Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL),
today reported financial results for the fiscal second quarter of
2019 ended December 31, 2018.
The results for the fiscal second quarter of 2019 ended
December 31, 2018 were as follows:
GAAP Financial Comparison Quarterly (in
millions, except percentage and per share data) (unaudited)
Three Months Ended December 31, September 30,
December 31, 2018 2018 2017 Revenue $ 114.9 $ 115.1 $ 103.9 Gross
Margin 25.7
%
28.3 % 27.0 % Operating Income (Loss) $ (3.2 ) $ 0.9 $ 3.2 Net
Income (Loss) Attributable to AOS $ (1.5 ) $ 2.4 $ 6.8 Net Income
(Loss) Per Share Attributable to AOS - Diluted $ (0.06 ) $ 0.10 $
0.27
Non-GAAP Financial Comparison
Quarterly (in millions, except percentage and per share
data) (unaudited) Three Months Ended
December 31, September 30, December 31, 2018 2018 2017 Revenue $
114.9 $ 115.1 $ 103.9 Non-GAAP Gross Margin 29.2 % 29.7 % 27.4 %
Non-GAAP Operating Income $ 8.5 $ 9.7 $ 7.2 Non-GAAP Net Income
Attributable to AOS $ 7.2 $ 8.8 $ 8.1 Non-GAAP Net Income Per Share
Attributable to AOS - Diluted $ 0.30 $ 0.36 $ 0.32
The non-GAAP financial measures in the schedule above and under
the section “Financial Results for Fiscal Q2 Ended December 31,
2018” below exclude the effect of share-based compensation expenses
in each of the periods presented, pre-production costs relating to
the Chongqing Joint Venture and production ramp up costs for the
quarter ended December 31, 2018 and September 30, 2018, as well as
income tax benefit from tax reform for the quarter ended December
31, 2017. A detailed reconciliation of GAAP and non-GAAP financial
measures is included at the end of this press release.
Financial Results for Fiscal Q2 Ended December 31,
2018
- Revenue was $114.9 million, an increase
of 10.6% from the same quarter last year driven by continuous gains
in market share of our products.
- Gross margin stayed healthy. GAAP gross
margin was 25.7%, as compared to 27.0% from the same quarter last
year, as we were ramping up production at Chongqing Joint Venture.
Non-GAAP gross margin was 29.2%, an increase of 180 basis point
year-over-year as we continued to migrate to higher margin
products.
- Operating expenses increase reflected
costs relating to the build-up of our digital power controller team
and higher level of its R&D activities. GAAP operating expenses
were $32.7 million. Non-GAAP operating expenses were $25.1 million,
up 18% year-over-year.
- GAAP operating loss was $3.2 million.
Non-GAAP operating income was $8.5 million, a 17.0% growth
year-over-year led by higher revenue and better gross margin.
- GAAP loss per share attributable to AOS
was $0.06. Non-GAAP earnings per share attributable to AOS was
$0.30 compared to $0.32 in the same quarter a year ago.
- Consolidated operating cash flow was
$13.1 million, compared to $9.6 million in the same quarter a year
ago. Operating cash flow generated by AOS alone was $22.1 million,
compared to $12.2 million in the same quarter a year ago.
- The Company closed the quarter with
$146.6 million of cash and cash equivalents, including $53.0
million cash balance at the Chongqing Joint Venture.
“We are pleased with our strong execution on business
results as well as our customer expansion. We achieved a
year-over-year revenue increase of 10.6% representing the
twelfth consecutive quarter of growth. Furthermore, we
continued to generate healthy operating cash flow, which is funding
our key growth initiatives,” stated Dr. Mike Chang, chairman
and CEO of the company.
“Despite current uncertainty in the overall semiconductor
market, we are very encouraged by our solid business pipeline
driven by continuous design wins with new and existing
customers. We remain committed to our near-term growth
initiatives while relentlessly pushing ahead with our
long-term business plans.”
Business Outlook for Fiscal Q3 Ending March 31,
2019
The following statements are based on management's current
expectations. These statements are forward-looking, and actual
results may differ materially. AOS undertakes no obligation to
update these statements.
- Revenue is expected to be in the range
of $109 million to $113 million.
- Gross margin is expected to be
approximately 25.2% plus or minus 1%. Non-GAAP gross margin is
expected to be approximately 28.5% plus or minus 1%. Non-GAAP gross
margin excludes $0.5 million of estimated share-based compensation
charge and $3.2 million of estimated production ramp-up costs
relating to the Chongqing Joint Venture.
- Operating expenses are expected to be
in the range of $32.3 million plus or minus $1 million. Non-GAAP
operating expenses are expected to be in the range of $25.2 million
plus or minus $1 million. Both GAAP and non-GAAP operating expenses
include $3.1 million to $3.3 million of estimated expenses relating
to the development of our digital power controller business.
Non-GAAP operating expenses exclude $2.7 million of estimated
share-based compensation charge and $4.4 million of estimated
pre-production expenses relating to the Chongqing Joint
Venture.
- Tax expenses are expected to be in the
range of $0.5 million to $0.7 million.
- Chongqing Joint Venture’s loss
attributable to noncontrolling interest is expected to be around
$4.8 million. On a non-GAAP basis, excluding estimated production
ramp-up costs and pre-production expenses, this item is expected to
be approximately $0.6 million.
Conference Call and Webcast
AOS plans to hold an investor teleconference and live webcast to
discuss the financial results for the fiscal second quarter of 2019
ended December 31, 2018 today, February 6, 2019 at 2:00
p.m. PT / 5:00 p.m. ET. To participate in the live call, analysts
and investors should dial 866-393-4306 (or 734-385-2616 if outside
the U.S.). To access the live webcast and the subsequent replay of
the conference call, which will be available for seven days after
the live call, go to the "Events & Presentations" section of
the company's investor relations website,
http://investor.aosmd.com. In addition, a copy of the script of
prepared remarks by CEO and CFO at the investor teleconference and
webcast is available prior to the call at the Company’s investor
relations website.
Forward-Looking Statements
This press release contains forward-looking statements that are
based on current expectations, estimates, forecasts and projections
of future performance based on management's judgment, beliefs,
current trends, and anticipated product performance. These
forward-looking statements include, without limitation, statements
relating to expected growth rate, our product portfolios, projected
amount of revenue, gross margin, operating income (loss), income
tax expenses, net income (loss), noncontrolling interest, and
share-based compensation expenses, non-GAAP gross margin, non-GAAP
operating expenses, tax expenses, and non-GAAP loss attributable to
noncontrolling interest, our ability and strategy to develop new
products, including digital power controller products, the ability
to expand our sales and market share, increase our capacity and
achieve sustained growth and profitability, the pre-production and
production phases of our Chongqing Joint Venture, the development
of digital power business, partnership with global brands, the
relationship with key customers, business pipeline from design
wins, and other information under the section entitled “Business
Outlook for Fiscal Q3 Ending March 31, 2019”. Forward-looking
statements involve risks and uncertainties that may cause actual
results to differ materially from those contained in the
forward-looking statements. These factors include, but are not
limited to, our ability to successfully operate our joint venture
in China; our ability to develop and succeed in the digital power
business; difficulties and challenges in executing our
diversification strategy into different market segments; new
tariffs on goods from China; ordering pattern from distributors and
seasonality; our ability to introduce or develop new and enhanced
products that achieve market acceptance; decline of PC markets; the
actual product performance in volume production; the quality and
reliability of our product, our ability to achieve design wins; the
general business and economic conditions; the state of
semiconductor industry and seasonality of our markets; our ability
to maintain factory utilization at a desirable level, and other
risks as described in our SEC filings, including our Annual Report
on Form 10-K for the fiscal year ended June 30, 2018 filed on
August 23, 2018. Other unknown or unpredictable factors or
underlying assumptions subsequently proving to be incorrect could
cause actual results to differ materially from those in the
forward-looking statements. Although we believe that the
expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, level of activity,
performance, or achievements. You should not place undue reliance
on these forward-looking statements. All information provided in
this press release is as of today's date, unless otherwise stated,
and AOS undertakes no duty to update such information, except as
required under applicable law.
Use of Non-GAAP Financial Measures
To supplement our unaudited consolidated financial statements
presented on a basis consistent with U.S. GAAP, we disclose certain
non-GAAP financial measures for our historical performance,
including non-GAAP gross profit, gross margin, operating income
(loss), net loss attributable to noncontrolling interest, net
income (loss) and diluted earnings per share ("EPS"). These
supplemental measures exclude share-based compensation expenses for
all periods presented, pre-production expenses related to Chongqing
Joint Venture and production ramp up costs for the quarter of
December 31, 2018 and September 30, 2018, as well as income tax
benefit from tax reform for the quarter ended December 31, 2017 in
this press release. We also disclose certain non-GAAP financial
measures in our guidance for the next quarter, including non-GAAP
gross margin, operating expenses and loss attributable to
noncontrolling interest. These forecast supplemental measures
exclude estimated pre-production expenses and production ramp-up
costs relating to our Chongqing Joint Venture and estimated
share-based compensation expenses. We believe that these historical
and forecast non-GAAP financial measures can provide useful
information to both management and investors by excluding certain
items and expenses that are not indicative of our core operating
results or do not reflect our normal business operations, such as
the joint venture pre-production expenses. In addition, our
management uses non-GAAP measures to compare our performance
relative to forecasts and to benchmark our performance externally
against competitors. Our use of non-GAAP financial measures has
certain limitations in that the non-GAAP financial measures we use
may not be directly comparable to those reported by other
companies. For example, the terms used in this press release, such
as non-GAAP net income (loss) or non-GAAP operating expenses, do
not have a standardized meaning. Other companies may use the same
or similarly named measures, but exclude different items, which may
not provide investors with a comparable view of our performance in
relation to other companies. We seek to compensate for the
limitation of our non-GAAP presentation by providing a detailed
reconciliation of the non-GAAP financial measures to the most
directly comparable U.S. GAAP measures both in the text in this
press release and in the tables attached hereto. Investors are
encouraged to review the related U.S. GAAP financial measures and
the reconciliation of these non-GAAP financial measures to their
most directly comparable U.S. GAAP financial measures.
About Alpha and Omega Semiconductor
Alpha and Omega Semiconductor Limited, or AOS, is a designer,
developer and global supplier of a broad range of power
semiconductors, including a wide portfolio of Power MOSFET, IGBT,
IPM, Power IC products and Digital Power. AOS has developed
extensive intellectual property and technical knowledge that
encompasses the latest advancements in the power semiconductor
industry, which enables us to introduce innovative products to
address the increasingly complex power requirements of advanced
electronics. AOS differentiates itself by integrating its Discrete
and IC semiconductor process technology, product design, and
advanced packaging know-how to develop high performance power
management solutions. AOS's portfolio of products targets
high-volume applications, including portable computers, flat panel
TVs, LED lighting, smart phones, battery packs, consumer and
industrial motor controls and power supplies for TVs, computers,
servers and telecommunications equipment. For more information,
please visit www.aosmd.com.
The following unaudited consolidated financial statements are
prepared in accordance with U.S. GAAP.
Alpha and Omega Semiconductor Limited Condensed
Consolidated Statements of Operations (in thousands, except
percentages and per share amounts) (unaudited)
Three Months Ended
Six Months Ended December 31, September 30,
December 31, December 31, December 31,
2018 2018 2017 2018 2017
Revenue $ 114,925 $ 115,072 $ 103,896 $ 229,997 $ 208,754 Cost of
goods sold 85,423 82,461 75,814 167,884
153,142 Gross profit 29,502 32,611 28,082 62,113 55,612
Gross margin 25.7 % 28.3 % 27.0 % 27.0 % 26.6 % Operating
expenses: Research and development 12,600 11,384 9,102 23,984
17,427 Selling, general and administrative 20,104 20,352
15,756 40,456 30,371 Total operating
expenses 32,704 31,736 24,858 64,440
47,798 Operating income (loss) (3,202 ) 875 3,224 (2,327 )
7,814 Interest income and other income (loss), net 74 262
(160 ) 336 (120 ) Interest expense (1,706 ) (1,490 ) (14 ) (3,196 )
(31 ) Income (loss) before income taxes (4,834 ) (353 ) 3,050
(5,187 ) 7,663 Income tax expense (benefit) 701 560
(2,072 ) 1,261 (798 ) Net income (loss) including
noncontrolling interest (5,535 ) (913 ) 5,122 (6,448 ) 8,461 Net
loss attributable to noncontrolling interest (3,990 ) (3,329 )
(1,669 ) (7,319 ) (3,130 ) Net income (loss) attributable to Alpha
and Omega Semiconductor Limited $ (1,545 ) $ 2,416 $ 6,791
$ 871 $ 11,591 Net income (loss) per
common share attributable to Alpha and Omega Semiconductor Limited
Basic $ (0.06 ) $ 0.10 $ 0.28 $ 0.04 $ 0.48 Diluted $ (0.06 ) $
0.10 $ 0.27 $ 0.04 $ 0.46 Weighted average number of common
shares attributable to Alpha and Omega Semiconductor Limited used
to compute net income (loss) per share Basic 23,887 23,844 23,925
23,865 23,973 Diluted 23,887 24,594 25,033 24,513 24,997
Alpha and Omega Semiconductor Limited Condensed
Consolidated Balance Sheets (in thousands, except par value
per share) (unaudited) December 31,
2018 June 30, 2018 ASSETS Current
assets: Cash and cash equivalents $ 146,632 $ 131,535 Restricted
cash 255 189 Accounts receivable, net 33,858 33,755 Inventories
102,962 90,182 Other current assets 34,271 29,551
Total current assets 317,978 285,212 Property, plant and equipment,
net 380,783 331,656 Intangible assets, net 16,939 16,591 Deferred
income tax assets 4,944 4,892 Other long-term assets 13,544
28,698 Total assets $ 734,188 $ 667,049
LIABILITIES AND EQUITY Current liabilities: Accounts payable
$ 102,617 $ 92,661 Accrued liabilities 59,013 49,841 Income taxes
payable 1,769 2,211
Short-term debt
22,797 3,811 Deferred margin — 1,665 Capital leases 7,429
4,491 Total current liabilities 193,625 154,680
Long-term debt
36,729 26,786 Income taxes payable - long-term 951 924 Deferred
income tax liabilities 1,134 713 Capital leases - long-term 51,185
56,791 Other long-term liabilities 6,036 993 Total
liabilities 289,660 240,887 Equity: Preferred shares,
par value $0.002 per share: Authorized: 10,000 shares, issued and
outstanding: none at December 31, 2018 and June 30, 2018 — — Common
shares, par value $0.002 per share: Authorized: 100,000 shares,
issued and outstanding: 30,590 shares and 23,939 shares,
respectively at December 31, 2018 and 30,400 shares and 23,860
shares, respectively at June 30, 2018 61 61 Treasury shares at
cost, 6,651 shares at December 31, 2018 and 6,540 shares at June
30, 2018 (66,283 ) (64,790 )
Additional paid-in capital
227,818 220,244 Accumulated other comprehensive income (loss)
(2,842 ) 440 Retained earnings 124,538 122,639 Total
Alpha and Omega Semiconductor Limited shareholder's equity 283,292
278,594 Noncontrolling interest 161,236 147,568 Total
equity 444,528 426,162 Total liabilities and equity $
734,188 $ 667,049
Supplemental disclosures of financial information: (in
thousands) As of December 31,
2018 As of June 30, 2018 AOS CQJV Consolidated AOS CQJV
Consolidated Cash and cash equivalents $ 93,623 $ 53,009 $ 146,632
$ 88,269 $ 43,266 $ 131,535 Bank borrowings liabilities $ 45,218 $
72,706 $ 117,924 $ 30,876 $ 60,416 $ 91,292 Property, plant and
equipment, net $ 149,245 $ 231,538 $ 380,783 $ 141,575 $ 190,081 $
331,656 Total assets $ 394,352 $ 339,836 $ 734,188 $ 384,380 $
282,669 $ 667,049 Total equity $ 306,739 $ 137,789 $ 444,528 $
293,609 $ 132,553 $ 426,162
Three Months Ended December 31,2018
Three Months Ended September 30,2018
Three Months Ended December 31,2017
AOS CQJV Consolidated AOS CQJV
Consolidated AOS CQJV Consolidated Net cash provided
by (used in) operating activities $ 22,149 $ (9,055 ) $ 13,094 $
18,403 $ (416 ) $ 17,987 $ 12,161 $ (2,557 ) $ 9,604 Purchase of
property and equipment $ 8,002 $ 8,451 $ 16,453 $ 15,216 $ 34,272 $
49,488 $ 16,074 $ 20,405 $ 36,479
Alpha and Omega
Semiconductor Limited Reconciliation of Condensed
Consolidated GAAP Financial Measures to Non-GAAP Financial
Measures (in thousands, except percentages and per share
data) (unaudited)
Three Months Ended Six Months Ended
December 31, 2018
September 30, 2018
December 31, 2017 December 31, 2018
December 31, 2017 GAAP gross profit $ 29,502 $
32,611 $ 28,082 $ 62,113 $ 55,612 Share-based compensation 541 497
415 1,038 731 Production ramp up costs related to joint venture
3,516 1,117 — 4,633 — Non-GAAP
gross profit $ 33,559 $ 34,225 $ 28,497 $
67,784 $ 56,343 Non-GAAP gross margin as a % of
revenue 29.2 % 29.7 % 27.4 % 29.5 % 27.0 % GAAP operating
income (loss) $ (3,202 ) $ 875 $ 3,224 $ (2,327 ) $ 7,814
Share-based compensation 4,418 3,129 4,009 7,547 6,017
Pre-production expenses related to joint venture 3,734 4,627 —
8,361 — Production ramp up costs related to joint venture 3,516
1,117 — 4,633 — Non-GAAP
operating income $ 8,466 $ 9,748 $ 7,233 $
18,214 $ 13,831 Non-GAAP operating margin as a % of
revenue 7.4 % 8.5 % 7.0 % 7.9 % 6.6 % GAAP net income (loss)
attributable to AOS $ (1,545 ) $ 2,416 $ 6,791 $ 871 $ 11,591
Share-based compensation 4,418 3,129 4,009 7,547 6,017
Pre-production expenses related to joint venture 2,458 2,662 —
5,120 — Production ramp up costs related to joint venture 1,912 582
— 2,494 — Income tax benefit from tax reform — —
(2,690 ) — (2,690 ) Non-GAAP net income attributable to AOS
$ 7,243 $ 8,789 $ 8,110 $ 16,032 $
14,918 Non-GAAP net margin attributable to AOS as a % of
revenue 6.3 % 7.6 % 7.8 % 7.0 % 7.1 % GAAP net income (loss)
attributable to AOS $ (1,545 ) $ 2,416 $ 6,791 $ 871 $ 11,591
Share-based compensation 4,418 3,129 4,009 7,547 6,017 Amortization
and depreciation 8,279 7,870 7,408 16,149 14,386 Interest expense
(income), net 1,664 1,424 (174 ) 3,088 (215 ) Income tax expense
(benefit) 701 560 (2,072 ) 1,261 (798 )
EBITDAS $ 13,517 $ 15,399 $ 15,962 $ 28,916
$ 30,981 GAAP diluted net income (loss)
per share attributable to AOS $ (0.06 ) $ 0.10 $ 0.27 $ 0.04 $ 0.46
Share-based compensation 0.18 0.13 0.16 0.31 0.25 Pre-production
expenses related to joint venture 0.10 0.11 — 0.21 — Production
ramp up costs related to joint venture 0.08 0.02 — 0.09 — Income
tax benefit from tax reform — — (0.11 ) —
(0.11 ) Non-GAAP diluted net income per share attributable to AOS $
0.30 $ 0.36 $ 0.32 $ 0.65 $ 0.60
Shares used to compute GAAP diluted net income (loss) per
share 23,887 24,594 25,033 24,513 24,997 Shares used to compute
Non-GAAP diluted net income per share 24,432 24,594 25,033 24,513
24,997
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Alpha and Omega Semiconductor LimitedInvestor RelationsSo-Yeon
Jeong408-789-3172investors@aosmd.com
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