IXYS Corporation Announces Results For The September 2015 Quarter

IXYS Corporation (NASDAQ:IXYS), an international power semiconductor and IC company, today reported results for its second quarter of fiscal year 2016, which ended September 30, 2015.

Net revenues for the quarter ended September 30, 2015 were $80.3 million, a decrease of $6.2 million from $86.4 million in net revenues for the September 2014 quarter. For the six months ended September 30, 2015, IXYS reported net revenues of $162.3 million, a decrease of $12.2 million, or 7.0%, as compared to net revenues of $174.5 million for the same period in the prior fiscal year.

"Given the slowdown in the global industrial markets, IXYS continued to demonstrate its agility in strategy and execution. We sustained our profitability with continued investments in new products and the transition to higher value-added power devices and integrated circuits," commented Dr. Nathan Zommer, Chairman, CEO and Founder of IXYS. "While we await the recovery in the industrial markets, IXYS is uniquely positioned for growth due to the diversity of its products, application markets and geographical presence. For example, we are gaining momentum in the IoT market with new ICs."

Net income for the quarter ended September 30, 2015 was $3.3 million, or $0.10 per diluted share, a decrease of $2.5 million, or 43.0%, as compared to net income of $5.7 million, or $0.18 per diluted share, for the same period in the prior fiscal year. Sequentially, net income in the September 2015 quarter increased by $288,000 from net income of $3.0 million in the June 30, 2015 quarter.

Net income for the six months ended September 30, 2015 was $6.3 million, or $0.19 per diluted share, a decrease of $3.1 million, or 32.9%, as compared to net income of $9.3 million, or $0.29 per diluted share, for the same period in the prior fiscal year.

The September 2015 quarter non-GAAP net income, which excludes the impact of charges for the amortization of acquired intangible assets and stock compensation, was $5.2 million, or $0.16 per diluted share, as compared to non-GAAP net income of $7.6 million, or $0.23 per diluted share, for the same period in the prior fiscal year.

For the six months ended September 30, 2015, non-GAAP net income, which excludes the impact of charges for the amortization of acquired intangible assets and stock compensation, was $10.4 million, or $0.32 per diluted share, as compared to non-GAAP net income of $13.4 million, or $0.42 per diluted share, for the same period in the prior fiscal year.

"Our operating income was $7.0 million for the September 2015 quarter and $12.7 million for the six months ended September 30, 2015, which is largely similar to our results in the prior fiscal year of $7.1 million for the September quarter and $12.4 million for the six months. This indicates our ability to operate the business efficiently in the face of a challenging environment," stated Mr. Uzi Sasson, President and CFO of IXYS.

Gross profit for the quarter ended September 30, 2015 was $26.0 million, or 32.4% of net revenues, as compared to gross profit of $26.2 million, or 30.3% of net revenues, for the same quarter in the prior fiscal year. Sequentially, gross profit margin also increased from 31.2% in the June 2015 quarter to 32.4% in the September quarter, a 120 basis point sequential increase in gross profit margin.

Gross profit for the six months ended September 30, 2015 was $51.6 million, or 31.8% of net revenues, as compared to a gross profit of $51.2 million, or 29.3% of net revenues, for the same period in the prior fiscal year.

Adjusted EBITDA, which excludes stock-based compensation expense, was $10.4 million dollars for the September 2015 quarter and $20.1 million dollars for the six months ended September 30, 2015.

Cash and cash equivalents totaled $116.9 million at September 30, 2015, as compared to $121.2 million at March 31, 2015. IXYS generated $8.5 million in cash from operations during the September 2015 quarter.

The disbursements resulting in the decrease in cash included $6.4 million for the repurchase of IXYS shares under the company's authorized stock buyback program and the payment of $2.4 million for dividends.

In the September 2015 quarter, IXYS declared a $0.04 per share dividend which is an increase of one-half cent per share over prior quarters. It is also the twelfth consecutive quarter of dividends.

"Our sales and promotional efforts are focused on increasing revenue in a weak global macroeconomic environment. With continued volatility in European and emerging markets, customers prefer to purchase on short lead times, without providing projections. We are capturing new business due to our ability to adapt to shortened delivery schedules, but we do not have strong visibility for the coming quarters. As a consequence, we expect revenues in the December 2015 quarter to be slightly higher than those of the September 2015 quarter," said Mr. Sasson.

Non-GAAP Information

Included above and within the attached schedules are certain non-GAAP financial figures. During the quarter ended September 30, 2015, the company incurred charges, including those associated with amortization of intangible assets and stock compensation. Adjusting the net income in the September 30, 2015 quarter to exclude the impact of amortization of intangible assets and stock compensation expenses, net of applicable tax at the effective tax rate for the respective periods, results in a financial presentation for the company without the effect of these charges. Similarly, adjusted EBITDA for the September 30, 2015 quarter reflects the exclusion of depreciation and amortization, stock compensation expenses, as well as interest and taxes, and may serve as an indication of the company's ability to service its debt. Management believes non-GAAP net income, non-GAAP net income per share and adjusted EBITDA are useful measures of operating performance. However, the non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net income and net income per share or other financial measures prepared in accordance with GAAP.

These non-GAAP measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Other companies in our industry may calculate non-GAAP net income, non-GAAP net income per share and adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

About IXYS Corporation

Since its founding in Silicon Valley, IXYS Corporation has been developing technology-driven products to improve energy conversion efficiency, generate clean energy, improve automation, and provide advanced products for the transportation, medical and telecommunications industries. IXYS, with its subsidiaries, is a worldwide pioneer in the development of power semiconductors, solid state relays, high voltage integrated circuits (HVIC), and microcontrollers that are necessary in conserving energy and in reducing the world's dependence on fossil fuels.

Diminishing natural resources, demand for renewable energy and environmental directives for energy efficiency represent a significant challenge. IXYS' power semiconductors and mixed-signal integrated circuits (IC) play a vital role in reducing energy costs and consumption by optimizing the energy efficiency of everyday products. With an end customer base of over 3,500 telecommunications, transportation, industrial, medical and consumer companies, IXYS is a worldwide recognized provider of advanced semiconductors.

Additional information may be obtained by visiting IXYS' website at http://www.ixys.com, or by contacting the company directly.

Safe Harbor Statement

The foregoing press release contains forward-looking statements, including those related to industrial markets, growth, momentum, market volatility, increasing revenue, lead times, new business, visibility and our revenues in the December 2015 quarter. Actual results may vary materially from those contained in the forward-looking statements, due to changes in customer delivery schedules, the cancellation of orders, an unanticipated decline in our business, increased competition, cash flow difficulties, unanticipated technological hurdles, manufacturing challenges and capacity limitations, adverse changes in customer demand, declining economic conditions or increasing product costs, among other things. Further information on other factors that could affect IXYS is detailed and included in reports that IXYS has filed with the Securities and Exchange Commission, including its Form 10-Q for the fiscal quarter ended June 30, 2015. IXYS undertakes no obligation to publicly release the results of any revisions to these forward-looking statements.
 
IXYS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 

September 30,
  March 31,
2015 2015
ASSETS
Current assets:
Cash and cash equivalents $ 116,851 $ 121,164
Restricted cash 1,244 266
Accounts receivable, net 38,865 41,042
Inventories, net 86,362 82,005
Prepaid expenses and other current assets 3,643 3,413
Deferred income taxes   7,085     7,077  
Total current assets 254,050 254,967
Plant and equipment, net 43,534 42,545
Other assets 65,426 51,463
Deferred income taxes   24,983     24,880  
 
Total assets $ 387,993   $ 373,855  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Current portion of capitalized lease obligations $ 55 $ 464
Current portion of notes payable to bank 47,812 45,790
Accounts payable 12,753 12,675
Accrued expenses and other current liabilities   23,439     19,865  
Total current liabilities 84,059 78,794
Notes payable, net of current portion 13,358 10,528
Pension liabilities   17,179     17,232  
Total liabilities   114,596     106,554  
 
Common stock 382 381
Additional paid-in capital 151,554 152,874
Retained earnings 141,018 137,134
Accumulated other comprehensive (loss)   (19,557 )   (23,088 )
Stockholders' equity   273,397     267,301  
 
Total liabilities and stockholders' equity $ 387,993   $ 373,855  
 

 
IXYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
  Three Months Ended   Six Months Ended
September 30, September 30,
2015   2014 2015   2014
   
Net revenues $ 80,257 $ 86,435 $ 162,304 $ 174,515
Cost of goods sold   54,245       60,265   110,690       123,345
Gross profit   26,012       26,170   51,614       51,170
Operating expenses:
Research, development and engineering 7,804 6,948 15,487 14,198
Selling, general and administrative 9,801 10,713 20,437 21,477
Amortization of intangibles   1,374       1,419   2,953       3,126
Total operating expenses   18,979       19,080   38,877       38,801
Operating income 7,033 7,090 12,737 12,369
Other (expense) income, net   (1,255 )     1,892   (2,312 )     1,737
Income before income tax provision 5,778 8,982 10,425 14,106
Provision for income tax   2,505       3,235   4,167       4,784
Net income $ 3,273     $ 5,747 $ 6,258     $ 9,322
 
Net income per share - basic $ 0.10     $ 0.18 $ 0.20     $ 0.30
 
Weighted average shares used in per share calculation - basic   31,651       31,499   31,769       31,439
 
Net income per share - diluted $ 0.10     $ 0.18 $ 0.19     $ 0.29
 
Weighted average shares used in per share calculation - diluted   32,380       32,235   32,627       32,142
 

 
Reconciliation of net income to Non-GAAP net income (in thousands, unaudited):
  Three Months Ended   Six Months Ended
September 30, September 30,
2015   2014 2015   2014
   
Net income $ 3,273 $ 5,747 $ 6,258 $ 9,322
 
Amortization of intangible assets 1,374 1,419 2,953 3,126
Stock compensation expense   539   446   1,164   911
Non-GAAP net income $ 5,186 $ 7,612 $ 10,375 $ 13,359
 
 
Reconciliation of net income per share, diluted to Non-GAAP net income per share, diluted (unaudited):
Three Months Ended Six Months Ended
September 30, September 30,
2015   2014 2015   2014
 
Net income per share, diluted $ 0.10 $ 0.18 $ 0.19 $ 0.29
 
Amortization of intangible assets 0.04 0.04 0.09 0.10
Stock compensation expense   0.02   0.01   0.04   0.03
Non-GAAP net income per share, diluted $ 0.16 $ 0.23 $ 0.32 $ 0.42
 
Weighted average shares used in per share calculation, diluted   32,380   32,235   32,627   32,142
 

 
Adjusted EBITDA (in thousands, unaudited)
  Three Months Ended   Six Months Ended
September 30, September 30,
2015   2014 2015   2014
Net income $ 3,273   $ 5,747 $ 6,258   $ 9,322
 
Add:
Income tax expense 2,505 3,235 4,167 4,784
Interest expense 284 322 598 732
Depreciation and amortization 3,361 4,339 7,145 9,148
Stock compensation expense   951   697   1,939   1,378
Adjusted EBITDA $ 10,374 $ 14,340 $ 20,107 $ 25,364
 

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