Micrel Reports Year-Over-Year Increase in First Quarter Revenues, Gross Margin, Operating Margin and Net Income
biz.yahoo.com
Tuesday April 25, 4:05 pm ET
* Revenues of $68.2 million, up 5% sequentially and up 12% from year-ago period
* Gross margin of 58.5%, an all-time company record
* GAAP earnings per diluted share of $0.10, up from $0.07 in year-ago period
* Non-GAAP earnings per diluted share, excluding stock compensation expense of $0.13, up from $0.08 in year-ago period
SAN JOSE, Calif., April 25 /PRNewswire-FirstCall/ -- Micrel, Incorporated (Nasdaq: MCRL), an industry leader in analog, high bandwidth communications and Ethernet IC solutions, today announced financial results for the first quarter ended March 31, 2006. Revenues for the first quarter were $68.2 million, an increase of 5% from fourth quarter revenues of $65.1 million and 12% higher than revenues of $60.7 million recorded in the year-ago period. First quarter net income, including equity-based compensation expense, was $8.7 million, or $0.10 per diluted share, compared with net income of $9.9 million, or $0.11 per share, in the previous quarter and net income of $6.6 million, or $0.07 per share, in the year-ago period.
The results for the first quarter of 2006 include the impact from the adoption of SFAS No. 123® "Share-Based Payment." The Company recorded pre-tax equity-based compensation expense of $2.4 million or $0.03 per diluted share in the first quarter of 2006 in its cost of revenues and operating expenses. Excluding the impact of equity-based compensation, first quarter net income on a non-GAAP basis would have been $10.9 million, or $0.13 per diluted share, compared on a similar basis with $0.11 in the previous quarter and $0.08 in the first quarter of 2005. The Company's effective tax rate increased to 40.8% in the first quarter due to the expiration of the federal research and development tax credit and the effects of non-deductible equity-based compensation expense.
"Demand from customers serving the industrial and communications end markets resulted in continued bookings strength and solid revenue growth in what is historically a seasonally weak quarter for Micrel," stated Ray Zinn, president and CEO of Micrel. "Furthermore, we are pleased to report that Micrel achieved a first quarter gross margin of 58.5%, the highest quarterly gross margin in the Company's history. This exceeded the previous peak gross margins recorded in second half of 2000, when revenue levels were higher than they are today. Q1 is the fifth consecutive quarter of gross margin expansion for Micrel. We believe this validates Micrel's high performance products can command higher margins even in the face of pricing pressure and competition. Our operating margin on a non-GAAP basis, excluding the effect of stock based compensation, of 23.2% in the first quarter also improved significantly, up from 18.9% in the previous quarter and 15.9% in the year ago period. This continued margin expansion demonstrates the leverage in the Company's business model and our ability to generate profitable growth."
Zinn continued, "Since the industry downturn in 2001, we have been working diligently to return Micrel's financial results to levels experienced before the height of the dot-com bubble. Six years ago, in the first quarter of 2000, Micrel earned net income of $0.13 per share, excluding stock compensation, on $69 million in revenue. On roughly the same revenue in Q1 2006, Micrel posted comparable non-GAAP EPS. This is a significant accomplishment given that Micrel currently has a lower level of high margin sales to the communications end market and lower factory utilization. Micrel is now a considerably stronger company financially than it was entering 2000. Our first quarter performance indicates we have achieved our objective."
Outlook
The Company's second quarter 2006 beginning backlog is higher than the beginning backlog for the first quarter. However, order lead times for the Company's products remain fairly short at five to six weeks, and a relatively high proportion of quarterly revenue must still be booked and shipped within the quarter to OEM customers or resold through the Company's distributors. As a result, it remains difficult to accurately predict future revenues. Based upon current backlog levels and demand estimates, the Company projects second quarter revenues will increase sequentially by 2% to 6%.
Zinn concluded, "We are encouraged by the apparent broad based demand we experienced for Micrel's products in the first quarter. We remain optimistic about the growth prospects for the semiconductor industry in 2006 and believe Micrel is well positioned to participate in the overall industry growth." |
