Actions Semiconductor's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Actions Semiconductor Co., Ltd. (ACTS)

Q2 2012 Earnings Call

August 7, 2012 5:30 p.m. EDT

Executives

Ellen Davis – The Blueshirt Group

Zhenyu Zhou – Chief Executive Officer

Nigel Liu – Chief Financial Officer

Analysts

Rick Fearon – Accretive Capital Partners

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Actions Semiconductor second quarter 2012 earnings conference call.

[Operator Instructions]. This conference is being recorded today, August 7 of 2012.

And I would now like to turn the conference over to Ellen Davis with the Blueshirt Group.

Ellen Davis

Good afternoon and thank you for joining us on today's conference call to discuss Actions Semiconductor's second quarter 2012 financial results. This call is being broadcast live over the web and can be accessed on the Investor Relations section of Actions' website at www.actions.semi.com for 90 days.

On today's call are Dr. Zhenyu Zhou, Chief Executive Officer; Nigel Liu, Chief Financial Officer; and Chung Hsu, Director of Investor Relations.

After the market closed in the US today, Actions issued a press release discussing the results for second quarter ended June 30, 2012. The press release was also filed on Form 6-K with the US Securities and Exchange Commission. The press release is accessible online at the company's website as well as the SEC's website, or you can call the Blueshirt Group at 415-217-7722 and we will email you a copy.

We would like to remind you that during the course of this conference call, Actions' management team may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are simply estimates and actual events or results may differ materially. We refer you to the documents that Actions filed from time to time with the SEC, specifically the company's most recently filed forms F-1, 20-F and 6-K's. These documents identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.

And now I'd like to turn the call over to Dr. Zhenyu Zhou.

Zhenyu Zhou

Thank you for participating in Actions' earnings conference call. We appreciate your continued interest in the company. I'm pleased to be able to share with you an update on our second quarter performance as well as discuss our strategy for the second half of 2012. Later on the call, Nigel Liu, CFO, will discuss financial results for the second quarter. I will be available for the Q&A portion on the call along with Nigel and Chung Hsu, Actions Director of Investor Relations.

And now for our update on our business. We were pleased to report revenue growth of 20.7% year over year and 17.8% from last quarter. In the second quarter of 2012, Actions revenue was $12.6 million and net loss was $0.56 million or $0.01 per ADS.

Gross margin in the second quarter increased 37% from 34.9% in the first quarter. Our more value-oriented solutions such as boom box products continued to comprise the largest portion of our product mix during the quarter. In addition to the continued strength in the boom box segment, we maintained our leading market share positions in the mainstream portable video and portable audio products.

We are proud of our market leadership positions and continue to believe it provides a strong platform for growth. Actions owns the dominant market share in non-Apple audio products and video players with gaming and video capturing functionality, and we continue to gain market share in the advanced high-definition portable video market. Our growth initiatives remain largely focused on penetrating and gaining tractions in the mobile internet enabled multimedia market. As we move through the second half of the year, we will continue to invest in R&D for advanced products and we'll maintain prudent management of our operating expenses.

Creating long-term shareholder value remains a top priority for the company. In the second quarter we spent approximately $1.4 million on the share repurchase program, compared with $1.0 million in the first quarter. As of June 30, 2012, the company had invested a total of approximately $43.9 million in the program, representing approximately 19.1 million ADS shares, which is close to the previously approved 20 million ADS cap of the existing buyback program. Therefore we are pleased to announce that today the Board approved an increase of 10 million ADS to the existing buyback program.

During the second quarter, we faced the additional headwind of RMB exchange rate volatility and recorded an exchange rate loss. Although we anticipate continued RMB volatility for the remainder of the year, by leveraging the RMB-denominated yields, we still enjoy a high return from our RMB-denominated assets.

And now for a detailed look at each category. Portable audio, during the second quarter we maintained our leading positions in the mainstream audio boom box market category. Volume shipments of our audio boom box products increased in the second quarter. We continue to secure design wins for our boom box products with large branded customers in China and we are beginning to penetrating international branded customers. In the second quarter, our sales to the mainstream segment of the MP3 market serving the non-display, mono-display and small color display media products continued to maintain the leading position in the market share of this category.

Portable video, overall shipments in the video category including our standard definition D1 and high-definition HD PMP and gaming products decreased in the second quarter as the market moved towards adoption of tablets. Video continues to be a key category for Actions, and as we move through the second half of 2012, we are focused on increasing our contributions from our newer advanced products in the video category.

Read the rest of this transcript for free on seekingalpha.com

More from Stocks

Markets Look Confused After Latest Beating

Markets Look Confused After Latest Beating

General Electric Expulsion From Dow Symbolizes Unsettled Week in Markets

General Electric Expulsion From Dow Symbolizes Unsettled Week in Markets

How Small-Cap Stocks Can Protect Your Portfolio From a Trade War

How Small-Cap Stocks Can Protect Your Portfolio From a Trade War

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

3 Great Stock Market Sectors Millennials Should Invest In

3 Great Stock Market Sectors Millennials Should Invest In