Hittite Microwave Corporation (HITT)
Q1 2010 Earnings Call
April 22, 2010 5:00 p.m. ET
Stephen G. Daly - Chairman of the Board, President, Chief Executive Officer, Director
William W. Boecke - Chief Financial Officer, Vice President, Treasurer
Aalok Shah - DA Davidson
Jiwon Lee - Sidoti & Company
Tore Svanberg - Thomas Weisel Partners
Gus Richard - Piper Jaffray
John Haller - HHR Asset Management
Previous Statements by HITT
» Hittite Microwave Q3 2009 Earnings Call Transcript
» Hittite Microwave Corporation Q2 2009 Earnings Call Transcript
» Hittite Microwave Corporation Q1 2009 Earnings Call Transcript
Ladies and gentlemen, thank you for standing by. Welcome to the Hittite Microwave Corporation first quarter 2010 conference call. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator instructions) This conference is being recorded today, Thursday, April 22, 2010. I would now like to turn the conference over to Mr. Stephen Daly, Chairman and CEO. Please go ahead.
Thank you. Ladies and gentlemen, good afternoon and welcome to Hittite Microwave Corporation's first 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 into our report on Form 10-K filed with the Securities 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 first quarter results. Following my comments, Bill will review in detail our financial performance. After that, I will provide revenue and earnings guidance for the second quarter of 2010. I will then invite listeners to ask questions. Following the question period I'll make some brief closing remarks.
In reviewing the first quarter, our revenue was $54.2 million, an increase of 24% over the fourth quarter of 2009 and 42% year-over-year. Net income was $16.1 million, a 20% sequential increase and 58% year-over-year.
Our revenue was above our plan our net income also exceeded our plan due to higher revenues and stronger gross profit margins. We are satisfied with our Q1 performance. It was a strong start to the year and the growth momentum we have established is great to have as we begin 2010.
On a geographic basis, 44% of our first quarter revenue was from domestic customers and 56% from international customers, which is similar to 2009's full-year split. In the near term we expect both international and domestic markets to gain strength. This trend is driven by international telecomm equipment manufacturers gaining worldwide market share as well as a variety of US end markets continuing to recover.
In the first quarter, three of our eight markets accounted for approximately 81% 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 19% of our revenue.
Seven of our eight markets experienced double-digit sequential growth in Q1. The strong growth was broad-based with sequential growth rates ranging from 17% to 116%. Q1 was our fourth consecutive quarter of sequential revenue growth and was driven by a combination of old and new customer programs.
We are pleased with the current strengths in our target eight markets, however, we are cautious and believe that growth levels will moderate in the coming quarters. As expected, our space business declined sequentially due to normal timing of orders.
Our engineering and product development team introduced 32 new products in the first quarter bringing the standard product portfolio size to 834 at the end of Q1. In addition, we launched our 25th product line, a tunable filter IC product line. Competition in this product area is typically non-IC based technology.
Products we have launched have been well received by customers because they have programmable cutoff and pass band features making them extremely versatile. For example, our customers are able to tune the filters and frequency and bandwidth, which essentially allows them to customize the filter's performance for their application.
These innovative filters will be sold into all eight of our target markets and are ideally suited for preselection and multiband communication systems, wideband radios and test and measurement equipment and back plane environments.
Our product line is currently comprised of two low-pass and two band-pass filters and our plan is to expand the product line in both frequency and functionality.
A few other technical highlights occurred in the quarter. First, we expanded our frequency mixer and converter product line. These products are used on LTE and 4G applications. Hittites mixers and converters continue to set the industry benchmark for high performance with superior isolation and intermod distortion.
The 4G radio is moving to more complex modulations such as 256 QAM. Customers are compelled to utilize Hittite's mixer products to improve system performance.