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Form 8-K Identiv, Inc. For: Mar 06

March 8, 2018 4:30 PM

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 6, 2018

 

 

IDENTIV, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

 

Delaware   000-29440   77-0444317

(State or Other Jurisdiction

of Incorporation)

  (Commission File Number)  

(IRS Employer

Identification No.)

2201 Walnut Avenue, Suite 100,

Fremont, California

  94538
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s Telephone Number, Including Area Code: (949) 250-8888

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 1.01 Entry into a Material Definitive Agreement.

On March 6, 2018, Identiv, Inc. (the “Company”) entered into an amendment (the “Fifth Amendment”) to its Loan and Security Agreement with East West Bank and 3VR Security, Inc. Under the Fifth Amendment, the revolving loan facility under the Loan and Security Agreement was increased from $12.0 million to $16.0 million. In addition, certain definitions were amended, including the definition of Borrowing Base.

The foregoing description of the Fifth Amendment is not complete and is qualified in its entirety by reference to the full text of such agreement, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.

Item 2.02 Results of Operations and Financial Condition.

The information contained in Item 2.02 of this Current Report, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information contained in this Current Report shall not be incorporated by reference into any registration statement or other document or filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

On March 8, 2018, the Company issued a press release announcing financial results for its fourth quarter and year ended December 31, 2017. A copy of the Company’s press release is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.

  

Description

99.1    Press release dated March 8, 2018 issued by Identiv, Inc.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    Identiv, Inc.
March 8, 2018     By:   /s/ Sandra Wallach
      Sandra Wallach
      Chief Financial Officer

Exhibit 99.1

 

LOGO

IDENTIV REPORTS FOURTH QUARTER AND FISCAL YEAR 2017 RESULTS

FREMONT, Calif., March 8, 2018 — Identiv, Inc. (NASDAQ: INVE), a global provider of physical security and secure identification, reported financial results for the fiscal year and fourth quarter ended December 31, 2017.

Recent Business Highlights

 

    Achieved 13% year-over-year revenue growth in the fourth quarter of 2017

 

    Acquired video technology and data analytics company 3VR, strengthening position in Premises security

 

    Strengthened financial position with financing of up to $20 million and elimination of 50% of term debt

 

    Amended financing agreement with improved line-of-credit terms, providing additional financial flexibility to execute on growth strategy

 

  Released ICPAM 3.1 with Input Modules, Data Center Rack Solution, and Mx-1 Controller Integration

 

  Continued volume shipments for NFC applications in apparel & home security

 

  Invested in Engineering leadership to accelerate delivery of products

Fourth Quarter 2017 Financial Results

Revenues for the fourth quarter of 2017 were $16.6 million, compared to $15.4 million in the third quarter of 2017 and $14.6 million in the fourth quarter of 2016, reflecting a sequential increase of 7% from the third quarter of 2017, and a year-over-year increase of 13% from the fourth quarter of 2016.

Revenues in the Premises (PACS) segment grew 20% sequentially and grew 5% year-over-year. Contributing to the sequential growth in the fourth quarter were strong controller and access reader sales and deliveries for Government orders. Year-over-year growth was mainly driven by increased revenue from services and software, in line with the Company’s focus and its recently launched Identiv Global Services program. Revenues in the Identity segment increased 9% sequentially and decreased 6% year-over-year. The fourth quarter benefited from continued strong sales of reader chipsets and payment modules, as well as strong demand from distribution and OEM partners for applications like secure printing. New distribution partnerships for international regions were signed during the quarter. Revenue in the Credentials segment decreased 6% sequentially and grew 48% year-over-year. The year-over-year growth reflects an increase in RFID and NFC transponder sales, predominantly to key accounts in the U.S. and Asia-Pacific regions, as well as continuing growth in access cards sales domestically.

GAAP gross margin was 30% in the fourth quarter of 2017, compared to 38% in the third quarter of 2017 and 43% in the fourth quarter of 2016. The sequential gross margin decrease mainly reflects an increase in gross margin in the Premises and Identity segments, offset by lower margin in the Credentials segment due to a transponder related inventory reserve adjustment associated with a customer relationship which ended at the end of 2015 and the Company’s decision to discontinue plans for alternate use of the product.


Non-GAAP gross margin was 43% in the fourth quarter of 2017, compared to 40% in the third quarter of 2017 and 45% in the fourth quarter of 2016.

GAAP operating expenses were $7.0 million in the fourth quarter of 2017, compared to $6.2 million in the third quarter of 2017, and $6.4 million in the fourth quarter of 2016, reflecting a sequential increase of 12% and a year-over-year increase of 10%. The increase predominantly reflects general and administrative expenses, which in the previous and comparable quarter were lower due to reimbursements received from insurance providers.

Non-GAAP operating expenses for the fourth quarter of 2017 were $5.8 million, compared to $5.2 million in the third quarter of 2017 and $5.4 million in the fourth quarter of 2017, reflecting a sequential increase of 12% and a year-over-year increase of 8%. Non-GAAP operating expenses were in line with the Company’s stated target of less than $6 million quarterly of business-related operating expenses.

GAAP net loss totaled $4.5 million, or $(0.31) per share in the fourth quarter of 2017, compared to $1.0 million, or $(0.07) per share in the third quarter of 2017, and $1.1 million, or $(0.10) per share in the fourth quarter of 2016. The increase in the quarter mainly reflects the transponder related inventory reserve adjustment noted above and the loss on extinguishment of debt.

Non-GAAP adjusted EBITDA for the fourth quarter of 2017 totaled $1.3 million, compared with $0.9 million in the third quarter of 2017 and $1.1 million in the fourth quarter of 2016.

Fiscal Year 2017 Financial Results

Fiscal year 2017 revenue was $60.2 million, an increase of 7% from $56.2 million in fiscal year 2016. The increase was predominantly driven by a 21% increase of revenues in the Credentials segment resulting from high demand in RFID and NFC transponder inlays for library and higher value applications in brand authenticity and consumer experience as well as access cards. Revenues from the Identity segment grew 11%, driven by strong demand for smart card readers, chipsets and OEM modules for payment and identity applications. Revenue in the PACS segment decreased by 2%, mainly reflecting lower revenue from controllers and access readers, partially offset by increasing revenue from software and services.

Fiscal year 2017 GAAP gross margin was 37%, compared to 42% in fiscal year 2016. The lower gross margin in 2017 mainly relates to a transponder related inventory reserve adjustment in the Credentials segment made in the fourth quarter of 2017, as well as product and channel mix, with the faster growing Credentials segment contributing a higher proportion of revenue in relation to the higher margin Premises segment in 2017 versus 2016.

GAAP operating expenses, including research and development (R&D), sales and marketing (S&M), general and administrative (G&A), and restructuring and severance charges were $26.8 million in fiscal year 2017, compared to $34.9 million in fiscal year 2016, a decrease of 23%.

Non-GAAP operating expenses were $22.6 million in fiscal year 2017, compared to $27.2 million in fiscal year 2016, a decrease of 17%. The decrease was primarily driven by lower expenses across all categories as well as decreased general and administrative expenses due to lower legal and accounting professional fees associated with non-core business activities.


Fiscal year 2017 GAAP net loss was $8.1 million or $(0.61) per share, compared with GAAP net loss of $13.7 million or $(1.25) per share in fiscal year 2016. Fiscal year 2016 results included restructuring charges of $3.1 million.

Full year 2017 non-GAAP adjusted EBITDA was $2.7 million, compared with a non-GAAP adjusted EBITDA loss of $(2.1) million in full year 2016, predominantly reflecting the higher revenue and the lower operating expense base.

Cash was $19.1 million at December 31, 2017, compared to $15.7 million at September 30, 2017, and $9.1 million at December 31, 2016. The increased liquidity predominantly reflects the proceeds from an underwritten offering of common stock in May 2017 and the issuance of convertible preferred stock in December 2017.

See note regarding “Use of Non-GAAP Financial Measures” below for a discussion of the non-GAAP measures used in this press release.

Fiscal Year 2018 Guidance

For the fiscal year ending December 31, 2018, the Company expects revenue to be between $74 million and $78 million, and non-GAAP adjusted EBITDA between $4 million and $6 million.

Management Commentary

“2017 was a year of significant progress for Identiv,” said Steven Humphreys, Identiv CEO. “The business returned to annual growth, with the fastest growth occurring in the fourth quarter, demonstrating our building momentum. We’ve solidified our business platform, reaching key parameters of our mid-term target business model, which has led to positive non-GAAP adjusted EBITDA for the first year since 2010. Our business performance has allowed us to significantly strengthen our balance sheet, positioning us well for organic and inorganic growth in 2018. We believe we are at one of the most exciting inflection points for our company in years. Our core markets have substantial growth opportunities as the physical world leverages access control, RFID, IP, video, mobile and smart card technologies. With the recent addition of 3VR’s analytics platform and the launch of our Identiv Global Services offering, we believe we’re positioned to be one of the leading providers of next-generation security and information solutions for the physical world. We’ve now established our position as the trusted provider for frictionless, cost-effective, high-security solutions for premises and identification, enabling a new level of security and business intelligence for our customers.”

Conference Call

Identiv, Inc. management will hold a conference call today (March 8, 2018) at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss these financial results. A question and answer session will follow management’s presentation.

U.S. dial-in number: +1-800-289-0438

International number: +1-323-794-2423


Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

The conference call webcast will be broadcasted live and available for replay here and via the Investor Relations section of Identiv’s website.

A replay of the call will be available after 8:00 p.m. Eastern time through April 8, 2018.

Toll-free replay number: +1-844-512-292

1International replay number: +1-412-317-6671

Conference ID: 6863560

About Identiv

Identiv, Inc. is a global provider of physical security and secure identification. Identiv’s products, software, systems, and services address the markets for physical and logical access control, video analytics and a wide range of RFID-enabled applications. Customers in the government, enterprise, consumer, education, healthcare, banking, retail, and transportation sectors rely on Identiv’s access and identification solutions. Identiv’s mission is to secure the connected physical world: from perimeter to desktop access, and from the world of physical things to the Internet of Everything. Identiv is a publicly traded company and its common stock is listed on the NASDAQ Capital Market in the U.S. under the symbol “INVE.” For more information, visit identiv.com.

Non-GAAP Financial Measures (Unaudited)

This press release includes financial information that has not been prepared in accordance with GAAP, including non-GAAP gross margin, non-GAAP adjusted EBITDA and non-GAAP operating expenses. Identiv uses non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. The non-GAAP measures discussed above exclude items that are included in GAAP net income (loss), GAAP operating expenses, and GAAP gross margin, including provision (benefit) for income taxes, net loss attributable to non-controlling interest, interest expense, loss on extinguishment of debt, foreign currency losses (gains), stock-based compensation, amortization and depreciation, acquisition related transaction costs, a transponder related inventory reserve adjustment, and restructuring and severance. For historical periods, the exclusions are detailed in the reconciliation table included in this press release. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures as detailed in this press release. Identiv has not provided a reconciliation of its full-year 2018 adjusted EBITDA outlook to an expected GAAP net income (loss) outlook because certain items that are a component of GAAP net income (loss) cannot be reasonably projected. In particular, sufficient information is not available to calculate certain adjustments required for such reconciliations, including interest expense, income tax expense (benefit), share-based compensation, and foreign currency (gains) losses. These components of GAAP net income (loss) could significantly impact Identiv’s actual net income (loss).


Note Regarding Forward-Looking Information

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those involving future events and future results that are based on current expectations as well as the current beliefs and assumptions of the Company’s management and can be identified by words such as “anticipates”, “believes”, “plans”, “will”, “intends”, “expects”, and similar references to the future. Any statement that is not a historical fact, including the statements regarding the Company’s expectations regarding future operating and financial performance, including full year 2018 revenue and adjusted EBITDA guidance, the Company’s beliefs regarding momentum in its business, the Company’s belief that it is well-positioned for organic and inorganic growth in 2018, the Company’s belief that it is at an inflection point in its business, potential growth opportunities, the benefits to the Company’s business as a result of the 3VR acquisition and related opportunities, and the Company’s beliefs regarding its status in the market and with customers is a forward-looking statement. Forward-looking statements are only predictions and are subject to a number of risks and uncertainties, many of which are outside our control, which could cause actual results to differ materially and adversely from those expressed in any forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, actual results for fiscal 2017, the Company’s ability to continue the momentum in its business, its ability to successfully execute its business strategy, the actual benefits achieved through the acquisition of 3VR, the level of customer orders, the success of its products and partnerships, industry trends and seasonality, and factors discussed in our public reports, including our Annual Report on Form 10-K for the year ended December 31, 2016 and subsequent reports filed with the U.S. Securities and Exchange Commission. All forward-looking statements are based on information available to us on the date hereof, and we assume no obligation to update such statements.

Investor Relations Contact:

Matt Glover and Najim Mostamand, CFA

Liolios Group, Inc.

949-574-3860

[email protected]

Media Contact:

[email protected]

— Financials Follow —


Identiv, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended     Twelve Months Ended  
     December 31,
2017
    September 30,
2017
    December 31,
2016
    December 31,  
           2017     2016  

Net revenue

   $ 16,555     $ 15,432     $ 14,647     $ 60,219     $ 56,168  

Cost of revenue

     11,636       9,571       8,401       38,059       32,439  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     4,919       5,861       6,246       22,160       23,729  

Operating expenses:

          

Research and development

     1,562       1,597       1,523       6,146       6,520  

Selling and marketing

     3,310       3,448       3,225       13,452       14,032  

General and administrative

     2,122       1,247       1,635       7,241       11,309  

Restructuring and severance

     —         (49     (12     (49     3,088  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     6,994       6,243       6,371       26,790       34,949  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (2,075     (382     (125     (4,630     (11,220

Non-operating income (expense):

          

Interest expense, net

     (595     (643     (564     (2,590     (2,378

Loss on extinguishment of debt

     (1,765     —         —         (788     —    

Foreign currency (losses) gains, net

     (156     (51     (282     (358     27  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes and noncontrolling interest

     (4,591     (1,076     (971     (8,366     (13,571

Income tax benefit (provision)

     53       42       (97     214       (132
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before noncontrolling interest

     (4,538     (1,034     (1,068     (8,152     (13,703

Less: Loss attributable to noncontrolling interest

     22       2       4       14       8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to Identiv, Inc.

   $ (4,516   $ (1,032   $ (1,064   $ (8,138   $ (13,695
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net loss per share

   $ (0.31   $ (0.07   $ (0.10   $ (0.61   $ (1.25

Weighted average shares used to compute basic and diluted loss per share

     14,659       14,409       11,098       13,273       10,916  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


Identiv, Inc.

Consolidated Balance Sheets

(in thousands)

 

     December 31,
2017
     September 30,
2017
     December 31,
2016
 
ASSETS         

Current assets:

        

Cash

   $ 19,052      $ 15,741      $ 9,116  

Accounts receivable, net of allowances

     12,282        10,642        9,430  

Inventories

     11,126        13,396        11,596  

Prepaid expenses and other assets

     1,779        2,492        1,510  
  

 

 

    

 

 

    

 

 

 

Total current assets

     44,239        42,271        31,652  

Property and equipment, net

     2,043        2,117        2,416  

Intangible assets, net

     4,365        4,728        5,820  

Other assets

     715        722        712  
  

 

 

    

 

 

    

 

 

 

Total assets

   $ 51,362      $ 49,838      $ 40,600  
  

 

 

    

 

 

    

 

 

 
LIABILITIES AND STOCKHOLDERS´ EQUITY         

Current liabilities:

        

Accounts payable

   $ 5,863      $ 7,552      $ 6,024  

Current portion - payment obligation

     888        877        786  

Current portion - financial liabilities

     9,829        9,957        8,119  

Deferred revenue

     1,090        1,143        1,085  

Accrued compensation and related benefits

     1,515        1,639        1,520  

Other accrued expenses and liabilities

     2,020        2,978        5,032  
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     21,205        24,146        22,566  

Long-term payment obligation

     2,998        3,281        3,987  

Long-term financial liabilities

     2,921        6,474        9,779  

Other long-term liabilities

     385        181        335  
  

 

 

    

 

 

    

 

 

 

Total liabilities

     27,509        34,082        36,667  
  

 

 

    

 

 

    

 

 

 

Total stockholders´ equity

     23,853        15,756        3,933  
  

 

 

    

 

 

    

 

 

 

Total liabilities and stockholders´equity

   $ 51,362      $ 49,838      $ 40,600  
  

 

 

    

 

 

    

 

 

 


Identiv, Inc.

Reconciliation of GAAP and Non-GAAP Financial Information

(in thousands)

(unaudited)

 

     Three Months Ended     Twelve Months Ended  
     December 31,
2017
    September 30,
2017
    December 31,
2016
    December 31,  
           2017     2016  

Reconciliation of GAAP gross profit margin and non-GAAP gross profit margin

          

GAAP cost of revenue

   $ 11,636     $ 9,571     $ 8,401     $ 38,059     $ 32,439  

Reconciling items included in GAAP cost of revenue:

          

Stock-based compensation

     (11     (24     (5     (82     (77

Amortization and depreciation

     (280     (291     (299     (1,131     (1,239

Transponder related inventory reserve adjustment

     (1,971     —         —         (1,971     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total reconciling items included in GAAP cost of revenue

     (2,262     (315     (304     (3,184     (1,316
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP cost of revenue

   $ 9,374     $ 9,256     $ 8,097     $ 34,875     $ 31,123  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit margin

     43     40     45     42     45
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of GAAP operating expenses

          

GAAP operating expenses

   $ 6,994     $ 6,243     $ 6,371     $ 26,790     $ 34,949  

Reconciling items included in GAAP operating expenses:

          

Stock-based compensation

     (553     (640     (592     (2,398     (2,765

Amortization and depreciation

     (391     (414     (374     (1,621     (1,922

Acquisition related transaction costs

     (204     —         —         (212     —    

Restructuring and severance

     —         49       12       49       (3,088
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total reconciling items included in GAAP operating expenses

     (1,148     (1,005     (954     (4,182     (7,775
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating expenses

   $ 5,846     $ 5,238     $ 5,417     $ 22,608     $ 27,174  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of GAAP net loss to non-GAAP adjusted EBITDA

          

GAAP net loss attributable to Identiv, Inc.

   $ (4,516   $ (1,032   $ (1,064   $ (8,138   $ (13,695

Reconciling items included in GAAP net loss:

          

(Benefit) provision for income taxes

     (53     (42     97       (214     132  

Net loss attributable to noncontrolling interest

     (22     (2     (4     (14     (8

Interest expense, net

     595       643       564       2,590       2,378  

Loss on extinguishment of debt

     1,765       —         —         788       —    

Foreign currency losses (gains), net

     156       51       282       358       (27

Stock-based compensation

     564       664       597       2,480       2,842  

Amortization and depreciation

     671       705       673       2,752       3,161  

Acquisition related transaction costs

     204       —         —         212       —    

Transponder related inventory reserve adjustment

     1,971       —         —         1,971       —    

Restructuring and severance

     —         (49     (12     (49     3,088  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total reconciling items included in GAAP net loss

     5,851       1,970       2,197       10,874       11,566  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted EBITDA

   $ 1,335     $ 938     $ 1,133     $ 2,736     $ (2,129
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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