OAKLAND, Calif.--(BUSINESS WIRE)--Zhone Technologies, Inc. (NASDAQ: ZHNE), a global leader in the fiber access market, today reported its financial results for the fourth quarter ended December 31, 2015.
Revenue for the fourth quarter of 2015 was $24.0 million compared to $22.1 million for the third quarter of 2015 and $30.1 million for the fourth quarter of 2014. Net income for the fourth quarter of 2015, calculated in accordance with generally accepted accounting principles (“GAAP”), was $0.4 million or $0.01 per share compared with net loss of $1.5 million or $0.04 per share for the third quarter of 2015 and net loss of $2.1 million or $0.06 per share for the fourth quarter of 2014. Adjusted earnings before stock-based compensation, interest, taxes, and depreciation (“adjusted EBITDA”) was an adjusted EBITDA income of $1.0 million for the fourth quarter of 2015, compared to an adjusted EBITDA loss of $0.8 million for the third quarter of 2015 and an adjusted EBITDA loss of $1.7 million for the fourth quarter of 2014.
"We continue to be optimistic that we are positioned for strong growth opportunities that will lead to success in 2016 and beyond," stated Jim Norrod, Zhone's chief executive officer. "We also remain committed to converting that success into profitability and shareholder value."
Cash and cash equivalents at December 31, 2015 was $10.1 million compared to $11.5 million at December 31, 2014.
Zhone will conduct a conference call and audio webcast today, January 26, 2016, at approximately 2:00 p.m. PT / 5:00 p.m. ET to review its fourth quarter 2015 results. This call is open to the public by dialing +1 (888) 306-9369 for U.S. callers, and +1 (503) 406-4059 for international callers, and then entering passcode 20593287. The audio webcast will be simultaneously available on the Investor Relations section of Zhone's website at http://www.zhone.com/investors/.
A replay of the conference call will be available after the original call by dialing +1 (855) 859-2056 for U.S. callers, and +1 (404) 537-3406 for international callers and then entering passcode 20593287. An audio webcast replay will also be available online at http://www.zhone.com/investors/ for approximately one week following the original call.
Non-GAAP Financial Measures
To supplement Zhone's consolidated financial statements presented in accordance with GAAP, Zhone uses adjusted EBITDA, a non-GAAP measure Zhone believes is appropriate to enhance an overall understanding of Zhone's past financial performance and prospects for the future. Zhone defines adjusted EBITDA as net income (loss) plus (i) interest expense, (ii) provision (benefit) for taxes, (iii) depreciation and amortization, (iv) non-cash equity-based compensation expense, and (v) material non-recurring non-cash transactions, such as gain (loss) on sale of assets or impairment of fixed assets. Zhone believes that the presentation of adjusted EBITDA enhances the usefulness of its financial information by presenting a measure that management uses internally to monitor and evaluate Zhone's operating performance and to evaluate the effectiveness of its business strategies. Management believes adjusted EBITDA also assists investors and analysts in comparing Zhone's performance across reporting periods on a consistent basis because it excludes the impact of items that Zhone does not believe reflect its core operating performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation between net loss calculated on a GAAP basis and adjusted EBITDA is provided in a table immediately following the Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss).
About Zhone Technologies
Zhone Technologies, Inc. (NASDAQ: ZHNE) is a global leader in fiber access transformation for service provider and enterprise networks, serving more than 750 of the world's most innovative network operators. The IP Zhone is the only solution that enables service providers to build the network of the future today, supporting end-to-end Voice, Data, Entertainment, Social Media, Business, Mobile Backhaul and Mobility service. Zhone is committed to building the fastest and highest quality All IP Multi-Service solution for its customers. Zhone is headquartered in California and its products are manufactured in the USA in a facility that is emission, waste-water and CFC free.
Zhone, the Zhone logo, and all Zhone product names are trademarks of Zhone Technologies, Inc. Other brand and product names are trademarks of their respective holders. Specifications, products, and/or products names are all subject to change without notice.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which Zhone operates and the beliefs and assumptions of Zhone's management. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” variations of such words, and similar expressions are intended to identify forward-looking statements. In addition, forward-looking statements include, among others, statements that refer to projections of profitability, revenue, margins, expenses or other financial items; anticipated growth and trends in Zhone's business or key markets; future economic conditions; plans, objectives and strategies for future investments and operations; and other characterizations of future events or circumstances. Readers are cautioned that actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause such a difference include, but are not limited to, the ability to generate sufficient revenue to achieve or sustain profitability, the ability to raise additional capital to fund existing and future operations or to refinance or repay Zhone's existing indebtedness, defects or other performance problems in Zhone's products, the economic slowdown in the telecommunications industry that has restricted the ability of Zhone's customers to purchase Zhone's products, commercial acceptance of Zhone's SLMS products in its core and FiberLAN businesses, intense competition in the communications equipment market from large equipment companies as well as private companies with products that address the same networks needs as Zhone's products, and higher than anticipated expenses that Zhone may incur. In addition, please refer to the risk factors contained in the Company's SEC filings available at www.sec.gov, including without limitation, the Company's annual report on Form 10-K for the year ended December 31, 2014 and the Company's quarterly report on Form 10-Q for the quarters ended March 31, 2015, June 30, 2015, and September 30, 2015. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements for any reason.
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ZHONE TECHNOLOGIES, INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) (In thousands, except per share data) |
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| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
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December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
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| Net revenue | $ | 24,013 | $ | 22,128 | $ | 30,115 | $ | 100,756 | $ | 120,582 | ||||||||||
| Cost of revenue | 14,397 | 13,370 | 20,909 | 61,982 | 78,741 | |||||||||||||||
| Stock-based compensation | 1 | 1 | 5 | 7 | 7 | |||||||||||||||
| Gross profit | 9,615 | 8,757 | 9,201 | 38,767 | 41,834 | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and product development (1) | 3,504 | 3,953 | 4,419 | 15,449 | 17,340 | |||||||||||||||
| Sales and marketing (1) | 3,735 | 3,871 | 4,822 | 16,375 | 19,079 | |||||||||||||||
| General and administrative (1) | 1,818 | 2,388 | 2,052 | 8,691 | 9,409 | |||||||||||||||
| Total operating expenses | 9,057 | 10,212 | 11,293 | 40,515 | 45,828 | |||||||||||||||
| Operating income (loss) | 558 | (1,455 | ) | (2,092 | ) | (1,748 | ) | (3,994 | ) | |||||||||||
| Interest expense, net | (8 | ) | (11 | ) | (11 | ) | (88 | ) | (68 | ) | ||||||||||
| Other income (expense), net | (12 | ) | 23 | 8 | 7 | (1 | ) | |||||||||||||
| Income (loss) before income taxes | 538 | (1,443 | ) | (2,095 | ) | (1,829 | ) | (4,063 | ) | |||||||||||
| Income tax provision | 135 | 9 | 2 | 188 | 68 | |||||||||||||||
| Net income (loss) | $ | 403 | $ | (1,452 | ) | $ | (2,097 | ) | $ | (2,017 | ) | $ | (4,131 | ) | ||||||
| Other comprehensive loss | (113 | ) | (137 | ) | (70 | ) | (322 | ) | (100 | ) | ||||||||||
| Comprehensive income (loss) | $ | 290 | $ | (1,589 | ) | $ | (2,167 | ) | $ | (2,339 | ) | $ | (4,231 | ) | ||||||
| Weighted average shares outstanding | ||||||||||||||||||||
| Basic | 33,527 | 32,902 | 32,484 | 32,925 | 32,380 | |||||||||||||||
| Diluted | 33,957 | 32,902 | 32,484 | 32,925 | 32,380 | |||||||||||||||
| Earnings per common share | ||||||||||||||||||||
| Basic | $ | 0.01 | $ | (0.04 | ) | $ | (0.06 | ) | $ | (0.06 | ) | $ | (0.13 | ) | ||||||
| Diluted | $ | 0.01 | $ | (0.04 | ) | $ | (0.06 | ) | $ | (0.06 | ) | $ | (0.13 | ) | ||||||
| (1) Amounts include stock-based compensation costs as follows: | ||||||||||||||||||||
| Research and product development | $ | 13 | $ | 14 | $ | 7 | $ | 53 | $ | 11 | ||||||||||
| Sales and marketing | 31 | 25 | 15 | 105 | 29 | |||||||||||||||
| General and administrative | 206 | 367 | 228 | 966 | 739 | |||||||||||||||
| $ | 250 | $ | 406 | $ | 250 | $ | 1,124 | $ | 779 | |||||||||||
| GAAP net income (loss) | $ | 403 | $ | (1,452 | ) | $ | (2,097 | ) | $ | (2,017 | ) | $ | (4,131 | ) | ||||||
| Stock-based compensation | 251 | 407 | 255 | 1,131 | 786 | |||||||||||||||
| Interest expense | 11 | 14 | 11 | 98 | 68 | |||||||||||||||
| Income taxes | 135 | 9 | 2 | 188 | 68 | |||||||||||||||
| Depreciation | 190 | 193 | 118 | 767 | 403 | |||||||||||||||
| Non-GAAP Adjusted EBITDA income (loss) | $ | 990 | $ | (829 | ) | $ | (1,711 | ) | $ | 167 | $ | (2,806 | ) | |||||||
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ZHONE TECHNOLOGIES, INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Balance Sheets (In thousands) |
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December 31, 2015 |
December 31, 2014 |
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| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 10,113 | $ | 11,528 | ||||
| Accounts receivable | 28,209 | 29,916 | ||||||
| Inventories | 14,802 | 19,985 | ||||||
| Prepaid expenses and other current assets | 1,914 | 2,863 | ||||||
| Total current assets | 55,038 | 64,292 | ||||||
| Property and equipment, net | 1,358 | 1,165 | ||||||
| Other assets | 249 | 255 | ||||||
| Total assets | $ | 56,645 | $ | 65,712 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 10,053 | $ | 11,719 | ||||
| Line of credit | 5,000 | 10,000 | ||||||
| Accrued and other liabilities | 5,742 | 7,669 | ||||||
| Total current liabilities | 20,795 | 29,388 | ||||||
| Other long-term liabilities | 1,693 | 1,981 | ||||||
| Total liabilities | 22,488 | 31,369 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 34 | 32 | ||||||
| Additional paid-in capital | 1,077,459 | 1,075,309 | ||||||
| Other comprehensive income | (356 | ) | (35 | ) | ||||
| Accumulated deficit | (1,042,980 | ) | (1,040,963 | ) | ||||
| Total stockholders’ equity | 34,157 | 34,343 | ||||||
| Total liabilities and stockholders’ equity | $ | 56,645 | $ | 65,712 | ||||
