Intersil Corporation Reports Strong Quarterly Results

Company Achieves Target Operating Model

(PRNewswire) — Intersil Corporation (NASDAQ: ISIL), a leading provider of innovative power management and precision analog solutions, today announced financial results for the third quarter ended September 30, 2016. Third quarter revenue was up 4% sequentially and 8% year-over-year to $139.0 million.

Company Highlights

  • Consumer and Computing (C&C) revenue increased 6% sequentially and 9% year-over-year, the fourth consecutive quarter of year-over-year growth.
  • Industrial and Infrastructure (I&I) revenue was up 2% sequentially and 8% year-over-year.
  • Computing and automotive end markets were key growth areas, with revenue in automotive increasing by 16% year-over-year.
  • Gross margin increased sequentially to 60.6% on a GAAP basis and 60.7% on a non-GAAP basis, achieving the company's non-GAAP target model of 60%.
  • GAAP operating margin increased sequentially and year-over-year to 16.4%. Non-GAAP operating margin increased by over 450 basis points to 25.7%, achieving the company's non-GAAP target model of 25%.
  • GAAP earnings per share increased sequentially to $0.11. Non-GAAP earnings per share increased by 29% sequentially and 46% year-over-year to $0.22.
  • Cash and cash equivalents increased by $27 million to $284 million, the 14th consecutive quarter of sequential growth.

Business Review
Revenue for the third quarter improved sequentially due to strength in both the C&C and I&I businesses. Seasonal growth in C&C, particularly in computing, increased C&C revenue to its highest point since 2014. The ramp of next generation PC processors continued to drive demand for the company's computing power products, and design win traction in mobile platforms remained strong.

Strength across a number of product areas contributed broadly to the I&I sequential revenue improvement and year-over-year growth. I&I power revenue reached its highest level in six quarters, with power modules achieving record revenue in the quarter.

Intersil's automotive revenue reached record levels as well. The company also introduced new products in Q3 that address the major trends in advanced driver assistance systems (ADAS) and around view displays.

The revenue breakdown by end market follows:

 


Q3 2016


Q2 2016


Q3 2015

End Market Revenue

$M


%


$M


%


$M


%

Industrial & Infrastructure

90.8


65%


88.6


66%


84.2


66%

Consumer & Computing

48.2


35%


45.4


34%


44.2


34%

Total Revenue

$139.0




$134.0




$128.4



 

Table 1. Intersil End Market Mix

"The third quarter marked a significant milestone for us as we achieved the gross and operating margin goals we set for the business. The top line has continued to show progress towards our goal as well, as new product investments translated into solid year-over-year revenue growth. This reflects the high quality foundation of the business we've built over the last three years," said Necip Sayiner, president and CEO of Intersil. "Strong execution has been an important aspect of our turnaround efforts and we have been able to successfully intersect a number of key trends with our power management and precision analog solutions in every one of our target end markets. With power efficiency becoming a consistent thread through virtually every application, we believe Intersil solutions can be central to the evolution of next-generation electronics."

Financial Highlights
Third quarter GAAP gross margin was up to 60.6%, a 120 basis point sequential increase and a 140 basis point year-over-year increase. Total third quarter GAAP operating expenses decreased to $61.4 million and included R&D expense of $31.3 million and SG&A expense of $22.8 million. Third quarter GAAP operating income increased sequentially and year-over-year to $22.8 million, or 16.4% of revenue. GAAP net income for the third quarter increased to $15.9 million , resulting in diluted earnings per share of $0.11 .

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