Hittite Microwave Corporation (HITT)
Q2 2010 Earnings Call
July 22, 2010; 05:00 pm ET
Stephen Daly - Chairman & Chief Executive Officer
Bill Boecke - Vice President & Chief Financial Officer
Collin Denman - DA Davidson
Eric - Stifel Nicolaus
[Jason Rishal] - Needham & Company
Previous Statements by HITT
» Hittite Microwave Q1 2010 Earnings Call Transcript
» Hittite Microwave Q3 2009 Earnings Call Transcript
» Hittite Microwave Corporation Q2 2009 Earnings Call Transcript
Good afternoon Ladies and gentlemen, thank you for standing by. Welcome to the Hittite Microwave Corporation second quarter 2010 conference call. During today's presentation, all parties will be in a listen-only mode. (Operator Instructions) This conference is being recorded today, Thursday, July 22, 2010.
I would now like to turn the conference over to Mr. Stephen Daly, Chairman and Chief Executive Officer. Please go ahead sir.
Thank you. Ladies and gentlemen, good afternoon and welcome to Hittite Microwave Corporation's second quarter 2010 conference call. With me today is Bill Boecke, our Vice President and Chief Financial Officer. Before I begin the discussion, I would like to review the Safe Harbor statement.
Please note that statements made in this conference call about Hittite’s future expectations, plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor provisions under the private securities litigation reform act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors.
For information about these factors, I refer you to the earnings release that we issued earlier today and to our annual report on Form 10-K and 10-Qs filed with the Security and Exchange Commission.
The earnings release along with other financial and statistical data that we may discuss on the call and copies of our SEC reports are available in the investor relations section of our website at www.hittite.com. You may also obtain copies of our SEC reports and a copy of our press release furnished under Form 8-K from the SEC’s website at www.sec.gov.
Today's conference call will be structured as follows: I will begin by summarizing our second quarter results. Following my comments, Bill will review in detail our financial performance. After that, I will provide revenue and earnings guidance for the third quarter of 2010. I will then invite listeners to ask questions and following the question period, I will make some brief closing remarks.
In reviewing the second quarter, our revenue was $60.3 million, an increase of 11.3% over the first quarter of 2010 and a 52% increase year-over-year. Net income was $19.2 million, an 18.9% sequential increase and an 81% increase year-over-year.
Our net income exceeded our plan due to slightly higher than expected revenues and stronger than expected gross profit margins. Overall, we are very satisfied with our Q2 performance. The first two quarters of the year had been very strong primarily due to the significant improvement in the business environment compared to last year.
On a geographic basis, 45.6% of our second quarter revenue was from domestic customers and 54.4% from international customers, which is similar to 2009's full-year’s split and last quarter’s results. The 15% sequential domestic revenue growth is driven by the military market and the 8.6% sequential international revenue growth is driven by the microwave communication markets.
In the first quarter, three of our eight markets accounted for approximately 84% of our total revenue. These markets are cellular infrastructure, microwave and millimeter wave communications and military. The remaining target markets, automotive, broadband, fiberoptic, space and tested measurement accounted for 16% of our revenue.
Four of our eight markets experienced positive sequential growth, one was flat and three were down. This quarter-to-quarter growth variation is normal in a result of timing of orders and revenue. Here today, our total revenue has grown by 47% compared to the first six months of last year. This is exceptionally high growth and we are cautious and expect the growth levels will moderate in the coming quarters.
At a macro level, the increasing demand for additional wireless data bandwidth and network capacity has been driving our growth. Our strategy is to expand our product portfolio to capitalize on this trend and take market share.
Our engineering and product development team introduced 23 new products in the second quarter for a total of 55 year-to-date and brings the standard product portfolio size to 857 at the end of Q2. I am pleased that we launched three new IC product lines in Q2, which expand our product offerings for the cellular, fiber and microwave markets
Each new product line will offer unique products, which will enable us to capture more performance based non-commodity business. Our customers will be attracted to these products because of their industry leading performance, which in turn give us our customers a competitive advantage.
I will briefly review the three new IC product lines. First is the broadband time delay product line. The product line offers both analog and digitally controlled time delay solutions. For example, the HMC-910 provides continuous time delay from 0-70 Pico seconds.
Additionally, the HMC-856 uses the five-bit digital controller to provide up to 90 Pico seconds of delay in 3 Pico seconds increments. These products can be used in communication systems where clock and data signals need to be recovered and synchronized or adjusted, as well as in applications were timing adjustments of serial data streams at speeds up to 32 gigabits as required, which is typically in 40 and 100 G systems.
Second is our new multiplexer and demultiplexer or mux and demux product line. The first product is a 4:1 mux, which takes four separate lanes of digital data and up to seven gigabits per second and serializes them into a single lane of digital data at up to 28 gigabits per second at its output.