Press Release
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RANCHO SANTA MARGARITA, Calif.--(BUSINESS WIRE)--Nov. 8, 2007--Liquidmetal(R) Technologies Inc. (OTCBB:LQMT) today reported financial results for the three months ended September 30, 2007. Revenue for the Third Quarter was $7.1 million. This represents a (15%) decline from $8.3 million in the Second Quarter due to the implementation of the licensing model for part of the business by the Company during the Third Quarter. Financial numbers for the quarter include royalties on sales by licensees as opposed to gross revenue for direct customer sales by the Company as reported in the past. As indicated last quarter, by pursuing licensing opportunities, Liquidmetal Technologies is inherently trading off higher, but less profitable top-line revenues in favor of higher profit margin, but lower absolute revenues from royalties and material sales. For comparison purposes, revenues for the quarter would have been $9.3 million if the gross revenues would have been captured by LQMT for the quarter.
Overall Gross Margins improved to 27% in the Third Quarter versus 8% in the Second Quarter. This significant improvement in the Company's gross margin is directly attributable to its transition to the licensing model providing the ability to reduce manufacturing costs while receiving royalties and material sales. Selling, General & Administrative Expenses came in at $1.9 million for the quarter, down from $2.5 million in the Second Quarter, and Research & Development Expense was at $0.3 million in the Third Quarter, a level consistent with the Second Quarter.
The improvement in the gross margin of the business and the reduction in the overall expenses allowed us to achieve the best results in the Company's history. Earnings before interest, taxes, and depreciation and non-cash expenses ("Adjusted EBITDA") for the Third Quarter were $0.7 million. This continues the improving trend seen in recent quarters. Under GAAP, the Company had a net loss of $1.5 million in the Third Quarter compared to a net loss of $3.0 million in the Second Quarter. The variation of net loss results reflects the accounting treatment for the outstanding warrants and conversion features of the convertible notes which are non-cash expenses.
Commenting on the operations, Mr. Larry Buffington, President and CEO, noted, "We are very pleased with the smooth transition which we made this quarter in licensing the Korean business. While the transition did create a reduction in revenues for the quarter as we had indicated it would, it generated a significant improvement in our gross margin and the best earnings for the Company. We hope to build on this model of licensing out certain markets while we continue to manufacture and build key markets ourselves to continue to improve the business going forward."
Conference Call
As previously announced, Liquidmetal Technologies will host a conference call at 4:30 pm (EST) on Thursday, November 8th, 2007 to discuss the results.
Listeners may access the conference call live over the Internet from Liquidmetal Technologies' website http://ir.liquidmetal.com or at http://www.companyboardroom.com.
This press release may contain "forward-looking statements" that involve risks and uncertainties, including statements regarding our plans, future events, objectives, expectations, forecasts, or assumptions. Any statement in this press release that is not a statement of historical fact is a forward-looking statement, and in some cases, words such as "believe," "estimate," "project," "expect," "intend," "may," "anticipate," "plans," "seeks," and similar expressions identify forward-looking statements. These statements involve risks and uncertainties that could cause actual outcomes and results to differ materially from the anticipated outcomes or result, and undue reliance should not be placed on these statements. These risks and uncertainties may include: our limited operating history in developing and manufacturing products from bulk amorphous alloys; the adoption of our alloys by customers; the commercial success of our customer's products; our ability to identify, develop, and commercialize new applications for our alloys; competition with suppliers of incumbent materials; the development of new materials that render our alloys obsolete; the ability to manage our anticipated growth; our limited direct experience in manufacturing bulk alloy products; scaling-up our manufacturing facilities; protecting our intellectual property; problems associated with manufacturing and selling our alloys outside of the United States; and other risks and uncertainties discussed in filings made with the Securities and Exchange Commission (including risks described in subsequent reports on Form 10-Q, Form 10-K, Form 8-K, and other filings). Liquidmetal Technologies disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Use of Non-GAAP Numbers
The financial results disclosed in this release include certain measures calculated and presented in accordance with generally accepted accounting principles in the United States of America ("GAAP"). In addition to the GAAP financial measures, Liquidmetal Technologies provides supplemental, non-GAAP financial measures to facilitate evaluation of Liquidmetal Technologies' operating performance. Management believes that Adjusted EBITDA is a useful financial measure that facilitates evaluating the past and future performance of Liquidmetal Technologies' operations on a comparable basis. Liquidmetal Technologies reports Adjusted EBITDA as an alternative method for assessing total company performance. Included in this press release is a reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measure as provided with the financial statements attached to this press release.
Liquidmetal Technologies, Inc.
Consolidated Statements of Operations Data
(In thousands, except per share data)
For the three months For the nine months
ended ended
----------------------- -----------------------
9/30/2007 9/30/2006 9/30/2007 9/30/2006
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
Revenue $ 7,106 $ 8,040 $ 20,504 $ 21,685
Cost of sales 5,194 6,449 19,321 17,337
----------- ----------- ----------- -----------
Gross profit 1,912 1,591 1,183 4,348
Operating expenses
Selling, general and
administrative
expenses 1,853 2,290 6,880 7,363
Research and
development
expenses 331 269 887 753
----------- ----------- ----------- -----------
Total operating
expenses 2,184 2,559 7,767 8,116
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Loss before interest,
other income and
income taxes (272) (968) (6,584) (3,768)
Loss from
extinguishments of
debt - - (648) -
Change in value of
warrants, gain
(loss) 220 1,361 4,476 (1,354)
Change in value of
conversion feature,
gain (loss) 625 1,987 6,137 (1,933)
Other income - - 49 572
Interest expense (1,991) (2,302) (7,454) (7,361)
Interest income 14 8 121 17
----------- ----------- ----------- -----------
(Loss) income before
minority interests
and income taxes (1,404) 86 (3,903) (13,827)
Minority interests (66) - (66) -
Income taxes - - - -
----------- ----------- ----------- -----------
Net (loss) income $ (1,470) $ 86 $ (3,969) $ (13,827)
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Net (loss) income per
share - basic and
diluted $ (0.03) $ 0.00 $ (0.09) $ (0.32)
=========== =========== =========== ===========
Weighted average
common shares - basic
and diluted 44,652 44,100 44,736 43,664
=========== =========== =========== ===========
Liquidmetal Technologies, Inc.
Reconciliation of EBITDA and Adjusted EBITDA
(In thousands)
For the three months For the nine months
ended ended
----------------------- -----------------------
9/30/2007 9/30/2006 9/30/2007 9/30/2006
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
Net (loss) income as
reported $ (1,470) $ 86 $ (3,969) $ (13,827)
Add Back:
Interest expense,
net 1,977 2,294 7,333 7,344
Depreciation &
amortization 765 893 2,499 2,658
----------- ----------- ----------- -----------
EBITDA $ 1,272 $ 3,273 $ 5,863 $ (3,825)
Add Back:
Minority interests 66 - 66 -
Loss from
extinguishment of
debt - - 648 -
Change in value of
warrants, (gain)
loss (220) (1,361) (4,476) 1,354
Change in value of
conversion feature,
(gain) loss (625) (1,987) (6,137) 1,933
Stock based
compensation 172 296 575 831
----------- ----------- ----------- -----------
Adjusted EBITDA $ 665 $ 221 $ (3,461) $ 293
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CONTACT: Liquidmetal Technologies
Otis Buchanan, 949-635-2120
otis.buchanan@liquidmetal.com
SOURCE: Liquidmetal Technologies Inc.