DGAP-News: Dialog Semiconductor Plc. / Key word(s): Half Year Results
DIALOG SEMICONDUCTOR REPORTS SECOND QUARTER RESULTS ENDED 1 JULY 2016.
Company reports revenue in line with guidance, sequential earnings increase
and guides to 24% sequential quarter revenue growth at mid-point of the Q3
outlook
28.07.2016 / 07:30
The issuer is solely responsible for the content of this announcement.
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London, UK, July 28, 2016 - Dialog Semiconductor plc (FWB: DLG), a
provider of highly integrated power management, AC/DC, solid state lighting
and Bluetooth(R) low energy wireless technology, today reports results for
the second quarter ended July 1, 2016.
Q2 2016 financial highlights
- Revenue of $246 million in line with May guidance
- Power Conversion revenue up 46% over Q2 2015 to $28.6 million
- Gross margin at 46.3%. Underlying* gross margin at 47.1%
- Operating profit of $22.9 million, a year-on-year reduction of 63%.
Underlying* operating profit of $33.2 million, a sequential increase of
11% and a year-on-year reduction of 53%
- All operational business segments profitable on an underlying basis
- Diluted EPS of 22 cents, a year-on-year reduction of 60%. Underlying*
diluted EPS of 34 cents, a sequential increase of 21% and a year-on-
year reduction of 48%
- Cash flow from operating activities of $13 million (Q2 2015: $46
million). $33 million of free cash flow* generated in Q2 2016, up 113%
over Q2 2015. $660 million of cash and cash equivalents, $212 million
above Q2 2015
- Subsequent to quarter end, on July 5, 2016 the Company purchased
590,000 ordinary shares at an average price of EUR27.6429
Q2 2016 operational highlights
- Continued design win momentum for Power Management ICs (PMICs) with
both custom and standard products at leading smartphone and computing
OEMs
- Innovative new standard products: PMICs, Charging and Audio ICs sampled
to the market
- Enhancement of leadership position in the mobile adapter rapid charge
market
- Continued Bluetooth design win success at Xiaomi for their Mi Band 2
fitness band
- Expanded our IoT product portfolio and ecosystem with new product
offerings within the Home Automation segment
- Continued momentum in China smartphone market with second generation
sub-PMIC ASSP
- Good progress in our strategic objective to expand our business
footprint in China
Commenting on the results Dialog Chief Executive, Dr Jalal Bagherli, said:
"During the quarter we have delivered sequential revenue and earnings
growth while maintaining focused investment in R&D. The exceptional growth
achieved within our Power Conversion and Bluetooth low energy businesses is
an indicator of the growth potential these markets offer.
The product pipeline remains strong across our core business groups and we
expect to ramp a number of new high volume products in the second half of
this year. Looking further ahead, we believe our R&D investments will
generate new opportunities with Tier 1 OEMs, increase our share of content
in mobile devices and expand our IoT footprint. All of which gives us
confidence that our positive momentum will continue through the second half
of 2016 ,and in to 2017 and 2018."
Outlook
Based on our current visibility, we anticipate revenue for Q3 2016 to
improve sequentially from Q2 2016 and to be in the range of $290 to $320
million. On the basis of this revenue guidance, gross margin in Q3 2016
will be marginally above H1 2016.
As a result of the continuing softness in smartphone market demand, we now
anticipate revenue for the full year 2016 to decline approximately 15%
year-on-year. We expect growth momentum in our Connectivity and Power
Conversion products to remain strong through 2016.
In line with the revenue performance, we expect underlying gross margin
percentage for the full year to be slightly below the level achieved in
2015. The effect of the lower anticipated revenue in FY 2016 will be
partially offset by rigorous control of operating expenses in the period.
Financial overview
<pre>
IFRS Second First Half
Quarter
US$ million 2016 2015 Var. 2016 2015 Var.
Revenue 245.7 316.5 -22% 487.2 627.7 -22%
Gross Margin 46.3% 46.5% -20bps 45.4% 46.2% -80bps
R&D %1 24.3% 17.7% +660bps 24.1% 17.5% +660bps
SG&A %1 12.7% 9.3% +340bps 13.9% 10.1% +380bps
Other operating 0.1% 0.1% - 28.3% 0.2% nm
income %2
Operating profit 22.9 62.5 -63% 174.1 118.1 +47%
Operating margin 9.3% 19.7% nm 35.7% 18.7% nm
Net income 16.8 42.9 -61% 159.7 81.7 +96%
Basic EPS $ 0.23 0.59 -61% 2.11 1.15 +83%
Diluted EPS $ 0.22 0.55 -60% 2.02 1.08 +87%
Cash flow from 13.5 45.7 -70% 120.6 165.3 -27%
operating
activities
Underlying* Second First Half
Quarter
US$ million 2016 2015 Var. 2016 2015 Var.
Revenue 245.7 316.5 -22% 487.2 627.7 -22%
Gross margin 47.1% 47.1% - 46.3% 46.9% -60bps
R&D %1 23.1% 17.0% +610bps 22.7% 16.5% +620bps
SG&A %1 10.6% 7.8% +280bps 10.7% 7.9% +280bps
EBITDA 44.5 80.8 -45% 85.3 160.9 -47%
EBITDA % 18.1% 25.5% -740bps 17.5% 25.6% -810bps
Operating profit 33.2 71.2 -53% 63.2 142.1 -56%
Operating margin 13.5% 22.5% -900bps 13.0% 22.6% -960bps
Net income 26.7 52.1 -49% 48.3 107.6 -55%
Basic EPS $ 0.36 0.71 -49% 0.65 1.51 -57%
Diluted EPS $ 0.34 0.66 -48% 0.62 1.37 -55%
</pre>
1. R&D and SG&A as a percentage of revenue.
2. First Half Other operating income includes $137.3 million Atmel
termination fee.
Revenue in Q2 2016 was down 22% to $246 million. The revenue performance
was the result of the anticipated year-on-year volume decline in Mobile
Systems (31%) partially offset by 46% growth in Power Conversion. Revenue
performance improved sequentially in Connectivity 38%, Power Conversion 19%
and Automotive and Industrial 14%.
Q2 2016 gross margin was 46.3%, 20bps below Q2 2015. Q2 2016. Underlying*
gross margin was 47.1%, 160bps above Q1 2016 and in line with Q2 2015.
Excluding $2.7 million manufacturing costs credit, underlying gross margin
in Q2 2016 was 46.0%, 50bps above Q1 2016.
Net OPEX (comprising SG&A and R&D expenses, and other operating income) in
Q2 2016 was $90.8 million, or 37.0%. Underlying* net OPEX (comprising SG&A
and R&D expenses, and other operating income) in Q2 2016 was $82.6 million,
or 33.6% of revenue. On a trailing twelve month basis, underlying* net OPEX
in Q2 2016 was 26.8% of revenue (Q2 2015: 23.3%).
R&D expense in Q2 2016 was up 7% from Q2 2015. As a percentage of revenue
R&D in Q2 2016 was up 660bps year-on-year to 24.3%. As a percentage of
revenue, underlying* R&D in Q2 2016 was up 610bps year-on-year to 23.1% (Q2
2015:17.0%). This increase was predominantly the result of the lower
revenue in Q2 2016 and the on-going investment in large application-
specific customer opportunities. On a trailing twelve month basis,
underlying* R&D was 18.0% of revenue (Q2 2015: 15.9%). On an underlying*
basis, R&D expense was up 6% from Q1 2016.
SG&A expense in Q2 2016 was 12.7% of revenue, 340bps above Q2 2015. This
increase was predominantly the result of the lower revenue in Q2 2016 and
the scaling up of our support functions in 2016. Underlying* SG&A in Q2
2016 was 10.6% of revenue, 30bps below Q1 2016.
In Q2 2016 we achieved IFRS and underlying* operating profit of $22.9
million and $33.2 million, respectively. Operating profit in the quarter
was down 63% year-on-year. Underlying operating profit in the quarter was
up 11% sequentially over Q1 2016 and down 53% over Q2 2015. The year-on-
year decrease was mainly the result of the revenue decline and higher OPEX
expenses.
The effective tax rate in H1 2016 was 7.4% (H1 2015: 28.5%).The underlying*
effective tax rate in Q2 2016 was 25%, which increased slightly
sequentially and is in line with the Q2 2015 rate. The underlying*
effective tax rate for H1 2016 was 24.0%, which compares with 25.0% for FY
2015.
In Q2 2016, net income was down 61% year-on-year. Underlying* net income
was up 24% sequentially over Q1 2016 and down 49% year-on-year. Underlying*
diluted EPS in Q2 2016 was up 21% sequentially over Q1 2016 and down 48%
year-on-year.
As indicated in May, at the end of Q2 2016, our total inventory level was
down 8% over the prior quarter to $141million (or ~98 days), representing a
5-day decrease in our days of inventory. The decrease in the inventory
value was mostly due to the decrease in raw materials. During Q3 2016 we
expect inventory value to be broadly at the same level as Q2 2016 and
inventory days to decrease from Q2 2016 as we serve our customers backlog.
At the end of Q2 2016, we had a cash and cash equivalents balance of $660
million. In the second quarter we generated $33 million of free cash flow*,
more than double what the business generated in Q2 2015 (Q2 2015: $15
million).
Subsequent to the quarter end, the first interim (six weeks) settlement of
the first tranche of the buyback programme took place. On 5 July 2016 the
Company purchased 590,000 ordinary shares at an average price of
EUR27.6429. The maximum maturity date for the first tranche shall be 15
September 2016 and the maximum total cost of the shares to be purchased by
the Company from Barclays Bank PLC shall be EUR50 million and the minimum
cost EUR37.5 million.
* Non-IFRS measures
Underlying measures and free cash flow quoted in this Press Release are
non-IFRS measures. Our use of underlying measures is explained on pages 149
to 154 of our 2015 Annual Report. Reconciliations of the underlying
measures to the nearest equivalent IFRS measures for Q2 2016, Q2 2015, H1
2016 and H1 2015 are presented in Section 3 of the Q2 2016 Interim Report.
For ease of reference, we present below those reconciliations for Q2 2016.
<pre>
Q2 2016 IFRS Share-based Amortisation Aborted Effective Underlying
US$000 compensation of acquired merger interest US$000
and related intangible with US$000
payroll assets Atmel
taxes US$000 US$000
US$000
Revenue 245,747 - - - - 245,747
Gross 113,737 326 1,755 - - 115,818
profit
SG&A (31,179) 3,338 1,900 (15) - (25,956)
expenses
R&D (59,816) 2,996 - - - (56,820)
expenses
Other 200 - - - - 200
operating
income
Operating 22,942 6,660 3,655 (15) - 33,242
profit
Net 2,497 - - - 138 2,635
finance
income
Income (8,653) (250) (217) - (27) (9,147)
tax
expense
Net 16,786 6,410 3,438 (15) 111 26,730
income
EBITDA n/a 44,527
</pre>
EBITDA is defined as underlying net income of US$26.7 million (Q2 2015: US
$52.1 million), before income tax expense of US$9.1 million (Q2 2015: US
$17.6 million), depreciation of US$6.6 million (Q2 2015: US$5.7 million),
amortisation of US$4.7 million (Q2 2015: US$4.0 million) and net finance
(income) expense of US$(2.6) million (Q2 2015: US$1.4 million).
Free Cash Flow is defined as net income of US$16.8 million (Q2 2015: US
$42.9 million), before depreciation of US$6.6 million (Q2 2015: US$5.7
million), amortisation of US$8.3 million (Q2 2015: US$7.6 million) and the
net interest (income) expense of US$(0.6) million (Q2 2015: US$1.1
million), plus (minus) the net decrease (increase) in working capital of US
$13.7 million (Q2 2015: US$(19.4) million) and minus capital expenditure of
US$12.3 million (Q2 2015: US$22.6 million).
Operational overview
Our latest generation of highly integrated PMICs will begin to ramp in high
volume production during Q3 2016. Additionally, during the quarter we
completed a number of sophisticated PMIC designs which are now sampling to
our customers for products targeting H2 2017 production.
The company made further progress in the strategic objective of expanding
its business footprint and deepening customer engagements in Asia:
- Building on the success of our R&D initiatives in Power Management, our
next generation Chargers ICs will ship in volume production for a Tier
1 Korean customer's smartphones and tablets from Q3 2016.
- The on-going initiative to establish further regional strategic
partnerships in Greater China and develop deeper customer engagements
in the region is well under way, with a first major engagement for a
2017 platform.
- The roll-out of our RapidChargeTM solutions continued to gather
momentum, enhancing Dialog's estimated 70% market share of the rapid
charging adapter market for smartphones, tablets and other devices.
- Our second generation sub-PMIC was shipped during Q2 2016 to leading
Chinese smartphones OEMs who entered volume production of their
MediaTek based LTE platforms.
Bluetooth low energy continues to be rapidly adopted across a wide range of
IoT applications. Our business made solid progress during the quarter in
capturing the high-growth opportunity within IoT with our Bluetooth(R) low
energy, smart LED driver ICs and ambient light and colour sensor controls:
- SmartBondTM DA14681 Wearable-on-Chip(TM) was selected to power Xiaomi's
latest activity tracking wrist band, Mi Band 2, one of the most
anticipated wearable devices of 2016. The DA14681 provides
connectivity, application processing, sensor fusion and advanced power
management functionality enabling the Mi Band 2 to be even better
positioned to further grow share in the rapidly expanding wearable
market.
- Launched the industry-first OpenThread Sandbox Development Platform to
support the development of Home Automation applications. It provides
Thread ecosystem developers with plug-and-play hardware and OpenThread
software released by Nest, enabling development for the connected home.
By adding Thread capability to our Bluetooth low energy portfolio,
Dialog has created a unique combination of connectivity solutions for
IoT and smart home applications.
- Added ambient light and colour sensor controls to our smart lighting
platform of advanced LED drivers and Bluetooth controllers. This
represents another significant milestone in the joint effort with Dyna
Image as both companies continue to combine their core technologies to
provide complete platform solutions.
In line with our diversification strategy, during the quarter we expanded
into the consumer headset segment with the launch of our SmartBeat(TM)
Audio IC, enabling a new immersive headset experience. Supporting both
wired USB 3.0 type C and Bluetooth based headsets, the DA14195 offers a new
route to next generation active headphone development. This digital SoC
with built in advanced audio processing heightens performance and defines a
new standard for headset functionality and sound quality.
We continued to provide effective and efficient Power Management innovation
to the market, expanding our range of ASSP solutions with the DA9061 and
DA9062 PMICs. These highly efficient, cost-optimized devices can power a
broad range of single or dual-core ARM(R) Cortex(R) based processors in
applications such as handheld consumer, industrial embedded, smart home and
automotive systems.
The expansion into the smart TV and set-top box (STB) market continues to
progress according to plan with a number of leading customers evaluating
our recently released integrated PMICs targeted for volume production in
Q1 2017.
* * * * *
Dialog Semiconductor invites you today at 09.30 am (London) / 10.30 am
(Frankfurt) to take part in a live conference call and to listen to
management's discussion of the Company's Q2 2016 performance, as well as
guidance for Q3 2016. Participants will need to register using the link
below labelled 'Online Registration'. A full list of dial in numbers will
also be available.
To register for the webcast and receive dial in numbers, the conference PIN
and a unique User ID please click on the link below:
http://members.meetingzone.com/selfregistration/registration.aspx?
booking=gum7t5ZQcIR91evp5n3Pdmy0gkWFjnVKQSbOVqsTZ5s=&b=d58ae4ab-80e5-47f2-
8295-e04d92bbba83
In parallel to the call, the analyst presentation will be webcasted on our
website at http://webcast.openbriefing.com/semiconductor_q2_results_280716/
A replay will be posted on the Dialog website four hours after the
conclusion of the presentation and will be available at http://www.dialog-
semiconductor.com/investor-relations
Full release including the Company's Interim condensed consolidated income
statement, consolidated balance sheet, consolidated statements of cash
flows and selected notes for the quarter ended 1 July 2016 is available
under the investor relations section of the Company's website at:
http://www.dialog-semiconductor.com/investor-relations
Dialog, the Dialog logo, SmartBond , RapidCharge, SmartBeat are registered
trademarks of Dialog Semiconductor Plc or its subsidiaries. All other
product or service names are the property of their respective owners. (c)
Copyright 2016 Dialog Semiconductor. All rights reserved
For further information please contact:
Dialog Semiconductor
Jose Cano
Head of Investor Relations
T: +44 (0)1793 756 961
jose.cano@diasemi.com
FTI Consulting London
Matt Dixon
T: +44 (0)2037 271 137
matt.dixon@fticonsulting.com
FTI Consulting Frankfurt
Anja Meusel
T: +49 (0) 69 9203 7120
Anja.Meusel@fticonsulting.com
Note to editors
Dialog Semiconductor provides highly integrated standard (ASSP) and custom
(ASIC) mixed-signal integrated circuits (ICs), optimised for smartphone,
tablet, IoT, LED Solid State Lighting (SSL), and Smart Home applications.
Dialog brings decades of experience to the rapid development of ICs while
providing flexible and dynamic support, world-class innovation and the
assurance of dealing with an established business partner. With world-class
manufacturing partners, Dialog operates a fabless business model and is a
socially responsible employer pursuing many programs to benefit the
employees, community, other stakeholders and the environment we operate in.
Dialog's power saving technologies including DC-DC configurable system
power management deliver high efficiency and enhance the consumer's user
experience by extending battery lifetime and enabling faster charging of
their portable devices. Its technology portfolio also includes audio,
Bluetooth(R) Low Energy, Rapid Charge(TM) AC/DC power conversion and multi-
touch.
Dialog Semiconductor plc is headquartered in London with a global sales,
R&D and marketing organisation. In 2015, it had $1.35 billion in revenue
and was one of the fastest growing European public semiconductor companies.
It currently has approximately 1,660 employees worldwide. The company is
listed on the Frankfurt (FWB: DLG) stock exchange (Regulated Market, Prime
Standard, ISIN GB0059822006) and is a member of the German TecDax index.
Forward Looking Statements
This press release contains "forward-looking statements" that reflect
management's current views with respect to future events. The words
"anticipate," "believe," "estimate", "expect," "intend," "may," "plan,"
"project" and "should" and similar expressions identify forward-looking
statements. Such statements are subject to risks and uncertainties,
including, but not limited to: an economic downturn in the semiconductor
and telecommunications markets; changes in currency exchange rates and
interest rates, the timing of customer orders and manufacturing lead times,
insufficient, excess or obsolete inventory, the impact of competing
products and their pricing, political risks in the countries in which we
operate or sale and supply constraints. If any of these or other risks and
uncertainties occur (some of which are described under the heading "Risks
and their management" in Dialog Semiconductor's most recent Annual Report)
or if the assumptions underlying any of these statements prove incorrect,
then actual results may be materially different from those expressed or
implied by such statements. We do not intend or assume any obligation to
update any forward-looking statement which speaks only as of the date on
which it is made, however, any subsequent statement will supersede any
previous statement.
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28.07.2016 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Language: English
Company: Dialog Semiconductor Plc.
Tower Bridge House, St. Katharine's Way
E1W 1AA London
United Kingdom
Phone: +49 7021 805-412
Fax: +49 7021 805-200
E-mail: jose.cano@diasemi.com, lauren.ofstedahl@diasemi.com
Internet: www.dialog-semiconductor.com
ISIN: GB0059822006, XS0757015606
WKN: 927200
Indices: TecDAX
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover,
Munich, Stuttgart, Tradegate Exchange; Terminbörse EUREX;
Luxemburg
End of News DGAP News Service
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486831 28.07.2016
DGAP-News: DIALOG SEMICONDUCTOR REPORTS SECOND QUARTER RESULTS ENDED 1 JULY 2016. Company reports revenue in line with guidance, sequential earnings increase and guides to 24% sequential quarter revenue growth at mid-point of the Q3 outlook
| Source: EQS Group AG