Montage Technology Group Limited (Nasdaq:MONT) ("Montage
Technology" and "Montage"), a global fabless provider of analog and
mixed-signal semiconductor solutions addressing the home
entertainment and cloud computing markets, today announced
financial results for the first quarter ended March 31, 2014.
First Quarter 2014 Highlights:
- Attained revenue of $35.6 million, an increase of 77.2 percent
year-over-year;
- Increased memory interface product revenue by 68.7 percent over
the fourth quarter;
- Reported gross margin of 63.9 percent, compared to 62.4 percent
last quarter;
- Reported operating margin of 22.4 percent, and on an adjusted
basis, non-GAAP operating margin of 35.9%, after excluding the
audit committee's independent review and follow-on offering costs
and non-cash expenses;
- Achieved net income per diluted share of $0.27, and non-GAAP
net income per diluted share of $0.32, after excluding non-cash
expenses;
- Completed an SEC-registered public follow-on offering with net
proceeds of $19.8 million; and
- Generated $6.2 million of cash from operations.
First Quarter 2014 Results
Commenting on the results, Howard Yang, Montage Technology's
chairman and chief executive officer stated, "Montage reported
first quarter results exceeding our original guidance, driven by
strong growth for our memory interface products and better than
typical seasonal set-top box product sales for the first quarter.
Gross margin improved 150 basis points to 63.9 percent primarily
due to more favorable product mix and an increase in the percentage
of sales from integrated SoC set-top box solutions. Additionally,
we achieved operating margin of 22.4% and an adjusted non-GAAP
operating profit margin of 35.9%, the highest in the Company's
history.
Stephen Tai, Montage Technology's president, added, "The
continued growth of our memory interface sales reflects the
increased demand for our LRDIMM products resulting from the rapid
adoption of Intel's high-performance Ivy Bridge platform by memory
module manufacturers and server OEMs. We believe our superior
performance and low power design have allowed Montage to become a
primary supplier to this market. During the quarter, we announced
production release of our fully qualified DDR4 RDIMM and LRDIMM
platforms for Intel's next-generation product family as we continue
to position Montage as a leading provider of DDR4 memory interface
solutions.
"In the set-top box market, our product revenue declined
sequentially due to the Chinese New Year holiday, but remained
above typical first quarter seasonality due to higher demand. We
believe that we remain well positioned in this market to expand our
market share with our highly integrated SoC products, while
continuing to increase our market opportunities in high definition
as well as cable and terrestrial applications with our new
products."
Total revenue for the first quarter 2014 was $35.6 million, an
increase of 0.4 percent compared to $35.4 million in the prior
quarter, and an increase of 77.2 percent compared to $20.1 million
in the first quarter 2013. Total revenue consisted of $26.8 million
from set-top box products, or 75.3 percent of revenue, and $8.8
million from memory interface products, or 24.7 percent of
revenue.
Gross profit for the first quarter 2014 was $22.7 million, or
63.9 percent of revenue, compared to $22.1 million, or 62.4 percent
of revenue in the prior quarter, and $12.3 million, or 61.3 percent
in the first quarter 2013. Operating expenses for the first quarter
2014 were $14.8 million, compared to $13.3 million in the prior
quarter and $8.8 million in the first quarter 2013. Operating
expenses in the first quarter included $2.6 million in expenses
related to the independent review process by the Company's audit
committee and $0.6 million in costs related to the Company's
follow-on offering.
Income from operations was $8.0 million, or 22.4 percent of
revenue, compared to $8.9 million, or 25.1 percent of revenue in
the prior quarter, and $3.5 million, or 17.5 percent of revenue in
the first quarter 2013. Non-GAAP income from operations, which
excludes stock based compensation and amortization was $9.5
million, or 26.8 percent of revenue. Adjusting for the audit
committee's independent review and follow-on offering costs, as
adjusted non-GAAP operating income would be $12.8 million or 35.9
percent of revenue.
First quarter 2014 net income was $7.8 million, or $0.27 per
diluted share, compared to fourth quarter 2013 net income of $8.9
million, or $0.31 per diluted share, and first quarter 2013 net
income of $3.3 million, or $0.11 per diluted share. The effective
tax rate for the first quarter 2014 was 7 percent, compared to an
effective tax rate of 10 percent for the first quarter of 2013.
Non-GAAP net income for the first quarter 2014 was $9.4 million,
or $0.32 per diluted share, which excluded $1.3 million of pre-tax
stock-based compensation expenses and $0.2 million of amortization
of acquired assets related to an assembled workforce in Taiwan.
This compares to non-GAAP net income of $10.4 million, or $0.37 per
diluted share, for the fourth quarter 2013 and $3.9 million, or
$0.13 per diluted share, for the first quarter 2013.
Cash, cash equivalents and short-term investments totaled
approximately $133.4 million as of March 31, 2014, compared to
approximately $107.7 million as of December 31, 2013. The Company
completed a follow-on public offering on February 5, 2014, raising
$19.8 million in net proceeds, after deducting underwriting
discounts and offering expenses. The Company generated $6.2 million
in cash flow from operations, compared to $12.6 million in cash
flow from operations in the prior quarter.
Business Outlook
For the second quarter of 2014, the Company expects revenue to
be in the range of $36.0 million to $40.0 million and gross margin
to be in the range of 59 percent to 61 percent.
Conference Call
Montage Technology will host a conference call on Tuesday, May
6, 2014 at 8:00 a.m. Eastern Time (8:00 p.m. in Shanghai, China) to
discuss its first quarter 2014 financial results. This call may
include forward looking statements and other material information
regarding Montage Technology's financial and operating results.
Investors and analysts may join the conference call by dialing
1-855-500-8701 and providing the confirmation code 32422980.
International callers may join the teleconference by dialing
1-845-675-0438, and callers in China may join by dialing
4001200654, entering the same confirmation code at the prompt. A
telephone replay of the call will be made available approximately
two hours after the call and will remain available for seven days.
The replay number is 1-855-452-5696 with a pass code of 32422980.
International callers should dial 1-646-254-3697 and enter the same
pass code at the prompt. Additionally, this conference call will be
broadcast live over the Internet and can be accessed by all
interested parties on the Investors section of Montage's website at
http://www.montage-tech.com. To listen to the live call, please go
to the Investors section of Montage's website and click on the
conference call link at least 15 minutes prior to the start of the
call to register, download and install any necessary audio
software. For those unable to participate during the live
broadcast, a replay will be available shortly after the call on
Montage's website for approximately 90 days.
About Montage Technology
Montage Technology is a global fabless provider of analog and
mixed-signal semiconductor solutions currently addressing the home
entertainment and cloud computing markets. In the home
entertainment market, Montage's technology platform enables the
company to design highly integrated end-to-end solutions with
customized software for set-top boxes. These solutions optimize
signal processing performance under demanding operating conditions
typically found in emerging marketing environments. In the cloud
computing market, Montage offers high performance, low power memory
interface solutions that enable memory intensive server
applications. Its technology platform approach allows Montage to
provide integrated solutions that meet the expanding needs of
customers through continuous innovation, efficient design and rapid
product development. For more information regarding Montage please
visit the company's website at www.montage-tech.com.
Forward Looking Statements
This press release contains forward-looking statements regarding
our future business expectations, including our revenue estimates
for the first quarter of 2014, and expected market opportunities,
market share growth and customer adoption, which are subject to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are only predictions
and may differ materially from actual results due to a variety of
factors including: our ability to sustain recent revenue growth
rates; our ability to address the evolving nature of the market for
semiconductor solutions; our ability to develop and maintain
relationships with industry and technology leaders, including the
largest OEMs; our ability to manage our future growth; Montage's
ability to continue to gain market share with its existing products
as well as newly released products in both the set-top box and
memory interface markets; additional expenses resulting from the
audit committee's independent review, expense from current or
future legal proceedings, and the Company's ability to regain
compliance with Nasdaq requirements by filing its Form 10-K for
2013. These and other potential risks and uncertainties that could
cause actual results to differ from the results predicted are more
fully detailed under the caption "Risk Factors" in our final
prospectus filed with the SEC on January 31, 2014, which is
available on our Investor Relations website at www.montage-tech.com
and on the SEC website at www.sec.gov. Additional information will
also be set forth in our Annual Report on Form 10-K for the year
ended December 31, 2013. In addition, please note that any
forward-looking statements contained herein are based on
assumptions that we believe to be reasonable as of the date of this
press release. We undertake no obligation to update these
statements as a result of new information or future events except
if required by law.
Company Contact: Montage Technology Mark Voll,
CFO P: 408-982-2780 or 86-21-6128-5678 x8618 E:
ir@montage-tech.com
Investor Relations Contact: Shelton Group
Leanne Sievers, EVP P: 949-224-3874 E: lsievers@sheltongroup.com
Matt Kreps, Managing Director P: 972-239-5119 ext. 125 E:
mkreps@sheltongroup.com
|
|
|
MONTAGE TECHNOLOGY
GROUP, LTD. |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(Dollar in thousands,
except per share amounts) |
(Unaudited) |
|
|
|
|
Three Months
Ended |
|
March 31, |
|
2014 |
2013 |
|
|
|
Revenues |
$ 35,587 |
$ 20,084 |
|
|
|
Cost of revenues |
12,840 |
7,769 |
|
|
|
Gross profit |
22,747 |
12,315 |
|
|
|
Operating expenses |
|
|
Research and development |
6,837 |
5,700 |
Sales, general and administrative |
7,923 |
3,100 |
Total operating
expenses |
14,760 |
8,800 |
|
|
|
Income from operations |
7,987 |
3,515 |
Interest income/Other income (expense),
net |
409 |
145 |
|
|
|
Income before income tax expenses |
8,396 |
3,660 |
Provision for income tax |
569 |
371 |
|
|
|
Net income |
$ 7,827 |
$ 3,289 |
|
|
|
Net income per share |
|
|
Basic |
$ 0.29 |
$ 0.12 |
Diluted |
$ 0.27 |
$ 0.11 |
|
|
|
Weighted - average shares used in
computing net income per share: |
|
|
Basic |
26,767 |
4,566 |
Diluted |
29,158 |
6,578 |
|
|
|
|
|
|
MONTAGE TECHNOLOGY
GROUP, LTD. |
RECONCILIATION OF GAAP
NET INCOME/(LOSS) |
TO NON-GAAP NET
INCOME |
(Dollar in thousands,
except per share amounts) |
(Unaudited) |
|
|
|
|
Three Months
Ended |
|
March 31, |
|
2014 |
2013 |
|
|
|
GAAP net income |
$ 7,827 |
$ 3,289 |
|
|
|
Share-based compensation expense: |
|
|
Cost of revenues |
32 |
3 |
Research and development |
550 |
151 |
Sales, general and administrative |
756 |
176 |
Total share-based
compensation expense |
1,338 |
330 |
|
|
|
Amortization of assembled workforce |
211 |
316 |
|
|
|
Non-GAAP net income |
$ 9,376 |
$ 3,935 |
|
|
|
GAAP basic earnings per share |
$ 0.29 |
$ 0.12 |
Effect of non-GAAP adjustments on basic
earnings per share |
0.06 |
0.03 |
Non-GAAP basic earnings per share |
$ 0.35 |
$ 0.15 |
|
|
|
GAAP diluted earnings per share |
$ 0.27 |
$ 0.11 |
Effect of non-GAAP adjustments on diluted
earnings per share |
0.05 |
0.02 |
Non-GAAP diluted earnings per share |
$ 0.32 |
$ 0.13 |
|
|
|
Weighted - average shares used in
computing net income per share: |
|
|
Basic |
26,767 |
4,566 |
Diluted |
29,158 |
6,578 |
|
|
|
In addition to disclosing
financial results calculated in accordance with U. S. generally
accepted accounting principles (GAAP), the operating results
presented contain non-GAAP financial measures that exclude the
income statement effects of share-based compensation expense and
amortization of acquired intangible assets of assembled workforce
in Taiwan. |
|
|
|
Management believes it is useful
to provide these non-GAAP financial measures and a reconciliation
to comparable GAAP financial measures as we believe non-GAAP
measures provide useful supplemental information for investors to
evaluate our operating results in the same manner as the research
analysts that follow Montage, all of whom present non-GAAP
projections in their published reports. As such, non-GAAP
measures provided by Montage facilitate a more direct comparison of
its performance with the financial projections published by the
analysts. The items reconciling GAAP financial measures to non-GAAP
financial measures and additional comments and the usefulness of
each item are set forth below: |
|
|
|
(1) Share-based compensation
is excluded by management when evaluating operating activities and
for strategic decision making, forecasting future results and
evaluating current performance. Management believes that utilizing
non-GAAP financial measures that exclude this non-cash item is
useful in providing an alternate measure that excludes the
variability caused by different methodologies and subjective
assumptions used in the valuation of equity awards across different
companies. |
|
|
|
(2) Amortization of acquired
research and development workforce is excluded from internal
analysis of Montage's operations and management does not view this
non-cash expense as reflective of the business' current
performance. Management believes that utilizing non-GAAP financial
measures that exclude this non-cash item is useful in providing an
alternate measure that excludes the variability caused by such
item. |
|
|
|
Non-GAAP financial measures are
not prepared in accordance with GAAP; therefore, the information is
not necessarily comparable to other companies' financial
information and should be considered as a supplement to, not a
substitute for, or superior to, the corresponding measures
calculated in accordance with GAAP. |
|
|
|
|
|
|
MONTAGE TECHNOLOGY
GROUP, LTD. |
RECONCILIATION OF GAAP
NET INCOME/(LOSS) |
TO AS ADJUSTED NON-GAAP
NET INCOME |
(Dollar in
thousands, except per share amounts) |
|
|
(Unaudited) |
|
|
|
|
Three Months
Ended |
|
March 31, |
|
2014 |
2013 |
|
|
|
GAAP net income |
$ 7,827 |
$ 3,289 |
|
|
|
Share-based compensation expense: |
|
|
Cost of revenues |
32 |
3 |
Research and development |
550 |
151 |
Sales, general and administrative |
756 |
176 |
Total share-based
compensation expense |
1,338 |
330 |
|
|
|
Independent review and follow-on offering
expenses: |
|
|
Cost of revenues |
-- |
-- |
Research and development |
-- |
-- |
Sales, general and administrative |
3,250 |
-- |
Total share-based
compensation expense |
3,250 |
-- |
|
|
|
Amortization of assembled workforce |
211 |
316 |
|
|
|
As adjusted Non-GAAP net
income |
$ 12,626 |
$ 3,935 |
|
|
|
GAAP basic earnings per share |
$ 0.29 |
$ 0.12 |
Effect of as adjusted non-GAAP adjustments on
basic earnings per share |
0.17 |
0.03 |
As adjusted Non-GAAP basic earnings per
share |
$ 0.46 |
$ 0.15 |
|
|
|
GAAP diluted earnings per share |
$ 0.27 |
$ 0.11 |
Effect of as adjusted non-GAAP adjustments on
diluted earnings per share |
0.16 |
0.02 |
As adjusted Non-GAAP diluted earnings per
share |
$ 0.43 |
$ 0.13 |
|
|
|
Weighted - average shares used in
computing net income per share: |
|
|
Basic |
26,767 |
4,566 |
Diluted |
29,158 |
6,578 |
|
|
|
|
|
|
In addition to disclosing
financial results calculated in accordance with U. S. generally
accepted accounting principles (GAAP), the operating results
presented contain non-GAAP financial measures that exclude the
income statement effects of share-based compensation expense and
amortization of acquired intangible assets of assembled workforce
in Taiwan. |
|
|
|
Management believes it is useful
to provide these non-GAAP financial measures and a reconciliation
to comparable GAAP financial measures as we believe non-GAAP
measures provide useful supplemental information for investors to
evaluate our operating results in the same manner as the research
analysts that follow Montage, all of whom present non-GAAP
projections in their published reports. As such, non-GAAP
measures provided by Montage facilitate a more direct comparison of
its performance with the financial projections published by the
analysts. The items reconciling GAAP financial measures to non-GAAP
financial measures and additional comments and the usefulness of
each item are set forth below: |
|
|
|
(1) Share-based compensation
is excluded by management when evaluating operating activities and
for strategic decision making, forecasting future results and
evaluating current performance. Management believes that utilizing
non-GAAP financial measures that exclude this non-cash item is
useful in providing an alternate measure that excludes the
variability caused by different methodologies and subjective
assumptions used in the valuation of equity awards across different
companies. |
|
|
|
(2) Amortization of acquired
research and development workforce is excluded from internal
analysis of Montage's operations and management does not view this
non-cash expense as reflective of the business' current
performance. Management believes that utilizing non-GAAP financial
measures that exclude this non-cash item is useful in providing an
alternate measure that excludes the variability caused by such
item. |
|
|
|
(3) One time expenses, such
as the audit committee's independent review and follow-on offering,
are excluded by management when evaluating operating activities and
for strategic decision making, forecastiing future results and
evaluating current performance. |
|
|
|
Non-GAAP financial measures are
not prepared in accordance with GAAP; therefore, the information is
not necessarily comparable to other companies' financial
information and should be considered as a supplement to, not a
substitute for, or superior to, the corresponding measures
calculated in accordance with GAAP. |
|
|
|
|
|
|
MONTAGE TECHNOLOGY
GROUP, LTD. |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(Dollar in
thousands) |
|
|
|
|
March 31, |
December 31, |
|
2014 |
2013 |
|
|
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 129,300 |
$ 82,774 |
Short-term investments |
4,115 |
24,901 |
Accounts receivable, net |
11,531 |
12,053 |
Inventories |
14,637 |
13,404 |
Prepaid expenses and other current
assets |
2,363 |
2,631 |
Deferred tax assets |
615 |
620 |
Total current assets |
162,561 |
136,383 |
|
|
|
Property and equipment, net |
2,147 |
2,330 |
Acquired intangible assets, net |
547 |
715 |
Deferred tax assets |
404 |
405 |
Total assets |
$ 165,659 |
$ 139,833 |
|
|
|
|
|
|
Liabilities and shareholders'
equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 5,072 |
$ 8,116 |
Accrued liabilities |
13,843 |
13,202 |
Deferred margin, net |
1,823 |
1,818 |
Income tax payable |
982 |
1,523 |
Total current
liabilities |
21,720 |
24,659 |
|
|
|
Long-term tax liability |
4,623 |
4,622 |
|
|
|
Total liabilities |
$ 26,343 |
$ 29,281 |
|
|
|
Shareholders' equity: |
|
|
Ordinary shares |
340 |
327 |
Additional paid-in capital |
127,004 |
105,798 |
Accumulated comprehensive income |
2,100 |
2,382 |
Statutory reserves |
745 |
745 |
Retained earnings |
9,127 |
1,300 |
Total shareholders' equity |
139,316 |
110,552 |
Total liabilities and
shareholders' equity |
$ 165,659 |
$ 139,833 |
|
|
|
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