Q2 FY16 Revenue of $169.5M; up 5.3% Q/Q and
23.6% Y/Y
Q2 FY16 GAAP Diluted EPS (from Continuing
Operations) of $0.28
Q2 FY16 Non-GAAP Diluted EPS of $0.35
Integrated Device Technology, Inc. (IDT®) (NASDAQ: IDTI) today
announced results for the fiscal second quarter ended September 27,
2015.
“Second quarter fiscal 2016 results were excellent. Revenue grew
to $169.5 million dollars, an increase of almost 24 percent
year-over-year and 5 percent sequentially, driven by a strong
rebound in sales of our communications products, continued market
leadership in memory interface, as well as solid contributions from
our wireless charging business,” said Greg Waters, president and
chief executive officer. “Combined with robust top line growth, our
continued focus on execution and expense control contributed to a
non-GAAP operating margin of 31 percent, and free cash flow as a
percentage of revenues on a trailing twelve-month basis of 27
percent.”
“Additionally, our board recently increased our share repurchase
authorization by another $300 million. This is incremental to our
prior authorization and to the remaining repurchase authorization
balance as of September end of $231 million. We intend to fund this
incremental $300 million through debt financing, subject to market
conditions, and execute this portion of our buyback on an
accelerated pace. We remain well-positioned to continue delivering
excellent results and increasing returns to our shareholders with a
solid base of existing business, combined with exciting new product
development and design-win traction,” concluded Mr. Waters.
Recent Business Highlights – Computing
- BAE Systems and IDT Launch New
Space-Grade Chip to Speed Data Movement in Space
- SMART Modular Selects IDT as Preferred
Partner for DDR4 NVDIMM Technology
Recent Business Highlights – Communications
- New VersaClock 6 Programmable Clock
Generator Achieves Best Performance to Date for IDT’s Award-Winning
VersaClock Family
- IDT and Altera Simplify SyncE
Compliance for Ethernet Node Designs
- IDT Introduces New RF Voltage Variable
Attenuators Delivering up to 1,000X Improvement in Linearity Over
GaAs Products
- IDT expands its RF product portfolio
with two low-loss, high-isolation switches
- IDT Introduces Ultra-High-Performance
Clock Jitter Attenuator/Frequency Synthesizers
- IDT Simplifies IEEE 1588
Synchronization with New Hardware and Software Solution
Recent Business Highlights – Consumer
- IDT Makes Wireless Power Accessible to
the Mass Market
- IDT Teams with Samsung to Integrate
Wireless Charging
The following highlights the Company’s financial performance on
both a GAAP and supplemental non-GAAP basis. For financial
statement purposes, the high speed data converter business is
treated as discontinued operations for all periods presented. IDT
has excluded results from the high speed data converter business
from current and historical non-GAAP results. The Company provides
supplemental information regarding its operating performance on a
non-GAAP basis that excludes certain gains, losses and charges
which occur relatively infrequently and which management considers
to be outside our core operating results. Non-GAAP results are not
in accordance with GAAP and may not be comparable to non-GAAP
information provided by other companies. Non-GAAP information
should be considered a supplement to, and not a substitute for,
financial statements prepared in accordance with GAAP. A complete
reconciliation of GAAP to non-GAAP results from continuing
operations is attached to this press release.
- Revenue from continuing operations for
the fiscal second quarter of 2016 was $169.5 million, compared with
$160.9 million reported last quarter, and $137.1 million reported
in the same period one year ago.
- GAAP net income from continuing
operations for the fiscal second quarter of 2016 was $42.4 million,
or $0.28 per diluted share, versus GAAP net income from continuing
operations of $38.7 million or $0.25 per diluted share last
quarter, and a GAAP net income from continuing operations of $24.2
million or $0.16 per share in the same period one year ago. Fiscal
second quarter 2016 GAAP results include $8.6 million in
stock-based compensation expense, $1.9 million expense in severance
and retention related charges, $0.8 million expense relating to
amortization of intangible assets, $0.2 million expense in facility
closure costs, and $0.2 million expense in related tax
effects.
- Non-GAAP net income for the fiscal
second quarter of 2016 was $53.9 million or $0.35 per diluted
share, compared with non-GAAP net income of $48.2 million or $0.31
per diluted share last quarter, and non-GAAP net income of $31.8
million or $0.20 per diluted share reported in the same period one
year ago.
- GAAP gross profit from continuing
operations for the fiscal second quarter of 2016 was $106.5
million, or 62.9 percent, compared with GAAP gross profit of $99.2
million or 61.7 percent last quarter, and $81.9 million, or 59.7
percent, reported in the same period one year ago. Non-GAAP gross
profit for the fiscal second quarter of 2016 was $107.5 million, or
63.4 percent, compared with non-GAAP gross profit of $100.9
million, or 62.7 percent last quarter, and $83.9 million, or 61.2
percent, reported in the same period one year ago.
- GAAP R&D expense for the fiscal
second quarter of 2016 was $35.3 million, compared with GAAP
R&D expense of $33.8 million last quarter, and $30.7 million
reported in the same period one year ago. Non-GAAP R&D expense
for the fiscal second quarter of 2016 was $31.5 million, compared
with non-GAAP R&D expense of $29.7 million last quarter, and
$28.2 million in the same period one year ago.
- GAAP SG&A expense for the fiscal
second quarter of 2016 was $29.2 million, compared with GAAP
SG&A expense of $28.1 million last quarter, and $26.8 million
in the same period one year ago. Non-GAAP SG&A expense for the
fiscal second quarter of 2016 was $23.5 million, compared with
non-GAAP SG&A expense of $24.0 million last quarter, and $23.3
million in the same period one year ago.
Webcast and Conference Call Information
Investors may listen to a live or replay webcast of the
Company’s quarterly financial conference call at
http://ir.idt.com/. The live webcast will begin at 1:30 p.m.
Pacific time on October 26, 2015. The webcast replay will be
available after 5 p.m. Pacific time on October 26, 2015.
Investors may also listen to the live call at 1:30 p.m. Pacific
time on October 26, 2015 by calling (888) 211-0226 (United States);
or (913) 905-3216 (International). The access code is 580812. The
conference call replay will be available for one week following the
event at (888) 203-1112 (United States); or (719) 457-0820
(International). The access code is 580812.
IDT’s next regularly scheduled Quiet Period will begin December
21, 2015, during which time IDT representatives will not comment on
IDT’s business outlook, financial results or expectations. The
Quiet Period will extend until the day when IDT’s third quarter
fiscal 2016 earnings release is published.
About IDT
Integrated Device Technology, Inc. develops system-level
solutions that optimize its customers’ applications. IDT uses its
market leadership in timing, serial switching and interfaces, and
adds analog and system expertise to provide complete
application-optimized, mixed-signal solutions for the
communications, computing and consumer segments. Headquartered in
San Jose, Calif., IDT has design, manufacturing, sales facilities
and distribution partners throughout the world. IDT stock is traded
on the NASDAQ Global Select Stock Market® under the symbol “IDTI.”
Additional information about IDT is accessible at www.IDT.com.
Follow IDT on Facebook, LinkedIn, Twitter, YouTube
and Google+.
Forward Looking Statements
Investors are cautioned that forward-looking statements in this
release, including but not limited to statements regarding demand
for Company products, anticipated trends in Company sales, expenses
and profits, involve a number of risks and uncertainties that could
cause actual results to differ materially from current
expectations. Risks include, but are not limited to, global
business and economic conditions, fluctuations in product demand,
manufacturing capacity and costs, inventory management,
competition, pricing, patent and other intellectual property rights
of third parties, timely development and introduction of new
products and manufacturing processes, dependence on one or more
customers for a significant portion of sales, successful
integration of acquired businesses and technology, availability of
capital, cash flow and other risk factors detailed in the Company’s
Securities and Exchange Commission filings. The Company urges
investors to review in detail the risks and uncertainties in the
Company’s Securities and Exchange Commission filings, including but
not limited to the Annual Report on Form 10-K for the fiscal year
ended March 29, 2015. All forward-looking statements are made as of
the date of this release and the Company disclaims any duty to
update such statements.
Non-GAAP Reporting
To supplement its consolidated financial results presented in
accordance with GAAP, IDT 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 IDT’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 IDT's non-GAAP information may be
different from the non-GAAP information provided by other
companies. Non-GAAP financial measures used by IDT include:
• Cost of revenues;
• Gross profit;
• Research and development expenses;
• Selling, general and administrative expenses;
• Interest income and other;
• Provision for (benefit from) income taxes, continuing
operations;
• Operating income;
• Net income from continuing operations;
• Diluted net income per share, continuing operations; 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 divestiture related
costs (gain), share-based compensation expense, results from
discontinued operations, stockholder expenses 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 IDT'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 “Reconciliation of GAAP to Non-GAAP” 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 IDT’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 IDT’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.
- Acquisition related costs such as
legal, accounting and other professional or consulting fees
directly related to an acquisition.
- Fair market value adjustment to
acquired inventory sold.
Restructuring related.
Restructuring charges primarily relate to changes in IDT’s
infrastructure in efforts to reduce costs and expenses (gains)
associated with strategic divestitures and restructuring in force
actions. Restructuring charges (gains) are excluded from non-GAAP
financial measures because they are not considered core operating
activities. Although IDT 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 IDT’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.
- Gain on divestiture consists of gains
recognized upon the strategic sale of business units.
- Assets impairments including
accelerated depreciation of certain assets no longer in use and
impairment charge related to a note receivable and subsequent
recoveries.
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 IDT. Excluding this data allows investors
to better compare IDT’s period-over-period performance without such
expense, which IDT believes may be useful to the investor
community. Other adjustments primarily include:
- Stock based compensation expense.
- Compensation expense (benefit) –
deferred compensation, consists of gains and losses on marketable
equity securities related to our deferred compensation
arrangements.
- Loss (gain) on deferred compensation
plan securities represents the changes in the fair value of the
assets in a separate trust that is invested in corporate owned life
insurance under our deferred compensation plan.
- Life insurance proceeds received,
represents proceeds received under corporate owned life insurance
under our deferred compensation plan.
- Tax effects of non-GAAP adjustments.
Effective first quarter of fiscal 2016, the Company changed its
methodology for reporting non-GAAP taxes to be based on estimated
cash tax expense and reserves. The Company forecasts its annual
cash tax liability and allocates the tax to each quarter in
proportion to earnings for that period. This approach is designed
to enhance the ability of investors to understand the impact of the
Company's tax expense on its current operations, provide improved
modeling accuracy, and substantially reduce fluctuations caused by
GAAP to non-GAAP adjustments, which may not reflect actual cash tax
expense. Non-GAAP tax amounts for periods prior to March 30, 2015
have not been adjusted to reflect the new methodology.
- Diluted weighted average shares
non-GAAP adjustment, for purposes of calculating non-GAAP diluted
net income per share, the GAAP diluted weighted average shares
outstanding is adjusted to exclude the benefits of stock
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
method.
IDT and the IDT logo are trademarks or
registered trademarks of Integrated Device Technology, Inc. All
other brands, product names and marks are or may be trademarks or
registered trademarks used to identify products or services of
their respective owners.
INTEGRATED DEVICE TECHNOLOGY, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In
thousands, except per share data)
Three Months
Ended Six Months Ended Sept. 27, June
28, Sept. 28, Sept. 27, Sept.
28, 2015 2015 2014
2015 2014 Revenues
$ 169,498 $ 160,907 $ 137,093 $ 330,405 $ 263,395 Cost of revenues
62,952 61,673 55,217
124,625 107,510 Gross profit 106,546 99,234
81,876 205,780 155,885 Operating expenses: Research and development
35,301 33,754 30,742 69,055 62,792 Selling, general and
administrative 29,227 28,143 26,795
57,370 52,254 Total operating
expenses 64,528 61,897 57,537
126,425 115,046 Operating income
42,018 37,337 24,339
79,355 40,839 Other income, net
1,016 1,818 405 2,834
1,267 Income from continuing operations before income
taxes 43,034 39,155 24,744 82,189 42,106 Provision for income taxes
611 435 498 1,046
749 Net income from continuing operations
42,423 38,720 24,246 81,143 41,357 Discontinued operations:
Gain from divestiture - - - - 16,840 Loss from discontinued
operations - (547 ) (9,747 ) (547 ) (21,900 ) Provision for income
taxes - 15 57 15
12 Net loss from discontinued operations - (562 )
(9,804 ) (562 ) (5,072 ) Net income $ 42,423 $ 38,158
$ 14,442 $ 80,581 $ 36,285 Basic
net income per share - continuing operations $ 0.29 $ 0.26 $ 0.16 $
0.55 $ 0.28 Basic net loss per share - discontinued operations
- - (0.06 ) -
(0.04 ) Basic net income per share $ 0.29 $ 0.26 $ 0.10
$ 0.55 $ 0.24 Diluted net income per
share - continuing operations $ 0.28 $ 0.25 $ 0.16 $ 0.53 $ 0.27
Diluted net loss per share - discontinued operations -
- (0.07 ) - (0.03 )
Diluted net income per share $ 0.28 $ 0.25 $ 0.09 $
0.53 $ 0.24 Weighted average shares: Basic
147,724 148,396 148,683
148,058 148,983 Diluted 152,152
153,758 153,784 152,997
153,816
INTEGRATED DEVICE TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (a)
(Unaudited) (In thousands, except per share data)
Three
Months Ended Six Months Ended Sept. 27,
June 28, Sept. 28, Sept. 27,
Sept. 28, 2015 2015
2014 2015
2014 GAAP net income from continuing
operations $ 42,423
$ 38,720 $ 24,246
$ 81,143
$ 41,357 GAAP diluted net income per share
- continuing operations $ 0.28
$ 0.25 $ 0.16 $
0.53
$ 0.27 Acquisition related: Amortization of
acquisition related intangibles 751
832 1,676 1,583
4,225 Restructuring related: Severance and retention costs 1,894
921 319 2,815
845 Facility closure costs 154
- 20 154
67 Assets impairment and other -
147 401 147
2,703 Other: Stock-based compensation expense 8,581
7,866 5,929 16,447
10,891 Gain from divestiture (25 ) (51 ) - (76 ) - Assets
impairment and other (28 ) (325 ) - (353 ) - Compensation expense
(benefit) - deferred compensation plan (817 )
115 (242 ) (702 )
252 Loss (gain) on deferred compensation plan securities 827
(108 ) 245 719
(235 ) Non-GAAP tax adjustments 182
83 (826 ) 265
(1,685 )
Non-GAAP net income from continuing
operations $ 53,942
$ 48,200 $ 31,768 $
102,142
$ 58,420 GAAP weighted average shares - diluted
152,152
153,758 153,784 152,997
153,816 Non-GAAP adjustment 2,600
1,836 2,128 2,149
2,017 Non-GAAP weighted average shares - diluted
154,752
155,594 155,912 155,146
155,833
Non-GAAP diluted net income per share -
continuing operations $ 0.35
$ 0.31 $ 0.20 $
0.66
$ 0.37 GAAP gross profit
$ 106,546
$ 99,234 $ 81,876
$ 205,780
$ 155,885 Acquisition related: Amortization of
acquisition related intangibles 617
617 1,264 1,234
2,950 Restructuring related: Severance and retention costs 6
182 96 188
119 Assets impairment and other -
147 334 147
2,269 Other: Compensation expense (benefit) - deferred compensation
plan (299 )
42 (70 ) (257 )
77 Stock-based compensation expense 645
682 436 1,327
755
Non-GAAP gross profit $
107,515
$ 100,904 $ 83,936
$ 208,419
$ 162,055 GAAP R&D expenses:
$ 35,301
$ 33,754 $ 30,742
$ 69,055
$ 62,792 Restructuring related: Severance and
retention costs (681 )
(347 ) (136 ) (1,028 )
(376 ) Facility closure costs (154 )
- - (154 )
- Assets impairment and other 261 - (67 ) 261 (434 ) Other:
Compensation benefit (expense) - deferred compensation plan 319
(45 ) 114 274
(126 ) Stock-based compensation expense (3,543 )
(3,632 ) (2,464 ) (7,175 )
(4,985 )
Non-GAAP R&D expenses $
31,503
$ 29,730 $ 28,189
$ 61,233
$ 56,871 GAAP SG&A expenses:
$ 29,227
$ 28,143 $ 26,795
$ 57,370
$ 52,254 Acquisition related: Amortization of
acquisition related intangibles (134 )
(215 ) (412 ) (349 )
(1,275 ) Restructuring related: Severance and retention costs
(1,207 )
(392 ) (87 ) (1,599 )
(350 ) Facility closure costs -
-
(20
)
-
(67
)
Assets impairment and other (233 )
- - (233 )
- Other: Compensation benefit (expense) - deferred compensation
plan 199
(28 ) 58 171
(49 ) Stock-based compensation expense (4,393 )
(3,552 ) (3,029 ) (7,945 )
(5,151 )
Non-GAAP SG&A expenses $
23,459
$ 23,956 $ 23,305
$ 47,415
$ 45,362 GAAP interest income and
other, net $ 1,016
$ 1,818 $ 405 $ 2,834
$ 1,267 Gain from divestiture (25 ) (51 ) - (76 ) -
Loss (gain) on deferred compensation plan securities 827
(108 ) 245 719
(235 ) Assets impairment and other -
(325 ) - (325 )
-
Non-GAAP interest income and other, net
$ 1,818
$ 1,334 $ 650 $
3,152
$ 1,032 GAAP provision for income
taxes - continuing operations $ 611
$ 435 $ 498 $ 1,046
$ 749 Non-GAAP tax adjustments (182 )
(83 ) 826 (265 )
1,685
Non-GAAP provision for income taxes - continuing
operations $ 429
$ 352 $ 1,324 $
781
$ 2,434
(a) Refer to the accompanying “Notes to Non-GAAP Financial
Measures” for a detailed discussion of management’s use of non-GAAP
financial measures.
INTEGRATED DEVICE TECHNOLOGY,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
Sept. 27, Mar. 29, (In thousands)
2015 2015 ASSETS Current assets: Cash
and cash equivalents $ 91,557 $ 116,945 Short-term investments
467,364 438,115 Accounts receivable, net 63,373 63,618 Inventories
43,946 45,410 Prepaid and other current assets 15,095
16,041 Total current assets 681,335 680,129 Property, plant
and equipment, net 64,890 65,508 Goodwill 135,644 135,644
Acquisition-related intangibles 12,983 5,535 Other assets
25,487 26,843
TOTAL ASSETS $ 920,339 $ 913,659
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 31,730 $ 28,006 Accrued compensation and related
expenses 27,492 43,649 Deferred income on shipments to distributors
11,476 15,694 Deferred taxes liabilities 1,629 1,401 Other accrued
liabilities 11,305 17,582 Total current liabilities
83,632 106,332 Deferred tax liabilities 1,135 1,121 Long
term income taxes payable 226 347 Other long-term obligations
19,619 17,605 Total liabilities 104,612 125,405
Stockholders' equity 815,727 788,254
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 920,339 $
913,659
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151026006382/en/
Integrated Device Technology, Inc.Financial
Contact:Suzanne Schmidt, 415-217-4962IDT Investor
Relationssuzanne@blueshirtgroup.comorPress Contact:Graham
Robertson, 408-284-2644IDT Worldwide
Marketinggraham.robertson@idt.com
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