AOSL

Alpha and Omega Semiconductor Limited (AOSL)

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Alpha and Omega Semiconductor Limited (AOSL)

Q2 2014 Results Earnings Call

February 05, 2014, 05:00 PM ET

Executives

So-Yeon Jeong - IR

Mike Chang - CEO and Chairman

Yifan Liang - Interim CFO

Analysts

Craig Ellis - B. Riley

Ross Seymore - Deutsche Bank

Evan Wang - Stifel

Presentation

Operator

Good day, ladies and gentlemen, and thank you for your patience. You've joined the Alpha and Omega Semiconductor Fiscal Second Quarter 2014 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, this conference may be recorded.

I would now like to turn the call over to your host, Ms. So-Yeon Jeong. Ma'am you may begin.

So-Yeon Jeong

Thank you. Good afternoon, everyone and welcome to the Alpha and Omega Semiconductor's second fiscal quarter of 2014 conference call. This is So-Yeon Jeong, Investor Relations Representative for the company. I'm joined by Dr. Mike Chang, the Chairman and Chief Executive Officer; and Yifan Liang, Interim Chief Financial Officer 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 GlobeNewswire today, February 5, 2014 after the market close. The release is also posted on our company's website.

Our earnings release and this presentation include certain non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful information 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'll 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 a 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 ends on June 30, 2014.

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

Yifan Liang

Thank you, So-Yeon. Good afternoon and thank you for joining us. Today on our call, I will discuss the key financial results for the quarter. Then I will turn it over to Mike our CEO who will review the company's business highlights and then I will follow-up with our guidance for the next quarter. Revenue for the December 2013 quarter was $76.3 million, a decrease of 9.3% from the prior quarter, and a decrease of 14.7% from the same quarter last year.

MOSFET revenue was $58.9 million, down 9.5% sequentially. Power IC revenue was $13.2 million, down 2.9% from the prior quarter. And our service revenue was $4.1 million, as compared to $5.4 million from the prior quarter.

The decrease in product revenue quarter-over-quarter largely reflected seasonality of the markets that we are in. Gross margin was 17.9% for the December quarter as compared to 20.4% in the prior quarter, and 23% for the same quarter last year. The decrease in gross margin was primarily due to low factory utilization which was partially offset by shutdowns and temporary pay cuts.

Operating expenses for the quarter were $12.3 million, as compared to $15.8 million for the prior quarter and $15.7 million for the December quarter last year. The lower operating expenses reflected $1.7 million temporary cost savings measures that we took in the quarter, such as office shutdowns, along with the holiday season and temporary pay cuts which have been restored in January 2014.

In addition, share-based compensation charge was reduced by $1 million due to the reversal of previous amortization expenses as a result of departure of certain employee stock option holders. Such reversal is required by GAAP. We have also taken some cost saving measures by prioritizing our R&D efforts to further strengthen our financial performance.

Income tax expense was $1.1 million in the quarter, as compared to $1 million for the prior quarter, reflecting the impact of our relatively fixed tax structure.

Net income for the quarter was approximately $0.2 million or $0.01 per share, remained flat as compared to the prior quarter. Net income in the December quarter included $142,000 stock-based compensation expense in cost of goods sold, a negative $32,000 in R&D, and a negative $5,000 in SG&A.

Depreciation and amortization expenses were $6.9 million for the quarter. The non-GAAP net income for the December quarter was $0.01 as compared to $0.06 for the prior quarter.

Now moving on to our balance sheet. We completed the December quarter with cash and cash equivalents balance of approximately $103 million, as compared to $96 million at September 30, 2013 and $92 million at December 31, 2012.

Net trade receivables were $39 million compared to $41 million last quarter and $43 million last year. Day sales outstanding for the quarter was approximately 46 days compared to 44 days last quarter. Net inventory was $62.8 million at the quarter end, down from $68.4 million for the last quarter and down from $71.5 million for the prior year.

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