Intersil Corporation Reports First Quarter Results

MILPITAS, Calif., April 26, 2016 /PRNewswire/ -- Intersil Corporation (NASDAQ: ISIL), a leading provider of innovative power management and precision analog solutions, today announced financial results for the first quarter ended April 1, 2016. First quarter revenue of $129.3 million was up 2.1% sequentially. Gross margin also increased sequentially, operating expenses remained in line with expectations, and the company sustained strong operating income levels.

Company Highlights

• Consumer and Computing (C&C) revenue was better than seasonal, increasing year-over-year by over 8%.
• Infrastructure and Industrial (I&I) demand improved broadly, resulting in 4% sequential growth.
• Gross margin increased sequentially by 120 and 130 basis points, respectively, to 58.8% on a GAAP basis and 59.1% on a non-GAAP basis.
• The company again reported solid profitability, with non-GAAP operating margin of 20% or greater for the 11th consecutive quarter.
• Cash and cash equivalents increased to $254 million at quarter-end.

Quarterly Results Revenue for the first quarter was better than seasonal due to ramps of new business in C&C, record revenue in automotive, and recovery in infrastructure and industrial markets. I&I revenue increased 4% sequentially, with automotive, power and analog growing in the quarter. Automotive revenue reached another record as strong end-market demand and new business propelled the business forward. First quarter C&C revenue decreased only 1% sequentially and was up over 8% year over year. The company's new products shipping into high profile mobile platforms were behind the better than seasonal result. The breakdown by end market follows:

 

Table 1. Intersil End Market Mix

GAAP gross margin for the quarter increased to 58.8%. First quarter GAAP operating expenses increased to $60.8 million as a result of increasing R&D investment. R&D expense was $33.7 million and SG&A expense was $23.6 million. First quarter GAAP operating income was $15.2 million or 11.8% of revenue. GAAP net income was $11.8 million, and fully diluted GAAP earnings per share were $0.09.

The following non-GAAP results exclude amortization of purchased intangibles, equity-based compensation expense, certain legal judgments and governmental penalties, acquisition-related charges, and gain on recovery of auction rate securities, as well as the related tax effects. First quarter non-GAAP gross margin increased by 130 basis points to 59.1%. Non-GAAP R&D investment increased to $30.6 million while non-GAAP SG&A decreased to $20.0 million, resulting in total non-GAAP operating expense of $50.6 million for the quarter. Q1 non-GAAP operating income increased to $25.8 million, resulting in non-GAAP operating margin of 20.0%. Fully diluted Q1 earnings per share on a non-GAAP basis were $0.15.

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 $254 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 27, 2016 to shareholders of record as of the close of business on May 17, 2016.

"Q1 was a solid quarter, with new product ramps and a stabilizing demand environment," said Necip Sayiner, president and CEO of Intersil. "We're encouraged by the strong design activity and momentum building across all of our investment businesses."

Second Quarter 2016 Outlook

The following forward-looking guidance is for the second quarter ending July 1, 2016, based on current business trends and conditions:

 

Table 2. Intersil Q2 2016 Outlook

Earnings Call WebcastIntersil 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 (888) 656-8682 or +1 (503) 343-6028 and enter the passcode 87919628. 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 (855) 859-2056, international dial +1 (404) 537-3406, using the passcode 98625303.

About IntersilIntersil 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 STATEMENTSSome 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, as defined 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 or uncertainty 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 1, 2016. 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 ReportingTo 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 charges. 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.
• One-time charges associated with completing an acquisition including contract termination costs.

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.

 

 

 

 

 

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SOURCE Intersil Corporation