INTERSIL CORP MILPITAS, Calif., Jan. 27, 2016 /PRNewswire/ -- Intersil Corporation (NASDAQ:ISIL), a leading provider of innovative power management and precision analog solutions, today announced financial results for the fourth quarter and the year ended January 1, 2016. Fourth quarter revenue of $126.6 million was down 1.4% sequentially, resulting in revenue of $521.6 million for 2015. Gross margin increased again in 2015, and consistently solid operating results and spending controls throughout the year allowed the company to sustain strong profits and cash generation.
Company Highlights
-- 2015 gross margin increased year-over-year by 90 and 100 basis points
respectively to 59.0% on a GAAP basis and 59.3% on a non-GAAP basis.
-- The company again reported solid profitability, with non-GAAP operating
margin of 20% or greater for the 10(th) consecutive quarter.
-- Cash and cash equivalents increased to $247 million at year-end, and the
company continued to return a majority of free cash flow to shareholders
through one of the sector's highest yielding dividends.
Quarterly Results
Revenue for the fourth quarter declined as anticipated driven by lower demand in industrial and infrastructure end markets. Industrial and Infrastructure (I&I) revenue declined 6% sequentially, with all of the major product categories except automotive declining in the quarter. Automotive product demand remained strong and automotive revenue was a record for the quarter and for the year. Fourth quarter Computing and Consumer (C&C) revenue increased 7.5% sequentially and 3% year-over-year. The company's new display and power management ICs shipped into ramping mobile platforms, which drove the growth for the quarter. The breakdown by end market follows:
Q4 2015 Q3 2015 Q4 2014
------- ------- -------
End Market
Revenue $M % $M % $M %
--- --- --- --- --- ---
Industrial
&
Infrastructure 79.1 62% 84.2 66% 85.0 65%
Consumer &
Computing 47.5 38% 44.2 34% 46.1 35%
Total
Revenue $126.6 $128.4 $131.1
====== ====== ======
Table 1. Intersil End Market Mix
GAAP gross margin for the quarter was 57.6% and 59.0% for the full year. Fourth quarter GAAP operating expenses declined to $57 million. R&D expense was $30.0 million and SG&A expense was $22.8 million. Fourth quarter GAAP operating income was $15.9 million or 12.5% of revenue. GAAP net income was $21.3 million, and fully diluted GAAP earnings per share were $0.16.
For the full year, GAAP operating expenses totaled $322 million, increasing year-over-year as a result of an adverse jury verdict that the company is contesting. This resulted in a GAAP operating loss of $14.2 million. GAAP net income was $7.2 million due to an income tax benefit arising from the release of tax reserves from prior years. Fully diluted 2015 GAAP earnings per share were $0.05.
The following non-GAAP results exclude amortization of purchased intangibles, equity-based compensation expense, certain legal judgments and governmental penalties, gain on recovery of auction rate securities and related tax effects. Fourth quarter non-GAAP gross margin declined as expected to 57.8% as a result of manufacturing variances and mix. Non-GAAP operating expenses declined to $47.9 million as the company continued to closely manage spending. R&D expense was $27.6 million and SG&A expense was $20.3 million. Q4 non-GAAP operating income was $25.3 million, resulting in non-GAAP operating margin of 20%. Fully diluted Q4 earnings per share on a non-GAAP basis were $0.20.
For 2015, non-GAAP gross margin increased for the third consecutive year to 59.3%. Non-GAAP operating expenses declined year-over-year and totaled $201.6 million. Non-GAAP operating income was $107.6 million or 20.6% of revenue. Fully diluted 2015 earnings per share on a non-GAAP basis were $0.68.
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 again to $247 million at the end of the fourth 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 February 26, 2016, to shareholders of record as of the close of business on February 16, 2016.
"It was a good year for Intersil in terms of progress made towards improving the competitiveness and financial strength of the company, and new design wins helped us to offset some of the end market weakness that persisted for most of the year," said Necip Sayiner, president and CEO of Intersil. "We believe stabilization in demand and a solid financial position will allow us to get the new year off to a good start."
First Quarter 2016 Outlook
The following forward-looking guidance is for the first quarter ending April 1, 2016, based on current business trends and conditions:
GAAP Non-GAAP
---- --------
Revenue $125 - $131 million
------- -------------------
Gross margin Up 50 to 100 bps
------------ ----------------
Operating expenses Approx. $59M Approx. $50M
------------------ ------------ ------------
Earnings per share $0.08 to $0.10 $0.14 to $0.16
------------------ -------------- --------------
Table 2. Intersil Q1 2016 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) 703-6110 or +1 (857) 244-7309 and enter the passcode 22634365. 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 98625303.
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
Some of the statements included in this press release constitute forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, in connection with the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements. These forward-looking statements include statements that reflect the current expectations, estimates, beliefs, assumptions, and projections of our senior management about future events with respect to our business and our industry in general. Statements that include 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 of a future or forward-looking nature 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, there are or will be important factors that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. We believe that the factors that may affect our business, future operating results and financial condition include, but are not limited to, the following: 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 end markets we serve, 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, and adverse results in litigation matters. For a more detailed discussion of how these and other risks and uncertainties could cause our actual results to differ materially from those indicated in our forward-looking statements, see our reports filed 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), including our Annual Report on Form 10-K for the year ended January 2, 2015. 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.
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 purchased intangibles, which include purchased
intangibles such as purchased technology, patents, customer
relationships, trademarks, backlog and non-compete agreements.
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 judgments, awards, or governmental fines or penalties.
-- Income from IP agreements.
-- Restructuring and related costs.
-- 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.
Intersil Corporation
Condensed Consolidated Statements of Income
Unaudited
(In thousands, except percentages and per share amounts)
Quarter Ended Year Ended
Jan. 1, Oct. 2, Jan. 2, Jan. 1, Jan. 2,
2016 2015 2015 2016 2015
---- ---- ---- ---- ----
Q4 2015 Q3 2015 Q4 2014
Revenue $126,626 $128,396 $131,126 $521,616 $562,555
Cost of revenue 53,707 52,338 52,933 213,820 235,800
------ ------ ------ ------- -------
Gross profit 72,919 76,058 78,193 307,796 326,755
Gross margin % 57.6% 59.2% 59.6% 59.0% 58.1%
Expenses:
Research and
development 29,983 31,252 30,367 126,350 125,851
Selling, general and
administrative 22,784 23,532 24,840 96,963 99,926
Amortization of
purchased
intangibles 4,261 3,777 5,559 17,625 22,241
Provision for TAOS
litigation - - - 81,100 -
Provision for export
compliance
settlement - - - - 4,000
Total expenses 57,028 58,561 60,766 322,038 252,018
------ ------ ------ ------- -------
Operating income
(loss) 15,891 17,497 17,427 (14,242) 74,737
Other income /
(expense) (257) (215) 511 (530) (204)
---- ---- --- ---- ----
Income (loss) before
income taxes 15,634 17,282 17,938 (14,772) 74,533
Income tax (benefit)
expense (5,668) 298 664 (21,958) 19,721
Net income $21,302 $16,984 $17,274 $7,186 $54,812
======= ======= ======= ====== =======
Earnings per share:
Basic $0.16 $0.13 $0.13 $0.05 $0.42
===== ===== ===== ===== =====
Diluted $0.16 $0.13 $0.13 $0.05 $0.41
===== ===== ===== ===== =====
Weighted average shares outstanding:
Basic 132,608 132,133 130,138 131,793 129,149
======= ======= ======= ======= =======
Diluted 134,288 132,445 132,276 133,273 132,657
======= ======= ======= ======= =======
Intersil Corporation
Condensed Consolidated Balance Sheets
Unaudited
(in thousands)
Jan. 1, Oct. 2, Jan. 2,
2016 2015 2015
---- ---- ----
Assets
Current assets:
Cash and cash
equivalents $247,403 $228,898 $211,216
Trade receivables, net 42,684 51,158 55,585
Inventories 65,334 68,967 73,770
Prepaid expenses and
other current assets 7,176 7,647 9,779
Income taxes receivable 7,584 1,030 1,162
Deferred income tax
assets - 20,977 20,433
Total current assets 370,181 378,677 371,945
------- ------- -------
Non-current assets:
Property, plant and
equipment, net 71,044 72,227 72,272
Purchased intangibles,
net 32,507 36,768 34,400
Goodwill 571,770 571,770 565,424
Deferred income tax
assets 63,139 39,916 39,334
Other non-current
assets 29,977 32,289 70,885
Total non-current
assets 768,437 752,970 782,315
------- ------- -------
Total assets $1,138,618 $1,131,647 $1,154,260
========== ========== ==========
Liabilities and shareholders' equity
Current liabilities:
Trade payables 23,382 24,011 26,246
Deferred income 14,482 14,632 11,631
Income taxes payable 3,270 1,689 2,790
Provision for TAOS
litigation 77,988 78,014 -
Other accrued expenses 48,913 52,844 64,847
Total current
liabilities 168,035 171,190 105,514
------- ------- -------
Non-current liabilities:
Income taxes payable 1,609 3,199 59,745
Other non-current
liabilities 14,224 13,947 7,453
Total non-current
liabilities 15,833 17,146 67,198
------ ------ ------
Total shareholders'
equity 954,750 943,311 981,548
Total liabilities and
shareholders' equity $1,138,618 $1,131,647 $1,154,260
========== ========== ==========
Intersil Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited
(In thousands)
Quarter Ended Year Ended
Jan. 1, Oct. 2, Jan. 2, Jan. 1, Jan. 2,
2016 2015 2015 2016 2015
---- ---- ---- ---- ----
Q4 2015 Q3 2015 Q4 2014
Operating activities:
Net income $21,302 $16,984 $17,274 $7,186 $54,812
Depreciation 3,557 3,635 4,930 15,285 19,423
Amortization of
purchased
intangibles 4,261 3,777 5,559 17,625 22,241
Equity-based
compensation 5,148 5,565 5,009 23,158 18,688
Deferred income
taxes (2,247) 1,412 (1,327) (6,285) 35,569
Other (2,300) (771) 8,024 (4,194) (2,162)
Net changes in
operating assets
and liabilities 1,467 4,193 (21,158) 64,229 (75,182)
Net cash flows
provided by
operating
activities 31,188 34,795 18,311 117,004 73,389
------ ------ ------ ------- ------
Investing activities:
Cash paid for
acquisition, net
of cash acquired - (15,948) - (15,948) -
Proceeds from
investments 150 460 615 1,198 1,075
Net capital
expenditures (1,214) (1,764) (3,857) (12,965) (9,857)
Net cash flows used
in investing
activities (1,064) (17,252) (3,242) (27,715) (8,782)
------ ------- ------ ------- ------
Financing activities:
Proceeds from
equity-based
awards, net 4,610 2,587 1,794 13,403 16,939
Dividends paid (16,008) (15,959) (15,685) (64,860) (62,910)
Net cash flows used
in financing
activities (11,398) (13,372) (13,891) (51,457) (45,971)
------- ------- ------- ------- -------
Effect of exchange
rates on cash and
cash equivalents (221) (235) (544) (1,645) (2,207)
---- ---- ---- ------ ------
Net change in cash
and cash
equivalents 18,505 3,936 634 36,187 16,429
------ ----- --- ------ ------
Cash and cash
equivalents as of
the beginning of
the period 228,898 224,962 210,582 211,216 194,787
------- ------- ------- ------- -------
Cash and cash
equivalents as of
the end of the
period $247,403 $228,898 $211,216 $247,403 $211,216
======== ======== ======== ======== ========
Intersil Corporation
Non-GAAP Results
Unaudited
(In thousands, except percentages)
Quarter Ended Year Ended
Jan. 1, Oct. 2, Jan. 2, Jan. 1, Jan. 2,
2016 2015 2015 2016 2015
---- ---- ---- ---- ----
Q4 2015 Q3 2015 Q4 2014
Non-GAAP gross profit:
GAAP gross profit $72,919 $76,058 $78,193 $307,796 $326,755
Equity-based
compensation COS 268 304 319 1,400 1,326
--- --- --- ----- -----
Non-GAAP gross
profit $73,187 $76,362 $78,512 $309,196 $328,081
======= ======= ======= ======== ========
Non-GAAP gross margin:
GAAP gross margin 57.6% 59.2% 59.6% 59.0% 58.1%
Equity-based
compensation COS 0.2% 0.3% 0.2% 0.3% 0.2%
Non-GAAP gross
margin 57.8% 59.5% 59.8% 59.3% 58.3%
==== ==== ==== ==== ====
Non-GAAP R&D expenses:
GAAP R&D expenses $29,983 $31,252 $30,367 $126,350 $125,851
Equity-based
compensation (2,368) (2,390) (2,500) (10,167) (8,468)
------ ------ ------ ------- ------
Non-GAAP R&D
expenses: $27,615 $28,862 $27,867 $116,183 $117,383
======= ======= ======= ======== ========
Non-GAAP SG&A expenses:
GAAP SG&A expenses $22,784 $23,532 $24,840 $96,963 $99,926
Equity-based
compensation (2,512) (2,871) (2,190) (11,591) (8,894)
------ ------ ------ ------- ------
Non-GAAP SG&A
expenses: $20,272 $20,661 $22,650 $85,372 $91,032
======= ======= ======= ======= =======
Non-GAAP operating expenses:
GAAP operating
expenses $57,028 $58,561 $60,766 $322,038 $252,018
Provision for
export compliance
settlement - - - - (4,000)
Provision for TAOS
litigation - - - (81,100) -
Equity-based
compensation
(excl. COS) (4,880) (5,261) (4,690) (21,758) (17,362)
Amortization of
purchased
intangibles (4,261) (3,777) (5,559) (17,625) (22,241)
Non-GAAP operating
expenses $47,887 $49,523 $50,517 $201,555 $208,415
======= ======= ======= ======== ========
Non-GAAP operating income:
GAAP operating
income (loss) $15,891 $17,497 $17,427 $(14,242) $74,737
Provision for
export compliance
settlement - - - - 4,000
Provision for TAOS
litigation - - - 81,100 -
Equity-based
compensation 5,148 5,565 5,009 23,158 18,688
Amortization of
purchased
intangibles 4,261 3,777 5,559 17,625 22,241
Non-GAAP operating
income $25,300 $26,839 $27,995 $107,641 $119,666
======= ======= ======= ======== ========
Non-GAAP operating margin:
GAAP operating
margin 12.5% 13.6% 13.3% (2.7%) 13.3%
Excluded items as a
percent of revenue 7.5% 7.3% 8.0% 23.3% 8.0%
Non-GAAP operating
margin 20.0% 20.9% 21.3% 20.6% 21.3%
==== ==== ==== ==== ====
Intersil Corporation
Non-GAAP Results
Unaudited
(In thousands, except per share amounts)
Quarter Ended Year Ended
Jan. 1, Oct. 2, Jan. 2, Jan. 1, Jan. 2,
2016 2015 2015 2016 2015
---- ---- ---- ---- ----
Q4 2015 Q3 2015 Q4 2014
Non-GAAP net income:
GAAP net income $21,302 $16,984 $17,274 $7,186 $54,812
Tax impact of Non-
GAAP adjustments (2,668) (5,049) (2,025) (34,140) 173
Provision for export
compliance
settlement - - - - 4,000
Gain on recovery
from auction rate
securities (150) (460) (615) (1,198) (1,075)
Equity-based
compensation 5,148 5,565 5,009 23,158 18,688
Amortization of
purchased
intangibles 4,261 3,777 5,559 17,625 22,241
Provision for TAOS
litigation - - - 81,100 -
Non-GAAP net income $27,893 $20,817 $25,202 $93,731 $98,839
======= ======= ======= ======= =======
GAAP weighted
average shares -
diluted 134,288 132,445 132,276 133,273 132,657
Non-GAAP adjustment 4,314 5,273 4,099 3,795 2,117
Non-GAAP weighted
average shares -
diluted 138,602 137,718 136,375 137,068 134,774
======= ======= ======= ======= =======
Non-GAAP earnings per diluted share:
GAAP earnings per
diluted share $0.16 $0.13 $0.13 $0.05 $0.41
Excluded items per
share impact 0.04 0.02 0.05 0.63 0.32
Non-GAAP earnings
per diluted share $0.20 $0.15 $0.18 $0.68 $0.73
===== ===== ===== ===== =====
Equity-based compensation expense by classification:
Cost of revenue
("COS") $268 $304 $319 $1,400 $1,326
Research and
development $2,368 $2,390 $2,500 $10,167 $8,468
Selling, general and
administrative $2,512 $2,871 $2,190 $11,591 $8,894
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SOURCE Intersil Corporation
