International Rectifier Corporation (IRF) Q3 2012 Earnings Call May 3, 2012 5:00 p.m. ET Executives Christopher Toth – Executive Director, Investor Relations Oleg Khaykin – President, Chief Executive Officer Ilan Daskal – EVP, Chief Financial Officer Analysts Gabriela Borges – Goldman Sachs Ramesh Misra – National Security Stephen Chin – UBS Craig Berger – FBR Capital Markets Terence Whalen – Citi Steven Smigie – Raymond James Presentation Operator
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In addition to these risks, we refer you to the risk factors included in our press release issued today, and the company’s filings with the SEC. Including the most recent Form 10-K and 10-Q.Before I hand the call off Ilan, I would like to mention the following upcoming events. On Monday, May 14, we will be attending the JMP Securities Research Conference in San Francisco, and on Tuesday, June 5, we will be attending the Raymond James Spring Investors Conference in Boston. 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 third quarter of fiscal 2012 IR reported revenue of $248.1 million, which was a 7.8% increase from the prior quarter, and a 16.4% decrease from the third quarter of fiscal year 2011. Revenue over the last quarter increased as the market started to show initial signs that demand is recovering. Automotive was strong and we saw solid traction in the consumer and computing end markets. Gross margin for the March quarter was 29.8%, about 1.5 percentage points lower than our guidance, mainly due to mix as a higher margin industrial and appliance end markets were weaker than expected, and lower margin consumer and computing products rebounded stronger than expected. We reported a net loss of $2.5 million, or $0.04 per fully diluted share for the quarter. Excluding the discrete tax benefit of $6.2 million, a gain on the property sale of $5.4 million in amortization of intangibles of $2.1 million, net loss would’ve been $12 million, or $0.17 per share. R&D expenses were $34.8 million, compared with $32.2 million in the prior quarter. The higher R&D was the result of increased engineering bills to accelerate new product introductions, during the quarter, as we took advantage of a lower fab utilization. R&D expenses represented 14% of revenue for the quarter.
SG&A expenses were $49.6 million, down from $50.6 million in the prior quarter as we work to reduce our fixed cost structure. SG&A expenses represented 20% of revenue for the quarter. Amortization of acquisition related intangibles was $2.1 million.During the March quarter, we had a $5.4 million gain on disposition of property from the sale of a vacant site of an old R&D facility located in Oxford, England. Operating loss was $7.1 million for the quarter. Income tax was a $4.5 million benefit due primarily to discrete tax benefit of $6.2 million, which was partially offset by $1.7 million in tax accrual in our foreign jurisdictions. The discrete tax benefit was mainly due to our release of tax reserve. The total cash, cash equivalents and investments at the end of the quarter were $366.2 million, which included $1.4 million of restricted cash. During the quarter, inventory remained about flat at $307 million. Weeks of inventory decreased four weeks to 23, as a result of increasing revenue. We used $14.5 million in cash from operating activities in the quarter, mainly due to changes in working capital. Cash capital expenditures for the quarter were $24.7 million and represented 9.9% of revenue. Depreciation and amortization expense was $21.9 million and stock-based compensation was $4.1 million. During the quarter, we did not purchase any shares of our stock. We have about 69 million shares outstanding at the end of the March quarter. Moving onto our outlook. We currently expect revenue for the June quarter to be between $265 million and $270 million. For this projected revenue range, we currently estimate gross margin in the June quarter to be about 30%, primarily due to under absorption and lower margin in consumer and computing product mix. Read the rest of this transcript for free on seekingalpha.com