Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL)
today reported financial results for the fiscal third quarter of
2022 ended March 31, 2022.
The results for the fiscal third quarter of 2022 ended March 31,
2022 were as follows:
GAAP Financial
Comparison
Quarterly
(in millions, except percentage
and per share data)
(unaudited)
Three Months Ended
March 31, 2022
December 31, 2021
March 31, 2021
Revenue
$
203.2
$
193.3
$
169.2
Gross Margin
35.6
%
35.4
%
31.1
%
Operating Income
$
31.2
$
27.7
$
17.8
Net Income Attributable to AOS
$
31.7
$
383.0
$
16.1
Net Income Per Share Attributable to AOS -
Diluted
$
1.11
$
13.54
$
0.58
Non-GAAP Financial
Comparison
Quarterly
(in millions, except percentage
and per share data)
(unaudited)
Three Months Ended
March 31, 2022
December 31, 2021
March 31, 2021
Revenue
$
203.2
$
193.3
$
169.2
Non-GAAP Gross Margin
36.7
%
36.7
%
31.9
%
Non-GAAP Operating Income
$
40.5
$
37.4
$
23.0
Non-GAAP Net Income Attributable to
AOS
$
38.2
$
34.0
$
21.4
Non-GAAP Net Income Per Share Attributable
to AOS - Diluted
$
1.34
$
1.20
$
0.77
The non-GAAP financial measures in the schedule above and under
the section “Financial Results for Fiscal Q3 Ended March 31, 2022”
below exclude the effect of share-based compensation expenses,
amortization of purchased intangible, legal costs related to
government investigation, income tax effect of non-GAAP adjustments
in each of the periods presented, and equity method investment loss
from equity investee for the three months ended March 31, 2022, as
well as gain on deconsolidation and changes of equity interest in
the JV Company for the three months ended March 31, 2022 and
December 31, 2021. A detailed reconciliation of GAAP and non-GAAP
financial measures is included at the end of this press
release.
Financial Results for Fiscal Q3 Ended March 31, 2022
- Revenue was $203.2 million, an increase of 5.1% from the prior
quarter and an increase of 20.1% from the same quarter last
year.
- GAAP gross margin was 35.6%, up from 35.4% in the prior quarter
and up from 31.1% in the same quarter last year.
- Non-GAAP gross margin was 36.7%, same as 36.7% in the prior
quarter and up from 31.9% in the same quarter last year.
- GAAP operating expenses were $41.2 million, up from $40.6
million in the prior quarter and up from $34.9 million in the same
quarter last year.
- Non-GAAP operating expenses were $34.0 million, an increase of
$0.4 million from last quarter and an increase of $3.0 million from
the same quarter last year.
- GAAP operating income was $31.2 million, up from $27.7 million
in the prior quarter and up from $17.8 million in the same quarter
last year.
- Non-GAAP operating income was $40.5 million as compared to
$37.4 million for the prior quarter and $23.0 million for the same
quarter last year.
- GAAP net income per diluted share attributable to AOS was
$1.11, compared to $13.54 net income per share for the prior
quarter primarily due to the gain on deconsolidation and changes of
equity interest in the JV Company, and $0.58 net income per share
for the same quarter a year ago.
- Non-GAAP net income per share attributable to AOS was $1.34
compared to $1.20 for the prior quarter and $0.77 for the same
quarter a year ago.
- Consolidated cash flow provided by operating activities was
$61.8 million, which included $6.4 million net customer deposits,
as compared to $50.8 million in the prior quarter, which included
$11.2 million net customer deposits.
- The Company closed the quarter with $323.1 million of cash and
cash equivalents.
- In April 2022, we became aware of a cybersecurity incident
involving unauthorized access to our internal email system, which
resulted in a loss of $1.5 million for the three months ended March
31, 2022. We are conducting a comprehensive investigation of
the incident. As part of our quarterly review process and in
consultation with our independent auditors, the management is
currently assessing the impact of this incident on our internal
control over financial reporting as of March 31, 2022. The
financial impact of this incident is not material, and we expect
there will be no changes to previously released financial results
or financial statements.
AOS Chairman and Chief Executive Officer Dr. Mike Chang
commented, “Q3 was another great quarter and once again, we
succeeded in outperforming our guidance. Our revenue grew 20%
year-over-year to a record $203 million, which was the first time
in our history to cross the $200 million threshold. This was
achieved by securing additional wafer capacity from our existing
foundry partners and continuing to optimize product mix. This
resulted in a record non-GAAP EPS of $1.34, up 74%
year-over-year.”
Dr. Chang continued, “For the June quarter, a good portion of
our back-end packaging and testing operations were suspended for
three weeks in April due to the city-wide COVID lockdown in
Shanghai. Fortunately, at the end of April, the Shanghai government
classified AOS as an essential business and cleared us to resume
operations. However, the pace at which we can open is still
uncertain. We currently estimate the Shanghai lockdown will impact
the June quarter revenue by approximately $20 million to $25
million, but expect to recover a good portion of the lost revenue
in the second half of the calendar year once things normalize.
Looking out further, we believe the impact of the lockdown is
temporary and we remain on our growth trajectory to reach $1
billion annual revenue in 2024.”
Business Outlook for Fiscal Q4 Ending June 30, 2022
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.
Our expectations for the fourth quarter of fiscal year 2022 are
as follows:
- Revenue to be approximately $190 million, plus or minus $10
million, primarily reflecting the suspension of production at our
Shanghai packaging and testing facilities due to the impact of the
Shanghai COVID lock down. Our Shanghai facilities had resumed
partial production at the end of April. This guidance is based on
the assumptions that our Shanghai facilities remain COVID free and
can continue to ramp up its production gradually in May and return
to normal production in June.
- GAAP gross margin to be 31.9% plus or minus 2%. We anticipate
non-GAAP gross margin to be 33.0% plus or minus 2%, reflecting the
estimated impact of suspension of operations and incremental
expenses required in response to the Shanghai COVID shut down and
gradual resumption of production. Non-GAAP gross margin guidance
excludes $0.8 million amortization of acquired IP and $1.3 million
of estimated share-based compensation charges.
- GAAP operating expenses to be in the range of $44.3 million
plus or minus $1 million. Non-GAAP operating expenses are expected
to be in the range of $36.0 million plus or minus $1 million.
Non-GAAP operating expenses exclude $8.1 million of estimated
share-based compensation charges and $0.2 million of estimated
legal expenses relating to the government investigation.
- Interest expense is expected to be approximately $0.8
million.
- Income tax expense is expected to be in the range of $1.3
million to $1.5 million.
Conference Call and Webcast
AOS plans to hold an investor teleconference and live webcast to
discuss the financial results for the fiscal third quarter ended
March 31, 2022 today, May 5, 2022 at 2:00 p.m. PT / 5:00 p.m. ET.
To listen to the live conference call, please dial +1 (844)
200-6205 or +1 (929) 526-1599 if dialing from outside the United
States and Canada. The access code is 151277. A live webcast of the
call will also be available in the "Events & Presentations"
section of the company's investor relations website,
http://investor.aosmd.com. The webcast replay will be available for
seven days after the live call on the same website. In addition, a
copy of the script of management's prepared remarks and a live
webcast of the call will also be available in the "Events &
Presentations" section of the company's investor relations website,
http://investor.aosmd.com.
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 resumption of production at our Shanghai facilities and
continuing impact of COVID-19 pandemic, anticipated earnings power
and non-GAAP EPS on an annual basis, our growth opportunities and
new markets, our annual revenue target, projected amount of
revenue, gross margin, operating income, income tax expenses, net
income, and share-based compensation expenses, non-GAAP gross
margin, non-GAAP operating expenses, tax expenses, our objectives
to achieve revenue target, our ability to gain new customers and
design wins, strategic partnership with customers, and other
information under the section entitled “Business Outlook for Fiscal
Q4 Ending June 30, 2022”. 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, the impact of
COVID-19 pandemic on our business and the city-wide lockdown in
Shanghai; our lack of control over the joint venture in China;
difficulties and challenges in executing our diversification
strategy into different market segments; new tariffs on goods from
China; ordering pattern from distributors and seasonality; changes
in regulatory environment and government investigation; 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, 2021 filed by AOS with the
SEC and other periodic reports we filed with the SEC. 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,
net loss attributable to AOS, net income, diluted earnings per
share ("EPS") and EBITDAS. These supplemental measures exclude,
among other items, share-based compensation expenses, legal and
profession fees related to government investigation, amortization
of purchased intangible, income tax effect of non-GAAP adjustments,
and equity method investment loss from equity investee, as well as
gain on deconsolidation and changes of equity interest in the JV
Company. We also disclose certain non-GAAP financial measures in
our guidance for the next quarter, including non-GAAP gross margin,
operating expenses and earnings/loss in equity method investment.
We believe that these historical and forecast non-GAAP financial
measures 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. 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 such non-GAAP financial measures 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. In addition, we included amount of income tax
effect of non-GAAP adjustments in the non-GAAP net income of
reconciliation table for all periods presented as the management
believes that such non-GAAP presentation provides useful
information to investors, even though the amounts are not
significant. 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, TVS, HVIC, GaN/SiC, Power IC and Digital Power products. 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’ portfolio of products targets
high-volume applications, including personal and portable
computers, graphic cards, flat panel TVs, home appliances, smart
phones, battery packs, quick chargers, 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.
Condensed Consolidated
Statements of Operations
(in thousands, except
percentages and per share amounts)
(unaudited)
Three Months Ended
Nine Months Ended
March 31, 2022
December 31,
2021
March 31, 2021
March 31, 2022
March 31, 2021
Revenue
$
203,239
$
193,319
$
169,212
$
583,593
$
479,593
Cost of goods sold
130,837
124,954
116,521
378,259
335,630
Gross profit
72,402
68,365
52,691
205,334
143,963
Gross margin
35.6
%
35.4
%
31.1
%
35.2
%
30.0
%
Operating expenses:
Research and development
16,545
16,516
15,557
50,873
45,671
Selling, general and administrative
24,625
24,132
19,338
70,563
56,579
Total operating expenses
41,170
40,648
34,895
121,436
102,250
Operating income
31,232
27,717
17,796
83,898
41,713
Other income (loss), net
263
473
(253
)
720
2,087
Interest income (expense), net
(308
)
(541
)
(1,562
)
(3,025
)
(4,832
)
Gain on deconsolidation of the JV
Company
—
399,093
—
399,093
—
Gain (loss) on changes of equity interest
in the JV Company, net
4,501
(7,641
)
—
(3,140
)
—
Net income before income taxes
35,688
419,101
15,981
477,546
38,968
Income tax expense
2,902
34,096
1,014
38,318
2,694
Net income before loss from equity method
investment
32,786
385,005
14,967
439,228
36,274
Equity method investment loss from equity
investee
1,136
—
—
1,136
—
Net income
31,650
385,005
14,967
438,092
36,274
Net gain (loss) attributable to
noncontrolling interest
—
2,007
(1,133
)
20
(2,303
)
Net income attributable to Alpha and Omega
Semiconductor Limited
$
31,650
$
382,998
$
16,100
$
438,072
$
38,577
Net income per common share attributable
to Alpha and Omega Semiconductor Limited
Basic
$
1.18
$
14.40
$
0.62
$
16.47
$
1.51
Diluted
$
1.11
$
13.54
$
0.58
$
15.58
$
1.42
Weighted average number of common shares
attributable to Alpha and Omega Semiconductor Limited used to
compute net income per share
Basic
26,829
26,593
25,882
26,596
25,631
Diluted
28,423
28,287
27,716
28,116
27,128
Alpha and Omega Semiconductor
Limited
Condensed Consolidated Balance
Sheets
(in thousands, except par
value per share)
(unaudited)
March 31, 2022
June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
323,134
$
202,412
Restricted cash
236
233
Accounts receivable, net
39,207
35,789
Inventories
143,538
154,293
Other current assets
11,698
14,595
Total current assets
517,813
407,322
Property, plant and equipment, net
245,770
436,977
Operating lease right-of-use assets,
net
24,971
34,660
Intangible assets, net
10,890
13,410
Equity method investment
379,824
—
Deferred income tax assets
436
5,167
Restricted cash - long-term
—
2,168
Other long-term assets
29,465
18,869
Total assets
$
1,209,169
$
918,573
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
69,758
$
80,699
Accrued liabilities
91,333
69,494
Other payable, equity investee
15,171
—
Income taxes payable
6,733
2,604
Short-term debt
11,332
58,030
Finance lease liabilities
862
16,724
Operating lease liabilities
4,303
5,679
Total current liabilities
199,492
233,230
Long-term debt
53,887
77,990
Income taxes payable - long-term
1,359
1,319
Deferred income tax liabilities
29,192
2,448
Finance lease liabilities - long-term
3,834
12,698
Operating lease liabilities -
long-term
22,120
30,440
Other long-term liabilities
72,384
44,123
Total liabilities
382,268
402,248
Equity:
Preferred shares, par value $0.002 per
share:
Authorized: 10,000 shares; issued and
outstanding: none at March 31, 2022 and June 30, 2021
—
—
Common shares, par value $0.002 per
share:
Authorized: 100,000 shares; issued and
outstanding: 33,681 shares and 27,063 shares, respectively at March
31, 2022 and 32,975 shares and 26,350 shares, respectively at June
30, 2021
67
66
Treasury shares at cost: 6,618 shares at
March 31, 2022 and 6,625 shares at June 30, 2021
(66,006
)
(66,064
)
Additional paid-in capital
276,509
259,993
Accumulated other comprehensive income
1,422
2,315
Retained earnings
614,909
176,895
Total Alpha and Omega Semiconductor
Limited shareholder's equity
826,901
373,205
Noncontrolling interest
—
143,120
Total equity
826,901
516,325
Total liabilities and equity
$
1,209,169
$
918,573
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
Nine Months Ended
March 31, 2022
December 31,
2021
March 31, 2021
March 31, 2022
March 31, 2021
GAAP gross profit
$
72,402
$
68,365
$
52,691
$
205,334
$
143,963
Share-based compensation
1,282
1,709
427
3,560
1,195
Amortization of purchased intangible
812
811
812
2,435
2,435
Production ramp up costs related to joint
venture
—
—
—
—
275
Non-GAAP gross profit
$
74,496
$
70,885
$
53,930
$
211,329
$
147,868
Non-GAAP gross margin as a % of
revenue
36.7
%
36.7
%
31.9
%
36.2
%
30.8
%
GAAP operating expense
$
41,170
$
40,648
$
34,895
$
121,436
$
102,250
Share-based compensation
6,990
6,838
3,398
17,894
8,730
Legal costs related to government
investigation
221
293
563
946
2,513
Non-GAAP operating expense
$
33,959
$
33,517
$
30,934
$
102,596
$
91,007
GAAP operating income
$
31,232
$
27,717
$
17,796
$
83,898
$
41,713
Share-based compensation
8,272
8,547
3,825
21,454
9,925
Amortization of purchased intangible
812
811
812
2,435
2,435
Production ramp up costs related to joint
venture
—
—
—
—
275
Legal costs related to government
investigation
221
293
563
946
2,513
Non-GAAP operating income
$
40,537
$
37,368
$
22,996
$
108,733
$
56,861
Non-GAAP operating margin as a % of
revenue
19.9
%
19.3
%
13.6
%
18.6
%
11.9
%
GAAP net income attributable to AOS
$
31,650
$
382,998
$
16,100
$
438,072
$
38,577
Share-based compensation
8,272
8,547
3,825
21,454
9,925
Amortization of purchased intangible
812
811
812
2,435
2,435
Gain on deconsolidation and changes of the
equity interest in the JV Company
(4,501
)
(391,452
)
—
(395,953
)
—
Production ramp up costs related to joint
venture
—
—
—
—
135
Legal costs related to government
investigation
221
293
563
946
2,513
Equity method investment loss from equity
investee
1,136
—
—
1,136
—
Income tax effect of non-GAAP
adjustments
630
32,800
64
33,431
55
Non-GAAP net income attributable to
AOS
$
38,220
$
33,997
$
21,364
$
101,521
$
53,640
Non-GAAP net margin attributable to AOS as
a % of revenue
18.8
%
17.6
%
12.6
%
17.4
%
11.2
%
GAAP net income attributable to AOS
$
31,650
$
382,998
$
16,100
$
438,072
$
38,577
Share-based compensation
8,272
8,547
3,825
21,454
9,925
Gain on deconsolidation and changes of the
equity interest in the JV Company
(4,501
)
(391,452
)
—
(395,953
)
—
Equity method investment loss from equity
investee
1,136
—
—
1,136
—
Amortization and depreciation
8,603
11,938
13,745
34,263
39,434
Interest expense (income), net
308
541
1,562
3,025
4,832
Income tax expense
2,902
34,096
1,014
38,318
2,694
EBITDAS
$
48,370
$
46,668
$
36,246
$
140,315
$
95,462
GAAP diluted net income per share
attributable to AOS
$
1.11
$
13.54
$
0.58
$
15.58
$
1.42
Share-based compensation
0.29
0.30
0.14
0.76
0.37
Gain on deconsolidation changes of the
equity interest in the JV Company
(0.16
)
(13.84
)
—
(14.08
)
—
Equity method investment loss from equity
investee
0.04
—
—
0.04
—
Production ramp up costs related to joint
venture
—
—
—
—
0.01
Legal costs related to government
investigation
0.01
0.01
0.02
0.03
0.09
Amortization of purchased intangible
0.03
0.03
0.03
0.09
0.09
Income tax effect of non-GAAP
adjustments
0.02
1.16
0.00
1.19
0.00
Non-GAAP diluted net income per share
attributable to AOS
$
1.34
$
1.20
$
0.77
$
3.61
$
1.98
Shares used to compute GAAP diluted net
income per share
28,423
28,287
27,716
28,116
27,128
Shares used to compute Non-GAAP diluted
net income per share
28,423
28,287
27,716
28,116
27.128
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The Blueshirt Group Gary Dvorchak, CFA In US +1 323 240 5796 In
China +86 (138) 1079-1480 gary@blueshirtgroup.com
Yujia Zhai The Blueshirt Group Yujia@blueshirtgroup.com +1 (860)
214-0809
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