PSEM

Pericom Semiconductor Corporation (PSEM)

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Pericom Semiconductor Corporation (PSEM)

F4Q11 (Qtr End 07/02/2011) Earnings Call

August 9, 2011 4:30 pm ET

Executives

Robert Strickland - IR

Alex Hui - President and CEO

Aaron Tachibana - CFO

Analysts

Brian Peterson - Raymond James

Krishna Shankar - ThinkEquity

Presentation

Operator

Good day ladies and gentlemen and welcome to the Pericom Semiconductor Corporation fourth quarter 2011 earnings conference call. (Operator Instructions) I would now like to turn your conference over to your host for today, Mr. Robert Strickland.

Robert Strickland

Good afternoon and welcome to Pericom's fourth quarter fiscal year 2011 conference call. Our speakers today are Alex Hui, President and CEO and Aaron Tachibana, the CFO.

Before we get started, please be aware that we will be presenting several visual slides during management's discussion of the business. To view these slides, please go to www.pericon.com and click on the Investor's link.

Today, the company will discuss its financial results, comment on the industry and on Pericom's business and provide guidance for the first quarter of fiscal 2012. Certain matters discussed in the press release and on this conference call may contain forward-looking statements that involve risk and uncertainty. Therefore, we encourage you to review all filings made by the company with the Securities and Exchange Commission, particularly the risk factor sections of such filings.

In accordance with regulations of fair disclosure, Pericom will continue to only provide guidance via its earnings release and its conference calls. The company will not provide further guidance or updates during the quarter unless it does so via a press release.

Aaron will discuss the financial performance for the quarter, and Alex will give his comments on the industry and on Pericom's business. Then Aaron will provide guidance for the first quarter of fiscal 2012. Aaron.

Aaron Tachibana

Thank you, Bob, and good afternoon everyone. We recently concluded fiscal year 2011, which was very successful. Although the economic environment was turbulent, we still reached a new record revenue level of $166 million for the year.

Another key highlight was the PTI acquisition that we closed during the first quarter of the year. Our balance sheet remained in excellent condition. We improved our cash per share by 8% year-over-year to $5.12, and also improved our book value per share by 11% year-over-year to $9.74.

Consistent with the last three quarters, please note that we are reporting non-GAAP financial measures for net income, gross profit and operating expenses in addition to our GAAP financial results. Due to the PTI acquisition, we have a significant amount of cash and non-operating income and expense items included in the income statement, which are not reflective of the performance of our normal business operation.

Now let's review some of the detail. Our consolidated net revenues for the fourth quarter were $43.3 million, an increase by 10% from the $39.6 million reported last quarter, and increased by 4% over the $41.5 million for the same period last year. Please note that last year's Q4 included one extra week, so the normalized year-over-year change was actually 12%.

During Q4 the networking and communications and the enterprise computing segments were relatively strong, while the consumer segment was weaker on a sequential basis. For the full fiscal year, net revenues were $166.3 million and represented a 13% year-over-year increase. When normalizing for last years extra week, the growth was 16%.

The Q4 geographic distribution was as follows, Asia 91%, U.S. 6%, and Europe 3%. Our channel sales mix was, international distribution 68%, contract manufacturers 24%, OEMs 6%, and U.S. distribution 2%.

Consolidated non-GAAP gross profit was $15.7 million for Q4 compared with $12.9 million last quarter, and $15.4 million last year. Non-GAAP gross margin for the fourth quarter was 36.2% and was 3.6% higher than last quarter's 32.6%, and 0.8% lower than year's 37%.

The sequential quarter gross margin increase was due to a couple of factors. First, we had some favorable mix due to the decline in product shipment for the consumer segment. And also, our oscillator volume increased quarter-to-quarter. And second, we had much lower unfavorable absorption charges compared with last quarter due to higher volume.

For the full fiscal year consolidated gross margin was 35.1% compared with 34.8% last year. And gross profit was $58.4 million compared with $51.2 million last year.

Non-GAAP operating expenses were $11.2 million for Q4 compared with $10.6 million last quarter and $10.8 million last year. The Q4 operating income on a non-GAAP basis was $4.5 million or 10% of revenue compared with $2.2 million or 6% of revenue last quarter, and $4.5 million or 11% of revenue for the same period last year.

The sequential increase was primarily due to the higher revenue volume and also the 3.6% increase in gross margin. Our total fiscal year 2011, non-GAAP operating income was $15.7 million and was 37% higher than the $11.5 million last year.

Interest and other income was $0.9 million for Q4 compared with $1.3 million last quarter, and $1.1 million last year. The decrease of $0.4 million was mostly due to Q4 having a $0.1 million currency exchange loss, while last quarter had a $0.3 million gain.

Income before tax was $5.4 million on a non-GAAP basis for Q4 compared with $3.6 million last quarter, and $5.6 million last year. The non-GAAP effective tax rate was 34% for Q4 compared with 31% last quarter, and 28% for the same period last year. The Q4 tax rate was higher than last quarter and last year, primarily due to the mixture of domestic versus foreign income.

Read the rest of this transcript for free on seekingalpha.com