International Rectifier Corp.
) reported third-quarter 2013 loss per share of 29 cents,
narrower than the Zacks Consensus Estimate of 40 cents loss per
The company reported revenues of $224.3 million, down 9.6% year
over year and at the lower end of management's guidance of
$220-$235 million due to weak demand across Energy saving
products, Enterprise power and HiRel business segments, partially
offset by strength in other segments.
Segment wise, Power management devices revenues increased 52.7%
year over year to $85.2 million; Energy saving products revenues
decreased 24.4% to $43.6 million; Enterprise power revenues
decreased 36.4% to $20.5 million; Automotive products revenues
increased 8.0% to $31.1 million while HiRel revenues dropped
10.5% to $43.6 million.
Intellectual property revenues were $0.30 million in the quarter,
down 31.8% year over year.
Reported gross margin for the quarter was 24.3%, up 240 basis
points (bps) sequentially but down 550 bps from the year-ago
quarter. The sequential increase was due to better mix and
manufacturing efficiencies in the quarter.
Operating expenses (SG&A and R&D) of $71.9 million
decreased 14.8% year over year due to solid expense management.
Though selling, general and administrative (SG&A) and
research and development (R&D) expenses decreased as a
percentage of sales from the year-ago quarter, the reported
operating loss of 8.9% increased significantly from the year-ago
quarter operating loss of 2.9%.
The quarter's GAAP net loss was $21.2 million or loss per share
of 31 cents, compared with a net loss of $2.5 million or loss of
4 cents in the comparable quarter last year. Excluding special
items, non-GAAP net loss was $19.8 million or loss per share of
29 cents compared with a net loss of $14.9 million or loss of 22
cents a share in the year-ago quarter.
The company has a cash and cash equivalents, restricted cash and
short-term investments balance of $402.7 million, up from $377.4
million in the prior quarter. Trade receivables were $135.0
million, up from $134.0 million in the prior quarter.
Cash flow from operations was $33.2 million, down from $41.9
million in the prior quarter. Capex was $12.9 million versus
$26.1 million in the prior quarter.
For the fourth quarter of 2013, International Rectifier expects
total revenue in the range of $255-$265 million, representing a
sequential increase of 14.3% at the mid-point. Gross margins are
expected in the range of 28% to 30%. Research and development
expense is likely to be $32 million and selling, general and
administrative expenses are expected to remain flat at about $47
million. The company expects restructuring and other charges of
$1 to $2 million, resulting from the resizing of manufacturing
facilities and other cost reduction efforts. Net other expense is
expected to be about $1 million whereas tax amount is likely to
be $4 million.
For the fourth quarter, capital expenditure is expected to be
about $15 million.
International Rectifier designs, manufactures, and markets analog
integrated circuits (ICs) and power components, focused on power
management applications. Though the company reported a
disappointing quarter, the loss incurred was narrower than
In the quarter, the company performed poorly with both its
revenues and gross margins decreasing from the year-ago quarter.
However, the company's gross margins increased sequentially and
its cost reduction initiative seems to be paying off.
Management's also provided a modest fourth quarter guidance
reflecting slight improvement in the fundamentals.
We remain optimistic about the company's long-term prospects. Its
decision to initiate operational restructuring activities will
reduce fixed cost base and hence reduce operating expenses.
Currently, International Rectifier has a Zacks Rank #3 (Hold).
Investors should look out for some other stocks with a Zacks Rank
of #1, #2 or #3 and positive ESP (
Read: Zacks Earnings ESP: A Better Method
Applied Materials, Inc.
), Earnings ESP of +7.69% and Zacks Rank #2 (Buy)
), with an ESP of +3.03% and a Zacks Rank #2 (Buy)
), with an ESP of +14.3% and a Zacks Rank #3 (Hold)
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