DGAP-News: Dialog Semiconductor Plc. / Key word(s): Quarter Results
DIALOG SEMICONDUCTOR REPORTS RECORD THIRD QUARTER 2015 RESULTS. Third
quarter year on year revenue growth of 18%, increasing profitability
and cash flow generation
28.10.2015 / 07:30
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London, UK, 28 October 2015 - Dialog Semiconductor plc (XETRA: DLG), a
provider of highly integrated power management, AC/DC power conversion,
solid state lighting and Bluetooth(R) Smart wireless technology, today
reports results for its third quarter ending 2 October 2015
Q3 2015 financial highlights
- IFRS revenue up 18% over Q3 2014 at $330 million and up 4% over Q2 2015
- IFRS gross margin increased year on year to 46.3%
- Underlying (*) EBITDA (**) at $80.8 million or 24.5% of revenue
- IFRS operating profit (EBIT) up 44% over Q3 2014 to $60.4 million or
18.3% of revenue
- Underlying (*) basic and diluted EPS up 27% and 28% respectively over
Q3 2014. IFRS basic and diluted EPS up 50% and 53% respectively over Q3
2014
- $52 million of cash generated from operations, up 76% over Q3 2014
Q3 2015 operational highlights
- Dialog announced entry into a conditional agreement to acquire Atmel(R)
Corporation (NASDAQ :ATML) a leader in Microcontrollers (MCUs).
- Atmel will release today Q3 2015 results ending 30 September 2015.
Dialog shareholders are encouraged to read those results.
- Acquisition to transform Dialog into a global leader in both power
management and embedded processing with $2.7 billion of combined
revenues(1)
- Increasing design-win momentum in Power Management with custom and
standard products in leading smartphone OEMs
- Additional design-wins for our Bluetooth(R) Smart increasing
penetration in Smart Home and gaming markets
- Established early leadership with deployment of Rapid ChargeTM power
conversion products for smartphone power adapters in China
- Continued success in China smartphone market with sub-PMIC technology
through platform integration with MediaTek
- Last twelve months revenues
Commenting on the results, Dialog Chief Executive Dr Jalal Bagherli, said:
"I am delighted to report a successful third quarter for Dialog with strong
revenue growth, increasing year-on-year profitability and even faster
earnings growth. We remain focused on successfully delivering the next
phase of the steep ramp of new high volume products in Power Management,
Bluetooth(R) Smart and Rapid ChargeTM technologies for market leading
customers."
"We are now awaiting shareholder and regulatory approval for the Atmel
acquisition, which we expect to close in the first quarter of 2016. The
combined company will significantly broaden our customer base, leveraging
the combined world class technologies, talent and distribution channels to
offer more complete solutions for the high growth mobility and smart
connected devices; a combined market opportunity worth approximately $20
billion by 2019."
Outlook
Given our current visibility we estimate Q4 2015 revenue in the range of
$430 million to $460 million. At the mid-point, this will result in full
year revenue of $1,402 million, delivering 21 percent revenue growth over
2014.
We anticipate that underlying gross margin for the full year will be
consistent with the level achieved year to date. This will result in
significant gross margin improvement for the full year 2015 over 2014.
Financial overview
IFRS Third Quarter
US$ million 2015 2014 Var.
Revenue 330.4 281.0 +18%
Gross Margin 46.3% 44.8% +150bps
R&D % 18.0% 19.6% (160)bps
SG&A %1 10.0% 10.4% (40)bps
EBIT 60.4 41.9 +44%
EBIT % 18.3% 14.9% +340bps
Net income2 43.0 25.6 +68%
Basic EPS $2 0.57 0.38 +50%
Diluted EPS $2 0.55 0.36 +53%
Cash from operations 51.6 29.3 +76%
Underlying Third Quarter
US$ million 2015 2014 Var.
Gross Margin 47.1% 45.4% +170bps
EBITDA 80.8 60.8 +33%
EBITDA % 24.5% 21.6% +290bps
EBIT 70.4 51.7 +36%
EBIT % 21.3% 18.4% +290bps
Net Income 53.2 37.6 +41%
Basic EPS $ 0.71 0.56 +27%
Diluted EPS $ 0.68 0.53 +28%
See underlying definition on page 4.
(1) Including other operating expenses/income
(2) 2014 IFRS amounts have been adjusted. Please refer to Note 2 of the Q3
2015 Interim Report
Revenue in Q3 2015 was up 18% to $330 million with strong revenue
performance in Mobile Systems, up 18% on Q3 2014, and Connectivity, up 31%
on Q3 2014. Power Conversion revenue was up 3% over Q3 2014 with strong
performance in the AC/DC converters segment being offset by softness in the
Solid State Lighting LED business.
Q3 2015 IFRS gross margin was 150bps above Q3 2014 and broadly in line with
the previous quarter. The year-on-year increase was the result of the
following items:
- Higher revenue achieved in the quarter and the subsequent lower
allocation per unit of the fixed component of Cost of Goods Sold;
- Positive product mix contribution from the Connectivity Segment and new
products in Mobile Systems; and
- Benefits of the ongoing manufacturing cost optimisation, yield and test
time improvements in high volume products.
In Q3 2015 underlying (*) net OPEX as a percentage of revenue was 25.8%,
110bps below Q3 2014 and 120bps above Q2 2015.
Investments in R&D increased through the third quarter as expected.
Underlying (*) R&D investment in Q3 2015 stood at 17.6% of revenue, 100bps
below Q3 2014 and 60bps above Q2 2015. We have accelerated several R&D
programmes in both, existing product initiatives as well as new initiatives
that have the potential to support profitable growth and the
diversification of our business.
Underlying (*) SG&A in Q3 2015 stood at 8.2% of revenue, 20bps below Q3
2014 and 40bps above the previous quarter. We continued to manage our SG&A
costs effectively and achieved further year-on-year leverage. Acquisition
costs of US$2.9 million have been expensed in connection with the proposed
acquisition of Atmel in the Q3 2015 income statement. These costs are
excluded in the calculation of underlying expenses.
In Q3 2015 we achieved IFRS and underlying EBIT of $60.4 million and $70.4
million respectively, 44% and 36% over Q3 2014. Underlying EBIT margin in
the quarter was 21.3%. The Q3 2015 underlying EBIT increase of 36% was
primarily driven by the solid performance of Mobile Systems and the
turnaround in the Connectivity segment. On an underlying basis,
Connectivity contributed $1.4 million EBIT profit in Q3 2015 (Q3 2014 EBIT
loss: $1.5 million)
In total, a net tax charge of $17.1 million was recorded in Q3 2015,
resulting from applying an effective tax rate of 28.5% (adjusted Q3 2014:
31.1%). The effective tax rate of 28.5% represents the expected full year
effective tax rate excluding any one-off impact of costs relating to the
proposed acquisition of Atmel . Such costs may increase the actual IFRS
reported tax rate for the full year. The effective tax rate for the year
ending 31 December 2014 was 29.0% (excluding one-off non-cash deferred tax
credit). The decrease in our group effective tax rate is driven by the
on-going exercise to align our Intellectual Property with the commercial
structure of the group. This has allowed Dialog to fully recognise
previously unrecognised UK trading loss carry forwards and to benefit from
the favourable UK tax regime for technology companies. We believe this
gradual decrease is sustainable and will now accelerate from 2016, thus
continuing to drive further reductions in our effective tax rate in the
years to come.
In Q3 2015, underlying net income increased 41% year on year. Underlying
diluted EPS in Q3 2015 was 28% higher than in the same quarter of 2014.
At the end of Q3 2015, our total inventory level was $139 million (or ~71
days), an increase of $19 million over the prior quarter. This represents a
7 day increase in our days of inventory. We are managing our inventory
levels tightly and we feel this level is appropriate in order to service
our current customer backlog. During Q4 2015 we expect inventory value and
inventory days to decrease from Q3 2015 as we service a number of high
volume product launches in the quarter.
At the end of Q3 2015, we had cash and cash equivalents balance of $478
million. In the third quarter we generated $52 million of cash from
operations, an increase of 76% over the same quarter of 2014. Free cash
flow generated in Q3 2015 was $15.6 million (***).
Atmel will release Q3 2015 financial results on Wednesday, 28 October 2015
after the market close. (http://ir.atmel.com/index.cfm)
(*) Underlying results (net of tax) in Q3-2015 are based on IFRS, adjusted
to exclude share-based compensation charges and related charges for
National Insurance of US$4.0 million, excluding US$0.2 million of
amortisation of intangibles associated with the acquisition of SiTel (now
Dialog B.V.), excluding US$ 0.06 million non-cash effective interest
expense related to a licensing agreement, , excluding US$0.2 million
acquisition and integration expenses in connection with the purchase of
iWatt, excluding US$2.9 million acquisition expenses in connection with the
proposed acquisition of Atmel Corporation and excluding US$3.2 million of
amortisation and depreciation expenses associated with the acquisition of
iWatt.
(*) Underlying results (net of tax) in Q3-2014 are based on IFRS, adjusted
to exclude share-based compensation charges and related charges for
National Insurance of US$4.4 million, excluding US$0.2 million of
amortisation of intangibles associated with the acquisition of SiTel (now
Dialog B.V.), excluding US$2.1 million non-cash effective interest expense
in connection with the convertible bond, excluding US$0.2 million non-cash
effective interest expense related to a licensing agreement, US$0.4 million
of expenses associated with the merger discussions with ams AG, excluding
US$1.4 million acquisition and integration expenses in connection with the
purchase of iWatt, and excluding US$3.3 million of amortisation and
depreciation expenses associated with the acquisition of iWatt
The term "underlying" is not defined in IFRS and therefore may not be
comparable with similarly titled measures reported by other companies.
Underlying measures are not intended as a substitute for, or a superior
measure to, IFRS measures. Underlying results (net of tax) have been fully
reconciled to IFRS results (net of tax) above. All other underlying
measures disclosed within this report are a component of this measure and
adjustments between IFRS and underlying measures for each of these measures
are a component of those disclosed above.
(**) EBITDA in Q3 2015 is defined as operating profit excluding
depreciation for property, plant and equipment, (Q3 2015: US$6.4 million,
Q3 2014: US$5.4 million), amortisation of intangible assets (Q3 2015:
US$7.6 million, Q3 2014:US$7.4 million) and losses on disposals and
impairment of fixed assets (Q3 2015: US$0.2 million, Q3 2014:US$0.0
million).
(***) Free Cash Flow in Q3 2015 is defined as net income of US$43.0 million
plus amortisation and depreciation of US$14.0 million, minus net interest
income of US$0.2 million, minus change in working capital of US$27.8
million and minus capital expenditure of US$13.4 million.
Operational overview
On 20 September 2015, Dialog announced that it had entered into a
conditional agreement to acquire Atmel in a cash and stock transaction.
Based on the closing price of EUR 37.19 per Dialog share as of 14 October
2015 and a Euro to U.S. Dollar exchange ratio of 1.114, the value of the
consideration to be received by Atmel shareholders for each Atmel share
would be the economic equivalent of $9.41 per Atmel share and would imply a
total equity value for Atmel of approximately $4.1 billion. This
acquisition will create a global leader in Power Management and Embedded
Processing solutions and the directors believe that the combined company's
sellable addressable market has the potential to grow from $11 billion to
$20 billion in 2019. The transaction is expected to close in the first
quarter of calendar year 2016. Dialog intends to fund the transaction with
a combination of existing cash, $2.1 billion of new debt and the issuance
to Atmel shareholders of approximately 51 million American Depositary
Shares ("ADSs") expected to be listed on The NASDAQ Stock Exchange. The
transaction would result in a capital structure with a leverage of
approximately 3x Net Debt/Estimated LTM EBITDA at closing. Dialog expects
to continue to have a strong cash flow generation profile and have the
ability to substantially pay down the transaction debt approximately three
years after closing.
Completion of the acquisition is subject, among other things, to the
approval by a majority of shareholders of a resolution to authorise the
directors to allot new Dialog shares in connection with the acquisition
("The Resolution"). A circular which gives details of the acquisition and
which contains a Notice of General Meeting in respect of the the general
meeting of shareholders (the "General Meeting") has been sent to all our
shareholders as defined in Dialog's articles of association. The General
Meeting will be held at Reynolds Porter Chamberlain LLP, Tower Bridge
House, St Katharine's Way, London E1W 1AA on 19 November 2015 at 12.00
noon GMT.
During the quarter we successfully delivered our latest highly integrated
Power Management IC for tier 1 customers. In several next generation mobile
projects our technology is gaining traction beyond classic Power Management
and this will allow us to increase our content share for smartphones and
tablets, primarily for products entering production in 2017.
Our sub-PMIC MediaTek companion products continue to win China based
customers in smartphone and more recently multiple tablet products.
Revenues are expected to ramp by Q1 2016.
Further progress was made in successfully penetrating the Smart Home market
segment with our Bluetooth(R) Smart technology providing full support for
Apple(R) HomeKit accelerating the development of Smart Home internet
connected accessories. The Smart Home market is expected to grow at an
annual rate of 67% between now and 2019, resulting in 1.8 billion2
accessories shipping annually by the end of that period.
This development is a key part of our strategy to capture opportunities
within the high growth segment of smart connected IoT devices. Our recently
announced strategic collaboration with Bosch Sensortec is a prime example
where together we created an ultra-low power smart sensor platform
combining Bosch Sensortec's 12 Degrees-of Freedom (DoF) sensors with
Dialog's low power Bluetooth(R) Smart technology. Together we bring leading
Bluetooth(R) Smart, power management and sensor technologies that enable
our customers to develop high-performance, innovative products with
exceptionally long battery life.
Our growing range of Bluetooth(R) Smart products continue to gain market
penetration throughout Q3 with success in a range of exciting new customers
in growing market segments including smart watches and fitness bands,
smart home applications, advanced TV remote controls and wireless gaming
accessories which are scheduled to start production over the next six
months.
Dialog continues to lead the industry in Rapid Charge(TM) power conversion
IC's in the worldwide smartphone market enjoying increased market shares
estimated at 70 percent. During the quarter we announced two additional
wins:
- Huawei's new Honor 7 smartphones use Dialog's Rapid charge adapter
chipset to enable Huawei's Fast Charger Protocol (FCP).
- LeTV & Information Technology (Beijing) an emerging trend-setting
Chinese Smartphone manufacturer recently launched smartphones, the Le
Max and Le 1 Pro.
(2) BI Intelligence Home Automation report October 2014
* * * * *
Dialog Semiconductor invites you today at 09.00 am (London) / 10.00 am
(Frankfurt) to take part in a live conference call and to listen to
management's discussion of the Company's Q3 2015 performance, as well as
guidance for Q4 2015. Participants will need to register using the link
below labelled 'Online Registration'. A full list of dial in numbers will
also be available.
Online registration:
http://members.meetingzone.com/selfregistration/registration.aspx?booking=
hgjbWbbUktQwcXbBq3f9DLPhIy8bm8CYbXThCKd4Nqc=&b=d58ae4ab-80e5-47f2-8295-e04
d92bbba83
Conference Number: +44 (0) 20 7073 8804
Conference ID: 3579145#
In synchronicity with the call, the analyst presentation will be webcasted
on our website at: http://www.dialog-semiconductor.com/investor-relations.
A replay will be posted at the same address four hours after the conclusion
of the presentation and will be available for 30 days.
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)20 7269 7214
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) Smart, 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 2014, it had $1.16 billion in revenue
and was one of the fastest growing European public semiconductor companies.
It currently has approximately 1,500 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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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
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, Munich,
Stuttgart
End of News DGAP News Service
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406085 28.10.2015
DGAP-News: DIALOG SEMICONDUCTOR REPORTS RECORD THIRD QUARTER 2015 RESULTS. Third quarter year on year revenue growth of 18%, increasing profitability and cash flow generation
| Source: EQS Group AG