International Rectifier CEO Discusses F1Q2010 Results - Earnings Call Transcript
International Rectifier Corp. (
)
F1Q2010 Earnings Call
November 04, 2010 04:30 pm ET
Executives
Chris Toth - IR
Ilan Daskal - CFO
Oleg Khaykin - President and CEO
Analysts
James Schneider - Goldman Sachs
Terence Whalen - Citi
Steve Smigie - Raymond James
Craig Berger - FBR Capital Markets
Brian Piccioni - BMO Capital Markets
Ramesh Misra - Brigantine Advisors
Stephen Chin - UBS
Steve Smigie - Raymond James
Presentation
Operator
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International Rectifier Corporation F1Q10 (Qtr End 9/27/2009) Earnings Call Transcript
Good afternoon ladies and gentlemen and welcome. My name is Carrie and I will be your conference operator today. At this time I would like to welcome everyone to the International Rectifier fiscal first quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. (Operator Instructions). To ensure that everyone has a chance to ask their question, we ask that you please limit yourselves to one question and one follow-up.
Thank you. It is now my pleasure to turn the conference over to our first speaker, Mr. Chris Toth with Investor Relations. Sir you may begin your conference.
Chris Toth
Thank you, Carrie and good afternoon. If you have not already read through our press release issued earlier today, it can be found on our website at investor.irf.com, in the Investor Relations section. Our quarterly report on Form 10-Q is expected to be filed with the SEC tomorrow Friday, November 5, 2010 and can be accessed using the same web address. This call is being broadcast over the internet and can also be accessed through IR's web address. A conference call replay will also be available through November 11, 2010. After our prepared comments, we will open the line for questions.
Our discussion today will include some forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution that such statements are subject to a number of uncertainties and actual results may differ materially. Risk factors that could affect the company's actual results are included in our press release issued today, and the company's filings with the SEC including the most recent Forms 10-K and 10-Q.
Before we begin, I would also like to mention that following events of note. From November 8, through November 11, we will be at the Electronica Trade conference in Munich, Germany and I would also like to mention that International Rectifier will commemorate its 50
th
Anniversary on the New York Stock Exchange by ringing the opening bell on Tuesday morning December 7.
Now Ilan will discuss our most recent financials. Ilan?
Ilan Daskal
Thank you, Chris. Good afternoon and thank you all for joining us. For the first quarter of Fiscal 2011, IR reported revenue of 280.9 million which was a 6.5% increase from the prior quarter and a 56.6% increase from the first quarter of fiscal year 2010. We continue to see a healthy increase in revenue driven by a strong end market demand driven primarily by our OEM customers.
Gross margin increased to 38.7% up 260 basis points compared with a prior quarter. The increase resulted primarily from a retail product mix as we continue to see strengths in the higher margin industrial and enterprise infrastructure end markets. Overall, we continue to see good progression on our gross margin and remain confident of our target range in the low 40s. We reported a net income of 33.5 million or $0.47 per full diluted share compared with $29 million or $0.41 per fully diluted share in the June quarter.
The September quarter results included a $3.8 million gross tax benefit that increased the diluted earning per share by $0.05. The June quarter results included an $8.5 million gross tax benefit that increased the diluted earning per share by $0.12. For the September quarter, R&D expenses were $27.6 million which represented 9.8% of revenue. SG&A expenses were $48.3 million which represented 17.2% of revenue. The increase from the June quarter is primarily from employee incentive compensation and commissions associated with higher revenue. Operating income for the quarter was $31.6 million, an increase of 43% compared to the prior quarter.
Operating income represented 11.3% of sales for the quarter. Other expense net was $1.3 million in the September quarter and interest income net was $1.4 million primarily from our existing investments. Income tax for the quarter was $1.8 million benefit due primarily to a release of tax reserves and other discrete items totaling $3.8 million which was partially offset by about $2 million in tax accrual in our foreign jurisdiction. The total cash, cash equivalents and investments at the end of the first quarter was $575.5 million which included $3.4 million of restricted cash. Inventory was $187.6 million which is up $17.4 million or about 10% from the prior quarter. Inventory weeks were 14 up one week compared to the last quarter. Cash from operating activities in the quarter was $37.6 million and free cash flow was $14.9 million.
Cash, capital expenditures were $22.7 million which was about 8.1% of revenue. Depreciation and amortization expenses were $18.9 million and stock based compensation was $4.4 million. During the quarter, we purchased just over 1 million shares of our stock at total cost of $20 million. We had 69.4 million shares outstanding at the end of the September quarter.
Moving on to our outlook. Despite weakness in consumer and notebook market, continued strength in our industrial appliance and automotive markets should enable roughly flat revenue compared with the September quarter. We currently expect revenue for the December quarter to be between 275 and $285 million. For this projected revenue range, we currently estimate gross margin in the December quarter to range between 39.5% and 40%. We expect the gross margin to increase due to a retail product mix and operational efficiencies.
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