Micrel Reports Higher First Quarter Net Income and Achieves 50 Percent Gross Margin
biz.yahoo.com
Thursday April 28, 4:05 pm ET
- Revenues Increased 2 Percent Sequentially to $60.7 Million
- Gross Margin Increased 376 Basis Points Sequentially And 500 Basis Points Year-Over-Year to 50.1 Percent, Highest Quarterly Level in Four Years
- Net Income Increased 30 Percent Sequentially and 44 Percent Year-Over-Year
- Balance Sheet Strong With Sequential Decrease in Inventory to 100 Days and DSOs to 48 Days
SAN JOSE, Calif., April 28 /PRNewswire-FirstCall/ -- Micrel, Incorporated, an industry leader in high performance analog and mixed signal IC solutions, today announced financial results for the quarter ended March 31, 2005. First quarter revenues were $60.7 million, a decrease of 1 percent over the year ago period and an increase of 2 percent from revenues in the fourth quarter of 2004, in spite of the seasonality that usually characterizes the first quarter. First quarter 2005 net income was $6.6 million, or $0.07 per diluted share, an increase in net income of more than 40 percent from the year ago period and up 30 percent from the fourth quarter of 2004.
"The first quarter financial results demonstrate the progress Micrel has made in its commitment to improve profitability independent of increasing revenues," stated Ray Zinn, president and chief executive officer of Micrel. "In the first quarter we achieved a 500 basis point improvement in gross margin year-over-year at approximately the same level of revenue. This is the highest quarterly gross margin Micrel has achieved in four years, and was accomplished while reducing inventory levels and operating at less than 50 percent of equipped capacity."
The Company improved its operating profit in the first quarter by more than 30 percent both sequentially and year-over-year as a result of the higher gross margin and disciplined management of expenses. Cash flows continued to be solidly positive in the first quarter, allowing the Company to repurchase over 1.8 million shares of Micrel common stock during the quarter while maintaining a balance of cash and short-term investments of over $140 million.
Outlook
"Although customer demand in the first quarter improved markedly over the fourth quarter, order lead times from our customers continued to average two to three weeks," continued Zinn. "This suggests that our customers continue to believe that there is sufficient capacity to meet demand on relatively short notice." The Company's first quarter bookings increased sequentially by 40 percent and the book-to-bill ratio was above one. The Company's second quarter beginning backlog is higher than the first quarter; however, the short lead time and high turns-fill environment continue to make it difficult to accurately predict future revenues. Based on current backlog levels and demand estimates, the Company projects that second quarter 2005 revenues will increase sequentially by two percent to seven percent.
Zinn concluded, "Over the past two years, Micrel has been steadily improving its profit margins, striving to return to pre-bubble levels of profitability. We remain committed to this goal and look forward to continuing to unlock the leverage in Micrel's business model."
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