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Alpha and Omega Semiconductor Reports Financial Results for the Fiscal First Quarter of 2024 Ended September 30, 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,

2023

 

June 30,

2023

 

September 30,

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 Ended 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,

2023

 

June 30,

2023

 

September 30,

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)

 

September 30, 2023

 

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

 

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,

2023

 

June 30,

2023

 

September 30,

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

 

 

 

 

 

 

 

 

 

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