Netlist Reports Full Year and Fourth Quarter 2022 Results

Rhea-AI Summary

Netlist reported its financial results for the fourth quarter and full year ended December 31, 2022. Net product sales for 2022 surged by 58% to $161.6 million, up from $102.4 million in 2021, while gross profit increased by 34% to $11.9 million. However, the company faced a net loss of $33.4 million for the year, a stark contrast to a net income of $4.8 million in the prior year. The fourth quarter showed lower sales at $21.7 million compared to $36.3 million last year, with a net loss of $12.9 million. CEO C.K. Hong cautioned about weak memory demand impacting near-term performance but highlighted ongoing efforts to license intellectual property.

Positive

• Full year net product sales increased by 58% to $161.6 million.
• Full year product gross profit increased by 34% to $11.9 million.

Negative

• Net loss for the fourth quarter was $12.9 million, compared to $8.2 million in the prior year.
• Net loss for the full year was $33.4 million, contrasting with a net income of $4.8 million in 2021.
• Fourth quarter net product sales decreased to $21.7 million from $36.3 million year-over-year.
• Weak memory demand expected to impact near-term performance.

IRVINE, CA / ACCESSWIRE / February 21, 2023 / Netlist, Inc. (OTCQB:NLST) today reported financial results for the full year and fourth quarter ended December 31, 2022.

2022 Highlights:

• Full year net product sales increased by 58% to $161.6 million compared to $102.4 million for last year.
• Full year product gross profit dollars increased by 34% to $11.9 million compared to $8.9 million for last year.

"For the full year Netlist delivered strong revenue and product gross profit growth, reflecting a favorable memory market in the first half of 2022," said Chief Executive Officer C.K. Hong. "As we look to 2023 the demand for memory is expected to remain significantly weak, and this will impact our near-term performance. The campaign to fairly license Netlist's intellectual property continues to advance and we look forward to the upcoming trials in Texas and in Germany."

Net product sales for the fourth quarter ended December 31, 2022 were $21.7 million, compared to net product sales of $36.3 million for the fourth quarter ended January 1, 2022. Product gross profit for the fourth quarter ended December 31, 2022 was $1.6 million, compared to a product gross profit of $2.0 million for the fourth quarter ended January 1, 2022.

Net product sales for the full year ended December 31, 2022 were $161.6 million, compared to net product sales of $102.4 million for the full year ended January 1, 2022. Product gross profit for the full year ended December 31, 2022 was $11.9 million, compared to a product gross profit of $8.9 million for the full year ended January 1, 2022.

Net loss for the fourth quarter ended December 31, 2022 was ($12.9) million, or ($0.06) per share, compared to a net loss in the prior year period of ($8.2) million, or ($0.04) per share. These results include stock-based compensation expense of $0.9 million and $0.4 million for the quarters ended December 31, 2022 and January 1, 2022, respectively.

Net loss for the full year ended December 31, 2022 was ($33.4) million, or ($0.14) per share, compared to a net income in the prior year period of $4.8 million, or $0.02 per share. These results include stock-based compensation expense of $3.2 million and $1.6 million for the full years ended December 31, 2022 and January 1, 2022, respectively.

As of December 31, 2022, cash, cash equivalents and restricted cash was $43.6 million, total assets were $67.3 million, working capital was $25.8 million, total debt was $5.4 million, and stockholders' equity was $27.2 million.

Conference Call Information
C.K. Hong, Chief Executive Officer, and Gail Sasaki, Chief Financial Officer, will host an investor conference call today, February 21, 2023 at 12:00 p.m. Eastern Time to review Netlist's results for the fourth quarter ended December 31, 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 memory solutions to enterprise customers in diverse industries. The Company's products are available in various capacities and form factors and its 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	Netlist, Inc.
Mike Smargiassi	Gail M. Sasaki
NLST@theplunkettgroup.com	Chief Financial Officer
(212) 739-6729	(949) 435-0025

Netlist, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands)
	(unaudited)
	December 31,			January 1,
	2022			2022
ASSETS
Current assets:
Cash and cash equivalents	$	25,011		$	47,679
Restricted cash		18,600			10,800
Accounts receivable, net		8,242			12,727
Inventories		10,686			15,670
Prepaid expenses and other current assets		1,308			1,126
Total current assets		63,847			88,002
Property and equipment, net		1,138			989
Operating lease right-of-use assets		2,043			1,891
Other assets		295			294
Total assets	$	67,323		$	91,176
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	28,468		$	25,887
Revolving line of credit		4,935			7,000
Accrued payroll and related liabilities		1,588			1,308
Accrued expenses and other current liabilities		2,635			632
Long-term debt due within one year		447			562
Total current liabilities		38,073			35,389
Operating lease liabilities		1,744			1,593
Other liabilities		270			152
Total liabilities		40,087			37,134
Commitments and contingencies
Stockholders' equity:
Preferred stock		-			-
Common stock		233			231
Additional paid-in capital		250,428			243,866
Accumulated deficit		(223,425)			(190,055)
Total stockholders' equity		27,236			54,042
Total liabilities and stockholders' equity	$	67,323		$	91,176

Netlist, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except per share amounts)
	Three Months Ended						Year Ended
	December 31,			January 1,			December 31,			January 1,
	2022			2022			2022			2022
Net product sales	$	21,655		$	36,346		$	161,637		$	102,355
License fee		-			-			-			40,000
Net sales		21,655			36,346			161,637			142,355
Cost of sales(1)		20,054			34,323			149,745			93,458
Gross profit		1,601			2,023			11,892			48,897
Operating expenses:
Research and development(1)		2,945			2,019			10,624			7,241
Intellectual property legal fees		8,705			4,909			20,421			19,494
Selling, general and administrative(1)		2,918			3,140			14,347			10,779
Total operating expenses		14,568			10,068			45,392			37,514
Operating (loss) income		(12,967)			(8,045)			(33,500)			11,383
Other income (expense), net:
Interest income (expense), net		19			(151)			57			(568)
Other income, net		-			2			74			643
Total other income (expense), net		19			(149)			131			75
(Loss) income before provision for income taxes		(12,948)			(8,194)			(33,369)			11,458
Provision for income taxes		-			26			1			6,627
Net (loss) income	$	(12,948)		$	(8,220)		$	(33,370)		$	4,831
Earnings (loss) per common share:
Basic	$	(0.06)		$	(0.04)		$	(0.14)		$	0.02
Diluted	$	(0.06)		$	(0.04)		$	(0.14)		$	0.02
Weighted-average common shares outstanding:
Basic		232,367			227,277			231,487			218,171
Diluted		232,367			233,943			231,487			225,589
(1) Amounts include stock-based compensation expense as follows:
Cost of sales	$	22		$	3		$	63		$	12
Research and development		229			132			903			570
Selling, general and administrative		599			283			2,248			998
Total stock-based compensation	$	850		$	418		$	3,214		$	1,580

SOURCE: Netlist, Inc.

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https://www.accesswire.com/740028/Netlist-Reports-Full-Year-and-Fourth-Quarter-2022-Results

FAQ

What were Netlist's total product sales for the full year 2022?

Netlist's total product sales for the full year 2022 were $161.6 million.

How much did Netlist's net loss increase in Q4 2022?

Netlist's net loss in Q4 2022 was $12.9 million, an increase from $8.2 million in Q4 2021.

What is the outlook for Netlist's performance in 2023?

Netlist expects weak demand for memory, which will negatively impact near-term performance in 2023.

What was the gross profit for Netlist in 2022?

Netlist's gross profit for the full year 2022 was $11.9 million.

How did cash and cash equivalents change for Netlist by year-end 2022?

As of December 31, 2022, Netlist reported cash, cash equivalents, and restricted cash of $43.6 million.