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RDA Microelectronics Announces Second Quarter 2013 Financial Results and Establishes Quarterly Dividend Policy

Second Quarter Revenue Increased 13.5% Sequentially and 16.9% Year-Over-Year
Gross Margin Expanded to 32.3%
Declares $0.10 Per ADS Cash Dividend for Third Quarter 2013

SHANGHAI, China, Aug. 6, 2013 (GLOBE NEWSWIRE) -- RDA Microelectronics (Nasdaq:RDA) ("RDA Microelectronics" or the "Company"), a fabless semiconductor company that designs, develops and markets wireless systems-on-chip and radio-frequency (RF) semiconductors for cellular, connectivity and broadcast applications, today announced its financial results for the second quarter ended June 30, 2013 and a recurring quarterly cash dividend policy.

Second Quarter Financial Highlights (in US dollars):

  • Revenue was $110.3 million, within the Company's guidance of $109 million to $111 million, and representing an increase of 13.5% from the $97.1 million in the first quarter and 16.9% from the $94.4 million in the second quarter of 2012.
  • Gross margin was 32.3%, compared to 32.1% in the previous quarter and 31.0% in the second quarter of 2012.
  • GAAP net income was $13.7 million, or $0.29 per diluted ADS, compared to $10.7 million, or $0.22 per diluted ADS in the previous quarter and $12.2 million, or $0.25 per diluted ADS, in the second quarter of 2012.
  • Non-GAAP net income was $16.9 million, or $0.35 per diluted ADS, compared to $13.7 million, or $0.28 per diluted ADS, in the previous quarter and $15.2 million, or $0.32 per diluted ADS, in the second quarter of 2012.

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

Second Quarter and Recent Business Highlights:

  • Secured SP3T switch design wins for 2G and 3G Samsung smartphones, demonstrating RDA's commitment to grow its global smartphone market share in emerging markets as well as developed regions, such as Europe.
  • Expanded sampling of the RDA8810 EDGE baseband smartphone solution and introduced sampling of the RDA8811 EDGE baseband for tablets.
  • Introduced 802.11n WiFi combo chip integrating WiFi 802.11n, Bluetooth and FM on a single die for smartphone and tablet applications in China and the emerging markets.

In regards to the Company's second quarter financial results, Vincent Tai, chairman and CEO of RDA Microelectronics commented, "Second quarter revenue increased 17% over the prior year quarter as a result of increased sales of our baseband products as well as higher volumes of our WiFi combo chip. We are pleased with our continued progress to penetrate the ultra-low cost feature phone market with our highly integrated 2G baseband solution. The 8851, which represents the large majority of our shipments, continues to be well-received by customers as we increase our silicon content and addressable market.

"To further expand our future growth opportunities, we have sampled our 8810 EDGE baseband solution for low-cost smartphones. In addition to the rapid growth of smartphones in China, this product is well suited for emerging markets where EDGE is the predominate network for low-cost smartphones. We remain on track to reach volume shipments of our smartphone baseband in the fourth quarter of this year.

"In addition to the smartphone market, we began sampling our 8811 EDGE product specifically designed to address significant opportunities in the tablet market. Similar to its sister product, RDA8811 is a highly integrated solution that incorporates an ARM® Cortex®-A5 application processor with the EDGE modem on a single chip, which provides significant competitive advantages. RDA is once again offering the highest level of product integration available in the market. We also recently launched our second generation WiFi combo chip, which integrates WiFi 802.11n, Bluetooth and FM on a single die for both smartphone and tablet applications.

"These recent product introductions serve as good examples of RDA's ability to leverage our advanced R&D capabilities and broad range of IP to efficiently develop products and aggressively penetrate large and growing markets. We also remain on track to begin sampling our WCDMA baseband by year-end and continue to make further progress on our TD-SCDMA and LTE solutions."

Commenting on the dividend declaration, Mr. Tai concluded, "We are also pleased to announce a recurring quarterly dividend for RDA shareholders. This decision reflects our confidence in the Company's business model and sustainable free cash flow to not only support our growth initiatives, but also return capital to our investors on a regular basis."

Second Quarter Operating Summary:

  • Revenue was $110.3 million, compared to $97.1 million in the previous quarter and $94.4 million in the second quarter of 2012. The sequential increase in revenue mainly resulted from more working days in the second quarter.
  • Gross margin was 32.3%, compared to 32.1% in the previous quarter and 31.0% in the second quarter of 2012. The sequential increase in gross margin was due to ongoing product cost reduction initiatives. The increase in gross margin over the prior year period was driven by increasing shipments of the higher margin RDA8851 baseband solution.
  • R&D expenses were $17.7 million, compared to $15.9 million in the previous quarter and $12.5 million in the second quarter of 2012. The increase in R&D was mainly due to higher tape-out expenses for new product development as well as higher employee compensation costs.
  • SG&A expenses were $4.5 million, compared with $4.3 million in the previous quarter and $4.0 million in the prior year period.
  • Non-GAAP net income was $16.9 million, compared to $13.7 million in the previous quarter and $15.2 million in the second quarter of 2012.

Balance Sheet and Cash Flow Summary as of June 30, 2013:

  • Cash, cash equivalents and short-term investments increased to $122.9 million, compared to $114.2 million as of March 31, 2013. In the second quarter of 2013, the Company generated $16.8 million in cash from operations, compared to $1.9 million used in the prior quarter.
  • Repurchased 281,488 shares of ADS's for $2.9 million under the Company's stock repurchase authorization during the quarter.
  • Accounts receivable was $41.8 million, compared to $39.8 million as of March 31, 2013, reflecting higher revenue during the period.
  • Inventory decreased $3.6 million to $56.1 million.
  • Accounts payable was $47.6 million, compared to $59.0 million as of March 31, 2013.

Dividend Policy and First Quarterly Pay-Out

The Board of Directors of the Company approved a new dividend policy, pursuant to which, starting from the third quarter of 2013, the Company will issue a recurring cash dividend every quarter in an amount to be determined by the Board of Directors based on the Company's financial performance and cash position in the preceding quarters.

Under this policy, the Board declared the Company's first quarterly cash dividend of $0.10 per ADS, each representing six ordinary shares of the Company, for the third quarter of 2013. The cash dividend will be payable on September 20, 2013 to shareholders of record at the close of business on August 30, 2013. Dividends to be paid to the Company's ADS holders through the depositary bank will be subject to the terms of the deposit agreement, including the fees and expenses payable thereunder.

Third Quarter 2013 Business Outlook:

For the third quarter of 2013, the Company expects revenue to be in the range of $105 million to $115 million. The Company expects gross margins to be approximately 32.6 %.

Conference Call:

RDA Microelectronics will host a conference call and live webcast for analysts and investors at 8:00 a.m. Eastern Time on Tuesday, August 6, 2013 (8:00 p.m. in Shanghai, China).

  • For parties in the United States and Canada, please call 1-877-280-7280, conference code 12417207
  • For parties in Hong Kong, please call 800933597, conference code 12417207
  • Other International parties please call 1-678-825-8232, conference code 12417207

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 12417207, 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 system-on-chip and radio-frequency semiconductors for cellular, connectivity and broadcast applications. The Company's product portfolio currently includes baseband, radio-frequency 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
June 30, 2012 March 31, 2013 June 30, 2013
(unaudited) (unaudited) (unaudited)
(amounts in thousands of USD, except number of shares and
per share data)
ASSETS
Current assets
Cash and cash equivalents 55,550 71,727 69,255
Short-term investments-time deposit 103,459 42,476 53,691
Accounts receivable 21,516 39,778 41,808
Inventories 44,561 59,735 56,106
Prepaid expenses and other current assets 6,524 11,662 8,398
Deferred tax assets 5 -- --
Total current assets 231,615 225,378 229,258
Non-current assets
Property, plant and equipment, Net 8,305 10,012 10,291
Intangible Assets 52,595 52,111 49,801
Goodwill 8,900 8,900 8,900
Other long-term assets 2,079 3,695 4,903
Investment 48 -- --
Total assets 303,542 300,096 303,153
LIABILITIES
Current liabilities
Accounts payable 54,015 58,965 47,575
Accrued expenses and other current liabilities 19,266 24,776 25,054
Deferred revenue 6,623 9,098 9,975
Total current liabilities 79,904 92,839 82,604
Other long-term liability -- -- 521
Deferred tax Liability 95 92 83
Total liabilities 79,999 92,931 83,208
Commitments and contingencies
SHAREHOLDERS' EQUITY
Ordinary shares 2,820 2,885 2,891
Additional paid-in capital 144,821 146,734 147,969
Recourse loans (1,301) (2,106) (2,241)
Accumulated other comprehensive income 1,083 1,260 1,567
Treasury stock (12,969) (12,687) (15,023)
Retained earnings 89,089 71,079 84,782
Total shareholders' equity 223,543 207,165 219,945
Total liabilities and shareholders' equity 303,542 300,096 303,153
RDA MICROELECTRONICS, INC.
Consolidated Statement of Operations Information
Quarter Ended
June 30, 2012 March 31, 2013 June 30, 2013
(unaudited) (unaudited) (unaudited)
(amounts in thousands of USD, except number of shares and per share data)
Revenue 94,370 97,146 110,294
Cost of revenue (65,088) (65,922) (74,618)
Gross profit 29,282 31,224 35,676
Operating expenses:
Research and development (12,464) (15,922) (17,669)
Selling, general and administrative (3,957) (4,306) (4,467)
Total operating expenses (16,421) (20,228) (22,136)
Operating income 12,861 10,996 13,540
Other income:
Interest income 927 766 810
Other income (expense), net (370) 20 768
Income before income taxes 13,418 11,782 15,118
Income tax expense (1,204) (1,074) (1,414)
Net income 12,214 10,708 13,704
Earnings per ADS
- Basic 0.27 0.23 0.30
- Diluted 0.25 0.22 0.29
Weighted average ADS equivalent: [1]
- Basic 45,509,278 46,405,847 46,399,565
- Diluted 48,066,210 48,119,292 48,015,470
Share-based compensation was allocated in operating expenses as follows:
Research and development 333 357 468
Selling, general and administrative 358 373 431
[1] Assumes all outstanding ordinary shares are represented by ADSs. Each ADS represents six ordinary shares.
RDA MICROELECTRONICS, INC.
Consolidated Statement of Operations Information
Six Months Ended
June 30, 2012 June 30, 2013
(unaudited) (unaudited)
(amounts in thousands of USD, except number of shares and per share data)
Revenue 166,365 207,440
Cost of revenue (111,217) (140,540)
Gross profit 55,148 66,900
Operating expenses:
Research and development (20,728) (33,591)
Selling, general and administrative (7,149) (8,773)
Total operating expenses (27,877) (42,364)
Operating income 27,271 24,536
Other income (expense):
Interest income 1,697 1,576
Other income (expense), net (370) 788
Income before income taxes 28,598 26,900
Income tax expense (2,534) (2,488)
Net income 26,064 24,412
Earnings per ADS
- Basic 0.59 0.53
- Diluted 0.56 0.51
Weighted average ADS equivalent:
- Basic 44,335,098 46,402,706
- Diluted 46,875,947 48,067,381
Share-based compensation was allocated in operating expenses as follows:
Research and development 704 825
Selling, general and administrative 730 804
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 June 30, 2013
(unaudited)
% of Share-based Amortization of Non-GAAP % of Non-GAAP % of
GAAP Result Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development 17,669 16% 468 2,265 2% 14,936 13%
Selling, general and administrative 4,467 4% 431 -- 0% 4,036 4%
Total operating expenses 22,136 20% 899 2,265 3% 18,972 17%
Operating income 13,540 12% 899 2,265 3% 16,704 15%
Net income 13,704 12% 899 2,265 3% 16,868 15%
Diluted earnings per ADS 0.29 0.01 0.05 0.35
Weighted average ADS-Diluted 48,015,470 48,015,470 48,015,470 48,015,470
Quarter Ended March 31, 2013
(unaudited)
% of Share-based Amortization of Non-GAAP % of Non-GAAP % of
GAAP Result Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development 15,922 16% 357 2,265 3% 13,300 13%
Selling, general and administrative 4,306 4% 373 -- 0% 3,933 4%
Total operating expenses 20,228 20% 730 2,265 3% 17,233 17%
Operating income 10,996 11% 730 2,265 3% 13,991 14%
Net income 10,708 11% 730 2,265 3% 13,703 14%
Diluted earnings per ADS 0.22 0.01 0.05 0.28
Weighted average ADS-Diluted 48,119,292 48,119,292 48,119,292 48,119,292
Quarter Ended June 30, 2012
(unaudited)
% of Share-based Amortization of Non-GAAP % of Non-GAAP % of
GAAP Result Net Revenue Compensation Intangible Assets Net Revenue Results 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 outstanding-Diluted 48,066,210 48,066,210 48,066,210 48,066,210
Six Months Ended June 30, 2013
(unaudited)
% of Share-based Amortization of Non-GAAP % of Non-GAAP % of
GAAP Result Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development 33,591 16% 825 4,530 3% 28,236 14%
Selling, general and administrative 8,773 4% 804 -- 0% 7,969 4%
Total operating expenses 42,364 20% 1,629 4,530 3% 36,205 17%
Operating income 24,536 12% 1,629 4,530 3% 30,695 15%
Net income 24,412 12% 1,629 4,530 3% 30,571 15%
Diluted earnings per ADS 0.51 0.02 0.10 0.63
Weighted average ADS outstanding-Diluted 48,067,381 48,067,381 48,067,381 48,067,381
Six Months Ended June 30, 2012
(unaudited)
% of Share-based Amortization of Non-GAAP % of Non-GAAP % of
GAAP Result Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development 20,728 12% 704 2,745 2% 17,279 10%
Selling, general and administrative 7,149 4% 730 -- 0% 6,419 4%
Total operating expenses 27,877 16% 1,434 2,745 2% 23,698 14%
Operating income 27,271 16% 1,434 2,745 2% 31,450 18%
Net income 26,064 16% 1,434 2,745 2% 30,243 18%
Diluted earnings per ADS 0.56 0.03 0.06 0.65
Weighted average ADS outstanding-Diluted 46,875,947 46,875,947 46,875,947 46,875,947

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.