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Anadigics (ANAD) Q1 Loss Meets Estimates, Narrows Y/Y - Analyst Blog

Semiconductor manufacturer Anadigics, Inc.ANAD reported first-quarter 2015 non-GAAP net loss of $3.8 million or loss of 4 cents per share, narrower than the loss of $9.6 million or loss of 11 cents per share in the year-ago quarter. The adjusted loss (with employee stock option adjustments) of 6 cents per share matched exactly with the Zacks Consensus Estimate.

Anadigics Inc. - Earnings Surprise | FindTheCompany

GAAP net loss for the reported quarter came in at 6 cents per share versus a loss of 14 cents a share in the year-earlier quarter. Despite lower revenues year over year, the improved performance was primarily due to significantly lesser operating expenses.

Revenues

Total revenue for the reported quarter was $18.4 million, down 21.0% year over year from $23.3 million in the prior-year period. Revenues missed the Zacks Consensus Estimate of $18.0 million. The sharp year-over-year fall in revenues was largely attributable to a decline in demand for its legacy mobile business, partly offset by a stronger-than-expected progress in infrastructure-targeted activities.

For the infrastructure market, Anadigics manufactures RF and optical products for cable television, cellular wireless small cell, WiFi and machine-to-machine (M2M). The Infrastructure segment contributed $12.0 million and accounted for 65.2% of the total revenue. The Mobile segment, comprising WiFi and Cellular products that primarily address the smartphone, handset and tablet markets, generated $6.4 million or 34.8% of the total revenue.

Continued Corporate Restructuring Initiatives

Anadigics is continuing with its corporate restructuring activities to reduce operating costs and better align its resources in accordance with the evolving demand for infrastructure-based products. The infrastructure-targeted products have a higher revenue and profit margin than mobile-targeted products. As such, Anadigics has continually reduced its fixed costs by unwinding production of RF (radio frequency) power amplifier and front-end products for a variety of mobile applications including handsets, tablets and data cards in the cellular 3G/4G and WiFi markets. The company expects revenue from the Infrastructure segment to be 75% of the aggregate revenue by 2015 and remains well on target to achieve that.

As global demand for high-data-rate connectivity to the Internet increases exponentially, demand for high-performance infrastructure-based products is set to rise as well. In order to capitalize on this revenue potential, Anadigics is aligning its R&D investment focus and in-house manufacturing capacity toward a higher mix of infrastructure products.

The restructuring activities reduced operating expenses by one-third in the reported quarter on a year-over-year basis to $8.1 million. This was achieved through workforce reduction to eliminate redundant manufacturing operations and diligent execution of infrastructure-based business model. Moving forward, all these measures are expected to strengthen its presence in key infrastructure markets and continue reducing fixed costs over a period of time.

Margins

During the reported quarter, Anadigics continued to improve its cost structure through stringent cost-cutting initiatives, while maintaining a sharp focus on new product developments. Gross profit margin for the quarter increased 455 basis points on a sequential basis to 23.2%. Combating headwinds such as sequentially lower factory utilization and sequentially lower revenues, an improved product mix along with expense reduction due to restructuring actions drove the increase in gross margin.

Anadigics has expanded its product pipeline by launching differentiated solutions while strengthening its relationship with major OEM (Original Equipment Manufacturers) and chipset partners. The company looks set to exploit the widening range of applications in the WiFi market. Its front-end Integrated Circuits (ICs) enable producers to save board space, extend battery life and expand high throughput connectivity, earning design wins and driving revenue growth for the company.

Financial Position

Anadigics ended the quarter with cash and cash equivalents of $17.0 million. Inventories stood at $11.5 million or approximately 84 days of sale. During the quarter, capacity utilization was 32%. Anadigics has a $6 million available borrowing capacity under its $10 million credit facility with Silicon Valley Bank. The improved cash efficiency of the new operating model combined with existing net cash and an improved credit facility are likely to provide the company with the resources required to realize positive cash flow in the coming quarters.

Outlook

Management did not provide any specific guidance for the ongoing quarter. For the second quarter of 2015, Anadigics expects total revenue to decline by 10% to 15% sequentially, driven by a decrease in the mobile business and sequential decline in infrastructure revenues. In addition, non-GAAP gross margin is expected to contract 100-300 basis points sequentially due to lower top-line growth. Operating expenses are expected to be down 5-7% sequentially with capacity utilization of 25-30%.

Anadigics presently has a Zacks Rank #3 (Hold). Better-ranked players in the industry that are worth mentioning include FormFactor Inc. FORM , Cirrus Logic Inc. CRUS and Silicon Motion Technology Corp. SIMO , each carrying a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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