QuickLogic Corporation ( QUIK) Q3 2010 Earnings Call Transcript November 2, 2010 5:30 pm ET Executives Thomas Hart – Chairman and CEO Andy Pease – President Ralph Marimon – VP, Finance and CFO Analysts Edwin Mok – Needham & Company Brian Coleman – Hawk Hill Asset Management Robert West [ph] – NI Technical Research [ph] Presentation Operator
For the third quarter of 2010, total revenue was 7.3 million. This represents a sequential increase of 13% and was within our guidance range. New product revenue grew to 2.8 million, representing a 20% sequential increase. Legacy product revenue totaled 4.6 million, which was a 9% sequential increase. Both product lines were within our guidance range.Our non-GAAP gross profit margin for Q3 was 64.5%, and was above our guidance due to the mix of product shipped. Non-GAAP operating expenses for Q3 totaled 3.8 million, which was at the low-end of our guidance. These lower expenses, combined with higher than planned gross margin produced a non-GAAP operating profit of 921,000. Non-GAAP operating expenses increased compared to Q2, primarily due to an increase in third-party engineering expenses and a modest increase in SG&A. On a non-GAAP basis, tax and other expenses totaled approximately 4,000. This resulted in a non-GAAP net profit of 917,000 or $0.02 per diluted share, compared with a net profit of 418,000 or $0.01 per diluted share in the second quarter of 2010. Our ending cash position of 19.2 million reflects an increase of approximately 1.3 million from the Q2 ending balance. This increase was driven by our higher than expected gross margin, lower than expected operating expenses and the exercise of warrants from our November 2009 Registered Direct offering. Why investors from our November offering exercised (inaudible) provided cash to the company of approximately 556,000. Our Q3 GAAP net profit was 550,000 or $0.01 per diluted share. Our GAAP results include stock-based compensation charges of 568,000, which was partially offset by a one-time tax benefit of 209,000 related to our investment in TowerJazz shares. Because of our GAAP profit, shares outstanding are now calculated on a fully diluted basis. Weighted average fully diluted shares outstanding at the end of Q3 totaled 38.7 million shares. Please see today’s press release for a detailed reconciliation of our GAAP to non-GAAP results.
I’ll rejoin you in a few minutes to discuss our guidance for the fourth quarter, but first Tom will update you on the status of our strategic efforts. Tom?Thomas Hart Yeah. Thanks, Ralph. Well, by every measure, it’s been a year of tremendous progress here at QuickLogic. Q3 2010 total revenue was up 13% sequentially and 120% year-over-year. With this growth, we’ve returned to GAAP profitability, positive cash flow and exited the quarter with 19.2 million in cash. In addition to these tangible accomplishments, we’ve made significant strategic progress with our customer-specific standard products or CSSPs that we believe will fuel our growth and profitability during the coming year. I’ll cover this progress in a few minutes, but first, let’s take time to evaluate our near term industry events are impacting QuickLogic. As you’ve undoubtedly heard from many semiconductor companies that have already reported calendar Q3 results, short-term visibility has been reduced and in many cases, there is some degree if inventory rebalancing expected to occur during Q4. Because we’ve been able to maintain short and dependable lead times for our legacy products throughout 2010, we’re not anticipating any material impact from inventory rebalancing. Even though Q4 is normally a seasonally soft quarter for the industry sectors we serve with our legacy products, we expect sales for these products to be flat to Q3. We’re also forecasting flat new product revenue in Q4. Read the rest of this transcript for free on seekingalpha.com