Intersil Corporation (NASDAQ: ISIL), a world leader in the design
and manufacture of high-performance analog and mixed-signal
semiconductors, today reported financial results for its second
quarter ended June 29, 2012.
GAAP Results of Operations
Net revenue for the second quarter of 2012 was $163.0 million, a
22.0% decrease from $209.1 million in the second quarter of 2011,
and a 4.5% increase from $156.0 million in the first quarter of
2012. Changes in Intersil's second quarter end market product mix
are summarized below.
----------------------------------------------------------------------------
Q2 2012 Q2 2011 Q1 2012
End Market* % of Revenue % of Revenue % of Revenue
----------------------------------------------------------------------------
Industrial & Infrastructure 59% 53% 56%
Personal Computing 25% 25% 25%
Consumer 17% 22% 19%
----------------------------------------------------------------------------
*Note: Percentages may not calculate precisely due to rounding
Gross margin for the second quarter of 2012 was 54.5%, compared
with gross margin of 58.2% in the same quarter last year, and
slightly lower than the first quarter of 2012 at 54.6%, primarily
due to product mix.
Operating margin was negative 5.7% during the second quarter.
Net loss for the second quarter of 2012 was $14.5 million, or $0.11
per share, compared with net income of $21.8 million, or $0.17 per
diluted share, in the same quarter last year, and net loss of $3.3
million, or $0.03 per share, in the first quarter of 2012. GAAP
earnings per share were adversely affected by an $8.3 million
restructuring charge.
Non-GAAP Results of Operations
Non-GAAP operating income, net income and
earnings per share exclude the effects of equity-based
compensation, intangible amortization,
restructuring, certain tax adjustments and
unusual expenses.
Non-GAAP operating income during the second quarter of 2012 was
$14.4 million, or 8.8% of revenue. Non-GAAP net income for the
second quarter of 2012 was $9.6 million, or $0.08 per diluted
share.
"Two important goals were accomplished during the second
quarter," said Dave Bell, President and Chief Executive Officer.
"We focused nearly all our development resources on our carefully
chosen Top Ten Growth Drivers that we're confident will drive
significant growth beginning in 2013. We also reduced annual
operating expenses by $40 million to enable us to achieve our
target operating model at a lower revenue level."
At the end of the second quarter, Intersil's cash totaled $316.1
million. Intersil reduced its long term debt by $25 million to
$150.0 million. Free cash flow was negative $35.2 million during
the second quarter which included a $46.6 million one-time tax
payment. During the quarter, the company reduced inventory by $4.7
million.
Intersil's Board of Directors has authorized the payment of a
quarterly dividend of $0.12 per share of common stock. The payment
of this dividend will be made on August 24, 2012 to shareholders of
record as of the close of business on August 14, 2012.
Third Quarter 2012 Outlook
- Revenue is expected to be between $156 million and $163 million
(-4% to 0% sequentially)
- Gross margin is expected to be flat to slightly down
- R&D expenses are expected to be approximately $40 million
($37 million excluding equity-based compensation)
- SG&A expenses are expected to be approximately $32 million
($29 million excluding equity-based compensation)
- Total equity-based compensation is expected to be approximately
$6.4 million
- Amortization of intangibles is expected to be approximately
$7.1 million
- GAAP earnings per diluted share are expected to be between
$0.02 and $0.04
- Non-GAAP earnings per diluted share are expected to be between
$0.10 and $0.12
"Our bookings rate grew during most of the second quarter, but
began to deteriorate in June. We closed the second quarter with a
book-to-bill ratio slightly less than one," said Bell. "Given
continued uncertainty about the worldwide economy, we are
forecasting sub-seasonal revenue for the third quarter. However,
our significantly reduced operating expenses will drive strong EPS
improvement in the third quarter."
Intersil will discuss its second quarter 2012 financial results
during its scheduled conference call following market close on July
25, 2012. To participate in the conference call, please dial (888)
700-7173, and international participants please dial (617)
213-8838, using the password 98396805 at approximately 1:40 p.m.
Pacific Time. You may also listen to the call via webcast on
Intersil's investor relations website: ir.intersil.com. A copy of
the presentation accompanying the conference call is available on
Intersil's website.
A replay of the earnings conference call will be available on
Intersil's website, or may be accessed for two weeks by dialing
(888) 286-8010, international dial (617) 801-6888, using the
password 61811488.
About Intersil Intersil Corporation is a
leader in the design and manufacture of high-performance analog,
mixed-signal and power management semiconductors. The Company's
products address some of the fastest growing markets within the
industrial and infrastructure, personal computing and high-end
consumer markets. For more information about Intersil or to find
out how to become a member of our winning team, visit our website
and career page at www.intersil.com.
About Non-GAAP Financial Results The
presentation of non-GAAP financial information is intended to be
considered together with the financial information prepared and
presented in accordance with GAAP. For more information on non-GAAP
financial measures, please see the reconciliations of such measures
in the tables on page eight of this release. Management uses
non-GAAP financial measures for financial and operational
decision-making and as a means to evaluate period-to-period
comparisons. Management believes that non-GAAP financial measures
provide meaningful supplemental information regarding Intersil's
performance and liquidity by excluding certain expenses and
expenditures that may not be indicative of recurring core business
operating results. During the quarter ended July 1, 2011, we
revised current quarter and historical presentation of non-GAAP
financial information to exclude equity-based compensation in
addition to previously excluded intangible amortization,
acquisition charges, certain tax adjustments and one-time costs.
Management feels this change aligns our non-GAAP presentation with
that of our closest peers and increases comparability of our
results with published earnings estimates widely available on the
Internet.
FORWARD-LOOKING STATEMENTS Intersil
Corporation press releases and other related comments may contain
forward-looking statements as defined in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, in connection with the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements are based upon
Intersil's management's current expectations, estimates, beliefs,
assumptions and projections about Intersil's business and industry.
Words such as "anticipates," "expects," "intends," "plans,"
"predicts," "believes," "seeks," "estimates," "may," "will,"
"should," "would," "potential," "continue," "goals," "targets" and
variations of these words (or negatives of these words) or similar
expressions, are intended to identify forward-looking statements.
In addition, any statements that refer to projections or other
characterizations of future events or circumstances, including any
underlying assumptions, are forward-looking statements. These
forward-looking statements are not guarantees of future performance
and are subject to certain risks, uncertainties and assumptions
that are difficult to predict. Therefore, our actual results could
differ materially and adversely from those expressed in any
forward-looking statements as a result of various risk factors.
Intersil does not adopt and is not responsible for any
forward-looking statements and projections made by others in this
press release. Intersil's Annual Report on Form 10-K, subsequent
Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K
and other Intersil filings with the U.S. Securities and Exchange
Commission (which you may obtain for free at the SEC's web site at
http://www.sec.gov) discuss some of the important risk factors that
may affect our business, results of operations and financial
condition. These forward-looking statements are made only as of the
date of this communication and Intersil undertakes no obligation to
update or revise these forward-looking statements.
Intersil Corporation
Condensed Consolidated Statements of Operations
Unaudited
(In millions, except percentages and per share amounts)
Quarter Ended Two Quarters Ended
------------------------------- --------------------
Jun. 29, Jul. 1, Mar. 30, Jun. 29, Jul. 1,
2012 2011 2012 2012 2011
--------- --------- --------- --------- ---------
Q2 2012 Q2 2011 Q1 2012 YTD YTD
Net revenue $ 163.0 $ 209.1 $ 156.0 $ 319.0 $ 407.9
Cost of revenue 74.2 87.3 70.8 145.0 171.1
--------- --------- --------- --------- ---------
Gross profit 88.8 121.8 85.2 174.0 236.8
Gross margin 54.5% 58.2% 54.6% 54.5% 58.1%
Expenses
Research and
development 46.2 47.8 44.4 90.6 97.5
Selling, general
and administrative 36.4 36.2 34.2 70.6 71.5
Amortization of
purchased
intangibles 7.2 6.7 7.2 14.4 13.6
Restructuring-
related costs 8.3 0.1 1.5 9.8 2.4
--------- --------- --------- --------- ---------
Operating (loss)
income (9.3) 31.0 (2.2) (11.4) 51.8
(Loss) gain on
deferred comp
investments (0.5) - 0.7 0.2 0.2
Interest income 0.1 0.7 0.2 0.3 1.5
Interest expense
and fees (1.8) (4.2) (2.0) (3.8) (8.7)
--------- --------- --------- --------- ---------
(Loss) income before
income taxes (11.4) 27.5 (3.3) (14.7) 44.7
Income tax expense 3.1 5.7 - 3.1 8.8
--------- --------- --------- --------- ---------
Net (loss) income $ (14.5) $ 21.8 $ (3.3) $ (17.8) $ 35.9
========= ========= ========= ========= =========
(Loss) earnings per
share:
Basic $ (0.11) $ 0.17 $ (0.03) $ (0.14) $ 0.29
========= ========= ========= ========= =========
Diluted $ (0.11) $ 0.17 $ (0.03) $ (0.14) $ 0.29
========= ========= ========= ========= =========
Weighted average
shares outstanding:
Basic 127.5 125.7 126.6 127.1 125.6
========= ========= ========= ========= =========
Diluted 127.5 126.0 126.6 127.1 125.9
========= ========= ========= ========= =========
Note: Totals and percentages may not add or calculate precisely due to
rounding.
Intersil Corporation
Condensed Consolidated Balance Sheets
Unaudited
(In millions)
Jun. 29, Dec. 30,
2012 2011
--------- ---------
Assets
Current assets:
Cash and short-term investments $ 316.1 $ 410.2
Trade receivables, net 62.9 64.9
Inventories 85.5 97.9
Prepaid expenses and other current assets 14.0 16.1
Income tax receivable 10.9 -
Deferred income tax asset 20.4 47.0
--------- ---------
Total current assets 509.7 636.1
--------- ---------
Non-current assets:
Property, plant and equipment, net 86.1 91.0
Purchased intangibles, net 97.8 112.2
Goodwill 565.4 565.4
Deferred income tax asset 89.3 73.8
Long-term investments 2.7 4.8
Other 82.4 85.9
--------- ---------
Total non-current assets 923.7 933.1
--------- ---------
Total assets $ 1,433.4 $ 1,569.2
========= =========
Liabilities and shareholders' equity
Current liabilities:
Trade payables $ 30.6 $ 27.9
Deferred net revenue 7.5 8.6
Income taxes payable - 60.6
Other accrued items 68.9 69.0
--------- ---------
Total current liabilities 107.0 166.1
--------- ---------
Non-current liabilities:
Long-term debt 150.0 200.0
Income taxes payable 105.3 93.8
Other non-current liabilities 24.9 28.6
--------- ---------
Total non-current liabilities 280.2 322.4
--------- ---------
Total shareholders' equity 1,046.2 1,080.7
--------- ---------
Total liabilities and shareholders' equity $ 1,433.4 $ 1,569.2
========= =========
Note: Totals and percentages may not add or calculate precisely due to
rounding.
Intersil Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited
(In millions)
Quarter Ended Two Quarters Ended
------------------------------- --------------------
Jun. 29, Jul. 1, Mar. 30, Jun. 29, Jul. 1,
2012 2011 2012 2012 2011
--------- --------- --------- --------- ---------
Q2 2012 Q2 2011 Q1 2012 YTD YTD
Operating activities:
Net (loss) income $ (14.5) $ 21.8 $ (3.3) $ (17.8) $ 35.9
Depreciation 4.8 5.6 4.9 9.8 11.2
Amortization of
purchased
intangibles 7.2 6.7 7.2 14.4 13.6
Equity-based
compensation 8.7 9.3 5.3 14.0 16.3
Provision for
inventory
obsolescence 1.7 2.8 1.4 3.1 4.3
Other 0.3 (0.1) 0.2 0.5 (0.1)
Deferred income
taxes 11.8 2.7 - 11.8 4.1
Net changes in
operating assets
and liabilities (52.1) 0.4 6.1 (46.0) (5.1)
--------- --------- --------- --------- ---------
Net cash flows
from operating
activities (32.1) 49.2 21.9 (10.2) 80.2
--------- --------- --------- --------- ---------
Investing activities:
Purchases of
investments - (29.0) - - (29.0)
Proceeds from
investments - - 26.5 26.5 10.1
Net capital
expenditures (3.1) (3.5) (1.5) (4.6) (5.3)
--------- --------- --------- --------- ---------
Net cash flows
from investing
activities (3.1) (32.5) 25.0 21.9 (24.2)
--------- --------- --------- --------- ---------
Financing activities:
Proceeds and tax
benefit from
equity-based
awards 1.7 (1.3) (0.6) 1.1 1.3
Fees on credit
facilities (0.4) - - (0.4) -
Repayments of long-
term debt (25.0) - (25.0) (50.0) (20.3)
Dividends paid (16.0) (15.7) (15.4) (31.4) (30.9)
--------- --------- --------- --------- ---------
Net cash flows
from financing
activities (39.8) (17.0) (41.0) (80.8) (49.9)
--------- --------- --------- --------- ---------
Effect of exchange
rates on cash and
cash equivalents (0.6) 0.5 0.1 (0.5) 1.3
--------- --------- --------- --------- ---------
Net change in
cash and cash
equivalents (75.6) 0.1 6.0 (69.6) 7.4
Cash and equivalents
as of the beginning
of the period 389.7 390.3 383.7 383.7 383.0
--------- --------- --------- --------- ---------
Cash and
equivalents as
of the end of
the period $ 314.1 $ 390.4 $ 389.7 $ 314.1 $ 390.4
========= ========= ========= ========= =========
Note: Totals and percentages may not add or calculate precisely due to
rounding.
Intersil Corporation
Additional Financial Information
Unaudited
(In millions)
Quarter Ended Two Quarters Ended
------------------------------ --------------------
Jun. 29, Jul. 1, Mar. 30, Jun. 29, Jul. 1,
2012 2011 2012 2012 2011
--------- --------- --------- --------- ---------
Q2 2012 Q2 2011 Q1 2012 YTD YTD
EBITDA:
Operating (loss)
income $ (9.3) $ 31.0 $ (2.2) $ (11.4) $ 51.8
Depreciation 4.8 5.6 4.9 9.8 11.2
Amortization of
purchased
intangibles 7.2 6.7 7.2 14.4 13.6
Equity-based
compensation 8.7 9.3 5.3 14.0 16.3
--------- --------- --------- --------- ---------
EBITDA $ 11.4 $ 52.6 $ 15.2 $ 26.7 $ 92.9
========= ========= ========= ========= =========
Six-month backlog $ 127.4 $ 174.8 $ 142.5
========= ========= =========
Equity-based
compensation expense
by classification:
Cost of revenue $ 0.6 $ 0.6 $ 0.4 $ 0.9 $ 1.1
Research and
development $ 3.7 $ 4.6 $ 3.0 $ 6.8 $ 9.3
Selling, general and
administrative $ 4.4 $ 4.1 $ 1.9 $ 6.3 $ 5.9
Revenue by end market:
Industrial and
Infrastructure $ 95.8 $ 110.5 $ 86.9 $ 182.7 $ 215.9
Personal Computing 40.0 52.1 39.4 $ 79.4 104.1
Consumer 27.2 46.5 29.7 $ 56.9 87.9
--------- --------- --------- --------- ---------
Total revenue $ 163.0 $ 209.1 $ 156.0 $ 319.0 $ 407.9
========= ========= ========= ========= =========
Free cash flow:
Cash flows from
operations $ (32.1) $ 49.2 $ 21.9 $ (10.2) $ 80.2
Net capital
expenditures 3.1 3.5 1.5 4.6 5.3
--------- --------- --------- --------- ---------
Free cash flow: $ (35.2) $ 45.7 $ 20.4 $ (14.8) $ 74.9
========= ========= ========= ========= =========
Note: Totals and percentages may not add or calculate precisely due to
rounding.
Intersil Corporation
Non-GAAP Results
Unaudited
(In millions, except percentages and per share amounts)
Quarter Ended Two Quarters Ended
-------------------------------- ---------------------
Jun. 29, Jul. 1, Mar. 30, Jun. 29, Jul. 1,
2012 2011 2012 2012 2011
--------- --------- --------- --------- ---------
Q2 2012 Q2 2011 Q1 2012 YTD YTD
Non-GAAP operating
income:
GAAP operating
(loss) income $ (9.3) $ 31.0 $ (2.2) $ (11.4) $ 51.8
Restructuring-
related costs 8.3 0.1 1.5 9.8 2.4
Deferred
compensation
expense (0.5) 0.1 0.8 0.3 0.4
Equity-based
compensation 8.7 9.3 5.3 14.0 16.3
Amortization of
purchased
intangibles 7.2 6.7 7.2 14.4 13.6
--------- --------- --------- --------- ---------
Non-GAAP
operating
income: $ 14.4 $ 47.2 $ 12.7 $ 27.1 $ 84.5
========= ========= ========= ========= =========
Revenue $ 163.0 $ 209.1 $ 156.0 $ 319.0 $ 407.9
========= ========= ========= ========= =========
Non-GAAP operating
margin
GAAP operating
margin (5.7)% 14.8% (1.4)% (3.6)% 12.7%
Excluded items
as a percent of
revenue 14.5% 7.8% 9.5% 12.1% 8.0%
--------- --------- --------- --------- ---------
Non-GAAP
operating
margin 8.8% 22.6% 8.1% 8.5% 20.7%
========= ========= ========= ========= =========
Non-GAAP net
income:
GAAP net (loss)
income $ (14.5) $ 21.8 $ (3.3) $ (17.8) $ 35.9
Tax adjustments
from non-cash
and discrete
items (0.1) (0.6) (2.5) (2.8) (2.2)
Restructuring-
related costs 8.3 0.1 1.5 9.8 2.4
Equity-based
compensation 8.7 9.3 5.3 14.0 16.3
Amortization of
purchased
intangibles 7.2 6.7 7.2 14.4 13.6
--------- --------- --------- --------- ---------
Non-GAAP net
income $ 9.6 $ 37.3 $ 8.2 $ 17.6 $ 66.0
========= ========= ========= ========= =========
Diluted shares
outstanding 127.5 126.0 126.6 127.1 125.9
========= ========= ========= ========= =========
Non-GAAP earnings
per diluted share
GAAP (loss)
earnings per
diluted share $ (0.11) $ 0.17 $ (0.03) $ (0.14) $ 0.29
Excluded items
per share
impact 0.19 0.13 0.09 0.28 0.23
--------- --------- --------- --------- ---------
Non-GAAP
earnings per
diluted share $ 0.08 $ 0.30 $ 0.06 $ 0.14 $ 0.52
========= ========= ========= ========= =========
Non-GAAP results exclude restructuring-related costs, acquisition-related
expenses, losses and impairments on investments, equity-based compensation,
amortization of purchased intangibles and related tax benefits.
Note: Totals and percentages may not add or calculate precisely due to
rounding.
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