Pixelworks, Inc. (PXLW) Q3 2011 Earnings Conference Call October 20, 2011 5:00 PM ET Executives Bruce Walicek – President and CEO Steven Moore – VP and CFO Presentation Operator
Additionally, the Company's press release and management’s statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms, including gross margin, operating expenses, net income loss, and net income loss per share. These non-GAAP measures exclude restructuring charges, amortization of acquired developed technology, stock-based compensation expense, gain on sale of patents, gain on sale of marketable securities, and additional amortization of a prepaid royalty. We use these non-GAAP measures internally to assess our operating performance. The Company believes these non-GAAP measures provide a meaningful perspective on our core operating results and underlying cash flow dynamics, but we caution investors to consider these measures in addition to, not as a substitute for, nor superior to, the Company's consolidated financial results as presented in accordance with GAAP.Included in the Company's press release are definitions and reconciliations of GAAP to non-GAAP net income/loss and GAAP net income/loss to adjusted EBITDA, which provide additional details. Bruce will begin today’s call with a strategic update on the business, after which I will review our Q3 financial results and discuss our outlook for the fourth quarter of 2011. Bruce Walicek Thanks Steve. Good afternoon everyone and thank you for taking the time to join us today. Let me start out by making a few comments and observations about our third quarter 2011, and then Steve will follow with more details on our financial results. The third quarter was a solid quarter of growth as revenues increased 11% sequentially, and came in at the midpoint of guidance. This increase was primarily driven by a rebound in our Advanced TV/Panel product line, as new customers ramped into volume production. TV/Panel products were 17% of revenue and were up 84% sequentially and 102% year over year. While overall book-to-bill was less than one reflecting customers providing less lead time on orders, the book-to-bill in TV/Panel products was 1.2 to 1, as we continued to have success with our PA series devices. Overall our new products continued their growth, rising 33% year over year, and up 21% sequentially. New products accounted for 56% of revenue during the quarter, up from 40% in the 3rd quarter of 2010, reflecting continued adoption and success across our product lines. Gross margin came in above the range of guidance and combined with topline growth and low end of the range operating expenses, resulted in positive EBITDA and positive cash flow from operations for the second quarter in a row.
On the Product front, we introduced and ramped into production, several new devices across our product lines. In our TV/Panel Product Line: We ramped our 5th generation Advanced Video Processor, the PA136, into high-volume production. The PA136 provides industry leading video quality, and incorporates a number of advanced features, such as real-time static and motion based 2D-to-3D conversion and Pixelworks’ innovative n2m technology which ensures smooth playback of low frame-rate Internet video. In the third quarter, we sampled the PA138, which includes all the improvements and features of the 136, but is targeted for advanced high end systems and support for the latest generation high speed panel interface. Our momentum in the Tier 1 segment of the Advanced TV market continued in the third quarter, as we penetrated another Top 5/Tier 1 TV OEM for our PA series products and these programs will begin shipping in production in the fourth quarter. Our penetration of the Top Tier customer base, confirms Pixelworks’ leading position in providing innovative solutions in video processing to this market. These customers are selecting Pixelwork’s products because, we provide superior video quality and innovative value added features at a competitive price/performance point, combined with the ability to deliver product in high volume to the highest quality standards.Read the rest of this transcript for free on seekingalpha.com