OmniVision Reports Financial Results For the First Quarter of Fiscal 2016

Aug 27, 2015, 16:18 ET from OmniVision Technologies, Inc.

SANTA CLARA, Calif., Aug. 27, 2015 /PRNewswire/ -- OmniVision Technologies, Inc. (Nasdaq: OVTI), a leading developer of advanced digital imaging solutions, today reported financial results for the first quarter of fiscal 2016 that ended on July 31, 2015.

Revenues for the first quarter of fiscal 2016 were $329.9 million, as compared to $285.9 million in the fourth quarter of fiscal 2015, and $406.5 million in the first quarter of fiscal 2015. GAAP net income in the first quarter of fiscal 2016 was $18.2 million, or $0.31 per diluted share, as compared to net income of $6.0 million, or $0.10 per diluted share in the fourth quarter of fiscal 2015, and $45.3 million, or $0.78 per diluted share in the first quarter of fiscal 2015. For the first quarter of fiscal 2016, the Company recorded a non-cash tax benefit of $3.1 million, as compared to $15.1 million for the first quarter of fiscal 2015. These tax benefits reflected the lapses of applicable statute of limitations in certain foreign jurisdictions.

Non-GAAP net income in the first quarter of fiscal 2016 was $28.6 million, or $0.46 per diluted share. Non-GAAP net income in the fourth quarter of fiscal 2015 was $13.9 million, or $0.22 per diluted share. Non-GAAP net income in the first quarter of fiscal 2015 was $54.4 million, or $0.91 per diluted share. Non-GAAP net income excludes stock-based compensation expenses and the related tax effects. Please refer to the attached schedule for a reconciliation of GAAP net income to non-GAAP net income for the three months ended July 31, 2015, July 31, 2014 and April 30, 2015.

GAAP gross margin for the first quarter of fiscal 2016 was 22.6%, as compared to 22.4% for the fourth quarter of fiscal 2015 and 21.7% for the first quarter of fiscal 2015. The sequential increase in the first quarter gross margin reflected a decrease in allowance for excess and obsolete inventories, largely offset by selling price erosions.

The Company ended the period with cash, cash equivalents and short-term investments totaling $593.8 million, an increase of $69.6 million from the previous quarter. The increase was primarily attributable to cash provided by operating activities in the first quarter of fiscal 2016.

"We are pleased with our results for the first quarter. We are encouraged by the sequential growth that we experienced in our mobile phones and automotive markets," said Shaw Hong, chief executive officer of OmniVision Technologies, Inc. "Nevertheless, in the near-term, the business environment and demand from some of our end-markets will remain volatile. We will continue to drive our long-term business strategies as we aim to resume our growth trajectory in the long-term."

Outlook

Based on current trends, the Company expects revenues for the second quarter of fiscal 2016 will be in the range of $300 million to $330 million and GAAP net income per share will be between $0.12 and $0.27 per diluted share. Excluding the estimated expense and related tax effects associated with stock-based compensation, the Company expects its non-GAAP net income per share will be between $0.25 and $0.40 per diluted share. Refer to the table below for a reconciliation of GAAP to non-GAAP net income.

Conference Call

OmniVision Technologies, Inc. will host a conference call today at 5:00 p.m. Eastern time to discuss these results further. This conference call can be accessed via a webcast at www.ovt.com. The call can also be accessed by dialing 866-318-8613 (domestic) or 617-399-5132 (international) and entering passcode 95117355.

A replay of the call will remain available at www.ovt.com for approximately twelve months. A replay of the call will also be available for one week beginning approximately one hour after the conclusion of the call. To access the replay, dial 888-286-8010 (domestic) or 617-801-6888 (international) and enter passcode 46433816.

About OmniVision

OmniVision Technologies, Inc. is a leading developer of advanced digital imaging solutions. Its CameraChip™ and CameraCubeChip™ products are highly integrated, single-chip CMOS image sensors for consumer and commercial applications, including mobile phones, tablets and entertainment devices, notebooks and webcams, security and surveillance systems, digital still and video cameras, automotive and medical imaging systems. Additional information is available at www.ovt.com.

Safe Harbor Statement

Certain statements in this press release, including statements regarding our focus in developing our technologies and growing our business, and statements regarding our expectations regarding revenues and earnings per share for the three months ending October 31, 2015 are forward-looking statements. These forward-looking statements are based on management's current expectations, and certain factors could cause actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, our ability to maintain or increase sales to current key and new customers and end-users of our products; competition in current and emerging markets for image sensor products, including pricing pressures that could result from competition and unfavorable exchange rate movements; the potential for a slowdown in sales in the near term due to general economic conditions and market volatility, which can reduce visibility and thus orders from the end-user customers of our products; our ability to increase the average selling prices or lower the costs associated with the development and manufacture of our new, complex products and technologies; fluctuations of wafer manufacturing costs, manufacturing yields, manufacturing capacity and other manufacturing processes and the impact on gross margins; uncertainties for our customers, foundries, vendors, employees, or others with whom we do business that may be created by our recently announced merger agreement which uncertainties could adversely affect our business; the continued growth and development of current markets and the emergence of new markets in which we sell, or may sell, our products; fluctuations in sales mix and average selling prices; our ability to timely complete the product development cycle for new sensors; our ability to obtain design wins from various image sensor device manufacturers including manufacturers of mobile phones, tablets and entertainment devices, notebooks and webcams, security and surveillance systems, digital still and video cameras, automotive and medical imaging systems; our dependence on third party wafer foundries and their ability to manufacture our wafers in the required quantities, at acceptable quality, yields and costs, and in a timely manner; our ability to accurately forecast customer demand for our products; the market acceptance of products into which our products are designed; the development, production, introduction and marketing of new products and technology; the occurrence of litigation regarding intellectual property or indemnification claims from our suppliers or customers relating to our intellectual property; our strategic investments and relationships, and other risks detailed from time to time in our Securities and Exchange Commission filings and reports, including, but not limited to, our most recent Annual Report on Form 10-K and recent Quarterly Reports on Form 10-Q. We expressly disclaim any obligation to update information contained in any forward-looking statement.

Use of Non-GAAP Financial Information

To supplement the reader's overall understanding of both its reported results presented in accordance with U.S. generally accepted accounting principles ("GAAP") and its outlook, the Company also presents non-GAAP measures of net income and net income per share which are adjusted from results based on GAAP. In particular, the Company excludes stock-based compensation expenses and the related tax effects. The non-GAAP financial measures which the Company discloses also exclude the effects of stock-based compensation on the number of basic and diluted common shares used in calculating non-GAAP basic and diluted net income per share. The Company provides these non-GAAP financial measures to enhance an investor's overall understanding of its current financial performance and to assess its prospects for the future. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with its GAAP results and the accompanying reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the Company's business. The economic basis for the Company's decision to use non-GAAP financial measures is that the adjustments to net income did not reflect the on-going relative strength of the Company's performance. The Company's objective is to minimize any confusion in the financial markets by providing non-GAAP net income and non-GAAP net income per share measurements and disclosing the related components. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP.

The Company uses non-GAAP financial measures for internal management purposes to conduct and evaluate its business, when publicly providing its business outlook and to facilitate period-to-period comparisons. The Company views non-GAAP net income per share as a primary indicator of the profitability of its underlying business. In addition, because stock-based compensation is a non-cash expense and is offset in full by a credit to additional paid-in capital, it has no effect on total stockholders' equity. As the calculation of non-GAAP financial measures differs between companies, the non-GAAP financial measures used by the Company may not be comparable to similarly titled measures used by other companies. Other than stock-based compensation and the related tax effects, these differences may cause the Company's non-GAAP measures to not be directly comparable to other companies' non-GAAP measures. Although these non-GAAP financial measures adjust cost, expenses and basic and diluted share items to exclude the accounting treatment of stock-based compensation, they should not be viewed as a non-GAAP presentation reflecting the elimination of the underlying stock-based compensation programs. Thus, the Company's non-GAAP presentations are not intended to present, and should not be used, as a basis for assessing what its operating results might be if it were to eliminate its stock-based compensation programs. The Company compensates for these limitations by providing full disclosure of the net income and net income per share on a basis prepared in accordance with GAAP to enable investors to consider net income and net income per share determined under GAAP as well as on an adjusted basis, and perform their own analysis, as appropriate. As a result of the foregoing limitations, the Company does not use, nor does the Company intend to use, the non-GAAP financial measures when assessing the Company's performance against that of other companies.

Estimating stock-based compensation expenses and the related tax effects for a future period is subject to inherent risks and uncertainties, including but not limited to the price of the Company's stock, stock market volatility, expected option life, risk-free interest rates, and the number of option exercises and sales during the quarter.

 


OMNIVISION TECHNOLOGIES, INC


RECONCILIATION OF GUIDANCE FOR GAAP NET INCOME PER DILUTED SHARE

TO PROJECTED NON-GAAP NET INCOME PER DILUTED SHARE

(unaudited)



Three Months Ending October 31, 2015


GAAP
Range of Estimates


Non-GAAP
Range of Estimates


From

To

Adjustment

From

To

Net income per share

$    0.12

$    0.27

       $    0.13(1)

$    0.25

$    0.40

 ________________


(1)  

Reflects estimated adjustment for expenses and related tax effects associated with stock-based compensation.

 


OMNIVISION TECHNOLOGIES, INC.


CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)





July 31,

April 30,


2015

2015

ASSETS



Current assets:



      Cash and cash equivalents

$       434,376

$       318,892

      Short-term investments

159,433

205,271

      Accounts receivable, net

147,468

151,086

      Inventories

320,598

343,966

      Prepaid and deferred income taxes

4,171

7,149

      Prepaid expenses and other current assets

20,729

5,628

      Recoverable insurance proceeds

12,500

            Total current assets

1,086,775

1,044,492

Property, plant and equipment, net

143,735

145,214

Long-term investments

151,634

192,021

Goodwill

10,227

10,227

Intangibles, net

49,127

52,287

Other long-term assets

28,480

24,155

                  Total assets

$    1,469,978

$    1,468,396




LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:



      Accounts payable

$       121,486

$       118,796

      Accrued expenses and other current liabilities

32,960

37,112

      Litigation settlement accrual

12,500

      Income taxes payable

888

3,444

      Deferred revenues, less cost of revenues

42,833

22,621

      Current portion of long-term debt

9,545

7,096

            Total current liabilities

207,712

201,569

Long-term liabilities:



      Long-term income taxes payable

53,451

55,150

      Non-current portion of long-term debt

22,407

24,999

      Other long-term liabilities

18,363

23,898

            Total long-term liabilities

94,221

104,047

                  Total liabilities

301,933

305,616




Stockholders' equity:



            Common stock, $0.001 par value; 100,000 shares authorized; 80,185 shares issued and 59,586 outstanding at July 31, 2015 and 78,734 shares issued and 58,135 outstanding at April 30, 2015, respectively

80

79

            Additional paid-in capital

719,261

709,442

            Accumulated other comprehensive income

17,272

40,069

            Treasury stock, 20,599 shares at July 31, 2015 and April 30, 2015, respectively

(278,683)

(278,683)

            Retained earnings

710,115

691,873

                  Total stockholders' equity

1,168,045

1,162,780

                  Total liabilities and stockholders' equity

$    1,469,978

$    1,468,396

 


OMNIVISION TECHNOLOGIES, INC


CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)



Three Months Ended


July 31,


2015

2014

Revenues

$   329,891

$   406,536

Cost of revenues

255,354

318,116

      Gross profit

74,537

88,420




Operating expenses:



      Research, development and related

36,114

34,732

      Selling, general and administrative

21,147

19,210

      Amortization of acquired patent portfolio

2,321

2,321

            Total operating expenses

59,582

56,263




Income from operations

14,955

32,157

Equity in earnings of investee

373

935

Interest expense, net

(233)

(455)

Other income, net

1,109

1,045

Income before income taxes

16,204

33,682




Benefit from income taxes

(2,038)

(11,645)

Net income

$     18,242

$     45,327




Net income per share:



      Basic

$         0.31

$         0.80

      Diluted

$         0.31

$         0.78




Shares used in computing net income per share:



      Basic

58,584

56,583

      Diluted

59,739

58,158

 

OMNIVISION TECHNOLOGIES, INC


RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

(in thousands, except per share amounts)

(unaudited)



Three Months Ended


Three Months
Ended


July 31,


April 30,


2015

2014


2015

GAAP net income

$   18,242

$   45,327


$       5,996

Add:





      Stock-based compensation in cost of revenues

1,343

985


1,063

      Stock-based compensation in research, development and related expenses

4,790

4,260


3,939

      Stock-based compensation in selling, general and administrative expenses

3,739

3,204


3,326

Decrease (increase) in provision for (benefit from) income taxes without the effect of stock-based compensation

461

602


(473)

Non-GAAP net income

$   28,575

$   54,378


$     13,851






GAAP provision for (benefit from) income taxes

$    (2,038)

$  (11,645)


$          798

Decrease (increase) in provision for (benefit from) income taxes without the effect of stock-based compensation

461

602


(473)

Non-GAAP provision for (benefit from) income taxes

$    (2,499)

$  (12,247)


$       1,271






Non-GAAP net income per share:





      Basic

$       0.49

$       0.96


$         0.24

      Diluted

$       0.46

$       0.91


$         0.22






Shares used in computing non-GAAP net income per share:





      Basic

58,584

56,583


58,104

      Diluted

62,124

60,081


62,145

 

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SOURCE OmniVision Technologies, Inc.



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