Micrel Reports 2013 Second Quarter Financial Results

Marketwired

SAN JOSE, CA--(Marketwired - Jul 25, 2013) - Micrel, Incorporated (NASDAQ: MCRL)

  • Revenues of $59.2 million, compared to $59.7 million in the prior quarter
  • GAAP net income of $5.0 million, or $0.09 per diluted share compared to a net income of $5.2 million, or $0.09 per diluted share in the prior quarter
  • Non-GAAP net income of $6.2 million, or $0.10 per diluted share compared to a net income of $6.3 million, or $0.11 per diluted share in the prior quarter
  • Gross margin of 52.5%, compared to 52.0% in the prior quarter
  • Second quarter book to bill over 1:1
  • Re-purchased 469,000 shares of Micrel common stock for a total of $4.7 million
  • Board of Directors approved an 18 percent increase in the quarterly dividend to $0.05 per share from $0.0425 per share payable on August 28, 2013 to shareholders of record as of August 14, 2013

Micrel, Incorporated (NASDAQ: MCRL), a leading global manufacturer of IC solutions for the worldwide high performance linear and power, LAN and timing and communications markets, today announced financial results for the second quarter ended June 30, 2013.

Second quarter revenues totaled $59.2 million, a decrease of $0.6 million, or 0.9%, from $59.7 million in the first quarter of 2013. Micrel experienced strength in most of its end markets except for its mobile handset market which was down 18.2% compared to the prior quarter. Compared to the same period last year, second quarter 2013 revenues were lower by $4.5 million, or 7.1%.

Second quarter 2013 GAAP net income of $5.0 million, or $0.09 per diluted share, compares to first quarter 2013 GAAP net income of $5.2 million, or $0.09 per diluted share, and GAAP net income of $6.0 million, or $0.10 per diluted share in the same period in 2012. Second quarter 2013 non-GAAP net income of $6.2 million, or $0.10 per diluted share, compares to first quarter 2013 non-GAAP net income of $6.3 million, or $0.11 per diluted share, and non-GAAP net income of $7.3 million, or $0.12 per diluted share, in the same period of 2012. A reconciliation of the GAAP net income to non-GAAP net income is provided in the financial tables at the end of this press release. Non-GAAP results exclude the impact of stock-based compensation expense with the related tax effects.

Commenting on the second quarter 2013 results, Micrel's President and CEO Ray Zinn said, "Revenues of $59.2 million during the quarter benefited from higher sales of Micrel's products to the communications, computing, consumer and industrial end markets but this strength was offset by lower than anticipated sales to the Company's largest mobile handset customer. Operationally, second quarter gross margin improved sequentially to 52.5% from 52.0% primarily due to a product mix favoring a greater percentage of higher margin communications, computing and industrial products. Despite the continued economic uncertainty facing our industry, I am encouraged by the sustained strength of our bookings, which have yielded a book-to-bill ratio above one for the second quarter and on a year-to-date basis. In addition, we remain focused on increasing shareholder value through our stock repurchase program and quarterly dividend payments. Just this past quarter, Micrel spent $4.7 million to repurchase nearly 469,000 shares of common stock, and we also increased our quarterly dividend 18% to $0.05 per common share to shareholders of record as of August 14, 2013." 

Outlook
Mr. Zinn continued, "We continue to be optimistic about Micrel's future. While the overall semiconductor industry appears to be showing signs of improvement thus far in the third quarter, it now appears that the recovery will not initially be as robust as we originally thought primarily due to continued weakness in the world economies and, in particular, the U.S. economy. Although we are experiencing strength in the automotive and industrial markets, slowing demand in the mobile phone market, and in particular for smartphones, is impacting growth for the industry as a whole. However, we are encouraged with the improved booking levels we are getting from our largest mobile customer for the third quarter."

"Based upon current inventory levels and demand estimates, Micrel projects third quarter 2013 revenue growth will be in the range of flat to plus 5% on a sequential basis. Gross profit margin is expected to be approximately 52.0%. In addition, the Company estimates that third quarter 2013 GAAP net income will be approximately $0.07 to $0.09 per diluted share. Design win momentum continues to improve and we are releasing exciting new products which give us confidence the Company will be able to grow going forward," Mr. Zinn concluded.

Dividend
The Company announced today that Micrel's Board of Directors has authorized an increase in the quarterly cash dividend to $0.05 per share of common stock. The payment of this dividend will be made on August 28, 2013, to shareholders of record as of August 14, 2013.

Conference Call
The Company will host a conference call today, July 25, 2013, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). President and Chief Executive Officer, Raymond Zinn, and Chief Financial Officer, Ray Wallin, will present an overview of the 2013 second quarter financial results, discuss current business conditions, and then respond to questions.

The call is available, live, to any interested party, on a listen-only basis, by dialing (855) 410-0553 and entering the participant code 129262 followed by the # key. For international callers, please dial (646) 583-7389 and enter the participant code 129262 followed by the # key. A live webcast will also be available at the 'Investors' section of Micrel's website at: www.micrel.com. An audio replay of the conference call will be available for all interested parties through August 1, 2013, by dialing (877) 764-8714 or (646) 583-7395 and entering the participant code 338622 followed by the # key. The webcast replay will also be available on the Company's website.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This press release includes statements that qualify as forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about the following topics: our expectations regarding future financial results, including revenues, customer demand and inventories, order lead times, backlog, turns-fill requirements, net income, earnings per share, gross margin, average selling prices, the effect of cost-control efforts, supply chain constraints, channel inventory levels and trends, capacity utilization, development of new products, design wins and customer order patterns, and the nature and extent of macro-economic and industry trends. Forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially. Those risks and uncertainties include, but are not limited to, such factors as: softness in demand for our products; customer decisions to cancel, rescheduling, or delayed orders for our products; the effect that lead times and channel inventories have on the demand for our products; economic or financial difficulties experienced by our customers; the effect of business conditions in the computing, wireless, telecommunications and industrial markets; the impact of any previous or future acquisitions; changes in demand for the Company's products; the impact of competitive products and pricing and alternative technological advances; the accuracy of estimates used to prepare the Company's financial statements and forecasts; the global economic situation; the ability of the Company's vendors and subcontractors to supply or manufacture the Company's products in a timely manner; the timely and successful development and market acceptance of new products and upgrades to existing products; softness in the economy and the U.S. stock markets as a whole; fluctuations in the market price of Micrel's common stock and other market conditions; the difficulty of predicting our future cash needs; the nature of other investment opportunities available to the Company from time to time; Micrel's operating cash flow, and economic and industry projections. For further discussion of these risks and uncertainties, please refer to the documents the Company files with the SEC from time to time, including the Company's Annual Report on Form 10-K for the year ended December 31, 2012. All forward-looking statements are made as of today, and the Company disclaims any duty to update such statements.

Non-GAAP Reporting
The Company presents non-GAAP financial measures only because investors and financial analysts use non-GAAP results in their analysis of historical results and projections of the Company's future operating results. The Company's management uses non-GAAP measures on a limited basis, primarily for employee performance-based compensation. In order to facilitate the computation of non-GAAP results for the financial analyst community and investors, the Company makes reference to non-GAAP net income and earnings per share. These non-GAAP results exclude the impact of stock-based compensation expense with related taxes. Micrel references those results to allow a better comparison of results in the current period to those in prior periods and to provide insight to the Company's on-going operating performance after exclusion of these items. The Company has reconciled such non-GAAP results to the most directly comparable GAAP financial measures in the financial tables at the end of this press release.

Reference to these non-GAAP results should be considered in addition to results that are prepared under current accounting standards, but should not be considered a substitute for results that are presented in accordance with GAAP. It should also be noted that Micrel's non-GAAP information may be different from the non-GAAP information provided by other companies.

About Micrel
Micrel, Inc. is a leading global manufacturer of IC solutions for the worldwide high performance linear and power, LAN and timing and communications markets. The Company's products include advanced mixed-signal, analog and power semiconductors; high performance communication, clock management, Ethernet switch and physical layer transceiver ICs. Company customers include leading manufacturers of enterprise, consumer, industrial, mobile, telecommunications, automotive, and computing products. Corporation headquarters and state-of-the-art wafer fabrication facilities are located in San Jose, CA, with regional sales and support offices and advanced technology design centers situated throughout the Americas, Europe and Asia. In addition, the Company maintains an extensive network of distributors and reps worldwide.

For further information, contact Ray Wallin at: Micrel, Incorporated, 2180 Fortune Drive, San Jose, California 95131, (408) 944-0800; or visit the Micrel website at: www.micrel.com.

-Financial Tables to Follow-

                       
MICREL, INCORPORATED  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share amounts)  
(Unaudited)  
                       
    Three Months Ended   Six Months Ended  
    June 30,   June 30,   March 31,   June 30,  
    2013   2012   2013   2013   2012  
Net revenues   $ 59,171   $ 63,699   $ 59,733   $ 118,904   $ 124,850  
Cost of revenues*     28,089     28,565     28,653     56,742     56,540  
Gross profit     31,082     35,134     31,080     62,162     68,310  
Operating expenses:                                
  Research and development*     13,501     13,920     13,771     27,272     27,244  
  Selling, general and administrative*     11,433     12,179     11,861     23,294     23,339  
    Total operating expenses     24,934     26,099     25,632     50,566     50,583  
Income from operations     6,148     9,035     5,448     11,596     17,727  
Interest and other income (expense):                                
  Interest income     126     187     126     252     388  
  Interest expense     -     (42 )   -     -     (47 )
  Other income (expense)     (52 )   (123 )   (91 )   (143 )   (123 )
    Interest and other income (expense), net     74     22     35     109     218  
Income before income taxes and noncontrolling interest     6,222     9,057     5,483     11,705     17,945  
Provision for income taxes     1,187     3,026     238     1,425     6,007  
Net income     5,035     6,031     5,245     10,280     11,938  
Less: Net income attributable to noncontrolling interest     -     (4 )   -     -     (4 )
Net income attributable to Micrel, Incorporated   $ 5,035   $ 6,027   $ 5,245   $ 10,280   $ 11,934  
                                 
Net income per share:                                
  Basic   $ 0.09   $ 0.10   $ 0.09   $ 0.18   $ 0.20  
  Diluted   $ 0.09   $ 0.10   $ 0.09   $ 0.17   $ 0.19  
                                 
Shares used in computing per share amounts:                                
  Basic     58,303     60,217     58,270     58,287     60,533  
  Diluted     59,007     60,837     59,030     59,021     61,219  
                                 
                                 
* Includes amortization of stock-based compensation as follows:                                
  Cost of revenues   $ 270   $ 282   $ 244   $ 514   $ 566  
  Research and development     652     812     652     1,304     1,557  
  Selling, general and administrative     772     815     723     1,495     1,568  
                                 
                                 
                                 
                       
MICREL, INCORPORATED  
SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS  
(In thousands, except per share amounts)  
(Unaudited)  
                       
    Three Months Ended   Six Months Ended  
    June 30,   June 30,   March 31,   June 30,  
    2013   2012   2013   2013   2012  
                       
GAAP net income attributable to Micrel, Incorporated   $ 5,035   $ 6,027   $ 5,245   $ 10,280   $ 11,934  
  Adjustments -                                
    Stock-based compensation included in:                                
      Cost of revenues     270     282     244     514     566  
      Research and development     652     812     652     1,304     1,557  
      Selling, general and administrative     772     815     723     1,495     1,568  
      Tax effect of adjustments to GAAP income     (552 )   (679 )   (550 )   (1,102 )   (1,305 )
  Total adjustments to GAAP net income     1,142     1,230     1,069     2,211     2,386  
Non-GAAP net income attributable to Micrel, Incorporated*   $ 6,177   $ 7,257   $ 6,314   $ 12,491   $ 14,320  
                                 
Shares used in computing non-GAAP income per share attributable to Micrel, Incorporated:                                
      Basic     58,303     60,217     58,270     58,287     60,533  
      Diluted     59,007     61,142     59,030     59,021     61,514  
                                 
GAAP income per share - basic   $ 0.09   $ 0.10   $ 0.09   $ 0.18   $ 0.20  
Total adjustments to GAAP net income     0.02     0.02     0.02     0.03     0.04  
Non-GAAP income per share - basic   $ 0.11   $ 0.12   $ 0.11   $ 0.21   $ 0.24  
                                 
GAAP income per share - diluted   $ 0.09   $ 0.10   $ 0.09   $ 0.17   $ 0.19  
Total adjustments to GAAP net income     0.01     0.02     0.02     0.04     0.04  
Non-GAAP income per share - diluted   $ 0.10   $ 0.12   $ 0.11   $ 0.21   $ 0.23  
                                 
* Non-GAAP results were reached by excluding the stock-based compensation expense with related income tax effects. Non-GAAP results are presented to supplement our GAAP consolidated financial statements to allow a better comparison of results in the current period to those in prior periods and to provide meaningful insight to the Company's on-going operating performance after exclusion of these items.  
   
               
                                 
       
       
MICREL, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
       
  June 30,   December 31,
  2013   2012
ASSETS      
       
CURRENT ASSETS:      
  Cash, cash equivalents and short-term investments $ 104,917   $ 103,630
  Restricted cash   126     291
  Accounts receivable, net   35,535     27,683
  Inventories   43,215     42,256
  Income taxes receivable   2,253     4,090
  Other current assets   2,201     2,355
  Deferred income taxes   21,751     19,811
    Total current assets   209,998     200,116
           
LONG-TERM INVESTMENTS   4,216     4,159
PROPERTY, PLANT AND EQUIPMENT, NET   57,946     60,692
DEFERRED INCOME TAXES   659     16
GOODWILL   6,076     6,076
INTANGIBLE ASSETS, NET   8,779     7,906
OTHER ASSETS   1,492     2,489
TOTAL $ 289,166   $ 281,454
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
CURRENT LIABILITIES:          
  Accounts payable $ 13,574   $ 21,936
  Deferred income on shipments to distributors   31,980     25,768
  Other current liabilities   9,665     8,833
    Total current liabilities   55,219     56,537
           
LONG-TERM INCOME TAXES PAYABLE   3,425     2,759
LONG-TERM DEFFERRED INCOME TAXES   792     1,054
OTHER LONG-TERM LIABILITIES   54     -
           
SHAREHOLDERS' EQUITY:          
TOTAL SHAREHOLDERS' EQUITY   229,676     221,104
TOTAL $ 289,166   $ 281,454
           
    -     -
           
           
           
Contact:

Ray Wallin
Micrel, Incorporated
2180 Fortune Drive
San Jose, CA 95131
Phone: (408) 944-0800

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