Intersil Corporation Fiscal Fourth Quarter and Full Year Results

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Fourth quarter revenue up by 10% year-over-year

Intersil Corporation, a leading provider of innovative power management and precision analog solutions, on January 30, 2017, announced financial results for the fourth quarter and the full year ended December 30, 2016. Fourth quarter revenue increased by 10.4% year-over-year to $139.8 million, representing the third consecutive quarter of year-over-year revenue growth. Full year revenue grew by 4% to $542.1 million.

Company Highlights

  • Consumer and Computing (C&C) revenue increased year-over-year again for the fifth consecutive quarter and grew by 4% sequentially in Q4 and 6% for the full year.
  • Industrial and Infrastructure (I&I) revenue increased on a year-over-year basis for the third consecutive quarter and grew by 3% for the full year.
  • Gross margin remained strong for the quarter and increased again for the full year by 60 basis points on a GAAP basis and 50 basis points on a non-GAAP basis.
  • The company delivered strong earnings leverage, with full year GAAP earnings per share of $0.35 and non-GAAP earnings per share of $0.74.
  • Cash, cash equivalents and short-term investments increased for the 15th consecutive quarter to $307 million, a $59 million increase from a year ago.

Business Review
Revenue for the fourth quarter increased sequentially due to continued growth in C&C as well as strong, double-digit growth in automotive. For the full year, the company experienced growth in all investment areas, including automotive, industrial and infrastructure power, consumer, computing and aerospace. Automotive and aerospace achieved record annual revenues, contributing to gross margin strength.

The revenue breakdown by end market follows:

Q4 2016 Q3 2016 Q4 2015
End Market Revenue $M % $M % $M %
Industrial & Infrastructure 89.6 64% 90.8 65% 79.1 62%
Consumer & Computing 50.2 36% 48.2 35% 47.5 38%
Total Revenue $139.8 $139.0 $126.6
Table 1. Intersil End Market Mix

“I’d like to take this opportunity to thank our employees for their contributions towards making our turnaround a success. Together, we demonstrated our ability to grow Intersil organically while reaching our profitability targets. I look forward to continuing to work together to strengthen our business as we move to the next chapter,” said Necip Sayiner, president and CEO of Intersil.

Financial Highlights
GAAP gross margin for the fourth quarter was 59.7% and 59.6% for the full year. Total fourth quarter GAAP operating expenses decreased to $60.6 million and included R&D expense of $31.6 million and SG&A expense of $24.2 million. Fourth quarter GAAP operating income increased to $22.8 million and increased to $63.3 million for the full year. GAAP net income for the fourth quarter increased to $19.1 million, resulting in diluted earnings per share of $0.14. For the full year, GAAP net income increased to $48.1 million, resulting in diluted earnings per share of $0.35.

The following non-GAAP results exclude merger-related expenses, restructuring and related costs, amortization of purchased intangibles, equity-based compensation expense, acquisition-related charges, provision for the TAOS litigation, gain on recovery of auction rate securities, and related tax effects.

On a non-GAAP basis, fourth quarter gross margin was 59.8%. For the full year, non-GAAP gross margin increased by 50 basis points to 59.8%. Non-GAAP operating expenses for the fourth quarter increased slightly to $49.4 million and decreased to $200.4 million for the full year. Fourth quarter non-GAAP R&D expense was $28.8 million and non-GAAP SG&A expense was $20.6 million. Non-GAAP operating margin was 24.5% for the fourth quarter and increased by 230 basis points to 22.9% for the full year. Non-GAAP net income was $27.7 million for the quarter, resulting in non-GAAP diluted earnings per share of $0.19. For the full year, non-GAAP net income increased to $103.9 million, resulting in diluted earnings per share of $0.74, an 8.8% increase over 2015.

For a complete reconciliation of GAAP and non-GAAP results, please see the “Non-GAAP Results” tables included at the end of this release.

Cash, cash equivalents and short-term investments increased by $59 million by year end to $307 million. Inventories declined in absolute dollars and channel inventory remained balanced.

Intersil’s board of directors authorized payment of a quarterly dividend of $0.12 per share of common stock. The payment of this dividend will be made on or about February 24, 2017 to stockholders of record as of the close of business on February 14, 2017.

On September 12, 2016 Renesas Electronics Corporation, a premier supplier of advanced semiconductor solutions, and Intersil Corporation announced they had signed a definitive agreement for Renesas to acquire Intersil for US$22.50 per share in cash, representing an aggregate equity value of approximately US$3.2 billion. Closing of the transaction is expected in the first calendar quarter of 2017, conditioned on approval by the relevant governmental authorities. The companies received China MOFCOM approval on January 25 and are awaiting U.S. regulatory approval, which is currently proceeding as expected.

Fourth Quarter Earnings and First Quarter Outlook
Given the pending acquisition by Renesas, Intersil will not be holding a fourth quarter results conference call or providing guidance for the first quarter of 2017.

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