TQNT (MM)

TriQuint Semiconductor, Inc. (NASDAQ: TQNT), a leading RF solutions supplier and technology innovator, announces its financial results for the quarter ended March 30, 2013, including the following highlights:

• Revenue for the quarter was $184.2 million
• GAAP net loss for the quarter was $27.9 million, or $(0.17) per share
• Non-GAAP net loss for the quarter was $27.2 million, or $(0.17) per share
• Received the 2013 CS Industry Award for GaN thermal management breakthroughs
• Released 5 new Transimpedance Amplifiers for Optical market
• Launched premium TC-SAW and BAW filters to support 4G and Wi-Fi Coexistence
• Healthy design win traction with highly efficient MMPAs at major OEMs

Commenting on the results for the quarter ended March 30, 2013, Ralph Quinsey, President and Chief Executive Officer, stated, “Q1 results, while disappointing, should be our low quarter for 2013. We have healthy design win traction and I expect strong second half revenue will improve utilization and push us back into profitability for the full year. We are well positioned in each of our markets to regain growth and margin momentum.”

Summary Financial Results for the Three Months Ended March 30, 2013:

Revenue for the first quarter of 2013 was $184.2 million, down 15% from the first quarter of 2012 and down 21% sequentially. Mobile Device market revenue declined 30%, Networks grew 2% and Defense was down 16%, in each case sequentially.

GAAP

Gross margin for the first quarter of 2013 was 21.0%, down sequentially from 29.3% in the fourth quarter of 2012 and down 28.9% from the first quarter of 2012 due to lower revenue and about $5 million in charges from a now resolved quality issue.

Operating expenses for the first quarter of 2013 were $73.3 million, or 40% of revenue, up from $72.0 million in the previous quarter and $66.2 million for the same period in 2012. Increased R&D spending drove the change.

Net loss for the first quarter of 2013 was $27.9 million or $(0.17) per share, compared with a net loss of $3.8 million, or $(0.02) per share, in the previous quarter and net income of $1.9 million or $0.01 per diluted share for the three months ended March 31, 2012.

Cash and investments increased by $2.2 million to $141.1 million in the quarter.

Non-GAAP

Gross margin for the first quarter was 22.8%, down sequentially from 31.7% and down from 30.4% for the same period in 2012. Lower revenue and about $5 million in charges from a now resolved quality issue drove the decline.

Operating expenses for the quarter were $68.0 million, up $1.4 million sequentially. Increased R&D spending drove the change.

Net loss for the first quarter of 2013 was $27.2 million, or $(0.17) per share, down sequentially from net income of $6.2 million or $0.04 per diluted share, and down from net income of $4.1 million or $0.02 per diluted share for the three months ended March 31, 2012.

Please see the discussion of non-GAAP financial measures below and the attached supplemental schedule for a reconciliation of GAAP to non-GAAP financial measures.

Outlook:

The Company believes second quarter 2013 revenue will be between $185 million and $190 million. Non-GAAP gross margin is expected to be between 27% and 29% with higher factory utilization and the absence of the first quarter quality issue driving the expected sequential improvement. Second quarter non-GAAP net loss per share is expected to be between $(0.10) and $(0.12) per share. The Company is 92% booked to the midpoint of revenue guidance.

Additional Information regarding March 30, 2013 Results:

GAAP and non-GAAP financial measures are presented in the tables below (in millions, except for percentage and per share information). Non-GAAP financial measures are reconciled to the corresponding GAAP financial measures in the financial statement portion of this press release.

GAAP RESULTS                    

Three Months Ended

 

Q1 2013

Q4 2012

Changevs.

Q4 2012

 

Q1 2012

 

Changevs.Q1 2012

Revenue $ 184.2   $ 233.6   (21 )%   $ 216.7     (15 )% Gross Profit $ 38.8   $ 68.5   (43 )%   $ 62.6     (38 )% Gross Margin % 21.0 % 29.3 % (8.3 )% 28.9 %   (7.9 )% Operating Loss $ (34.5 ) $ (3.6 ) (858 )% $ (3.6 )   (858 )% Net (Loss) Income $ (27.9 ) $ (3.8 ) (634 )% $ 1.9     (1,568 )% Diluted per share $ (0.17 ) $ (0.02 ) $ (0.15 )   $ 0.01     $ (0.18 )                   NON-GAAP RESULTS A                  

Three Months Ended

 

Q1 2013

Q4 2012

Changevs.Q4 2012

 

Q1 2012

 

Changevs.Q1 2012

Revenue $ 184.2   $ 233.6   (21 )% $ 216.7     (15 )% Gross Profit $ 42.0   $ 74.1   (43 )% $ 65.8     (36 )% Gross Margin % 22.8 % 31.7 % (8.9 )% 30.4 %   (7.6 )% Op (Loss) Income $ (26.0 ) $ 7.5   (447 )% $ 4.4     (691 )% Net (Loss) Income $ (27.2 ) $ 6.2   (539 )% $ 4.1     (763 )% Diluted per share $ (0.17 ) $ 0.04   $ (0.21 ) $ 0.02     $ (0.19 ) A Excludes stock based compensation charges, non-cash tax (benefit) expense, certain entries associated with acquisitions and other specifically identified non-routine transactions.

Conference Call:

TriQuint will host a conference call this afternoon at 1:30 p.m. PDT to discuss the results for the quarter and our future expectations for the company. To access the conference call, please dial (888) 813-6582 domestically, or (706) 643-7082 internationally, approximately ten minutes prior to the beginning of the call, using passcode 24313821. The call can also be heard via webcast accessed through the “Investors” section of TriQuint's web site at: http://invest.triquint.com. A replay of the conference call will be available until May 1, 2013.

Non-GAAP Financial Measures:

This press release provides financial measures for non-GAAP net income (loss), diluted earnings (loss) per share, gross profit, gross margin, operating expenses and operating income (loss) that exclude equity compensation expense, non-cash tax (benefit) expense, certain entries associated with acquisitions and other specifically identified non-routine items, and are therefore not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”). The charges associated with acquisitions reflect the amortization of intangible and tangible assets recorded in connection with acquisition accounting and charged to the income statement. The non-cash tax (benefit) expense excludes certain deferred tax charges and benefits that do not result in a tax payment or tax refund. Management believes that these non-GAAP financial measures provide meaningful supplemental information that enhances management's and investors' ability to evaluate TriQuint's operating results.

These non-GAAP financial measures are not intended to be used in isolation and should not be considered a substitute for any other performance measure determined in accordance with GAAP. Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool, including that other companies may calculate similar non-GAAP financial measures differently than we do, limiting their usefulness as a comparative tool. The company compensates for these limitations by providing specific information regarding the GAAP amount excluded from the non-GAAP financial measures. The company further compensates for the limitations of our use of non-GAAP financial measures by presenting comparable GAAP measures more prominently. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with our GAAP net income and net income per share.

Forward-Looking Statements:

This press release contains forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements under "Outlook" regarding TriQuint's anticipated second quarter revenues, non-GAAP gross margin and net loss per share; our bookings to revenue; and statements regarding steps that will lead TriQuint back to growth and improved financial performance in 2013. These forward-looking statements are statements of management's opinion and are subject to various assumptions, risks, uncertainties and changes in circumstances. Actual results may vary materially from those expressed or implied in the statements herein or from historical results, due to changes in economic, business, competitive, technological and/or regulatory factors. More detailed information about risk factors that may affect actual results are set forth in TriQuint's reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission. These reports can be accessed at the SEC web site, www.sec.gov. Except as required by law, TriQuint undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.

A reader of this release should understand that it is not possible to predict or identify all risk factors and should not consider the risk factors described in TriQuint's filings with the Securities and Exchange Commission to be a complete statement of all potential risks and uncertainties.

Facts About TriQuint

Founded in 1985, TriQuint Semiconductor (NASDAQ: TQNT) is a leading RF solutions supplier and technology innovator for the world's top communications, defense and aerospace companies. People and organizations around the world need real-time, all-the-time connections; TriQuint products help reduce the cost and increase the performance of connected mobile devices and the networks that deliver critical voice, data and video communications. With the industry's broadest technology portfolio, recognized R&D leadership, and expertise in high-volume manufacturing, TriQuint creates standard and custom products using gallium arsenide (GaAs), gallium nitride (GaN), surface acoustic wave (SAW) and bulk acoustic wave (BAW) technologies. The company has ISO9001-certified manufacturing facilities in the U.S., production in Costa Rica, and design centers in North America and Germany. For more information, visit www.triquint.com.

TriQuint: Reach Further, Reach Faster™

TQNT-F

TriQuint Semiconductor, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)         March 30, 2013

December 31, 2012

Assets Current assets: Cash and cash equivalents $ 120,679 $ 116,653 Investments in marketable securities 20,461 22,305 Accounts receivable, net 106,076 132,729 Inventories 136,177 138,246 Prepaid expenses 11,511 8,938 Deferred tax assets, net 13,296 12,530 Other current assets 48,796   48,382   Total current assets 456,996 479,783 Property, plant and equipment, net 463,746 448,741 Goodwill 4,391 4,391 Intangible assets, net 21,397 23,163 Deferred tax assets – noncurrent, net 65,296 57,185 Other noncurrent assets, net 36,921   40,415   Total assets $ 1,048,747   $ 1,053,678     Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 77,752 $ 65,388 Accrued payroll 33,929 33,254 Other accrued liabilities 15,722   15,132   Total current liabilities 127,403 113,774 Long-term liabilities: Long-term income tax liability 3,366 2,809 Cross-licensing liability 12,560 12,818 Other long-term liabilities 17,010   15,878   Total liabilities 160,339 145,279 Stockholders' equity: Common stock 161 161 Additional paid-in capital 684,159 676,203 Accumulated other comprehensive loss (364 ) (366 ) Retained earnings 204,452   232,401   Total stockholders' equity 888,408   908,399   Total liabilities and stockholders' equity $ 1,048,747   $ 1,053,678    

TriQuint Semiconductor, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)           Three Months Ended

March 30,2013

December 31, 2012

March 31,2012

  Revenues $ 184,209 $ 233,621 $ 216,730 Cost of goods sold 145,437   165,165   154,141   Gross profit 38,772 68,456 62,589   Operating expenses: Research, development and engineering 46,071 44,453 37,074 Selling, general and administrative 27,241   27,569   29,086   Total operating expenses 73,312 72,022 66,160       Operating loss (34,540 ) (3,566 ) (3,571 )   Other (expense) income: Interest income 38 45 49 Interest expense (1,139 ) (784 ) (350 ) Gain/recovery of investment — — 6,953 Other, net (309 ) (53 ) 110   Other (expense) income, net (1,410 ) (792 ) 6,762       (Loss) income before income tax (35,950 ) (4,358 ) 3,191   Income tax (benefit) expense (8,001 ) (602 ) 1,308   Net (loss) income $ (27,949 ) $ (3,756 ) $ 1,883     Per Share Data: Basic per share net (loss) income $ (0.17 ) $ (0.02 ) $ 0.01 Diluted per share net (loss) income $ (0.17 ) $ (0.02 ) $ 0.01   Weighted-average shares outstanding: Basic 160,758 162,083 166,237 Diluted 160,758 162,083 170,566  

TriQuint Semiconductor, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (% of revenue)           Three Months Ended   March 30, 2013

December 31, 2012

March 31, 2012   Revenues 100.0 % 100.0 % 100.0 % Cost of goods sold 79.0 % 70.7 % 71.1 % Gross profit 21.0 % 29.3 % 28.9 %   Operating expenses: Research, development and engineering 25.0 % 19.0 % 17.1 % Selling, general and administrative 14.8 % 11.8 % 13.4 % Total operating expenses 39.8 % 30.8 % 30.5 %       Operating loss (18.8 )% (1.5 )% (1.6 )%   Other (expense) income: Interest income 0.0 % 0.0 % 0.0 % Interest expense (0.6 )% (0.3 )% (0.2 )% Gain/recovery of investment — % — % 3.2 % Other, net (0.2 )% (0.1 )% 0.1 % Other (expense) income, net (0.8 )% (0.4 )% 3.1 %       (Loss) income before income tax (19.6 )% (1.9 )% 1.5 %   Income tax (benefit) expense (4.4 )% (0.3 )% 0.6 % Net (loss) income (15.2 )% (1.6 )% 0.9 %  

TriQuint Semiconductor, Inc.

SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP RESULTS (Unaudited) (Dollars in thousands, except per share amounts)         Three Months Ended   March 30, 2013     December 31, 2012     March 31, 2012   (% of revenues) (% of revenues) (% of revenues) GAAP GROSS PROFIT $ 38,772 21.0 % $ 68,456 29.3 % $ 62,589 28.9 % Adjustment for stock based compensation charges 2,036 1.1 % 2,544 1.1 % 2,106 1.0 % Adjustment for accelerated depreciation of certain machinery and equipment — — % 2,018 0.9 % — — % Adjustment for charges associated with acquisitions 1,208   0.7 % 1,126   0.4 % 1,095   0.5 % NON-GAAP GROSS PROFIT $ 42,016 22.8 % $ 74,144 31.7 % $ 65,790 30.4 %   GAAP OPERATING EXPENSES $ 73,312 39.8 % $ 72,022 30.8 % $ 66,160 30.5 % Adjustment for stock based compensation charges (4,987 ) (2.7 )% (5,062 ) (2.2 )% (4,591 ) (2.1 )% Adjustment for charges associated with acquisitions (314 ) (0.2 )% (312 ) (0.1 )% (202 ) (0.1 )% NON-GAAP OPERATING EXPENSES $ 68,011 36.9 % $ 66,648 28.5 % $ 61,367 28.3 %   GAAP OPERATING LOSS $ (34,540 ) (18.8 )% $ (3,566 ) (1.5 )% $ (3,571 ) (1.6 )% Adjustment for stock based compensation charges 7,023 3.8 % 7,606 3.3 % 6,697 3.1 % Adjustment for accelerated depreciation of certain machinery and equipment — — % 2,018 0.9 % — — % Adjustment for charges associated with acquisitions 1,522   0.9 % 1,438   0.5 % 1,297   0.6 % NON-GAAP OPERATING (LOSS) INCOME $ (25,995 ) (14.1 )% $ 7,496 3.2 % $ 4,423 2.1 %   GAAP NET (LOSS) INCOME $ (27,949 ) (15.2 )% $ (3,756 ) (1.6 )% $ 1,883 0.9 % Adjustment for stock based compensation charges 7,023 3.8 % 7,606 3.3 % 6,697 3.1 % Adjustment for accelerated depreciation of certain machinery and equipment — — % 2,018 0.9 % — — % Adjustment for gain/recovery of investment — — % — — % (6,953 ) (3.2 )% Adjustment for non-cash tax (benefit) expense (8,311 ) (4.5 )% (1,196 ) (0.5 )% 1,143 0.5 % Adjustment for charges associated with acquisitions 2,012   1.1 % 1,540   0.6 % 1,323   0.6 % NON-GAAP NET (LOSS) INCOME $ (27,225 ) (14.8 )% $ 6,212 2.7 % $ 4,093 1.9 %   GAAP DILUTED (LOSS) EARNINGS PER SHARE $ (0.17 ) $ (0.02 ) $ 0.01 Adjustment for stock based compensation charges 0.04 0.05 0.04 Adjustment for accelerated depreciation of certain machinery and equipment — 0.01 — Adjustment for gain/recovery of investment — — (0.04 ) Adjustment for non-cash tax (benefit) expense (0.05 ) (0.01 ) 0.00 Adjustment for charges associated with acquisitions 0.01   0.01   0.01   NON-GAAP DILUTED (LOSS) EARNINGS PER SHARE $ (0.17 ) $ 0.04 $ 0.02

Our earnings release contains forward looking estimates of non-GAAP gross margin and earnings per share for the second quarter of 2013. We provide these non-GAAP measures on a prospective basis for the same reasons that we provide them to investors on a historical basis. The following table provides a reconciliation of GAAP gross margin and loss per share to non-GAAP gross margin and earnings per share for the second quarter of 2013 based on the mid-point of guidance.

Forward Looking GAAP Gross Margin   26.5 %   Adjustment for stock based compensation charges 1.0 % Adjustment for charges associated with acquisitions 0.5 % Forward Looking non-GAAP Gross Margin 28.0 %   Forward Looking GAAP Loss per Share $ (0.13 ) Adjustment for stock based compensation charges 0.05 Adjustment for non-cash tax (benefit) expense (0.04 ) Adjustment for charges associated with acquisitions 0.01   Forward Looking non-GAAP Loss per Share $ (0.11 )