) adjusted earnings for the first quarter of fiscal 2014 came in
at 36 cents per share, which surpassed the Zacks Consensus
Estimate by a penny.
Microsemi reported revenues of $255.6 million, up 2.1%
sequentially, 3.2% year over year and also above the Zacks
Consensus Estimate of $245 million. The quarter's revenues
included $21 million in sales from the acquisition of
In the last quarter, book-to-bill ratio was greater than 1,
driven by orders for longer lead time products.
Revenues by End Market
Microsemi generates revenues from the Defense & security,
Aerospace, Communications and Industrial markets.
Defense & Security market
generated 25% of sales, down 15% sequentially to $63.0 million.
The decline was due to some push-outs and industry weakness due
to government shutdown and sequestration.
Around 38% of Microsemi's quarterly revenues came from the
which was up over $28 million sequentially. Management attributed
the increase to strength in PoE wireless products and voice
circuit products. PoE's expansion into new markets is another
growth factor for Microsemi. Also, strengthening telecom spending
worldwide, including emerging markets such as China and India are
benefiting the company.
was down $9.9 million sequentially and generated 15% of
first-quarter revenues. The decrease was attributable to some
satellite shipment delays.
Going forward, management believes that growing product mix
and strong industry fundamentals will benefit this end market.
Additionally, the ramp up of more electronic aircraft such as
Boeing 787, Airbus A350 and A380 will lead to significant content
generated 22% of sales, down 1.0% sequentially to $55.9
Going forward, management expects strong revenues from this
end market from the ramp up of new chip scale atomic clocks which
helps in energy exploration applications and other new
was 54.1%, down 290 basis points (bps) sequentially and 350 bps
from 57.6% in the year-ago quarter. The decrease was due to
unfavorable product mix.
of $131.1 million were higher than the previous quarter's $117.1
million. As a percentage of sales, general and administrative
expenses increased, while research & development (R&D)
expenses decreased from the year-ago quarter. The net result was
a GAAP operating margin of 2.8%, down 750 bps year over year.
Microsemi generated GAAP net profit of $1.4 million or 1 cent
a share compared with $14.1 million or 15 cents a share in the
previous quarter and net income of $14.2 million or 16 cents a
share in the year-ago quarter.
Excluding these special items, pro-forma net income was $33.9
million or earnings of 36 cents per share compared with $37
million or earnings of 41 cents per share in the year-ago quarter
and $39.1 million or earnings of 42 cents per share in the
Cash and cash equivalents balance at quarter-end was $218.1
million, down $38.3 million during the fourth quarter. Cash
generated from operations was $62.5 million and capex was $12.1
million, netting a free cash flow of $50.4 million.
Inventories increased 33.5% to $216.3 million from $162.0
million in the previous quarter. Days sales outstanding (DSOs)
increased to 59 days from 57 days in the last quarter.
Microsemi provided guidance for the second quarter of fiscal
2014. Revenues are expected to increase 10%-14% sequentially.
Gross margins are expected in the range of 54.5%-55.5% and
non-GAAP earnings per share are expected to be around 48 cents-54
cents per share.
Microsemi's first-quarter earnings exceeded the Zacks
Consensus Estimate by a penny, while the year-over-year
comparisons were disappointing.
In the last quarter, the company gave an encouraging forward
guidance. It expects sequential dollar growth in all of its end
markets, indicating improving demand environment and increased
Also, Microsemi's R&D program remains on track, helping
the company to manage its expenses well. Additionally, the
company's focus on security and increasing electronic content per
device and customer will eventually boost its market share.
Microsemi has a Zacks Rank #1 (Strong Buy). Other stocks that
are performing well at current levels include
M/A-Com Technology Solutions Holdings, Inc.
). All these stocks carry a Zacks Rank #1.
MICROSEMI CORP (MSCC): Free Stock Analysis
MA-COM TECH SOL (MTSI): Free Stock Analysis
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