Synaptics' CEO Discusses F4Q2012 Results - Earnings Call Transcript

Synaptics Inc. (SYNA)

F4Q2012 Results Earnings Call

August 2, 2012 5:00 PM ET

Executives

Alex Wellins – The Blueshirt Group, IR

Rick Bergman – President and CEO

Kathy Bayless – Chief Financial Officer

Analysts

John Vinh – Pacific Crest Securities

Philip Lee – Lazard Capital Markets

Rob Stone – Cowen & Company

Dean Grumlose – Stifel Nicolaus

Rajiv Gill – Needham & Company

Charlie Anderson – Dougherty & Company

Shaw Wu – Sterne, Agee

Presentation

Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Synaptics Fourth Quarter and Fiscal Year 2012 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions)

This conference is being recorded today, Thursday, August 2, 2012. I would now like to turn the conference over to Alex Wellins, of The Blueshirt Group. Please go ahead, sir.

Alex Wellins

Good afternoon. And thanks for joining us today on Synaptics fourth quarter and fiscal 2012 conference call. This call is also being broadcast live over the web and can be accessed from the Investor Relations section of the company's website at www.synaptics.com. With me on today's call are Rick Bergman, President and CEO; and Kathy Bayless, CFO.

In addition to the company's GAAP results, management will also provide supplementary results on a non-GAAP basis, which exclude non-cash share-based compensation charges and certain other non-operational and non-cash items. Please refer to the press release issued after the market closed today for detailed reconciliation of GAAP and non-GAAP results.

Additionally, we'd like to remind you that during the course of this conference call, Synaptics will make forward-looking statements including predictions and estimates that involve a number of risks and uncertainties, these are including, but not limited to, statements regarding the company's future financial performance and outlook, including expectations of modest growth year-over-year, financial guidance for the fiscal -- first quarter of fiscal 2013, anticipated sequential changes in PC and mobile product revenues for the first quarter, anticipated expenses and expense trends associated to company’s recent acquisitions, the timing of ForcePad and ThinTouch product revenue, and the ramp and timing of when video product revenue will become accretive.

Also the company’s expectations for above market unit growth within the mobile market, including the impact of a higher mix of lower cost chip solutions, the company’s belief that its laying the foundation to capitalize on its target markets as never before, to lock in new incremental opportunities for expanded long-term growth, expectations of the pipeline for large touchscreen solutions expanding throughout the year, and the acquisition of its new video display capabilities further fueling future growth through touch and display integration opportunities.

Actual results may differ materially from any future performance suggested in the company's forward-looking statements. We refer you to the company's SEC filings, including Form 10-K for the fiscal year ended June 30, 2011 for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statement. We expressly disclaim any obligation to update this the forward-looking information.

With that said, I'll turn the call over to Rick Bergman. Rick?

Rick Bergman

Thanks, Alex, and I'd like to welcome everyone to today's call. As you may have seen from our announcement this afternoon, we have a lot to cover today based on some really existing new products and acquisitions that expand the market opportunity for Synaptics. So let’s dive right in.

We are very pleased with our fiscal 2012 performance, particularly against the backdrop of challenging marketing conditions. Fiscal 2012 revenue was $548 million, down 8% from the prior year, as a revenue impact from module to chip transition for our mobile phone products more than offset strong unit growth.

On the eclipse side higher margin mobile chip products lifted the overall gross margin percentage 550 basis point from the prior year, increasing gross margin dollars by 4% and addition operating leverage to our business model.

Non-GAAP net income and earnings per share was $79 million and $2.28, respectively, reflecting our investment in research and development to enhance and broaden our product offerings and technology portfolio.

In fiscal 2012, we further entrenched our leadership position in our key markets, broaden our solutions portfolio and our ability to scale to meet opportunities in front of us, and continue to position a company for long-term growth. We maintained our majority share in notebook PCs and drove favorable ASP trends with the transition to Image Sensing TouchPad and ClickPad’s.

In the smartphone market we expanded our market share among a broader base of OEMs. We shift the industry’s first In-Cell enabled smartphone with the launch of the Sony Xperia P.

Additionally, we began sampling the world’s first integrated touch and display driver In-Cell solution with our ClearPad Series 4. In the large touchscreen market we were the first to market with the single ASIC solution, our ClearPad 7300, which is now shipping in the 10-inch Samsung Galaxy Tab 2 and its garnered design wins with other OEMs.

Having the broadest product portfolio in the industry enabled us to apply our system level engineering expertise to a wide number of solutions. This includes the recently announced ClearPad 2300 single-layer multi-touch solution that drives down the smartphone buildup material costs and supports all combination of sensors and lenses.

Series 2 solutions can also be found in the latest model from Huawei and DTE. Our Series 3 solutions have enabled us to build on our technology leadership position in the premier mobile touch market with our second In-Cell solution, the HTC EVO Design. Discrete sensor solution such as the well received HTC OneX and On-Cell solutions such the Sharp Aquos smartphone.

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