Supertex, Inc. (NASDAQ: SUPX) today reported financial results for
the second fiscal quarter ended October 2, 2010. Net sales for the
second fiscal quarter were $22,359,000, a 3% decrease compared to
the prior quarter of $23,155,000 and a 41% increase compared to
$15,875,000 in the same quarter last year. On a GAAP basis, net
income in the second fiscal quarter was $3,822,000, or $0.29 per
diluted share, as compared with $4,108,000 or $0.32 per diluted
share in the prior fiscal quarter, and $1,083,000 or $0.08 per
diluted share in the same quarter of the prior fiscal year.
For the first six months ended October 2, 2010, net sales were
$45,514,000 compared to $29,430,000 for the same period of the
prior fiscal year, and on a GAAP basis, net income was $7,930,000,
or $0.61 per diluted share, as compared with $1,988,000, or $0.15
per diluted share, in the same period of the prior fiscal year.
Non-GAAP earnings per diluted share for the second quarter of
fiscal 2011 were $0.35, excluding pre-tax employee stock-based
compensation of $818,000, compared with $0.37 in the prior quarter,
excluding pre-tax employee stock based-compensation of $759,000,
and $0.15 in the same quarter of the prior fiscal year, excluding
pretax employee stock-based compensation of $835,000. For the six
months ended October 2, 2010, non-GAAP net income per diluted share
was $0.72, excluding pre-tax employee stock-based compensation of
$1,577,000, as compared to $0.28 for the same period of the prior
fiscal year, excluding pre-tax employee stock-based compensation of
$1,655,000.
"The general market softness for LCD TVs with LED backlighting
was the major cause of our overall sequential sales decline of 3%.
This softness caused excess channel inventory of our LED drivers
used in these TVs, which resulted in some of our customers
requesting that we halt scheduled shipments of our drivers during
the last two weeks of our second fiscal quarter," stated Dr. Henry
C. Pao, President and CEO. "Fortunately, the global demand for our
products for medical ultrasound systems was high, especially our
new high voltage pulsers and T/R switches, which are being designed
into many new models and are starting production ramp. The
sequential growth of our medical electronics was 7%. Telecom and
imaging product sales were down sequentially at 6% and 4%,
respectively. Coming out of the recession, through the first half
of fiscal 2011, our total sales have increased 55%, with all of our
target markets having grown at double-digit rates. For our third
fiscal quarter, although orders for our telecom products have
increased significantly, we project our overall sales to be flat to
5% lower sequentially due to the normal seasonality decline in
medical ultrasound products and continued softness in the demand
for LCD TVs with LED backlighting. We believe the decline in LED
driver sales for LCD TV backlighting is temporary and will recover
once the inventory in the channel is reduced to normal levels."
"Gross margin for the second fiscal quarter was 56%, compared to
57% last quarter. Our fab capacity utilization remained high, at
71% vs. 76% last quarter," added Dr. Pao. "We have a large number
of new products under development with many about to be introduced.
At the same time, we have streamlined our R&D operations to
control costs. Selling, general and administrative expenses were
17% higher sequentially due primarily to an increase in asset value
of our non-qualified deferred compensation plan. This expense is
offset in other income. Our tax rate was 34%, about the same as in
the prior quarter. Inventories increased $2.9 million in the
quarter, primarily due to reduced shipments at our customers'
request, resulting from excess channel inventory of our LED drivers
for backlighting LCD TVs, as described earlier. We generated
approximately $4.2 million in operating cash flow in the quarter,
extending our trend of consecutive positive cash flow quarters to
74. For the third fiscal quarter we forecast gross margin to be
55%-57% and our tax rate to be approximately 33%."
Forward-Looking Statements:
The industry in which we compete is characterized by extreme
rapid changes in technology and frequent new product introductions.
We believe that our long-term growth will depend largely on our
ability to continue to enhance existing products and to introduce
new products and features that meet the continually changing
requirements of our customers. All statements contained in this
press release that are not historical facts are forward-looking
statements. They are not guarantees of future performance or
events. They are based upon current expectations, estimates,
beliefs, and assumptions about the future, which may prove
incorrect, and upon our goals and objectives, which may change.
Often such statements can be identified by the use of the words
such as "will," "intends," "expects," "plans," "believes,"
"anticipates" and "estimates." Examples of forward-looking
statements include our expectations that third fiscal quarter sales
will be flat to 5% lower sequentially; gross margin will be 55% to
57%; and our tax rate will be 33% together with our beliefs that
during the third fiscal quarter we will experience the normal
seasonality decline in sales of our medical ultrasound products and
continued softness in the demand for LCD TVs with LED backlighting
and that the decline in LED driver sales for LCD TV backlighting is
temporary and will recover once the inventory in the channel is
reduced to normal levels.
These forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. They are not guarantees of future performance or events
but rather involve a number of risks and uncertainties including,
but not limited to, whether our customers experience the demand we
anticipate for their products based in part upon their input and
our order backlog, whether the designed performance of our devices
satisfies our customers' requirements so that they continue to
design our devices into their products, whether our devices perform
to their design specification, whether competitors introduce
devices at lower prices than our devices causing price erosion,
whether we encounter production issues in device manufacturing or
moving new products from engineering into production, and whether
our fab equipment continues to operate at expected capacities
without need of replacement, as well as other risk factors detailed
in our Form 8-K, 10-K, and 10-Q filings with the Securities and
Exchange Commission. Due to these and other risks, our future
actual results could differ materially from those discussed above.
We undertake no obligation to publicly release updates or revisions
to these statements that speak only as of this date.
Conference Call Details
The Company will host a conference call at 2:30 p.m. PDT (5:30
p.m. EDT) on October 26, 2010, following the earnings release.
President and CEO, Dr. Henry C. Pao, VP, Marketing, Hernan DeGuzman
and VP, Finance & CFO, Phil Kagel, will present an overview of
the second fiscal quarter financial results, discuss current
business conditions, and then respond to questions.
The call is available live for any interested party by dialing
800-862-9098 (domestic) or 785-424-1051 (toll, international)
before the scheduled start time and using "Supertex" as conference
ID. A recorded replay will be available for 30 days immediately
following the conference call until 11:59 p.m. EDT, November 26,
2010 at 800-283-4783 (domestic) and 402-220-0859 (toll,
international).
About Supertex
Supertex, Inc. is a publicly held mixed signal semiconductor
manufacturer, focused in high voltage products for use in the
medical ultrasound imaging, LCD TV backlighting, LED general
lighting, telecommunications, printer, flat panel display,
industrial and consumer product industries. Supertex product,
corporate and financial information is readily available at our
website: http://www.supertex.com.
For further information, contact Investor Relations at Supertex,
Inc., 1235 Bordeaux Drive, Sunnyvale, California 94089,
408-222-8888 or visit our website at http://www.supertex.com.
Use of Non-GAAP Financial Information
To supplement our financial results presented in accordance with
GAAP, we use the following non-GAAP financial measures: non-GAAP
net income and diluted non-GAAP net income per share. We present
such non-GAAP financial measures in reporting our financial results
to provide investors with an additional tool to evaluate our
operating results. Because these non-GAAP measures are not
calculated in accordance with GAAP, they may not necessarily be
comparable to similarly titled measures employed by other
companies. These non-GAAP financial measures should not be
considered in isolation or as a substitute for comparable GAAP
measures, and should be read only in conjunction with our
consolidated financial statements prepared in accordance with
GAAP.
Our management uses each of the above non-GAAP financial
measures internally to understand, manage and evaluate our
business. Our management believes it is useful for us and for
investors to review, as applicable, both GAAP information, which
includes employee stock-based compensation expense, and the
non-GAAP measures, which exclude this information, in order to
assess the performance of our core continuing businesses and for
planning and forecasting in future periods. Each of these non-GAAP
measures is intended to provide investors with an understanding of
our operational results and trends that more readily enables them
to analyze our base financial and operating performance and
facilitate period-to-period comparisons and analysis of operation
trends. Our management believes each of these non-GAAP financial
measures is useful to investors in allowing for greater
transparency with respect to supplemental information used by
management in its financial and operational decision-making.
Our GAAP cost of sales and operating expenses include employee
stock-based compensation. Our non-GAAP financial measures reflect
adjustments to exclude this employee stock-based compensation. We
believe cost of sales excluding share-based compensation, R&D
expense excluding share-based compensation, and SG&A expense
excluding share-based compensation are useful information for
investors because comparative differences in the corresponding GAAP
measures for different periods may reflect factors such as a
different stock price when equity awards were made and different
equity award practices rather than changes in the operation of the
business. Stock options are the form of equity compensation we
presently utilize and they are a key incentive we offer our
employees. We believe they have contributed to the sales earned
during the period and will contribute to our future sales
generation. Employee stock-based compensation expenses will recur
in future periods.
SUPERTEX, INC.
CONSOLIDATED BALANCE SHEET INFORMATION
(unaudited)
October 2, 2010 April 3, 2010
---------------- ----------------
(in thousands)
ASSETS
Cash and cash equivalents $ 16,851 $ 10,153
Short term investments 101,623 76,860
Trade accounts receivable, net 12,037 10,786
Inventories 19,397 15,450
Deferred income taxes 7,819 8,162
Prepaid income taxes 2,268 2,456
Prepaid expenses and other current
assets 2,851 3,726
---------------- ----------------
Total current assets 162,846 127,593
Long term investments 47,300 65,000
Property, plant and equipment, net 6,397 6,791
Other assets 665 580
Deferred income taxes 4,329 5,254
---------------- ----------------
TOTAL ASSETS $ 221,537 $ 205,218
================ ================
LIABILITIES
Trade accounts payable $ 5,407 $ 3,748
Accrued salaries and employee benefits 12,559 11,430
Other accrued liabilities 1,440 1,167
Deferred revenue 4,467 3,962
Income taxes payable 241 15
---------------- ----------------
Total current liabilities 24,114 20,322
Income taxes payable, noncurrent 5,219 4,520
---------------- ----------------
Total liabilities 29,333 24,842
SHAREHOLDERS' EQUITY
Common stock 66,941 64,296
Accumulated other comprehensive loss (1,313) (2,566)
Retained earnings 126,576 118,646
---------------- ----------------
Total shareholders' equity 192,204 180,376
---------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 221,537 $ 205,218
================ ================
SUPERTEX, INC.
CONSOLIDATED INCOME STATEMENT INFORMATION
(unaudited)
Three Months Ended Six Months Ended
--------------------- ---------------------
(in thousands, except per share amounts)
October 2, September October 2, September
2010 26, 2009 2010 26, 2009
---------- ---------- ---------- ----------
Net sales $ 22,359 $ 15,875 $ 45,514 $ 29,430
Cost of sales(1) 9,819 8,474 19,780 14,899
---------- ---------- ---------- ----------
Gross profit 12,540 7,401 25,734 14,531
Research and development(1) 3,620 3,604 7,131 7,609
Selling, general and
administrative(1) 3,861 3,158 7,172 5,948
---------- ---------- ---------- ----------
Income from operations 5,059 639 11,431 974
Interest and other income, net 723 853 634 1,639
---------- ---------- ---------- ----------
Income before income taxes 5,782 1,492 12,065 2,613
Provision for income taxes 1,960 409 4,135 625
---------- ---------- ---------- ----------
Net income $ 3,822 $ 1,083 $ 7,930 $ 1,988
========== ========== ========== ==========
Net income per share:
Basic $ 0.29 $ 0.08 $ 0.61 $ 0.15
========== ========== ========== ==========
Diluted $ 0.29 $ 0.08 $ 0.61 $ 0.15
========== ========== ========== ==========
Shares used in per share
computation:
Basic 12,991 12,902 12,974 12,893
========== ========== ========== ==========
Diluted 13,048 12,987 13,044 12,977
========== ========== ========== ==========
(1) Includes amortization of employee stock-based
compensation as follows:
Cost of sales $ 179 $ 196 $ 329 $ 344
Research and development $ 323 $ 342 $ 676 $ 731
Selling, general and
administrative $ 316 $ 297 $ 572 $ 580
SUPERTEX, INC.
SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
(unaudited)
Three Months Ended Six Months Ended
---------------------- ----------------------
(in thousands, except per share amounts)
October 2, September October 2, September
2010 26, 2009 2010 26, 2009
---------- ---------- ---------- ----------
GAAP net income $ 3,822 $ 1,083 $ 7,930 $ 1,988
Adjustment for stock-based
compensation included in:
Cost of sales 179 196 329 344
Research and development 323 342 676 731
Selling, general and
administrative 316 297 572 580
---------- ---------- ---------- ----------
Subtotal 818 835 1,577 1,655
Tax effect of stock-based
compensation (36) (26) (59) (51)
---------- ---------- ---------- ----------
Non-GAAP net income
excluding employee
stock-based compensation $ 4,604 $ 1,892 $ 9,448 $ 3,592
========== ========== ========== ==========
Non-GAAP net income per
share:
Basic $ 0.35 $ 0.15 $ 0.73 $ 0.28
========== ========== ========== ==========
Diluted $ 0.35 $ 0.15 $ 0.72 $ 0.28
========== ========== ========== ==========
Shares used in per share
computation:
Basic 12,991 12,902 12,974 12,893
========== ========== ========== ==========
Diluted 13,048 12,987 13,044 12,977
========== ========== ========== ==========
SUPERTEX, INC.
SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP INCOME PER SHARE
(unaudited)
Three Months Ended Six Months Ended
---------------------- ----------------------
(in thousands, except per share amounts)
October 2, September October 2, September
2010 26, 2009 2010 26, 2009
---------- ---------- ---------- ----------
Shares used in per share
computation:
Diluted 13,048 12,987 13,044 12,977
========== ========== ========== ==========
DILUTED:
GAAP net income per share $ 0.29 $ 0.08 $ 0.61 $ 0.15
Adjustments to reconcile
net income to non-GAAP
net income per share:
Employee stock-based
compensation effects
included in:
Cost of sales 0.01 0.02 0.02 0.03
Research and development 0.03 0.03 0.05 0.06
Selling, general and
administrative 0.02 0.02 0.04 0.04
Provision for income
taxes (0.00) (0.00) (0.00) (0.00)
---------- ---------- ---------- ----------
Non-GAAP net income per
share excluding employee
stock-based compensation $ 0.35 $ 0.15 $ 0.72 $ 0.28
========== ========== ========== ==========
Corporate Headquarters: Dr. Henry C. Pao President & CEO
408/222-8888
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