MILPITAS, Calif., July 29, 2015 /PRNewswire/ -- Intersil
Corporation (NASDAQ:ISIL), a leading provider of innovative power
management and precision analog solutions, today announced
financial results for the second quarter of 2015. Revenue of
$132.4 million was down 1.3%
sequentially. Strong gross margin and lower operating expenses
resulted in solid operating margin for the eighth consecutive
quarter. The company reported GAAP earnings per share of
$0.28 and non-GAAP earnings per share
of $0.16.
Company Highlights
- Gross margin performance was strong at 59.3% on a GAAP basis
and 59.6% on a non-GAAP basis.
- The company again reported solid profitability, with GAAP
operating margin of 12.2% and non-GAAP operating margin of
20.3%.
- Cash and cash equivalents increased to $225 million.
- New products introduced during the quarter represent industry
firsts for power management in tablets and ultrabooks, wearables
and industrial applications.
Quarterly Results
Revenue for the second quarter was slightly lower than expected due
to persistent demand weakness in computing and infrastructure end
markets. Computing and Consumer (C&C) revenue grew 2.4%
sequentially driven by new smartphone wins. Industrial and
Infrastructure (I&I) revenue was down 3.1% sequentially. In the
I&I business, strength in automotive and military/aerospace was
offset by softness in infrastructure power and industrial analog.
The breakdown by end market for the quarter was as follows:
|
Q2
2015
|
|
Q1
2015
|
|
Q2
2014
|
End Market
Revenue
|
$M
|
|
%
|
|
$M
|
|
%
|
|
$M
|
|
%
|
Industrial &
Infrastructure
|
87.9
|
|
66%
|
|
90.7
|
|
68%
|
|
94.8
|
|
64%
|
Consumer &
Computing
|
44.5
|
|
34%
|
|
43.5
|
|
32%
|
|
53.0
|
|
36%
|
Total
Revenue
|
$132.4
|
|
|
|
$134.2
|
|
|
|
$147.8
|
|
|
|
Table 1. Intersil
End Market Mix
|
GAAP gross margin for the quarter was 59.3%, an increase of 120
basis points from the second quarter of 2014. Total GAAP operating
expenses were $62.3 million. R&D
expense was $33.1 million and
SG&A expense was $25.2 million.
GAAP operating income was $16.2
million or 12.2% of revenue. Q2 GAAP net income was
$37.7 million and diluted GAAP EPS
was $0.28.
The following non-GAAP results exclude amortization of
acquisition-related intangibles and stock compensation expense.
Non-GAAP gross margin for the quarter was 59.6%. Margin declined
slightly sequentially due primarily to a lower mix of I&I
products. Non-GAAP operating expenses declined to $52 million as the company efficiently managed
expenses. Q2 non-GAAP operating income was $26.9 million resulting in a non-GAAP operating
margin of 20.3%. Fully diluted Q2 earnings per share on a
non-GAAP basis were $0.16.
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 and cash equivalents increased to $225 million at the end of the second quarter.
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 or about
August 28, 2015, to shareholders of
record as of the close of business on August
18, 2015.
Third Quarter 2015 Outlook
The following forward looking guidance is for the third quarter
ending October 2, 2015, based on current business trends and
conditions:
|
GAAP
|
Reconciling
items
|
Non-GAAP
|
Revenue
|
$122 - $130
million
|
|
$122 - $130
million
|
Gross
margin
|
Down 150
bps
|
|
Down 150
bps
|
Operating
expenses
|
$60 million +/-
$500K
|
$6 million
equity-based compensation
$4 million
amortization of purchased intangibles
|
$50 million +/-
$500K
|
Earnings per
share
|
$0.05 to
$0.08
|
|
$0.12 to
$0.15
|
|
Table 2. Intersil
Q3 2015 Outlook
|
"New business has started ramping, but not at a pace to offset
the broader weakness resulting from a sluggish global demand
environment," said Necip Sayiner,
president and CEO of Intersil. "We continue to be focused on
building a highly profitable growth business. While the path to
revenue growth is taking longer than we'd like, we feel positive
about the progress thus far."
Earnings Call Webcast
Intersil will be hosting a webcast to discuss the quarterly results
and outlook today at 1:30 p.m. Pacific
Time. To access the webcast, please visit the investor
relations page of the company's website at ir.intersil.com.
Participants can also dial (866) 700-6067 or +1 (617) 213-8834 and
enter the pass code 41566174. 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
99476491.
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.
Important factors that may affect our business, future operating
results and financial condition include: any faltering in global
economic conditions, the highly cyclical nature of the
semiconductor industry, intense competition in the semiconductor
industry, unsuccessful product development or failure to obtain
market acceptance of our products, downturns in the computing
market, failure to make or deliver products in a timely manner,
unavailability of raw materials, services, supplies or
manufacturing capacity, delays in production or in implementing new
production techniques, product defects or unreliability of
products, adverse results in litigation matters, and other risk
factors described in 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). 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 does not adopt and is not responsible for any
forward-looking statements and projections made by others in this
press release.
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 earnings (loss) per share; 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 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 agreement.
- Write-offs (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
|
|
Jul.
3,
|
|
Apr.
3,
|
|
Jul.
4,
|
|
2015
|
|
2015
|
|
2014
|
|
Q2
2015
|
|
Q1
2015
|
|
Q2
2014
|
|
|
|
|
|
|
Revenue
|
$ 132,441
|
|
$ 134,153
|
|
$ 147,761
|
Cost of
revenue
|
53,948
|
|
53,827
|
|
61,953
|
Gross
profit
|
78,493
|
|
80,326
|
|
85,808
|
Gross margin
%
|
59.3%
|
|
59.9%
|
|
58.1%
|
Expenses:
|
|
|
|
|
|
Research and
development
|
33,098
|
|
32,017
|
|
32,491
|
Selling, general and
administrative
|
25,194
|
|
25,453
|
|
27,076
|
Amortization of
purchased intangibles
|
4,026
|
|
5,561
|
|
5,560
|
Provision for TAOS
litigation
|
-
|
|
81,100
|
|
-
|
Total
expenses
|
62,318
|
|
144,131
|
|
65,127
|
Operating income
(loss)
|
16,175
|
|
(63,805)
|
|
20,681
|
Interest expense and
other
|
(503)
|
|
(257)
|
|
(384)
|
(Loss) gain on
investments, net
|
(71)
|
|
773
|
|
495
|
Income (loss)
before income taxes
|
15,601
|
|
(63,289)
|
|
20,792
|
Income tax (benefit)
expense
|
(22,123)
|
|
5,535
|
|
7,146
|
Net income
(loss)
|
$ 37,724
|
|
$ (68,824)
|
|
$ 13,646
|
|
|
|
|
|
|
Earnings (loss)
per share:
|
|
|
|
|
|
Basic
|
$ 0.29
|
|
$ (0.53)
|
|
$ 0.11
|
Diluted
|
$ 0.28
|
|
$ (0.53)
|
|
$ 0.10
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
Basic
|
131,916
|
|
130,513
|
|
129,020
|
Diluted
|
132,823
|
|
130,513
|
|
132,214
|
Intersil
Corporation
|
Condensed
Consolidated Balance Sheets
|
Unaudited
|
(in
thousands)
|
|
|
|
|
|
|
|
Jul.
3,
|
|
Apr.
3,
|
|
Jul.
4,
|
|
2015
|
|
2015
|
|
2014
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$ 224,962
|
|
$ 220,900
|
|
$ 201,241
|
Trade receivables,
net
|
55,972
|
|
51,236
|
|
59,121
|
Inventories
|
71,816
|
|
77,798
|
|
65,077
|
Prepaid expenses and
other current assets
|
6,563
|
|
14,301
|
|
9,966
|
Income taxes
receivable
|
1,073
|
|
1,129
|
|
2,839
|
Deferred income tax
assets
|
20,724
|
|
20,615
|
|
15,590
|
Total
current assets
|
381,110
|
|
385,979
|
|
353,834
|
Non-current
assets:
|
|
|
|
|
|
Property, plant and
equipment, net
|
74,224
|
|
73,073
|
|
75,798
|
Purchased
intangibles, net
|
24,813
|
|
28,839
|
|
45,520
|
Goodwill
|
565,424
|
|
565,424
|
|
565,424
|
Deferred income tax
assets
|
44,493
|
|
38,779
|
|
55,186
|
Other non-current
assets
|
33,574
|
|
71,297
|
|
73,144
|
Total
non-current assets
|
742,528
|
|
777,412
|
|
815,072
|
Total
assets
|
$ 1,123,638
|
|
$ 1,163,391
|
|
$ 1,168,906
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Trade
payables
|
$ 23,419
|
|
$ 22,544
|
|
$ 28,330
|
Deferred
income
|
15,992
|
|
13,442
|
|
10,965
|
Income taxes
payable
|
1,761
|
|
5,764
|
|
8,370
|
Provision for TAOS
litigation
|
79,017
|
|
79,470
|
|
-
|
Other accrued
expenses
|
53,068
|
|
62,362
|
|
62,745
|
Total
current liabilities
|
173,257
|
|
183,582
|
|
110,410
|
Non-current
liabilities:
|
|
|
|
|
|
Income taxes
payable
|
2,944
|
|
60,661
|
|
72,367
|
Other non-current
liabilities
|
12,244
|
|
12,656
|
|
17,949
|
Total
non-current liabilities
|
15,188
|
|
73,317
|
|
90,316
|
Total
shareholders' equity
|
935,193
|
|
906,492
|
|
968,180
|
Total liabilities
and shareholders' equity
|
$ 1,123,638
|
|
$ 1,163,391
|
|
$ 1,168,906
|
Intersil
Corporation
|
Condensed
Consolidated Statements of Cash Flows
|
Unaudited
|
(In
thousands)
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Jul.
3,
|
|
Apr.
3,
|
|
Jul.
4,
|
|
2015
|
|
2015
|
|
2014
|
|
Q2
2015
|
|
Q1
2015
|
|
Q2
2014
|
Operating
activities:
|
|
|
|
|
|
Net income
(loss)
|
$ 37,724
|
|
$ (68,824)
|
|
$ 13,646
|
Depreciation
|
3,607
|
|
4,486
|
|
4,785
|
Amortization
of purchased intangibles
|
4,026
|
|
5,561
|
|
5,560
|
Equity-based
compensation
|
6,689
|
|
5,756
|
|
5,585
|
Deferred
income taxes
|
(5,823)
|
|
373
|
|
1,575
|
Other
|
(64)
|
|
(1,059)
|
|
(55)
|
Net changes in
operating assets and liabilities
|
(21,933)
|
|
80,502
|
|
(17,890)
|
Net cash
flows provided by operating activities
|
24,226
|
|
26,795
|
|
13,206
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
Proceeds from
investments
|
-
|
|
588
|
|
-
|
Net capital
expenditures
|
(4,997)
|
|
(4,990)
|
|
(2,066)
|
Net cash
flows used in investing activities
|
(4,997)
|
|
(4,402)
|
|
(2,066)
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
Proceeds from
equity-based awards, net
|
1,851
|
|
4,355
|
|
8,957
|
Dividends
paid
|
(17,196)
|
|
(15,697)
|
|
(16,220)
|
Net cash flows
used in financing activities
|
(15,345)
|
|
(11,342)
|
|
(7,263)
|
|
|
|
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
178
|
|
(1,367)
|
|
28
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
4,062
|
|
9,684
|
|
3,905
|
|
|
|
|
|
|
Cash and cash
equivalents as of the beginning of the period
|
220,900
|
|
211,216
|
|
197,336
|
|
|
|
|
|
|
Cash and cash
equivalents as of the end of the period
|
$ 224,962
|
|
$ 220,900
|
|
$ 201,241
|
Intersil
Corporation
|
Non-GAAP
Results
|
Unaudited
|
(In thousands,
except percentages)
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Jul.
3,
|
|
Apr.
3,
|
|
Jul.
4,
|
|
2015
|
|
2015
|
|
2014
|
|
Q2
2015
|
|
Q1
2015
|
|
Q2
2014
|
|
|
|
|
|
|
Non-GAAP gross
profit:
|
|
|
|
|
|
GAAP gross
profit
|
$ 78,493
|
|
$ 80,326
|
|
$ 85,808
|
Equity-based
compensation COS
|
436
|
|
392
|
|
394
|
Non-GAAP
gross profit
|
$ 78,929
|
|
$ 80,718
|
|
$ 86,202
|
|
|
|
|
|
|
Non-GAAP gross
margin:
|
|
|
|
|
|
GAAP gross
margin
|
59.3%
|
|
59.9%
|
|
58.1%
|
Equity-based
compensation COS
|
0.3%
|
|
0.3%
|
|
0.2%
|
Non-GAAP
gross margin
|
59.6%
|
|
60.2%
|
|
58.3%
|
|
|
|
|
|
|
Non-GAAP operating
expenses:
|
|
|
|
|
|
GAAP operating
expenses
|
$ 62,318
|
|
$ 144,131
|
|
$ 65,128
|
Provision for TAOS
litigation
|
-
|
|
(81,100)
|
|
-
|
Equity-based
compensation (excl. COS)
|
(6,253)
|
|
(5,364)
|
|
(5,191)
|
Amortization of
purchased intangibles
|
(4,026)
|
|
(5,561)
|
|
(5,560)
|
Non-GAAP
operating expenses
|
$ 52,039
|
|
$ 52,106
|
|
$ 54,377
|
|
|
|
|
|
|
Non-GAAP operating
income:
|
|
|
|
|
|
GAAP operating
income (loss)
|
$ 16,175
|
|
$ (63,805)
|
|
$ 20,681
|
Provision for TAOS
litigation
|
-
|
|
81,100
|
|
-
|
Equity-based
compensation
|
6,689
|
|
5,756
|
|
5,585
|
Amortization of
purchased intangibles
|
4,026
|
|
5,561
|
|
5,560
|
Non-GAAP
operating income
|
$ 26,890
|
|
$ 28,612
|
|
$ 31,826
|
|
|
|
|
|
|
Non-GAAP operating
margin:
|
|
|
|
|
|
GAAP operating
margin
|
12.2 %
|
|
(47.6)%
|
|
14.0 %
|
Excluded items as a
percent of revenue
|
8.1 %
|
|
68.9 %
|
|
7.5 %
|
Non-GAAP
operating margin
|
20.3 %
|
|
21.3 %
|
|
21.5 %
|
Intersil
Corporation
|
Non-GAAP
Results
|
Unaudited
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Jul.
3,
|
|
Apr.
3,
|
|
Jul.
4,
|
|
2015
|
|
2015
|
|
2014
|
|
Q2
2015
|
|
Q1
2015
|
|
Q2
2014
|
|
|
|
|
|
|
Non-GAAP net
income:
|
|
|
|
|
|
GAAP net income
(loss)
|
$37,724
|
|
$(68,824)
|
|
$13,646
|
Tax adjustments from
non-cash and discrete items
|
(26,351)
|
|
(71)
|
|
1,232
|
Gain on recovery from
auction rate securities
|
-
|
|
(588)
|
|
-
|
Equity-based
compensation
|
6,689
|
|
5,756
|
|
5,585
|
Amortization of
purchased intangibles
|
4,026
|
|
5,561
|
|
5,560
|
Provision for TAOS
litigation
|
-
|
|
81,100
|
|
-
|
Non-GAAP
net income
|
$22,088
|
|
$ 22,934
|
|
$26,023
|
|
|
|
|
|
|
GAAP weighted
average shares - diluted
|
132,823
|
|
130,513
|
|
132,214
|
Non-GAAP
adjustment
|
5,090
|
|
6,798
|
|
3,527
|
Non-GAAP
weighted average shares - diluted
|
137,913
|
|
137,311
|
|
135,741
|
|
|
|
|
|
|
Non-GAAP earnings
per diluted share:
|
|
|
|
|
|
GAAP earnings per
diluted share
|
$ 0.28
|
|
$ (0.53)
|
|
$ 0.10
|
Excluded items per
share impact
|
(0.12)
|
|
0.70
|
|
0.09
|
Non-GAAP
earnings per diluted share
|
$ 0.16
|
|
$ 0.17
|
|
$ 0.19
|
|
|
|
|
|
|
Equity-based
compensation expense by classification:
|
|
|
|
|
|
Cost of revenue
("COS")
|
$ 436
|
|
$ 392
|
|
$ 394
|
Research and
development
|
$ 2,658
|
|
$ 2,751
|
|
$ 2,046
|
Selling, general and
administrative
|
$ 3,595
|
|
$ 2,613
|
|
$ 3,145
|
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SOURCE Intersil Corporation