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Alpha and Omega Semiconductor Reports Financial Results for Fiscal Fourth Quarter and Fiscal Year Ended June 30, 2022

·19 min read

SUNNYVALE, Calif., August 10, 2022--(BUSINESS WIRE)--Alpha and Omega Semiconductor Limited ("AOS") (NASDAQ: AOSL), today reported financial results for the fiscal fourth quarter and the fiscal year ended June 30, 2022.

The results for the fiscal fourth quarter ended June 30, 2022 were as follows:

GAAP Financial Comparison

Quarterly

(in millions, except percentage and per share data)

(unaudited)

Three Months Ended

June 30, 2022

March 31, 2022

June 30, 2021

Revenue

$

194.0

$

203.2

$

177.3

Gross Margin

32.6

%

35.6

%

34.2

%

Operating Income

$

18.1

$

31.2

$

22.4

Net Income Attributable to AOS

$

15.1

$

31.7

$

19.5

Net Income Per Share Attributable to AOS - Diluted

$

0.53

$

1.11

$

0.71

Non-GAAP Financial Comparison

Quarterly

(in millions, except percentage and per share data)

(unaudited)

Three Months Ended

June 30, 2022

March 31, 2022

June 30, 2021

Revenue

$

194.0

$

203.2

$

177.3

Non-GAAP Gross Margin

33.8

%

36.7

%

34.9

%

Non-GAAP Operating Income

$

28.9

$

40.5

$

29.1

Non-GAAP Net Income Attributable to AOS

$

27.1

$

38.2

$

26.3

Non-GAAP Net Income Per Share Attributable to AOS - Diluted

$

0.95

$

1.34

$

0.95

The non-GAAP financial measures in the schedule above and under the section "Financial Result for Fiscal Q4 Ended June 30, 2022" below exclude the effect of share-based compensation expenses, amortization of purchased intangible, legal costs related to government investigation and income tax effect of non-GAAP adjustments in each of the periods presented, and equity method investment loss from equity investee for the three months ended June 30, 2022 and March 31, 2022, as well as gain on deconsolidation and changes of equity interest in the JV Company for the three months ended March 31, 2022. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.

The results for the fiscal year ended June 30, 2022 and 2021 were as follows:

GAAP Financial Comparison

Annually

(in millions, except percentage and per share data)

(unaudited)

Year Ended June 30,

2022

2021

Revenue

$

777.6

$

656.9

Gross Margin

34.5

%

31.1

%

Operating Income

$

102.0

$

64.1

Net Income Attributable to AOS

$

453.2

$

58.1

Net Income Per Share attributable to AOS - Diluted

$

16.07

$

2.13

Non-GAAP Financial Comparison

Annually

(in millions, except percentage and per share data)

(unaudited)

Year Ended June 30,

2022

2021

Revenue

$

777.6

$

656.9

Non-GAAP Gross Margin

35.6

%

31.9

%

Non-GAAP Operating Income

$

137.6

$

86.0

Non-GAAP Net Income Attributable to AOS

$

128.6

$

79.9

Non-GAAP Net Income Per Share Attributable to AOS - Diluted

$

4.56

$

2.93

The non-GAAP financial measures in the schedule above exclude the effect of share-based compensation expenses, amortization of purchased intangible, legal costs related to government investigation and income tax effect of non-GAAP adjustments for fiscal years ended June 30, 2022 and 2021, and equity method investment loss from equity investee and gain on deconsolidation and changes of equity interest in the JV Company for the fiscal year ended June 30, 2022, as well as production ramp up costs related to joint venture for fiscal year ended June 30, 2021. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.

Financial Results for Fiscal Q4 Ended June 30, 2022

  • Revenue was $194.0 million, an increase of 9.4% from the same quarter last year and a decrease of 4.6% quarter-over-quarter.

  • GAAP gross margin was 32.6%, down from 34.2% year-over-year and 35.6% in the prior quarter.

  • Non-GAAP gross margin was 33.8%, down from 34.9% from the same quarter last year and down from 36.7% in the prior quarter.

  • GAAP operating expenses were $45.1 million, up from $41.2 million in the prior quarter and up from $38.2 million from the same quarter last year.

  • Non-GAAP operating expenses were $36.7 million, an increase of $2.7 million from last quarter and an increase of $3.9 million from the same quarter last year.

  • GAAP operating income was $18.1 million, as compared to $31.2 million in the prior quarter and $22.4 million from the same quarter last year.

  • Non-GAAP operating income was $28.9 million as compared to $40.5 million for the prior quarter and $29.1 million for the same quarter last year.

  • GAAP net income per share attributable to AOS was $0.53, compared to $0.71 earnings per share for the same quarter last year and $1.11 for the prior quarter.

  • Non-GAAP earnings per share attributable to AOS was $0.95, compared to $0.95 for the same quarter last year and $1.34 for the prior quarter.

  • Consolidated cash flow provided by operating activities was $25.7 million, which included $3.4 million of net customer deposits, as compared to $61.8 million in prior quarter, which included $6.4 million of net customer deposits.

  • The Company closed the quarter with $314.4 million of cash and cash equivalents.

AOS Chairman and Chief Executive Officer Dr. Mike Chang commented, "Our fiscal Q4 was another strong quarter despite the challenge posed by the COVID lockdown in Shanghai. Once again, we outperformed our guidance midpoint. Revenue was $194 million, an increase of 9% year-over-year. Non-GAAP gross margin was 33.8% and non-GAAP EPS was $0.95. As a reminder, our ability to assemble and ship products was severely limited for most of April due to the city-wide lockdown in Shanghai. Once cleared to restart operations at the end of April, it also took time for our assembly lines to return to full utilization. Our Shanghai facilities are mostly back to normal and are currently operating at full capacity. I want to express my deepest appreciation to our employees once again for their immense sacrifice and unwavering dedication to AOS during these challenging times. We are grateful to have their loyalty and support."

Dr. Chang continued, "Looking ahead, we are seeing inventory corrections happening in certain consumer end markets. While we are not immune to current global market conditions, as of today, our demand and backlog are still higher than our overall capacity. I believe our strategic position within our sector is resilient thanks to our technology leadership, diversified product portfolio, and strong Tier 1 customer base in all our business segments. In fact, our market share at Tier 1 customers is the highest that it has ever been. The electrification of everything is just getting started, and our power products sit at the forefront of this trend. We are on pace and focused to achieve our one billion dollar annual revenue target in the next couple of years."

Business Outlook for Fiscal Q1 Ending September 30, 2022

The following statements are based on management's current expectations. These statements are forward-looking, and actual results may differ materially. AOS undertakes no obligation to update these statements.

  • Revenue is expected to be $210 million plus or minus $3 million.

  • Gross margin is expected to be 33.8% plus or minus 1%. Non-GAAP gross margin is expected to be 35.0% plus or minus 1%. Note that non-GAAP gross margin excludes $1.8 million of estimated share-based compensation charges and $0.8 million of amortization of purchased intangible assets.

  • GAAP operating expenses are expected to be in the range of $45.7 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $36.5 million plus or minus $1 million. Non-GAAP operating expenses exclude $9.0 million of estimated share-based compensation charges and $0.2 million of estimated legal expenses related to the government investigation.

  • Interest expense is expected to be $1.2 million, and

  • Tax expense is expected to be $1.2 million to $1.4 million.

Conference Call and Webcast

AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal fourth quarter and the fiscal year ended June 30, 2022 today, August 10, 2022 at 2:00 p.m. PT / 5:00 p.m. ET. To listen to the live conference call, please dial +1 (844) 200-6205 or +1 (929) 526-1599 if dialing from outside the United States and Canada. The access code is 577380. A live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com. The webcast replay will be available for seven days after the live call on the same website. In addition, a copy of the script of management's prepared remarks and a live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com.

Forward Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, statements relating to macroeconomic conditions, resumption of production at our Shanghai facilities and continuing impact of COVID-19 pandemic, anticipated earnings power and non-GAAP EPS on an annual basis, our growth opportunities and new markets, our annual revenue target, projected amount of revenue, gross margin, operating income, income tax expenses, net income, and share-based compensation expenses, non-GAAP gross margin, non-GAAP operating expenses, tax expenses, our objectives to achieve revenue target, our ability to gain new customers and design wins, strategic partnership with customers, and other information under the section entitled "Business Outlook for Fiscal Q1 Ending September 30, 2022". Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 pandemic on our business and the city-wide lockdown in Shanghai; deconsolidation of CQJV; our lack of control over the joint venture in China; difficulties and challenges in executing our diversification strategy into different market segments; new tariffs on goods from China; ordering pattern from distributors and seasonality; changes in regulatory environment and government investigation; our ability to introduce or develop new and enhanced products that achieve market acceptance; decline of PC markets; the actual product performance in volume production; the quality and reliability of our product, our ability to achieve design wins; the general business and economic conditions; the state of semiconductor industry and seasonality of our markets; our ability to maintain factory utilization at a desirable level; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 to be filed by AOS with the SEC and other periodic reports we filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law. The fiscal 2022 financial information reported in this press release is subject to the completion of our annual report which will be reported in our forthcoming Form 10-K to be filed with the SEC.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a basis consistent with U.S. GAAP, we disclose certain non-GAAP financial measures for our historical performance, including non-GAAP gross profit, gross margin, operating income, net income attributable to AOS, net income, diluted earnings per share ("EPS") and EBITDAS. These supplemental measures exclude, among other items, share-based compensation expenses, legal costs related to government investigation, amortization of purchased intangible, production ramp up costs related to the JV Company, income tax effect of non-GAAP adjustments, equity method investment loss from equity investee, and gain on deconsolidation and changes of equity interest in the JV Company. We also disclose certain non-GAAP financial measures in our guidance for the next quarter, including non-GAAP gross margin, operating expenses and earnings/loss in equity method investment. We believe that these historical and forecast non-GAAP financial measures provide useful information to both management and investors by excluding certain items and expenses that are not indicative of our core operating results or do not reflect our normal business operations. In addition, our management uses non-GAAP measures to compare our performance relative to forecasts and to benchmark our performance externally against competitors. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as non-GAAP net income (loss) or non-GAAP operating expenses, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. In addition, we included the income tax effect of non-GAAP adjustments in the non-GAAP net income of reconciliation table for all periods presented as the management believes that such non-GAAP presentation provides useful information to investors, even though the amounts are not significant. We seek to compensate for the limitation of our non-GAAP presentation by having provided a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures both in the text in this press release and in the tables attached hereto. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures.

About Alpha and Omega Semiconductor

Alpha and Omega Semiconductor Limited, or AOS, is a designer, developer and global supplier of a broad range of power semiconductors, including a wide portfolio of Power MOSFET, IGBT, IPM, TVS, HVIC, GaN/SiC, Power IC and Digital Power products. AOS has developed extensive intellectual property and technical knowledge that encompasses the latest advancements in the power semiconductor industry, which enables us to introduce innovative products to address the increasingly complex power requirements of advanced electronics. AOS differentiates itself by integrating its Discrete and IC semiconductor process technology, product design, and advanced packaging know-how to develop high performance power management solutions. AOS’ portfolio of products targets high-volume applications, including personal and portable computers, graphic cards, flat panel TVs, home appliances, power tools, smart phones, battery packs, quick chargers, home appliances, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment. For more information, please visit www.aosmd.com.

The following unaudited consolidated financial statements are prepared in accordance with U.S. GAAP.

Alpha and Omega Semiconductor Limited

Condensed Consolidated Statements of Operations

(in thousands, except percentages and per share amounts)

(unaudited)

Three Months Ended

Fiscal Year Ended

June 30,
2022

March 31,
2022

June 30,
2021

June 30,
2022

June 30,
2021

Revenue

$

193,959

$

203,239

$

177,309

$

777,552

$

656,902

Cost of goods sold

130,737

130,837

116,729

508,996

452,359

Gross profit

63,222

72,402

60,580

268,556

204,543

Gross margin

32.6

%

35.6

%

34.2

%

34.5

%

31.1

%

Operating expenses:

Research and development

20,386

16,545

17,282

71,259

62,953

Selling, general and administrative

24,696

24,625

20,935

95,259

77,514

Total operating expenses

45,082

41,170

38,217

166,518

140,467

Operating income

18,140

31,232

22,363

102,038

64,076

Other income, net

279

263

369

999

2,456

Interest expense, net

(895

)

(308

)

(1,476

)

(3,920

)

(6,308

)

Gain on deconsolidation of the JV Company

399,093

Gain (loss) on changes of equity interest in the JV Company, net

4,501

(3,140

)

Net income before income taxes

17,524

35,688

21,256

495,070

60,224

Income tax expense

940

2,902

1,241

39,258

3,935

Net income before loss from equity method investment

16,584

32,786

20,015

455,812

56,289

Equity method investment loss from equity investee

1,493

1,136

2,629

Net income

15,091

31,650

20,015

453,183

56,289

Net income (loss) attributable to noncontrolling interest

476

20

(1,827

)

Net income attributable to Alpha and Omega Semiconductor Limited

$

15,091

$

31,650

$

19,539

$

453,163

$

58,116

Net income per common share attributable to Alpha and Omega Semiconductor Limited

Basic

$

0.55

$

1.18

$

0.74

$

16.93

$

2.25

Diluted

$

0.53

$

1.11

$

0.71

$

16.07

$

2.13

Weighted average number of common share attributable to Alpha and Omega Semiconductor Limited used to compute net income per share:

Basic

27,269

26,829

26,251

26,764

25,786

Diluted

28,466

28,423

27,705

28,203

27,272

Alpha and Omega Semiconductor Limited

Condensed Consolidated Balance Sheets

(in thousands, except par value per share)

(unaudited)

June 30, 2022

June 30, 2021

ASSETS

Current assets:

Cash and cash equivalents

$

314,352

$

202,412

Restricted cash

299

233

Accounts receivable, net

65,681

35,789

Inventories

158,040

154,293

Other current assets

11,220

14,595

Total current assets

549,592

407,322

Property, plant and equipment, net

318,666

436,977

Operating lease right-of-use assets, net

23,674

34,660

Intangible assets, net

10,050

13,410

Equity method investment

378,378

Deferred income tax assets

592

5,167

Restricted cash - long-term

2,168

Other long-term assets

17,677

18,869

Total assets

$

1,298,629

$

918,573

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

87,377

$

80,699

Accrued liabilities

115,632

69,494

Payable related to equity investee, net

28,989

Income taxes payable

4,248

2,604

Short-term debt

24,878

58,030

Finance lease liabilities

1,376

16,724

Operating lease liabilities

3,850

5,679

Total current liabilities

266,350

233,230

Long-term debt

38,156

77,990

Income taxes payable - long-term

2,158

1,319

Deferred income tax liabilities

28,757

2,448

Finance lease liabilities - long-term

9,634

12,698

Operating lease liabilities - long-term

20,878

30,440

Other long-term liabilities

78,603

44,123

Total liabilities

444,536

402,248

Equity:

Preferred shares, par value $0.002 per share:

Authorized: 10,000 shares; issued and outstanding: none at June 30, 2022 and 2021

Common shares, par value $0.002 per share:

Authorized: 100,000 shares; issued and outstanding: 33,988 shares and 27,371 shares, respectively at June 30, 2022 and 32,975 shares and 26,350 shares, respectively at June 30, 2021

68

66

Treasury shares at cost; 6,617 shares at June 30, 2022 and 6,625 shares at June 30, 2021

(66,000

)

(66,064

)

Additional paid-in capital

288,951

259,993

Accumulated other comprehensive income

1,080

2,315

Retained earnings

629,994

176,895

Total Alpha and Omega Semiconductor Limited shareholders’ equity

854,093

373,205

Noncontrolling interest

143,120

Total equity

854,093

516,325

Total liabilities and equity

$

1,298,629

$

918,573

Alpha and Omega Semiconductor Limited

Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures

(in thousands, except percentages and per share data)

(unaudited)

Three Months Ended

Fiscal Year Ended

June 30,
2022

March 31,
2022

June 30,
2021

June 30,
2022

June 30,
2021

GAAP gross profit

$

63,222

$

72,402

$

60,580

$

268,556

$

204,543

Share-based compensation

1,565

1,282

561

5,125

1,756

Amortization of purchased intangible

811

812

812

3,247

3,247

Production ramp up costs related to the JV Company

275

Non-GAAP gross profit

$

65,598

$

74,496

$

61,953

$

276,928

$

209,821

Non-GAAP gross margin as a % of revenue

33.8

%

36.7

%

34.9

%

35.6

%

31.9

%

GAAP operating expense

$

45,082

$

41,170

$

38,217

$

166,518

$

140,467

Share-based compensation

8,305

6,990

4,838

26,199

13,568

Legal costs related to government investigation

84

221

553

1,030

3,066

Non-GAAP operating expense

$

36,693

$

33,959

$

32,826

$

139,289

$

123,833

GAAP operating income

$

18,140

$

31,232

$

22,363

$

102,038

$

64,076

Share-based compensation

9,870

8,272

5,399

31,324

15,324

Amortization of purchased intangible

811

812

812

3,247

3,247

Production ramp up costs related to the JV Company

275

Legal costs related to government investigation

84

221

553

1,030

3,066

Non-GAAP operating income

$

28,905

$

40,537

$

29,127

$

137,639

$

85,988

Non-GAAP operating margin as a % of revenue

14.9

%

19.9

%

16.4

%

17.7

%

13.1

%

GAAP net income attributable to AOS

$

15,091

$

31,650

$

19,539

$

453,163

$

58,116

Share-based compensation

9,870

8,272

5,399

31,324

15,324

Amortization of purchased intangible

811

812

812

3,247

3,247

Gain on deconsolidation and changes of the equity interest in the JV Company

(4,501

)

(395,953

)

Equity method investment loss from equity investee

1,493

1,136

2,629

Production ramp up costs related to the JV Company

135

Legal costs related to government investigation

84

221

553

1,030

3,066

Income tax effect of non-GAAP adjustments

(234

)

630

(2

)

33,197

53

Non-GAAP net income attributable to AOS

$

27,115

$

38,220

$

26,301

$

128,637

$

79,941

Non-GAAP net margin attributable to AOS as a % of revenue

14.0

%

18.8

%

14.8

%

16.5

%

12.2

%

GAAP net income attributable to AOS

$

15,091

$

31,650

$

19,539

$

453,163

$

58,116

Share-based compensation

9,870

8,272

5,399

31,324

15,324

Amortization and depreciation

8,588

8,603

13,251

42,851

52,685

Gain on deconsolidation and changes of the equity interest in the JV Company

(4,501

)

(395,953

)

Equity method investment loss from equity investee

1,493

1,136

2,629

Interest expense, net

895

308

1,476

3,920

6,308

Income tax expense

940

2,902

1,241

39,258

3,935

EBITDAS

$

36,877

$

48,370

$

40,906

$

177,192

$

136,368

GAAP diluted net income per share attributable to AOS

$

0.53

$

1.11

$

0.71

$

16.07

$

2.13

Share-based compensation

0.35

0.29

0.19

1.11

0.56

Amortization of purchased intangible

0.03

0.03

0.03

0.11

0.12

Gain on deconsolidation and changes of the equity interest in the JV Company

(0.16

)

(14.04

)

Equity method investment loss from equity investee

0.05

0.04

0.09

Production ramp up costs related to the JV Company

0.01

Legal costs related to government investigation

0.00

0.01

0.02

0.04

0.11

Income tax effect of non-GAAP adjustments

(0.01

)

0.02

0.00

1.18

0.00

Non-GAAP diluted net income per share attributable to AOS

$

0.95

$

1.34

$

0.95

$

4.56

$

2.93

Shares used to compute GAAP diluted net income per share

28,466

28,423

27,705

28,203

27,272

Shares used to compute Non-GAAP diluted net income per share

28,466

28,423

27,705

28,203

27.272

View source version on businesswire.com: https://www.businesswire.com/news/home/20220808005894/en/

Contacts

Investor and media inquiries:

The Blueshirt Group
Gary Dvorchak, CFA
In US +1 323 240 5796
In China +86 (138) 1079-1480
gary@blueshirtgroup.com

Yujia Zhai
The Blueshirt Group
Yujia@blueshirtgroup.com
+1 (860) 214-0809