IRVINE, CA / ACCESSWIRE / October 27, 2022 / Netlist, Inc. (OTCQB:NLST) today reported financial results for the third quarter ended October 1, 2022.
Third Quarter 2022 Highlights:
- Net product sales increased by 29% to $34.4 million compared to $26.7 million for last year's quarter.
- Year-to-date net product sales more than doubled to $140.0 million compared to $66.0 million for the prior year period.
"Netlist delivered double digit revenue gains from the year ago quarter and continues to execute on both its product and licensing strategies," said Chief Executive Officer, C.K. Hong. "However, the quarterly results reflect the impact of the current over-supplied environment, which is expected to continue into 2023."
Net product sales for the third quarter ended October 1, 2022 were $34.4 million, compared to net product sales of $26.7 million for the third quarter ended October 2, 2021. Product gross profit for the third quarter ended October 1, 2022 was $2.2 million, compared to a product gross profit of $2.5 million for the third quarter ended October 2, 2021.
Net product sales for the nine months ended October 1, 2022 were $140.0 million, compared to net product sales of $66.0 million for the nine months ended October 2, 2021. Product gross profit for the nine months ended October 1, 2022 was $10.3 million, compared to a product gross profit of $6.9 million for the nine months ended October 2, 2021.
Net loss for the third quarter ended October 1, 2022 was ($9.6) million, or ($0.04) per share, compared to a net loss in the prior year period of ($10.7) million, or ($0.05) per share. These results include stock-based compensation expense of $0.9 million and $0.4 million for the quarters ended October 1, 2022 and October 2, 2021, respectively.
Net loss for the nine months ended October 1, 2022 was ($20.4) million, or ($0.09) per share, compared to a net income in the prior year period of $13.1 million, or $0.06 per share. These results include stock-based compensation expense of $2.4 million and $1.2 million for the nine months ended October 1, 2022 and October 2, 2021, respectively.
As of October 1, 2022, cash, cash equivalents and restricted cash was $43.4 million, total assets were $77.0 million, working capital was $37.2 million, total debt was $8.0 million, and stockholders' equity was $38.7 million.
Conference Call Information
C.K. Hong, Chief Executive Officer, and Gail Sasaki, Chief Financial Officer, will host an investor conference call today, October 27, 2022 at 12:00 p.m. Eastern Time to review Netlist's results for the third quarter ended October 1, 2022. The live webcast and archived replay of the call can be accessed for 90 days in the Investors section of Netlist's website at www.netlist.com.
About Netlist
Netlist provides high-performance solid-state drives and modular memory solutions to enterprise customers in diverse industries. The Company's NVMe™ SSDs in various capacities and form factors and the line of custom and specialty memory products bring industry-leading performance to server and storage appliance customers and cloud service providers. Netlist licenses its portfolio of intellectual property including patents, in server memory, hybrid memory and storage class memory, to companies that implement Netlist's technology. To learn more, visit www.netlist.com.
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical facts and often address future events or Netlist's future performance. Forward-looking statements contained in this news release include statements about Netlist's ability to execute on its strategic initiatives. All forward-looking statements reflect management's present expectations regarding future events and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by any forward-looking statements. These risks, uncertainties and other factors include, among others: risks related to Netlist's plans for its intellectual property, including its strategies for monetizing, licensing, expanding, and defending its patent portfolio; risks associated with patent infringement litigation initiated by Netlist, or by others against Netlist, as well as the costs and unpredictability of any such litigation; risks associated with Netlist's product sales, including the market and demand for products sold by Netlist and its ability to successfully develop and launch new products that are attractive to the market; the success of product, joint development and licensing partnerships; the competitive landscape of Netlist's industry; and general economic, political and market conditions, including quarantines, factory slowdowns or shutdowns, and travel restrictions resulting from the COVID-19 pandemic. The military conflict between Russia and Ukraine may increase the likelihood of supply interruptions. All forward-looking statements reflect management's present assumptions, expectations and beliefs regarding future events and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by any forward-looking statements. These and other risks and uncertainties are described in Netlist's annual report on Form 10-K for its most recently completed fiscal year filed on March 1, 2022, and the other filings it makes with the U.S. Securities and Exchange Commission from time to time, including any subsequently filed quarterly and current reports. In light of these risks, uncertainties and other factors, these forward-looking statements should not be relied on as predictions of future events. These forward-looking statements represent Netlist's assumptions, expectations and beliefs only as of the date they are made, and except as required by law, Netlist undertakes no obligation to revise or update any forward-looking statements for any reason.
(Tables Follow)
For more information, please contact:
The Plunkett Group
Mike Smargiassi
NLST@theplunkettgroup.com
(212) 739-6729
Netlist, Inc.
Gail M. Sasaki
Chief Financial Officer
(949) 435-0025
Netlist, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
| (unaudited) | ||||||||
| October 1, | January 1, | |||||||
| 2022 | 2022 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 23,342 | $ | 47,679 | ||||
Restricted cash |
20,100 | 10,800 | ||||||
Accounts receivable, net |
10,668 | 12,727 | ||||||
Inventories |
18,391 | 15,670 | ||||||
Prepaid expenses and other current assets |
868 | 1,126 | ||||||
Total current assets |
73,369 | 88,002 | ||||||
Property and equipment, net |
1,166 | 989 | ||||||
Operating lease right-of-use assets |
2,207 | 1,891 | ||||||
Other assets |
297 | 294 | ||||||
Total assets |
$ | 77,039 | $ | 91,176 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 24,112 | $ | 25,887 | ||||
Revolving line of credit |
8,000 | 7,000 | ||||||
Accrued payroll and related liabilities |
1,714 | 1,308 | ||||||
Accrued expenses and other current liabilities |
2,374 | 632 | ||||||
Long-term debt due within one year |
1 | 562 | ||||||
Total current liabilities |
36,201 | 35,389 | ||||||
Operating lease liabilities |
1,845 | 1,593 | ||||||
Other liabilities |
317 | 152 | ||||||
Total liabilities |
38,363 | 37,134 | ||||||
Commitments and contingencies |
||||||||
Stockholders' equity: |
||||||||
Preferred stock |
- | - | ||||||
Common stock |
233 | 231 | ||||||
Additional paid-in capital |
248,920 | 243,866 | ||||||
Accumulated deficit |
(210,477 | ) | (190,055 | ) | ||||
Total stockholders' equity |
38,676 | 54,042 | ||||||
Total liabilities and stockholders' equity |
$ | 77,039 | $ | 91,176 | ||||
Netlist, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 1, | October 2, | October 1, | October 2, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Net product sales |
$ | 34,424 | $ | 26,749 | $ | 139,982 | $ | 66,009 | ||||||||
License fee |
- | - | - | 40,000 | ||||||||||||
Net sales |
34,424 | 26,749 | 139,982 | 106,009 | ||||||||||||
Cost of sales(1) |
32,244 | 24,241 | 129,691 | 59,135 | ||||||||||||
Gross profit |
2,180 | 2,508 | 10,291 | 46,874 | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development(1) |
2,550 | 2,038 | 7,679 | 5,222 | ||||||||||||
Intellectual property legal fees |
5,577 | 8,461 | 11,716 | 14,585 | ||||||||||||
Selling, general and administrative(1) |
3,767 | 2,590 | 11,429 | 7,639 | ||||||||||||
Total operating expenses |
11,894 | 13,089 | 30,824 | 27,446 | ||||||||||||
Operating (loss) income |
(9,714 | ) | (10,581 | ) | (20,533 | ) | 19,428 | |||||||||
Other income (expense), net: |
||||||||||||||||
Interest income (expense), net |
34 | (125 | ) | 38 | (417 | ) | ||||||||||
Other income (expense), net |
82 | (2 | ) | 74 | 641 | |||||||||||
Total other income (expense), net |
116 | (127 | ) | 112 | 224 | |||||||||||
(Loss) income before provision for income taxes |
(9,598 | ) | (10,708 | ) | (20,421 | ) | 19,652 | |||||||||
Provision for income taxes |
- | - | 1 | 6,601 | ||||||||||||
Net (loss) income |
$ | (9,598 | ) | $ | (10,708 | ) | $ | (20,422 | ) | $ | 13,051 | |||||
Earnings (loss) per common share: |
||||||||||||||||
Basic |
$ | (0.04 | ) | $ | (0.05 | ) | $ | (0.09 | ) | $ | 0.06 | |||||
Diluted |
$ | (0.04 | ) | $ | (0.05 | ) | $ | (0.09 | ) | $ | 0.06 | |||||
Weighted-average common shares outstanding: |
||||||||||||||||
Basic |
231,739 | 224,020 | 231,194 | 215,135 | ||||||||||||
Diluted |
231,739 | 224,020 | 231,194 | 235,862 | ||||||||||||
(1) Amounts include stock-based compensation expense as follows: |
|
|||||||||||||||
Cost of sales |
$ | 22 | $ | 2 | $ | 41 | $ | 9 | ||||||||
Research and development |
283 | 160 | 674 | 438 | ||||||||||||
Selling, general and administrative |
587 | 283 | 1,649 | 715 | ||||||||||||
Total stock-based compensation |
$ | 892 | $ | 445 | $ | 2,364 | $ | 1,162 | ||||||||
SOURCE: Netlist, Inc.
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