MILPITAS, Calif., Oct. 29, 2014 /PRNewswire/ -- Intersil
Corporation (NASDAQ: ISIL), a leading provider of innovative power
management and precision analog solutions, today announced
financial results for the third quarter ended October 3, 2014. Revenue of $143.6 million was lower than expected,
reflecting weaker end market demand at the end of the quarter.
Earnings per share results were within expectations as continued
improvement in gross margin and lower operating expenses supported
profitability.
Company Highlights
- Both GAAP and non-GAAP gross margin improved for the sixth
consecutive quarter to 58.4% and 58.6% respectively
- Operating margin increased again to a recent record of 15.2% on
a GAAP basis and 22.1% on a non-GAAP basis
- Earnings per diluted share were within expectations and flat
sequentially at $0.10 on a GAAP basis
and $0.19 on a non-GAAP basis
- Cash and investment balances increased to $211 million
Revenue for the third quarter of $143.6 million decreased
3% sequentially due primarily to weaker than anticipated demand in
consumer and industrial and infrastructure markets. Up 4%
year-over-year, Intersil's industrial and infrastructure revenue
decreased broadly sequentially across most end markets. Consumer
revenue was down 8% sequentially reflecting the continued
transition from non-strategic to new product revenue. Computing
demand was strong, but excess inventory at distributors will
contribute to steep declines in the fourth quarter. The breakdown
by end market was as follows:
End Market
|
Q3
2014
|
Q2
2014
|
Q3
2013
|
Revenue $M
|
Revenue %
|
Revenue $M
|
Revenue %
|
Revenue $M
|
Revenue %
|
Industrial &
Infrastructure
|
91.1
|
63%
|
94.8
|
64%
|
87.8
|
58%
|
Computing
|
31.4
|
22%
|
30.0
|
20%
|
28.2
|
18%
|
Consumer
|
21.1
|
15%
|
23.0
|
16%
|
36.6
|
24%
|
Total
Revenue
|
$143.6
|
|
$147.8
|
|
$152.6
|
|
Financial Results
The Company's solid operating
results despite lower revenue reflected the improved health of the
business. In the third quarter, GAAP operating expenses decreased
by 5% sequentially to $62.0 million.
GAAP gross margin increased to 58.4%. Operating income improved to
$21.9 million, or 15.2% of revenue
compared to 3.3% in Q3 2013. GAAP net income for the quarter
increased to $13.9 million or
$0.10 per diluted share, compared to
a loss in the same period last year.
The non-GAAP results also showed meaningful improvement.
Non-GAAP gross margin improved to 58.6% in the third quarter. Third
quarter non-GAAP operating expenses declined to $52.3 million, down 4% sequentially and
year-over-year. Third quarter non-GAAP operating income increased
sequentially to $31.8 million,
resulting in non-GAAP operating margin of 22.1%. Third quarter
non-GAAP net income of $25.5 million
resulted in non-GAAP earnings per diluted share of $0.19. For a complete reconciliation of GAAP and
non-GAAP results, please see the "Non-GAAP Results" tables included
at the end of this release.
Cash flow from operating activities was $24.0 million, contributing to a sequential
increase in cash and short-term investments to $211 million. Intersil's board of directors
authorized payment of a quarterly dividend of $0.12 per share of common stock. The payment of
this dividend will be made on November 29,
2014, to shareholders of record as of the close of business
on November 18, 2014.
"We are staying focused on the things we can control," said
Necip Sayiner, president and CEO of
Intersil. "We're operating our business to protect profitability,
we're continuing to introduce new products and we're securing the
design wins that we believe will allow us to grow and drive
earnings higher in 2015."
Fourth Quarter 2014 Outlook
The following forward looking guidance is for the fourth quarter
ending January 2, 2015, based on current business trends and
conditions:
|
GAAP
|
Reconciling
items
|
Non-GAAP
|
Revenue
|
$125 to $132
million
|
|
$125 to $132
million
|
Gross
margin
|
Up 50
bps
|
|
Up 50
bps
|
Operating
expenses
|
Down $1
million
|
$4.5 million
equity-based compensation
$5.6 million
amortization of purchased intangibles
|
Down $1
million
|
Earnings per
share(diluted)
|
$0.06 to
$0.08
|
|
$0.13 to
$0.15
|
Earnings Call Webcast
Intersil will be hosting a
webcast to discuss the quarterly results and outlook today at
1:45 p.m. Pacific Time. To access the
conference call, please visit the company's investor relations
website at ir.intersil.com. Participants can also dial (866)
277-1184 or +1 (617) 597-5360 and enter the pass code 42634846. A
replay of the webcast will be available for two weeks following the
conference call on the Company website, or may be accessed by
dialing (888) 286-8010, international dial +1 (617) 801-6888, using
the pass code 34839042.
About Intersil
Intersil Corporation is a leading
provider of innovative power management and precision analog
solutions. The Company's products form the building blocks of
increasingly intelligent, mobile and power hungry electronics,
enabling advances in power management to improve efficiency and
extend battery life. With a deep portfolio of intellectual property
and a rich history of design and process innovation, Intersil is
the trusted partner to leading companies in some of the world's
largest markets, including industrial and infrastructure, mobile
computing, automotive and aerospace. For more information about
Intersil, visit our website at www.intersil.com.
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.
Non-GAAP Reporting
To supplement its consolidated
financial results presented in accordance with GAAP, Intersil 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 Intersil'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 Intersil's non-GAAP information may be different from
the non-GAAP information provided by other companies. Non-GAAP
financial measures used by Intersil include:
- Gross profit
- Operating expenses
- Provision (benefit) for income taxes
- Operating income (loss)
- Net income (loss)
- Diluted net income (loss) per share
- 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 related costs,
equity-based compensation expense, 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
Intersil'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 "Non-GAAP Results" 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
Intersil'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 Intersil'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
Restructuring and related costs. Restructuring charges primarily
relate to changes in Intersil's infrastructure in efforts to reduce
costs and rebalance its workforce. Restructuring charges (gains)
are excluded from non-GAAP financial measures because they are not
considered core operating activities. Although Intersil 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 Intersil'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
- Other write-offs such as intangibles related to a restructuring
action
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
Intersil. Excluding this data allows investors to better compare
Intersil's period-over-period performance without such expense,
which Intersil believes may be useful to the investor community.
Other adjustments primarily include:
- Equity-based compensation expense
- Legal or governmental judgments, awards, fines or
penalties
- Income from IP agreements
- Writeoffs (recoveries) related to Auction Rate Securities
- Tax effects of non-GAAP adjustments
- Diluted weighted average shares non-GAAP adjustment. For
purposes of calculating non-GAAP diluted earnings per share, the
GAAP diluted weighted average shares outstanding is adjusted to
exclude the benefits of equity-based 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 stock method.
Comparability. The above criteria has been consistently applied
when calculating the non-GAAP financial measures for all periods
presented in this press release and accompanying tables. During the
second quarter of fiscal 2013 we revised our non-GAAP financial
information to reduce the types of items excluded from our non-GAAP
presentation in an effort to increase comparability of our results
with published earnings estimates widely available on the
Internet. In the past we excluded other items such as the
compensation expense(benefit) associated with our non-qualified
deferred compensation plan, CEO severance costs, loss on
interest-rate swaps, and related tax effects of these items, from
our non-GAAP financial information. As a result, a non-GAAP
financial measure presented in the accompanying press release
tables may be different from that presented in a prior press
release.
Intersil
Corporation
|
Condensed
Consolidated Statements of Operations
|
Unaudited
|
(In thousands,
except percentages and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Oct.
3,
|
|
Jul.
4,
|
|
Oct.
4,
|
|
2014
|
|
2014
|
|
2013
|
|
Q3
2014
|
|
Q2
2014
|
|
Q3
2013
|
|
|
|
|
|
|
Revenue
|
$ 143,612
|
|
$ 147,761
|
|
$ 152,644
|
Cost of
revenue
|
59,763
|
|
61,953
|
|
68,008
|
Gross
profit
|
83,849
|
|
85,808
|
|
84,636
|
Gross margin
%
|
58.4%
|
|
58.1%
|
|
55.4%
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Research and
development
|
31,194
|
|
32,491
|
|
31,311
|
Selling,
general and administrative
|
25,243
|
|
27,076
|
|
27,083
|
Amortization of
purchased intangibles
|
5,561
|
|
5,560
|
|
6,080
|
Provision for
export compliance settlement
|
-
|
|
-
|
|
6,000
|
Restructuring
and related costs
|
-
|
|
-
|
|
9,067
|
Total
expenses
|
61,998
|
|
65,127
|
|
79,541
|
|
|
|
|
|
|
Operating
income
|
21,851
|
|
20,681
|
|
5,095
|
Interest
expense, fees and other expenses
|
(554)
|
|
(384)
|
|
(429)
|
(Loss) / gain
on investments
|
(148)
|
|
495
|
|
893
|
Income before
income taxes
|
21,149
|
|
20,792
|
|
5,559
|
Income tax
expense
|
7,262
|
|
7,146
|
|
13,737
|
Net
income
|
$ 13,887
|
|
$ 13,646
|
|
$ (8,178)
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Basic
|
$ 0.11
|
|
$ 0.11
|
|
$ (0.06)
|
Diluted
|
$ 0.10
|
|
$ 0.10
|
|
$ (0.06)
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
Basic
|
129,620
|
|
129,020
|
|
127,339
|
Diluted
|
132,626
|
|
132,214
|
|
127,339
|
Intersil
Corporation
|
Condensed
Consolidated Balance Sheets
|
Unaudited
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Oct.
3,
|
|
Jul.
4,
|
|
Jan.
3,
|
|
|
2014
|
|
2014
|
|
2014
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and
short-term investments
|
|
$ 210,582
|
|
$ 201,241
|
|
$ 194,787
|
Trade
receivables, net
|
|
58,680
|
|
59,121
|
|
49,466
|
Inventories
|
|
67,651
|
|
65,077
|
|
62,408
|
Prepaid
expenses and other current assets
|
|
9,945
|
|
9,966
|
|
9,752
|
Income taxes
receivable
|
|
1,450
|
|
2,839
|
|
1,091
|
Deferred income
tax assets
|
|
14,337
|
|
15,590
|
|
22,328
|
Total
current assets
|
|
362,645
|
|
353,834
|
|
339,832
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant
and equipment, net
|
|
73,755
|
|
75,798
|
|
81,867
|
Purchased
intangibles, net
|
|
39,959
|
|
45,520
|
|
56,641
|
Goodwill
|
|
565,424
|
|
565,424
|
|
565,424
|
Deferred income
tax assets
|
|
53,455
|
|
55,186
|
|
73,008
|
Other
non-current assets
|
|
71,720
|
|
73,144
|
|
74,624
|
Total
non-current assets
|
|
804,313
|
|
815,072
|
|
851,564
|
Total
assets
|
|
$ 1,166,958
|
|
$ 1,168,906
|
|
$ 1,191,396
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade
payables
|
|
$ 26,809
|
|
$ 28,330
|
|
$ 26,248
|
Deferred
income
|
|
10,821
|
|
10,965
|
|
11,936
|
Income taxes
payable
|
|
6,105
|
|
8,370
|
|
14,588
|
Other accrued
expenses
|
|
66,151
|
|
70,166
|
|
77,117
|
Total
current liabilities
|
|
109,886
|
|
117,831
|
|
129,889
|
Non-current
liabilities:
|
|
|
|
|
|
|
Income taxes
payable
|
|
72,887
|
|
72,367
|
|
90,102
|
Other
non-current liabilities
|
|
8,991
|
|
10,528
|
|
13,603
|
Total
non-current liabilities
|
|
81,878
|
|
82,895
|
|
103,705
|
Total
shareholders' equity
|
|
975,194
|
|
968,180
|
|
957,802
|
Total liabilities
and shareholders' equity
|
|
$ 1,166,958
|
|
$ 1,168,906
|
|
$ 1,191,396
|
Intersil
Corporation
|
Condensed
Consolidated Statements of Cash Flows
|
Unaudited
|
(In
thousands)
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Oct.
3,
|
|
Jul.
4,
|
|
Oct.
4,
|
|
2014
|
|
2014
|
|
2013
|
|
Q3
2014
|
|
Q2
2014
|
|
Q3
2013
|
Operating
activities:
|
|
|
|
|
|
Net income
|
$ 13,887
|
|
$ 13,646
|
|
$ (8,178)
|
Depreciation
|
4,898
|
|
4,785
|
|
4,380
|
Amortization of
purchased intangibles
|
5,561
|
|
5,560
|
|
6,080
|
Equity-based
compensation
|
4,385
|
|
5,585
|
|
4,287
|
Non-cash portion of
restructuring charges
|
-
|
|
-
|
|
1,012
|
Other
|
(195)
|
|
(55)
|
|
(220)
|
Deferred income
taxes
|
2,985
|
|
1,575
|
|
12,028
|
Net changes in
operating assets and liabilities
|
(7,505)
|
|
(17,891)
|
|
185
|
Net cash flows
from operating activities
|
24,016
|
|
13,205
|
|
19,574
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
Proceeds from
investments
|
192
|
|
-
|
|
2,991
|
Net capital
expenditures
|
(3,150)
|
|
(2,066)
|
|
(3,461)
|
Net cash flows
from investing activities
|
(2,958)
|
|
(2,066)
|
|
(470)
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
Proceeds from
equity-based awards, net
|
5,700
|
|
8,957
|
|
3,260
|
Dividends
paid
|
(15,634)
|
|
(16,220)
|
|
(15,339)
|
Net cash flows
from financing activities
|
(9,934)
|
|
(7,263)
|
|
(12,079)
|
|
|
|
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
(1,783)
|
|
29
|
|
859
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
9,341
|
|
3,905
|
|
7,884
|
|
|
|
|
|
|
Cash and cash
equivalents as of the beginning of the period
|
201,241
|
|
197,336
|
|
158,916
|
|
|
|
|
|
|
Cash and cash
equivalents as of the end of the period
|
$ 210,582
|
|
$ 201,241
|
|
$ 166,800
|
Intersil
Corporation
|
Non-GAAP
Results
|
Unaudited
|
(In thousands,
except percentages)
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Oct.
3,
|
|
Jul.
4,
|
|
Oct.
4,
|
|
2014
|
|
2014
|
|
2013
|
|
Q3
2014
|
|
Q2
2014
|
|
Q3
2013
|
|
|
|
|
|
|
Non-GAAP gross
profit:
|
|
|
|
|
|
GAAP gross
profit
|
$ 83,849
|
|
$ 85,808
|
|
$ 84,636
|
Equity-based
compensation COS
|
294
|
|
394
|
|
324
|
Non-GAAP gross
profit
|
$ 84,143
|
|
$ 86,202
|
|
$ 84,960
|
|
|
|
|
|
|
Non-GAAP gross
margin:
|
|
|
|
|
|
GAAP gross
margin
|
58.4%
|
|
58.1%
|
|
55.4%
|
Equity-based
compensation COS
|
0.2%
|
|
0.2%
|
|
0.3%
|
Non-GAAP gross
margin
|
58.6%
|
|
58.3%
|
|
55.7%
|
|
|
|
|
|
|
Non-GAAP operating
expenses:
|
|
|
|
|
|
GAAP operating
expenses
|
$ 61,998
|
|
$ 65,127
|
|
$ 79,541
|
Restructuring and
related costs
|
-
|
|
-
|
|
(9,067)
|
Provision for export
compliance settlement
|
-
|
|
-
|
|
(6,000)
|
Equity-based
compensation (excl. COS)
|
(4,091)
|
|
(5,191)
|
|
(3,963)
|
Amortization of
purchased intangibles
|
(5,561)
|
|
(5,560)
|
|
(6,080)
|
Non-GAAP operating
expenses
|
$ 52,346
|
|
$ 54,376
|
|
$ 54,431
|
|
|
|
|
|
|
Non-GAAP operating
income:
|
|
|
|
|
|
GAAP operating
income
|
$ 21,851
|
|
$ 20,681
|
|
$ 5,095
|
Restructuring and
related costs
|
-
|
|
-
|
|
9,067
|
Provision for export
compliance settlement
|
-
|
|
-
|
|
6,000
|
Equity-based
compensation
|
4,385
|
|
5,585
|
|
4,287
|
Amortization of
purchased intangibles
|
5,561
|
|
5,560
|
|
6,080
|
Non-GAAP operating
income
|
$ 31,797
|
|
$ 31,826
|
|
$ 30,529
|
|
|
|
|
|
|
Non-GAAP operating
margin:
|
|
|
|
|
|
GAAP operating
margin
|
15.2 %
|
|
14.0 %
|
|
3.3 %
|
Excluded items as a
percent of revenue
|
6.9 %
|
|
7.5 %
|
|
16.7 %
|
Non-GAAP operating
margin
|
22.1 %
|
|
21.5 %
|
|
20.0 %
|
Intersil
Corporation
|
Non-GAAP
Results
|
Unaudited
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Oct.
3,
|
|
Jul.
4,
|
|
Oct.
4,
|
|
2014
|
|
2014
|
|
2013
|
|
Q3
2014
|
|
Q2
2014
|
|
Q3
2013
|
|
|
|
|
|
|
Non-GAAP net
income:
|
|
|
|
|
|
GAAP net
income
|
$ 13,887
|
|
$ 13,646
|
|
$ (8,178)
|
Tax adjustments
from non-cash and discrete items
|
1,821
|
|
1,232
|
|
8,816
|
Restructuring
and related costs
|
-
|
|
-
|
|
9,067
|
Provision for
export compliance settlement
|
-
|
|
-
|
|
6,000
|
Gain on
recovery from auction rate securities
|
(191)
|
|
-
|
|
(241)
|
Equity-based
compensation
|
4,385
|
|
5,585
|
|
4,287
|
Amortization of
purchased intangibles
|
5,561
|
|
5,560
|
|
6,080
|
Non-GAAP net
income
|
$ 25,463
|
|
$ 26,023
|
|
$ 25,831
|
|
|
|
|
|
|
GAAP weighted
average shares - diluted
|
132,626
|
|
132,214
|
|
127,339
|
Non-GAAP
adjustment
|
4,409
|
|
3,527
|
|
3,267
|
Non-GAAP
weighted average shares - diluted
|
137,035
|
|
135,741
|
|
130,606
|
|
|
|
|
|
|
Non-GAAP earnings
per diluted share:
|
|
|
|
|
|
GAAP
earnings per diluted share
|
$ 0.10
|
|
$ 0.10
|
|
$ (0.06)
|
Excluded items
per share impact
|
0.09
|
|
0.09
|
|
0.26
|
Non-GAAP
earnings per diluted share
|
$ 0.19
|
|
$ 0.19
|
|
$ 0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity-based
compensation expense by classification:
|
|
|
|
|
|
Cost of
revenue ("COS")
|
$ 294
|
|
$ 394
|
|
$ 324
|
Research
and development
|
$ 1,967
|
|
$ 2,046
|
|
$ 1,691
|
Selling,
general and administrative
|
$ 2,124
|
|
$ 3,145
|
|
$ 2,272
|
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SOURCE Intersil Corporation