UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):  August 10, 2022


Alpha and Omega Semiconductor Limited
(Exact name of registrant as specified in its charter)

 
Bermuda
  
001-34717
  
77-0553536
(State or other jurisdiction
of incorporation)
  
(Commission
File Number)
  
(I.R.S. Employer
Identification No.)
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
(Address of principal registered offices)
(408) 830-9742
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares
AOSL
The Nasdaq Global Select Market


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.

The information in Item 2.02 of this Current Report, including the accompanying exhibit, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of Section 18. The information in Item 2.02 of this Current Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language contained in such filing.
On August 10, 2022, Alpha and Omega Semiconductor Limited (the “Company”) issued a press release regarding its financial results for its fiscal fourth quarter and fiscal year ended June 30, 2022.  A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.

Item 9.01  Financial Statements and Exhibits.

        
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 10, 2022

 
Alpha and Omega Semiconductor Limited
     
 
By:
/s/    Yifan Liang
 
Name:
Yifan Liang
 
Title:
Chief Financial Officer and Corporate Secretary
 
Exhibit 99.1

 Alpha and Omega Semiconductor Reports Financial Results for Fiscal Fourth Quarter and Fiscal Year Ended June 30, 2022

SUNNYVALE, Calif.--(BUSINESS WIRE)--August 10, 2022--Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL), today reported financial results for the fiscal fourth quarter and the fiscal year ended June 30, 2022.

The results for the fiscal fourth quarter ended June 30, 2022 were as follows:

GAAP Financial Comparison

Quarterly

(in millions, except percentage and per share data)

(unaudited)

 


Three Months Ended

 


June 30, 2022


March 31, 2022


June 30, 2021

Revenue


$

194.0

 


$

203.2

 


$

177.3

 

Gross Margin


 

32.6

%


 

35.6

%


 

34.2

%

Operating Income


$

18.1

 


$

31.2

 


$

22.4

 

Net Income Attributable to AOS


$

15.1

 


$

31.7

 


$

19.5

 

Net Income Per Share Attributable to AOS - Diluted


$

0.53

 


$

1.11

 


$

0.71

 

Non-GAAP Financial Comparison

Quarterly

(in millions, except percentage and per share data)

(unaudited)

 


Three Months Ended

 


June 30, 2022


March 31, 2022


June 30, 2021

Revenue


$

194.0

 


$

203.2

 


$

177.3

 

Non-GAAP Gross Margin


 

33.8

%


 

36.7

%


 

34.9

%

Non-GAAP Operating Income


$

28.9

 


$

40.5

 


$

29.1

 

Non-GAAP Net Income Attributable to AOS


$

27.1

 


$

38.2

 


$

26.3

 

Non-GAAP Net Income Per Share Attributable to AOS - Diluted


$

0.95

 


$

1.34

 


$

0.95

 

The non-GAAP financial measures in the schedule above and under the section "Financial Result for Fiscal Q4 Ended June 30, 2022" below exclude the effect of share-based compensation expenses, amortization of purchased intangible, legal costs related to government investigation and income tax effect of non-GAAP adjustments in each of the periods presented, and equity method investment loss from equity investee for the three months ended June 30, 2022 and March 31, 2022, as well as gain on deconsolidation and changes of equity interest in the JV Company for the three months ended March 31, 2022. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.

The results for the fiscal year ended June 30, 2022 and 2021 were as follows:

GAAP Financial Comparison

Annually

(in millions, except percentage and per share data)

(unaudited)

 


Year Ended June 30,

 


2022


2021

Revenue


$

777.6

 


$

656.9

 

Gross Margin


 

34.5

%


 

31.1

%

Operating Income


$

102.0

 


$

64.1

 

Net Income Attributable to AOS


$

453.2

 


$

58.1

 

Net Income Per Share attributable to AOS - Diluted


$

16.07

 


$

2.13

 

Non-GAAP Financial Comparison

Annually

(in millions, except percentage and per share data)

(unaudited)

 


Year Ended June 30,

 


2022


2021

Revenue


$

777.6

 


$

656.9

 

Non-GAAP Gross Margin


 

35.6

%


 

31.9

%

Non-GAAP Operating Income


$

137.6

 


$

86.0

 

Non-GAAP Net Income Attributable to AOS


$

128.6

 


$

79.9

 

Non-GAAP Net Income Per Share Attributable to AOS - Diluted


$

4.56

 


$

2.93

 

The non-GAAP financial measures in the schedule above exclude the effect of share-based compensation expenses, amortization of purchased intangible, legal costs related to government investigation and income tax effect of non-GAAP adjustments for fiscal years ended June 30, 2022 and 2021, and equity method investment loss from equity investee and gain on deconsolidation and changes of equity interest in the JV Company for the fiscal year ended June 30, 2022, as well as production ramp up costs related to joint venture for fiscal year ended June 30, 2021. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.

Financial Results for Fiscal Q4 Ended June 30, 2022

  • Revenue was $194.0 million, an increase of 9.4% from the same quarter last year and a decrease of 4.6% quarter-over-quarter.
  • GAAP gross margin was 32.6%, down from 34.2% year-over-year and 35.6% in the prior quarter.
  • Non-GAAP gross margin was 33.8%, down from 34.9% from the same quarter last year and down from 36.7% in the prior quarter.
  • GAAP operating expenses were $45.1 million, up from $41.2 million in the prior quarter and up from $38.2 million from the same quarter last year.
  • Non-GAAP operating expenses were $36.7 million, an increase of $2.7 million from last quarter and an increase of $3.9 million from the same quarter last year.
  • GAAP operating income was $18.1 million, as compared to $31.2 million in the prior quarter and $22.4 million from the same quarter last year.
  • Non-GAAP operating income was $28.9 million as compared to $40.5 million for the prior quarter and $29.1 million for the same quarter last year.
  • GAAP net income per share attributable to AOS was $0.53, compared to $0.71 earnings per share for the same quarter last year and $1.11 for the prior quarter.
  • Non-GAAP earnings per share attributable to AOS was $0.95, compared to $0.95 for the same quarter last year and $1.34 for the prior quarter.
  • Consolidated cash flow provided by operating activities was $25.7 million, which included $3.4 million of net customer deposits, as compared to $61.8 million in prior quarter, which included $6.4 million of net customer deposits.
  • The Company closed the quarter with $314.4 million of cash and cash equivalents.

AOS Chairman and Chief Executive Officer Dr. Mike Chang commented, "Our fiscal Q4 was another strong quarter despite the challenge posed by the COVID lockdown in Shanghai. Once again, we outperformed our guidance midpoint. Revenue was $194 million, an increase of 9% year-over-year. Non-GAAP gross margin was 33.8% and non-GAAP EPS was $0.95. As a reminder, our ability to assemble and ship products was severely limited for most of April due to the city-wide lockdown in Shanghai. Once cleared to restart operations at the end of April, it also took time for our assembly lines to return to full utilization. Our Shanghai facilities are mostly back to normal and are currently operating at full capacity. I want to express my deepest appreciation to our employees once again for their immense sacrifice and unwavering dedication to AOS during these challenging times. We are grateful to have their loyalty and support.”

Dr. Chang continued, "Looking ahead, we are seeing inventory corrections happening in certain consumer end markets. While we are not immune to current global market conditions, as of today, our demand and backlog are still higher than our overall capacity. I believe our strategic position within our sector is resilient thanks to our technology leadership, diversified product portfolio, and strong Tier 1 customer base in all our business segments. In fact, our market share at Tier 1 customers is the highest that it has ever been. The electrification of everything is just getting started, and our power products sit at the forefront of this trend. We are on pace and focused to achieve our one billion dollar annual revenue target in the next couple of years.”

Business Outlook for Fiscal Q1 Ending September 30, 2022

The following statements are based on management's current expectations. These statements are forward-looking, and actual results may differ materially. AOS undertakes no obligation to update these statements.

  • Revenue is expected to be $210 million plus or minus $3 million.
  • Gross margin is expected to be 33.8% plus or minus 1%. Non-GAAP gross margin is expected to be 35.0% plus or minus 1%. Note that non-GAAP gross margin excludes $1.8 million of estimated share-based compensation charges and $0.8 million of amortization of purchased intangible assets.
  • GAAP operating expenses are expected to be in the range of $45.7 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $36.5 million plus or minus $1 million. Non-GAAP operating expenses exclude $9.0 million of estimated share-based compensation charges and $0.2 million of estimated legal expenses related to the government investigation.
  • Interest expense is expected to be $1.2 million, and
  • Tax expense is expected to be $1.2 million to $1.4 million.

Conference Call and Webcast

AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal fourth quarter and the fiscal year ended June 30, 2022 today, August 10, 2022 at 2:00 p.m. PT / 5:00 p.m. ET. To listen to the live conference call, please dial +1 (844) 200-6205 or +1 (929) 526-1599 if dialing from outside the United States and Canada. The access code is 577380. A live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com. The webcast replay will be available for seven days after the live call on the same website. In addition, a copy of the script of management's prepared remarks and a live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com.

Forward Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, statements relating to macroeconomic conditions, resumption of production at our Shanghai facilities and continuing impact of COVID-19 pandemic, anticipated earnings power and non-GAAP EPS on an annual basis, our growth opportunities and new markets, our annual revenue target, projected amount of revenue, gross margin, operating income, income tax expenses, net income, and share-based compensation expenses, non-GAAP gross margin, non-GAAP operating expenses, tax expenses, our objectives to achieve revenue target, our ability to gain new customers and design wins, strategic partnership with customers, and other information under the section entitled “Business Outlook for Fiscal Q1 Ending September 30, 2022”. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 pandemic on our business and the city-wide lockdown in Shanghai; deconsolidation of CQJV; our lack of control over the joint venture in China; difficulties and challenges in executing our diversification strategy into different market segments; new tariffs on goods from China; ordering pattern from distributors and seasonality; changes in regulatory environment and government investigation; our ability to introduce or develop new and enhanced products that achieve market acceptance; decline of PC markets; the actual product performance in volume production; the quality and reliability of our product, our ability to achieve design wins; the general business and economic conditions; the state of semiconductor industry and seasonality of our markets; our ability to maintain factory utilization at a desirable level; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 to be filed by AOS with the SEC and other periodic reports we filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law. The fiscal 2022 financial information reported in this press release is subject to the completion of our annual report which will be reported in our forthcoming Form 10-K to be filed with the SEC.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a basis consistent with U.S. GAAP, we disclose certain non-GAAP financial measures for our historical performance, including non-GAAP gross profit, gross margin, operating income, net income attributable to AOS, net income, diluted earnings per share ("EPS") and EBITDAS. These supplemental measures exclude, among other items, share-based compensation expenses, legal costs related to government investigation, amortization of purchased intangible, production ramp up costs related to the JV Company, income tax effect of non-GAAP adjustments, equity method investment loss from equity investee, and gain on deconsolidation and changes of equity interest in the JV Company. We also disclose certain non-GAAP financial measures in our guidance for the next quarter, including non-GAAP gross margin, operating expenses and earnings/loss in equity method investment. We believe that these historical and forecast non-GAAP financial measures provide useful information to both management and investors by excluding certain items and expenses that are not indicative of our core operating results or do not reflect our normal business operations. In addition, our management uses non-GAAP measures to compare our performance relative to forecasts and to benchmark our performance externally against competitors. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as non-GAAP net income (loss) or non-GAAP operating expenses, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. In addition, we included the income tax effect of non-GAAP adjustments in the non-GAAP net income of reconciliation table for all periods presented as the management believes that such non-GAAP presentation provides useful information to investors, even though the amounts are not significant. We seek to compensate for the limitation of our non-GAAP presentation by having provided a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures both in the text in this press release and in the tables attached hereto. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures.

About Alpha and Omega Semiconductor

Alpha and Omega Semiconductor Limited, or AOS, is a designer, developer and global supplier of a broad range of power semiconductors, including a wide portfolio of Power MOSFET, IGBT, IPM, TVS, HVIC, GaN/SiC, Power IC and Digital Power products. AOS has developed extensive intellectual property and technical knowledge that encompasses the latest advancements in the power semiconductor industry, which enables us to introduce innovative products to address the increasingly complex power requirements of advanced electronics. AOS differentiates itself by integrating its Discrete and IC semiconductor process technology, product design, and advanced packaging know-how to develop high performance power management solutions. AOS’ portfolio of products targets high-volume applications, including personal and portable computers, graphic cards, flat panel TVs, home appliances, power tools, smart phones, battery packs, quick chargers, home appliances, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment. For more information, please visit www.aosmd.com.

The following unaudited consolidated financial statements are prepared in accordance with U.S. GAAP.

 

Alpha and Omega Semiconductor Limited

Condensed Consolidated Statements of Operations

(in thousands, except percentages and per share amounts)

(unaudited)

 


 


 


 


 


 

 


Three Months Ended


Fiscal Year Ended

 


June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

 


 


 


 


 


 

Revenue


$

193,959

 


$

203,239

 


$

177,309

 


$

777,552

 


$

656,902

 

Cost of goods sold


 

130,737

 


 

130,837

 


 

116,729

 


 

508,996

 


 

452,359

 

Gross profit


 

63,222

 


 

72,402

 


 

60,580

 


 

268,556

 


 

204,543

 

Gross margin


 

32.6

%


 

35.6

%


 

34.2

%


 

34.5

%


 

31.1

%

 


 


 


 


 


 

Operating expenses:


 


 


 


 


 

Research and development


 

20,386

 


 

16,545

 


 

17,282

 


 

71,259

 


 

62,953

 

Selling, general and administrative


 

24,696

 


 

24,625

 


 

20,935

 


 

95,259

 


 

77,514

 

Total operating expenses


 

45,082

 


 

41,170

 


 

38,217

 


 

166,518

 


 

140,467

 

Operating income


 

18,140

 


 

31,232

 


 

22,363

 


 

102,038

 


 

64,076

 

 


 


 


 


 


 

Other income, net


 

279

 


 

263

 


 

369

 


 

999

 


 

2,456

 

Interest expense, net


 

(895

)


 

(308

)


 

(1,476

)


 

(3,920

)


 

(6,308

)

Gain on deconsolidation of the JV Company


 

—

 


 

—

 


 

—

 


 

399,093

 


 

—

 

Gain (loss) on changes of equity interest in the JV Company, net


 

—

 


 

4,501

 


 

—

 


 

(3,140

)


 

—

 

Net income before income taxes


 

17,524

 


 

35,688

 


 

21,256

 


 

495,070

 


 

60,224

 

 


 


 


 


 


 

Income tax expense


 

940

 


 

2,902

 


 

1,241

 


 

39,258

 


 

3,935

 

Net income before loss from equity method investment


 

16,584

 


 

32,786

 


 

20,015

 


 

455,812

 


 

56,289

 

Equity method investment loss from equity investee


 

1,493

 


 

1,136

 


 

—

 


 

2,629

 


 

—

 

Net income


 

15,091

 


 

31,650

 


 

20,015

 


 

453,183

 


 

56,289

 

Net income (loss) attributable to noncontrolling interest


 

—

 


 

—

 


 

476

 


 

20

 


 

(1,827

)

Net income attributable to Alpha and Omega Semiconductor Limited


$

15,091

 


$

31,650

 


$

19,539

 


$

453,163

 


$

58,116

 

 


 


 


 


 


 

Net income per common share attributable to Alpha and Omega Semiconductor Limited


 


 


 


 


 

Basic


$

0.55

 


$

1.18

 


$

0.74

 


$

16.93

 


$

2.25

 

Diluted


$

0.53

 


$

1.11

 


$

0.71

 


$

16.07

 


$

2.13

 

 


 


 


 


 


 

Weighted average number of common share attributable to Alpha and Omega Semiconductor Limited used to compute net income per share:


 


 


 


 


 

Basic


 

27,269

 


 

26,829

 


 

26,251

 


 

26,764

 


 

25,786

 

Diluted


 

28,466

 


 

28,423

 


 

27,705

 


 

28,203

 


 

27,272

 

 

Alpha and Omega Semiconductor Limited

Condensed Consolidated Balance Sheets

(in thousands, except par value per share)

(unaudited)

 

 

June 30, 2022

 

June 30, 2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

314,352

 

 

$

202,412

 

Restricted cash

 

 

299

 

 

 

233

 

Accounts receivable, net

 

 

65,681

 

 

 

35,789

 

Inventories

 

 

158,040

 

 

 

154,293

 

Other current assets

 

 

11,220

 

 

 

14,595

 

Total current assets

 

 

549,592

 

 

 

407,322

 

Property, plant and equipment, net

 

 

318,666

 

 

 

436,977

 

Operating lease right-of-use assets, net

 

 

23,674

 

 

 

34,660

 

Intangible assets, net

 

 

10,050

 

 

 

13,410

 

Equity method investment

 

 

378,378

 

 

 

—

 

Deferred income tax assets

 

 

592

 

 

 

5,167

 

Restricted cash - long-term

 

 

—

 

 

 

2,168

 

Other long-term assets

 

 

17,677

 

 

 

18,869

 

Total assets

 

$

1,298,629

 

 

$

918,573

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

87,377

 

 

$

80,699

 

Accrued liabilities

 

 

115,632

 

 

 

69,494

 

Payable related to equity investee, net

 

 

28,989

 

 

 

—

 

Income taxes payable

 

 

4,248

 

 

 

2,604

 

Short-term debt

 

 

24,878

 

 

 

58,030

 

Finance lease liabilities

 

 

1,376

 

 

 

16,724

 

Operating lease liabilities

 

 

3,850

 

 

 

5,679

 

Total current liabilities

 

 

266,350

 

 

 

233,230

 

Long-term debt

 

 

38,156

 

 

 

77,990

 

Income taxes payable - long-term

 

 

2,158

 

 

 

1,319

 

Deferred income tax liabilities

 

 

28,757

 

 

 

2,448

 

Finance lease liabilities - long-term

 

 

9,634

 

 

 

12,698

 

Operating lease liabilities - long-term

 

 

20,878

 

 

 

30,440

 

Other long-term liabilities

 

 

78,603

 

 

 

44,123

 

Total liabilities

 

 

444,536

 

 

 

402,248

 

Equity:

 

 

 

 

Preferred shares, par value $0.002 per share:

 

 

 

 

Authorized: 10,000 shares; issued and outstanding: none at June 30, 2022 and 2021

 

 

—

 

 

 

—

 

Common shares, par value $0.002 per share:

 

 

 

 

Authorized: 100,000 shares; issued and outstanding: 33,988 shares and 27,371 shares, respectively at June 30, 2022 and 32,975 shares and 26,350 shares, respectively at June 30, 2021

 

 

68

 

 

 

66

 

Treasury shares at cost; 6,617 shares at June 30, 2022 and 6,625 shares at June 30, 2021

 

 

(66,000

)

 

 

(66,064

)

Additional paid-in capital

 

 

288,951

 

 

 

259,993

 

Accumulated other comprehensive income

 

 

1,080

 

 

 

2,315

 

Retained earnings

 

 

629,994

 

 

 

176,895

 

Total Alpha and Omega Semiconductor Limited shareholders’ equity

 

 

854,093

 

 

 

373,205

 

Noncontrolling interest

 

 

—

 

 

 

143,120

 

Total equity

 

 

854,093

 

 

 

516,325

 

Total liabilities and equity

 

$

1,298,629

 

 

$

918,573

 

 

Alpha and Omega Semiconductor Limited

Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures

(in thousands, except percentages and per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

 

June 30,
2022

 

March 31,
2022

 

June 30,
2021

 

June 30,
2022

 

June 30,
2021

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

63,222

 

 

$

72,402

 

 

$

60,580

 

 

$

268,556

 

 

$

204,543

 

Share-based compensation

 

 

1,565

 

 

 

1,282

 

 

 

561

 

 

 

5,125

 

 

 

1,756

 

Amortization of purchased intangible

 

 

811

 

 

 

812

 

 

 

812

 

 

 

3,247

 

 

 

3,247

 

Production ramp up costs related to the JV Company

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

275

 

Non-GAAP gross profit

 

$

65,598

 

 

$

74,496

 

 

$

61,953

 

 

$

276,928

 

 

$

209,821

 

Non-GAAP gross margin as a % of revenue

 

 

33.8

%

 

 

36.7

%

 

 

34.9

%

 

 

35.6

%

 

 

31.9

%

 

 

 

 

 

 

 

 

 

 

 

GAAP operating expense

 

$

45,082

 

 

$

41,170

 

 

$

38,217

 

 

$

166,518

 

 

$

140,467

 

Share-based compensation

 

 

8,305

 

 

 

6,990

 

 

 

4,838

 

 

 

26,199

 

 

 

13,568

 

Legal costs related to government investigation

 

 

84

 

 

 

221

 

 

 

553

 

 

 

1,030

 

 

 

3,066

 

Non-GAAP operating expense

 

$

36,693

 

 

$

33,959

 

 

$

32,826

 

 

$

139,289

 

 

$

123,833

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

18,140

 

 

$

31,232

 

 

$

22,363

 

 

$

102,038

 

 

$

64,076

 

Share-based compensation

 

 

9,870

 

 

 

8,272

 

 

 

5,399

 

 

 

31,324

 

 

 

15,324

 

Amortization of purchased intangible

 

 

811

 

 

 

812

 

 

 

812

 

 

 

3,247

 

 

 

3,247

 

Production ramp up costs related to the JV Company

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

275

 

Legal costs related to government investigation

 

 

84

 

 

 

221

 

 

 

553

 

 

 

1,030

 

 

 

3,066

 

Non-GAAP operating income

 

$

28,905

 

 

$

40,537

 

 

$

29,127

 

 

$

137,639

 

 

$

85,988

 

Non-GAAP operating margin as a % of revenue

 

 

14.9

%

 

 

19.9

%

 

 

16.4

%

 

 

17.7

%

 

 

13.1

%

 

 

 

 

 

 

 

 

 

 

 

GAAP net income attributable to AOS

 

$

15,091

 

 

$

31,650

 

 

$

19,539

 

 

$

453,163

 

 

$

58,116

 

Share-based compensation

 

 

9,870

 

 

 

8,272

 

 

 

5,399

 

 

 

31,324

 

 

 

15,324

 

Amortization of purchased intangible

 

 

811

 

 

 

812

 

 

 

812

 

 

 

3,247

 

 

 

3,247

 

Gain on deconsolidation and changes of the equity interest in the JV Company

 

 

—

 

 

 

(4,501

)

 

 

—

 

 

 

(395,953

)

 

 

—

 

Equity method investment loss from equity investee

 

 

1,493

 

 

 

1,136

 

 

 

—

 

 

 

2,629

 

 

 

—

 

Production ramp up costs related to the JV Company

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

135

 

Legal costs related to government investigation

 

 

84

 

 

 

221

 

 

 

553

 

 

 

1,030

 

 

 

3,066

 

Income tax effect of non-GAAP adjustments

 

 

(234

)

 

 

630

 

 

 

(2

)

 

 

33,197

 

 

 

53

 

Non-GAAP net income attributable to AOS

 

$

27,115

 

 

$

38,220

 

 

$

26,301

 

 

$

128,637

 

 

$

79,941

 

Non-GAAP net margin attributable to AOS as a % of revenue

 

 

14.0

%

 

 

18.8

%

 

 

14.8

%

 

 

16.5

%

 

 

12.2

%

 

 

 

 

 

 

 

 

 

 

 

GAAP net income attributable to AOS

 

$

15,091

 

 

$

31,650

 

 

$

19,539

 

 

$

453,163

 

 

$

58,116

 

Share-based compensation

 

 

9,870

 

 

 

8,272

 

 

 

5,399

 

 

 

31,324

 

 

 

15,324

 

Amortization and depreciation

 

 

8,588

 

 

 

8,603

 

 

 

13,251

 

 

 

42,851

 

 

 

52,685

 

Gain on deconsolidation and changes of the equity interest in the JV Company

 

 

—

 

 

 

(4,501

)

 

 

—

 

 

 

(395,953

)

 

 

—

 

Equity method investment loss from equity investee

 

 

1,493

 

 

 

1,136

 

 

 

—

 

 

 

2,629

 

 

 

—

 

Interest expense, net

 

 

895

 

 

 

308

 

 

 

1,476

 

 

 

3,920

 

 

 

6,308

 

Income tax expense

 

 

940

 

 

 

2,902

 

 

 

1,241

 

 

 

39,258

 

 

 

3,935

 

EBITDAS

 

$

36,877

 

 

$

48,370

 

 

$

40,906

 

 

$

177,192

 

 

$

136,368

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted net income per share attributable to AOS

 

$

0.53

 

 

$

1.11

 

 

$

0.71

 

 

$

16.07

 

 

$

2.13

 

Share-based compensation

 

 

0.35

 

 

 

0.29

 

 

 

0.19

 

 

 

1.11

 

 

 

0.56

 

Amortization of purchased intangible

 

 

0.03

 

 

 

0.03

 

 

 

0.03

 

 

 

0.11

 

 

 

0.12

 

Gain on deconsolidation and changes of the equity interest in the JV Company

 

 

—

 

 

 

(0.16

)

 

 

—

 

 

 

(14.04

)

 

 

—

 

Equity method investment loss from equity investee

 

 

0.05

 

 

 

0.04

 

 

 

—

 

 

 

0.09

 

 

 

—

 

Production ramp up costs related to the JV Company

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.01

 

Legal costs related to government investigation

 

 

0.00

 

 

 

0.01

 

 

 

0.02

 

 

 

0.04

 

 

 

0.11

 

Income tax effect of non-GAAP adjustments

 

 

(0.01

)

 

 

0.02

 

 

 

0.00

 

 

 

1.18

 

 

 

0.00

 

Non-GAAP diluted net income per share attributable to AOS

 

$

0.95

 

 

$

1.34

 

 

$

0.95

 

 

$

4.56

 

 

$

2.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute GAAP diluted net income per share

 

 

28,466

 

 

 

28,423

 

 

 

27,705

 

 

 

28,203

 

 

 

27,272

 

Shares used to compute Non-GAAP diluted net income per share

 

 

28,466

 

 

 

28,423

 

 

 

27,705

 

 

 

28,203

 

 

 

27.272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contacts

Investor and media inquiries:

The Blueshirt Group
Gary Dvorchak, CFA
In US +1 323 240 5796
In China +86 (138) 1079-1480
[email protected]

Yujia Zhai
The Blueshirt Group
[email protected]
+1 (860) 214-0809

Exhibit 99.2


Alpha and Omega Semiconductor Limited
Prepared Remarks for the Investor Conference Call
for the Quarter Ended and Fiscal Year Ended June 30, 2022

August 10, 2022

Gary Dvorchak (Moderator)

Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor’s conference call to discuss fiscal 2022 fourth quarter financial results.  I am Gary Dvorchak, Investor Relations representative for AOS.  With me today are Dr. Mike Chang, our CEO, Stephen Chang, our President, and Yifan Liang, our CFO.  This call is being recorded and broadcast live over the Web.  A replay will be available for seven days following the call via the link in the Investor Relations section of our website.

Our call will proceed as follows.  Mike will begin with strategic highlights.  Then, Stephen will provide business updates and a detailed segment report.  After that, Yifan will review the financial results and provide guidance for the September quarter.  Finally, we will have the question-and-answer session.

The earnings release was distributed over wire services today, August 10, 2022, after the close of market.  The release is also posted on the company's website.  Our earnings release and this presentation include non-GAAP financial measures.  We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures that we provide. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release.

We remind you that during this conference call, we will make certain forward-looking statements, including discussions of the business outlook and financial projections.  These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations.  For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC.  We assume no obligations to update the information provided in today's call.

Now, I will turn the call over to our CEO, Dr. Mike Chang, to provide strategic highlights.  Mike?

Mike Chang (Chief Executive Officer)

Thank you, Gary. I would like to welcome everyone to today's call. It is good to be speaking with all of you again.

Our fiscal Q4 was another strong quarter despite the challenge posed by the COVID lockdown in Shanghai.  Once again, we outperformed our guidance midpoint. Revenue was $194 million, growing 9% year-over-year. Non-GAAP gross margin was 33.8% and non-GAAP EPS was $0.95.

I am very proud of our people’s ability and determination to execute each quarter despite the uncertainty and challenges.  As you may remember, in early April, our Shanghai packaging and testing facilities were forced to shut down due to the city-wide COVID lockdown.  Our ability to assemble and ship products was severely limited for most of April. Once the lockdown eased and we were cleared to restart operations at the end of April, it took time for our assembly lines to return to full utilization.  It also took time for logistical support and supply chains to ramp up to full functional capacity. Our Shanghai facilities are mostly back to normal and are currently operating at full capacity. We are taking careful steps to reduce the risk of new COVID infections in compliance with local guidelines. I am most proud of and grateful for the great collaboration and unwavering dedication that our people, especially our Shanghai team, demonstrated during these challenging times. Our employees worked as one team relentlessly pressing on our mission and values, which is to help our customers succeed. I want to say thank you to our employees once again for their selfless devotion, loyalty and support.

Looking to the rest of 2022, we are seeing inventory corrections happening in certain consumer end markets.  While we are not immune to current global market conditions, as of today our demand and backlog are still higher than our overall capacity. Whether we are in an up cycle or down cycle, we always focus on the basics and strengthen the foundation to speed up future growth.

I founded AOS in September 2000, just as the internet bubble crashed and led to recession. This happened to be the best timing for a startup. Over our 22 years of history, the AOS team has navigated many semiconductor cycles, surviving and thriving even when we were far smaller than we are now.

Today, we are stronger than ever in terms of our leading technology, more diversified product portfolio, Tier 1 customer base in all our business segments, expanding manufacturing capability and supply chain, strong balance sheet, and dedicated and experienced management team.

We are confident that we can navigate the current economic environment.  More importantly, we are confident that near-term cyclical fluctuations will not overshadow the substantial long-term opportunities for our business.  The electrification of everything is just getting started and our power products sit at the forefront of that trend.  I believe our strategic position within our sector is resilient, and our customers list and market share at Tier 1 customers is the highest it has ever been.  We are confident we can achieve our one billion dollar annual revenue target in the next couple of years, and are actively investing to position ourselves to achieve even more after that.

Thank you. I will now turn the call over to Stephen for an update on our business and a detailed segment report. Stephen?

Stephen Chang (President)

Thank you, Mike, and good afternoon, everyone.  I will start with an update on our business and then provide color on our segment results.

As a reminder, in the June quarter, demand for our products was higher than our total capacity. The modest slowdown in our growth was caused by the very limited operations at our Shanghai packaging and assembly facilities due to the government imposed COVID lockdowns in the month of April. However, we still delivered solid results, which highlights our strong execution and the benefits of our diversified manufacturing capacity.

In the coming September quarter, as Mike mentioned, we are seeing some softness in consumer end markets due to inventory corrections. However, as of now, our backlog remains higher than our capacity, so our customers remain on allocation. Moreover, we believe a few aspects of our business make us more resilient in this type of environment, which we are highly proud of:

•
First, since we own the majority of our own manufacturing, we are able to quickly shift wafer capacity to other parts of the business where demand remains strong and therefore are at lower risk of costly inventory build-up that later may result in write-offs or selling at discounted prices.

•
Second, another trend that is worth mentioning is that most of our Tier 1 customers have remained resilient thus far. This benefits us as our share at our Tier 1 customers is at the highest level ever in our history.

•
Third, AOS has been upgrading our products to address higher performance sockets with differentiated solutions.  These are the types of products that remain on allocation now.

For the coming September quarter, with our Shanghai facility back in full operation, we expect high single-digit sequential growth. We expect September quarter revenue to be $210 million at the midpoint.

Now, let me drill down into each of our business segments.  Unless otherwise noted, the following figures refer to the June quarter of 2022.

Starting with Computing. Revenue was up 15.6% year-over-year, down 0.5% sequentially and represented 46% of total revenue. The year-over-year growth was driven by continued strong demand in notebooks, particularly from OEM customers that have a higher concentration of their businesses serving commercial laptop applications.  In addition, high-end PCs and gaming desktops were also strong. The sequential decline was mainly due to the shutdown of our facilities in Shanghai.

Looking ahead, in the September quarter we expect Computing to be flat to slightly down sequentially as our customers rebalance their inventories for a weaker end market.  Our total revenue won’t be affected however, as we are able to quickly shift wafer capacity to other parts of the business.

Turning to the Consumer segment, revenue declined 1.7% year-over-year and 16.9% sequentially, and represented 19% of total revenue. Nearly all of the revenue decline was attributable to the Shanghai lockdown, as the largest end market applications in this segment -- such as Home Appliances and Gaming are sourced solely from our Shanghai factory.

Looking ahead, we expect the Consumer segment to recover double digits sequentially on strong demand in Gaming and catchup shipments. We are expecting record Gaming volumes particularly from the #1 gaming console manufacturer, where we have leading share. Home Appliances are also expected to recover sequentially on catchup shipments, but in general is softer as overall demand has weakened, driven by inflation-induced slowdowns in real estate and consumer spending.

Next, let’s discuss the Communications segment, which was up 32% year-over-year and 2.9% sequentially and represented 15% of total revenue. This segment delivered strong year-over-year growth due to share gains at major Chinese smartphone OEMs, particularly in their premium tier models, which are still in shortage. These share gains more than offset an overall softening of the smartphone market in the quarter. This is due to our ability to serve the high-end market with our high-performance battery protection products as well as strong partnerships with our customers.

In the September quarter, we expect mid-single-digit revenue growth as we prepare for a launch from one of our major smartphone OEMs. AOS maintains high share in high-end models in all three of our markets in U.S., Korea and China.

Now, let’s talk about our last segment, Power Supply and Industrial, which accounted for 18% of total revenue. This segment was down 1.1% year-over-year and 4.8% sequentially.  The decline was mainly due to our intentional decision to deprioritize shipping quick charger parts into our distributors. With a slowing smartphone market, we want to manage channel inventory levels. Shipments for Solar applications and Power tools remained steady. For the September quarter, we anticipate this segment to grow low double digits sequentially, mostly from share gains in quick chargers at a major phone maker and growth in Power tools.

In closing, we are aware of the growing uncertainty in the macroeconomic environment. However, we still expect to grow as we focus on our long-term plan. We continue to execute our product and technology roadmaps, enhancing our diversified manufacturing capability and deepening strategic customer relationships, which should result in share gains and SAM expansion. Our $210 million September revenue guidance puts us well over an $800 million annual revenue run rate. We remain confident in our target of $1 billion of annual revenue in 2024.

With that, I will now turn the call over to Yifan for a discussion of our fiscal fourth quarter financial results and our outlook for the next quarter.

Yifan Liang (Chief Financial Officer)

Thank you, Stephen.  Good afternoon everyone and thank you for joining us.

Revenue for the quarter was $194.0 million, up 9.4% year-over-year and down 4.6% sequentially.  Given the COVID restrictions in Shanghai, we are pleased that we achieved better than our guidance midpoint.  Please recall that the March quarter was a record setting quarter and we expect another record quarter in September.

In terms of product mix, DMOS revenue was $138.9 million, up 9.2% year-over-year and down 1.2% sequentially.  Power IC revenue was $53.1 million, up 14.2% from a year ago and down 12.0% from the prior quarter.  Assembly service revenue was $2.0 million, as compared to $2.2 million last quarter and $3.6 million for the same quarter last year.

Non-GAAP gross margin was 33.8%, compared to 34.9% a year ago and 36.7% in the prior quarter.  Again, the decrease in non-GAAP gross margin was primarily impacted by the production shut-down at our Shanghai assembly and test facilities in April.

Non-GAAP operating expenses were $36.7 million, compared to $34.0 million for the prior quarter and $32.8 million last year.  The quarter-over-quarter increase in non-GAAP operating expenses was largely due to higher R&D engineering expenses and addition of headcount.  We continued to invest in R&D to fuel our future growth.

In sum, non-GAAP quarterly EPS was $0.95 per share, compared to $1.34 for last quarter and $0.95 a year ago.

On the fiscal year basis, revenue for the year 2022 was $777.6 million, up 18.4% year-over-year.  Non-GAAP gross margin was 35.6%, representing a year-over-year improvement of 370 basis points.  Non-GAAP operating expenses were $139.3 million, up 12.5% from last year.  Non-GAAP EPS for the year was $4.56, as compared to last year’s $2.93, an increase of 56%.

Moving on to cash flow, GAAP operating cash flow was $25.7 million, which included $3.4 million of net customer deposits.  By comparison, operating cash flow in the prior quarter was $61.8 million, which included $6.4 million of net customer deposits.  Operating cash flow on AOS stand-alone basis a year ago was $32.6 million, which included $10 million of customer deposits.  Consolidated EBITDAS was $36.9 million, compared to $48.4 million last quarter and $40.9 million a year ago.

For the fiscal year, cash flow from operations was $203.4 million, as compared to $114.3 million for the prior year.  Consolidated EBITDAS was $177.2 million as compared to $136.4 million a year ago.

Let’s move on to the balance sheet.

We completed the June quarter with a cash balance of $314.4 million, compared to $323.1 million at the end of the March quarter.  The cash balance a year ago was $164.9 million, excluding $37.5 million at the JV Company.

The bank borrowing balance at the end of June was $63.0 million, compared to $65.2 million a quarter ago.

Net trade receivables were $65.7 million at the end of the June quarter, as compared to $39.2 million at the end of the prior quarter and $35.8 million for the same quarter last year.  The quarter-over-quarter increase was due to the uneven shipments toward the second half of the quarter as a result of the shutdown of our Shanghai assembly and test facilities in April.  Days Sales Outstanding for the June quarter were 26 days, compared to 28 days in the prior quarter.

Net inventory was $158.0 million at quarter-end, up from $143.5 million last quarter and up from $154.3 million in the prior year.  The quarter-over-quarter increase was mainly due to increased wafer inventory as a result of lower wafer consumption at our Shanghai assembly and test facilities because of the COVID shut-down.  Average days in inventory were 104 days, compared to 94 days in the prior quarter.

Finally, Property, Plant and Equipment was $318.7 million, up from $245.8 million last quarter.  The fixed assets balance a year ago was $174.5 million, excluding $262.5 million at the JV Company.  An update on our Oregon fab expansion project – the cleanroom expansion has been completed and a good portion of the equipment was installed.   However, our equipment installation contractors have experienced a shortage of skilled labor and certain materials.  Therefore, we expect the project to be delayed by a quarter, and we currently anticipate additional capacity to come online in the March quarter of 2023.

Now, I would like to discuss September quarter guidance.

We expect:

•
Revenue to be approximately $210 million, plus or minus $3 million.
•
GAAP gross margin to be 33.8% plus or minus 1%.  We anticipate non-GAAP gross margin to be 35.0% plus or minus 1%.  Non-GAAP gross margin guidance excludes $0.8 million amortization of acquired IP and $1.8 million of estimated share-based compensation charges.
•
GAAP operating expenses to be in the range of $45.7 million plus or minus $1 million.  Non-GAAP operating expenses are expected to be in the range of $36.5 million plus or minus $1 million.  Non-GAAP operating expenses exclude $9.0 million of estimated share-based compensation charges and $0.2 million of estimated legal expenses relating to the government investigation.
•
Interest expense to be approximately $1.2 million, and
•
Income tax expense to be in the range of $1.2 million to $1.4 million.


With that, we will now open the call for questions.  Operator, please start the Q&A session.

Closing:
This concludes our earnings call today.  Thank you for your interest in AOS and we look forward to talking to you again next quarter.

Special Notes Regarding Forward Looking Statements

This script contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance.  These forward looking statements include, without limitation, statements relating to projected amount of revenues, gross margin, operating expenses, operating income, tax expenses, net income, noncontrolling interest and share-based compensation expenses, production ramp up costs and annual revenue and growth objectives; statements regarding expected financial performance of market segments; the macroeconomic conditions and our ability to mitigate economic downturns; the global capacity constraint; the lockdown in Shanghai and suspension of operations at our packaging facilities in Shanghai, and our ability to resume full production; our ability and strategy to develop new products; the Oregon fab expansion project and anticipated timing; projected annual revenue target; fluctuation in customer demand and market segments; our share of Tier 1 customer, our ability to control and maintain manufacturing capacity; the execution of our business plan and strategies; and other information regarding the future development of our business. Forward looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 pandemic on our business operation; our lack of control over the JV Company; our ability to develop and succeed in the digital power business; difficulties and challenges in executing our diversification strategy into different market segments; new tariffs on goods from China; ordering pattern and seasonality; our ability to introduce or develop new and enhanced products that achieve market acceptance; decline of the PC industry and our ability to respond to such decline; the actual product performance in volume production, the quality and reliability of our product, our ability to achieve design wins, the general business and economic conditions, the state of semiconductor industry and seasonality of our markets, our ability to maintain factory utilization at a desirable level; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 to be filed by AOS. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements.  Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements.  You should not place undue reliance on these forward-looking statements.  All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law.