8-K
ALPHA & OMEGA SEMICONDUCTOR Ltd (AOSL)
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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): November 6, 2023
Alpha and Omega Semiconductor Limited
(Exact name of registrant as specified in its charter)
| Bermuda | 001-34717 | 77-0553536 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission<br><br> <br>File Number) | (I.R.S. Employer<br><br> <br>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 November 6, 2023, Alpha and Omega Semiconductor Limited (the “Company”) issued a press release regarding its financial results for the fiscal first quarter of 2024 ended September 30, 2023. 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. | |
|---|---|---|
| (d) | Exhibits. | |
| --- | --- | --- |
| 99.1 | Press Release dated November 6, 2023 | |
| 99.2 | Script of Prepared Remarks for Earnings Call |
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: November 6, 2023
| 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 the Fiscal First Quarter of 2024 Ended September 30, 2023
SUNNYVALE, Calif.--(BUSINESS WIRE)--November 6, 2023--Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL) today reported financial results for the fiscal first quarter of 2024 ended September 30, 2023.
The results for the fiscal first quarter of 2024 ended September 30, 2023 were as follows:
| GAAP Financial Comparison | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Quarterly | |||||||||
| (in millions, except percentage and per share data) | |||||||||
| (unaudited) | |||||||||
| Three Months Ended | |||||||||
| September 30, <br><br> 2023 | June 30, <br><br> 2023 | September 30, <br><br> 2022 | |||||||
| Revenue | $ | 180.6 | $ | 161.5 | $ | 208.5 | |||
| Gross Margin | 28.2 | % | 27.6 | % | 34.1 | % | |||
| Operating Income | $ | 9.4 | $ | 2.6 | $ | 25.5 | |||
| Net Income (Loss) | $ | 5.8 | $ | (1.1 | ) | $ | 26.0 | ||
| Net Income (Loss) Per Share - Diluted | $ | 0.19 | $ | (0.04 | ) | $ | 0.88 | ||
| Non-GAAP Financial Comparison | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Quarterly | |||||||||
| (in millions, except percentage and per share data) | |||||||||
| (unaudited) | |||||||||
| Three Months Ended | |||||||||
| September 30, 2023 | June 30, 2023 | September 30, 2022 | |||||||
| Revenue | $ | 180.6 | $ | 161.5 | $ | 208.5 | |||
| Non-GAAP Gross Margin | 28.8 | % | 28.5 | % | 35.4 | % | |||
| Non-GAAP Operating Income | $ | 11.2 | $ | 6.9 | $ | 37.1 | |||
| Non-GAAP Net Income | $ | 9.9 | $ | 5.7 | $ | 35.2 | |||
| Non-GAAP Net Income Per Share - Diluted | $ | 0.33 | $ | 0.19 | $ | 1.20 |
The non-GAAP financial measures in the schedule above and under the section “Financial Results for Fiscal Q1 E nded September 30, 2023” below exclude the effect of share-based compensation expenses, amortization of purchased intangible, legal costs related to government investigation, equity method investment (loss) income from equity investee, and income tax effect of non-GAAP adjustments in each of the periods presented. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.
Financial Results for Fiscal Q1 Ended September 30, 2023
Revenue was $180.6 million, an increase of 11.8% from the prior quarter and a decrease of 13.4% from the same quarter last year.
GAAP gross margin was 28.2%, up from 27.6% in the prior quarter and down from 34.1% in the same quarter last year.
Non-GAAP gross margin was 28.8%, up from 28.5% in the prior quarter and down from 35.4% in the same quarter last year.
GAAP operating expenses were $41.5 million, down from $42.0 million in the prior quarter and down from $45.6 million in the same quarter last year.
Non-GAAP operating expenses were $40.8 million, up from $39.1 million from last quarter and up from $36.6 million in the same quarter last year.
GAAP operating income was $9.4 million, up from $2.6 million of operating income in the prior quarter and down from $25.5 million of operating income in the same quarter last year.
Non-GAAP operating income was $11.2 million as compared to $6.9 million of operating income for the prior quarter and $37.1 million of operating income for the same quarter last year.
GAAP net income per diluted share was $0.19, compared to $0.04 net loss per share for the prior quarter, and $0.88 net income per share for the same quarter a year ago.
Non-GAAP net income per share was $0.33 compared to $0.19 net income per share for the prior quarter and $1.20 net income per share for the same quarter a year ago.
Consolidated cash flow provided by operating activities was $13.8 million, as compared to negative $28.2 million in the prior quarter.
The Company closed the quarter with $193.6 million of cash and cash equivalents.
AOS Chief Executive Officer Stephen Chang commented, “We delivered solid fiscal Q1 results driven by an encouraging rebound in PC and smartphone shipments for fall device launches and the holiday season. Looking forward, we remain cautious about a sustained broader recovery as we are seeing signs of demand constraints in other end markets, which are affected by the persistent high-interest rate environment and geopolitical uncertainties.”
Mr. Chang continued, “Despite ongoing market challenges, we are focused on positioning AOS towards long-term growth by extending the reach of our business into new applications and broadening our product portfolio to address increasing global power trends. We also aim to deepen our penetration in our core markets with integrated solutions and drive higher BOM content. We believe the fundamentals of our business remain strong driven by record Tier 1 customer partnerships and market share across many of our end markets and we continue to expect to navigate the current environment better than the broader market that we serve.”
Business Outlook for Fiscal Q2 Ending December 31, 2023
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.
Our expectations for the second quarter of fiscal year 2024 are as follows:
Revenue to be approximately $165 million, plus or minus $10 million.
GAAP gross margin to be 27.1%, plus or minus 1%. We anticipate non-GAAP gross margin to be 28.5%, plus or minus 1%.
GAAP operating expenses to be in the range of $48.0 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $40.3 million, plus or minus $1 million.
Interest expense to be approximately $1.1 million, and
Income tax expense to be in the range of $0.8 million to $1.2 million.
Conference Call and Webcast
AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal first quarter ended September 30, 2023 today, November 6, 2023 at 2:00 p.m. PT / 5:00 p.m. ET. To listen to the live conference call, please dial +1 (833) 470-1428 or +1 (404) 975-4839 if dialing from outside the United States and Canada. The access code is 198548. 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, market trends in the semiconductor industry; our ability to mitigate economic downturns; seasonality of our business, our ability to penetrate new markets and achieve long-term growth, our annual revenue target, projected amount of revenue, gross margin, operating income (loss), income tax expenses, net income (loss), and share-based compensation expenses, non-GAAP gross margin, non-GAAP operating expenses, income tax expenses, our ability to continue to win and acquire market share and other information under the section entitled “Business Outlook for Fiscal Q2 Ending December 31, 2023”. 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 state of semiconductor industry and seasonality of our markets; government policies on our business operations in China; our lack of control over the joint venture in China; difficulties and challenges in executing our diversification strategy into different market segments; 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; 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, 2023 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.
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 expenses, operating income (loss), net income (loss), diluted earnings per share ("EPS") and EBITDAS. These supplemental measures exclude, among other items, share-based compensation expenses, legal and profession fees related to government investigation, amortization of purchased intangible, income tax effect of non-GAAP adjustments and equity method investment (loss) income from equity investee. We also disclose certain non-GAAP financial measures in our guidance for the next quarter, including non-GAAP gross margin and operating expenses. 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 amount of income tax effect of non-GAAP adjustments in the non-GAAP net income (loss) 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 providing 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 technologies, product design, and advanced packaging know-how to develop high performance power management solutions. AOS’ portfolio of products targets high-volume applications, including portable computers, graphic cards, flat panel TVs, home appliances, 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 condensed 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 | |||||||||
| September 30, <br><br> 2023 | June 30, <br><br> 2023 | September 30, <br><br> 2022 | |||||||
| Revenue | $ | 180,633 | $ | 161,525 | $ | 208,476 | |||
| Cost of goods sold | 129,708 | 116,944 | 137,348 | ||||||
| Gross profit | 50,925 | 44,581 | 71,128 | ||||||
| Gross margin | 28.2 | % | 27.6 | % | 34.1 | % | |||
| Operating expenses: | |||||||||
| Research and development | 22,113 | 22,711 | 21,389 | ||||||
| Selling, general and administrative | 19,431 | 19,258 | 24,205 | ||||||
| Total operating expenses | 41,544 | 41,969 | 45,594 | ||||||
| Operating income | 9,381 | 2,612 | 25,534 | ||||||
| Other income (loss), net | 26 | (298 | ) | (16 | ) | ||||
| Interest income (expense), net | 229 | (87 | ) | (608 | ) | ||||
| Net income before income taxes | 9,636 | 2,227 | 24,910 | ||||||
| Income tax expense | 1,138 | 387 | 1,374 | ||||||
| Net income before income (loss) from equity method investment | 8,498 | 1,840 | 23,536 | ||||||
| Equity method investment income (loss) from equity investee | (2,712 | ) | (2,944 | ) | 2,502 | ||||
| Net income (loss) | $ | 5,786 | $ | (1,104 | ) | $ | 26,038 | ||
| Net income (loss) per common share | |||||||||
| Basic | $ | 0.21 | $ | (0.04 | ) | $ | 0.95 | ||
| Diluted | $ | 0.19 | $ | (0.04 | ) | $ | 0.88 | ||
| Weighted average number of common shares used to compute net income (loss) per share | |||||||||
| Basic | 27,693 | 27,598 | 27,391 | ||||||
| Diluted | 29,786 | 27,598 | 29,423 |
| Alpha and Omega Semiconductor Limited | |||||
|---|---|---|---|---|---|
| Condensed Consolidated Balance Sheets | |||||
| (in thousands, except par value per share) | |||||
| (unaudited) | |||||
| June 30, 2023 | |||||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 193,576 | $ | 195,188 | ||
| Restricted cash | 206 | 415 | |||
| Accounts receivable, net | 34,403 | 22,420 | |||
| Inventories | 187,751 | 183,247 | |||
| Other current assets | 23,993 | 22,666 | |||
| Total current assets | 439,929 | 423,936 | |||
| Property, plant and equipment, net | 354,229 | 357,831 | |||
| Operating lease right-of-use assets | 26,582 | 24,349 | |||
| Intangible assets, net | 5,953 | 6,765 | |||
| Equity method investment | 357,878 | 366,617 | |||
| Deferred income tax assets | 518 | 536 | |||
| Other long-term assets | 21,278 | 19,703 | |||
| Total assets | 1,206,367 | $ | 1,199,737 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable | 52,268 | $ | 50,775 | ||
| Accrued liabilities | 83,948 | 79,533 | |||
| Payable related to equity investee, net | 20,115 | 11,950 | |||
| Income taxes payable | 4,691 | 5,546 | |||
| Short-term debt | 11,483 | 11,434 | |||
| Deferred revenue | 9,181 | 8,073 | |||
| Finance lease liabilities | 884 | 867 | |||
| Operating lease liabilities | 4,977 | 4,383 | |||
| Total current liabilities | 187,547 | 172,561 | |||
| Long-term debt | 35,470 | 38,360 | |||
| Income taxes payable - long-term | 2,871 | 2,817 | |||
| Deferred income tax liabilities | 26,083 | 27,283 | |||
| Finance lease liabilities - long-term | 2,989 | 3,216 | |||
| Operating lease liabilities - long-term | 22,155 | 20,544 | |||
| Other long-term liabilities | 43,973 | 51,037 | |||
| Total liabilities | 321,088 | 315,818 | |||
| Shareholders' Equity: | |||||
| Preferred shares, par value 0.002 per share: | |||||
| Authorized: 10,000 shares; issued and outstanding: none at September 30, 2023 and June 30, 2023 | — | — | |||
| Common shares, par value 0.002 per share: | |||||
| Authorized: 100,000 shares; issued and outstanding: 34,903 shares and 27,746 shares, respectively at September 30, 2023 and 34,811 shares and 27,654 shares, respectively at June 30, 2023 | 70 | 70 | |||
| Treasury shares at cost: 7,157 shares at September 30, 2023 and 7,157 shares at June 30, 2023 | (79,365 | ) | (79,365 | ) | |
| Additional paid-in capital | 330,015 | 329,034 | |||
| Accumulated other comprehensive income | (13,518 | ) | (8,111 | ) | |
| Retained earnings | 648,077 | 642,291 | |||
| Total shareholders' equity | 885,279 | 883,919 | |||
| Total liabilities and shareholders' equity | 1,206,367 | $ | 1,199,737 |
All values are in US Dollars.
| Alpha and Omega Semiconductor Limited | ||||||
|---|---|---|---|---|---|---|
| Selected Cash Flow Information | ||||||
| ( in thousands, unaudited) | ||||||
| Three Months Ended September 30, | ||||||
| 2023 | 2022 | |||||
| Net cash provided by operating activities | $ | 13,823 | $ | 36,675 | ||
| Net cash used in investing activities | (12,510 | ) | (39,974 | ) | ||
| Net cash provided by (used in) financing activities | (2,999 | ) | 5,462 | |||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (135 | ) | (417 | ) | ||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (1,821 | ) | 1,746 | |||
| Cash, cash equivalents and restricted cash at beginning of period | 195,603 | 314,651 | ||||
| Cash, cash equivalents and restricted cash at end of period | $ | 193,782 | $ | 316,397 |
| 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 | |||||||||
| September 30, <br><br> 2023 | June 30, <br><br> 2023 | September 30, <br><br> 2022 | |||||||
| GAAP gross profit | $ | 50,925 | $ | 44,581 | $ | 71,128 | |||
| Share-based compensation | 212 | 592 | 1,788 | ||||||
| Amortization of purchased intangible | 812 | 812 | 812 | ||||||
| Non-GAAP gross profit | $ | 51,949 | $ | 45,985 | $ | 73,728 | |||
| Non-GAAP gross margin as a % of revenue | 28.8 | % | 28.5 | % | 35.4 | % | |||
| GAAP operating expense | $ | 41,544 | $ | 41,969 | $ | 45,594 | |||
| Share-based compensation | 706 | 2,777 | 8,808 | ||||||
| Legal costs related to government investigation | 52 | 99 | 142 | ||||||
| Non-GAAP operating expense | $ | 40,786 | $ | 39,093 | $ | 36,644 | |||
| GAAP operating income | $ | 9,381 | $ | 2,612 | $ | 25,534 | |||
| Share-based compensation | 918 | 3,369 | 10,596 | ||||||
| Amortization of purchased intangible | 812 | 812 | 812 | ||||||
| Legal costs related to government investigation | 52 | 99 | 142 | ||||||
| Non-GAAP operating income | $ | 11,163 | $ | 6,892 | $ | 37,084 | |||
| Non-GAAP operating margin as a % of revenue | 6.2 | % | 4.3 | % | 17.8 | % | |||
| GAAP net income (loss) | $ | 5,786 | $ | (1,104 | ) | $ | 26,038 | ||
| Share-based compensation | 918 | 3,369 | 10,596 | ||||||
| Amortization of purchased intangible | 812 | 812 | 812 | ||||||
| Equity method investment (income) loss from equity investee | 2,712 | 2,944 | (2,502 | ) | |||||
| Legal costs related to government investigation | 52 | 99 | 142 | ||||||
| Income tax effect of non-GAAP adjustments | (406 | ) | (397 | ) | 119 | ||||
| Non-GAAP net income | $ | 9,874 | $ | 5,723 | $ | 35,205 | |||
| Non-GAAP net margin as a % of revenue | 5.5 | % | 3.5 | % | 16.9 | % | |||
| GAAP net income (loss) | $ | 5,786 | $ | (1,104 | ) | $ | 26,038 | ||
| Share-based compensation | 918 | 3,369 | 10,596 | ||||||
| Amortization and depreciation | 12,951 | 12,045 | 9,352 | ||||||
| Equity method investment (income) loss from equity investee | 2,712 | 2,944 | (2,502 | ) | |||||
| Interest expense (income), net | (229 | ) | 87 | 608 | |||||
| Income tax expense | 1,138 | 387 | 1,374 | ||||||
| EBITDAS | $ | 23,276 | $ | 17,728 | $ | 45,466 | |||
| GAAP diluted net income (loss) per share | $ | 0.19 | $ | (0.04 | ) | $ | 0.88 | ||
| Share-based compensation | 0.03 | 0.11 | 0.36 | ||||||
| Amortization of purchased intangible | 0.03 | 0.03 | 0.03 | ||||||
| Equity method investment (income) loss from equity investee | 0.09 | 0.10 | (0.09 | ) | |||||
| Legal costs related to government investigation | 0.00 | 0.00 | 0.01 | ||||||
| Income tax effect of non-GAAP adjustments | (0.01 | ) | (0.01 | ) | 0.01 | ||||
| Non-GAAP diluted net income per share | $ | 0.33 | $ | 0.19 | $ | 1.20 | |||
| Shares used to compute GAAP diluted net income (loss) per share | 29,786 | 27,598 | 29,423 | ||||||
| Shares used to compute Non-GAAP diluted net income (loss) per share | 29,786 | 29,382 | 29,423 |
Contacts
Investor and media inquiries:
The Blueshirt Group
Gary Dvorchak, CFA
In US +1 323 240 5796
In China +86 \(138\) 1079-1480
gary@blueshirtgroup.com
Yujia Zhai
The Blueshirt Group
Yujia@blueshirtgroup.com
+1 \(860\) 214-0809
Exhibit 99.2
Alpha and Omega Semiconductor Limited
Prepared Remarks for the Investor Conference Call
for the Quarter Ended September 30, 2023
November 6, 2023
Yujia Zhai
Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor’s conference call to discuss fiscal 2024 first quarter financial results. I am Yujia Zhai, Investor Relations representative for AOS. With me today are Stephen Chang, our CEO, 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 today. Stephen will begin business updates including strategic highlights, and a detailed segment report. After that, Yifan will review the financial results and provide guidance for the December quarter. Finally, we will have the Q&A session.
The earnings release was distributed over wire today, November 6, 2023, after the market close. 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. 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, Stephen Chang. Stephen?
Stephen Chang
Thank you, Yujia, and good afternoon, everyone.
I will begin today with a high-level overview of our results and then jump into segment details.
We delivered fiscal Q1 results in-line with our guidance. Revenue was $180.6 million, Non-GAAP gross margin was 28.8%, and non-GAAP EPS was $0.33. These results were driven by strong shipments across notebooks, desktop computing and smartphones for fall device launches and the Q4 holiday season. I am pleased that our team delivered solid execution amid macroeconomic headwinds and inventory corrections in some end markets.
We have been managing our business through various cycles and coping with an ever-changing business environment, but our principle remains unchanged: AOS is committed to building towards long-term growth. We are steadily extending the reach of our business into future and new applications and broadening our product portfolio to address increasing global power trends. As an example, we are leveraging our core technology IP and strengths in advanced computing, battery, motor and power supply and continue to invest in new adjacent markets like datacenters for AI, automotive, and energy generation. In addition, we are taking products deeper into our existing core markets with more integrated solutions that will drive higher BOM content. By investing in new adjacent markets as well as going deeper into our core markets, we believe we will be well positioned to emerge stronger than ever on the other side of this cycle.
The rebound in PCs and smartphones is encouraging following multiple quarters of inventory correction. However, we remain cautious about a sustained broader recovery as we are seeing signs of demand constraints in other end markets, which are feeling the effects of the persistent high-interest rate environment and geopolitical uncertainties. Moreover, Gaming, which has been a significant revenue driver for us is now going through an inventory correction as we indicated last quarter.
While we cannot be immune to the macroeconomic headwinds, it is important to reiterate that our core fundamentals remain strong. Many of our strategic investments over the past years have better positioned us for sustainable growth. We are excited to have a record number of Tier 1 customer partnerships and growing market share in strategic applications across many of our end markets. We continue to expect to navigate the current environment better than the broader market that we serve.
With that, let me now cover our segment results and provide some guidance by segment for the next quarter.
Starting with Computing. September quarter revenue was down 21.2% year-over-year but up 35.1% sequentially and represented 38.9% of total revenue. These results were driven by solid recovery in shipments across notebook, tablets and desktop computing applications. The recovery has been driven by high-end driver ICs and MOSFETs for powering CPUs. Looking forward into the December quarter, we expect this segment be down low-single-digits following a strong September quarter.
Turning to the Consumer segment, September quarter revenue was down 31.3% year-over-year and down 28.9% sequentially and represented 17.2% of total revenue. As we indicated last quarter, Gaming is going through an inventory correction after an extremely strong 12 months of shipments into the number one console manufacturer. Similar to what we saw in PCs and Smartphones earlier this year, given the speed of the current correction, we believe demand will revert back to a new normal in a couple quarters, factoring in that the console is now in its mid-life part of the platform cycle. However, we do see opportunities to increase BOM content within the current console platform as part of its refresh next year. Longer term, our relationship with this customer is very strong and we are already engaged in discussions for their next model design. For the December quarter, we anticipate a further mid-20% decline in this segment.
Next, let’s discuss the Communications segment, revenue in the September quarter was down 1.3% year-over-year but up 80.2% sequentially, and represented 17.2% of total revenue. These results were driven by strong shipments to the number one U.S. smartphone manufacturer for their fall phone launch and continued strong demand from Chinese smartphone OEMs for their high-end devices. Looking ahead, we anticipate this segment to remain at current healthy levels driven by continued strong shipments to Chinese OEMs ahead of their winter and spring launches.
Now, let’s talk about our last segment, Power Supply and Industrial, which accounted for 23.1% of total revenue. September quarter revenue was slightly below our prior expectations, increasing 2.1% year-over-year and 0.5% sequentially. These results were driven by strong shipments for quick chargers for peak season to our Tier 1 U.S. smartphone customer but offset by weakness in Power Tools. For the December quarter, we expect this segment to decline in the low-teens sequentially, mainly due to reduced quick chargers following the peak season and lower solar demand.
In closing, we delivered a solid fiscal Q1. We are closely monitoring market dynamics and macro headwinds. However, our fundamentals are strong and we are focused on positioning the company towards growth beyond our $1 billion revenue target on the other side of this cycle driven by our leading technology, more diversified product portfolio, Tier 1 customer base in all our business segments, and expanding manufacturing capability and supply chain.
With that, I will now turn the call over to Yifan for a discussion of our fiscal first 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 $180.6 million, up 11.8% sequentially and down 13.4% year-over-year.
In terms of product mix, DMOS revenue was $121.5 million, up 27% sequentially and down 16% over last year. Power IC revenue was $52.7 million, down 10.5% from the prior quarter and 15.4% from a year ago. Assembly service revenue was $0.7 million, as compared to $0.6 million last quarter and $1.6 million for the same quarter last year. License and engineering service revenue was $5.6 million for the quarter versus $6.3 million in the prior quarter.
Non-GAAP gross margin was 28.8%, compared to 28.5% in the prior quarter and 35.4% a year ago. The quarter-over-quarter increase in non-GAAP gross margin was mainly driven by the mix improvement.
Non-GAAP operating expenses were $40.8 million, compared to $39.1 million for the prior quarter and $36.6 million last year. The quarter-over-quarter increase was primarily due to higher R&D engineering expenses and professional service fees.
Non-GAAP quarterly EPS was $0.33, compared to $0.19 last quarter and $1.20 a year ago.
Moving on to cash flow. Operating cash flow was $13.8 million, including $8.6 million of repayment of customer deposits. By comparison, operating cash flow was negative $28.2 million in the prior quarter and positive $36.7 million a year ago. EBITDAS for the quarter was $23.3 million, compared to $17.7 million last quarter and $45.5 million for the same quarter last year.
Now let me turn to our balance sheet.
We completed the September quarter with a cash balance of $193.6 million, compared to $195.2 million at the end of last quarter.
Net trade receivables were $34.4 million compared to $22.4 million at the end of the prior quarter. Days Sales Outstanding were 18 days for the quarter versus 19 days for the prior quarter.
Net inventory was $187.8 million at quarter-end compared to $183.2 million at the end of the prior quarter. Average days in inventory were 129 days, compared to 140 days in the prior quarter.
CapEx for the quarter was $12.5 million, compared to $19.2 million for the prior quarter. We expect CapEx for the December quarter to range from $10 to $15 million.
Now, I would like to discuss December quarter guidance.
We expect:
| • | Revenue to be approximately $165 million, plus or minus $10 million. |
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| • | GAAP gross margin to be 27.1%, plus or minus 1%. We anticipate non-GAAP gross margin to be 28.5%, plus or minus 1%. |
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| • | GAAP operating expenses to be in the range of $48.0 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $40.3 million, plus or minus $1 million. |
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| • | Interest expense to be approximately $1.1 million, and |
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| • | Income tax expense to be in the range of $0.8 million to $1.2 million. |
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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, share-based compensation expenses, annual revenue and growth objectives; statements regarding expected financial performance of market segments; the macroeconomic conditions and our expectation of recovery of current downturn; our ability to mitigate risks relating to economic downturn; our ability and strategy to develop new products; 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 state of semiconductor industry and seasonality of our markets; 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, 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, 2023 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.