Cypress Reports Second-Quarter 2013 Results
Cypress Reports Second-Quarter 2013 Results
SAN JOSE, Calif.--(BUSINESS WIRE)-- Cypress Semiconductor Corp. (NAS: CY) today announced its second-quarter 2013 results, which included the remarks below from its president and CEO, T.J. Rodgers. Highlights for the quarter included:
|Revenue, gross margin, and earnings exceeded guidance|
|Cash from operations totaled $30.4 million, or 15.7% of revenue|
|Design wins remain strong both at strategic accounts and in distribution|
|Revenue growth and earnings leverage to continue in the third quarter|
Our revenue and earnings for the quarter are given below, compared with those of the prior quarter and prior year:
(In thousands, except per-share data)
Net income (loss)
|Diluted EPS |
(loss per share)
Cypress performed well in the second quarter, posting revenue of $193.5 million—up 12.0% from the first quarter, exceeding our guidance. Our revenue growth was driven by broad strength across all business units, combined with particularly strong performance by our TrueTouch® BU.
Our gross margins increased from 50.7% to 53.1% in the second quarter. Non-GAAP EPS was $0.14, 4.7x the first quarter, as higher revenue and gross margins combined with structural operating expense reductions generated significant revenue fall-through.
I am pleased to announce that we achieved first revenue on our new PSoC® 4 product just 90 days after its launch—making PSoC 4 the fastest overall new product ramp in Cypress's history. We have also shipped more than 5,000 PSoC 4 development kits, a strong leading indicator of future demand.
We ended the second quarter with a book-to-bill of 1.05 despite having our lowest lead times in five years. We thus expect our revenue to grow again sequentially in the third quarter and with continued strong earnings leverage.
Finally, I am proud to announce that our products won four awards last quarter. Embedded Computing Design magazine named PSoC 4 an "Editor's Choice Product" in May, and our fourth-generation touchscreen chip, Gen4, won in June. PSoC 4 also won the 19th annual "Product of the Year" award given by Japan's Semiconductor Industry News. Finally, Cypress subsidiary AgigA Tech received a gold medal for its nonvolatile memory systems in the renowned Edison Awards.
+ Our non-GAAP consolidated gross margin for the second quarter was 53.1%, up 2.4 percentage points from the previous quarter, due mainly to improvement in factory utilization and product and customer mix. Our second-quarter GAAP consolidated gross margin was 47.3%.
+ Net inventory at the end of the second quarter was $98.6 million, down $10.6 million, or 9.7% from the first quarter, driven down by an active corporate initiative. This figure includes $27.3 million of inventory acquired from Ramtron.
+ Cash and investments for the second quarter totaled $102.0 million, flat from the prior quarter. During the quarter we used $16.1 million to pay our regular quarterly dividend and $9.7 million to pay down debt.
NET SALES SUMMARY
(In thousands, except percentages)
THREE MONTHS ENDED
|China and ROW||69%||64%||65%||5%||4%|
PSD, Programmable Systems Division; DCD, Data Communications Division; MPD, Memory Products Division: ETD, Emerging Technology Division.
"Emerging Technology" includes businesses outside our core semiconductor businesses outlined in Footnote 1. Includes subsidiaries AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit.
SECOND-QUARTER 2013 HIGHLIGHTS
+ Cypress introduced the first two product families based on its PSoC 4 programmable system-on-chip architecture: the PSoC 4100 and PSoC 4200 families. The new families provide an entire mixed-signal embedded system chip with a 32-bit ARM® Cortex™-M0 core for prices as low as $1. The PSoC 4100 family, the lowest-cost ARM-based PSoC, brings PSoC flexibility and integration to cost-sensitive, high-volume applications. The PSoC 4200 family features a faster processor, a 36-button CapSense block, four programmable logic blocks to create custom digital functions, programmable analog blocks for variable-gain amplifiers and configurable filters, programmable serial interfaces, programmable input/output pins, and multiple programmable timers, counters and waveform generators—all on a chip one-tenth the size of an average little fingernail.
+ Cypress's new PSoC 3 MFi Digital Audio Development Kit helps the designers of MFi (Made for iPod | iPhone | iPad) mobile devices and accessories to accelerate designs that use Apple's new, all-digital Lightning connector. PSoC-based digital audio solutions ensure bit-perfect audio streaming with no added or dropped audio samples. PSoC is the de facto standard for digital audio in the music industry, providing Cypress with a strong position in the fast-growing, $7 billion MFi accessory market.
+ Cypress released four new PSoC Components™ for PSoC Creator™ 2.2, the Integrated Design Environment (IDE) that supports PSoC products. PSoC Components are production-ready "virtual chips" that replace and integrate multiple competitor chips onto a single PSoC to create highly customized single-chip system solutions for a broad array of applications, from the Tesla automotive dashboard to smart residential power meters to cell phone touchscreens.
+ Customer demand for Cypress's new TrueTouch Gen5 touchscreen controllers has exceeded expectations, in part due to its industry-leading noise immunity. Noise from cell phone chargers can render mobile phones inoperable during charging. Gen5 offers a 3x improvement in noise immunity versus Gen4, which itself offered best-in-class performance.
+ Cypress introduced new features in its TrueTouch Gen4 capacitive touchscreen controller family, including the industry's best tracking of gloved fingers. The Gen4 solution automatically switches into glove-mode based on the touch of a gloved finger, as compared with competitive solutions that require users to remove their gloves and change their smartphones' settings in order to enable gloved touches. The family also delivers passive stylus support to capture handwriting and signatures accurately, and proximity detection that can eliminate false touches such as those caused by a user's face when making a call on a mobile phone.
+ Cypress expanded its market-leading USB product portfolio with a USB-Serial bridge controller family. The family is the industry's first to provide CapSense® capacitive touch-sensing functionality along with two serial channels with configurable UART/SPI/I2C communication capability. The family is also the first to integrate efficient battery-charge detection compliant with Version 1.2 of the USB Implementers Forum (USB-IF) battery charging specification.
+ Cypress qualified a Bluetooth® Low Energy radio on its S8™ 130-nanometer flash-based SONOS process technology to combine with its PSoC, CapSense and TrueTouch technologies, allowing the company to move forward with single-chip solutions for emerging Bluetooth Smart applications such as PC peripherals, sporting goods and fitness devices, healthcare equipment and smart remote controls.
+ Cypress announced that its Board of Directors approved a quarterly cash dividend of $0.11 per share, payable to holders of record of the company's common stock as of the close of business on June 27, 2013. This dividend will be paid on July 18, 2013.
Cypress delivers high-performance, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value. Cypress offerings include the flagship PSoC 1, PSoC 3, PSoC 4, and PSoC 5 programmable system-on-chip families. Cypress is a world leader in capacitive user interface solutions including CapSense touch sensing, TrueTouch touchscreens, and trackpad solutions for notebook PCs and peripherals. Cypress is the world leader in USB controllers, which enhance connectivity and performance in a wide range of consumer and industrial products. Cypress is also the world leader in SRAM and nonvolatile RAM memories. Cypress serves numerous major markets, including consumer, mobile handsets, computation, data communications, automotive, industrial, and military. Cypress trades on the NASDAQ Global Select Market under the ticker symbol CY. Visit Cypress online at www.cypress.com.
Statements herein that are not historical facts and that refer to Cypress or its subsidiaries' plans and expectations for Q3 2013 and the remainder of fiscal year 2013 and beyond are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may use words such as "believe," "expect," "future," "plan," "intend" and similar expressions to identify such forward-looking statements that include, but are not limited to, statements related to the semiconductor market, the strength and growth of our proprietary and programmable products, our expectations regarding our Q3 2013 revenue and earnings leverage, margins, profit, cash flow and cost-saving measures; and our expectations regarding the demand for our products and how our products are expected to perform, as well as our future design win activity and market share gains. Such statements reflect our current expectations, which are based on information and data available to our management as of the date of this release. Our actual results may differ materially due to a variety of uncertainties and risk factors, including, but not limited to, the state of and future of the global economy, business conditions and growth trends in the semiconductor market, whether our products perform as expected, whether the demand for our proprietary and programmable products is fully realized, whether our product and design wins and kit sales result in increased sales, our ability to manage our business to have strong earnings, reduce operating expenses, factory utilization, the strength or softness of the markets we serve, our ability to maintain and improve our gross margins and realize our bookings, the seasonality of the markets we serve, the financial performance of our subsidiaries and Emerging Technology Division, and other risks described in our filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.
Cypress, the Cypress logo, PSoC, TrueTouch, EZ-USB, and CapSense are registered trademarks, and PSoC Components, PSoC Creator, PSoC Designer, FX3, and S8 are trademarks of Cypress Semiconductor Corp. All other trademarks or registered trademarks are the property of their respective owners.
|CYPRESS SEMICONDUCTOR CORPORATION|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|June 30,||December 30,|
|Cash, cash equivalents and short-term investments||$||101,987||$||117,210|
|Accounts receivable, net||114,792||82,920|
|Inventories, net (a)||98,580||127,596|
|Property, plant and equipment, net||262,586||274,427|
|Goodwill and other intangible assets, net||110,812||113,410|
|LIABILITIES AND EQUITY|
|Deferred margin on sales to distributors||158,409||131,192|
|Income tax liabilities||31,433||47,454|
|Long-term revolving credit facility||227,000||232,000|
|Total Cypress stockholders' equity||170,234||180,900|
|Total liabilities and equity||$||809,623||$||831,629|
|(a)||Net inventories include $3.6 million and $2.8 million of capitalized inventories related to stock compensation expense, as of June 30, 2013 and December 30, 2012, respectively.|
|CYPRESS SEMICONDUCTOR CORPORATION|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|ON A GAAP BASIS|
|(In thousands, except per-share data)|
|Three Months Ended|
|June 30,||March 31,||July 1,|
|Cost of revenues||102,041||93,682||94,531|
|Research and development||48,804||49,330||47,946|
|Selling, general and administrative||48,073||45,442||51,955|
|Amortization of acquisition-related intangibles||1,987||2,009||731|
|Total operating expenses, net||99,557||108,221||101,621|
|Operating income (loss)||(8,132||)||(29,175||)||5,148|
|Interest and other income, net||2,119||483||1|
|Income (loss) before income taxes||(6,013||)||(28,692||)||5,149|
|Income tax provision (benefit)||(9,343||)||146||517|
|Income (loss), net of taxes||3,330||(28,838||)||4,632|
|Adjust for net loss attributable to noncontrolling interest||436||643||345|
|Net Income (loss) attributable to Cypress||$||3,766||$||(28,195||)||$||4,977|
|Net Income (loss) per share attributable to Cypress:|
|Cash dividend per share||$||0.11||$||0.11||$||0.11|
|Shares used in net income (loss) per share calculation:|