Investor Relations

Printer Friendly Version View printer-friendly version
<< Back
Intersil Corporation Reports Fourth Quarter and Full Year Results

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 10th 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

 

Intersil Corporation Logo

Logo - http://photos.prnewswire.com/prnh/20140926/148698

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/intersil-corporation-reports-fourth-quarter-and-full-year-results-300210806.html

SOURCE Intersil Corporation

Shannon Pleasant, Intersil Corporation, (512) 382-8444, spleasant@intersil.com