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IXYS Corporation Announces Results for the September 2014 Quarter

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IXYS Corporation (NASDAQ:IXYS) , an international power semiconductor and IC company, today reported results for its second quarter of fiscal year 2015, which ended September 30, 2014.

Net revenues for the quarter ended September 30, 2014 were $86.4 million, up $534,000 from $85.9 million in net revenues for the September 2013 quarter.

For the six months ended September 30, 2014, IXYS reported net revenues of $174.5 million, an increase of $17.4 million, or 11.1%, as compared to net revenues of $157.1 million for the same period in the prior fiscal year.

“Over the last year, organic growth has been achieved through a diversified product platform, strong customer relationships, new sales and marketing initiatives and increased cross-selling. Offering products across 90% of the power spectrum, we maintain our front-runner advantage in power semiconductors and ICs, while advancing our microcontrollers and ICs for power management and energy sustainable products. Additionally, we implemented our global manufacturing strategy through consolidation and outsourcing, and by seeking synergies and achieving better manufacturing utilization, all of which contributed to improved profitability,” commented Dr. Nathan Zommer, Chairman, CEO and Founder of IXYS.

Net income for the quarter ended September 30, 2014 was $5.7 million, or $0.18 per diluted share, an increase of $2.4 million, or 69.9%, as compared to net income of $3.4 million, or $0.11 per diluted share, for the same period in the prior fiscal year. Sequentially, net income in the September 2014 quarter increased by $2.2 million from net income of $3.6 million in the June 30, 2014 quarter.

Net income for the six months ended September 30, 2014 was $9.3 million, or $0.29 per diluted share, an increase of $4.0 million, or 73.9%, as compared to net income of $5.4 million, or $0.17 per diluted share, for the same period in the prior fiscal year.

The September 2014 quarter non-GAAP net income, which excludes the impact of expenses for the amortization of acquired intangible assets and stock compensation, was $7.6 million, or $0.23 per diluted share. This is an increase of $328,000, as compared to the non-GAAP net income for the same period in the prior fiscal year.

Gross profit for the quarter ended September 30, 2014 was $26.2 million, or 30.3% of net revenues, as compared to gross profit of $27.9 million, or 32.5% of net revenues, for the same quarter in the prior fiscal year. Sequentially, the gross profit margin rose by 1.9 percentage points from the June 2014 quarter.

“Improvements have been achieved through sales of higher-margin products, as well as cost cutting, consolidation of manufacturing for better efficiency, and prudent realization of our pricing strategy. Margin expansion will continue to be a focus for us going forward,” noted Uzi Sasson, President and Chief Financial Officer of IXYS.

Gross profit for the six months ended September 30, 2014 was $51.2 million, or 29.3% of net revenues, as compared to a gross profit of $49.0 million, or 31.2% of net revenues, for the same period in the prior fiscal year.

Cash and cash equivalents totaled $125.6 million at September 30, 2014, an increase of $26.9 million as compared to March 31, 2014. This increase includes an additional $30 million drawdown on our existing bank credit line.

In the September 2014 quarter, the company declared a $0.035 per share dividend, highlighting the eighth consecutive quarter of dividends.

“Global market volatility persists, with modest growth potential in the U.S. offset by weakness in emerging markets and many European and Asian economies. As a result, our customer base is reluctant to provide long-term demand projections, instead placing orders on an as-needed basis. Many of our competitors face the same constraints. Without this visibility, we prefer to offer conservative guidance. We expect revenues in the December 2014 quarter to be somewhat lower than in the September 2014 quarter, as we enter the cyclically slower holiday season, punctuated by fewer selling days as well as customers seeking to rationalize their inventory and hold cash reserves prior to year end,” stated Mr. Sasson.

Non-GAAP Information

Included above and within the attached schedules are certain non-GAAP financial figures. During the second quarter of fiscal 2015, ended September 30, 2014, the company incurred non-cash expenses, including those associated with amortization of intangible assets and stock compensation. Adjusting the net income in the September 2014 quarter to exclude the impact of amortization of intangible assets and stock compensation expenses results in a financial presentation for the company without the effect of these non-cash charges. Management believes non-GAAP net income and non-GAAP net income per share are useful measures of operating performance. However, the non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net income and net income per share or other financial measures prepared in accordance with GAAP.

These non-GAAP measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Other companies in our industry may calculate non-GAAP net income and non-GAAP net income per share differently than we do, limiting their usefulness as comparative measures.

About IXYS Corporation

Since its founding in Silicon Valley, IXYS Corporation has been developing technology-driven products to improve energy conversion efficiency, generate clean energy, improve automation, and provide advanced products for the transportation, medical and telecommunications industries. IXYS, with its subsidiaries, is a worldwide pioneer in the development of power semiconductors, solid state relays, high voltage integrated circuits (HVIC), and microcontrollers that are necessary in conserving energy and in reducing the world’s dependence on fossil fuels.

Diminishing natural resources, demand for renewable energy and environmental directives for energy efficiency represent a significant challenge. IXYS’ power semiconductors and mixed-signal integrated circuits (IC) play a vital role in reducing energy costs and consumption by optimizing the energy efficiency of everyday products. With an end customer base of over 3,500 telecommunications, transportation, industrial, medical and consumer companies, IXYS is a worldwide recognized provider of advanced semiconductors.

Additional information may be obtained by visiting IXYS’ website at http://www.ixys.com, or by contacting the company directly.

Safe Harbor Statement

The foregoing press release contains forward-looking statements, including those related to the maintenance of our front-runner advantage, our focus on margin expansion, market volatility, growth and weakness in markets and economies, demand projections, orders, competitive conditions, visibility, seasonality, customer behavior regarding inventory and cash and our revenues in the December 2014 quarter. Actual results may vary materially from those contained in the forward-looking statements, due to changes in customer delivery schedules, the cancellation of orders, an unanticipated decline in our business, increased competition, cash flow difficulties, unanticipated technological hurdles, manufacturing challenges and capacity limitations, adverse changes in customer demand, declining economic conditions or increasing product costs, among other things. Further information on other factors that could affect IXYS is detailed and included in reports that IXYS has filed with the Securities and Exchange Commission, including its Form 10-Q for the fiscal quarter ended June 30, 2014. IXYS undertakes no obligation to publicly release the results of any revisions to these forward-looking statements.

IXYS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, March 31,
2014 2014
ASSETS
Current assets:
Cash and cash equivalents $ 125,637 $ 98,775
Accounts receivable, net 42,419 45,707
Inventories, net 93,145 93,028
Prepaid expenses and other current assets 3,675 9,520
Deferred income taxes 7,782 7,975
Total current assets 272,658 255,005
Plant and equipment, net 48,010 50,569
Other assets 50,662 53,292
Deferred income taxes 24,569 24,316
Total assets $ 395,899 $ 383,182
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of capitalized lease obligations $ 1,527 $ 2,468
Current portion of notes payable to bank 969 1,028
Accounts payable 14,659 15,684
Accrued expenses and other current liabilities 36,374 50,166
Total current liabilities 53,529 69,346
Capitalized lease and other long term obligations, net of current portion 56,779 27,659
Pension liabilities 13,882 15,545
Total liabilities 124,190 112,550
Common stock 381 380
Additional paid-in capital 150,103 147,508
Retained earnings 124,953 117,715
Accumulated other comprehensive income (3,728 ) 5,029
Stockholders’ equity 271,709 270,632
Total liabilities and stockholders’ equity $ 395,899 $ 383,182
IXYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
2014 2013 2014 2013
Net revenues $ 86,435 $ 85,901 $ 174,515 $ 157,087
Cost of goods sold 60,265 58,000 123,345 108,049
Gross profit 26,170 27,901 51,170 49,038
Operating expenses:
Research, development and engineering 6,948 7,453 14,198 15,140
Selling, general and administrative 10,713 10,583 21,477 20,626
Amortization of intangibles 1,419 3,425 3,126 3,671
Total operating expenses 19,080 21,461 38,801 39,437
Operating income 7,090 6,440 12,369 9,601
Other income (expense), net 1,892 (1,696 ) 1,737 (1,952 )
Income before income tax provision 8,982 4,744 14,106 7,649
Provision for income tax 3,235 1,361 4,784 2,287
Net income $ 5,747 $ 3,383 $ 9,322 $ 5,362
Net income per share – basic $ 0.18 $ 0.11 $ 0.30 $ 0.17
Weighted average shares used in per share calculation – basic 31,499 31,127 31,439 31,037
Net income per share – diluted $ 0.18 $ 0.11 $ 0.29 $ 0.17
Weighted average shares used in per share calculation – diluted 32,235 31,849 32,142 31,737
Reconciliation of net income to Non-GAAP net income
Three Months Ended Six Months Ended
September 30, September 30,
2014 2013 2014 2013
Net income $ 5,747 $ 3,383 $ 9,322 $ 5,362
Amortization of intangible assets 1,419 3,425 3,126 3,671
Stock compensation expense 446 476 909 939
Non-GAAP net income $ 7,612 $ 7,284 $ 13,357 $ 9,972
Reconciliation of net income per share, diluted to Non-GAAP net income per share, diluted
Three Months Ended

Six Months Ended

September 30, September 30,
2014 2013 2014 2013
Net income per share, diluted $ 0.18 $ 0.11 $ 0.29 $ 0.17
Amortization of intangible assets 0.04 0.11 0.10 0.12
Stock compensation expense 0.01 0.01 0.03 0.03
Non-GAAP net income per share, diluted $ 0.23 $ 0.23 $ 0.42 $ 0.32
Weighted average shares used in per share calculation, diluted 32,235 31,849 32,142 31,737

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