Q2 FY15 Revenue (from Continuing Operations) of $137.1M; up 8.5% Q/Q and 10.5% Y/Y
Q2 FY15 GAAP Diluted EPS (from Continuing Operations) of $0.16
Q2 FY15 Non-GAAP Diluted EPS of $0.20
SAN JOSE, Calif.-- Integrated Device Technology, Inc. (IDT®) (IDTI) today announced results for the fiscal second quarter ended September 28, 2014.
“The second fiscal quarter was a continuation of the strong momentum we saw last quarter, highlighted by the achievement of important business milestones across all focus areas and excellent financial results,” said Greg Waters, president and chief executive officer. “Second quarter revenue grew by 8.5 percent sequentially, driven by increasing demand for our products across each of our Communications, Computing, and Consumer end markets. Additionally, we achieved a significant number of design wins that set the stage for additional growth ahead. Along with excellent business and technology traction, our focus on operational excellence led to a non-GAAP operating margin of 23.7 percent and free cash flow equal to 30 percent of revenue for the quarter.”
“As we look ahead to the remainder of this fiscal year and beyond, we are optimistic about our prospects for success and remain focused on executing our growth strategies,” concluded Mr. Waters.
Recent Business Highlights - Communications
Recent Business Highlights - Computing
Recent Business Highlights - Consumer
The following highlights the Company’s financial performance on both a GAAP and supplemental non-GAAP basis. The Company is pursuing the divestiture of its high speed data converter business and is in active discussions with potential buyers. For financial statement purposes, the high speed data converter business is classified as assets held for sale and 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.
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 27, 2014. The webcast replay will be available after 5 p.m. Pacific time on October 27, 2014.
Investors may also listen to the live call at 1:30 p.m. Pacific time on October 27, 2014 by calling (888) 428-9490 or (719) 325-2491. The access code is 9863312. The conference call replay will be available for one week after the event at (888) 203-1112 or (719) 457-0820. The access code is 9863312.
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 30, 2014. 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 (benefit) for 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:
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:
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:
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. 28, | June 29, | Sept. 29, | Sept. 28, | Sept. 29, | |||||||||||||||||||||||||||||||
2014 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||||
Revenues | $ | 137,093 | $ | 126,302 | $ | 124,047 | $ | 263,395 | $ | 241,511 | |||||||||||||||||||||||||
Cost of revenues | 55,217 | 52,293 | 53,286 | 107,510 | 104,628 | ||||||||||||||||||||||||||||||
Gross profit | 81,876 | 74,009 | 70,761 | 155,885 | 136,883 | ||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||
Research and development | 30,742 | 32,050 | 38,937 | 62,792 | 76,876 | ||||||||||||||||||||||||||||||
Selling, general and administrative | 26,795 | 25,459 | 27,301 | 52,254 | 54,139 | ||||||||||||||||||||||||||||||
Total operating expenses | 57,537 | 57,509 | 66,238 | 115,046 | 131,015 | ||||||||||||||||||||||||||||||
Operating income | 24,339 | 16,500 | 4,523 | 40,839 | 5,868 | ||||||||||||||||||||||||||||||
Gain from divestiture | - | - | 82,349 | - | 82,349 | ||||||||||||||||||||||||||||||
Other income, net | 405 | 862 | 756 | 1,267 | 813 | ||||||||||||||||||||||||||||||
Income from continuing operations before income taxes | 24,744 | 17,362 | 87,628 | 42,106 | 89,030 | ||||||||||||||||||||||||||||||
Provision for income taxes | 498 | 251 | 217 | 749 | 118 | ||||||||||||||||||||||||||||||
Net income from continuing operations | 24,246 | 17,111 | 87,411 | 41,357 | 88,912 | ||||||||||||||||||||||||||||||
Discontinued operations: | |||||||||||||||||||||||||||||||||||
Gain from divestiture | - | 16,840 | - | 16,840 | - | ||||||||||||||||||||||||||||||
Loss from discontinued operations | (9,747 | ) | (12,153 | ) | (3,935 | ) | (21,900 | ) | (7,799 | ) | |||||||||||||||||||||||||
Provision for (benefit from) income taxes | 57 | (45 | ) | (175 | ) | 12 | (274 | ) | |||||||||||||||||||||||||||
Net income (loss) from discontinued operations | (9,804 | ) | 4,732 | (3,760 | ) | (5,072 | ) | (7,525 | ) | ||||||||||||||||||||||||||
Net income | $ | 14,442 | $ | 21,843 | $ | 83,651 | $ | 36,285 | $ | 81,387 | |||||||||||||||||||||||||
Basic net income per share - continuing operations | $ | 0.16 | $ | 0.11 | $ | 0.58 | $ | 0.28 | $ | 0.60 | |||||||||||||||||||||||||
Basic net income (loss) per share - discontinued operations | (0.06 | ) | 0.04 | (0.02 | ) | (0.04 | ) | (0.05 | ) | ||||||||||||||||||||||||||
Basic net income per share | $ | 0.10 | $ | 0.15 | $ | 0.56 | $ | 0.24 | $ | 0.55 | |||||||||||||||||||||||||
Diluted net income per share - continuing operations | $ | 0.16 | $ | 0.11 | $ | 0.57 | $ | 0.27 | $ | 0.59 | |||||||||||||||||||||||||
Diluted net income (loss) per share - discontinued operations | (0.07 | ) | 0.03 | (0.03 | ) | (0.03 | ) | (0.05 | ) | ||||||||||||||||||||||||||
Diluted net income per share | $ | 0.09 | $ | 0.14 | $ | 0.54 | $ | 0.24 | $ | 0.54 | |||||||||||||||||||||||||
Weighted average shares: | |||||||||||||||||||||||||||||||||||
Basic | 148,683 | 149,283 | 149,814 | 148,983 | 148,157 | ||||||||||||||||||||||||||||||
Diluted | 153,784 | 153,741 | 153,497 | 153,816 | 151,630 |
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. 28, | June 29, | Sept. 29, | Sept. 28, | Sept. 29, | ||||||||||||||||||||||||||||||
2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||||
GAAP net income from continuing operations | $ | 24,246 |
|
$ | 17,111 | $ | 87,411 | $ | 41,357 | $ | 88,912 | |||||||||||||||||||||||
GAAP diluted net income per share continuing operations | $ | 0.16 |
|
$ | 0.11 | $ | 0.57 | $ | 0.27 | $ | 0.59 | |||||||||||||||||||||||
Acquisition related: | ||||||||||||||||||||||||||||||||||
Amortization of acquisition related intangibles | 1,676 |
|
2,549 | 3,322 | 4,225 | 6,643 | ||||||||||||||||||||||||||||
Acquisition related legal and consulting fees | - |
|
- | 240 | - | 708 | ||||||||||||||||||||||||||||
Restructuring related: | ||||||||||||||||||||||||||||||||||
Severance and retention costs | 319 |
|
526 | 4,499 | 845 | 5,673 | ||||||||||||||||||||||||||||
Facility closure costs | 20 |
|
47 | 13 | 67 | 21 | ||||||||||||||||||||||||||||
Gain from divestiture | - |
|
- | (82,349 | ) | - | (82,349 | ) | ||||||||||||||||||||||||||
Assets impairment and other | 401 |
|
2,302 | 4,080 | 2,703 | 4,044 | ||||||||||||||||||||||||||||
Other: | ||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 5,929 |
|
4,962 | 2,320 | 10,891 | 7,140 | ||||||||||||||||||||||||||||
Compensation expense (benefit) - deferred compensation plan | (242 | ) |
|
494 | 623 | 252 | 523 | |||||||||||||||||||||||||||
(Gain) loss on deferred compensation plan securities | 245 |
|
(480 | ) | (619 | ) | (235 | ) | (518 | ) | ||||||||||||||||||||||||
Tax effects of Non-GAAP adjustments | (826 | ) |
|
(859 | ) | (994 | ) | (1,685 | ) | (1,656 | ) | |||||||||||||||||||||||
Non-GAAP net income from continuing operations | $ | 31,768 |
|
$ | 26,652 | $ | 18,546 | $ | 58,420 | $ | 29,141 | |||||||||||||||||||||||
GAAP weighted average shares - diluted | 153,784 |
|
153,741 | 153,497 | 153,816 | 151,630 | ||||||||||||||||||||||||||||
Non-GAAP adjustment | 2,128 |
|
1,867 | 3,065 | 2,017 | 2,836 | ||||||||||||||||||||||||||||
Non-GAAP weighted average shares - diluted | 155,912 |
|
155,608 | 156,562 | 155,833 | 154,466 | ||||||||||||||||||||||||||||
Non-GAAP diluted net income per share continuing operations | $ | 0.20 |
|
$ | 0.17 | $ | 0.12 | $ | 0.37 | $ | 0.19 | |||||||||||||||||||||||
GAAP gross profit | $ | 81,876 |
|
$ | 74,009 | $ | 70,761 | $ | 155,885 | $ | 136,883 | |||||||||||||||||||||||
Acquisition related: | ||||||||||||||||||||||||||||||||||
Amortization of acquisition related intangibles | 1,264 |
|
1,686 | 2,435 | 2,950 | 4,870 | ||||||||||||||||||||||||||||
Restructuring related: | ||||||||||||||||||||||||||||||||||
Severance and retention costs | 96 |
|
23 | 86 | 119 |
|
87 | |||||||||||||||||||||||||||
Facility closure costs | - |
|
- | 4 | - | 6 | ||||||||||||||||||||||||||||
Assets impairment and other | 334 |
|
1,935 | (38 | ) | 2,269 | (74 | ) | ||||||||||||||||||||||||||
Other: | ||||||||||||||||||||||||||||||||||
Compensation expense (benefit) - deferred compensation plan | (70 | ) |
|
147 | 192 | 77 | 161 | |||||||||||||||||||||||||||
Stock-based compensation expense | 436 |
|
319 | 392 | 755 | 725 | ||||||||||||||||||||||||||||
Non-GAAP gross profit | $ | 83,936 |
|
$ | 78,119 | $ | 73,832 | $ | 162,055 | $ | 142,658 | |||||||||||||||||||||||
GAAP R&D expenses: | $ | 30,742 |
|
$ | 32,050 | $ | 38,937 | $ | 62,792 | $ | 76,876 | |||||||||||||||||||||||
Restructuring related: | ||||||||||||||||||||||||||||||||||
Severance and retention costs | (136 | ) |
|
(240 | ) | (2,751 | ) | (376 | ) | (3,843 | ) | |||||||||||||||||||||||
Facility closure costs | - |
|
- | (5 | ) | - | (7 | ) | ||||||||||||||||||||||||||
Assets impairment and other | (67 | ) | (367 | ) | (4,118 | ) | (434 | ) | (4,118 | ) | ||||||||||||||||||||||||
Other: | ||||||||||||||||||||||||||||||||||
Compensation expense (benefit) - deferred compensation plan | 114 |
|
(240 | ) | (323 | ) | (126 | ) | (271 | ) | ||||||||||||||||||||||||
Stock-based compensation expense | (2,464 | ) |
|
(2,521 | ) | (383 | ) | (4,985 | ) | (2,698 | ) | |||||||||||||||||||||||
Non-GAAP R&D expenses | $ | 28,189 |
|
$ | 28,682 | $ | 31,357 | $ | 56,871 | $ | 65,939 | |||||||||||||||||||||||
GAAP SG&A expenses: | $ | 26,795 |
|
$ | 25,459 | $ | 27,301 | $ | 52,254 | $ | 54,139 | |||||||||||||||||||||||
Acquisition related: | ||||||||||||||||||||||||||||||||||
Amortization of acquisition related intangibles | (412 | ) |
|
(863 | ) | (887 | ) | (1,275 | ) | (1,773 | ) | |||||||||||||||||||||||
Acquisition related legal and consulting fees | - |
|
- | (240 | ) | - | (708 | ) | ||||||||||||||||||||||||||
Restructuring related: | ||||||||||||||||||||||||||||||||||
Severance and retention costs | (87 | ) |
|
(263 | ) | (1,662 | ) | (350 | ) | (1,743 | ) | |||||||||||||||||||||||
Facility closure costs | (20 | ) |
|
(47 | ) | (4 | ) | (67 | ) | (8 | ) | |||||||||||||||||||||||
Other: | ||||||||||||||||||||||||||||||||||
Compensation expense (benefit) - deferred compensation plan | 58 |
|
(107 | ) | (108 | ) | (49 | ) | (91 | ) | ||||||||||||||||||||||||
Stock-based compensation expense | (3,029 | ) |
|
(2,122 | ) | (1,545 | ) | (5,151 | ) | (3,717 | ) | |||||||||||||||||||||||
Non-GAAP SG&A expenses | $ | 23,305 |
|
$ | 22,057 | $ | 22,855 | $ | 45,362 | $ | 46,099 | |||||||||||||||||||||||
GAAP interest income and other, net | $ | 405 |
|
$ | 862 | $ | 756 | $ | 1,267 | $ | 813 | |||||||||||||||||||||||
(Gain) loss on deferred compensation plan securities | 245 |
|
(480 | ) | (619 | ) | (235 | ) | (518 | ) | ||||||||||||||||||||||||
Non-GAAP interest income and other, net | $ | 650 |
|
$ | 382 | $ | 137 | $ | 1,032 | $ | 295 | |||||||||||||||||||||||
GAAP provision for income taxes - continuing operations | $ | 498 |
|
$ | 251 | $ | 217 | $ | 749 | $ | 118 | |||||||||||||||||||||||
Tax effects of Non-GAAP adjustments | 826 |
|
859 | 994 | 1,685 | 1,656 | ||||||||||||||||||||||||||||
Non-GAAP provision for income taxes - continuing operations | $ | 1,324 |
|
$ | 1,110 | $ | 1,211 | $ | 2,434 | $ | 1,774 | |||||||||||||||||||||||
(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. 28, | March 30, | ||||||||||||||
(In thousands) | 2014 | 2014 | |||||||||||||
ASSETS | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 105,020 | $ | 91,211 | |||||||||||
Short-term investments | 384,493 | 362,604 | |||||||||||||
Accounts receivable, net | 77,437 | 68,904 | |||||||||||||
Inventories | 37,639 | 49,622 | |||||||||||||
Prepaid and other current assets | 10,688 | 13,034 | |||||||||||||
Total current assets | 615,277 | 585,375 | |||||||||||||
Property, plant and equipment, net | 65,765 | 69,827 | |||||||||||||
Goodwill | 135,644 | 135,644 | |||||||||||||
Acquisition-related intangibles | 7,882 | 18,741 | |||||||||||||
Other assets | 23,626 | 21,373 | |||||||||||||
TOTAL ASSETS | $ | 848,194 | $ | 830,960 | |||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable | $ | 27,002 | $ | 25,442 | |||||||||||
Accrued compensation and related expenses | 28,456 | 24,343 | |||||||||||||
Deferred income on shipments to distributors | 15,497 | 14,006 | |||||||||||||
Deferred taxes liabilities | 1,440 | 1,346 | |||||||||||||
Other accrued liabilities | 14,605 | 11,525 | |||||||||||||
Total current liabilities | 87,000 | 76,662 | |||||||||||||
Deferred tax liabilities | 1,494 | 1,494 | |||||||||||||
Long term income taxes payable | 272 | 266 | |||||||||||||
Other long term obligations | 18,444 | 18,683 | |||||||||||||
Total liabilities | 107,210 | 97,105 | |||||||||||||
Stockholders' equity | 740,984 | 733,855 | |||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 848,194 | $ | 830,960 |
Financial Contact:
IDT Investor Relations
Suzanne Schmidt, 415-217-4962
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or
Press Contact:
IDT Worldwide Marketing
Graham Robertson, 408-284-2644
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