InterDigital Inc (IDCC)

[FISH21049]

InterDigital Announces Financial Results for Second Quarter 2019

Thu August 1, 2019 8:30 AM

|GlobeNewswire|About: IDCC, TCLRY

New wireless licensing and expansion of business to consumer electronics drive 10% year-over-year growth in recurring revenue

WILMINGTON, Del., Aug. 01, 2019 (GLOBE NEWSWIRE) -- InterDigital, Inc. (IDCC), a mobile and video technology research and development company, today announced results for the second quarter ended June 30, 2019.

Second Quarter 2019 Financial Highlights

Second quarter 2019 recurring revenue was $74.4 million, a 10% increase compared to recurring revenue of $67.5 million in second quarter 2018. The increase reflects the contribution of InterDigital's new consumer electronic licensing program, as well as revenue from agreements signed in the second half of 2018 in the company's mobile device licensing program.
Second quarter 2019 operating expenses were $66.7 million, compared to $53.9 million in second quarter 2018. The increase was primarily driven by $13.2 million in costs related to the acquisition of Technicolor SA's (Euronext Paris:TCH) (OTCQX:TCLRY) patent licensing business and Research and Innovation (R&I) research and development organization. Of those, $5.9 million were either transaction, integration or amortization expenses.
Second quarter 2019 net income1 was $7.7 million, or $0.24 per diluted share compared to net income1 $11.0 million, or $0.31 per diluted share, in second quarter 2018.
From January 1, 2019 through June 30, 2019, the company repurchased 2.5 million shares of common stock under its stock repurchase program for a total cost of $171.3 million, $19.6 million of which is attributable to the repurchase by the company of its common stock in connection with the issuance of the 2024 Notes (as defined below). $96.8 million remains available for repurchase subject to the increase to the buyback authorization in May 2019.
In second quarter 2019, the company recorded $22.7 million of cash used in operating activities, compared to $6.8 million of cash provided in second quarter 2018. The company used $33.4 million of free cash flow2 in second quarter 2019, compared to $0.8 million of free cash flow used in second quarter 2018. These decreases were primarily driven by the timing of cash collections under fixed-fee agreements. Ending cash and short-term investments as of June 30, 2019 totaled $0.8 billion.
In second quarter 2019, the company recognized a tax provision of $5.0 million compared to a tax provision of $1.1 million in second quarter 2018.
“With the completion of the acquisition of Technicolor’s R&I team, InterDigital now has fully integrated research-driven businesses in two of today’s most exciting technology segments, and has become one of the largest pure research and licensing businesses in the world,” said William J. Merritt, President and CEO of InterDigital. “That research and our patent portfolio are perfectly aligned with today’s converged devices and advanced services, and represent what we see as a powerful, significantly de-risked platform for growth going forward.”

Additional Highlights

On June 3, 2019, the company completed a private offering of $400 million in aggregate principal amount of 2.00% Senior Convertible Notes due 2024 (the “2024 Notes”). The net proceeds from the offering were approximately $391.6 million after deducting the initial purchasers’ fees and estimated offering expenses. A portion of the net proceeds from the issuance of the 2024 Notes were used to repurchase $221.1 million in aggregate principal amount of the company’s existing 1.50% senior convertible notes due 2020, and to repurchase $19.6 million in shares of the company’s common stock.
On May 31, 2019, the company completed its acquisition of the R&I research and development organization of Technicolor. The acquisition made the company one of the largest long-term R&D and licensing companies in the world, with approximately 340 engineers worldwide.
Other Income in second quarter 2019 included $8.7 million to record the net impact of a gain resulting from our purchase of Technicolor’s R&I organization and a loss on extinguishment of debt related to our May 2019 repurchase of a portion of our convertible notes.
On July 19, 2019, the company completed the sale of its Hillcrest Laboratories, Inc. business to a subsidiary of CEVA, Inc. As part of the transaction, InterDigital retained substantially all of the patent assets that it acquired in 2016.