Market Overview

Dialog Semiconductor Reports Fourth Quarter and Year Ended 31 December 2011 Results

KIRCHHEIM/TECK, Germany--(BUSINESS WIRE)--

Dialog Semiconductor plc (FWB: DLG), a provider of highly integrated innovative power management, audio and short range wireless technologies today reports results for Q4 and audited results for the financial year ended 31 December 2011.

Q4 AND FINANCIAL YEAR 2011 FINANCIAL HIGHLIGHTS

  • Revenue for Q4 2011 was $172.1 million, an increase of 22.4% over the prior quarter and 96.5% on Q4 2010. For the financial year as a whole, revenue was $527.3 million representing an increase of 77.8% over financial year 2010
  • Cash and cash equivalents at year-end stood at $113.6 million, an increase in Q4 2011 of $19.2 million over the prior quarter
  • Cash generated from operations during FY 2011 was $72.4 million
  • For the financial year 2011, IFRS operating profit was $61.6 million or 11.7% of revenue with underlying(*) operating profit of $ 79.8 million or 15.1% of revenue
  • Q4 2011 underlying(*) diluted earnings per share of 35 cents, with full year underlying(*) diluted earnings per share of 111 cents

Q4 AND FINANCIAL YEAR 2011 OPERATIONAL HIGHLIGHTS

  • Continued power management smartphone and tablet pc design win success with the leading trend-setting manufacturers
  • Addition of Samsung as a new customer for power management and audio technology for smartphone platforms, with first phones in production from Q4 2011
  • Acquisition and successful integration of SiTel Semiconductor targeting short range wireless applications
  • ARM multicore support added to Dialog's newest generation of system level PMICs
  • Addition of Freescale as latest member of processor partner initiative for companion PMICs targeting popular iMX53 platforms

Commenting on the results Dialog Chief Executive, Dr Jalal Bagherli, said:

'2011 was a very successful year for Dialog, where we led the industry in terms of integrated power management market share for smartphones and tablet pcs, while achieving our management goal of breaking through $500 million in annual revenue. Through a very difficult supply chain period, I am particularly proud that we increased unit shipments by 61 percent across the company and offered our customers higher value solutions.

We executed on our first significant acquisition, adding short range wireless technology to our portfolio and achieved earnings accretion just one quarter after closing the acquisition. As a result, Dialog is well positioned with a much stronger portfolio to take further advantage of opportunities in the emerging high growth personal portable connected device market.'

FINANCIAL OVERVIEW

Revenue in Q4 2011 was $172.1 million representing a sequential increase of 22.4% on the $140.6 million of revenue delivered in Q3 2011 and an increase of 96.5% over the $87.6 million delivered in the comparative period last year. This revenue growth was primarily driven by the success of our customers in the smartphone and tablet pc market. For the financial year 2011 revenue was $527.3 million: an increase of 77.8% over FY 2010. Excluding the $108.8 million of revenue associated with the acquired SiTel business for 2011 and $28.7 million in Q4 2011, quarterly year on year organic growth was 63.7%, with annualised growth at 41.1%.

For the financial year 2011, gross margin was 39.5% (FY 2010: 46.3%), with underlying(*) gross margin at 40.1%. Gross margin in Q4 2011 was 36.5% (Q3 2011: 40.9%). As previously indicated, gross margins remained under pressure due to the product mix increasingly reflecting the higher volume customer contracts together with higher material costs.

Our operating expenses increased in Q4 2011 by $2.75 million over the prior quarter to $41.3 million. However, we have continued to keep tight control over our operating expenses such that R&D and SG&A in Q4 2011 stood at 14.5% and 9.4% of revenue respectively compared to 17.7% and 9.7% in the prior quarter. On an annual basis for 2011, R&D and SG&A was 17.1% and 10.8% of revenue respectively, compared to 19.0% and 11.8% in FY 2010.

Operating profit on an IFRS basis in Q4 2011 was $21.5 million or 12.5% of revenue. This compares to the $19.1 million or 13.6% of revenue delivered in the prior quarter and $12.9 million or 14.8% in Q4 2010. The underlying(*) operating profit achieved in Q4 2011 was $26.1 million or 15.2% of revenue, compared with the underlying(*) operating profit of $22.8 million or 16.2% of revenue in the prior quarter and $17.3 million or 19.7% in Q4 2010.

For the financial year 2011, operating profit on an IFRS basis was $61.6 million or 11.7% of revenue (FY 2010: $45.3 million, 15.3% of revenue). The underlying(*) operating profit achieved in 2011 was $79.8 million or 15.1% of revenue (FY 2010: $56.2 million, 18.9% of revenue).

In Q4 2011 underlying(*) EBITDA(**) was $33.3 million or 19.4% of revenue compared to $19.5 million or 22.3% in Q4 2010. For the financial year, the underlying EBITDA(**) was $96.0 million or 18.2% of revenue compared to $63.8 million or 21.5% in FY 2010.

The tax charge in Q4 2011 continued to benefit from the utilisation of brought-forward tax losses resulting in a residual minimum level current tax charge. In total a net tax charge of $2.4 million was recorded in Q4 2011. Consequently, the overall effective tax rate for Q4 2011 was 11.1%. For the full year 2011 the overall effective tax rate was 9.1% compared to 4.0% in FY 2010.

Available accumulated trading losses carried forward in Dialog GmbH that can be offset against future profits are now expected to be fully utilised by Q1 2013, resulting in a full year 2012 effective tax rate that is expected to approach 27.0%.

In Q4 2011, on an IFRS basis net profit was $19.1 million or 30 cents per basic share and 28 cents per diluted share. This compares to 28 cents per basic share and 26 cents per diluted share delivered in the prior quarter. For the full year 2011, basic and diluted EPS were 89 and 84 cents respectively, compared to 70 and 66 cents in FY 2010.

The underlying(*) earnings per share (diluted) in Q4 2011 and for the full year 2011 was 35 cents and 111 cents respectively. This compares to 31 cents for the prior quarter and 82 cents for FY 2010.

At the end of Q4 2011, our total inventory level was at 52 days ($62.6 million) a decrease of 24 days over the prior quarter and 24 days over Q4 2010. The inventory remains at a level we believe is appropriate to service our demand as we enter the new financial year.

At the end of Q4 2011, we had a cash and cash equivalents balance of $113.6 million. This represents an increase of $19.2 million over the cash and cash equivalents balance at the end of Q3 2011. During 2011, $72.4 millions of cash were generated from operations. Dialog is currently debt free.

(*) Underlying results are based on IFRS, adjusted to exclude share-based compensation charges (Q4 2011: $1.6 million; 2011: $6.2 million), excluding one-time costs associated with the acquisition of SiTel Semiconductor ('SiTel') (Q4 2011: $0.1 million; 2011: $3.3 million), excluding amortisation of intangibles associated with the acquisition of SiTel (Q4 2011: $2.3 million; 2011: $6.4 million) and excluding amortisation expenses in relation to previously capitalised R&D expenses for close to end of life products from SiTel (Q4 2011: $0.6 million; 2011: 2.2 million). The term 'underlying' is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies. Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures.

(**) EBITDA is defined as operating profit excluding depreciation for property, plant and equipment (Q4 2011: $ 2.7 million; 2011: $8.8 million), and amortisation for intangible assets (Q4 2011: $ 7.4 million; 2011: $16.0 million).

OPERATIONAL OVERVIEW

We continue to successfully execute on our strategy, both to further strengthen our technology leadership and to expand our addressable market. The acquisition of SiTel Semiconductor in February 2011 added short range wireless technology to our portfolio, significantly increasing our addressable market and extending our ability to deliver more products in more areas of the portable device arena.

Within the wireless segment, our portable device design win momentum has continued in 2011, including major wins not only in smartphones but also with a new generation of tablet pcs. Samsung was also added as a new customer for both power management and ultra low power audio technology in a stacked die configuration in a single package. The first phones based on this first platform win were launched in Q4 2011 to the SC-TDMA market in China with leading local operator, China Telecom. We continue to view both the smartphone and tablet pc markets, which have emerged strongly in 2011 and underpinned our own strong revenue growth, as significant markets that can support Dialog's ongoing growth plans.

Our third generation of configurable system PMICs was launched in 2011. This PMIC set supports the ARM Cortex(TM) family of processors including multi-processor core configurations for both high and low end portable systems. Delivering class-leading energy efficiency and power-up flexibility, this new generation of standard products supports leading mobile graphics and application processor families. During 2011 we also began the transition to higher integrated PMICs including high voltage FET components, enabled by TSMC BCD technology.

Through the acquisition of SiTel, and based on its excellent customer list and proprietary short range technology, Gigaset and Panasonic have emerged as two of Dialog's top 5 customers in revenue terms for 2011, mainly for digital cordless ICs. During 2011 we successfully launched new generations of products from this acquired business. Firstly, a new low power class of Green VoIP ICs was brought to market. Here we are already successfully engaged with the leading VoIP equipment manufacturers. In addition we launched an innovative new family of wireless sensor network ICs, branded as 'SmartPulse(TM)', targeting the rapidly growing internet connectivity market around personal and home controlled devices. We were delighted to announce the launch of SmartPulse alongside news that Panasonic has chosen to become our first customer for SmartPulse, using the technology for a home security system.

This year we saw limited production of our first generation of SmartXtend(TM) passive matrix OLED display driver IC with Lenovo for a China smartphone product, with further innovative niche volume adopters inthe pipeline for 2012. We continue to engage with major tier 1 OEMs and module display manufacturers to secure their adoption of this technology and their investment in the required display production capacity, before proceeding with further R&D by Dialog in the next generation of this technology.

Within our automotive and industrial segment, our success with Bosch around wiper motor control IC systems continued through 2011 and a new customer for our automotive business in Japan is planned to now start production in 2012. The global transition to an increasing use of energy-saving lighting, including LED based bulbs, is also providing an exciting opportunity for Dialog to further build on its existing lighting business for the future.

In recognition of the many operational achievements delivered during the year, Dialog once again received the Global Semiconductor Association's prestigious 'Outstanding European Semiconductor Company' award for the third consecutive year.

OUTLOOK

For Q1 2012, we expect a strong start to the year with revenue for the quarter to be in the range of $160 to $166 million, delivering significant year on year growth and less of a seasonal decline over Q4 than normal. We expect to maintain our strong revenue momentum throughout financial year 2012 and, although gross margins remain under pressure, we believe that gross margin in Q1 2012 will stabilise at a similar level to that seen in Q4 2011 and then we expect gradual improvement in the gross margin going forward in 2012.

US$000   Q4 - 2011   Q4 - 2010
 
IFRS   Adjust-   Adjust-   Under- IFRS   Adjust-   Under-
ment ment lying *) ment lying *)
Share SiTel Share
Options Acqui- Options
sition
 
Revenues 172,078 - - 172,078 87,565 - 87,565
 
Cost of
sales (109,315) 69 (1,127) (108,257) (48,232) (132) (48,100)
 
Gross profit 62,763 69 (1,127) 63,821 39,333 (132) 39,465
 
Selling and
marketing
expenses (9,346) (950) (1,550) (6,846) (4,998) (620) (4,378)
 
M&A related
general and
administrative
expenses (3,291) - (3,291) - - - -
 
Other
general and
administrative
expenses (3,614) (67) 3,193 (6,740) (5,761) (2,208) (3,553)
 
General and
administrative
expenses
(total) (6,905) (67) (98) (6,740) (5,761) (2,208) (3,553)
 
Research and
development
expenses (25,015) (665) (200) (24,150) (15,648) (1,374) (14,274)
 
Restructuring
expenses - - - - (9) - (9)
 
Operating
profit 21,497 (1,613) (2,975) 26,085 12,917 (4,334) 17,251
 
Financial
result (55) - - (55) (458) - (458)
 
Result before
income taxes 21,442 (1,613) (2,975) 26,030 12,459 (4,334) 16,793
 
Income tax
expense (2,390) - - (2,390) 570 - 570
 
Net profit 19,052 (1,613) (2,975) 23,640 13,029 (4,334) 17,363
 
Earnings per
share in US$
Basic 0.30 (0.03) (0.05) 0.37 0.21 0.07 0.29
Diluted 0.28 (0.02) (0.04) 0.35 0.20 0.07 0.26
 
 
EBITDA **) 31,594 (1,613) (98) 33,305 15,192 (4,334) 19,526
 
   
US$000 2011 2010
 
IFRS   Adjust-   Adjust-   Under- IFRS   Adjust-   Under-
ment ment lying *) ment lying *)
Share SiTel Share
Options Acqui- Options
sition
 
Revenues 527,261 - - 527,261 296,597 - 296,597
 
Cost of
sales (319,073) (499) (2,552) (316,022) (159,334) (460) (158,874)
 
Gross profit 208,188 (499) (2,552) 211,239 137,263 (460) 137,723
 
Selling and
marketing
expenses (32,370) (1,115) (5,428) (25,827) (17,391) (1,603) (15,788)
 
M&A related
general and
administrative
expenses (3,291) - (3,291) - - - -
 
Other
general and
administrative
expenses (21,151) (1,211) - (19,940) (17,471) (5,305) (12,166)
 
General and
administrative
expenses
(total) (24,442) (1,211) (3,291) (19,940) (17,471) (5,305) (12,166)
 
Research and
development
expenses (90,046) (3,410) (679) (85,957) (56,465) (3,485) (52,980)
 
Restructuring
expenses - - - - (595) - (595)
 
other income
and
(expense) 303 - - 303 - - -
 
Operating
profit 61,633 (6,235) (11,950) 79,818 45,341 (10,853) 56,194
 
Financial
result (211) - - (211) (1,078) - (1,078)
 
Result before
income taxes 61,422 (6,235) (11,950) 79,607 44,263 (10,853) 55,116
 
Income tax
expense (5,559) - - (5,559) (1,784) - (1,784)
 
Net profit 55,863 (6,235) (11,950) 74,048 42,479 (10,853) 53,332
 
Earnings per
share in US$
Basic 0.89 (0.10) (0.19) 1.18 0.70 (0.18) 0.88
Diluted 0.84 (0.09) (0.18) 1.11 0.66 (0.17) 0.82
 
 
EBITDA **) 86,464 (6,235) (20,609) 95,990 52,899 (10,853) 63,752

Conference Call on Wednesday 22nd February at 09:00 UK / 10:00 CET

Dialog Semiconductor invites you to listen to a management discussion on the Q4 2011 and full year 2011 performance. To access the conference call please use the following dial-in numbers: Germany 0800 101 4960, UK 0800 694 0257, USA +1 866 966 9439, ROW +44 (0)1452 555 566, with no access code required. An instant replay facility will be available for 30 days after the call and can be accessed at +44 (0)1452 550 000 with access code 41219463#. An audio replay of the conference call will also be posted soon thereafter on the company's website at: http://www.diasemi.com/investor_relations.php

Additional information to this corporate news release including the company's consolidated income statement, consolidated balance sheet, consolidated statements of cash flows and selected notes for the period ending 31 December 2011 is available under the investor relations section of the Company's web site.

Note to editors:

Dialog Semiconductor creates highly integrated, mixed-signal integrated circuits (ICs) optimised for personal portable, low energy short-range wireless, lighting, display and automotive applications. The company provides flexible and dynamic support, world-class innovation and the assurance of dealing with an established business partner.

With its focus and expertise in energy efficient system power management, and now with the recent addition of low energy short range wireless and VoIP technology to the portfolio, Dialog brings decades of experience to the rapid development of ICs for personal portable applications including smartphones, tablet pc's, digital cordless phones and gaming applications.

Dialog's power management processor companion chips are essential for enhancing both the performance in terms of extended battery lifetime and the consumers' multimedia experience. With world-class manufacturing partners, Dialog operates a fabless business model.

Dialog Semiconductor plc is headquartered near Stuttgart with a global sales, R&D and marketing organisation. In 2011, it had approximately $527 million in revenue and was one of the fastest growing European public semiconductor companies. It currently has approximately 650 employees. The company is listed on the Frankfurt (FWB: DLG) stock exchange and is a member of the German TecDax index.

Forward Looking Statements:

This press release contains 'forward-looking statements' that reflect management's current views with respect to future events. The words 'anticipate,' 'believe,' 'estimate, 'expect,' 'intend,' 'may,' 'plan,' 'project' and 'should' and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties, including, but not limited to: an economic downturn in the semiconductor and telecommunications markets; changes in currency exchange rates and interest rates, the timing of customer orders and manufacturing lead times, insufficient, excess or obsolete inventory, the impact of competing products and their pricing, political risks in the countries in which we operate or sale and supply constraints. If any of these or other risks and uncertainties occur (some of which are described under the heading 'Risks and their management' in Dialog Semiconductor's most recent Annual Report) or if the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. We do not intend or assume any obligation to update any forward-looking statement, which speaks only as of the date on which it is made, however, any subsequent statement, will supersede any previous statement.

Language:   English
Company: Dialog Semiconductor Plc.
Tower Bridge House, St. Katharine's Way
E1W 1AA London
United Kingdom
Phone: +49 7021 805-412
Fax: +49 7021 805-200
E-mail:

birgit.hummel@diasemi.com

Internet:

www.diasemi.com

ISIN: GB0059822006
WKN: 927200
Listed: Regulierter Markt in Frankfurt (Prime Standard);
Freiverkehr in Berlin, Düsseldorf, Hamburg, München,
Stuttgart

FTI Consulting - London
Matt Dixon
T +44 20 7269 7214
matt.dixon@fticonsulting.com
or
FTI Consulting - Frankfurt
Thomas M. Krammer
T +49 69 920 37 183
thomas.krammer@fticonsulting.com

 

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