Exar Corporation Announces 2016 Fourth Quarter and Fiscal Year-End Financial Results

- Fourth Quarter Non-GAAP Operating Profit of $3.9 Million and Non-GAAP EPS of $0.08;

(PRNewswire) —  Exar Corporation (NYSE: EXAR) a leading supplier of analog mixed-signal semiconductor components and system solutions serving the industrial, high-end consumer and infrastructure markets, today announced financial results for the Company's 2016 fourth quarter and fiscal year-end, which ended on March 27, 2016.

Richard L. Leza, Exar's Chairman and Interim President and CEO, commented, "We delivered solid non-GAAP results within our EPS expectation range.  Revenue does not include $1.1 million of display shipments to a single direct customer, which, although shipped in the fourth quarter, did not meet revenue recognition criteria.  It is reflected in our first quarter guidance.  Fourth quarter non-GAAP gross margin improved approximately 150 basis points sequentially, as we benefited from favorable product mix and our strategic manufacturing cost-down initiatives."  Mr. Leza continued, "In the period that I have been Interim CEO, the entire Exar team has responded to the Company's new strategic direction; and as a result of our focus, teamwork, and improved execution, non-GAAP operating income has increased 34%."

2016 Fourth Quarter and Fiscal Year-End Highlights
The following highlights the Company's financial performance on both a GAAP and supplemental non-GAAP basis.  The Company provides supplemental information regarding its operating performance on a non-GAAP basis that excludes certain gains, losses, and charges, which either occur relatively infrequently or which management considers to be outside our core operating results.  Non-GAAP results are not in accordance with GAAP and may not be comparable to non-GAAP information provided by other companies.  Non-GAAP information should be considered a supplement to, not a substitute for, financial statements prepared in accordance with GAAP.  A complete reconciliation of GAAP to non-GAAP results is attached to this press release.

Fourth Quarter Fiscal Year 2016 Highlights on a Non-GAAP Basis:

  • Fourth quarter revenues of $36.8 million decreased $0.7 million or 2% from the previous quarter's revenue of $37.4 million, and decreased $7.1 million or 16% from the $43.9 million reported in the same quarter a year ago.
  • Gross margin of 47.6% increased from the 46.1% reported in the previous quarter, and decreased from the 48.7% reported in the same quarter a year ago.
  • Operating expenses of $13.6 million decreased $0.1 million or 1% from the previous quarter's expenses of $13.7 million, and decreased $1.9 million or 12% from the same quarter a year ago.
  • Net income of $3.8 million increased $0.4 million or 12% from the previous quarter's net income of $3.4 million, and decreased $1.8 million or 32% from the same quarter a year ago.
  • Diluted earnings per share of $0.08 increased $0.01 per share from the previous quarter, and decreased $0.03 per share from the same quarter a year ago.

Fourth Quarter Fiscal Year 2016 Highlights on a GAAP Basis:

  • Fourth quarter revenues were $36.8 million.
  • Gross margin of 40.2% increased from the 39.2% reported in the previous quarter, and decreased from the 40.9% reported in the same quarter a year ago.
  • Operating expenses of $16.9 million decreased $4.7 million from the previous quarter's expenses of $21.5 million, and decreased $3.4 million from the same quarter a year ago.
  • Net loss of $2.2 million compared to the previous quarter's net loss of $7.1 million, and a $2.9 million net loss for the same quarter a year ago.
  • Loss per share of $0.04 compared to the previous quarter's loss per share of $0.15, and a $0.06 loss per share for the same quarter a year ago.
  • GAAP results were impacted by charges of (i) $3.4 million related to amortization, (ii) $1.2 million related to stock-based compensation, (iii) $0.8 million accrual for settlement and legal fees related to patent litigation, and (iv) $0.6 million related to ongoing restructuring activities and legal costs associated with the strategic alternatives review.

Fiscal Year 2016 Highlights on a Non-GAAP Basis:

  • 2016 revenues of $151.9 million decreased $12.2 million or 7% from the $164.1 million reported for fiscal year 2015.
  • 2016 diluted earnings per share of $0.31 increased $0.02 per share from fiscal year 2015.

Fiscal Year 2016 Highlights on a GAAP Basis:

  • 2016 revenues of $149.4 million decreased $12.7 million or 8% from the $162.1 million reported for fiscal year 2015.
  • 2016 loss per share of $0.33 compared to a $0.95 loss per share for fiscal year 2015.

Ryan Benton, Exar's Senior Vice President and Chief Financial Officer, stated, "We finished fiscal year 2016 solidly and are entering fiscal year 2017 well positioned, with strategic focus, discipline, and strong momentum on multiple fronts.  In addition to strong free cash flow for the fourth quarter of $4.3 million, we recently signed an agreement for the sale and leaseback of our corporate facility for a sale price of $26.0 million.  This transaction is part of our larger strategy to focus on our core competencies, maximize Exar's operating cash and redeploy assets toward our fundamental goal of increasing shareholder value."

2017 First Quarter Non-GAAP Guidance
For the 2017 first quarter ending July 3, 2016, the Company expects revenue to be up 7% to 12% sequentially, non-GAAP gross margin to be in the range of 47% to 49%, and non-GAAP EPS on a fully diluted basis to be in the range of $0.09 to $0.13.

Exar noted that the first quarter of 2017 is comprised of fourteen weeks, as opposed to the usual thirteen weeks, and is reflected in the guidance.

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