) reported second-quarter 2014 earnings per share of 15 cents,
beating the Zacks Consensus Estimate by a penny. The increasing
demand for Industrial and infrastructure products and improving
margins led to an overall increase in profitability.
The company reported revenues of $147.8 million, up 2% year over
year and 5.5% sequentially, and marginally beat the Zacks Consensus
Estimate of $147 million. The increase was due to strong demand in
the Industrial & infrastructure end markets, partially offset
by relative weakness in the Consumer market.
Revenues by End Market
Industrial & infrastructure comprised 64% of Intersil's sales
in the quarter, up 8.5% sequentially and 9% from the year-ago
quarter. The increase was due to strong demand for products in
automotive, industrial and aerospace markets.
Intersil's Personal computing segment generated 20% of sales, up 1%
sequentially and 4.9% from the year-ago quarter. The increase was
due to an improving PC market.
Intersil's Consumer segment generated the remaining 16% of sales,
flat sequentially but down 21.2% from the year-ago quarter. The
decline was due to weak demand in the Gaming and display markets.
Lack of a new platform ramp up was also responsible for the
Reported gross margin for the quarter was 58.1%, up 290 basis
points (bps) year over year and 180 bps sequentially.
Higher-than-expected volumes and an improved mix drove gross
margins in the quarter.
Operating expenses, including selling, general and administrative
(SG&A) and research and development (R&D) expenses, of
$65.1 million were down 10.3% from $72.6 million in the year-ago
quarter. As a percentage of sales, both SG&A and R&D
expenses declined. As a result, reported operating margin was
14.0%, up 900 bps from the year-ago quarter margin of 5.0%.
Intersil Corporation - Earnings Surprise |
The quarter's GAAP net income was $13.6 million or earnings per
share of 10 cents compared with $10.0 million or earnings of 8
cents in the prior quarter. Excluding special items but including
stock-based compensation expenses, adjusted net income was $19.8
million or earnings per share of 15 cents compared with $18.7
million or 14 cents in the prior quarter.
The company ended the second quarter with cash and short-term
investments balance of $201.2 million, up from $197.3 million in
the prior quarter. Trade receivables were $59.1 million, up from
$52.8 million in the prior quarter.
Cash flow from operations was $13.2 million compared with $17.9
million in the prior quarter. Capex was $2.1 million versus $0.8
million in the prior quarter. Free cash flow was $11.1 million in
During the quarter, the company did not repurchase any shares but
paid a total dividend of $16.2 million.
For the third quarter of 2014, Intersil expects total revenue to be
flat to up 3%. Gross margins are likely to be flat sequentially.
The company expects GAAP operating expenses to be flat to down
slightly and non-GAAP operating expenses to be flat sequentially.
GAAP earnings per share are expected in the range of 10-11 cents,
while non-GAAP earnings per share are likely to be in the range of
19-20 cents. The Zacks Consensus Estimate for the upcoming quarter
is pegged at 16 cents.
Intersil designs and manufactures high-performance analog,
mixed-signal and power components, focused on power management
applications. The company reported a solid quarter, with earnings
surpassing the Zacks Consensus Estimate.
Also, both top-line as well as bottom-line figures were above the
prior-quarter figures. Management also gave a modest third-quarter
guidance, which indicates improving demand visibility and an
overall improving analog market.
Additionally, we believe that the company's new products and design
wins in the quarter will likely drive demand for light sensor
products, going forward. We also remain optimistic about Intersil's
long-term prospects and contend that its restructuring activities
will reduce fixed cost base and operating expenses.
Currently, Intersil shares have a Zacks Rank #2 (Buy). Other stocks
that have been performing well and are worth a look include Analog
), Agilent Technologies (
) and Fairchild Semiconductor International Inc. (
). All these stocks carry the same Zacks Rank as Intersil.
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