International Rectifier Reports First Quarter Fiscal Year 2014 Results

EL SEGUNDO, Calif. — (BUSINESS WIRE) — October 30, 2013 — International Rectifier Corporation (NYSE: IRF) today announced financial results for the first quarter (ended September 29, 2013) of its fiscal year 2014. Revenue was $269.8 million, a 2.4% decrease compared to $276.5 million in the prior quarter (which was a 14-week quarter ended June 30, 2013) and a 7% increase from $252.5 million in the prior year quarter. GAAP net income for the first quarter was $8.7 million, or $0.12 per fully diluted share compared to GAAP net loss of $6.1 million, or $0.09 per fully diluted share, in the prior quarter and GAAP net loss of $28.8 million, or $0.42 per fully diluted share in the prior year quarter.

“First quarter revenue and gross margin exceeded our guidance, as all of our business segments performed above expectations led by the industrial, automotive and high performance computing end markets,” stated President and Chief Executive Officer Oleg Khaykin. “In addition, both operating and net income grew significantly and we increased our cash balance by $23.5 million. Design win activity was strong and our technology remained particularly well positioned for future growth in the server market with digital power management, automotive IGBTs for hybrid and electric vehicles and power modules for the industrial and appliance end markets.”

GAAP gross margin for the first quarter was 35.3% compared to 30% in the prior quarter and 27.9% in the prior year quarter. GAAP operating income for the first quarter was $16.4 million compared to operating income of $237 thousand in the prior quarter and an operating loss of $20.8 million in the prior year quarter.

Cash, cash equivalents and marketable investments increased $23.5 million and totaled $479 million at the end of the first quarter, including restricted cash of $1.4 million.

Cash provided by operating activities for the quarter was $24.8 million and free cash flow was $12.9 million.

Non-GAAP Results

Non-GAAP net income for the first quarter was $15.1 million, or $0.21 per fully diluted share compared to non-GAAP net loss of $1.2 million, or $0.02 per fully diluted share in the prior quarter and non-GAAP net loss of $13.9 million, or $0.20 per fully diluted share in the prior year quarter.

Non-GAAP gross margin for the first quarter was 35.5% compared to non-GAAP gross margin of 30.2% in the prior quarter and non-GAAP gross margin of 28.3% in the prior year quarter. Non-GAAP operating income for the first quarter was $19.8 million, or 7% of revenue, compared to non-GAAP operating income of $4.5 million in the prior quarter and non-GAAP operating loss of $9.3 million in the prior year quarter.

The non-GAAP results the Company provides exclude the effects of accelerated depreciation, asset impairment, inventory write-offs associated with our El Segundo fab closure, restructuring costs, severance costs, impairment of goodwill, amortization of intangibles, the associated net tax effects of these items, and discrete tax provisions and benefits. The Company excludes any tax provisions (benefits) that are not directly related to ongoing operations and which are either isolated or cannot be expected to occur again with any regularity or predictability.

A reconciliation of these non-GAAP measures to the Company’s reported net income (loss), gross margin (referred to as gross profit in attached schedules) and operating income (loss) in accordance with U.S. GAAP are set forth in the attached schedules below.

December Quarter Outlook

Mr. Khaykin noted: “Looking ahead to the December quarter, we see a slight decline in our business driven by lower customer demand and year-end customer inventory adjustments. As a result, we currently expect revenue for the December quarter to range between $260 million to $270 million.

“Despite a seasonally weaker December quarter, we remain optimistic about calendar year 2014 as booking levels remain steady, inventory levels at our customers are lean and new design wins continue to ramp.”

The following table outlines International Rectifier’s current December quarter outlook on a GAAP basis and a non-GAAP basis, based on certain anticipated excluded items:

         
GAAP Excluded Items Non-GAAP
Revenue

$260 to $270 million

$260 to $270 million

 
Gross margin 34.3% to 35.3% 0.2% for accelerated depreciation 34.5% to 35.5%
 
Operating Expenses
 
Research & development expense $31 to $32 million $31 to $32 million
 
Sales general & administrative expense $44 to $45 million $44 to $45 million
 
Asset impairment, restructuring and other charges $1 to $1.5 million $1 to $1.5 million
 
Amortization of acquisition related intangibles $1.6 million $1.6 million
 
Other Expense, net $1 million $1 million
 
Tax $4.5 to $5.5 million Benefit

Approximately $9 million due primarily
from release of tax reserves

$3.5 to $4.5 million Expense
 

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