- Q4 revenues increased 4.4% sequentially.
- Q4 gross margin increased by 187 bps sequentially and 188 bps year-over-year.
- We are raising guidance for revenues and operating profit.
Pericom Semiconductor Corporation (
Net revenues for the fourth quarter were $31.7 million, an increase of 4.4% from the $30.4 million reported in the third quarter of fiscal 2013, and down 16.4% from the $37.9 million reported in the comparable period last year. The revenue increase from the prior quarter reflects strength from the server, storage and consumer end-market segments. Net revenues for the fiscal year 2013 were $129.3 million, a decrease of 5.7% from the $137.1 million reported last year. The book-to-bill ratio for the fiscal fourth quarter was greater than 1.0.
GAAP gross margin was 37.6% in the fourth quarter, an increase from 35.7% last quarter and also from the comparable period last year. On a non-GAAP basis, gross margin was 39.3% in the fourth quarter, which reflects exclusion of share-based compensation, amortization of intangible assets and amortization of fair value adjustments on acquired fixed assets. The comparable non-GAAP gross margins were 37.5% last quarter and 37.1% in the comparable period last year. The GAAP gross margin was 37.0% for the full fiscal year of 2013, an increase of 156 basis points from the 35.5% reported for fiscal year 2012. On a non-GAAP basis, the fiscal year 2013 gross margin was 38.7%, and increased by 182 basis points from fiscal year 2012's gross margin of 36.9%.
GAAP net loss for the fourth quarter was $16.8 million, or $0.74 per diluted share, compared with net loss of $681,000, or $0.03 per diluted share in the third quarter, and net loss of $1.9 million, or $0.08 per diluted share in the comparable period last year. GAAP net income for all periods included share-based compensation, amortization of intangible assets and amortization of fair value adjustments. The fiscal 2013 fourth quarter also included a $16.9 million charge for goodwill impairment and a $184,000 write off of equipment, and the third and fourth quarters of fiscal 2013 also included tax provisions totaling $500,000 resulting from intercompany transactions. The fiscal 2012 fourth quarter also included establishment of a $2.8 million deferred tax asset valuation allowance relating to California tax credits that may not be utilized in the future and a $0.6 million note receivable write off. Excluding these items, non-GAAP net income for the fourth quarter was $1.6 million, or $0.07 per diluted share, compared with non-GAAP net income of $965,000 or $0.04 per diluted share in the third quarter, and non-GAAP net income of $2.5 million, or $0.10 per diluted share in the comparable period last year. For the full fiscal year 2013, GAAP net loss was $21.6 million, or $0.93 per diluted share, compared with GAAP net loss of $2.1 million, or $0.09 per diluted share in fiscal year 2012. For the full fiscal year 2013, non-GAAP net income was $6.0 million, or $0.25 per diluted share, compared with $7.0 million, or $0.28 per diluted share in fiscal year 2012.
As mentioned above, Pericom recorded a goodwill impairment charge in the fourth quarter. Under accounting guidelines, companies are required to conduct an annual goodwill impairment test. Pericom's goodwill resulted primarily from the 2010 acquisition of the remaining interest in Pericom Technology Inc. ("PTI"). As a result of the 2013 impairment review, Pericom determined that $16.9 million of goodwill was impaired.
The balance sheet remained very strong with cash and investments in marketable securities of $118 million or $5.17 per diluted share at the end of the fourth quarter. Inventory increased $970,000 on a sequential basis to $14.8 million, which represents 70 days of supply based on non-GAAP cost of goods sold. At quarter-end, working capital was $82.8 million and the current ratio was 5.0.
"We were pleased to deliver fourth quarter non-GAAP gross margin and net income above the high end of our previous guidance," said Alex Hui, President and CEO of Pericom. "Our strategic focus is to expand business from networking, cloud computing and embedded customers with our serial connectivity and timing solutions. We are beginning to realize positive results from our strategic initiatives and we are excited by the opportunities we see ahead of us."
In the fourth quarter of fiscal 2013, Pericom introduced a total of 27 new products in our Signal Integrity, Connectivity, and Timing product areas. All of these new products are applicable for our target market segments, and were sampled to key customers during the quarter.
We introduced 16 new products across our Connectivity product families which included a power management load switch, a USB charger, switches for the MPS family, USB and Thunderbolt, and HiFlex ASSP IC.
We also expanded our Timing solutions for next generation platforms with 10 new products including TCXO, XO, High Performance and Embedded Clock Generators, and Clock Buffers.
For Signal Integrity, we introduced 1 new product targeting SAS3 12Gb storage applications.
Share Repurchase Update
On April 26, 2012 the Board authorized a repurchase program for up to $25 million of shares of our common stock. Pursuant to this authorization, the Company repurchased 252,836 shares in the three months ended June 29, 2013 for an aggregate cost of $1.7 million and an average per share purchase price of $6.56. The remaining balance of potential share repurchases under the authorization is approximately $17.9 million. Shares may be repurchased from time to time in the open market or through private transactions, at the discretion of Pericom management. As of July 26, 2013, Pericom had approximately 22.8 million shares of common stock outstanding.
Fiscal Q1 2014 Outlook
The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially.
- Revenues are expected to be in the range of $31.7 million to $33.7 million.
- GAAP gross margins are expected to be between 36.4% and 38.4%, and adjusting for share-based compensation, amortization of intangibles and fair value adjustments that are expected to total approximately 1.6%, non-GAAP gross margins are expected to be in the 38.0% to 40.0% range.
- GAAP operating expenses are expected to be between $12.3 million and $12.7 million, and adjusting for share-based compensation, amortization of intangibles and fair value adjustments that are expected to total approximately $1.1 million, non-GAAP operating expenses are expected to be in the range of $11.2 million to $11.6 million.
- Other income is expected to be between $0.5 million and $0.7 million on a GAAP basis and on a non-GAAP basis.
- The effective tax rate is expected to be approximately 34-38% on a GAAP basis and 24-28% on a non-GAAP basis.
The press release will be followed by a conference call beginning at 1:30 p.m. Pacific time on August 6, 2013. To listen to the call, dial (877) 377-7103 and reference "Pericom". A slide presentation will accompany the conference call. To view the slides, please visit the investor relations section of www.pericom.com.
The Pericom financial results conference call will be available via a live webcast on the investor relations section of the web site at http://www.pericom.com. Access the web site 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the web site for approximately 90 days.
A taped replay of the conference call will be made available for the period from this evening through midnight on Monday, August 12th. To listen to the replay, dial toll-free (855) 859-2056 and reference conference ID 24358867.
Pericom Semiconductor Corporation (