Record Quarterly Contribution from New Products at 33% of Revenues
Fourth Quarter Gross Margin Increased 340 Basis Points Year-over-Year to 43%
Fourth Quarter GAAP and Non-GAAP Earnings per Share Exceeded Guidance
Fourth Quarter Financial Highlights:
- GAAP and non-GAAP diluted earnings per share of
$0.00 and$0.07 , respectively, exceeding guidance - Revenues of approximately
$33.8 million , down 9% year-over-year - Record non-GAAP gross margin of 43.2%, exceeding the high end of guidance
- Non-GAAP operating income of
$1.4 million , 4% of revenues, compared to non-GAAP operating income of$1.1 million in the fourth quarter of 2014 - Non-GAAP net income of
$1.7 million , compared to non-GAAP net income of$1.3 million in the fourth quarter of 2014 - Generated
$8.3 million of cash flows from operations - Repurchased 206,000 shares for a total consideration of
$2.0 million - Cash, deposits and marketable securities of
$121.7 million as ofDecember 31, 2015
Full Year 2015 Financial Highlights:
- GAAP diluted earnings per share of
$0.07 and non-GAAP diluted earnings per share of$0.34 - Revenues of approximately
$144.3 million , an increase of 1% vs.$143.0 million in 2014 - Non–GAAP gross margins of 41.7%, a 160 basis points improvement vs. 2014
- Non-GAAP operating income of
$7.5 million , reaching 5% of revenues compared to non-GAAP operating income of$6.5 million in 2014 - Non-GAAP net income of
$8.0 million , reaching 6% of revenues compared to non-GAAP net income of$7.3 million in 2014 - GAAP net income of
$1.6 million compared to$3.6 million in 2014 - Generated
$12.2 million of cash from operating activities - Repurchased 1.3 million shares for a total consideration of
$13.2 million
Management Comments:
Commenting on the results,
Mr. Elyakim added, “In the first quarter of 2016, we expect a temporary slowdown in revenues due to decreasing demand for cordless telephony products, which will be partially mitigated by growth from new products. In particular, we expect mobile revenues to contribute more meaningfully to our first quarter results. The proven success of new product initiatives is propelling us rapidly towards an inflection point where the high growth, high margin segments will dominate our business and become the basis for sustaining our long-term value.”
Products and Market Highlights:
- Unveiled SparkPA, highest performance CMOS Power Amplifier (PA) for 5GHz Wi-Fi 802.11ac using TSMC standard CMOS Process
- New products revenues of
$11.2 million in the fourth quarter and$40.1 million for the full year 2015, representing year-over-year increases of 48% and 35%, respectively - Record Office/VoIP segment revenues of
$7.1 million for the fourth quarter and$22.2 million for the full year 2015, representing year-over-year increases of 79% and 56%, respectively - Major design-win for HDClear with a leading mobile OEM
- Turkcell selected our ULE products to power its newly launched home IoT service
Swisscom launched an innovative button by Askey based on our ULE SoC- Polycom’s next-generation DECT IP phones power by our DECT and VoIP chipset
2015 Fourth Quarter Results
GAAP Results:
Revenues for the fourth quarter of 2015 were
Year End Results:
Revenues for the year ended
Non-GAAP Results:
Non-GAAP net income and diluted earnings per share for the fourth quarter of 2015 were
Non-GAAP net income and diluted earnings per share for the year ended
Earnings Conference Call Details:
Investors may access the conference call by dialing +1 877 280 1254 (domestic US) or +1 646 254 3388 (international) approximately 10 minutes prior to the starting time. The password is
A replay of the conference call will be available for a week following the call. To listen to the session, please dial +1 347 366 9565 (domestic US) or +44(0)20 3427 0598 (international) and enter the company access code: 3790144#.
Presentation on Non-GAAP Net Income Calculation
The Company believes that the non-GAAP presentation of net income and diluted earnings per share presented in this press release is useful to investors in comparing results for the quarter and year ended
Forward Looking Statements
This press release contains statements that qualify as “forward-looking statements” under the Private Securities Litigation Reform Act of 1995, including Mr. Elyakim’s statements regarding a temporary slowdown in first quarter 2016 revenues due to decreasing demand for cordless telephony products which would be partially offset by growth in new products, optimism about reaping the rewards of prior R&D investments in the form of successful product launches and promising diversified revenue streams, anticipation that new products growth will accelerate and drive overall revenue growth, higher margins and better profitability, more meaningful revenues from mobile in the first quarter of 2016 and the potential that the high growth, high margin segments will dominate DSP Group’s business in the future and become the basis for sustaining the company’s long-term value. The results from these statements may not actually arise as a result of various factors, including the magnitude of the decline in DSP Group’s cordless business; the growth of VoIP sales; the market penetration of new products; unexpected delays in the commercial launch of new products, including in the mobile segment; slower than expected change in the nature of residential communications domain;
About
| Contact: | ||
| DSP Group Inc. | The Piacente Group | Investor Relations | |
| Dror Levy, CFO | Don Markley, 1-212-481-2050 | |
| Work: 1-408-240-6844 | dspg@thepiacentegroup.com | |
| Dror.Levy@dspg.com | ||
| DSP GROUP, INC. | |||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||
| (In thousands, except per share amounts) | |||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | ||||||||||
| Revenues | $ | 33,770 | $ | 37,159 | $ | 144,271 | $ | 143,036 | |||||
| Cost of revenues | 19,253 | 22,438 | 84,411 | 85,992 | |||||||||
| Gross profit | 14,517 | 14,721 | 59,860 | 57,044 | |||||||||
| Operating expenses: | |||||||||||||
| Research and development, net | 8,803 | 9,155 | 35,483 | 33,468 | |||||||||
| Sales and marketing | 2,995 | 2,980 | 12,103 | 11,905 | |||||||||
| General and administrative | 2,486 | 2,600 | 9,876 | 10,541 | |||||||||
| Amortization of intangible assets | 721 | 382 | 1,684 | 1,573 | |||||||||
| Total operating expenses | 15,005 | 15,117 | 59,146 | 57,487 | |||||||||
| Operating income (loss) | (488 | ) | (396 | ) | 714 | (443 | ) | ||||||
| Financial income, net | 304 | 309 | 1,175 | 1,204 | |||||||||
| Income (loss) before taxes on income | |
(184 | ) | (87 | ) | 1,889 | 761 | ||||||
| Taxes on income (income tax benefit) | (76 |
) |
(2816 | ) | 327 |
(2,841 | ) | ||||||
| Net income (loss) | $ | (108 | ) | $ | 2,729 | $ | 1,562 | $ | 3,602 | ||||
| Net earnings per share: | |||||||||||||
| Basic | $ | 0.00 | $ | 0.13 | $ | 0.07 | $ | 0.16 | |||||
| Diluted | $ | 0.00 | $ | 0.12 | $ | 0.07 | $ | 0.16 | |||||
| Weighted average number of shares used in per share computations of net earnings per share: | |||||||||||||
| Basic | 21,634 | 21,679 | 21,924 | 21,968 | |||||||||
| Diluted | 21,634 | 23,331 | 23,340 | 22,954 | |||||||||
| Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts) |
|||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| Unaudited | Unaudited | Unaudited | Unaudited | ||||||||||
| GAAP net income (loss) | $ | (108 | ) | $ | 2,729 | $ | 1,562 | $ | 3,602 | ||||
| Equity-based compensation expense included in cost of revenues | 72 | 63 | 300 | 300 | |||||||||
| Equity-based compensation expense included in research and development, net | 504 | 513 | 2,201 | 2,381 | |||||||||
| Equity-based compensation expense included in sales and marketing | 150 | 140 | 641 | 621 | |||||||||
| Equity-based compensation expense included in general and administrative | 441 | 444 | 1,950 | 2,057 | |||||||||
| Amortization of intangible assets and write off of expired option | 721 | 382 |
1,684 | 1,573 |
|||||||||
| Amortization of deferred tax liability related to intangible assets | (114 | ) | (49 | ) | (369 | ) | (339 | ) | |||||
| Reversal of income tax contingency reserve that was determined to be no longer needed due to the finalization of tax audit | (858 | ) | (858 | ) | |||||||||
| Elimination of valuation allowance of deferred tax assets and tax advances | (2,061 | ) | (2,061 | ) | |||||||||
| Non-GAAP net income | $ | 1,666 | $ | 1,303 | $ | 7,969 | $ | 7,276 | |||||
| Weighted-average number of common stock used in computation of GAAP diluted net earnings per share (in thousands) | 21,634 | 23,331 | 23,340 | 22,954 | |||||||||
| Weighted-average number of shares related to outstanding options, stock appreciation rights and restricted share units (in thousands) | 1,531 | 248 | 357 | 671 | |||||||||
| Weighted-average number of common stock used in computation of non-GAAP diluted net earnings per share (in thousands) | 23,165 | 23,579 | 23,697 | 23,625 | |||||||||
| GAAP diluted net earnings per share | $ | 0.00 | $ | 0.12 | $ | 0.07 | $ | 0.16 | |||||
| Equity-based compensation expense | 0.05 | 0.05 | 0.22 | 0.23 | |||||||||
| Amortization of intangible assets and write off of expired option | 0.03 | 0.02 | 0.07 | 0.07 | |||||||||
| Amortization of deferred tax liability related to intangible assets | (0.01 | ) | (0.01 | ) | (0.02 | ) | (0.02 | ) | |||||
| Reversal of income tax contingency reserve that was determined to be no longer needed due to the finalization of tax audit | (0.03 | ) | (0.04 | ) | |||||||||
| Elimination of valuation allowance of deferred tax assets and tax advances. | (0.09 | ) | (0.09 | ) | |||||||||
| Non-GAAP diluted net EPS | $ | 0.07 | $ | 0.06 | $ | 0.34 | $ | 0.31 | |||||
| DSP GROUP, INC. | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
| (In thousands) | |||||||||
| December 31, | December 31, | ||||||||
| 2015 | 2014 | ||||||||
| (Unaudited) | (Audited) | ||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents |
$ |
13,704 |
$ |
20,544 |
|||||
| Restricted deposits | 168 | 623 | |||||||
| Marketable securities and short term deposits | 18,070 | 11,508 | |||||||
| Trade receivables, net | 19,211 | 20,298 | |||||||
| Inventories | 11,453 | 15,635 | |||||||
| Other accounts receivable and prepaid expenses | 3,319 | 1,902 | |||||||
| Total current assets |
65,925 | 70,510 | |||||||
| Property and equipment, net | 3,764 | 2,843 | |||||||
| Long term marketable securities and deposits | 89,714 | 92,269 | |||||||
| Severance pay fund | 11,578 | 10,860 | |||||||
| Deferred income taxes | 1,311 | 924 | |||||||
| Intangible assets, net | 9,127 | 10,411 | |||||||
| Investment in other companies | 1,800 | 2,200 | |||||||
| Long term prepaid expenses and lease deposits | 743 | 1,162 | |||||||
| 114,273 | 117,826 | ||||||||
| Total assets |
$ | 183,962 | $ | 191,179 | |||||
| Liabilities and Stockholders’ Equity | |||||||||
| Current liabilities: | |||||||||
| Trade payables | $ | 13,103 | $ | 15,282 | |||||
| Other current liabilities | 14,470 | 16,411 | |||||||
| Total current liabilities | 27,573 | 31,693 | |||||||
| Accrued severance pay | 11,703 | 10,929 | |||||||
| Accrued pensions | 892 | 1,089 | |||||||
| Deferred income taxes | 476 | 845 | |||||||
| Total long term liabilities | 13,071 | 12,863 | |||||||
| Stockholders’ equity: | |||||||||
| Common stock | 22 | 22 | |||||||
| Additional paid-in capital | 361,023 | 355,906 | |||||||
| Accumulated other comprehensive loss | (1,267 | ) | (1,566 | ) | |||||
| Less – Cost of treasury stock | (125,697 | ) | (122,387 | ) | |||||
| Accumulated deficit | (90,763 | ) | (85,352 | ) | |||||
| Total stockholders’ equity | 143,318 | 146,623 | |||||||
| Total liabilities and stockholders’ equity | $ | 183,962 | $ | 191,179 | |||||