LONDON — (BUSINESS WIRE) — May 6, 2015 — Dialog Semiconductor plc (FWB: DLG), a provider of highly integrated power management, AC/DC, solid state lighting and Bluetooth(R) Smart wireless technology, today reports results for its first quarter ending 3 April 2015.
Q1 2015 financial highlights
- Revenue up 41% over Q1 2014 to $311 million
- IFRS gross margin at 46.0%
- Underlying (*) EBITDA (**) up 94% to 80.2 million or 25.8% of revenue
- IFRS operating profit (EBIT) up 142% over Q1 2014 to $55.6 million or 17.9% of revenue
- Underlying (*) basic and diluted EPS up 131% and 109% respectively over Q1 2014. IFRS basic and diluted EPS up 24% and 20% respectively over Q1 20141
- Record $132 million of cash generated from operations
(1) 2014 IFRS Net Income has been adjusted. Please refer to Note 2 of the Q1 2015 Interim Report
Q1 2015 operational highlights
- Design win momentum continues for Power Management smartphone and tablet designs
- Bluetooth(R) Smart product portfolio expansion with launch of four new products, including industry's first Wearable on Chip(TM)
- IoT success continues as our low power Bluetooth Smart technology is broadly adopted
- Mediatek's latest MT6795 Octa-core Application processor powered by Dialog's sub PMIC
- Sub PMIC adopted in HTC's latest two smartphones
- LED Solid State Lighting portfolio and market expansion with new products launched
- Sensor Joint Venture announced with DYNA Image
Commenting on the results Dialog Chief Executive, Dr Jalal Bagherli, said:
"This has been an outstanding first quarter for Dialog and I am extremely pleased that our strong, consistent growth trajectory continues. Our cash generation stands at a record level, underscoring the profitability and operational leverage of our business model.
"Our growth drivers remain aligned to our strategic focus. Momentum in Power Management and Bluetooth(R) Smart continues to gather pace with new customers and the industry's first Wearable on ChipTM. The joint venture with DYNA Image brings complementary sensor technology to our product portfolio.
"This is a strong note on which to start the year and we look forward to the months ahead with confidence in the continued development of our business."
Outlook
Given our current visibility, we expect 2015 to be another year of good growth. As in previous years, revenue performance will be weighted towards the second half of the year.
We expect revenue for Q2 2015 to be in the range of $290 to $310 million.
Gross margin in Q2 2015 will remain broadly in line with Q1 2015 and improve on a year-on-year basis. Gross margin for the full year 2015 is now expected to be slightly above the full year 2014.
Financial overview
|
IFRS |
First Quarter |
||||||||||||||
|
US$ million |
2015 |
2014 |
Var. |
||||||||||||
|
Revenue |
311.2 | 220.9 | +41% | ||||||||||||
|
Gross Margin |
46.0% | 42.1% | +390bps | ||||||||||||
|
R&D % |
17.3% | 20.7% | (340)bps | ||||||||||||
|
SG&A %1 |
10.8% | 11.0% | (20)bps | ||||||||||||
|
EBIT |
55.6 | 23.0 | 142% | ||||||||||||
|
EBIT % |
17.9% | 10.4% | +750bps | ||||||||||||
|
Net income2 |
38.8 | 31.0 | +25% | ||||||||||||
|
Basic EPS $2 |
0.57 | 0.46 | +24% | ||||||||||||
|
Diluted EPS $2 |
0.53 | 0.44 | +20% | ||||||||||||
|
Operating cash flow |
132.4 | 128.9 | 3% | ||||||||||||
|
Underlying |
First Quarter |
||||||||||||||
|
US$ million |
2015 |
2014 |
Var. |
||||||||||||
|
Gross Margin |
46.6% | 43.3% | +330pbs | ||||||||||||
|
EBITDA |
80.2 | 41.3 | +94% | ||||||||||||
|
EBITDA % |
25.8% | 18.7% | +710bps | ||||||||||||
|
EBIT |
71.0 | 32.2 | +120% | ||||||||||||
|
EBIT % |
22.8% | 14.6% | +820bps | ||||||||||||
|
Net income |
55.5 | 23.7 | +134% | ||||||||||||
|
Basic EPS $ |
0.81 | 0.35 | +131% | ||||||||||||
|
Diluted EPS $ |
0.71 | 0.34 | +109% | ||||||||||||
(1) Including other operating expenses/income
(2) 2014 IFRS amounts have been adjusted. Please refer to Note 2 of the Q1 2015 Interim Report
Revenue in Q1 2015 was up 41% to $311 million. The strong revenue performance was the result of:
- 53% year-on-year revenue growth in Connectivity driven by strong momentum in Bluetooth(R) Smart and wireless audio (DECT based solutions)
- Mobile Systems - up 46% over Q1 2014
Q1 2015 IFRS gross margin was 46.0%, significantly above Q1 2014 and 30bps below Q4 2014. The year-on-year increase was the result of:
- The lower allocation per unit of the fixed component of Cost of Goods Sold;
- Positive product mix contribution from the latest generation of products in Mobile Systems and Connectivity ;and
- The continuing realisation of the benefits of manufacturing cost optimisation.
In Q1 2015 underlying (*) net OPEX as a percentage of revenue was at 23.8%, 490bps below Q1 2014. The value of underlying net OPEX in Q1 2015 increased 17% over Q1 2014.
Investments in R&D increased through the first quarter. On an underlying (*) basis, R&D investment was up 14% over Q1 2014, which is in line with our strategy of continuing innovation and diversification of our product portfolio. As a percentage of revenue, underlying R&D in Q1 2015 decreased to 16.0% (Q1 2014: 19.9%). This reduction was the result of the strong top line growth during the period.
Underlying (*) SG&A in Q1 2015 stood at 8.0% of revenue, 140bps below Q1 2014 primarily as a result of the strong growth of the business. In Q1 2015, the company booked a provision of $3.4 million for the settlement of a claim brought in April 2014 by the former iWatt Inc. shareholders. Subsequent to quarter end, a settlement was reached for that amount without admission of faults, wrong doing or liabilities by Dialog. The Company expects to pay the settlement in May 2015.
In Q1 2015 we achieved IFRS and underlying (*) EBIT of $55.6 million and $71.0 million respectively, 142% and 120% over Q1 2014. Underlying EBIT margin in the quarter was 22.8% (Q1 2014: 14.6%). The Q1 2015 underlying EBIT increase of 120% was primarily driven by good performance in the Mobile Systems segment and the turnaround in the Connectivity segment. On an underlying basis, the Connectivity segment contributed $1.7 million EBIT profit in Q1 2015 (Q1 2014 EBIT loss: $1.2 million).
In total, a net tax charge of $15.5 million was recorded in Q1 2015. This represents an effective tax rate of 28.5% (adjusted Q1 2014: 32.8% excluding one-off non-cash deferred tax credit). The effective tax rate for the year ending 31 December 2014 was 29.0% (excluding one-off non-cash deferred tax credit). The decrease in our group effective tax rate is driven by the on-going exercise to align our Intellectual Property with the commercial structure of the group. This has allowed Dialog to fully recognise previously unrecognised UK trading loss carry forwards and to benefit from the favourable UK tax regime for technology companies. We believe this gradual decrease is sustainable and will now accelerate from 2016, thus continuing to drive further reductions in our effective tax rate in the years to come.
In Q1 2015, underlying (*) net income and underlying EPS more than doubled from Q1 2014 levels. Underlying diluted EPS in Q1 2015 was 109% higher than in the same quarter of 2014.
At the end of Q1 2015, our total inventory level was $105 million (or ~56 days), an increase of $6 million over the prior quarter and 19% over Q1 2014.This represents an 18 day increase in our days of inventory over the prior quarter. We are managing our inventory levels tightly at an appropriate level to service our current customer backlog. During Q2 2015 we expect inventory value and inventory days to increase from Q1 2015 in anticipation of a number of high volume product launches during the second half of the year.
At the end of Q1 2015, we had cash and cash equivalents balance of $421 million. In the first quarter alone we generated a record $132 million of operating cash and $98 million of free cash flow (***).
Subsequent to the end of the quarter, on 28 April, Dialog Semiconductor announced the total conversion of the $201 million Convertible Bond due 2017. As such, no bonds will be redeemed by Dialog pursuant to the optional redemption notice dated 16 March 2015 (in which Dialog announced its intention to redeem any outstanding Bonds on 5 May 2015) and all Bonds have been cancelled. Dialog has issued 6,797,025 new ordinary shares and the total number of ordinary shares issued by Dialog is now 77,865,955.
(*) Underlying results (net of tax) in Q1-2015 are based on IFRS, adjusted to exclude share-based compensation charges and related charges for National Insurance of US$7.3 million, excluding US$0.2 million of amortisation of intangibles associated with the acquisition of SiTel (now Dialog B.V.), excluding US$2.1 million non-cash effective interest expense in connection with the convertible bond, excluding US$0.2 million non-cash effective interest expense related to a licensing agreement, excluding US$3.7 million acquisition and integration expenses in connection with the purchase of iWatt (of which US$3.4 million correspond to a litigation provision)and excluding US$3.2 million of amortisation and depreciation expenses associated with the acquisition of iWatt.
(*) Underlying results (net of tax) in Q1-2014 are based on IFRS, adjusted to exclude share-based compensation charges and related charges for National Insurance of US$3.8 million, excluding US$0.6 million of amortisation of intangibles associated with the acquisition of SiTel (now Dialog B.V.), excluding US$2.0 million non-cash effective interest expense in connection with the convertible bond, excluding US$ 0.2 million non-cash effective interest expense related to a licensing agreement, excluding US$0.3 million acquisition and integration expenses in connection with the purchase of iWatt, excluding US$3.6 million of amortisation and depreciation expenses associated with the acquisition of iWatt and US$17.8 million one-off non-cash deferred tax credit resulting from an intra-group re-organisation of certain intellectual property.
The term "underlying" is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies. Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures. Underlying results (net of tax) have been fully reconciled to IFRS results (net of tax) above. All other underlying measures disclosed within this report are a component of this measure and adjustments between IFRS and underlying measures for each of these measures are a component of those disclosed above.
(**) EBITDA in Q1 2015 is defined as operating profit excluding depreciation for property, plant and equipment, (Q1 2015:US$5.3 million, Q1 2014:US$5.4 million), amortisation of intangible assets (Q1 2015:US$7.5 million, Q1 2014:US$7.9 million) and losses on disposals and impairment of fixed assets (Q1 2015:US$0.1 million, Q1 2014:US$0.1 million).
(***) Free Cash Flow in Q1 2015 is defined as net income of US$38.8 million (Q1 2014: 31.0 million), plus amortisation and depreciation (Q1 2015:US$12.8 million, Q1 2014:US$13.2 million), plus net interest expense (Q1 2015:US$2.9 million, Q1 2014:US$3.6 million), plus change in working capital (Q1 2015:US$57.8 million, Q1 2014:US$88.9 million) and minus capital expenditure (Q1 2015:US$14.3 million, Q1 2014:US$9.0 million).
Operational overview
Dialog is playing its part a global enabler of the Internet of Things (IoT). In Q1 2015, we built on the success of our first DA14580 SmartBond(TM) Bluetooth Smart System-on-Chip by announcing four new devices in the product family. In 2014, the revolutionary DA14580 offered less than half the power consumption and size of competing solutions and was adopted rapidly across multiple IoT segments by leading consumer companies. Volume shipments started in Q4 2014 and continued to ramp in Q1.
The new 2015 SmartBond(TM) SoCs are optimised for emerging high volume consumer markets including wireless charging, wearables, smart home and human interface devices. They integrate application specific functionality, and feature even lower system power consumption. Equally important, the high level of functional integration reduces our customers' bill of materials. For smart remote control units, which will replace traditional infrared controls, our latest SmartBond(TM) device includes ultra-low power audio codecs for voice control, a technology that remote control manufacturers are adopting in growing numbers. For wearables, one of the highest volume opportunities in the IoT, we launched the DA14680 Wearable on Chip(TM) SmartBond(TM) SoC. This leverages Dialog's power management expertise to provide all the power management needed for wearable computing products, including those powered using energy harvesting techniques. Dialog is now well placed to capture design wins in all of the major high volume consumer electronics segments of the IoT with innovative Bluetooth Smart solutions.
Our proven success with leading smartphone customers for custom power management IC's (PMICs) continued through Q1 2015 with new design wins. Additionally, during the quarter we continued to ramp several new high volume custom PMIC products for hugely popular smartphone models and recently launched wearable products.
Our sub-PMIC - DA9210 - multi-phase DC-DC converter powers the latest MT6795 MediaTek Octa-core Application Processor and is a key component of MediaTek's reference platform. This is in addition to the MT6595 platform where the DA9210 is already successfully used in many China tier 1 smartphone designs. Post the quarter close, we announced HTC's latest smartphones, the HTC One M9+ and HTC One E9+ have adopted this sub-PMIC technology.
In Q1, we launched two new products from the Power Conversion Business segment. We entered the MR16 - low voltage (12 volt) downlight LED form factor - market segment with an excellent dimming and universal transformer compatibility solution. Additionally, we launched a new dimming platform, delivering the ultimate in dimming performance while eliminating more than 20 external components from the bill of materials. These two devices allow Dialog to continue its market leadership in the dimming segment of the fast growing LED domestic retrofit market.
The shift to higher power and faster charging continues as the China smartphone market transitions through 2015, with our rapid charging technology broadly adopted by the top China smartphone manufacturers.
This week we announced a joint venture (JV) with the Lite-On Group in Taiwan for a strategic investment in Dyna Image a wholly owned subsidiary of Lite-On. Upon closing Dialog will be the largest shareholder with a 40% stake. Additionally, ShunSin Technology (Zhongshan) LTD, part of ShunSin Technology Holdings LTD, a subsidiary company of Foxconn will also hold an equity stake. The focus of the JV will be to accelerate adoption of Dyna Image's sensors technology into the smartphone and IoT markets, leveraging Dialog's broader power saving and Bluetooth(R) Smart expertise and ShunSin's packaging technology for smart system sensing solutions.
* * * * *
Dialog Semiconductor invites you today at 09.00 am (London) / 10.00 am (Frankfurt) to take part in a live conference call and to listen to management's discussion of the Company's Q1 2015 performance, as well as guidance for Q2 2015. Participants will need to register using the link below labelled 'Online Registration'. A full list of dial in numbers will also be available.
Online Registration: http://wcc.webeventservices.com/r.htm?e=968560&s=1&k=784D6482B43E6687A925828A6EDD63BD
Conference Number: +44 (0) 2071 928000
Conference ID: 9040952
In synchronicity with the call, the analyst presentation will be webcasted on our website at: http://www.dialog-semiconductor.com/investor-relations. A replay will be posted at the same address four hours after the conclusion of the presentation and will be available for 30 days.
Note to editors
Dialog Semiconductor provides highly integrated standard (ASSP) and custom (ASIC) mixed-signal integrated circuits (ICs), optimised for smartphone, tablet, IoT, LED Solid State Lighting (SSL) and Smart Home applications. Dialog brings decades of experience to the rapid development of ICs while providing flexible and dynamic support, world-class innovation and the assurance of dealing with an established business partner. With world-class manufacturing partners, Dialog operates a fabless business model and is a socially responsible employer pursuing many programs to benefit the employees, community, other stakeholders and the environment we operate in.
Dialog's power saving technologies including DC-DC configurable system power management deliver high efficiency and enhance the consumer's user experience by extending battery lifetime and enabling faster charging of their portable devices. Its technology portfolio also includes audio, Bluetooth(R) Smart, Rapid Charge(TM) AC/DC power conversion and multi-touch.
Dialog Semiconductor plc is headquartered in London with a global sales, R&D and marketing organisation. In 2014, it had $1.16 billion in revenue and was one of the fastest growing European public semiconductor companies. It currently has approximately 1,400 employees worldwide. The company is listed on the Frankfurt (FWB: DLG) stock exchange (Regulated Market, Prime Standard, ISIN GB0059822006) and is a member of the German TecDax index.
Forward Looking Statements
This press release contains "forward-looking statements" that reflect management's current views with respect to future events. The words "anticipate," "believe," "estimate", "expect," "intend," "may," "plan," "project" and "should" and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties, including, but not limited to: an economic downturn in the semiconductor and telecommunications markets; changes in currency exchange rates and interest rates, the timing of customer orders and manufacturing lead times, insufficient, excess or obsolete inventory, the impact of competing products and their pricing, political risks in the countries in which we operate or sale and supply constraints. If any of these or other risks and uncertainties occur (some of which are described under the heading "Risks and their management" in Dialog Semiconductor's most recent Annual Report) or if the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. We do not intend or assume any obligation to update any forward-looking statement which speaks only as of the date on which it is made, however, any subsequent statement will supersede any previous statement.
| Language: | English | ||||||
| Company: | Dialog Semiconductor Plc. | ||||||
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| Phone: | +49 7021 805-412 | ||||||
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| ISIN: | GB0059822006, XS0757015606 | ||||||
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| Indices: | TecDAX | ||||||
| Listed: | Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart; Luxemburg |
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