Q1 FY17 Revenue of $192.1M; up 1.5% Q/Q and
19.4% Y/YQ1 FY17 GAAP Diluted EPS of $0.15; Q1 FY17 Non-GAAP
Diluted EPS of $0.36
Integrated Device Technology, Inc. (IDT®) (NASDAQ: IDTI) today
announced results for the fiscal first quarter 2017, ended July 3,
2016.
“First quarter fiscal 2017 revenue increased by over 19 percent
year-over-year, driven by broad strength across our consumer,
communications, automotive and industrial end markets. On a
sequential basis, growth was driven by consumer timing, wireless
charging and mobile sensing products,” said Greg Waters, president
and chief executive officer.
“Operationally, we achieved two significant milestones in our
integration of ZMDI. First, we reached an agreement on the
labor-related aspects of the restructuring, and second, we
completed the automotive qualification of our test facility in
Penang, Malaysia. With both of these goals successfully met, we are
tracking ahead of plan on the combination. Design-win traction
remains strong across all of our target market segments, and we
look forward to continuing to deliver exceptional operating results
as the fiscal year unfolds,” concluded Mr. Waters.
Recent Business Highlights – Consumer
- IDT Speeds Adoption of Wireless Power
in Ultra-Compact, Low-Power Applications
- IDT Wireless Charging Technology Powers
China’s New Ticwatch
- Implantable Glucose Sensor Featuring
IDT Sensing Technology Awarded CE Mark
- iHome Selects IDT Technology to Provide
Convenience of Wireless Charging in Hotel Rooms
Recent Business Highlights – Auto and Industrial
- IDT Completes Full Automotive
Qualification of Penang, Malaysia Test Facility
- IDT Selects Marubeni Information
Systems for Japanese Distribution
- IDT Demonstrates gas, optical and
thermopile sensors for industrial and automotive applications at
Sensors Expo
- IDT Demonstrates high-precision
magneto-resistive sensors at Sensor and Test
- IDT Demonstrates Next-Generation Sensor
Signal Conditioning IC's for high-temperature sensing greater than
1000 degrees C
- IDT Demonstrates UL Certified Arc Fault
Detection system for photovoltaic systems
Recent Business Highlights – Computing
- IDT and BAE Systems Win Electrons d’Or
Award for Space-Grade Chip that Speeds Data Movement in Space
- IDT Introduces Latest Generation Highly
Integrated, Programmable and Scalable Power Management IC
- IDT RapidIO Technology Speeds Data
Movement in Sugon’s New Super Server
- IDT and CERN openlab Mark Milestone for
Data Acquisition and Data Center Analytics Applications Used for
Large Hadron Collider
- IDT Collaborates with Cavium to Support
Hyperscale Data Centers
Recent Business Highlights – Communications
- New IDT 12-Output Clock Generator
Delivers Best-In-Class Jitter Performance for Today’s Demanding
Applications
- IDT’s New VersaClock 3S Clock
Generators Deliver Innovative Features for Optimal Blend of
Performance, Power, and Flexibility
- IDT Introduces New Constant Linearity
Technology with Launch of Latest RF Digital VGA
- IDT’s Latest Broadband RF Switches
Deliver Industry-Leading Isolation and Power Handling While
Maintaining Low Insertion Loss
- New Addition to IDT’s FemtoClock Family
Delivers Unparalleled Frequency Flexibility for Complex Timing
Networks
The following highlights the Company’s financial performance on
both a GAAP and supplemental non-GAAP basis. 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 first quarter of 2017 was $192.1 million. This compared
with $189.4 million reported last quarter, and $160.9 million
reported in the same period one year ago.
- GAAP net income from continuing
operations for the fiscal first quarter of 2017 was $20.9 million,
or $0.15 per diluted share, versus GAAP net income from continuing
operations of $81.6 million or $0.59 per diluted share last
quarter, and GAAP net income from continuing operations of $38.7
million or $0.25 per share in the same period one year ago. Fiscal
first quarter GAAP results include $10.5 million in stock-based
compensation, $21.0 million in acquisition and restructuring
charges, $3.3 million in non-cash interest expense and $4.5 million
in related tax effects.
- Non-GAAP net income for the fiscal
first quarter of 2017 was $51.2 million or $0.36 per diluted share,
compared with non-GAAP net income of $51.5 million or $0.36 per
diluted share last quarter, and non-GAAP net income of $48.2
million or $0.31 per diluted share reported in the same period one
year ago.
- GAAP gross profit from continuing
operations for the fiscal first quarter of 2017 was $108.3 million,
or 56.4 percent, compared with GAAP gross profit of $108.0 million
or 57.0 percent last quarter, and $99.2 million, or 61.7 percent,
reported in the same period one year ago. Non-GAAP gross profit for
the fiscal fourth quarter of 2016 was $117.9 million, or 61.3
percent, compared with non-GAAP gross profit of $117.0 million, or
61.8 percent last quarter, and $100.9 million, or 62.7 percent,
reported in the same period one year ago.
- GAAP R&D expense for the fiscal
first quarter of 2017 was $49.6 million, compared with GAAP R&D
expense of $41.0 million last quarter, and $33.8 million reported
in the same period one year ago. Non-GAAP R&D expense for the
fiscal first quarter of 2017 was $37.7 million, compared with
non-GAAP R&D expense of $36.1 million last quarter, and $29.7
million in the same period one year ago.
- GAAP SG&A expense for the fiscal
first quarter of 2017 was $38.8 million, compared with GAAP
SG&A expense of $40.3 million last quarter, and $28.1 million
in the same period one year ago. Non-GAAP SG&A expense for the
fiscal first quarter of 2017 was $28.3 million, compared with
non-GAAP SG&A expense of $28.9 million last quarter, and $24.0
million in the same period one year ago.
Webcast and Conference Call Information
Investors may listen to the live call at 1:30 p.m. Pacific Time
on August 1, 2016 by calling (888) 637-7746. The access code is
4949921. 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 August 1, 2016. The webcast replay will be
available after 4:30 p.m. Pacific Time on August 1, 2016 for one
week.
IDT’s next regularly scheduled Quiet Period will begin September
19, 2016, 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 second quarter
fiscal 2017 earnings release is published.
About IDT
Integrated Device Technology, Inc. develops system-level
solutions that optimize its customers’ applications. IDT’s
market-leading products in RF, timing, wireless power transfer,
serial switching, interfaces, automotive ASICs, battery management
ICs, sensor signal conditioner ICs and environmental sensors are
among the company’s broad array of complete mixed-signal solutions
for the communications, computing, consumer, automotive and
industrial 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 April 3, 2016. 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 and other income (expense);
• 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.
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.
- Non-cash interest expense, consists of
amortization of issuance cost and accretion of discount related to
the convertible notes.
- 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.
- 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 July 3
Apr. 3 June
28, 2016 2016
2015 Revenues $ 192,128 $ 189,361 $ 160,907 Cost of
revenues 83,779 81,398 61,673
Gross profit 108,349 107,963 99,234 Operating expenses:
Research and development 49,648 41,023 33,754 Selling, general and
administrative 38,816 40,287
28,143 Total operating expenses 88,464
81,310 61,897 Operating income 19,885
26,653 37,337 Interest and other income (expense), net
(2,496 ) (3,601 ) 1,818 Income from continuing
operations before income taxes 17,389 23,052 39,155 Provision for
(benefit from) income taxes (3,558 ) (58,559 )
435 Net income from continuing operations
20,947 81,611 38,720
Discontinued operations: Loss from discontinued operations - - (547
) Provision for income taxes - -
15 Net loss from discontinued operations -
- (562 ) Net income $ 20,947 $
81,611 $ 38,158 Basic net income per share -
continuing operations $ 0.16 $ 0.61 $ 0.26 Basic net income per
share - discontinued operations - -
- Basic net income per share $ 0.16 $ 0.61
$ 0.26 Diluted net income per share -
continuing operations $ 0.15 $ 0.59 $ 0.25 Diluted net income per
share - discontinued operations - -
- Diluted net income per share $ 0.15 $ 0.59
$ 0.25 Weighted average shares: Basic
133,934 134,788 148,396 Diluted
138,109 139,239 153,758
INTEGRATED DEVICE TECHNOLOGY,
INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(a) (Unaudited) (In thousands, except per share data)
Three
Months Ended July 3 Apr. 3 June 28,
2016 2016 2015
GAAP net income from continuing operations
$ 20,947
$ 81,611 $ 38,720 GAAP
diluted net income per share continuing operations $
0.15
$ 0.59 $ 0.25 Acquisition
related: Amortization of acquisition related intangibles 5,775
9,347 832 Acquisition related fees -
245 - Amortization of fair market value adjustment to inventory
2,395
4,641 - Restructuring related: Severance and retention costs 11,918
2,587 921 Facility closure costs 19
53 - Assets impairment and other 870
- 147 Other: Stock-based compensation expense 10,515
8,249 7,866 Non-cash interest expense 3,268
3,191 - Gain from divestiture - - (51 ) Assets impairment and other
- - (325 ) Compensation expense - deferred compensation plan 402
157 115 Gain on deferred compensation plan securities (392 )
(151 ) (108 ) Non-GAAP tax adjustments (4,540 )
(58,388 ) 83
Non-GAAP net income from
continuing operations $ 51,177
$ 51,542 $ 48,200 GAAP
weighted average shares - diluted 138,109
139,239 153,758 Non-GAAP adjustment 2,287
2,100 1,836 Non-GAAP weighted average
shares - diluted 140,396
141,339 155,594
Non-GAAP diluted net
income per share continuing operations $ 0.36
$ 0.36 $ 0.31
GAAP gross profit $ 108,349
$ 107,963 $ 99,234
Acquisition related: Amortization of acquisition related
intangibles 3,415
3,355 617 Amortization of fair market value adjustment to inventory
2,395
4,641 - Restructuring related: Severance and retention costs 2,430
262 182 Assets impairment and other 336
- 147 Other: Compensation expense - deferred compensation plan 148
58 42 Stock-based compensation expense 779
715 682
Non-GAAP gross profit
$ 117,852
$ 116,994 $ 100,904
GAAP R&D expenses: $ 49,648
$ 41,023 $ 33,754
Restructuring related: Severance and retention costs (7,334 )
(1,152 ) (347 ) Assets impairment and other (107 ) - - Other:
Compensation expense - deferred compensation plan (157 )
(61 ) (45 ) Stock-based compensation expense (4,308 )
(3,660 ) (3,632 )
Non-GAAP R&D expenses
$ 37,742
$ 36,150 $ 29,730
GAAP SG&A expenses: $ 38,816
$ 40,287 $ 28,143
Acquisition related: Amortization of acquisition related
intangibles (2,360 )
(5,992 ) (215 ) Acquisition related fees -
(245 ) - Restructuring related: Severance and retention costs
(2,154 )
(1,173 ) (392 ) Facility closure costs (18 )
(53 ) - Assets impairment and other (428 )
- - Other: Compensation expense - deferred compensation plan (98 )
(38 ) (28 ) Stock-based compensation expense (5,428 )
(3,874 ) (3,552 )
Non-GAAP SG&A expenses
$ 28,330
$ 28,912 $ 23,956
GAAP interest and other income (expense), net $
(2,496 )
$ (3,601 ) $ 1,818 Non-cash
interest expense 3,268 3,191 - Gain from divestiture - - (51 ) Gain
on deferred compensation plan securities (393 )
(151 ) (108 ) Assets impairment and other -
- (325 )
Non-GAAP interest and other income
(expense), net $ 379
$ (561 ) $ 1,334
GAAP provision for (benefit from) income taxes - continuing
operations $ (3,558 )
$ (58,559 ) $ 435 Non-GAAP tax
adjustments 4,540
58,388 (83 )
Non-GAAP provision for
(benefit from) income taxes - continuing operations $
982
$ (171 ) $ 352 (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)
July 3 Apr. 3 (In thousands)
2016
2016 ASSETS Current assets: Cash and
cash equivalents $ 150,985 $ 203,231 Short-term investments 199,661
151,233 Accounts receivable, net 80,622 74,386 Inventories 45,107
54,243 Prepaid and other current assets 14,950 15,008 Assets held
for sale 4,155 - Total current assets 495,480 498,101
Property, plant and equipment, net 74,845 73,877 Goodwill
305,572 305,733 Acquisition-related intangibles 121,479 127,761
Deferred non-current tax assets 85,726 60,929 Other assets
31,739 32,788
TOTAL ASSETS $ 1,114,841 $ 1,099,189
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 32,773 $ 39,858 Accrued
compensation and related expenses 22,332 45,269 Deferred income on
shipments to distributors 12,285 7,006 Other accrued liabilities
23,166 14,974 Liabilities held for sale 2,732 - Total
current liabilities 93,288 107,107 Deferred tax liabilities
15,090 19,712 Long-term income taxes payable 976 2,190 Convertible
notes 275,489 272,221 Other long-term obligations 21,808
21,264 Total liabilities 406,651 422,494
Stockholders' equity 708,190 676,695
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,114,841 $ 1,099,189
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Integrated Device Technology, Inc.Financial
Contact:Suzanne Schmidt, 415-217-4962IDT Investor
Relationssuzanne@blueshirtgroup.comorPress Contact:Daniel
Aitken, 408-574-6480IDT Senior Director of Corporate Marketing and
Communicationsdaniel.aitken@idt.com
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