×

RDA Microelectronics Announces Third Quarter 2012 Financial Results

SHANGHAI, China, Nov. 6, 2012 (GLOBE NEWSWIRE) -- RDA Microelectronics (Nasdaq:RDA) ("RDA Microelectronics" or the "Company"), a fabless semiconductor company that designs, develops and markets wireless SoC and Radio Frequency (RF) semiconductors for cellular, connectivity and broadcast applications, today announced its financial results for the third quarter ended September 30, 2012.

Third Quarter Financial Highlights (in US dollars):

  • Revenue was $109.3 million, increasing 15.8% from the $94.4 million in the previous quarter and 30.2% from the $83.9 million in the third quarter of 2011.
  • Gross margin was 31.1%, compared to 31.0% in the previous quarter and 34.9% in the third quarter of 2011.
  • GAAP net income was $13.5 million, or $0.28 per diluted ADS, compared to $12.2 million, or $0.25 per diluted ADS, in the second quarter of 2012 and $15.7 million, or $0.34 per diluted ADS, in the third quarter of 2011.
  • Non-GAAP net income was $16.7 million, or $0.35 per diluted ADS, compared to $15.2 million, or $0.32 per diluted ADS, in the previous quarter and $16.8 million, or $0.36 per diluted ADS, in the third quarter of 2011.
  • The Company declared a special one-time cash dividend of US$0.20 per ordinary share, or US$1.20 per American depositary share ("ADS") for a total amount of US$55.9 million.

For a reconciliation of non-GAAP financial measures, please refer to the tables included in this press release.

Third Quarter and Recent Business Highlights:

  • Achieved volume shipments of DVB-S tuners to LG Innotek for TVs sold in Europe.
  • Achieved volume shipments of SP3T switch for use in Samsung's 2G handsets, reflecting the Company's progress on expanding global Tier-one customer relationships.
  • Shipped 1 million units of the recently launched RDA8851, the industry's most integrated single-chip baseband SoC.
  • Surpassed 1 million units shipped per month in September for the Company's WiFi, Bluetooth and FM three-in-one combo chip.
  • Began volume shipments of the RDA6815 low-band WCDMA Power Amplifier.
  • Began volume shipments of the RDA5850 Bluetooth embedded controller for non-handset applications.

Commenting on the results, Vincent Tai, chairman and CEO of RDA Microelectronics, said, "Revenue grew 16% sequentially as a result of increased customer demand for our baseband products and WiFi combo chips. Baseband shipments continued to ramp quickly throughout the quarter. Shipment volumes exceeded 10 million units per month beginning in August due to strong adoption in the high volume GSM feature phone market. Our newly launched RDA8851, the most integrated and cost-effective 2G baseband available, reached 1 million units shipped in the third quarter. Due to rapidly growing demand for this product, we expect unit volumes to continue ramping as we capture additional market share. The RDA8851 is ideally suited for ultra-low cost handsets where growth rates are the highest in the 2G market, in particular for emerging markets outside of China. We are very pleased with our initial success at expanding our baseband customer base and expect to begin shipping to additional local Tier-one brands in China and the emerging markets in the fourth quarter.

"We are also increasing our participation in the fast growing smartphone market to expand RDA's addressable market opportunities. During the quarter, our WiFi combo chips surpassed 1 million units shipped per month, and our current design win activity supports further volume growth. We are building on this base with new product development efforts to further expand our penetration of the smartphone market, including our highly anticipated 2.75G EDGE smartphone baseband product, which will be launched in early 2013. We are also securing design wins for our 3G PA solutions, while devoting resources for further development of multi-mode multi-band PAs, standalone and integrated GPS solutions and more advanced baseband chips for 3G handsets.

"Our strong financial results reflect our continued commitment to gaining market share in the 2G market and expanding our penetration of the low-cost smartphone market while investing aggressively in the development of highly integrated products for 3G and 4G."

Third Quarter Operating Summary:

  • Revenue was $109.3 million, compared to $94.4 million in the previous quarter and $83.9 million in the third quarter of 2011. The growth in revenue was mainly driven by market share gains for baseband and ramping shipments of the WiFi combo chip due to growth in the Chinese smartphone market.
  • Gross margin was 31.1%, compared with 31.0% in the previous quarter and 34.9% in the third quarter of 2011. The sequential increase in gross margin reflected higher shipments of the WiFi combo chip as well as increasing shipments of the higher margin 8851 baseband product, offset by shipments of lower margin legacy baseband solutions. The decrease in gross margin over the prior year period was primarily due to the addition of baseband revenue with lower than consolidated average gross margin.
  • R&D expenses were $16.0 million, compared to $12.5 million in the previous quarter and $9.6 million in the third quarter of 2011. The sequential increase in R&D expenses was mainly due to higher tape-out expenses for development of new products targeting the 3G/4G and smartphone market.
  • SG&A expenses were $4.0 million, compared to $4.0 million in the previous quarter and $3.9 million in the prior year period.
  • Non-GAAP net income was $16.7 million, compared to $15.2 million in the previous quarter and $16.8 million in the third quarter of 2011.

Balance Sheet and Cash Flow Summary as of September 30, 2012:

  • Cash, cash equivalents and short-term investments were $167.0 million, compared to $159.0 million as of June 30, 2012. In the third quarter of 2012, the Company generated $10.8 million in cash from operations, compared to $20.0 million in the prior quarter. Not reflected in the third quarter cash balance is a one-time special cash dividend totaling $55.9 million that was announced on September 13, 2012 and paid on October 18, 2012.
  • Accounts receivable increased to $28.2 million, compared to $21.5 million as of June 30, 2012, primarily due to the growth in business volumes. AR days decreased to 20 days from 22 days in the previous quarter.
  • Inventory increased $13.9 million to $58.5 million from $44.6 million as of June 30, 2012. The increase of inventory was mainly due to an inventory build in advance of the National Day Chinese holiday and growth in baseband.
  • Accounts payable was $55.8 million, compared to $54.0 million as of June 30, 2012.

Fourth Quarter 2012 Business Outlook:

For the fourth quarter of 2012, the Company expects revenue to be in the range of $100 million to $110 million, an increase of 21.4% to 33.6% year-over-year. The Company expects gross margins to be in the range of 31.1% to 32.1%.

Conference Call:

RDA Microelectronics will host a conference call and live webcast for analysts and investors at 8:00 a.m. Eastern Time on November 6, 2012 (9:00 p.m. in China).

  • For parties in the United States and Canada, please call 1-877-280-7280, conference code 37806505
  • For parties in Hong Kong, please call 800933597, conference code 37806505
  • Other International parties please call 1-678-825-8232, conference code 37806505

RDA Microelectronics will provide a live webcast of the conference call that will be accessible from the "Investors" section of the Company's website at www.rdamicro.com. The webcast will be archived on the website for a period of 30 days. An audio replay of the conference call will also be available two hours after the call and will be available for ten days. To hear the replay, parties in the United States and Canada should call 1-855-859-2056 and enter pass code 37806505, International parties should call 1-404-537-3406 and enter the same pass code.

About RDA Microelectronics

RDA Microelectronics is a fabless semiconductor company that designs, develops and markets wireless SoC and radio-frequency (RF) semiconductors for cellular, connectivity and broadcast applications. The Company's product portfolio currently includes baseband, RF front-end modules, power amplifiers, transceivers, Bluetooth system-on-chip, Wi-Fi, Bluetooth and FM combo chips, FM radio receivers, set-top box tuners, analog mobile television receivers, CMMB mobile television receivers, walkie-talkie transceivers and LNB satellite down converters. For additional information, please see the Company's website at http://www.rdamicro.com.

Forward-Looking Statements

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Any statements in this press release that are not historical facts are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include the Company's anticipated growth strategies; its future results of operations and financial condition; economic conditions in China; the regulatory environment in China; the Company's ability to attract customers and leverage its brand; trends and competition in the semiconductor industry; migration to new technology; the entry into baseband, new TV and display market and other factors and risks detailed in the Company's filings with the Securities and Exchange Commission. This press release also contains statements or projections that are based upon information available to the public, as well as other information from sources which the Company believes to be reliable but whose accuracy or completeness the Company cannot guarantee. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

Non-GAAP Financial Measures

To supplement the Company's unaudited consolidated financial results presented in accordance with U.S. GAAP, the Company uses adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense, which are defined as non-GAAP financial measures by the SEC. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see below and the tables captioned "Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this press release.

The Company believes that adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense, viewed in conjunction with the GAAP financial measures, provide meaningful supplemental information regarding the Company's performance and that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's historical performance and when planning and forecasting the Company's performance in future periods. The Company believes that excluding share-based compensation expenses and amortization of acquired and licensed intangibles helps both management and investors to get a better understanding of its ongoing business. Adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense do not include share-based compensation expenses and amortization of acquired and licensed intangibles that impact the Company's operating expenses and net income for the period. In addition, the Company's adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense may not be comparable to measures with the same or similar titles utilized by other companies, since other companies may not calculate such measures in the same manner as the Company does. The Company compensates for this and other limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures. Reconciliations of GAAP and non-GAAP results are included at the end of this press release.

RDA MICROELECTRONICS, INC.
Consolidated Balance Sheet Information
September 30, 2011 June 30, 2012 September 30, 2012
(unaudited) (unaudited) (unaudited)
(amounts in thousands of USD, except number of shares and
per share data)
ASSETS
Current assets
Cash and cash equivalents 120,038 55,550 58,848
Short-term investments-time deposit 35,000 103,459 108,098
Accounts receivable 37,873 21,516 28,229
Inventories 37,278 44,561 58,486
Prepaid expenses and other current assets 3,321 6,524 10,011
Deferred tax assets 1 5 3
Total current assets 233,511 231,615 263,675
Non-current assets
Property, plant and equipment, Net 3,548 8,305 8,386
Intangible Assets -- 52,595 50,805
Goodwill -- 8,900 8,900
Other long-term assets 303 2,079 3,206
Investment -- 48 48
Deferred tax assets 11 -- --
Total assets 237,373 303,542 335,020
LIABILITIES
Current liabilities
Accounts payable 31,906 54,015 55,808
Accrued expenses and other current liabilities 23,929 19,266 24,739
Deferred revenue 14,806 6,623 16,536
Dividend payable -- -- 55,946
Total current liabilities 70,641 79,904 153,029
Deferred tax Liability -- 95 89
Total liabilities 70,641 79,999 153,118
Commitments and contingencies
SHAREHOLDERS' EQUITY
Ordinary shares 2,635 2,820 2,885
Additional paid-in capital 116,582 144,821 146,674
Recourse loans -- (1,301) (1,567)
Accumulated other comprehensive income 1,051 1,083 1,042
Treasury stock -- (12,969) (14,139)
Retained earnings 46,464 89,089 47,007
Total shareholders' equity 166,732 223,543 181,902
Total liabilities and shareholders' equity 237,373 303,542 335,020
RDA MICROELECTRONICS, INC.
Consolidated Statement of Operations Information
Quarter Ended
September 30, 2011 June 30, 2012 September 30, 2012
(unaudited) (unaudited) (unaudited)
(amounts in thousands of USD, except number of shares and per share data)
Revenue 83,932 94,370 109,308
Cost of revenue (54,632) (65,088) (75,307)
Gross profit 29,300 29,282 34,001
34.91% 31.03% 31.11%
Operating expenses:
Research and development (9,556) (12,464) (16,029)
Selling, general and administrative (3,929) (3,957) (3,977)
Total operating expenses (13,485) (16,421) (20,006)
Operating income 15,815 12,861 13,995
Other income:
Interest income 626 927 1,069
Other income (expense), net 834 (370) (259)
Income before income taxes 17,275 13,418 14,805
Income tax expense (1,561) (1,204) (1,328)
Net income 15,714 12,214 13,477
Earnings per ADS
- Basic 0.36 0.27 0.30
- Diluted 0.34 0.25 0.28
Weighted average ADS equivalent: [1]
- Basic 44,101,282 45,509,278 45,590,013
- Diluted 46,684,385 48,066,210 47,904,835
Share-based compensation was allocated in operating expenses as follows:
Research and development 499 333 446
Selling, general and administrative 576 358 518
[1] Assumes all outstanding ordinary shares are represented by ADSs. Each ADS represents six ordinary shares.
RDA MICROELECTRONICS, INC.
Consolidated Statement of Operations Information
Nine Months Ended
September 30, 2011 September 30, 2012
(unaudited) (unaudited)
(amounts in thousands of USD, except number of shares and per share data)
Revenue 206,507 275,673
Cost of revenue (135,858) (186,524)
Gross profit 70,649 89,149
Operating expenses:
Research and development (24,042) (36,757)
Selling, general and administrative (10,176) (11,126)
Total operating expenses (34,218) (47,883)
Operating income 36,431 41,266
Other income (expense):
Interest income 1,205 2,766
Other income (expense), net 975 (629)
Income before income taxes 38,611 43,403
Income tax expense (3,541) (3,862)
Net income 35,070 39,541
Earnings per ADS
- Basic 0.80 0.88
- Diluted 0.75 0.84
Weighted average ADS equivalent:
- Basic 43,910,649 44,755,348
- Diluted 46,674,131 47,220,854
Share-based compensation was allocated in operating expenses as follows:
Research and development 1,645 1,150
Selling, general and administrative 1,396 1,248
RDA MICROELECTRONICS, INC.
Reconciliation of GAAP and Non-GAAP Results
(amounts in thousands of USD, except number of shares and per share data)
Quarter Ended September 30, 2012
(unaudited)

GAAP Result
% of
Net Revenue
Share-based
Compensation
Amortization of
Intangible Assets
Non-GAAP % of
Net Revenue
Non-GAAP
Results
% of
Net Revenue
Research and development 16,029 15% 446 2,265 2% 13,318 13%
Selling, general and administrative 3,977 3% 518 -- 1% 3,459 2%
Total operating expenses 20,006 18% 964 2,265 3% 16,777 15%
Operating income 13,995 13% 964 2,265 3% 17,223 16%
Net income 13,477 12% 964 2,265 3% 16,705 15%
Diluted earnings per ADS 0.28 0.02 0.05 0.35
Weighted average ADS-Diluted 47,904,835 47,904,835 47,904,835 47,904,835
Quarter Ended June 30, 2012
(unaudited)

GAAP Result
% of
Net Revenue
Share-based
Compensation
Amortization of
Intangible Assets
Non-GAAP % of
Net Revenue
Non-GAAP
Results
% of
Net Revenue
Research and development 12,464 13% 333 2,265 3% 9,866 10%
Selling, general and administrative 3,957 4% 358 -- 0% 3,599 4%
Total operating expenses 16,421 17% 691 2,265 3% 13,465 14%
Operating income 12,861 14% 691 2,265 3% 15,817 17%
Net income 12,214 13% 691 2,265 3% 15,170 16%
Diluted earnings per ADS 0.25 0.01 0.06 0.32
Weighted average ADS-Diluted 48,066,210 48,066,210 48,066,210 48,066,210
Quarter Ended September 30, 2011
(unaudited)

GAAP Result
% of
Net Revenue
Share-based
Compensation
Amortization of
Intangible Assets
Non-GAAP % of
Net Revenue
Non-GAAP
Results
% of
Net Revenue
Research and development 9,556 11% 499 -- 1% 9,057 10%
Selling, general and administrative 3,929 5% 576 -- 1% 3,353 4%
Total operating expenses 13,486 16% 1,075 -- 2% 12,410 14%
Operating income 15,815 19% 1,075 -- 2% 16,890 21%
Net income 15,714 19% 1,075 -- 2% 16,789 21%
Diluted earnings per ADS 0.34 0.02 -- 0.36
Weighted average ADS outstanding-Diluted 46,684,385 46,684,385 46,684,385 46,684,385
Nine Months Ended September 30, 2012
(unaudited)

GAAP Result
% of
Net Revenue
Share-based
Compensation
Amortization of
Intangible Assets
Non-GAAP % of
Net Revenue
Non-GAAP
Results
% of
Net Revenue
Research and development 36,757 13% 1,150 5,010 2% 30,597 11%
Selling, general and administrative 11,126 4% 1,248 -- 0% 9,878 4%
Total operating expenses 47,883 17% 2,398 5,010 2% 40,475 15%
Operating income 41,266 15% 2,398 5,010 2% 48,673 17%
Net income 39,541 14% 2,398 5,010 2% 46,948 16%
Diluted earnings per ADS 0.84 0.05 0.11 1.00
Weighted average ADS outstanding-Diluted 47,220,854 47,220,854 47,220,854 47,220,854
Nine Months Ended September 30, 2011
(unaudited)

GAAP Result
% of
Net Revenue
Share-based
Compensation
Amortization of
Intangible Assets
Non-GAAP % of
Net Revenue
Non-GAAP
Results
% of
Net Revenue
Research and development 24,042 12% 1,645 -- 1% 22,397 11%
Selling, general and administrative 10,176 5% 1,396 -- 1% 8,780 4%
Total operating expenses 34,218 17% 3,041 -- 2% 31,177 15%
Operating income 36,431 18% 3,041 -- 2% 39,472 20%
Net income 35,070 17% 3,041 -- 2% 38,111 19%
Diluted earnings per ADS 0.75 0.07 -- 0.82
Weighted average ADS outstanding-Diluted 46,674,131 46,674,131 46,674,131 46,674,131
CONTACT: Lily Dong, Chief Financial Officer RDA Microelectronics, Inc. +86-21-5027-1108 ir@rdamicro.com or Leanne Sievers, EVP Shelton Group Investor Relations 949-224-3874 lsievers@sheltongroup.comSource:RDA Microelectronics, Inc.