Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL) today reported financial results for the fiscal first quarter of 2022 ended September 30, 2021.
The results for the fiscal first quarter of 2022 ended September 30, 2021 were as follows:
GAAP Financial Comparison | ||||||||||||
Quarterly | ||||||||||||
(in millions, except percentage and per share data) | ||||||||||||
(unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
September 30,
|
June 30,
|
September 30,
| ||||||||||
Revenue | $ | 187.0 | $ | 177.3 | $ | 151.6 | ||||||
Gross Margin | 34.5 | % | 34.2 | % | 28.1 | % | ||||||
Operating Income | $ | 24.9 | $ | 22.4 | $ | 10.3 | ||||||
Net Income Attributable to AOS | $ | 23.4 | $ | 19.5 | $ | 9.6 | ||||||
Net Income Per Share Attributable to AOS - Diluted | $ | 0.85 | $ | 0.71 | $ | 0.36 | ||||||
Non-GAAP Financial Comparison | ||||||||||||
Quarterly | ||||||||||||
(in millions, except percentage and per share data) | ||||||||||||
(unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
September 30,
|
June 30,
|
September 30,
| ||||||||||
Revenue | $ | 187.0 | $ | 177.3 | $ | 151.6 | ||||||
Non-GAAP Gross Margin | 35.3 | % | 34.9 | % | 29.0 | % | ||||||
Non-GAAP Operating Income | $ | 30.8 | $ | 29.1 | $ | 15.4 | ||||||
Non-GAAP Net Income Attributable to AOS | $ | 29.3 | $ | 26.3 | $ | 14.5 | ||||||
Non-GAAP Net Income Per Share Attributable to AOS - Diluted | $ | 1.06 | $ | 0.95 | $ | 0.55 | ||||||
The non-GAAP financial measures in the schedule above and under the section “Financial Results for Fiscal Q1 Ended September 30, 2021” below exclude the effect of share-based compensation expenses, amortization of purchased intangible, legal costs related to government investigation and income tax effect of non-GAAP adjustments in each of the periods presented, and production ramp up costs for the three months ended September 30, 2020. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.
Financial Results for Fiscal Q1 Ended September 30, 2021
- Revenue was $187.0 million, an increase of 5.5% from the prior quarter and an increase of 23.4% from the same quarter last year.
- GAAP gross margin was 34.5%, up from 34.2% in the prior quarter and up from 28.1% in the same quarter last year.
- Non-GAAP gross margin was 35.3%, up from 34.9% in the prior quarter and up from 29.0% in the same quarter last year.
- GAAP operating expenses were $39.6 million, up from $38.2 million in the prior quarter and up from $32.2 million in the same quarter last year.
- Non-GAAP operating expenses were $35.1 million, an increase of $2.3 million from last quarter and an increase of $6.5 million from the same quarter last year.
- GAAP operating income was $24.9 million, up from $22.4 million in the prior quarter and up from $10.3 million in the same quarter last year.
- Non-GAAP operating income was $30.8 million as compared to $29.1 million for the prior quarter and $15.4 million for the same quarter last year.
- GAAP net income per share attributable to AOS was $0.85, compared to $0.71 net income per share for the prior quarter and $0.36 net income per share for the same quarter a year ago.
- Non-GAAP net income per share attributable to AOS was $1.06 compared to $0.95 for the prior quarter and $0.55 for the same quarter a year ago.
- Consolidated cash flow provided by operating activities was $80.6 million, compared to $44.2 million in the prior quarter. Operating cash flow provided by AOS alone (excluding the JV Company) was $84.4 million, compared to $32.6 million in the prior quarter.
- The Company closed the quarter with $252.5 million of cash and cash equivalents, including $20.9 million cash balance at the JV Company.
AOS Chairman and Chief Executive Officer Dr. Mike Chang commented, “Today, we celebrate an important milestone for AOS. For the first time in our history, we earned more than $1 a share on a non-GAAP basis in a single quarter. This demonstrates the effectiveness of our business strategies to deliver shareholder value, which we believe has enabled us to reach a sustainable level of earnings power of more than $4 per share annualized on a non-GAAP basis. This belief is supported by the earnings momentum we have established over the past two years and our prospects for even more growth in the years ahead. Our earnings power is underpinned by our outstanding teams that have demonstrated our sophistication in product development, sales and marketing effectiveness, and production acumen.”
Dr. Chang continued, “I am proud and thankful for our team’s execution, as we delivered double-digit growth in each of our market segments with record revenue, excellent profitability, and outstanding bottom-line performance. We have the right foundation for sustainable growth and the right technology in place to ensure that our earnings power grows even more in the years ahead. We are on track to achieve our mission of being a trusted technology partner and a global supplier of a broad portfolio of power semiconductors."
Business Outlook for Fiscal Q2 Ending December 31, 2021
The following statements are based on management's current expectations. These statements are forward-looking, and actual results may differ materially. AOS undertakes no obligation to update these statements.
Our expectations for the second quarter of fiscal year 2022 are as follows:
- Revenue is expected to be approximately $188 million, plus or minus $3 million.
- GAAP gross margin is expected to be approximately 34.8% plus or minus 1%. Non-GAAP gross margin is expected to be approximately 35.5% plus or minus 1%. Non-GAAP gross margin excludes $0.8 million amortization of acquired IP and $0.6 million of estimated share-based compensation charge.
- GAAP operating expenses are expected to be in the range of $39.3 million plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $34.5 million plus or minus $1 million. Non-GAAP operating expenses exclude $4.3 million of estimated share-based compensation charge and $0.5 million of estimated professional fees related to the government investigation.
- Income tax expense is expected to be approximately $1.2 million to $1.4 million.
- Loss attributable to noncontrolling interest is expected to be approximately $0.5 million.
Conference Call and Webcast
AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal first quarter ended September 30, 2021 today, November 4, 2021 at 2:00 p.m. PT / 5:00 p.m. ET. To listen to the live conference call, please dial 877-683-1095 (or 647-689-5445 if dialing from outside the United States and Canada). The conference ID number is 5562789. A live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com/. The webcast replay will be available for seven days after the live call on the same website. In addition, a copy of the script of management's prepared remarks and a live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com.
Forward-Looking Statements
This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, statements relating to anticipated earnings power and EPS on an annual basis, the valuation of our company and stock price, our growth opportunities and new markets, our ability to achieve sustained shareholder value, projected amount of revenue, gross margin, operating income (loss), income tax expenses, net income (loss), noncontrolling interest, and share-based compensation expenses, non-GAAP gross margin, non-GAAP operating expenses, tax expenses, and non-GAAP loss attributable to noncontrolling interest, our objectives to achieve long-term success, our ability to gain new customers and design wins, strategic partnership with customers, and other information under the section entitled “Business Outlook for Fiscal Q2 Ending December 31, 2021”. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 pandemic on our business; our ability to successfully operate our joint venture in China; our ability to develop and succeed in the digital power business; difficulties and challenges in executing our diversification strategy into different market segments; new tariffs on goods from China; ordering pattern from distributors and seasonality; changes in regulatory environment and government investigation; our ability to introduce or develop new and enhanced products that achieve market acceptance; decline of PC markets; the actual product performance in volume production; the quality and reliability of our product, our ability to achieve design wins; the general business and economic conditions; the state of semiconductor industry and seasonality of our markets; our ability to maintain factory utilization at a desirable level; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 filed by AOS with the SEC and other periodic reports we filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law.
Use of Non-GAAP Financial Measures
To supplement our unaudited consolidated financial statements presented on a basis consistent with U.S. GAAP, we disclose certain non-GAAP financial measures for our historical performance, including non-GAAP gross profit, gross margin, operating income (loss), net loss attributable to noncontrolling interest, net income (loss), diluted earnings per share ("EPS") and EBITDAS. These supplemental measures exclude, among other items, share-based compensation expenses, legal and profession fees related to government investigation, amortization of purchased intangible, as well as production ramp up costs related to the JV Company. We also disclose certain non-GAAP financial measures in our guidance for the next quarter, including non-GAAP gross margin, operating expenses and loss attributable to noncontrolling interest. We believe that these historical and forecast non-GAAP financial measures provide useful information to both management and investors by excluding certain items and expenses that are not indicative of our core operating results or do not reflect our normal business operations. In addition, our management uses non-GAAP measures to compare our performance relative to forecasts and to benchmark our performance externally against competitors. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as non-GAAP net income (loss) or non-GAAP operating expenses, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. In addition, we included amount of income tax effect of non-GAAP adjustments in the non-GAAP net income of reconciliation table for all periods presented as the management believes that such non-GAAP presentation provides useful information to investors, even though the amounts are not significant. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures both in the text in this press release and in the tables attached hereto. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures.
About Alpha and Omega Semiconductor
Alpha and Omega Semiconductor Limited, or AOS, is a designer, developer and global supplier of a broad range of power semiconductors, including a wide portfolio of Power MOSFET, IGBT, IPM, TVS, HVIC, GaN/SiC, Power IC and Digital Power products. AOS has developed extensive intellectual property and technical knowledge that encompasses the latest advancements in the power semiconductor industry, which enables us to introduce innovative products to address the increasingly complex power requirements of advanced electronics. AOS differentiates itself by integrating its Discrete and IC semiconductor process technology, product design, and advanced packaging know-how to develop high performance power management solutions. AOS’ portfolio of products targets high-volume applications, including personal and portable computers, graphic cards, flat panel TVs, home appliances, smart phones, battery packs, quick chargers, home appliances, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment. For more information, please visit www.aosmd.com.
The following unaudited consolidated financial statements are prepared in accordance with U.S. GAAP.
Condensed Consolidated Statements of Operations | ||||||||||||
(in thousands, except percentages and per share amounts) | ||||||||||||
(unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
September 30,
| June 30,
| September 30,
| ||||||||||
Revenue | $ | 187,035 | $ | 177,309 | $ | 151,551 | ||||||
Cost of goods sold | 122,468 | 116,729 | 109,028 | |||||||||
Gross profit | 64,567 | 60,580 | 42,523 | |||||||||
Gross margin | 34.5 | % | 34.2 | % | 28.1 | % | ||||||
Operating expenses: | ||||||||||||
Research and development | 17,812 | 17,282 | 14,691 | |||||||||
Selling, general and administrative | 21,806 | 20,935 | 17,505 | |||||||||
Total operating expenses | 39,618 | 38,217 | 32,196 | |||||||||
Operating income | 24,949 | 22,363 | 10,327 | |||||||||
Interest expense and other income (loss), net | (2,192 | ) | (1,107 | ) | (549 | ) | ||||||
Income before income taxes | 22,757 | 21,256 | 9,778 | |||||||||
Income tax expense | 1,320 | 1,241 | 1,011 | |||||||||
Net income including noncontrolling interest | 21,437 | 20,015 | 8,767 | |||||||||
Net income (loss) attributable to noncontrolling interest | (1,987 | ) | 476 | (807 | ) | |||||||
Net income attributable to Alpha and Omega Semiconductor Limited | $ | 23,424 | $ | 19,539 | $ | 9,574 | ||||||
Net income per common share attributable to Alpha and Omega Semiconductor Limited | ||||||||||||
Basic | $ | 0.89 | $ | 0.74 | $ | 0.38 | ||||||
Diluted | $ | 0.85 | $ | 0.71 | $ | 0.36 | ||||||
Weighted average number of common shares attributable to Alpha and Omega Semiconductor Limited used to compute net income per share | ||||||||||||
Basic | 26,365 | 26,251 | 25,340 | |||||||||
Diluted | 27,638 | 27,705 | 26,314 | |||||||||
Alpha and Omega Semiconductor Limited | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(in thousands, except par value per share) | ||||||||
(unaudited) | ||||||||
September 30, 2021 | June 30, 2021 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 252,453 | $ | 202,412 | ||||
Restricted cash | 342 | 233 | ||||||
Accounts receivable, net | 39,317 | 35,789 | ||||||
Inventories | 163,437 | 154,293 | ||||||
Other current assets | 17,518 | 14,595 | ||||||
Total current assets | 473,067 | 407,322 | ||||||
Property, plant and equipment, net | 441,279 | 436,977 | ||||||
Operating lease right-of-use assets, net | 33,437 | 34,660 | ||||||
Intangible assets, net | 12,570 | 13,410 | ||||||
Deferred income tax assets | 5,216 | 5,167 | ||||||
Restricted cash - long-term | 2,168 | 2,168 | ||||||
Other long-term assets | 23,941 | 18,869 | ||||||
Total assets | $ | 991,678 | $ | 918,573 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 81,681 | $ | 80,699 | ||||
Accrued liabilities | 92,207 | 69,494 | ||||||
Income taxes payable | 3,004 | 2,604 | ||||||
Short-term debt | 57,955 | 58,030 | ||||||
Finance lease liabilities | 16,722 | 16,724 | ||||||
Operating lease liabilities | 5,537 | 5,679 | ||||||
Total current liabilities | 257,106 | 233,230 | ||||||
Long-term debt | 75,991 | 77,990 | ||||||
Income taxes payable - long-term | 1,332 | 1,319 | ||||||
Deferred income tax liabilities | 3,136 | 2,448 | ||||||
Finance lease liabilities - long-term | 8,516 | 12,698 | ||||||
Operating lease liabilities - long-term | 29,342 | 30,440 | ||||||
Other long-term liabilities | 74,265 | 44,123 | ||||||
Total liabilities | 449,688 | 402,248 | ||||||
Equity: | ||||||||
Preferred shares, par value $0.002 per share: | ||||||||
Authorized: 10,000 shares; issued and outstanding: none at September 30, 2021 and June 30, 2021 | — | — | ||||||
Common shares, par value $0.002 per share: | ||||||||
Authorized: 100,000 shares; issued and outstanding: 32,996 shares and 26,373 shares, respectively at September 31, 2021 and 32,975 shares and 26,350 shares, respectively at June 30, 2021 | 66 | 66 | ||||||
Treasury shares at cost: 6,623 shares at September 30, 2021 and 6,625 shares at June 30, 2021 | (66,052 | ) | (66,064 | ) | ||||
Additional paid-in capital | 264,321 | 259,993 | ||||||
Accumulated other comprehensive income | 2,229 | 2,315 | ||||||
Retained earnings | 200,307 | 176,895 | ||||||
Total Alpha and Omega Semiconductor Limited shareholder's equity | 400,871 | 373,205 | ||||||
Noncontrolling interest | 141,119 | 143,120 | ||||||
Total equity | 541,990 | 516,325 | ||||||
Total liabilities and equity | $ | 991,678 | $ | 918,573 | ||||
Supplemental disclosures of financial information: | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
As of September 30, 2021 | As of June 30, 2021 | |||||||||||||||||||||||
AOS | CQJV | Consolidated | AOS | CQJV | Consolidated | |||||||||||||||||||
Cash and cash equivalents | $ | 231,508 | $ | 20,945 | $ | 252,453 | $ | 164,933 | $ | 37,479 | $ | 202,412 | ||||||||||||
Bank borrowings liabilities | $ | 22,233 | $ | 136,951 | * | $ | 159,184 | $ | 24,307 | $ | 141,135 | * | $ | 165,442 | ||||||||||
Inventory | $ | 109,471 | $ | 53,966 | $ | 163,437 | $ | 100,246 | $ | 54,047 | $ | 154,293 | ||||||||||||
Property, plant and equipment, net | $ | 175,068 | $ | 266,211 | $ | 441,279 | $ | 174,507 | $ | 262,470 | $ | 436,977 | ||||||||||||
* AOS is not a guarantor of CQJV's (Chongqing Joint Venture) debts. | ||||||||||||||||||||||||
Three Months Ended September 30, 2021 | Three Months Ended June 30, 2021 | Three Months Ended September 30, 2020 | ||||||||||||||||||||||||||||||||||
AOS | CQJV | Consolidated | AOS | CQJV | Consolidated | AOS | CQJV | Consolidated | ||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 84,384 | $ | (3,777 | ) | $ | 80,607 | $ | 32,646 | $ | 11,574 | $ | 44,220 | $ | 12,701 | $ | (2,853 | ) | $ | 9,848 | ||||||||||||||||
Purchase of property and equipment, net of government grant | $ | 15,560 | $ | 8,351 | $ | 23,911 | $ | 25,072 | $ | 7,087 | $ | 32,159 | $ | 7,944 | $ | 3,393 | $ | 11,337 | ||||||||||||||||||
EBITDAS | $ | 39,866 | $ | 3,424 | ** | $ | 45,277 | $ | 33,602 | $ | 7,780 | ** | $ | 40,906 | $ | 22,156 | $ | 4,609 | ** | $ | 27,572 | |||||||||||||||
** CQJV EBITDAS includes amounts attributable to noncontrolling interest. | ||||||||||||||||||||||||||||||||||||
Alpha and Omega Semiconductor Limited | ||||||||||||
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures | ||||||||||||
(in thousands, except percentages and per share data) | ||||||||||||
(unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
September 30,
| June 30,
| September 30,
| ||||||||||
GAAP gross profit | $ | 64,567 | $ | 60,580 | $ | 42,523 | ||||||
Share-based compensation | 569 | 561 | 385 | |||||||||
Amortization of purchased intangible | 812 | 812 | 812 | |||||||||
Production ramp up costs related to joint venture | — | — | 275 | |||||||||
Non-GAAP gross profit | $ | 65,948 | $ | 61,953 | $ | 43,995 | ||||||
Non-GAAP gross margin as a % of revenue | 35.3 | % | 34.9 | % | 29.0 | % | ||||||
GAAP operating expense | $ | 39,618 | $ | 38,217 | $ | 32,196 | ||||||
Share-based compensation | 4,066 | 4,838 | 2,491 | |||||||||
Legal costs related to government investigation | 431 | 553 | 1,107 | |||||||||
Non-GAAP operating expense | $ | 35,121 | $ | 32,826 | $ | 28,598 | ||||||
GAAP operating income | $ | 24,949 | $ | 22,363 | $ | 10,327 | ||||||
Share-based compensation | 4,635 | 5,399 | 2,876 | |||||||||
Amortization of purchased intangible | 812 | 812 | 812 | |||||||||
Production ramp up costs related to joint venture | — | — | 275 | |||||||||
Legal costs related to government investigation | 431 | 553 | 1,107 | |||||||||
Non-GAAP operating income | $ | 30,827 | $ | 29,127 | $ | 15,397 | ||||||
Non-GAAP operating margin as a % of revenue | 16.5 | % | 16.4 | % | 10.2 | % | ||||||
GAAP net income attributable to AOS | $ | 23,424 | $ | 19,539 | $ | 9,574 | ||||||
Share-based compensation | 4,635 | 5,399 | 2,876 | |||||||||
Amortization of purchased intangible | 812 | 812 | 812 | |||||||||
Production ramp up costs related to joint venture | — | — | 135 | |||||||||
Legal costs related to government investigation | 431 | 553 | 1,107 | |||||||||
Income tax effect of non-GAAP adjustments | 1 | (2 | ) | (8 | ) | |||||||
Non-GAAP net income attributable to AOS | $ | 29,303 | $ | 26,301 | $ | 14,496 | ||||||
Non-GAAP net margin attributable to AOS as a % of revenue | 15.7 | % | 14.8 | % | 9.6 | % | ||||||
GAAP net income attributable to AOS | $ | 23,424 | $ | 19,539 | $ | 9,574 | ||||||
Share-based compensation | 4,635 | 5,399 | 2,876 | |||||||||
Amortization and depreciation | 13,722 | 13,251 | 12,489 | |||||||||
Interest expense (income), net | 2,176 | 1,476 | 1,622 | |||||||||
Income tax expense | 1,320 | 1,241 | 1,011 | |||||||||
EBITDAS | $ | 45,277 | $ | 40,906 | $ | 27,572 | ||||||
GAAP diluted net income per share attributable to AOS | $ | 0.85 | $ | 0.71 | $ | 0.36 | ||||||
Share-based compensation | 0.16 | 0.19 | 0.11 | |||||||||
Production ramp up costs related to joint venture | — | — | 0.01 | |||||||||
Legal costs related to government investigation | 0.02 | 0.02 | 0.04 | |||||||||
Amortization of purchased intangible | 0.03 | 0.03 | 0.03 | |||||||||
Income tax effect of non-GAAP adjustments | 0.00 | (0.00 | ) | (0.00 | ) | |||||||
Non-GAAP diluted net income per share attributable to AOS | $ | 1.06 | $ | 0.95 | $ | 0.55 | ||||||
Shares used to compute Non-GAAP diluted net income per share | 27,638 | 27,705 | 26,314 | |||||||||
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