THIRD QUARTER HIGHLIGHTS
- Revenues increased 3.5% year-over-year to $31.8 million
- Achieved 46.3% gross margin (47.9% non-GAAP), a year-over-year increase of 550 bps
- Operating margin was 7.9% (14.1% non-GAAP) as compared with 1.3% in the same quarter last year
- Net income was $0.11 per diluted share as compared with $0.07 in Q3 last year
- Non-GAAP net income was $0.17 per diluted share as compared with $0.08 in Q3 last year
- Paid quarterly dividend of $0.06 per share
"Our continued execution during the quarter led to record non-GAAP gross margin of 47.9 percent, increasing 540 basis points over the prior year period. Combined with a 760 basis point year-over-year improvement in non-GAAP operating margin, we achieved non-GAAP earnings per diluted share of $0.17," said Alex Hui, President and CEO of Pericom. "Revenue in the quarter reflected sequential strength in our networking and server & storage end markets, primarily offset by softer than expected demand for our timing products. Looking forward, we expect continued improvement in profitability as we further expand our content in high-growth applications."
Net revenues for the third quarter were $31.8 million, up 3.5% from the $30.7 million reported in the year-ago quarter, and down 4.5% compared to $33.3 million in the second quarter of fiscal 2015. Revenue increased year-over-year primarily as a result of strength in the PC/notebook and server & storage end markets.
GAAP gross margin was 46.3% in the third quarter, a 550 basis point increase from 40.8% during the third quarter of fiscal 2014, and a 170 basis point increase compared to 44.6% in the prior quarter.
GAAP operating income in the fiscal third quarter was $2.5 million, or 7.9% of revenue, compared with $0.4 million, or 1.3% of revenue, in the third quarter of 2014, and operating income of $2.8 million, or 8.3% of revenue, in the second quarter of 2015.
GAAP net income for the third quarter was $2.5 million, or $0.11 per diluted share, compared with net income of $1.6 million, or $0.07 per diluted share, in the third quarter of 2014, and net income of $3.7 million, or $0.16 per diluted share in the second quarter of fiscal 2015.
To facilitate the complete understanding of comparable financial performance between periods, Pericom also presents performance results net of certain non-cash and one-time items as non-GAAP measures.
On a non-GAAP basis, gross margin was 47.9% in the third quarter, a 540 basis point increase from 42.5% during the third quarter of fiscal 2014, and a 170 basis point increase compared to 46.2% in the prior quarter.
On a non-GAAP basis, fiscal third quarter operating income was $4.5 million, or 14.1% of revenue, compared to $2.0 million, or 6.5% of revenue, in the year-ago quarter, and operating income of $4.5 million, or 13.5% of revenue, in the second quarter of 2015.
On a non-GAAP basis, net income for the third quarter was $3.9 million, or $0.17 per diluted share, compared to non-GAAP net income of $1.8 million, or $0.08 per diluted share, in the year-ago quarter, and non-GAAP net income of $5.0 million, or $0.22 per diluted share, in the second quarter of fiscal 2015.
In the third quarter of fiscal 2015, Pericom introduced a total of 16 new products in our Signal Integrity, Connectivity, Switching, and Timing product areas. All of these products are targeted to our focus market segments, and were sampled to key customers during the quarter.
We introduced 1 new Connectivity product -- a video/audio media bridge targeting PCIe video, automotive camera, and video server applications.
We introduced 2 new switches including a Type C protocol switch and a 12Gb high performance switch targeting server, storage/server, PC computing, and mobile platform applications. Type C refers to the new USB connector that will replace existing, older USB connectors on almost all devices over the next few years. The new Type C is small, doesn't care which way the connector is inserted, and can handle higher data rates and more power.
We expanded our Timing solutions for next generation enterprise and cloud computing platforms with 1 new XO product family with frequency programming, and 8 high performance clock buffers and low-power clock generators aimed at enterprise/ networking and cloud storage applications.
For Signal Integrity we introduced 4 new products, including additions to the USB3 5Gb redriver for mobility platforms, a new automotive USB3 ReDriver with AEC-Q rating for infotainment systems, and an HDMI active redriver/mux aimed at consumer and computing applications.
On January 26, 2015, the Company announced that Pericom's Board of Directors had approved the initiation of quarterly cash dividends, commencing with a dividend of $0.06 per share of common stock for the quarter ended December 27, 2014. The Company's dividend of $0.06 per share of common stock for the quarter ended March 28, 2015 will be payable on May 26, 2015 to shareholders of record at the close of business on May 12, 2015.
Share Repurchase Update
The Company repurchased 73,677 shares in the three months ended March 28, 2015 for an aggregate cost of $1.0 million at an average per share purchase price of $13.72. The remaining balance of potential share repurchases under the authorization is approximately $21.6 million. Shares may be repurchased from time to time in the open market or through private transactions, at the discretion of Pericom management. As of April 22, 2015, Pericom had approximately 22.4 million shares of common stock outstanding.
Fiscal Q4 2015 Outlook
The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. For the fiscal quarter ended June 27, 2015 guidance is as follows:
- Revenues are expected to be in the range of $31.0 million to $33.0 million.
- GAAP gross margins are expected to be between 44.0% and 46.0%, and adjusting for share-based compensation, amortization of intangibles and fair value adjustments that are expected to total approximately 1.5%, non-GAAP gross margins are expected to be in the 45.5% to 47.5% range.
- GAAP operating expenses are expected to be approximately $12.2 million, and adjusting for share-based compensation, amortization of intangibles and fair value adjustments that are expected to total approximately $1.2 million, non-GAAP operating expenses are expected to be approximately $11.0 million.
- Other income is expected to be approximately $1.0 million on both a GAAP and non-GAAP basis.
- The effective tax rate is expected to be approximately 24% on a GAAP basis and approximately 20% on a non-GAAP basis.
The press release will be followed by a conference call beginning at 1:30 p.m. Pacific time on April 28, 2015. To listen to the call, dial (877) 377-7103 and provide the operator with conference ID 28420725. A slide presentation will accompany the conference call. To view the slides, please visit the investor relations section of www.pericom.com.
The Pericom financial results conference call will also be available via a live webcast on the investor relations section of the website at http://www.pericom.com. Access the website 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the website for approximately 90 days.
Pericom Semiconductor Corporation (