News

Growth is Taking Longer than Anticipated at Intersil

July 29, 2015 by Jeff Shepard

Intersil Corporation announced financial results for the second quarter of 2015. Revenue of $132.4 million was down 1.3% sequentially. Strong gross margin and lower operating expenses resulted in solid operating margin for the eighth consecutive quarter. The company reported GAAP earnings per share of $0.28 and non-GAAP earnings per share of $0.16.

"New business has started ramping, but not at a pace to offset the broader weakness resulting from a sluggish global demand environment," said Necip Sayiner, president and CEO of Intersil. "We continue to be focused on building a highly profitable growth business. While the path to revenue growth is taking longer than we'd like, we feel positive about the progress thus far."

Company highlights include: Gross margin performance was strong at 59.3% on a GAAP basis and 59.6% on a non-GAAP basis. The company again reported solid profitability, with GAAP operating margin of 12.2% and non-GAAP operating margin of 20.3%. Cash and cash equivalents increased to $225 million. New products introduced during the quarter represent industry firsts for power management in tablets and ultrabooks, wearables and industrial applications.

Revenue for the second quarter was slightly lower than expected due to persistent demand weakness in computing and infrastructure end markets. Computing and Consumer (C&C) revenue grew 2.4% sequentially driven by new smartphone wins. Industrial and Infrastructure (I&I) revenue was down 3.1% sequentially. In the I&I business, strength in automotive and military/aerospace was offset by softness in infrastructure power and industrial analog.

GAAP gross margin for the quarter was 59.3%, an increase of 120 basis points from the second quarter of 2014. Total GAAP operating expenses were $62.3 million. R&D expense was $33.1 million and SG&A expense was $25.2 million. GAAP operating income was $16.2 million or 12.2% of revenue. Q2 GAAP net income was $37.7 million and diluted GAAP EPS was $0.28.

Non-GAAP gross margin for the quarter was 59.6%. Margin declined slightly sequentially due primarily to a lower mix of I&I products. Non-GAAP operating expenses declined to $52 million as the company efficiently managed expenses. Q2 non-GAAP operating income was $26.9 million resulting in a non-GAAP operating margin of 20.3%. Fully diluted Q2 earnings per share on a non-GAAP basis were $0.16.

Cash and cash equivalents increased to $225 million at the end of the second quarter. Intersil's board of directors authorized payment of a quarterly dividend of $0.12 per share of common stock. The payment of this dividend will be made on or about August 28, 2015, to shareholders of record as of the close of business on August 18, 2015.