INTERSIL CORP MILPITAS, Calif., April 29, 2015 /PRNewswire/ -- Intersil Corporation (NASDAQ:ISIL), a leading provider of innovative power management and precision analog solutions, today announced financial results for the first quarter of 2015. Revenue of $134.2 million was up 2.3% sequentially. The company reported a GAAP net loss of $68.8 million resulting from a charge related to intellectual property litigation. Non-GAAP earnings per share of $0.17 exceeded expectations due in part to lower than anticipated operating expenses but also as a result of record gross margin during the quarter.
Company Highlights
-- Gross margin improved again and was up to 59.9% on a GAAP basis and
60.2% on a non-GAAP basis.
-- Operating income on a non-GAAP basis increased sequentially, resulting
in a non-GAAP operating margin of 21.3%.
-- Diluted GAAP loss per share was $0.53 and non-GAAP earnings per share
were $0.17.
Quarterly Results
Revenue for the first quarter was better than seasonal as newly-introduced consumer products started ramping and the company's Industrial and Infrastructure (I&I) products experienced strong demand. All I&I product areas increased sequentially to contribute to a nearly 7% increase in revenue. Intersil's Consumer and Computing (C&C) revenue was down sequentially 6% as a result of weak demand in the PC market. Overall design win activity remained strong, particularly for new products. The breakdown by end market for the quarter was as follows:
Q1 2015 Q4 2014 Q1 2014
------- ------- -------
End Market Revenue $M % $M % $M %
--- --- --- --- --- ---
Industrial &
Infrastructure 90.7 68% 85.0 65% 87.4 62%
Consumer &
Computing 43.5 32% 46.1 35% 52.7 38%
Total Revenue $134.2 $131.1 $140.1
====== ====== ======
Table 1. Intersil End Market Mix
For the first quarter, GAAP results include an $81.1 million charge related to an intellectual property lawsuit brought against Intersil in 2008 by Texas Advanced Optical Solutions. Intersil is seeking to overturn the verdict through post-trial motions and appeals to the appropriate U.S. Circuit Court of Appeals, as necessary. GAAP operating expenses therefore totaled $144.1 million, with R&D expense of $32 million and SG&A expense of $25.5 million. GAAP gross margin increased again to 59.9%. For the quarter, the company reported an operating loss of $63.8 million and a net loss of $68.8 million. GAAP diluted loss per share was $0.53.
Non-GAAP gross margin improved again for the eighth consecutive quarter to 60.2% due to favorable product revenue mix driven by lower revenue in computing and higher revenue from the company's I&I products. The company reported non-GAAP operating expenses of $52.1 million. Q1 non-GAAP operating income was $28.6 million resulting in a non-GAAP operating margin of 21.3%. Fully diluted Q1 earnings per share on a non-GAAP basis were $0.17.
For a complete reconciliation of GAAP and non-GAAP results, please see the "Non-GAAP Results" table included at the end of this release.
Cash and short-term investments increased and totaled $221 million at the end of the first 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 May 29, 2015, to shareholders of record as of the close of business on May 19, 2015.
"New business began to ramp in Q1 as anticipated, and we are making steady progress on our turnaround," said Necip Sayiner, president and CEO of Intersil. "While some customer platform delays and a weaker macro environment are moderating our near-term growth rate, we continue to enjoy strong interest in our new products."
Second Quarter 2015 Outlook
The following forward looking guidance is for the second quarter ending July 3, 2015, based on current business trends and conditions:
GAAP Reconciling items Non-GAAP
---- ----------------- --------
Revenue Flat to Up 3% Flat to Up 3%
------- ------------ ------------
Gross margin Down 50 to 100 bps Down 50 to 100 bps
------------ ------------------ ------------------
$6 million equity-based compensation
Operating
expenses $63 million +/- $500K $4 million amortization of purchased intangibles $53 million +/- $500K
--------- --------------------- ------------------------------------ ---------------------
Earnings per
share $0.07 to $0.09 $0.15 to $0.17
------------ -------------- --------------
Table 2. Intersil Q2 2015 Outlook
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 (877) 280-4962 or +1 (857) 244-7319 and enter the pass code 56077149. 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 38641605.
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
-------------
Apr. 3, Jan. 2, Apr. 4,
2015 2015 2014
---- ---- ----
Q1 2015 Q4 2014 Q1 2014
Revenue $134,153 $131,126 $140,056
Cost of revenue 53,827 52,933 61,151
------ ------ ------
Gross profit 80,326 78,193 78,905
Gross margin % 59.9% 59.6% 56.3%
Expenses:
Research and
development 32,017 30,367 31,799
Selling, general and
administrative 25,453 24,840 22,767
Amortization of
purchased
intangibles 5,561 5,559 5,561
Provision for export
compliance
settlement - - 4,000
Provision for TAOS
litigation 81,100 - -
Total expenses 144,131 60,766 64,127
------- ------ ------
Operating (loss)
income (63,805) 17,427 14,778
Interest expense and
other (257) (316) (488)
Gain on investments,
net 773 827 364
(Loss) income before
income taxes (63,289) 17,938 14,654
Income tax expense 5,535 664 4,649
Net (loss) income $(68,824) $17,274 $10,005
======== ======= =======
(Loss) earnings per share:
Basic $(0.53) $0.13 $0.08
====== ===== =====
Diluted $(0.53) $0.13 $0.08
====== ===== =====
Weighted average shares outstanding:
Basic 130,513 130,138 127,819
======= ======= =======
Diluted 130,513 132,276 129,389
======= ======= =======
Intersil Corporation
Condensed Consolidated Balance Sheets
Unaudited
(in thousands)
Apr. 3, Jan. 2, Apr. 4,
2015 2015 2014
---- ---- ----
Assets
Current assets:
Cash and short-term
investments $220,900 $211,216 $197,336
Trade receivables, net 51,236 55,585 52,830
Inventories 77,798 73,770 61,877
Prepaid expenses and
other current assets 14,301 9,779 9,378
Income taxes receivable 1,129 1,162 976
Deferred income tax
assets 20,615 20,433 15,808
------ ------ ------
Total current assets 385,979 371,945 338,205
------- ------- -------
Non-current assets:
Property, plant and
equipment, net 73,073 72,272 77,958
Purchased intangibles,
net 28,839 34,400 51,081
Goodwill 565,424 565,424 565,424
Deferred income tax
assets 38,779 39,334 56,543
Other non-current
assets 71,297 70,885 73,413
------ ------ ------
Total non-current
assets 777,412 782,315 824,419
------- ------- -------
Total assets $1,163,391 $1,154,260 $1,162,624
========== ========== ==========
Liabilities and shareholders' equity
Current liabilities:
Trade payables $22,544 $26,246 $25,901
Deferred income 13,442 11,631 10,048
Income taxes payable 5,764 2,790 11,036
Provision for TAOS
litigation 79,470 - -
Other accrued expenses 68,522 64,847 76,030
------ ------ ------
Total current
liabilities 189,742 105,514 123,015
------- ------- -------
Non-current liabilities:
Income taxes payable 60,661 59,745 71,703
Other non-current
liabilities 6,496 7,453 12,065
----- ----- ------
Total non-current
liabilities 67,157 67,198 83,768
------ ------ ------
Total shareholders'
equity 906,492 981,548 955,841
------- ------- -------
Total liabilities and
shareholders' equity $1,163,391 $1,154,260 $1,162,624
========== ========== ==========
Intersil Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited
(In thousands)
Quarter Ended
-------------
Apr. 3, Jan. 2, Apr. 4,
2015 2015 2014
---- ---- ----
Q1 2015 Q4 2014 Q1 2014
Operating activities:
Net (loss) income $(68,824) $17,274 $10,005
Depreciation 4,486 4,929 4,810
Amortization of purchased
intangibles 5,561 5,559 5,561
Equity-based compensation 5,756 5,008 3,710
Deferred income taxes 373 8,024 22,985
Other (1,059) (1,326) (585)
Net changes in operating
assets and liabilities 80,502 (21,157) (28,629)
Net cash flows provided by
operating activities 26,795 18,311 17,857
------ ------ ------
Investing activities:
Proceeds from investments 588 615 268
Net capital expenditures (4,990) (3,857) (784)
Net cash flows used in
investing activities (4,402) (3,242) (516)
------ ------ ----
Financing activities:
Proceeds from equity-
based awards, net 4,355 1,794 488
Dividends paid (15,697) (15,685) (15,371)
Net cash flows used in
financing activities (11,342) (13,891) (14,883)
------- ------- -------
Effect of exchange rates
on cash and cash
equivalents (1,367) (544) 91
------ ---- ---
Net change in cash and
cash equivalents 9,684 634 2,549
----- --- -----
Cash and cash equivalents
as of the beginning of
the period 211,216 210,582 194,787
------- ------- -------
Cash and cash equivalents
as of the end of the
period $220,900 $211,216 $197,336
======== ======== ========
Intersil Corporation
Non-GAAP Results
Unaudited
(In thousands, except percentages)
Quarter Ended
-------------
Apr. 3, Jan. 2, Apr. 4,
2015 2015 2014
---- ---- ----
Q1 2015 Q4 2014 Q1 2014
Non-GAAP gross profit:
GAAP gross profit $80,326 $78,193 $78,905
Equity-based
compensation COS 392 319 319
Non-GAAP gross
profit $80,718 $78,512 $79,224
======= ======= =======
Non-GAAP gross margin:
GAAP gross margin 59.9% 59.6% 56.3%
Equity-based
compensation COS 0.3% 0.2% 0.3%
--- --- ---
Non-GAAP gross
margin 60.2% 59.8% 56.6%
==== ==== ====
Non-GAAP operating expenses:
GAAP operating
expenses $144,131 $60,766 $64,127
Provision for export
compliance
settlement - - (4,000)
Provision for TAOS
litigation (81,100) - -
Equity-based
compensation (excl.
COS) (5,364) (4,689) (3,391)
Amortization of
purchased
intangibles (5,561) (5,559) (5,561)
Non-GAAP operating
expenses $52,106 $50,518 $51,175
======= ======= =======
Non-GAAP operating income:
GAAP operating
(loss) income $(63,805) $17,427 $14,778
Provision for export
compliance
settlement - - 4,000
Provision for TAOS
litigation 81,100 - -
Equity-based
compensation 5,756 5,008 3,710
Amortization of
purchased
intangibles 5,561 5,559 5,561
Non-GAAP operating
income $28,612 $27,994 $28,049
======= ======= =======
Non-GAAP operating margin:
GAAP operating
margin (47.6)% 13.3 % 10.6 %
Excluded items as a
percent of revenue 68.9 % 8.0 % 9.4 %
----- ---- ----
Non-GAAP operating
margin 21.3 % 21.3 % 20.0 %
===== ===== =====
Intersil Corporation
Non-GAAP Results
Unaudited
(In thousands, except per share amounts)
Quarter Ended
-------------
Apr. 3, Jan. 2, Apr. 4,
2015 2015 2014
---- ---- ----
Q1 2015 Q4 2014 Q1 2014
Non-GAAP net income:
GAAP (loss) income $(68,824) $17,274 $10,005
Tax adjustments from
non-cash and discrete
items (71) (2,025) (855)
Provision for export
compliance settlement - - 4,000
Gain on recovery from
auction rate securities (588) (615) (268)
Equity-based
compensation 5,756 5,008 3,710
Amortization of
purchased intangibles 5,561 5,559 5,561
Provision for TAOS
litigation 81,100 - -
Non-GAAP net income $22,934 $25,201 $22,153
======= ======= =======
GAAP weighted average
shares -diluted 130,513 132,276 129,389
Non-GAAP adjustment 6,798 4,099 2,431
Non-GAAP weighted
average shares -
diluted 137,311 136,375 131,820
======= ======= =======
Non-GAAP earnings per diluted share:
GAAP (loss) earnings per
diluted share $(0.53) $0.13 $0.08
Excluded items per share
impact 0.70 0.05 0.09
Non-GAAP earnings per
diluted share $0.17 $0.18 $0.17
===== ===== =====
Equity-based compensation expense by
classification:
Cost of revenue ("COS") $392 $319 $319
Research and development $2,751 $2,500 $1,955
Selling, general and
administrative $2,613 $2,189 $1,436
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SOURCE Intersil Corporation
