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Alpha and Omega Semiconductor Reports Financial Results for the Fiscal Third Quarter of 2017 Ended March 31, 2017

SUNNYVALE, Calif., May 03, 2017 (GLOBE NEWSWIRE) -- Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ:AOSL), today reported financial results for the fiscal third quarter of 2017 ended March 31, 2017.

The results for the fiscal third quarter of 2017 ended March 31, 2017 were as follows:

GAAP Financial Comparison
Quarterly
(in millions, except percentage and per share data)
(unaudited)
Three Months Ended
March 31,
2017
December 31,
2016
March 31,
2016
Revenue $93.3 $94.7 $83.0
Gross Margin 24.3% 23.3% 19.7%
Operating Income (Loss) $3.0 $2.8 $(0.2)
Net Income (Loss) attributable to AOS $3.6 $2.8 $(1.3)
Income (Loss) Per Share attributable to AOS - Diluted $0.14 $0.11 $(0.06)

On a non-GAAP basis excluding the effect of share-based compensation expenses in each of the periods presented, the results were as set forth below (see detailed reconciliation included at the end of this press release).

Non-GAAP Financial Comparison
Quarterly
(in millions, except percentage and per share data)
(unaudited)
Three Months Ended
March 31,
2017
December 31,
2016
March 31,
2016
Revenue $93.3 $94.7 $83.0
Gross Margin 24.6% 23.6% 19.9%
Operating Income $4.7 $4.4 $1.0
Net Income (Loss) attributable to AOS $5.3 $4.4 $(0.1)
Income (Loss) Per Share attributable to AOS - Diluted $0.21 $0.18 $

Commenting on the March quarterly results, Dr. Mike Chang, the chairman and CEO of the company, stated, “Our new product momentum continued to contribute to the revenue and gross margin growth. AOS reported $93.3 million in revenue, close to the high-end of our guidance range, representing an increase of 12.4% from the revenue in the same quarter a year ago. We also posted the eighth consecutive quarter of gradual gross margin expansion and delivered $0.21 non-GAAP earnings per share despite the fact that the March quarter is seasonally our lowest quarter. This, once again, demonstrates the strength of AOS recovery strategy that is now translating into a sustained improvement of our financial performance. We are also taking proactive and deliberate steps to gradually alleviate capacity constraints, and we expect to see higher production output starting in the September quarter. The entire team at AOS continues to keenly focus on developing differentiated technologies and introducing market driven new products, which we believe will further propel our business growth and profitability.”

Business Outlook for Fiscal Q4 Ending June 30, 2017

The following statements are based on management's current expectations. These statements are forward-looking, and actual results may differ materially. AOS undertakes no obligation to update these statements.

  • Revenue is expected to be between $95 million and $99 million.

  • GAAP gross margin is expected to be 24.5% plus or minus 1%.

  • GAAP operating expenses are expected to be in the range of $19.8 million plus or minus $1 million.

  • Tax expense is expected to be approximately $1.0 million to $1.2 million.

  • Loss attributable to noncontrolling interest is expected to be between $1.2 million and $1.3 million.

The above projections on GAAP gross margin and GAAP operating expenses include estimated share-based compensation expense of $1.6 million to $1.8 million.

Conference Call and Webcast

AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal third quarter of 2017 ended March 31, 2017 today, May 3, 2017 at 2:00 p.m. PT / 5:00 p.m. ET. To participate in the live call, analysts and investors should dial 877-312-8797 (or 253-237-1194 if outside the U.S.). To access the live webcast and the subsequent replay of the conference call, which will be available for seven days after the live call, go to the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com. In addition, a copy of the script of prepared remarks by CEO and CFO at the investor teleconference and webcast is available prior to the call at the Company’s investor relations website.

Forward-Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, statements relating to projected amount of revenue, gross margin, operating income (loss), income tax expenses, net income (loss), noncontrolling interest, and share-based compensation expenses, our ability and strategy to develop new products, expand our sales, and achieve sustained growth and profitability, and other information under the section entitled “Business Outlook for Fiscal Q4 Ending June 30, 2017”. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the decline of the PC industry and our ability to respond to such decline, our ability to introduce or develop new and enhanced products that achieve market acceptance, the actual product performance in volume production, the quality and reliability of our product, our ability to achieve design wins, the general business and economic conditions, the state of semiconductor industry and seasonality of our markets, our ability to maintain factory utilization at a desirable level, our ability to successfully operate our joint venture in China, and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2016 filed on August 26, 2016. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a basis consistent with U.S. GAAP, we disclose certain non-GAAP financial measures, including non-GAAP gross profit, gross margin, operating income (loss), net income (loss) and diluted earnings per share ("EPS"). These supplemental measures exclude share-based compensation expenses for all periods presented in this press release and impairment of long-lived assets for the nine months ended March 31, 2016. We believe that non-GAAP financial measures can provide useful information to both management and investors by excluding certain expenses that are not indicative of our core operating results. In addition, our management uses non-GAAP measures to compare our performance relative to forecasts and to benchmark our performance externally against competitors. Our use of non-GAAP financial measures has certain limitations in that the non-GAAP financial measures we use may not be directly comparable to those reported by other companies. For example, the term used in this press release, non-GAAP net income (loss), does not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. In addition, different items may be excluded in non-GAAP measures presented in different periods. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures in the tables attached to this press release. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures.

About Alpha and Omega Semiconductor

Alpha and Omega Semiconductor Limited, or AOS, is a designer, developer and global supplier of a broad range of power semiconductors, including a wide portfolio of Power MOSFET, IGBT and Power IC products. AOS has developed extensive intellectual property and technical knowledge that encompasses the latest advancements in the power semiconductor industry, which enables it to introduce innovative products to address the increasingly complex power requirements of advanced electronics. AOS differentiates itself by integrating its Discrete and IC semiconductor process technology, product design, and advanced packaging know-how to develop high performance power management solutions. AOS's portfolio of products targets high-volume applications, including portable computers, flat panel TVs, LED lighting, smart phones, battery packs, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment. For more information, please visit http://www.aosmd.com. For investor relations, please contact So-Yeon Jeong at investors@aosmd.com.

The following unaudited consolidated financial statements are prepared in accordance with U.S. GAAP.

Alpha and Omega Semiconductor Limited
Condensed Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
March 31,
2017
December 31,
2016
March 31,
2016
March 31,
2017
March 31,
2016
Revenue$93,281 $94,687 $82,987 $285,330 $244,251
Cost of goods sold70,584 72,593 66,668 218,595 197,899
Gross profit22,697 22,094 16,319 66,735 46,352
Gross margin24.3% 23.3% 19.7% 23.4% 19.0%
Operating expenses:
Research and development7,625 7,284 6,924 21,928 19,029
Selling, general and administrative12,067 11,974 9,566 35,224 27,935
Impairment of long-lived assets 432
Total operating expenses19,692 19,258 16,490 57,152 47,396
Operating income (loss)3,005 2,836 (171) 9,583 (1,044)
Interest income and other income (loss), net(74) (70) 132 (193) (335)
Interest expense(22) (24) (5) (72) (22)
Income (loss) before income taxes2,909 2,742 (44) 9,318 (1,401)
Income tax expense523 1,085 1,219 2,845 3,448
Net income (loss) including noncontrolling interest2,386 1,657 (1,263) 6,473 (4,849)
Net loss attributable to noncontrolling interest(1,170) (1,190) (3,237)
Net income (loss) attributable to Alpha and Omega Semiconductor Limited$3,556 $2,847 $(1,263) $9,710 $(4,849)
Net income (loss) per common share attributable to Alpha and Omega Semiconductor Limited
Basic$0.15 $0.12 $(0.06) $0.42 $(0.22)
Diluted$0.14 $0.11 $(0.06) $0.39 $(0.22)
Weighted average number of common shares attributable to Alpha and Omega Semiconductor Limited used to compute net income (loss) per share
Basic23,675 23,481 22,232 23,396 22,400
Diluted24,951 24,977 22,232 24,781 22,400


Alpha and Omega Semiconductor Limited
Condensed Consolidated Balance Sheets
(in thousands, except par value per share)
(unaudited)
March 31, 2017 June 30, 2016
ASSETS
Current assets:
Cash and cash equivalents$116,150 $87,774
Restricted cash181 188
Accounts receivable, net22,452 26,594
Inventories73,349 68,848
Other current assets4,948 4,526
Total current assets217,080 187,930
Property, plant and equipment, net117,335 116,084
Land use rights, net8,737
Deferred income tax assets - long term5,539 12,132
Other long term assets21,522 2,359
Total assets$370,213 $318,505
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$44,990 $42,718
Accrued liabilities23,673 22,590
Income taxes payable2,879 2,356
Deferred margin713 997
Capital leases820 819
Total current liabilities73,075 69,480
Income taxes payable - long term985 1,577
Deferred income tax liabilities2,938 2,973
Capital leases - long term1,071 1,695
Other long term liabilities567 741
Total liabilities78,636 76,466
Equity:
Preferred shares, par value $0.002 per share:
Authorized: 10,000 shares, issued and outstanding: none at March 31, 2017 and June 30, 2016
Common shares, par value $0.002 per share:
Authorized: 50,000 shares, issued and outstanding: 29,391 shares and 23,778 shares, respectively at March 31, 2017 and 28,405 shares and 22,754 shares, respectively at June 30, 201659 57
Treasury shares at cost, 5,613 shares at March 31, 2017 and 5,651 shares at June 30, 2016(49,876) (50,199)
Additional paid-in capital202,739 191,444
Accumulated other comprehensive income39 769
Retained earnings109,788 100,071
Total Alpha and Omega Semiconductor Limited shareholder's equity262,749 242,142
Noncontrolling interest28,828 (103)
Total equity291,577 242,039
Total liabilities and equity$370,213 $318,505


Alpha and Omega Semiconductor Limited
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)
Three Months Ended Nine Months Ended
March 31,
2017
December 31,
2016
March 31,
2016
March 31,
2017
March 31,
2016
GAAP gross profit$22,697 $22,094 $16,319 $66,735 $46,352
Share-based compensation222 205 187 622 475
Non-GAAP gross profit$22,919 $22,299 $16,506 $67,357 $46,827
Non-GAAP gross margin as a % of revenue24.6% 23.6% 19.9% 23.6% 19.2%
GAAP operating income (loss)$3,005 $2,836 $(171) $9,583 $(1,044)
Share-based compensation1,715 1,554 1,173 4,585 3,047
Impairment of long-lived assets 432
Non-GAAP operating income$4,720 $4,390 $1,002 $14,168 $2,435
Non-GAAP operating income as a % of revenue5.1% 4.6% 1.2% 5.0% 1.0%
GAAP net income (loss) attributable to AOS$3,556 $2,847 $(1,263) $9,710 $(4,849)
Share-based compensation1,715 1,554 1,173 4,585 3,047
Impairment of long-lived assets 432
Non-GAAP net income (loss) attributable to AOS$5,271 $4,401 $(90) $14,295 $(1,370)
Non-GAAP net income (loss) attributable to AOS as a % of revenue5.7% 4.6% (0.1)% 5.0% (0.6)%
GAAP net income (loss) attributable to AOS$3,556 $2,847 $(1,263) $9,710 $(4,849)
Share-based compensation1,715 1,554 1,173 4,585 3,047
Impairment of long-lived assets 432
Amortization and depreciation6,885 6,760 6,927 20,148 20,705
Interest expense (income), net(54) (23) (6) (121) (9)
Income tax expense523 1,085 1,219 2,845 3,448
EBITDAS$12,625 $12,223 $8,050 $37,167 $22,774
GAAP diluted net income(loss) per share attributable to AOS$0.14 $0.11 $(0.06) $0.39 $(0.22)
Share-based compensation0.07 0.07 0.06 0.19 0.14
Impairment of long-lived assets 0.02
Non-GAAP diluted net income (loss) per share attributable to AOS$0.21 $0.18 $ $0.58 $(0.06)
Shares used to compute basic per share23,675 23,481 22,232 23,396 22,400
Shares used to compute dilute per share24,951 24,977 22,232 24,781 22,400


CONTACT: Alpha and Omega Semiconductor Limited Investor Relations So-Yeon Jeong 408-789-3172 investors@aosmd.com

Source:Alpha and Omega Semiconductor, Inc.