Achieves Record Revenue of $80.9 Million; Improves Gross Margin 200 Basis Points SequentiallyMILPITAS, Calif., April 30, 2014 — (PRNewswire) — Integrated Silicon Solution, Inc. (Nasdaq: ISSI) today reported financial results for the second fiscal quarter ended March 31, 2014.
Second Fiscal Quarter Highlights:
- Reported record revenue of $80.9 million, compared to $79.1 million in the first fiscal quarter of 2014 and $75.0 million in the second fiscal quarter of 2013;
- Gross margin was 34.3%, compared to 32.3% in the December 2013 quarter and 33.3% in the March 2013 quarter;
- DRAM revenue increased 10.7% and SRAM revenue increased 9.1% over the prior year period;
- Industrial, medical, and military (IMM) revenue increased 6.5% sequentially and 31.2% year-over-year;
- Automotive revenue grew 1.6% sequentially and 10.6% year-over-year;
- GAAP net income was $0.28 per diluted share and non-GAAP net income was $0.23 per diluted share;
- Realized $3.9 million in gains on sales of a portion of the Company's shares of Nanya Technology Corporation ("Nanya") and $2.1 million in gains on the sale of the Company's remaining shares of SMIC;
- Ended the quarter with cash and short-term investments of $130.8 million; and
- Achieved multiple DDR3, DDR2 and SDRAM design wins in automotive and industrial applications as well as RLDRAM2®, Pseudo SRAM, DDR2 and DDR3 design wins with communications customers.
"Second fiscal quarter 2014 set a revenue record for ISSI at $80.9 million, driven by record revenue for our DRAM products as well as record sales in our automotive and IMM end markets," said Scott Howarth, ISSI's President and CEO. "IMM was once again our strongest growth market, primarily due to strength among European customers, while automotive continues to be a growth market for us.
"In addition, gross margin improved 200 basis points sequentially thanks to improved product mix, favorable Taiwan currency rates and ongoing product cost initiatives which helped us exceed our net income expectations for the quarter. Looking forward, we continue to see end market growth in IMM and automotive and expect further revenue growth as volumes continue to ramp across our expanded product portfolio."
Second Fiscal Quarter 2014 Results
Revenue in the second fiscal quarter ended March 31, 2014 was $80.9 million, compared to $79.1 million in the fiscal first quarter of 2014 and $75.0 million in the second fiscal quarter of 2013. Revenue in the second fiscal quarter of 2014 consisted of $72.9 million of SRAM and DRAM revenue, $6.6 million of NOR flash revenue, and $1.4 million of analog revenue. SRAM and DRAM revenue increased 5.1% from the December 2013 quarter and 10.2% from the March 2013 quarter.
Gross margin in the second fiscal quarter was 34.3%, compared to 32.3% in the December 2013 quarter, and 33.3% in the March 2013 quarter.
During the quarter, the Company continued to sell a portion of the Nanya shares it purchased in September 2012, realizing a gain of $3.9 million. The remaining tradable Nanya shares are classified as short-term investments since the Company intends to sell such shares within one year. Additionally, the Company sold its remaining SMIC shares, realizing a gain of $2.1 million.
GAAP income tax expense in the second fiscal quarter was $2.9 million, compared to $1.6 million in the December 2013 quarter and $3.2 million in the March 2013 quarter.
GAAP net income in the second fiscal quarter of 2014 was $8.8 million, or $0.28 per diluted share, compared to GAAP net income of $5.4 million, or $0.18 per diluted share, in the December 2013 quarter and GAAP net income of $3.3 million, or $0.11 per diluted share, in the March 2013 quarter.
Second quarter non-GAAP net income was $7.2 million, or $0.23 per diluted share, compared to $5.4 million, or $0.18 per diluted share, in the December 2013 quarter and $6.1 million, or $0.21 per diluted share, in the March 2013 quarter.
Non-GAAP results exclude stock based compensation, amortization of intangibles related to acquisitions, gains on the sales of investments, and non-cash tax expense. A reconciliation of GAAP results to non-GAAP results is provided in the financial statement tables following the text of this press release.
June Quarter Outlook
The Company expects total revenue for the June quarter to range between $81.0 million and $86.0 million, consisting of SRAM and DRAM revenue of between $72.5 million and $76.0 million, NOR flash revenue between $6.5 million and $7.5 million, and analog revenue of between $2.0 million and $2.5 million. Gross margin for the June quarter is expected to range between 33.5 percent and 34.5 percent. Operating expenses are expected to range between $22.0 million and $23.0 million. The Company expects to realize additional gains on the Nanya shares in the June quarter. However, it is difficult to predict the total gains for the quarter and, as such, these gains have been excluded from the GAAP and non-GAAP net income guidance. GAAP net income is expected to be between $0.12 and $0.16 per diluted share and non-GAAP net income, which excludes stock based compensation, amortization of intangibles related to acquisitions, gains on the sales of Nanya shares and non-cash tax expense, is expected to range between $0.22 and $0.26 per diluted share.
Conference Call Information
A conference call will be held today at 7:00 a.m. Pacific Time to discuss the Company's second fiscal quarter financial results. To access ISSI's conference call via telephone, dial 888-455-2260 by 6:50 a.m. Pacific Time. The participant passcode is 8293165. The call will also be webcast from ISSI's website at http://www.issi.com.
Non-GAAP Financial Information
In addition to disclosing results determined in accordance with GAAP, ISSI discloses its non-GAAP operating income, provision for income taxes and net income for certain periods that exclude stock based compensation, the amortization of intangibles related to acquisitions, gains on sales of investments, and non-cash tax expense. When presenting non-GAAP results, the Company includes a reconciliation of the non-GAAP results to the results under GAAP. Management believes that including the non-GAAP results assists investors in assessing the Company's operational performance and its performance relative to its competitors. The Company has presented its non-GAAP results as a complement to its results provided in accordance with GAAP, and these results should not be regarded as a substitute for GAAP. Management uses non-GAAP measures to plan and forecast future periods, to establish operational goals, to compare with its business plan and individual operating budgets, to assist the public in measuring the Company's performance, to allocate resources and, relative to the Company's historical financial performance, to enable comparability between periods. Management also considers such non-GAAP results to be an important supplemental measure of its performance. The economic substance behind management's decision to use such non-GAAP measures relates to the non-GAAP measures being a useful measure of the potential future performance of the Company's business. In line with common industry practice and to help enable comparability with other technology companies, the Company's non-GAAP presentation excludes the impact of the items described above. Other companies may calculate non-GAAP results differently than the Company, limiting its usefulness as a comparative measure. In addition, such non-GAAP measures may exclude financial information that some may consider important in evaluating the Company's performance. Management compensates for the foregoing limitations of non-GAAP measures by presenting certain information on both a GAAP and non-GAAP basis and providing reconciliations of the GAAP and non-GAAP measures.