Acacia Communications declares preliminary fourth quarter and full 12 months 2020 outcomes

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MAYNARD, Mass., Jan. 11, 2021 (GLOBE NEWSWIRE) – Acacia Communications, Inc. (NASDAQ: ACIA) ("Acacia Communications" or "Company"), now a leader in high-speed coherent optical interconnect products, announced certain preliminary unaudited financial results for the fourth fiscal quarter and fiscal year ending December 31, 2020.

Preliminary results for the fourth quarter of 2020

  • Revenue from $ 160.0 million to $ 164.0 million
  • GAAP net income of $ 31.7 million to $ 35.4 million
  • Non-GAAP net income * from $ 38.3 million to $ 42.2 million
  • GAAP diluted earnings per share from $ 0.73 to $ 0.82
  • Diluted Non-GAAP EPS * went from $ 0.88 to $ 0.97

Preliminary results for the full year 2020

  • Revenue from $ 579.3 million to $ 583.3 million
  • GAAP net income of $ 87.7 million to $ 91.4 million
  • Non-GAAP net income * rose from $ 123.5 million to $ 127.4 million
  • GAAP diluted earnings per share from $ 2.03 to $ 2.11
  • Diluted Non-GAAP EPS * from $ 2.86 to $ 2.95

These preliminary unaudited financial results are based on preliminary unaudited information and estimates made by management and are inherently uncertain and are subject to change in connection with the Company's financial procedures and the completion of the Company's financial statements for the fourth fiscal quarter and fiscal year ended December 31. 2020 as well as any adjustments that were determined by the company's auditors in the course of their audit and, if applicable, the audit of such financial statements. The actual results and other information for the fourth fiscal quarter and the fiscal year ended December 31, 2020 could differ materially from these preliminary unaudited financial results. These preliminary unaudited financial results have not been prepared in the light of adherence to the American Institute of Certified Public Accountants' guidelines for projected financial information, but have been reasonably prepared and reflected in the opinion of the Company's management and management's best estimates and judgments currently available To the best of management's knowledge and belief, the company's expectations for the fourth fiscal quarter and the fiscal year ended December 31, 2020. Neither the Company's independent auditors, nor any other independent auditor, have compiled, reviewed, or performed any process in relation to these unaudited preliminary financial results, nor have they provided any opinion or any other form of representation about, and accept no responsibility for, these results preliminary unaudited financial results and disclaim all association with them. These preliminary unaudited financial results should not be used as a substitute for full annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”).

* Non-GAAP Net Income and Non-GAAP Diluted Earnings Per Share (EPS) are non-GAAP financial measures that are not prepared under GAAP. The following is a description of these non-GAAP financial measures using non-GAAP financial information and a reconciliation of the GAAP measures to non-GAAP measures attached as Appendix A to provide the GAAP financial measures directly comparable to them reconcile non-GAAP financial metrics.

telephone conferenceAcacia Communications plans a conference call and live audio webcast to discuss the latest developments, these preliminary unaudited financial results for the fourth quarter and fiscal year ending December 31, 2020, and the company's outlook and strategy at 5:00 p.m. CET . Eastern time today. This call does not contain a question-and-answer session. The live audio webcast of the call, as well as the company's press release and corporate presentation, are available on Acacia Communications' Investor Relations website at http://ir.acacia-inc.com. The US dial-in number for the call is (877) 407-8293 (or (201) 689-8349 for callers outside the US). Please request to be part of the Acacia Communications call. A replay of the conference call will be available until January 18, 2021 at 11:59 p.m. CET. Eastern Time, while an archived version of the webcast will be available on the Acacia Communications Investor Relations website for 90 days. The US dial-in number for conference call playback is (877) 660-6853 (or (201) 612-7415 for callers outside the US). The redo access code is 13714805.

Use of Non-GAAP Financial InformationThis press release contains non-GAAP financial measures that have not been prepared in accordance with or as an alternative to GAAP. In addition, these non-GAAP financial measures are not based on any standardized methodology required by GAAP and are not necessarily comparable to measures with similar titles from other companies.

Appendix A to this press release contains a reconciliation of Acacia Communications' most comparable preliminary GAAP financial measures to preliminary non-GAAP net income and preliminary diluted non-GAAP EPS for the fourth quarter and year ended December 31, 2020.

Acacia Communications believes that providing these non-GAAP financial metrics to investors, in addition to directly comparing GAAP metrics, gives investors the benefit of viewing the company's performance against the same financial metrics that the management team uses in many key assessment decisions how the earnings situation could look in the future. Acacia Communications' management does not believe that non-cash items such as cash & cash equivalents should be avoided. B. Non-cash compensation related to stock awards are part of the critical decision-making process. Acacia Communications' management also does not believe that items such as warranties and other costs arising from a quality issue in the manufacturing process, certain litigation-related costs and unwinding reserves outside the normal course of the Company's business, acquisition-related costs or certain adjustments to its valuation The value adjustment on deferred tax claims reflects the underlying operating performance of the company. In connection with the seven-year denial of export privileges that the U.S. Department of Commerce imposed on ZTE on April 15, 2018 and which was lifted on July 13, 2018, the company recorded write-downs on inventories. Acacia Communications management does not believe that these amortization and any subsequent adjustments based on management's ongoing assessment of the ZTE inventory reflect the company's underlying operating performance. Therefore, Acacia Communications may exclude these items from non-GAAP net income and non-GAAP diluted EPS.

Acacia Communications' non-GAAP financial measures reflect adjustments based on the measures described below and the related income tax effects. The income tax effect of these non-GAAP adjustments is determined by recalculating the income tax expense without these adjustments.

Non-GAAP Net Income and Non-GAAP Diluted EPS. Acacia Communications defines non-GAAP net income as the net income reported on the company's consolidated income statement, excluding the impact of stock-based compensation, which is a non-cash charge, and warranty and other costs that emissions, ZTE-related depreciation on inventories and subsequent adjustments, certain process-related costs and processing reserves, acquisition-related costs, the tax effects of these excluded items and certain adjustments to the value adjustment on deferred tax claims result from the quality of the manufacturing process.

Acacia Communications has reported non-GAAP net income and diluted non-GAAP earnings per share because the company believes that excluding the items discussed above will make it easier to compare its results of operations with other companies in its industry and underlying performance the company's more accurately reflects continuation of business operations.

Acacia Communications uses these non-GAAP financial metrics to evaluate operating performance and trends, and to make planning decisions. Acacia Communications believes that each of these non-GAAP financial measures will help identify underlying trends in its business that may otherwise be masked by the effects of the company's excluded items. Accordingly, Acacia Communications believes that these financial metrics will provide investors and others with useful information to understand and evaluate the results of operations, improve their overall understanding of past performance and future prospects for the company, and provide greater transparency about the financial metrics used Management in its financial and operational decision-making.

Acacia Communications' non-GAAP financial measures are non-GAAP and should not be viewed in isolation or as an alternative to GAAP measures. There are a number of restrictions on using these non-GAAP financial measures in lieu of Net Income or Diluted EPS, which are the most directly comparable GAAP measures. Some of these limitations are:

  • Acacia Communications excludes stock-based compensation expense from any of its non-GAAP financial metrics, although it has been and will be a significant recurring expense to its business recently and an important part of the company's compensation strategy ;;
  • Acacia Communications excludes the tax benefits arising from the exercise of unqualified stock options, the disqualifying sale of incentive stock options and ESPP shares, and the exercise of restricted share units, including any tax benefits recognized by the Company in the year and shortfalls in the taxable transaction in the Calculation of Non-GAAP Net Income and Non-GAAP Diluted EPS. The company believes that excluding these tax benefits will allow investors to see the full effect of excluding any stock-based compensation expense on operating income. These benefits are linked to the exercise or exercise of the underlying employee share awards and the price of the company's common stock at the time of exercise or exercise. These factors can vary from time to time regardless of the company's operational performance. Similar to stock-based compensation expenses, the company believes that excluding these tax breaks provides investors and management with a better view of the underlying performance of its business and makes it easier to compare it to other time periods as well as the results of other companies in its industry.
  • Acacia Communications excludes warranty and other costs arising from a quality issue in the manufacturing process from non-GAAP net income and non-GAAP diluted EPS because management does not believe that the cost exceeds the underlying operating performance of the Reflect company.
  • Acacia Communications is excluding certain adjustments to its allowance for deferred tax assets on non-GAAP net income and non-GAAP diluted EPS measures because management does not believe the charges reflect the company's underlying operating performance.
  • Acacia Communications excludes ZTE-related inventory write-downs and subsequent adjustments to non-GAAP net income and non-GAAP diluted EPS because management believes that the activity is unrelated to the normal course of business of the company and is not related to the underlying asset the company's operating performance;
  • Acacia Communications excludes certain litigation costs and run-off reserves from its non-GAAP net income and non-GAAP diluted EPS when management believes that the activity is unrelated to the normal course of business of the company and is not related to the company's underlying operating performance reflects. These costs may persist in the future. and
  • Acacia Communications excludes acquisition-related costs from non-GAAP net income and non-GAAP diluted EPS because management believes that the activity is not related to the normal course of business of the company and does not reflect the company's underlying operating performance.

Because of these limitations, non-GAAP financial measures should be considered along with other operational and financial performance measures presented in accordance with GAAP.

Acacia Communications' use of non-GAAP financial measures and the underlying methodology in excluding certain items are not necessarily indicative of future expected results of operations, or Acacia Communications will in fact not record these items in future periods.

Investors should review Acacia Communications' non-GAAP financial measures in conjunction with the corresponding GAAP financial measures.

About Acacia CommunicationsAcacia Communications designs, manufactures, and markets coherent high-speed optical interconnect products that transform communications networks through improvements in performance, capacity, and cost. By implementing optical interconnect technology in a silicon-based platform, Acacia Communications is known as “siliconizing the optical interconnect”. Acacia Communications is able to offer higher speed and density products with lower power consumption that meet the needs of the cloud and service providers and can be easily and cost effectively integrated with existing network equipment. www.acacia-inc.com.

Forward-Looking StatementsThis press release contains statements regarding Acacia Communications and its future expectations, plans, and prospects that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding preliminary unaudited financial results for the fourth fiscal quarter and fiscal year ended December 31, 2020 For that purpose, all statements contained herein that are not historical facts may be considered forward-looking statements. Without limiting the foregoing, the words "may", "should", "would", "expected", "plans", "anticipated", "could", "intends", "aim", "project", "contemplate" "," Believes "," estimates "," says "," potentially "," will "or" assumes "or the negative of these terms or other similar expressions are intended to help you identify forward-looking statements. The forward-looking statements in this press release are only predictions. The events and circumstances contained in the forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Acacia Communications has based these forward-looking statements largely on its current expectations and projections about future events and trends that the company believes may affect its business, financial and earnings position. These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties, and assumptions including, without limitation, the completion of the company's financial statements and financial statements for the fourth fiscal quarter and fourth fiscal year ended December 31, 2020 and all Adjustments identified by the company's auditors in the course of their audit and, if applicable, the audit of such financial statements; the potential impact on the business, reputation, relationships, results of operations, cash flows and financial condition of the company as a result of the proposed acquisition (the "Merger") of the Company by Cisco Systems, Inc. ("Cisco") under the Agreement and the merger plan (the “Merger Agreement”) by and between the Company, Cisco and Amarone Acquisition Corp., termination of the merger, uncertainty regarding the merger or litigation related to the merger; pending or potential litigation against the Company or its directors or officers in connection with the merger, merger agreement or termination, including litigation initiated by Cisco against the Company, and any adverse consequences of such litigation; the effects of any announcements related to the Merger and the Merger Agreement, including with respect to their termination and contestations to their termination; the costs, fees, expenses and other costs related to the merger, including in relation to any related litigation; Risks that the Merger and litigation related to the Merger may distract management from the day-to-day operations of the Company, disrupt the Company's business, and create potential difficulties in attracting and retaining employees; the company's ability to maintain its listing on the Nasdaq Global Select Market; Uncertainty as to the extent to which the coronavirus disease, COVID-19, pandemic and related response measures adversely affect the company's business, results of operations, cash flows and financial condition, or the business and financial condition of the company's customers and suppliers; the company's ability to maintain or increase revenue from its larger customers, generate revenue from new customers, or offset the discontinuation of focused purchases by its larger customers with purchases from new or existing customers; the company's ability to anticipate the timing and extent of demand for its products, including from its largest customers; the adverse effects of adverse economic conditions caused or exacerbated by the ongoing COVID-19 pandemic; the company's expectations for expenses and income, its ability to maintain and grow gross profits, the company's adequate liquidity, and the need for additional funding; the company's ability to manufacture products with no problems, defects, defects, or flaws; the Company's expected growth strategies, its competitive expectations, expected trends and challenges in the Company's business and in the markets in which it operates; the company's expectations for the supply chain and manufacturing, and capacity and stability; the size and growth of the potential markets for the Company's products and the ability to serve those markets; The scope, progress, expansion, and cost of developing and marketing the company's products; the timing, speed and degree of launch of one of its products and the market acceptance of one of its products; the company's ability to establish and maintain development partnerships; the company's ability to attract or retain key personnel; Company's expectations regarding federal, state, and foreign regulatory requirements, including export controls, changes and interpretations of tax law, economic sanctions, and anti-corruption regulations; regulatory or legal developments in the United States and abroad, including trade policies and tariffs, and export control laws or regulations that could affect the company's ability to sell its products to its customer ZTE Kangxun Telecom Co. Ltd. or any of its affiliates sell, hinder its ability to sell its products to other customers in certain foreign jurisdictions, including China, or to hinder the sale of those customers in the United States; the company's ability to obtain and maintain intellectual property protection for its products; and other risks set out under the heading "Risk Factors" in the Company's public filings with the SEC, including the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and others that the Company may file Filings with the SEC from time to time. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as an indication of future events. Acacia Communications assumes no obligation to update any forward-looking statements in this press release as a result of new information, future events, or otherwise.

SCHEDULE A.ACACIA COMMUNICATIONS, INC. Transition From GAAP MEASURES TO NON-GAAP MEASURES (in thousands, except data per share) (unaudited)

Quarter ended December 31, 2020 The whole year ended December 31, 2020
Low end-of-range High end of range Low end-of-range High end of range
Non-GAAP Net Income
GAAP Net Income $ 31,678 $ 35,363 $ 87,693 $ 91.378
Share-based payment 7.390 7,570 33,606 33,786
Warranty and other costs due to quality problems in the manufacturing process (265 ) (295 ) (1.003 ) (1.033 )
Process costs and processing reserves – – – – 8,000 8,000
Inventory depreciation – – – – (132 ) (132 )
acquisition cost 500 600 2.133 2.233
Tax effect of excluded items (676 ) (720 ) (5.960 ) (6.005 )
Adjustments to the value adjustment (336 ) (336 ) (854 ) (854 )
Non-GAAP Net Income $ 38.291 $ 42.182 $ 123.483 $ 127.373
Diluted Non-GAAP EPS
GAAP diluted EPS $ 0.73 $ 0.82 $ 2.03 $ 2.11
Share-based payment 0.17 0.18 0.78 0.78
Warranty and other costs due to quality problems in the manufacturing process (0.01 ) (0.01 ) (0.02 ) (0.02 )
Process costs and processing reserves – – – – 0.18 0.19
Inventory depreciation – – – – – – – –
acquisition cost 0.01 0.01 0.05 0.05
Tax effect of excluded items (0.01 ) (0.02 ) (0.14 ) (0.14 )
Adjustments to the value adjustment (0.01 ) (0.01 ) (0.02 ) (0.02 )
Diluted Non-GAAP EPS $ 0.88 $ 0.97 $ 2.86 $ 2.95
Weighted average stocks used to calculate Diluted GAAP and Diluted Non-GAAP EPS 43,340 43,340 43.233 43.233

SOURCE Acacia Communications, Inc.

For more information:

Investor Relations Contact: Monica GouldOffice: (212) 871-3927E-Mail: [email protected]

Lindsay SavareseOffice: (212) 331-8417E-Mail: [email protected]

PR Contact: Kelly KarrOffice: (408) 718-9350 Email: [email protected]

Source: Acacia Communications, Inc.