Intersil's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Intersil Corporation ( ISIL)

Q4 2011 Earnings Conference Call

February 1, 2012 4:45 PM EST

Executives

Brendan Lahiff – Senior IR Manager

Dave Bell – President and CEO

Jonathan Kennedy – SVP and CFO

Analysts

Bheeshma Chaudhary – Deutsche Bank

Craig Ellis – Caris & Company

Jim Schneider – Goldman Sachs

Steve Smigie –Raymond James

Terence Whalen – Citi

Tore Svanberg – Stifel Nicolaus

Patrick Walsh – Credit Suisse First Boston

David Wu – GC Research Ltd

Presentation

Operator

Ladies and gentlemen, welcome to Intersil Corporation’s fourth quarter and fiscal year-end 2011 earnings conference call.

I will be your coordinator for today.

I would now like to turn the presentation over to your host for today’s call, Mr. Brendan Lahiff, Senior Investor Relations Manager of Intersil. Mr. Lahiff, please proceed.

Brendan Lahiff

Thanks, Tunisia. Good afternoon and thank you for joining us today for Intersil’s fourth quarter and fiscal 2011 earnings results conference call. Today, with me is Dave Bell, Intersil’s President and Chief Executive Officer; and Jonathan Kennedy, Intersil’s Senior Vice President and Chief Financial Officer.

Today we will deliver remarks on the fourth quarter and fiscal 2011 results and provide a summary of our first quarter 2012 business outlook. After our prepared comments, we will open the lines for questions.

We completed our fourth quarter on December 30 th, 2011. An earnings press release was issued today at approximately 1:05 PM Pacific Time. A copy of the press release and supplementary slides to accompany the earnings conference call are available on the Investor Relations section of our website at ir.intersil.com.

In addition, this call is being webcast live over the Internet and may be also accessed via the Investor Relations section of our website. A telephonic replay of the conference call and webcast will be available for two weeks through February 15 th. Questions during the call may also be submitted online via the webcast that will be answered by email after the call.

Please note that some comments made during this conference call may contain forward-looking statements. I’d like to remind you that while these statements reflect our best current judgment, they are subject to risks and uncertainties that could cause our actual results to vary. These risk factors are discussed in detail in our filings with the Securities and Exchange Commission.

In addition, during this call, we may refer to financial measures that are not prepared to Generally Accepted Accounting Principles. We sometimes use these measures because we believe they provide useful information about the performance of our business and should be considered by investors in conjunction with GAAP measures reported.

Our agenda for the call today is as follows: Dave Bell will discuss key highlights from the quarter and year, and Jonathan Kennedy will review the quarter from a financial perspective, and Dave will follow with additional commentary on each of our four key markets, as well as our forward-looking guidance. A Q&A session will follow.

I’d now like to turn the call over to Dave Bell, President and CEO of Intersil.

Dave Bell

Thanks Brendan. Good afternoon and thank you for joining us today for Intersil’s fourth quarter and 2011 year-end earnings conference call.

I’ll first quickly review the results of the fourth quarter and the full year, I’ll then make some comments on the present business conditions and our strategy for managing through the present economic environment.

We reported fourth quarter revenues of $165.8 million, an 11% decrease from the third quarter, and a 15% decrease from the fourth quarter of 2010. Jonathan will provide more financial details in his remarks.

The economic conditions in the fourth quarter failed to improve significantly with demand remaining weak in all markets. With this downturn now headed into an unprecedented third quarter, we believe that demand in inventory drawdown have reached bottom. Some of our peers are already seeing the early stages of recovery. With the fourth quarter book-to-bill ratio slightly less than 1 and a quarter-to-date book-to-bill ratio slightly above 1, we’re anticipating clear signs of recovery in the near future.

We have seen economic cycles many times before and we’re positioning the company to respond to the upcoming demand snapback. During the last cycle, we’ve won awards from many of our customers due to our responsiveness and continuity of supply, and we expect the same this time around. We build inventory primarily in dye bank on parts that are likely to have high turns business. We’ve also reserve sufficient manufacturing capacity for strong growth in the coming quarters.

As I explained during the last two earnings calls, we focus the company on our top 10 growth drivers. These focus areas are expected to generated $700 million of additional annual revenue within the next five years. At the same time, the investments made in products aimed at the broad Industrial market are also paying off with increased design wins in sales. I’ll provide a bit more color on our product strategy after Jonathan’s financial summary.

Intersil’s management team reacted swiftly to control operating expenses during this downturn. We conducted another small reduction in force in R&D related to a refocusing efforts and at manufacturing to address underutilization. Our asset light manufacturing strategy allows us to be flexible with our manufacturing costs through the inevitable ups and downs in the semiconductor business. However, we have continued to make sizeable R&D investments in the top 10 areas that we’re absolutely confident it will drive strong growth. We have not allowed these critical R&D investments to be whipsawed with the ups and downs of the economic cycles.

Our Board of Directors is also committed to sustaining shareholder returns and has authorized a quarterly dividend of $0.12 per share of common stock.

At this time, I’d like to turn the call over to Jonathan Kennedy, who will provide a financial summary. I’ll then discuss the results from each of our end markets in more detail and finally provide comments on our first quarter 2012 outlook. Jonathan.

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