Q2 FY17 Revenue of $184.1M; up 8.6% Y/Y
Q2 FY17 GAAP Diluted EPS of $0.18 Q2 FY17
Non-GAAP Diluted EPS of $0.34
Integrated Device Technology, Inc. (IDT®) (NASDAQ: IDTI) today
announced results for the fiscal second quarter 2017, ended October
2, 2016.
“Second quarter fiscal 2017 revenue increased by over eight
percent as compared with the year ago quarter, and marks our
twelfth consecutive quarter of year-over-year revenue growth,”
commented Gregory Waters, president and chief executive officer.
“We are delivering new growth engines to the already strong IDT
franchise, along with operating synergies that support our
leadership financial model.”
“We continue to make strong progress on our integration of ZMDI
and have a clear line of sight to continued gains in operating
results as we move through the fiscal year. Our new design-in
funnel is extremely robust, with design-win traction and new
technology innovation being delivered across all of our
businesses,” concluded Mr. Waters.
Recent Business Highlights – Computing
- IDT and IBM Introduced a
high-performance computing solution for 5G and connected car “edge”
computing networks that combines its RapidIO technology with IBM’s
POWER8-based servers
- Taiwan-based
Micro-Star INT’L CO., LTD. (MSI) selected IDT’s
distributed-power architecture for two industrial compute boards.
IDT’s power management ICs (PMICs) and proprietary distributed
power unit (DPU) technology together deliver a solution with
unparalleled flexibility and scalability.
- Diablo Technologies selected the IDT®
DDR4 LRDIMM chipset as the preferred interface solution for its
award-winning Memory1™ 128GB system memory module.
Recent Business Highlights – Communications
- ZTE Corporation, a major international
provider of telecommunications, enterprise and consumer technology
solutions for the mobile Internet, selected the new IDT® RapidIO
10xN interconnect semiconductors for its next generation of
wireless base stations.
- IDT announced its new generation of
RapidIO technology is interoperable Xilinx UltraScale™ FPGAs,
enabling a key technology for global rollout of 5G and other
advanced network systems
Recent Business Highlights – Consumer
- Samsonite selected IDT’s P9038 wireless
power transmitter, making IDT the exclusive IC provider of its
first generation of wireless charging enabled consumer
products.
Recent Business Highlights – Auto and Industrial
- IDT has expanded its automotive
capabilities through the TS 16949 certification of a second test
and production facility. The company’s longstanding production
facility in Penang, Malaysia passed the two-stage certification
process for automotive backend manufacturing under the requirements
of TS 16949, the International Standard for Automotive Quality
Management Systems. The new Penang automotive backend production
floor joins the IDT Automotive Center of Excellence of ZMD AG in
Dresden, Germany, which has been successfully certified since 2004
as ZMDI, a company IDT acquired in December 2015.
The following highlights the Company’s financial performance on
both a GAAP and supplemental non-GAAP basis. The Company provides
supplemental information regarding its operating performance on a
non-GAAP basis that excludes certain gains, losses and charges
which occur relatively infrequently and which management considers
to be outside our core operating results. Non-GAAP results are not
in accordance with GAAP and may not be comparable to non-GAAP
information provided by other companies. Non-GAAP information
should be considered a supplement to, and not a substitute for,
financial statements prepared in accordance with GAAP. A complete
reconciliation of GAAP to non-GAAP results from continuing
operations is attached to this press release.
- Revenue from continuing operations for
the fiscal second quarter of 2017 was $184.1 million. This compared
with $192.1 million reported last quarter, and $169.5 million
reported in the same period one year ago.
- GAAP net income from continuing
operations for the fiscal second quarter of 2017 was $24.6 million,
or $0.18 per diluted share, versus GAAP net income from continuing
operations of $20.9 million or $0.15 per diluted share last
quarter, and GAAP net income from continuing operations of $42.4
million or $0.28 per diluted share in the same period one year ago.
Fiscal second quarter GAAP results include $9.2 million in
stock-based compensation, $10.8 million in acquisition and
restructuring charges, $3.3 million in non-cash interest expense,
$0.6 million in other income and $0.1 million in related tax
effects.
- Non-GAAP net income for the fiscal
second quarter of 2017 was $47.4 million or $0.34 per diluted
share, compared with non-GAAP net income of $51.2 million or $0.36
per diluted share last quarter, and non-GAAP net income of $53.9
million or $0.35 per diluted share reported in the same period one
year ago.
- GAAP gross profit from continuing
operations for the fiscal second quarter of 2017 was $106.5
million, or 57.9 percent, compared with GAAP gross profit of $108.3
million or 56.4 percent last quarter, and $106.5 million, or 62.9
percent, reported in the same period one year ago. Non-GAAP gross
profit for the fiscal second quarter of 2017 was $111.4 million, or
60.5 percent, compared with non-GAAP gross profit of $117.9
million, or 61.3 percent last quarter, and $107.5 million, or 63.4
percent, reported in the same period one year ago.
- GAAP R&D expense for the fiscal
second quarter of 2017 was $41.8 million, compared with GAAP
R&D expense of $49.6 million last quarter, and $35.3 million
reported in the same period one year ago. Non-GAAP R&D expense
for the fiscal second quarter of 2017 was $35.3 million, compared
with non-GAAP R&D expense of $37.7 million last quarter, and
$31.5 million in the same period one year ago.
- GAAP SG&A expense for the fiscal
second quarter of 2017 was $37.4 million, compared with GAAP
SG&A expense of $38.8 million last quarter, and $29.2 million
in the same period one year ago. Non-GAAP SG&A expense for the
fiscal second quarter of 2017 was $28.2 million, compared with
non-GAAP SG&A expense of $28.3 million last quarter, and $23.5
million in the same period one year ago.
Webcast and Conference Call Information
Investors may listen to the live call at 1:30 p.m. Pacific Time
on October 31, 2016 by calling (800) 475-6890. The access code is
3399190. Investors may listen to a live or replay webcast of the
Company’s quarterly financial conference call at
http://ir.idt.com/. The live webcast will begin at 1:30 p.m.
Pacific Time on October 31, 2016. The webcast replay will be
available after 4:30 p.m. Pacific Time on October 31, 2016 for one
week.
IDT’s next regularly scheduled Quiet Period will begin December
19, 2016, during which time IDT representatives will not comment on
IDT’s business outlook, financial results or expectations. The
Quiet Period will extend until the day when IDT’s third quarter
fiscal 2017 earnings release is published.
About IDT
Integrated Device Technology, Inc. develops system-level
solutions that optimize its customers’ applications. IDT’s
market-leading products in RF, timing, wireless power transfer,
serial switching, interfaces and sensing solutions are among the
company’s broad array of complete mixed-signal solutions for the
communications, computing, consumer, automotive and industrial
segments. Headquartered in San Jose, Calif., IDT has design,
manufacturing, sales facilities and distribution partners
throughout the world. IDT stock is traded on the NASDAQ Global
Select Stock Market® under the symbol “IDTI.” Additional
information about IDT is accessible at www.IDT.com. Follow IDT on
Facebook, LinkedIn, Twitter, YouTube and Google+.
Forward Looking Statements
Investors are cautioned that forward-looking statements in this
release, including but not limited to statements regarding demand
for Company products, anticipated trends in Company sales, expenses
and profits, involve a number of risks and uncertainties that could
cause actual results to differ materially from current
expectations. Risks include, but are not limited to, global
business and economic conditions, fluctuations in product demand,
manufacturing capacity and costs, inventory management,
competition, pricing, patent and other intellectual property rights
of third parties, timely development and introduction of new
products and manufacturing processes, dependence on one or more
customers for a significant portion of sales, successful
integration of acquired businesses and technology, availability of
capital, cash flow and other risk factors detailed in the Company’s
Securities and Exchange Commission filings. The Company urges
investors to review in detail the risks and uncertainties in the
Company’s Securities and Exchange Commission filings, including but
not limited to the Annual Report on Form 10-K for the fiscal year
ended April 3, 2016. All forward-looking statements are made as of
the date of this release and the Company disclaims any duty to
update such statements.
Non-GAAP Reporting
To supplement its consolidated financial results presented in
accordance with GAAP, IDT uses non-GAAP financial measures which
are adjusted from the most directly comparable GAAP financial
measures to exclude certain items, as described in detail below.
Management believes that these non-GAAP financial measures reflect
an additional and useful way of viewing aspects of the Company’s
operations that, when viewed in conjunction with IDT’s GAAP
results, provide a more comprehensive understanding of the various
factors and trends affecting the Company’s business and operations.
It should also be noted that IDT's non-GAAP information may be
different from the non-GAAP information provided by other
companies. Non-GAAP financial measures used by IDT include:
• Cost of revenues;
• Gross profit;
• Research and development expenses;
• Selling, general and administrative expenses;
• Interest and other income (expense);
• Provision for (benefit from) income taxes, continuing
operations;
• Operating income;
• Net income from continuing operations;
• Diluted net income per share, continuing operations; and
• Weighted average shares outstanding - diluted
The Company presents non-GAAP financial measures because the
investor community uses non-GAAP results in its analysis and
comparison of historical results and projections of the Company's
future operating results. These non-GAAP results exclude
acquisition related expense, restructuring and divestiture related
costs (gain), share-based compensation expense, results from
discontinued operations, stockholder expenses and certain other
expenses and benefits. Management uses these non-GAAP measures to
manage and assess the profitability of the business. These non-GAAP
results are also consistent with the way management internally
analyzes IDT's financial results.
There are limitations in using non-GAAP financial measures
because they are not prepared in accordance with GAAP and may be
different from non-GAAP financial measures used by other companies.
The presentation of non-GAAP financial information is not meant to
be considered in isolation or as a substitute for the most directly
comparable GAAP financial measures. The non-GAAP financial measures
supplement, and should be viewed in conjunction with, GAAP
financial measures. Investors should review the reconciliations of
the non-GAAP financial measures to their most directly comparable
GAAP financial measures as provided in the accompanying press
release.
As presented in the “Reconciliation of GAAP to Non-GAAP” tables
in the accompanying press release, each of the non-GAAP financial
measures excludes one or more of the following items:
Acquisition related.
Acquisition-related charges are not factored into management’s
evaluation of potential acquisitions or IDT’s performance after
completion of acquisitions, because they are not related to the
Company’s core operating performance. Adjustments of these items
provide investors with a basis to compare IDT’s performance to
other companies without the variability caused by purchase
accounting. Acquisition-related expenses primarily include:
- Amortization of acquisition related
intangibles, which include acquired intangibles such as purchased
technology, patents, customer relationships, trademarks, backlog
and non-compete agreements.
- Acquisition related costs such as
legal, accounting and other professional or consulting fees
directly related to an acquisition.
- Fair market value adjustment to
acquired inventory sold.
Restructuring related.
Restructuring charges primarily relate to changes in IDT’s
infrastructure in efforts to reduce costs and expenses (gains)
associated with strategic divestitures and restructuring in force
actions. Restructuring charges (gains) are excluded from non-GAAP
financial measures because they are not considered core operating
activities. Although IDT has engaged in various restructuring
activities in the past, each has been a discrete event based on a
unique set of business objectives. As such, management believes
that it is appropriate to exclude restructuring charges (gains)
from IDT’s non-GAAP financial measures as it enhances the ability
of investors to compare the Company’s period-over-period operating
results from continuing operations. Restructuring-related charges
(gains) primarily include:
- Severance and retention costs directly
related to a restructuring action.
- Facility closure costs consist of
ongoing costs associated with the exit of our leased and owned
facilities.
- Gain on divestiture consists of gains
recognized upon the strategic sale of business units.
- Assets impairments including
accelerated depreciation of certain assets no longer in use.
Other adjustments. These items are
excluded from non-GAAP financial measures because they are not
related to the core operating activities and on-going future
operating performance of IDT. Excluding this data allows investors
to better compare IDT’s period-over-period performance without such
expense, which IDT believes may be useful to the investor
community.
Other adjustments primarily include:
- Stock based compensation expense.
- Compensation expense (benefit) –
deferred compensation, consists of gains and losses on marketable
equity securities related to our deferred compensation
arrangements.
- Non-cash interest expense, consists of
amortization of issuance cost and accretion of discount related to
the convertible notes.
- Loss (gain) on deferred compensation
plan securities represents the changes in the fair value of the
assets in a separate trust that is invested in corporate owned life
insurance under our deferred compensation plan.
- Tax effects of non-GAAP adjustments.
Non-GAAP tax calculation is based on estimated cash tax expense and
reserves. The Company forecasts its annual cash tax liability and
allocates the tax to each quarter in proportion to earnings for
that period. This approach is designed to enhance the ability of
investors to understand the impact of the Company's tax expense on
its current operations, provide improved modeling accuracy, and
substantially reduce fluctuations caused by GAAP to non-GAAP
adjustments, which may not reflect actual cash tax expense.
- Diluted weighted average shares
non-GAAP adjustment, for purposes of calculating non-GAAP diluted
net income per share, the GAAP diluted weighted average shares
outstanding is adjusted to exclude the benefits of stock
compensation expense attributable to future services not yet
recognized in the financial statements that are treated as proceeds
assumed to be used to repurchase shares under the GAAP treasury
method.
IDT and the IDT logo are trademarks or
registered trademarks of Integrated Device Technology, Inc. All
other brands, product names and marks are or may be trademarks or
registered trademarks used to identify products or services of
their respective owners.
INTEGRATED DEVICE TECHNOLOGY,
INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands, except per share data)
Three Months
Ended Six Months Ended Oct. 2 July 3
Sept. 27 Oct. 2 Sept. 27 2016
2016 2015 2016 2015 Revenues $ 184,059
$ 192,128 $ 169,498 $ 376,187 $ 330,405 Cost of revenues
77,527 83,779 62,952 161,306
124,625 Gross profit 106,532 108,349 106,546
214,881 205,780 Operating expenses: Research and development 41,750
49,648 35,301 91,398 69,055 Selling, general and administrative
37,415 38,816 29,227
76,231 57,370 Total operating expenses
79,165 88,464 64,528 167,629
126,425 Operating income 27,367 19,885
42,018 47,252 79,355 Interest and other income (expense),
net (2,597 ) (2,496 ) 1,016 (5,093 ) 2,834
Income from continuing operations before income taxes
24,770 17,389 43,034 42,159 82,189 Provision for (benefit from)
income taxes 179 (3,558 ) 611
(3,379 ) 1,046 Net income from continuing
operations 24,591 20,947 42,423
45,538 81,143 Discontinued
operations: Gain from divestiture - - - - Loss from discontinued
operations - - - - (547 ) Provision for income taxes -
- - - 15
Net loss from discontinued operations - -
- - (562 ) Net income $
24,591 $ 20,947 $ 42,423 $ 45,538 $ 80,581
Basic net income per share - continuing operations $
0.18 $ 0.16 $ 0.29 $ 0.34 $ 0.55 Basic net income per share -
discontinued operations - - -
- - Basic net income per share $ 0.18
$ 0.16 $ 0.29 $ 0.34 $ 0.55
Diluted net income per share - continuing operations $ 0.18 $ 0.15
$ 0.28 $ 0.33 $ 0.53 Diluted net income per share - discontinued
operations - - - -
- Diluted net income per share $ 0.18 $ 0.15
$ 0.28 $ 0.33 $ 0.53 Weighted average
shares: Basic 134,186 133,934
147,724 134,059 148,058 Diluted
137,206 138,109 152,152 137,698
152,997
INTEGRATED DEVICE
TECHNOLOGY, INC. RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES (a) (Unaudited) (In thousands, except per
share data)
Three Months Ended Six Months
Ended Oct. 2 July 3 Sept. 27
Oct. 2 Sept. 27 2016 2016
2015 2016 2015 GAAP net income from
continuing operations $ 24,591 $
20,947 $ 42,423 $
45,538 $ 81,143 GAAP diluted
net income per share continuing operations $ 0.18
$ 0.15 $ 0.28
$ 0.33 $ 0.53 Acquisition
related: Amortization of acquisition related intangibles 5,246
5,775 751 11,021 1,583 Acquisition related fees 72 - - 72 -
Amortization of fair market value adjustment to inventory 520 2,395
- 2,915 - Restructuring related: Severance and retention costs
5,002 11,918 1,894 16,920 2,815 Facility closure costs - 19 154 19
154 Assets impairment and other - 870 - 870 147 Other: Stock-based
compensation expense 9,181 10,515 8,581 19,696 16,447 Non-cash
interest expense 3,309 3,268 - 6,577 - Gain from divestiture - -
(25 ) - (76 ) Assets impairment and other (652 ) - (28 ) (652 )
(353 ) Compensation expense (benefit) - deferred compensation plan
435 402 (817 ) 837 (702 ) Loss (gain) on deferred compensation plan
securities (417 ) (392 ) 827 (809 ) 719 Non-GAAP tax adjustments
147 (4,540 ) 182 (4,393 )
265
Non-GAAP net income from continuing
operations $ 47,434 $ 51,177
$ 53,942 $ 98,611
$ 102,142 GAAP weighted average shares -
diluted 137,206 138,109 152,152 137,698 152,997 Non-GAAP adjustment
2,581 2,287 2,600
2,313 2,149 Non-GAAP weighted average shares -
diluted 139,787 140,396 154,752
140,011 155,146
Non-GAAP
diluted net income per share continuing operations $
0.34 $ 0.36 $ 0.35
$ 0.70 $ 0.66
GAAP gross profit $ 106,532
$ 108,349 $ 106,546
$ 214,881 $ 205,780
Acquisition related: Amortization of acquisition related
intangibles 3,108 3,415 617 6,523 1,234 Amortization of fair market
value adjustment to inventory 520 2,395 - 2,915 - Restructuring
related: Severance and retention costs 257 2,430 6 2,687 188 Assets
impairment and other - 336 - 336 147 Other: Compensation expense
(benefit) - deferred compensation plan 159 148 (299 ) 307 (257 )
Stock-based compensation expense 802 779
645 1,581 1,327
Non-GAAP gross profit $ 111,378
$ 117,852 $ 107,515
$ 229,230 $ 208,419
GAAP R&D expenses: $ 41,750
$ 49,648 $ 35,301
$ 91,398 $ 69,055
Restructuring related: Severance and retention costs (3,074 )
(7,334 ) (681 ) (10,408 ) (1,028 ) Facility closure costs - - (154
) - (154 ) Assets impairment and other - (107 ) 261 (107 ) 261
Other: Compensation benefit (expense) - deferred compensation plan
(170 ) (157 ) 319 (327 ) 274 Stock-based compensation expense
(3,191 ) (4,308 ) (3,543 ) (7,499 )
(7,175 )
Non-GAAP R&D expenses $
35,315 $ 37,742 $
31,503 $ 73,057 $
61,233 GAAP SG&A expenses: $
37,415 $ 38,816 $
29,227 $ 76,231 $
57,370 Acquisition related: Amortization of
acquisition related intangibles (2,138 ) (2,360 ) (134 ) (4,498 )
(349 ) Acquisition related fees (72 ) - - (72 ) - Restructuring
related: Severance and retention costs (1,671 ) (2,154 ) (1,207 )
(3,825 ) (1,599 ) Facility closure costs - (18 ) - (18 ) - Assets
impairment and other - (428 ) (233 ) (428 ) (233 ) Other:
Compensation benefit (expense) - deferred compensation plan (106 )
(97 ) 199 (203 ) 171 Stock-based compensation expense (5,188
) (5,428 ) (4,393 ) (10,616 ) (7,945 )
Non-GAAP SG&A expenses $ 28,240
$ 28,331 $ 23,459
$ 56,571 $ 47,415
GAAP interest and other income (expense), net $
(2,597 ) $ (2,496 ) $
1,016 $ (5,093 ) $ 2,834
Non-cash interest expense 3,309 3,268 - 6,577 - Gain from
divestiture - - (25 ) - (76 ) Loss (gain) on deferred compensation
plan securities (417 ) (393 ) 827 (809 ) 719 Assets impairment and
other (652 ) - - (652 )
(325 )
Non-GAAP interest and other income (expense),
net $ (357 ) $ 379
$ 1,818 $ 23 $
3,152 GAAP provision for (benefit from)
income taxes - continuing operations $ 179
$ (3,558 ) $ 611 $
(3,379 ) $ 1,046 Non-GAAP tax
adjustments (147 ) 4,540 (182 )
4,393 (265 )
Non-GAAP provision for income taxes -
continuing operations $ 32 $
982 $ 429 $ 1,014
$ 781 (a) Refer to the
accompanying “Notes to Non-GAAP Financial Measures” for a detailed
discussion of management’s use of non-GAAP financial measures.
INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
Oct. 2 April 3 (In thousands)
2016 2016
ASSETS Current assets: Cash and cash equivalents $
113,872 $ 203,231 Short-term investments 260,362 151,233 Accounts
receivable, net 82,028 74,386 Inventories 44,035 54,243 Prepaid and
other current assets 15,374 15,008 Assets held for sale
4,045 - Total current assets 519,716 498,101
Property, plant and equipment, net 75,415 73,877 Goodwill 306,925
305,733 Other intangible assets, net 117,186 127,761 Deferred
non-current tax assets 84,892 60,929 Other assets 31,942
32,788
TOTAL ASSETS $ 1,136,076 $ 1,099,189
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 33,340 $ 39,858 Accrued compensation and related
expenses 25,094 45,269 Deferred income on shipments to distributors
7,225 7,006 Other accrued liabilities 30,084 14,974 Liabilities
held for sale 2,663 - Total current liabilities
98,406 107,107 Deferred tax liabilities 15,003 19,712
Convertible notes 278,798 272,221 Other long-term obligations
21,436 23,454 Total liabilities 413,643 422,494
Stockholders' equity 722,433 676,695
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,136,076 $
1,099,189
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Integrated Device Technology, Inc.Financial
Contact:Suzanne Schmidt, 415-217-4962IDT Investor
Relationssuzanne@blueshirtgroup.comorPress Contact:Daniel
Aitken, 408-574-6480IDT Senior Director of CorporateMarketing and
Communicationsdaniel.aitken@idt.com
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