RDA Microelectronics Announces First Quarter 2013 Financial Results

SHANGHAI, China, May 7, 2013 (GLOBE NEWSWIRE) -- RDA Microelectronics (Nasdaq:RDA) ("RDA Microelectronics" or the "Company"), a fabless semiconductor company that designs, develops and markets wireless systems-on-chip and radio-frequency (RF) semiconductors for cellular, connectivity and broadcast applications, today announced its financial results for the first quarter ended March 31, 2013.

First Quarter Financial Highlights (in US dollars):
  • Revenue was $97.1 million, exceeding the Company's guidance of $96 million to $97 million, and representing an increase of 34.9% from the $72.0 million in the first quarter of 2012.
  • Gross margin was 32.1%, compared to 31.7% in the previous quarter and 35.9% in the first quarter of 2012.
  • GAAP net income was $10.7 million, or $0.22 per diluted ADS, compared to $13.4 million, or $0.28 per diluted ADS, in the previous quarter and $13.9 million, or $0.30 per diluted ADS, in the first quarter of 2012.
  • Non-GAAP net income was $13.7 million, or $0.28 per diluted ADS, compared to $16.4 million, or $0.34 per diluted ADS, in the previous quarter and $15.1 million, or $0.33 per diluted ADS, in the first quarter of 2012.

For a reconciliation of non-GAAP financial measures, please refer to the tables included in this press release.

First Quarter and Recent Business Highlights:
  • Began sampling the 40nm single-die RDA8810 EDGE smartphone baseband.
  • Launched the RDA6861, a multimode front-end module for quad-band GSM/EDGE and WCDMA/CDMA/LTE handheld cellular devices.
  • Achieved volume production of EDGE transceivers for the Samsung Galaxy S® III.
  • Announced volume shipments of GPS low noise amplifiers for Samsung 3G handsets.
  • Reported volume shipments of DVB-S tuners to Samsung Electro-Mechanics.
  • Priced an offering of 9,602,000 American Depositary Shares ("ADSs") including the underwriter overallotment allocations, each representing six ordinary shares of the Company. The Company offered 100,000 ADSs and the selling shareholders offered 9,502,000 ADSs. The Company received no proceeds on the sale of shares by the selling shareholders.

"First quarter revenue increased 35% year-over-year as a result of strong baseband shipments and increasing volumes of our WiFi combo chip for low-cost smartphones," said Vincent Tai, chairman and CEO of RDA Microelectronics. "Our 8851 baseband, the most integrated and advanced SoC for the high volume GSM handset market, reached record shipment levels in March enabling us to strengthen our position as the second leading supplier to China handset manufacturers. We also further expanded our penetration of the smartphone market with increasing shipments of our WiFi combo solutions and TD-SCDMA PA products as market demand improved following the Chinese New Year holiday.

"To further expand our smartphone silicon content, we began sampling our RDA8810 EDGE baseband product. This product integrates an ARM ® Cortex ®-A5 processor, dedicated modem processor, RF transceiver and power management unit in a single 40nm CMOS die. Our competitors require multiple dies and multiple chips to provide equivalent functions. In addition to superior integration, the 8810 uses more advanced memory interfaces and handles 1080p video playback at 30 frames per second. These powerful features enable the highest performance at the lowest cost, which is ideally suited for low-cost smartphone market as well as the rapidly growing tablet market. We also launched sampling of the RDA6861, our first multimode front-end module for GSM/EDGE and WCDMA/CDMA/LTE handsets.

"The rapid adoption of our baseband and smartphone products is proof of our ability to capture share of large and growing markets with our advanced integration capabilities, technical expertise and strong customer relationships. I believe we will be able to replicate this success in the smartphone market with our EDGE and multimode products as well as our future WCDMA and LTE offerings. Our aggressive product roadmap and consistent execution have positioned the Company to further extend our successful market share strategy and expand into other high volume and high ASP markets to drive growth."

First Quarter Operating Summary:
  • Revenue was $97.1 million, compared to $115.6 million in the previous quarter and $72.0 million in the first quarter of 2012. The sequential decline of 16.0% was mainly due to typical seasonality related to the Chinese New Year holiday. The year-over-year increase is due to the addition of baseband as well as strong sales of GSM PAs and WiFi combo chips.
  • Gross margin was 32.1%, compared with 31.7% in the previous quarter and 35.9% in the first quarter of 2012. The sequential increase in gross margin was driven by higher sales of the RDA8851, which carries higher gross margin than the legacy baseband products, and increased WiFi combo chip volumes. The decrease in gross margin over the prior year period reflected lower GSM PA gross margins.
  • R&D expenses were $15.9 million, compared to $17.8 million in the previous quarter and $8.3 million in the first quarter of 2012. The sequential decrease in R&D expenses was mainly due to lower performance-based employee compensation costs partially offset by higher IP expenses for LTE product development.
  • SG&A expenses were $4.3 million, compared to $5.8 million in the previous quarter and $3.2 million in the prior year period. The sequential decrease in SG&A expenses was mainly due to lower performance-based employee compensation costs.
  • Non-GAAP net income was $13.7 million, compared to $16.4 million in the previous quarter and $15.1 million in the first quarter of 2012.

Balance Sheet and Cash Flow Summary as of March 31 , 201 3 :
  • Cash, cash equivalents and short-term investments were $114.2 million, compared to $117.5 million as of December 31, 2012. In the first quarter of 2013, the Company used $1.9 million in cash from operations, compared to $8.7 million generated in the prior quarter. The sequential decrease in cash flow is mainly due to the payment of accrued 2012 performance-based employee compensation expenses and an increase in inventory.
  • Accounts receivable increased to $39.8 million, compared to $31.7 million as of December 31, 2012, reflecting accelerated order builds late in the quarter following the Chinese New Year holiday.
  • Inventory increased $7.7 million to $59.7 million to support expected order growth in the second quarter.
  • Accounts payable was $59.0 million, compared to $45.1 million as of December 31, 2012.

Second Quarter 201 3 Business Outlook:

For the second quarter of 2013, the Company expects revenue to be in the range of $109 million to $111 million, an increase of 12.2% to 14.3% sequentially and an increase of 15.5% to 17.6% year-over-year. The Company expects gross margins to be approximately 32.3%.

Share Repurchase Program:

The Company also announced that it is extending the share repurchase program under an open authorization originally approved by the Company's board of directors in 2011. The Company had previously fulfilled a $15 million repurchase authorization as of March 2013. The Company will continue to repurchase ADSs in the open market from time to time in amounts that it deems appropriate under predetermined pricing and volume limitations.

Conference Call:

RDA Microelectronics will host a conference call and live webcast for analysts and investors at 8:00 a.m. Eastern Time on May 7, 2013 (8:00 p.m. in Shanghai, China).
  • For parties in the United States and Canada, please call 1-877-280-7280, conference code 33074276
  • For parties in Hong Kong, please call 800933597, conference code 33074276
  • Other International parties please call 1-678-825-8232, conference code 33074276

RDA Microelectronics will provide a live webcast of the conference call that will be accessible from the "Investors" section of the Company's website at www.rdamicro.com. The webcast will be archived on the website for a period of 30 days. An audio replay of the conference call will also be available two hours after the call and will be available for ten days. To hear the replay, parties in the United States and Canada should call 1-855-859-2056 and enter pass code 33074276, International parties should call 1-404-537-3406 and enter the same pass code.

About RDA Microelectronics

RDA Microelectronics is a fabless semiconductor company that designs, develops and markets wireless system-on-chip and radio-frequency semiconductors for cellular, connectivity and broadcast applications. The Company's product portfolio currently includes baseband, radio-frequency front-end modules, power amplifiers, transceivers, Bluetooth system-on-chip, Wi-Fi, Bluetooth and FM combo chips, FM radio receivers, set-top box tuners, analog mobile television receivers, CMMB mobile television receivers, walkie-talkie transceivers and LNB satellite down converters. For additional information, please see the Company's website at http://www.rdamicro.com.

Forward-Looking Statements

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Any statements in this press release that are not historical facts are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include the Company's anticipated growth strategies; its future results of operations and financial condition; economic conditions in China; the regulatory environment in China; the Company's ability to attract customers and leverage its brand; trends and competition in the semiconductor industry; migration to new technology; the entry into baseband, new TV and display market and other factors and risks detailed in the Company's filings with the Securities and Exchange Commission. This press release also contains statements or projections that are based upon information available to the public, as well as other information from sources which the Company believes to be reliable but whose accuracy or completeness the Company cannot guarantee. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

Non-GAAP Financial Measures

To supplement the Company's unaudited consolidated financial results presented in accordance with U.S. GAAP, the Company uses adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense, which are defined as non-GAAP financial measures by the SEC. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see below and the tables captioned "Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this press release.

The Company believes that adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense, viewed in conjunction with the GAAP financial measures, provide meaningful supplemental information regarding the Company's performance and that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's historical performance and when planning and forecasting the Company's performance in future periods. The Company believes that excluding share-based compensation expenses and amortization of acquired and licensed intangibles helps both management and investors to get a better understanding of its ongoing business. Adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense do not include share-based compensation expenses and amortization of acquired and licensed intangibles that impact the Company's operating expenses and net income for the period. In addition, the Company's adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense may not be comparable to measures with the same or similar titles utilized by other companies, since other companies may not calculate such measures in the same manner as the Company does. The Company compensates for this and other limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures. Reconciliations of GAAP and non-GAAP results are included at the end of this press release.
RDA MICROELECTRONICS, INC.
Consolidated Statement of Operations Information
  Quarter Ended
  March 31, 2012 December 31, 2012 March 31, 2013
  (unaudited) (unaudited) (unaudited)
  (amounts in thousands of USD, except number of shares and per share data)
Revenue  71,995  115,605  97,146
Cost of revenue  (46,129)  (78,949)  (65,922)
Gross profit  25,866  36,656  31,224
       
Operating expenses:      
Research and development  (8,264)  (17,840)  (15,922)
Selling, general and administrative  (3,192)  (5,836)  (4,306)
Total operating expenses  (11,456)  (23,676)  (20,228)
Operating income  14,410  12,980  10,996
Other income:      
Interest income  770  808  766
Impairment Loss  --  (48)  --
Other income(expense), net  --  425  20
Income before income taxes  15,180  14,165  11,782
Income tax expense  (1,330)  (801)  (1,074)
Net income  13,850  13,364  10,708
       
       
Earnings per ADS      
- Basic  0.32  0.29  0.23
- Diluted  0.30  0.28  0.22
       
Weighted average ADS equivalent: [1]      
- Basic  43,160,918  46,327,608  46,405,847
- Diluted  45,685,683  48,010,144  48,119,292
       
Share-based compensation was allocated in operating expenses as follows:      
Research and development  371  383  357
Selling, general and administrative  372  431  373
       
[1] Assumes all outstanding ordinary shares are represented by ADSs.  Each ADS represents six ordinary shares.
       
RDA MICROELECTRONICS, INC.
Consolidated Balance Sheet Information
  March 31, 2012 December 31, 2012 March 31, 2013
  (unaudited) (unaudited) (unaudited)
  (amounts in thousands of USD, except number of shares and per share data)
ASSETS      
Current assets       
Cash and cash equivalents  66,856  75,091  71,727
Short-term investments-time deposit  76,036  42,377  42,476
Accounts receivable  24,114  31,722  39,778
Inventories   29,298  52,007  59,735
Prepaid expenses and other current assets  5,895  11,302  11,662
Deferred tax assets  8  --  --
Total current assets  202,207  212,499  225,378
       
Non-current assets       
Property, plant and equipment, Net  5,547  10,195  10,012
Intangible Assets  55,327  54,908  52,111
Goodwill  8,900  8,900  8,900
Other long-term assets  1,266  3,396  3,695
Investment   48  --  --
Total assets  273,295  289,898  300,096
       
LIABILITIES      
Current liabilities       
Accounts payable  34,546  45,063  58,965
Accrued expenses and other current liabilities  18,197  37,869  24,776
Deferred revenue  9,590  10,641  9,098
Total current liabilities  62,333  93,573  92,839
       
Deferred tax Liability  69  98  92
       
Total liabilities  62,402  93,671  92,931
       
Commitments and contingencies      
       
SHAREHOLDERS' EQUITY      
Ordinary shares  2,819  2,885  2,885
Additional paid-in capital  144,112  146,887  146,734
Recourse loans  (1,174)  (1,544)  (2,106)
Accumulated other comprehensive income  1,148  1,207  1,260
Treasury stock  (12,887)  (13,579)  (12,687)
Retained earnings  76,875  60,371  71,079
Total shareholders' equity  210,893  196,227  207,165
       
Total liabilities and shareholders' equity  273,295  289,898  300,096
       
RDA MICROELECTRONICS, INC.
Reconciliation of GAAP and Non-GAAP Results
(amounts in thousands of USD, except number of shares and per share data)
 
  Quarter Ended March 31, 2013
  (unaudited)
    % of  Share-based Amortization of Non-GAAP % of  Non-GAAP  % of 
  GAAP Result  Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development  15,922 16%  357  2,265 3%  13,300 13%
Selling, general and administrative  4,306 4%  373  --  0%  3,933 4%
Total operating expenses  20,228 20%  730  2,265 3%  17,233 17%
               
Operating income  10,996 11%  730  2,265 3%  13,991 14%
Net income   10,708 11%  730  2,265 3%  13,703 14%
               
Diluted earnings per ADS  0.22    0.01  0.05    0.28  
               
Weighted average ADS-Diluted  48,119,292    48,119,292  48,119,292    48,119,292  
               
  Quarter Ended December 31, 2012
  (unaudited)
    % of  Share-based Amortization of Non-GAAP % of  Non-GAAP  % of 
  GAAP Result  Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development  17,840 15%  383  2,265 2%  15,192 13%
Selling, general and administrative  5,836 5%  431  --  1%  5,405 4%
Total operating expenses  23,676 20%  814  2,265 3%  20,597 17%
               
Operating income  12,980 11%  814  2,265 3%  16,059 14%
Net income   13,364 12%  814  2,265 3%  16,443 15%
               
Diluted earnings per ADS  0.28    0.01  0.05    0.34  
               
Weighted average ADS-Diluted  48,010,144    48,010,144  48,010,144    48,010,144  
               
  Quarter Ended March 31, 2012
  (unaudited)
    % of  Share-based Amortization of Non-GAAP % of  Non-GAAP  % of 
  GAAP Result  Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development  8,264 11%  371  480 1%  7,413 10%
Selling, general and administrative  3,192 5%  372  --  1%  2,820 4%
Total operating expenses  11,456 16%  743  480 2%  10,233 14%
               
Operating income  14,410 20%  743  480 2%  15,633 22%
Net income   13,850 19%  743  480 2%  15,073 21%
               
Diluted earnings per ADS  0.30    0.02  0.01    0.33  
               
Weighted average ADS outstanding-Diluted  45,685,683    45,685,683  45,685,683    45,685,683  
CONTACT: Lily Dong, Chief Financial Officer         RDA Microelectronics, Inc.         +86-21-5027-1108         ir@rdamicro.com         or         Leanne Sievers, EVP         Shelton Group Investor Relations         949-224-3874         lsievers@sheltongroup.com

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