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Press release from Business Wire

TriQuint Announces Second Quarter 2012 Results

Wednesday, July 25, 2012

TriQuint Announces Second Quarter 2012 Results16:03 EDT Wednesday, July 25, 2012 HILLSBORO, Ore. (Business Wire) -- TriQuint Semiconductor, Inc. (NASDAQ:TQNT), a leading RF solutions supplier and technology innovator, announces its financial results for the quarter ended June 30, 2012, including the following highlights: Revenue for the quarter was $178.0 million GAAP net loss for the quarter was $16.5 million, or $(0.10) per share Non-GAAP net loss for the quarter was $15.0 million, or $(0.09) per share Booked $13 million in orders for F-35 Lightning II Joint Strike Fighter and TPQ-53 Army radar Announced $12.3 million GaN DARPA contract to develop Ultra-Fast Power Switch technology Shipping MMPA & BAW content on new Galaxy* phone for Verizon Introduced industry's first 802.11ac Wi-Fi RF module for next-generation smartphones and tablets Closed major design wins in Fiber-to-the-Home and optical networks Commenting on the results for the quarter ended June 30, 2012, Ralph Quinsey, President and Chief Executive Officer, stated, “TriQuint's second quarter performance was in line with expectations. Mobile devices demand was soft in the second quarter as the smartphone industry prepares for a seasonally strong second half, and our Defense and Networks revenue was slightly up year-to-date with a healthy outlook for the remainder of the year. We believe TriQuint is well positioned for revenue growth and improved financial performance in the second half of 2012.” Summary Financial Results for the Three and Six Months Ended June 30, 2012: Revenues for the second quarter of 2012 were $178.0 million, down 22% from the second quarter of 2011 and down 18% sequentially. Mobile Devices market revenue declined 24%, Networks declined 5% and Defense was consistent sequentially. Revenue for the six months ended June 30, 2012 was $394.7 million, down 13% from the six months ended July 2, 2011. GAAP Gross margin for the second quarter of 2012 was 25.2%, down sequentially from 28.9%. Gross margin for the six months ended June 30, 2012 was 27.2%, down from 39.6% for the same period in 2011 due to low factory utilization. Operating expenses for the second quarter of 2012 were $69.4 million, or 39% of revenue, up from $66.2 million in the previous quarter due primarily to higher medical and engineering expenses. Operating expenses for the six months ended June 30, 2012 were $135.5 million compared to $138.0 million for the same period in 2011. Net loss for the second quarter of 2012 was $16.5 million or $(0.10) per share, down from net income of $1.9 million, or $0.01 per diluted share, in the previous quarter. Net loss for the six months ended June 30, 2012 was $14.6 million or $(0.09) per share compared to a net income of $29.0 million or $0.17 per share for the six months ended July 2, 2011. Cash and investments decreased by $32.5 million to $162.4 million in the quarter due primarily to the stock repurchase of nearly 4.9 million shares for approximately $25 million. Non-GAAP Gross margin for the second quarter was 27.9%, down sequentially from 30.4%. Gross margin for the six months ended June 30, 2012 was 29.2% down from 40.7% for the same period in 2011. Operating expenses for the quarter were $64.3 million, or 36% of revenue, up from $61.4 million in the prior quarter. Operating expenses for the six months ended June 30, 2012 was $125.7 million or 32% of revenue. Net loss for the second quarter of 2012 was $15.0 million, or $(0.09) per share, down sequentially from net income of $4.1 million or $0.02 per diluted share. Net loss for the six months ended June 30, 2012 was $10.9 million or $(0.07) per share compared to a net income of $55.0 million or $0.32 per diluted share for the six months ended July 2, 2011. Please see the discussion of non-GAAP financial measures below and the attached supplemental schedule for a reconciliation of GAAP to non-GAAP financial measures. Outlook: The Company believes third quarter 2012 revenues will be between $195 million and $205 million and non-GAAP gross margin is expected to be between 30% and 32%. Third quarter non-GAAP net income per share is expected to be about breakeven. The Company is 90% booked to the midpoint of revenue guidance. Additional Information Regarding June 30, 2012 Results: GAAP and non-GAAP financial measures are presented in the tables below (in millions, except for percentage and per share information). Non-GAAP financial measures are reconciled to the corresponding GAAP financial measures in the financial statement portion of this press release.   GAAP RESULTS         Three Months EndedSix Months EndedQ2 2012   Q1 2012   Changevs. Q12012   Q2 2011   Changevs. Q22011Q2 2012   Q2 2011   Changevs. Q22011 Revenue $ 178.0     $ 216.7     (18 )%   $ 228.8     (22 )% $ 394.7     $ 453.1     (13 )% Gross Profit $ 44.9     $ 62.6     (28 )%   $ 92.1     (51 )% $ 107.5     $ 179.5     (40 )% Gross Margin % 25.2 %   28.9 %   (3.7 )%   40.3 %   (15.1 )% 27.2 %   39.6 %   (12.4 )% Op (Loss) Income $ (24.4 )   $ (3.6 )   578 %   $ 21.3     (215 )% $ (28.0 )   $ 41.6     (167 )% Net (Loss) Income $ (16.5 )   $ 1.9     (968 )%   $ 16.6     (199 )% $ (14.6 )   $ 29.0     (150 )% Diluted per share $ (0.10 )   $ 0.01     $ (0.11 )   $ 0.10     $ (0.20 ) $ (0.09 )   $ 0.17     $ (0.26 )   NON-GAAP RESULTS A     Three Months EndedSix Months EndedQ2 2012   Q1 2012   Changevs. Q12012   Q2 2011   Changevs. Q22011Q2 2012   Q2 2011   Changevs. Q22011 Revenue $ 178.0     $ 216.7     (18 )%   $ 228.8     (22 )% $ 394.7     $ 453.1     (13 )% Gross Profit $ 49.7     $ 65.8     (24 )%   $ 94.8     (48 )% $ 115.4     $ 184.5     (37 )% Gross Margin % 27.9 %   30.4 %   (2.5 )%   41.4 %   (13.5 )% 29.2 %   40.7 %   (11.5 )% Op (Loss) Income $ (14.7 )   $ 4.4     (434 )%   $ 29.2     (150 )% $ (10.3 )   $ 55.7     (118 )% Net (Loss) Income $ (15.0 )   $ 4.1     (466 )%   $ 28.9     (152 )% $ (10.9 )   $ 55.0     (120 )% Diluted per share $ (0.09 )   $ 0.02     $ (0.11 )   $ 0.17     $ (0.26 ) $ (0.07 )   $ 0.32     $ (0.39 ) A Excludes stock based compensation charges, non-cash tax expense, certain entries associated with acquisitions, restructuring and other specifically identified non-routine transactions.   Conference Call: TriQuint will host a conference call this afternoon at 2:00 p.m. PDT to discuss the results for the quarter and our future expectations for the company. To access the conference call, please dial (888) 813-6582 domestically, or (706) 643-7082 internationally, approximately ten minutes prior to the beginning of the call, using passcode 91818717. The call can also be heard via webcast accessed through the “Investors” section of TriQuint's web site at: http://invest.triquint.com. A replay of the conference call will be available until August 1, 2012. Non-GAAP Financial Measures: This press release provides financial measures for non-GAAP net income (loss), diluted earnings (loss) per share, gross profit, gross margin, operating expenses and operating income (loss) that exclude equity compensation expense, non-cash tax expense, certain entries associated with acquisitions, restructuring charges and other specifically identified non-routine items, and are therefore not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”). The charges associated with acquisitions reflect the amortization of intangible and tangible assets recorded in connection with acquisition accounting and charged to the income statement. The non-cash tax expense excludes certain deferred tax charges and benefits that do not result in a tax payment or tax refund. Management believes that these non-GAAP financial measures provide meaningful supplemental information that enhances management's and investors' ability to evaluate TriQuint's operating results. These non-GAAP financial measures are not intended to be used in isolation and should not be considered a substitute for any other performance measure determined in accordance with GAAP. Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool, including that other companies may calculate similar non-GAAP financial measures differently than we do, limiting their usefulness as a comparative tool. The company compensates for these limitations by providing specific information regarding the GAAP amount excluded from the non-GAAP financial measures. The company further compensates for the limitations of our use of non-GAAP financial measures by presenting comparable GAAP measures more prominently. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with our GAAP net income and net income per share. Forward-Looking Statements: This press release contains forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding TriQuint's anticipated third quarter revenues, non-GAAP gross margin, net income and our bookings to revenue; expected seasonality in the smartphone market; and revenue growth and improved financial performance. These forward-looking statements are statements of management's opinion and are subject to various assumptions, risks, uncertainties and changes in circumstances. Actual results may vary materially from those expressed or implied in the statements herein or from historical results, due to changes in economic, business, competitive, technological and/or regulatory factors. More detailed information about risk factors that may affect actual results are set forth in TriQuint's reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission. These reports can be accessed at the SEC web site, www.sec.gov. Except as required by law, TriQuint undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements. A reader of this release should understand that it is not possible to predict or identify all risk factors and should not consider the risk factors described in TriQuint's filings with the Securities and Exchange Commission to be a complete statement of all potential risks and uncertainties. Facts About TriQuint Founded in 1985, TriQuint Semiconductor (NASDAQ: TQNT) is a leading RF solutions supplier and technology innovator for the world's top communications, defense and aerospace companies. People and organizations around the world need real-time, all-the-time connections; TriQuint products help reduce the cost and increase the performance of connected mobile devices and the networks that deliver critical voice, data and video communications. With the industry's broadest technology portfolio, recognized R&D leadership, and expertise in high-volume manufacturing, TriQuint creates standard and custom products using gallium arsenide (GaAs), gallium nitride (GaN), surface acoustic wave (SAW) and bulk acoustic wave (BAW) technologies. The company has ISO9001-certified manufacturing facilities in the U.S., production in Costa Rica, and design centers in North America and Germany. For more information, visit www.triquint.com. TriQuint: Connecting the Digital World to the Global Network® *Other names and brands may be claimed as the property of others TQNT - F   TriQuint Semiconductor, Inc.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(In thousands)     June 30, 2012   December 31,2011Assets Current assets: Cash and cash equivalents $ 127,296 $ 116,305 Investments in marketable securities 35,102 46,006 Accounts receivable, net 98,367 129,103 Inventories 154,760 151,577 Prepaid expenses 9,599 7,051 Deferred tax assets, net 11,526 11,857 Other current assets 47,527   35,756 Total current assets 484,177 497,655 Property, plant and equipment, net 456,303 469,943 Goodwill 3,376 3,376 Intangible assets, net 19,576 22,732 Deferred tax assets – noncurrent, net 58,451 48,957 Other noncurrent assets, net 32,264   12,605 Total assets $ 1,054,147   $ 1,055,268   Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 62,537 $ 67,812 Accrued payroll 31,255 28,519 Other accrued liabilities 11,620   9,901 Total current liabilities 105,412 106,232 Long-term liabilities: Long-term income tax liability 2,619 735 Cross-licensing liability 13,316 — Other long-term liabilities 10,976   11,013 Total liabilities 132,323 117,980 Stockholders' equity: Common stock 164 166 Additional paid-in capital 677,584 678,412 Accumulated other comprehensive income 138 140 Retained earnings 243,938   258,570 Total stockholders' equity 921,824   937,288 Total liabilities and stockholders' equity $ 1,054,147   $ 1,055,268     TriQuint Semiconductor, Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands, except per share amounts)     Three Months Ended   Six Months EndedJune 30,2012   March 31,2012   July 2,2011June 30,2012   July 2,2011   Revenues $ 178,002 $ 216,730 $ 228,785 $ 394,732 $ 453,108 Cost of goods sold 133,064   154,141   136,643   287,205   273,572   Gross profit 44,938 62,589 92,142 107,527 179,536   Operating expenses: Research, development and engineering 38,084 37,074 37,955 75,158 74,431 Selling, general and administrative 27,588 25,222 25,386 52,810 50,615 Litigation expense 3,682   3,864   7,512   7,546   12,911   Total operating expenses 69,354 66,160 70,853 135,514 137,957           Operating (loss) income (24,416 ) (3,571 ) 21,289 (27,987 ) 41,579   Other (expense) income: Interest income 89 49 106 138 210 Interest expense (313 ) (350 ) (354 ) (663 ) (741 ) Foreign currency (loss) gain (154 ) 36 87 (118 ) 31 Gain/recovery of investment 4 6,953 356 6,957 507 Other, net 189   74   71   263   94   Other (expense) income, net (185 ) 6,762 266 6,577 101           (Loss) income before income tax (24,601 ) 3,191 21,555 (21,410 ) 41,680   Income tax (benefit) expense (8,086 ) 1,308   4,990   (6,778 ) 12,676   Net (loss) income $ (16,515 ) $ 1,883   $ 16,565   $ (14,632 ) $ 29,004     Per Share Data: Basic per share net (loss) income $ (0.10 ) $ 0.01 $ 0.10 $ (0.09 ) $ 0.18 Diluted per share net (loss) income $ (0.10 ) $ 0.01 $ 0.10 $ (0.09 ) $ 0.17   Weighted-average shares outstanding: Basic 165,355 166,237 164,110 165,796 163,257 Diluted 165,355 170,566 173,518 165,796 173,222     TriQuint Semiconductor, Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(% of revenue)     Three Months Ended   Six Months EndedJune 30,2012   March 31,2012   July 2,2011June 30,2012   July 2,2011   Revenues 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Cost of goods sold 74.8 % 71.1 % 59.7 % 72.8 % 60.4 % Gross profit 25.2 % 28.9 % 40.3 % 27.2 % 39.6 %   Operating expenses: Research, development and engineering 21.4 % 17.1 % 16.6 % 19.0 % 16.4 % Selling, general and administrative 15.4 % 11.6 % 11.1 % 13.4 % 11.2 % Litigation expense 2.1 % 1.7 % 3.3 % 1.9 % 2.8 % Total operating expenses 38.9 % 30.4 % 31.0 % 34.3 % 30.4 %           Operating (loss) income (13.7 )% (1.5 )% 9.3 % (7.1 )% 9.2 %   Other (expense) income: Interest income 0.0 % 0.0 % 0.1 % 0.0 % 0.1 % Interest expense (0.2 )% (0.2 )% (0.2 )% (0.2 )% (0.2 )% Foreign currency (loss) gain (0.1 )% 0.0 % 0.0 % (0.0 )% 0.0 % Gain/recovery of investment 0.0 % 3.2 % 0.2 % 1.8 % 0.1 % Other, net 0.2 % 0.0 % 0.0 % 0.1 % 0.0 % Other (expense) income, net (0.1 )% 3.0 % 0.1 % 1.7 % 0.0 %           (Loss) income before income tax (13.8 )% 1.5 % 9.4 % (5.4 )% 9.2 %   Income tax (benefit) expense (4.5 )% 0.6 % 2.2 % (1.7 )% 2.8 % Net (loss) income (9.3 )% 0.9 % 7.2 % (3.7 )% 6.4 %     TriQuint Semiconductor, Inc.SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP RESULTS(Unaudited)(Dollars in thousands, except per share amounts)     Three Months Ended   Six Months EndedJune 30, 2012   March 31, 2012   July 2, 2011June 30, 2012   July 2, 2011 (% of revenues) (% of revenues) (% of revenues) (% of revenues) (% of revenues) GAAP GROSS PROFIT $ 44,938   25.2 % $ 62,589   28.9 % $ 92,142   40.3 % $ 107,527   27.2 % $ 179,536   39.6 % Adjustment for stock based compensation charges 1,823 1.0 % 2,106 1.0 % 1,585 0.7 % 3,929 1.0 % 2,804 0.6 % Adjustment for restructuring charges 1,763 1.0 % — — % — — % 1,763 0.5 % — — % Adjustment for charges associated with acquisitions 1,126     0.7 % 1,095     0.5 % 1,079     0.4 % 2,221     0.5 % 2,144     0.5 % NON-GAAP GROSS PROFIT $ 49,650 27.9 % $ 65,790 30.4 % $ 94,806 41.4 % 115,440 29.2 % 184,484 40.7 %   GAAP OPERATING EXPENSES $ 69,354 38.9 % $ 66,160 30.5 % $ 70,853 31.0 % $ 135,514 34.3 % $ 137,957 30.4 % Adjustment for stock based compensation charges (5,735 ) (3.2 )% (4,591 ) (2.1 )% (5,716 ) (2.5 )% (10,326 ) (2.6 )% (9,402 ) (2.1 )% Adjustment for charges associated with acquisitions 714     0.4 % (202 )   (0.1 )% 473     0.2 % 512     0.1 % 257     0.2 % NON-GAAP OPERATING EXPENSES $ 64,333 36.1 % $ 61,367 28.3 % $ 65,610 28.7 % $ 125,700 31.8 % $ 128,812 28.4 %   GAAP OPERATING (LOSS) INCOME $ (24,416 ) (13.7 )% $ (3,571 ) (1.6 )% $ 21,289 9.3 % $ (27,987 ) (7.1 )% $ 41,579 9.2 % Adjustment for stock based compensation charges 7,558 4.2 % 6,697 3.1 % 7,301 3.2 % 14,255 3.6 % 12,206 2.7 % Adjustment for restructuring charges 1,763 1.0 % — — % — — % 1,763 0.5 % — — % Adjustment for charges associated with acquisitions 412     0.3 % 1,297     0.6 % 606     0.3 % 1,709     0.4 % 1,887     0.4 % NON-GAAP OPERATING (LOSS) INCOME $ (14,683 ) (8.2 )% $ 4,423 2.1 % $ 29,196 12.8 % $ (10,260 ) (2.6 )% $ 55,672 12.3 %   GAAP NET (LOSS) INCOME $ (16,515 ) (9.3 )% $ 1,883 0.9 % $ 16,565 7.2 % $ (14,632 ) (3.7 )% $ 29,004 6.4 % Adjustment for stock based compensation charges 7,558 4.2 % 6,697 3.1 % 7,301 3.2 % 14,255 3.6 % 12,206 2.7 % Adjustment for restructuring charges 1,763 1.0 % — — % — — % 1,763 0.5 % — — % Adjustment for gain/recovery of investment (4 ) 0.0 % (6,953 ) (3.2 )% (356 ) (0.2 )% (6,957 ) (1.8 )% (507 ) (0.1 )% Adjustment for non-cash tax expense (8,238 ) (4.6 )% 1,143 0.5 % 4,734 2.1 % (7,095 ) (1.9 )% 12,338 2.7 % Adjustment for charges associated with acquisitions 412     0.3 % 1,323     0.6 % 628     0.3 % 1,735     0.5 % 1,949     0.4 % NON-GAAP NET (LOSS) INCOME $ (15,024 ) (8.4 )% $ 4,093 1.9 % $ 28,872 12.6 % $ (10,931 ) (2.8 )% $ 54,990 12.1 %   GAAP DILUTED (LOSS) EARNINGS PER SHARE $ (0.10 ) $ 0.01 $ 0.10 $ (0.09 ) $ 0.17 Adjustment for stock based compensation charges 0.05 0.04 0.04 0.09 0.07 Adjustment for restructuring charges 0.01 0.00 0.00 0.01 0.00 Adjustment for gain/recovery of investment (0.00 ) (0.04 ) (0.00 ) (0.04 ) (0.00 ) Adjustment for non-cash tax expense (0.05 ) 0.00 0.03 (0.05 ) 0.07 Adjustment for charges associated with acquisitions 0.00   0.01   0.00   0.01   0.01   NON-GAAP DILUTED (LOSS) EARNINGS PER SHARE $ (0.09 ) $ 0.02 $ 0.17 $ (0.07 ) $ 0.32   Our earnings release contains forward looking estimates of non-GAAP gross margin and earnings per share for the third quarter of 2012. We provide these non-GAAP measures on a prospective basis for the same reasons that we provide them to investors on a historical basis. The following table provides a reconciliation of GAAP gross margin and loss per share to non-GAAP gross margin and earnings per share for the third quarter of 2012 based on the mid-point of guidance.   Forward Looking GAAP Gross Margin   29.5 % Adjustment for stock based compensation charges 1.0 % Adjustment for charges associated with acquisitions 0.5 % Forward Looking non-GAAP Gross Margin 31.0 %   Forward Looking GAAP Loss per Share $ (0.06 ) Adjustment for stock based compensation charges 0.05 Adjustment for non-cash tax expense — Adjustment for charges associated with acquisitions 0.01   Forward Looking non-GAAP Earnings per Share $ —   TriQuint Semiconductor, Inc.VP of Finance & Administration, CFOSteve Buhaly, +1-503-615-9401steve.buhaly@tqs.comorMedia Contact:Director, Marketing CommsBrandi Frye, +1-503-615-9488brandi.frye@tqs.com