AOSL

Alpha and Omega Semiconductor Limited (AOSL)

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Alpha and Omega Semiconductor Limited (AOSL)

F1Q 2014 Earnings Conference Call

October 30, 2013 05:00 PM ET

Executives

So-Yeon Jeong - IR

Mike Chang - CEO and Chairman

Mary Dotz - CFO and Corporate Secretary

Analysts

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Alpha and Omega Semiconductor fiscal first quarter earnings call. At this time, participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this call is being recorded.

Now, I would like to introduce your host for today’s conference, So-Yeon Jeong. You may begin.

So-Yeon Jeong

Thank you. Good afternoon, everyone, and welcome to the Alpha and Omega Semiconductor first fiscal quarter of 2014 conference call. This is So-Yeon Jeong, Investor Relations Representative for the company. I am joined by Dr. Mike Chang, the Chairman and Chief Executive Officer and Mary Dotz, the Chief Financial Officer & Corporate Secretary of the company.

This call is being recorded and broadcasted live over the web and can be accessed for seven days following the call via a link in the Investor Relations section of our website at www.aosmd.com.

The earnings release was distributed by Globe Newswire today, October 30, 2013 after the market closed. The release is also posted on the company's website. Our earnings release and desk presentation includes certain non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful formation about our operating performance that should be considered by investors in conjunction with the GAAP measures that we provide.

A reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. We would like to remind you that during the course of this conference call, we will make forward-looking statements including discussions of business outlook and financial projections. These forward-looking statements are based on management’s current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations.

For more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligation to update the information provided in today’s call. AOS 2014 fiscal year end is as of June 30, 2014.

Now, let's hear from Mary who will provide an overview of the first fiscal quarter 2014 financial results. Mary?

Mary Dotz

Thanks, So-Yeon. Good afternoon and thank you for joining us today. AOS revenue for the September 2013 quarter was $84.1 million, an increase of approximately 8.9% from the prior quarter and a decrease of about 12.2% from the same quarter last year. Our MOSFET revenue was $65.1 million, up 7.7% sequentially. Power IC revenue was $13.6 million, up 3.7% from the prior quarter. Our service revenue was $5.4 million as compared to $3.6 million for the prior quarter. The increase in our product revenue quarter-over-quarter reflected our new product design wins, seasonal growth in computing and consumer and growth in power supply.

Our GAAP gross margin was 20.4% for the September 2013 quarter, as compared to 17.1% for the prior quarter and 26.7% for the same quarter last year. The sequential improvement in gross margin was primarily due to the higher factory loading and lower manufacturing cost.

GAAP operating expenses were relatively flat at $15.8 million in the September quarter, as compared to $16.1 million for the prior quarter and $15.7 million for the same quarter last year. Income tax expense was $1 million for the quarter, as compared to $1.1 million for the prior quarter reflecting our relatively fixed rate tax structure.

GAAP net income for the quarter was approximately $300,000 or $0.01 per share, as compared to a GAAP net loss of $0.16 per share for the prior quarter. GAAP net income in the September quarter included stock compensation expense of a $196,000 in cost of goods sold, $295,000 in R&D and $718,000 in SG&A. Depreciation and amortization expenses were $7 million for the quarter.

The non-GAAP net income for the September 2013 quarter was $0.06, as compared to an $0.11 net loss for the prior quarter.

Our balance sheet remains strong. We completed the September quarter with cash and cash equivalents of approximately $96 million, as compared to $92.4 million of at June 30 of 2013 quarter end and $95.2 million at September 30 of last year and we paid down $1.4 million of our term debt in the September 2013 quarter.

Net trade receivables were $40.9 million, compared to $38.3 million last quarter and $29.4 million last year. DSO for the quarter was approximately 44 days, compared to 45 days last quarter.

Net inventory was 68.4 million at the quarter end almost flat as compared to last quarter and down from 71.1 million for the prior year. Average days in inventory were 92 days for the quarter compared to 95 days for the prior quarter. The channel inventory was down as of September quarter ended within our target range.

Net property, plant and equipment was about $133 million, a decrease of $5.1 million quarter-over-quarter. Capital expenditures were $1.6 million for the quarter. We anticipate our capital expenditures for calendar 2013 not to exceed $10 million and we spent about $6.6 million for the calendar year to-date.

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