     48,786       (160)       (2,089)       -       46,537  
Gross margin     46.5 %     (0.2)%       (2.0)%       - %     44.3 %
Operating expenses     50,644       3,052       2,552       24       56,272  
Operating loss     (1,858)       (3,212)       (4,641)       (24)       (9,735)  
Interest and other income (expense), net     346       -       -       -       346  
Loss before provision for income taxes     (1,512)       (3,212)       (4,641)       (24) )     (9,389)  
Provision for income taxes     157       -       -       -       157  
Net loss   $ (1,669)     $ (3,212)     $ (4,641)     $ (24) )   $ (9,546)  
Weighted average diluted shares used to compute net loss per common share    
50,578		      
50,578		      
50,578		      
50,578		      
50,578		  
Net loss per diluted share   $ (0.03)     $ (0.06)     $ (0.09)     $ -     $ (0.19)  
                                         
                                         

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 fourth quarter 2015 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 systems and software enables communications service providers worldwide to transform their copper- and fiber-based 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 2014 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     Twelve Months Ended  
    December 31,     December 31,     December 31,     December 31,  
    2015     2014     2015     2014  
Revenue   $ 104,999     $ 111,633     $ 407,463     $ 401,227  
Cost of revenue:                                
  Products and services (1)     56,373       58,104       208,681       215,085  
  Amortization of intangible assets     2,089       2,088       8,353       8,353  
    Total cost of revenue     58,462       60,192       217,034       223,438  
Gross profit     46,537       51,441       190,429       177,789  
Operating expenses:                                
  Research and development (1)     22,829       21,207       89,714       80,311  
  Sales and marketing (1)     21,165       21,721       78,563       76,283  
  General and administrative (1)     9,726       8,814       38,454       31,371  
  Amortization of intangible assets     2,552       2,552       10,208       10,208  
    Total operating expenses     56,272       54,294       216,939       198,173  
Loss from operations     (9,735)       (2,853)       (26,510)       (20,384)  
Interest and other income (expense), net:                                
  Interest income     271       643       1,285       729  
  Interest expense     (223)       (632)       (1,144)       (806)  
  Other income (expense), net     298       107       571       228  
    Total interest and other income (expense), net     346       118       712       151  
Loss before provision for income taxes     (9,389)       (2,735)       (25,798)       (20,233)  
Provision for income taxes     157       253       535       581  
Net loss   $ (9,546)     $ (2,988)     $ (26,333)     $ (20,814)  
Net loss per common share:                                
    Basic and diluted   $ (0.19)     $ (0.06)     $ (0.51)     $ (0.41)  
Weighted average number of shares used to compute net loss per common share:                                
    Basic and diluted     50,578       51,300       51,489       50,808  
                                 
(1) Includes stock-based compensation as follows:                                
  Cost of revenue   $ 160     $ 206     $ 709     $ 1,120  
  Research and development     1,138       1,363       4,797       5,056  
  Sales and marketing     943       1,455       4,712       5,601  
  General and administrative     971       874       3,587       4,240  
      $ 3,212     $ 3,898     $ 13,805     $ 16,017  
                                   
                                   
                                   
Calix, Inc.  
Reconciliation of GAAP to Non-GAAP Results  
(Unaudited, in thousands, except per share data)  
                       
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,     December 31,   December 31,  
    2015     2014     2015   2014  
GAAP net loss   $ (9,546)     $ (2,988)     $ (26,333)   $ (20,814)  
Adjustments to reconcile GAAP net loss tonon-GAAP net income (loss):                              
  Stock-based compensation     3,212       3,898       13,805     16,017  
  Amortization of intangible assets     4,641       4,640       18,561     18,561  
  Acquisition-related costs     24       978       372     978  
Non-GAAP net income (loss)   $ (1,669)     $ 6,528     $ 6,405   $ 14,742  
Non-GAAP net income (loss) per common share:                              
  Basic   $ (0.03)     $ 0.13     $ 0.12   $ 0.29  
  Diluted   $ (0.03)     $ 0.13     $ 0.12   $ 0.29  
Weighted average shares used to compute non-GAAP net income (loss) per common share:                              
    Basic     50,578       51,300       51,489     50,808  
    Diluted (1)     50,578       52,047       52,038     51,450  
     
(1)   Includes the dilutive effect of outstanding stock options, restricted stock units and ESPP.
   
   
   
Calix, Inc.  
Condensed Consolidated Balance Sheets  
(Unaudited, in thousands)  
             
    December 31,     December 31,  
    2015     2014  
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 23,626     $ 48,829  
  Marketable securities     49,964       62,850  
  Restricted cash     -       295  
  Accounts receivable, net     47,155       30,744  
  Inventory     47,667       46,753  
  Deferred cost of revenue     4,918       5,080  
  Prepaid expenses and other current assets     9,470       12,936  
    Total current assets     182,800       207,487  
  Property and equipment, net     17,149       20,144  
  Goodwill     116,175       116,175  
  Intangible assets, net     6,618       25,179  
  Other assets     1,144       1,236  
    Total assets   $ 323,886     $ 370,221  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 19,603     $ 23,629  
  Accrued liabilities     35,512       39,443  
  Deferred revenue     12,124       12,722  
    Total current liabilities     67,239       75,794  
  Long-term portion of deferred revenue     19,569       19,393  
  Other long-term liabilities     1,293       2,443  
    Total liabilities     88,101       97,630  
  Stockholders' equity:                
  Common stock     1,326       1,291  
  Additional paid-in capital     818,754       801,810  
  Accumulated other comprehensive income (loss)     (195)       80  
  Accumulated deficit     (556,923)       (530,590)  
  Treasury stock     (27,177)       -  
    Total stockholders' equity     235,785       272,591  
    Total liabilities and stockholders' equity   $ 323,886     $ 370,221  
   
   
   
Calix, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited, in thousands)  
             
    Twelve Months Ended  
    December 31,     December 31,  
    2015     2014  
Operating activities:                
  Net loss   $ (26,333)     $ (20,814)  
  Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
    Depreciation and amortization     10,262       9,263  
    Loss on retirement of property and equipment     24       50  
    Amortization of intangible assets     18,561       18,561  
    Amortization of premiums relating to available-for-sale securities     907       574  
    Gain on sale of available-for-sale securities     -       (1)  
    Stock-based compensation     13,805       16,017  
    Changes in operating assets and liabilities:                
      Restricted cash     295       -  
      Accounts receivable, net     (16,411)       12,776  
      Inventory     (915)       4,319  
      Deferred cost of revenue     162       15,996  
      Prepaid expenses and other assets     2,889       (5,908)  
      Accounts payable     (4,021)       467  
      Accrued liabilities     (3,781)       7,440  
      Deferred revenue     (422)       (21,178)  
      Other long-term liabilities     (363)       513  
        Net cash provided by (used in) operating activities     (5,341)       38,075  
Investing activities:                
  Purchases of property and equipment     (7,278)       (11,961)  
  Purchases of marketable securities     (60,002)       (67,698)  
  Sales of marketable securities     -       615  
  Maturities of marketable securities     71,945       3,600  
        Net cash provided by (used in) investing activities     4,665       (75,444)  
Financing activities:                
  Proceeds from exercise of stock options     638       1,668  
  Proceeds from employee stock purchase plan     4,888       4,627  
  Payments for repurchases of common stock     (27,177)       -  
  Taxes paid for awards vested under equity incentive plans     (2,352)       (2,720)  
  Payments for debt issuance costs     (138)       -  
        Net cash provided by (used in) financing activities     (24,141)       3,575  
Effect of exchange rate changes on cash and cash equivalents     (386)       (124)  
Net decrease in cash and cash equivalents     (25,203)       (33,918)  
Cash and cash equivalents at beginning of period     48,829       82,747  
Cash and cash equivalents at end of period   $ 23,626     $ 48,829  

Investor Inquiries:

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

Source: Calix, Inc.