Netlist Reports Second Quarter 2021 Results
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Netlist Reports Second Quarter 2021 Results

Tuesday, August 3, 2021 8:30 AM
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Earnings
Netlist, Inc.

IRVINE, CA / ACCESSWIRE / August 3, 2021 / Netlist, Inc. (OTCQB:NLST) today reported financial results for the second quarter ended July 3, 2021.

Revenue for the second quarter ended July 3, 2021 was $64.4 million with $40 million in licensing fees and $24.4 million in product revenue which was up 123% quarter over quarter and up 64% consecutively.

Net income for the second quarter ended July 3, 2021 was $27.8 million, or earnings per basic share of $0.13, compared to a net loss in the prior year period of ($1.8) million, or a loss per basic share of ($0.01). These results include stock-based compensation expense of $0.4 million for the quarter ended July 3, 2021 and $0.2 million for the quarter ended June 27, 2020.

As of July 3, 2021, cash, cash equivalents and restricted cash was $54.4 million, total assets were $72.9 million, working capital was $35.2 million, total debt and accrued interest, net of debt discount, was $17.4 million, and stockholders' equity was $35.9 million.

"During the quarter, we delivered record financial results from strong product sales and the execution of a comprehensive licensing agreement with SK hynix. With this renewed momentum, we're excited to ramp investments in strategic areas of the business while remaining focused on the intellectual property enforcement actions against infringing parties," said Netlist's Chief Executive Officer, C.K. Hong.

Conference Call Information  
C.K. Hong, Chief Executive Officer, and Gail Sasaki, Chief Financial Officer, will host an investor conference call today, August 3, 2021 at 12:00 p.m. Eastern Time to review Netlist's results for the second quarter 2021. 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 SSDs and modular memory subsystems to enterprise customers in diverse industries. The Company's NVMe™ SSD portfolio provides industry-leading performance offered in multiple capacities and form factors. HybriDIMM™, Netlist's next-generation storage class memory product, addresses the growing need for real-time analytics in Big Data applications, in-memory databases, high-performance computing and advanced data storage solutions. Netlist also manufactures a line of specialty and legacy memory products to storage customers, appliance customers, system builders and cloud and datacenter customers. Netlist holds a portfolio of patents in the areas of server memory, hybrid memory, storage class memory, rank multiplication and load reduction. 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. 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 26, 2021, 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 
[email protected]  
(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)  
 
  

 
 July 3,  January 2,  

 
 2021  2021  
ASSETS
 
 
  
 
  
Current assets:
 
 
  
 
  
Cash and cash equivalents
 44,544  13,326  
Restricted cash
  9,900   3,200  
Accounts receivable, net
  4,807   4,680  
Inventories
  12,271   3,198  
Prepaid expenses and other current assets
  632   514  
Total current assets
  72,154   24,918  

 
         
Property and equipment, net
  261   182  
Operating lease right-of-use assets
  247   114  
Other assets
  271   58  
Total assets
 72,933  25,272  

 
         
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
         
Current liabilities:
         
Accounts payable
 17,341  5,327  
Revolving line of credit
  752   3,678  
Accrued payroll and related liabilities
  1,186   806  
Accrued expenses and other current liabilities
  1,008   777  
Long-term debt due within one year
  16,649   17,056  
Total current liabilities
  36,936   27,644  
Long-term debt
  -   146  
Other liabilities
  113   102  
Total liabilities
  37,049   27,892  

 
         
Commitments and contingencies
         

 
         
Stockholders' equity (deficit):
         
Preferred stock
  -   -  
Common stock
  216   195  
Additional paid-in capital
  206,795   192,071  
Accumulated deficit
  (171,127)  (194,886) 
Total stockholders' equity (deficit)
  35,884   (2,620) 
Total liabilities and stockholders' equity (deficit)
 72,933  25,272  

Netlist, Inc. and Subsidiaries  
Condensed Consolidated Statements of Operations (Unaudited)  
(in thousands, except per share amounts)

 
 
 

 
 
Three Months Ended
  
 
  
Six Months Ended
  
 
  

 
 July 3,  June 27,  July 3,  June 27,  

 
 2021  2020  2021  2020  

 
 
 
  
 
  
 
  
 
  
Net product sales
 24,363  10,906  39,260  25,537  
License fee
  40,000   -   40,000   -  
Net sales
  64,363   10,906   79,260   25,537  
Cost of sales(1)
  21,498   9,080   34,894   21,602  
Gross profit
  42,865   1,826   44,366   3,935  
Operating expenses:
                 
Research and development(1)
  2,060   698   3,184   1,352  
Intellectual property legal fees
  3,837   848   6,124   1,473  
Selling, general and administrative(1)
  3,092   1,957   5,049   4,178  
Total operating expenses
  8,989   3,503   14,357   7,003  
Operating income (loss)
  33,876   (1,677)  30,009   (3,068) 
Other (income) expense, net:
                 
Interest expense, net
  (145)  (150)  (292)  (298) 
Other income (expense), net
  645   (2)  643   (5) 
Total other income (expense), net
  500   (152)  351   (303) 
Income (loss) before provision for income taxes
  34,376   (1,829)  30,360   (3,371) 
Provision for income taxes
  6,600   1   6,601   1  
Net income (loss)
 27,776  (1,830) 23,759  (3,372) 

 
                 
Earnings (loss) per share:
                 
Basic
 0.13  (0.01) 0.11  (0.02) 
Diluted
 0.12  (0.01) 0.10  (0.02) 
Weighted-average common shares outstanding:
                 
Basic
  215,706   175,485   210,693   172,602  
Diluted
  235,176   175,485   229,305   172,602  

 
                 

 
                 
(1) Amounts include stock-based compensation expense as follows:
                 
Cost of sales
 4  4  7  7  
Research and development
  168   44   278   91  
Selling, general and administrative
  207   116   432   272  
Total stock-based compensation
 379  164  717  370  
                  

SOURCE: Netlist, Inc.

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