Infinera Corporation Reports Third Quarter 2024 Financial Results

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Therefore, we believe it is important to view free cash flow as supplemental to our entire statement of cash flows.  Three months ended Nine months ended  September 28, 2024 June 29, 2024 September 30, 2023 September 28, 2024 September 30, 2023Net cash provided by (used in) operating activities $44,563  $(59,954) $(29,793) $8,635  $(30,142)Purchase of property and equipment  (24,090)  (14,582)  (13,318)  (46,748)  (40,900)Free cash flow $20,473  $(74,536) $(43,111) $(38,113) $(71,042)  Infinera CorporationCondensed Consolidated Balance Sheets(In thousands, except par values)(Unaudited)  September 28,2024 December 30,2023ASSETS   Current assets:   Cash and cash equivalents$115,089  $172,505 Short-term restricted cash 42   517 Accounts receivable, net 288,265   381,981 Inventory 356,119   431,163 Prepaid expenses and other current assets 162,560   129,218 Total current assets 922,075   1,115,384 Property, plant and equipment, net 231,190   206,997 Operating lease right-of-use assets 39,359   39,973 Intangible assets, net 18,050   24,819 Goodwill 237,509   240,566 Long-term restricted cash 446   837 Other long-term assets 57,128   50,662 Total assets$1,505,757  $1,679,238 LIABILITIES AND STOCKHOLDERS’ EQUITY   Current liabilities:   Accounts payable$259,225  $299,005 Accrued expenses and other current liabilities 137,078   110,758 Accrued compensation and related benefits 48,683   85,203 Short-term debt, net 10,473   25,512 Accrued warranty 12,635   17,266 Deferred revenue 116,332   136,248 Total current liabilities 584,426   673,992 Long-term debt, net 667,205   658,756 Long-term accrued warranty 12,554   15,934 Long-term deferred revenue 21,626   21,332 Long-term deferred tax liability 1,770   1,805 Long-term operating lease liabilities 44,563   47,464 Other long-term liabilities 39,767   43,364 Commitments and contingencies   Stockholders’ equity:   Preferred stock, $0.001 par valueAuthorized shares – 25,000 and no shares issued and outstanding —   — Common stock, $0.001 par valueAuthorized shares - 500,000 as of September 28, 2024 and December 30, 2023    Issued and outstanding shares - 236,296 as of September 28, 2024 and 230,994 as of December 30, 2023 236   231 Additional paid-in capital 2,012,820   1,976,014 Accumulated other comprehensive loss (30,409)  (34,848)Accumulated deficit (1,848,801)  (1,724,806)Total stockholders' equity 133,846   216,591 Total liabilities and stockholders’ equity$1,505,757  $1,679,238   Infinera CorporationCondensed Consolidated Statements of Cash Flows(In thousands) (Unaudited)  Nine months ended September 28, 2024 September 30, 2023Cash Flows from Operating Activities:   Net loss$(123,995) $(38,086)Adjustments to reconcile net loss to net cash provided by (used in) operating activities:   Depreciation and amortization 46,744   59,403 Non-cash restructuring charges and other related costs 32   1,183 Amortization of debt issuance costs and discount 2,750   2,970 Operating lease expense 6,905   6,402 Stock-based compensation expense 38,721   49,393 Other, net 139   (683)Changes in assets and liabilities:   Accounts receivable 92,364   89,248 Inventory 74,527   (82,983)Prepaid expenses and other current assets (48,141)  16,811 Accounts payable (57,127)  (27,798)Accrued expenses and other current liabilities (5,386)  (46,163)Deferred revenue (18,898)  (59,839)Net cash provided by (used in) operating activities 8,635   (30,142)Cash Flows from Investing Activities:   Purchase of property and equipment (46,748)  (40,900)Net cash used in investing activities (46,748)  (40,900)Cash Flows from Financing Activities:   Proceeds from issuance of 2028 Notes, net of discount —   98,751 Repayment of 2024 Notes (18,747)  (83,446)Payment of debt issuance cost —   (2,108)Proceeds from asset-based revolving credit facility 50,000   — Repayment of asset-based revolving credit facility (40,000)  — Repayment of mortgage payable (354)  (381)Principal payments on finance lease obligations (469)  (784)Payment of term license obligation (7,882)  (7,720)Proceeds from issuance of common stock 5   14,931 Tax withholding paid on behalf of employees for net share settlement (1,860)  (2,217)Net cash (used in) provided by financing activities (19,307)  17,026 Effect of exchange rate changes on cash (862)  (8,551)Net change in cash, cash equivalents and restricted cash (58,282)  (62,567)Cash, cash equivalents and restricted cash at beginning of period 173,859   189,203 Cash, cash equivalents and restricted cash at end of period(1)$115,577  $126,636   Infinera CorporationCondensed Consolidated Statements of Cash Flows(In thousands) (Unaudited)  Nine months ended September 28, 2024 September 30, 2023Supplemental disclosures of cash flow information:   Cash paid for income taxes, net$18,205 $9,955 Cash paid for interest$25,967 $21,579 Supplemental schedule of non-cash investing and financing activities:   Property and equipment included in accounts payable and accrued liabilities$26,779 $18,529 Transfer of inventory to fixed assets$— $1,207 Unpaid term licenses (included in accounts payable, accrued liabilities and other long-term liabilities)$16,380 $16,510                (1) Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets (in thousands):  September 28, 2024 September 30, 2023Cash and cash equivalents$115,089 $123,927 Short-term restricted cash 42  1,725 Long-term restricted cash 446  984 Total cash, cash equivalents and restricted cash$115,577 $126,636   Infinera CorporationSupplemental Financial Information(Unaudited)    Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24GAAP Revenue $(Mil) $485.9  $392.1  $376.2  $392.4  $453.5  $306.9  $342.7  $354.4 GAAP Gross Margin %  37.1%  37.5%  38.0%  40.3%  38.6%  36.0%  39.6%  39.8% Non-GAAP Gross Margin %(1)  38.7%  38.8%  39.3%  41.9%  39.6%  36.6%  40.3%  40.4%GAAP Revenue Composition:                Domestic %  61%  60%  58%  59%  68%  54%  58%  60%International %  39%  40%  42%  41%  32%  46%  42%  40%Customers >10% of Revenue  1   —   1   1   1   —   —   2 Cash Related Information:                Cash from Operations $(Mil) $(0.6) $(1.8) $1.4  $(29.7) $79.6  $24.0  $(59.9) $44.5 Capital Expenditures $(Mil) $8.3  $16.8  $10.8  $13.3  $21.4  $8.1  $14.6  $24.0 Depreciation & Amortization $(Mil) $19.8  $19.6  $19.8  $20.0  $19.4  $15.4  $15.6  $15.7 DSOs(2)  79   78   79   76   77   79   76   74 Inventory Metrics:                Raw Materials $(Mil) $48.7  $67.6  $85.4  $110.4  $133.6  $132.5  $119.4  $105.2 Work in Process $(Mil) $66.6  $71.8  $71.9  $69.9  $68.4  $68.6  $68.7  $67.6 Finished Goods $(Mil) $259.6  $273.6  $270.1  $276.6  $229.2  $219.6  $196.1  $183.3 Total Inventory $(Mil) $374.9  $413.0  $427.4  $456.9  $431.2  $420.7  $384.2  $356.1 Inventory Turns(3)  3.4   2.4   2.2   2.1   2.5   1.8   2.0   2.3 Worldwide Headcount  3,267   3,351   3,365   3,369   3,389   3,323   3,334   3,340 Weighted Average Shares Outstanding (in thousands):                Basic  219,921   222,393   225,922   228,077   230,509   231,533   234,349   235,832 Diluted  258,030   265,921   262,712   257,219   259,210   260,980   265,591   267,999   (1)Non-GAAP adjustments include stock-based compensation expense, amortization of acquired intangible assets, restructuring and other related costs and warehouse fire recovery.

Infinera CorporationCondensed Consolidated Statements of Operations(In thousands, except per share data)(Unaudited)  Three months ended Nine months ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023Revenue:       Product$276,214  $316,613  $778,008  $931,057 Services 78,184   75,756   226,051   229,615 Total revenue 354,398   392,369   1,004,059   1,160,672 Cost of revenue:       Cost of product 170,693   190,312   494,248   577,152 Cost of services 42,515   40,209   121,910   124,889 Amortization of intangible assets —   3,528   —   10,621 Restructuring and other related costs (24)  —   652   — Total cost of revenue 213,184   234,049   616,810   712,662 Gross profit 141,214   158,320   387,249   448,010 Operating expenses:       Research and development 73,283   76,846   225,223   237,234 Sales and marketing 35,715   41,075   118,357   124,406 General and administrative 34,160   29,368   101,114   89,762 Amortization of intangible assets 2,257   2,976   6,769   10,088 Merger-related charges 6,954   —   15,471   — Restructuring and other related costs (157)  400   4,105   2,621 Total operating expenses 152,212   150,665   471,039   464,111 Income (loss) from operations (10,998)  7,655   (83,790)  (16,101)Other income (expense), net:       Interest income 874   546   2,789   1,734 Interest expense (8,764)  (7,608)  (25,556)  (21,795)Other gain (loss), net 8,485   (7,540)  (8,910)  10,586 Total other income (expense), net 595   (14,602)  (31,677)  (9,475)Loss before income taxes (10,403)  (6,947)  (115,467)  (25,576)Provision for income taxes 3,910   2,466   8,528   12,510 Net loss$(14,313) $(9,413) $(123,995) $(38,086)Net loss per common share:       Basic$(0.06) $(0.04) $(0.53) $(0.17)Diluted$(0.06) $(0.04) $(0.53) $(0.17)Weighted average shares used in computing net loss per common share:       Basic 235,832   228,077   233,905   225,465 Diluted 235,832   228,077   233,905   225,465   Infinera CorporationGAAP to Non-GAAP Reconciliations(In thousands, except percentages)(Unaudited)  Three months ended Nine months ended September 28, 2024   June 29, 2024   September 30, 2023 September 28, 2024 September 30, 2023Reconciliation of Gross Profit and Gross Margin:                   GAAP as reported$141,214  39.8% $135,594  39.6% $158,320 40.3% $387,249  38.6% $448,010  38.6%Stock-based compensation expense(1) 2,084  0.6%  1,777  0.5%  2,515 0.7%  5,754  0.5%  7,672  0.7%Amortization of acquired intangible assets(2) —  —%  —  —%  3,528 0.9%  —  —%  10,621  0.9%Restructuring and other related costs(3) (24) (0.0)%  703  0.2%  —    652  0.1%  —  —%Warehouse fire recovery(4) —  —%  —  —%  — —%  —  —%  (1,985) (0.2)%Non-GAAP as adjusted$143,274  40.4% $138,074  40.3% $164,363 41.9% $393,655  39.2% $464,318  40.0%                    Reconciliation of Operating Expenses:                   GAAP as reported$152,212    $165,403    $150,665   $471,039    $464,111   Stock-based compensation expense(1) 12,305     8,024     13,230    32,967     41,721   Amortization of acquired intangible assets(2) 2,257     2,256     2,976    6,769     10,088   Restructuring and other related costs(3) (157)    3,948     400    4,105     2,621   Merger-related charges(5) 6,954     8,517     —    15,471     —   Non-GAAP as adjusted$130,853    $142,658    $134,059   $411,727    $409,681                       Reconciliation of Income (Loss) from Operations and Operating Margin:                   GAAP as reported$(10,998) (3.1)% $(29,809) (8.7)% $7,655 2.0% $(83,790) (8.3)% $(16,101) (1.4)%Stock-based compensation expense(1) 14,389  4.1%  9,801  2.8%  15,745 3.9%  38,721  3.8%  49,393  4.3%Amortization of acquired intangible assets(2) 2,257  0.6%  2,256  0.7%  6,504 1.7%  6,769  0.7%  20,709  1.8%Restructuring and other related costs(3) (181) (0.1)%  4,651  1.4%  400 0.1%  4,757  0.5%  2,621  0.2%Warehouse fire recovery(4) —  —%  —  —%  — —%  —  —%  (1,985) (0.2)%Merger-related charges(5) 6,954  2.0%  8,517  2.5%  — —%  15,471  1.5%  —  —%Non-GAAP as adjusted$12,421  3.5% $(4,584) (1.3)% $30,304 7.7% $(18,072) (1.8)% $54,637  4.7%    Three months ended Nine months ended  September 28, 2024   June 29, 2024   September 30, 2023   September 28, 2024   September 30, 2023Reconciliation of Net Income (Loss):                  GAAP as reported $(14,313)   $(48,287)   $(9,413)   $(123,995)   $(38,086)Stock-based compensation expense(1)  14,389     9,801     15,745     38,721     49,393 Amortization of acquired intangible assets(2)  2,257     2,256     6,504     6,769     20,709 Restructuring and other related costs(3)  (181)    4,651     400     4,757     2,621 Warehouse fire recovery(4)  —     —     —     —     (1,985)Merger-related charges(5)  6,954     8,517     —     15,471     — Foreign exchange (gains) losses, net(6)  (8,039)    11,690     7,527     10,099     (9,903)Income tax effects(7)  (788)    (2,604)    (894)    (3,775)    2,072 Non-GAAP as adjusted $279    $(13,976)   $19,869    $(51,953)   $24,821                    Weighted Average Shares Used in Computing GAAP Net Income (Loss) per Common Share:                  Basic  235,832     234,349     228,077     233,905     225,465 Diluted(8)  235,832     234,349     228,077     233,905     225,465                    Weighted Average Shares Used in Computing Non-GAAP Net Income (Loss) per Common Share:                  Basic  235,832     234,349     228,077     233,905     225,465 Diluted(9)  240,502     234,349     257,219     233,905     228,735                    Reconciliation of Adjusted EBITDA (10):                  Non-GAAP net income (loss) $279    $(13,976)   $19,869    $(51,953)   $24,821 Add: Interest expense, net  7,890     7,370     7,062     22,767     20,061 Less: Other gain (loss), net  446     507     (13)    1,189     683 Add: Income tax effects  4,698     2,529     3,360     12,303     10,438 Add: Depreciation  13,501     13,285     13,498     39,975     38,694 Non-GAAP as adjusted $25,922    $8,701    $43,802    $21,903    $93,331                    Net Income (Loss) per Common Share: GAAP                  Basic $(0.06)   $(0.21)   $(0.04)   $(0.53)   $(0.17)Diluted(8) $(0.06)   $(0.21)   $(0.04)   $(0.53)   $(0.17)                   Net Income (Loss) per Common Share: Non-GAAP                  Basic $0.00    $(0.06)   $0.09    $(0.22)   $0.11 Diluted(9) $0.00    $(0.06)   $0.08    $(0.22)   $0.11   (1) Stock-based compensation expense is calculated in accordance with the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation effective January 1, 2006.

These potentially dilutive securities are added for the computation of diluted net income per share on a GAAP basis in periods when Infinera has net income on a GAAP basis, as its inclusion provides a better indication of Infinera's underlying business performance.  For purposes of calculating GAAP diluted earnings per share, we used the following net loss and weighted average common shares outstanding (in thousands, except per share data):   Three months ended Nine months ended  September 28, 2024 June 29, 2024 September 30, 2023 September 28, 2024 September 30, 2023GAAP net loss for basic earnings per share $(14,313) $(48,287) $(9,413) $(123,995) $(38,086)Interest expense related to the convertible senior notes, net of tax  —   —   —   —   — GAAP net loss for diluted earnings per share $(14,313) $(48,287) $(9,413) $(123,995) $(38,086)           Weighted average basic common shares outstanding  235,832   234,349   228,077   233,905   225,465 Dilutive effect of restricted and performance share units  —   —   —   —   — Dilutive effect of 2024 convertible senior notes(a)  —   —   —   —   — Dilutive effect of 2027 convertible senior notes(b)  —   —   —   —   — Dilutive effect of 2028 convertible senior notes(c)  —   —   —   —   — Weighted average dilutive common shares outstanding  235,832   234,349   228,077   233,905   225,465            GAAP net loss per common share:          Basic $(0.06) $(0.21) $(0.04) $(0.53) $(0.17)Diluted $(0.06) $(0.21) $(0.04) $(0.53) $(0.17)                        (a)   For the three-months ended September 28, 2024, June 29, 2024, and September 30, 2023, there were 1.4 million, 1.9 million and 1.9 million shares, respectively, excluded from the calculation of diluted net loss per share, due to their anti-dilutive effect.

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Author / Journalist: Infinera Corporation

Category: Technology

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Published On: 2024-11-05 @ 21:03:00 (2 weeks ago)

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