International Rectifier Reports Third Quarter Fiscal Year 2014 Results

EL SEGUNDO, Calif. — (BUSINESS WIRE) — April 30, 2014 — International Rectifier Corporation (NYSE: IRF) today announced financial results for the third quarter (ended March 30, 2014) of its fiscal year 2014. Revenue was $269.3 million, about flat compared to $270.0 million in the prior quarter and a 20.1% increase from $224.3 million in the prior year quarter. GAAP net income for the third quarter was $19.1 million, or $0.26 per fully diluted share compared to GAAP net income of $17.9 million, or $0.25 per fully diluted share, in the prior quarter and GAAP net loss of $21.2 million, or $0.31 per fully diluted share in the prior year quarter.

“We had a solid start in 2014 as the momentum we experienced at the end of 2013 continued through the March quarter, stated President and Chief Executive Officer Oleg Khaykin. “In particular, we saw significant strength in the industrial and automotive end markets in Europe.”

GAAP gross margin for the third quarter was 37.2% compared to 36.3% in the prior quarter and 24.3% in the prior year quarter. GAAP operating income for the third quarter was $19.2 million compared to GAAP operating income of $17.8 million in the prior quarter and a GAAP operating loss of $20.0 million in the prior year quarter.

Cash, cash equivalents and marketable investments increased $37.8 million during the third quarter and totaled $542.7 million at the end of the third quarter, including restricted cash of $1.4 million.

Cash provided by operating activities for the quarter was $51.6 million and free cash flow was $38.4 million for the quarter.

Non-GAAP Results

Non-GAAP net income for the third quarter was $19.7 million, or $0.27 per fully diluted share compared to non-GAAP net income of $13.4 million, or $0.19 per fully diluted share in the prior quarter and non-GAAP net loss of $19.8 million, or $0.29 per fully diluted share in the prior year quarter.

Non-GAAP gross margin for the third quarter was 36.3% compared to non-GAAP gross margin of 36.5% in the prior quarter and non-GAAP gross margin of 24.3% in the prior year quarter. Non-GAAP operating income for the third quarter was $20.1 million, or 7.5% of revenue, compared to non-GAAP operating income of $21.1 million in the prior quarter and non-GAAP operating loss of $17.5 million in the prior year quarter.

The non-GAAP results the Company provides exclude the effects of accelerated depreciation, a product claim reserve release, restructuring costs, amortization of intangibles, the associated net tax effects of these items, and discrete tax provisions and benefits. The Company excludes any tax provisions (benefits) that are not directly related to ongoing operations and which are either isolated or cannot be expected to occur again with any regularity or predictability.

A reconciliation of these non-GAAP measures to the Company’s reported net income (loss), gross margin (referred to as gross profit in attached schedules) and operating income (loss) in accordance with U.S. GAAP are set forth in the attached schedules below.

June Quarter Outlook

Mr. Khaykin noted: “Looking ahead to the June quarter, we expect to see continued improvement in our business driven by growth in our industrial and appliance end markets and a seasonal pick up in our computing and consumer end markets. As a result, we currently expect revenue for the June quarter to range between $280 million to $295 million.

“We remain optimistic for the remainder of 2014 as we continue to see an improving macro environment. We are also seeing strong momentum behind our specific growth drivers such as digital power management systems, automotive applications and high power industrial and appliance modules.”

The following table outlines International Rectifier’s current June quarter outlook on a GAAP basis and a non-GAAP basis, based on certain anticipated excluded items:

  GAAP   Excluded Items   Non-GAAP
Revenue $280 to $295 million $280 to $295 million
 
Gross margin

35.8% to 36.3%

0.2% for accelerated depreciation 36% to 36.5%
 
Operating Expenses
 
Research & development expense about $33 million about $33 million
 
Sales general & administrative expense

$45 to $46 million

$45 to $46 million

 
Asset impairment, restructuring and other charges $1 to $1.5 million $1 to $1.5 million
 

Amortization of acquisition related intangibles

$1.6 million

$1.6 million

 
Other Expense, net $1 million $1 million
 
Tax about $3.5 million Expense about $0.5 million due to net tax effects about $4 million Expense

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