Micrel Reports 2014 Second Quarter Financial Results

SAN JOSE, Calif., July 24, 2014 /PRNewswire/ -- Micrel, Incorporated (Nasdaq: MCRL), a leading global manufacturer of IC solutions for the worldwide high performance linear and power, LAN and timing and communications markets, today announced financial results for the quarter ended June 30, 2014.

Revenues for the second quarter of 2014 were $62.3 million, a $2.4 million or 4.1% increase, compared to $59.9 million for the first quarter of 2014, and the Company's largest sequential revenue increase since the second quarter of 2012.  Compared to the second quarter of 2013, revenues were $3.2 million, or 5.4% higher. 

GAAP net income was $3.5 million, or $0.06 per diluted share, for the second quarter of 2014, compared to net income of $2.3 million, or $0.04 per diluted share, for the first quarter of 2014, and net income of $5.0 million, or $0.09 per diluted share, for the second quarter of 2013. 

Non-GAAP net income was $5.0 million, or $0.09 per diluted share, for the second quarter of 2014, compared to non-GAAP net income of $3.7 million, or $0.07 per diluted share, for the first quarter of 2014, and non-GAAP net income of $6.4 million, or $0.11 per diluted share, for the second quarter of 2013.  A reconciliation of the GAAP net income to non-GAAP net income is provided in the financial tables at the end of this press release.  Non-GAAP results exclude the impact of share-based compensation and amortization of acquisition-related intangible assets with the related income tax effects.  Beginning in the first quarter of 2014, the Company changed the presentation of non-GAAP net income from previously reported to exclude the impact of acquisition-related intangible assets and the related tax effect.  The non-GAAP net income for the second quarter of 2013 and for the first six months of 2013 have been revised from previously reported amounts to exclude the impact of acquisition-related intangible assets and the related tax effect to conform with the current period presentation. 

Commenting on the second quarter 2014 results, Micrel's President and CEO Ray Zinn said, "The second quarter resulted in a solid period of growth for Micrel with revenue up 4.1% on a sequential quarter basis to $62.3 million.  This trend was driven by the strength in sales of Micrel's timing and communications products.  Moreover, second quarter gross margin improved to 52.6% from 52.2% in the previous quarter while inventory on hand held relatively steady.  I was also encouraged by our ability to control operating expenses in the quarter despite the higher sales volumes, which helped expand operating margins to the highest level in the past four quarters.  Despite the slow recovery and ongoing macro-economic headwind facing our entire industry, I am pleased with the strength of our bookings, which have yielded a book-to-bill ratio above one for the second quarter and on a year-to-date basis.  In addition, we remain focused on increasing shareholder value through our stock repurchase program and quarterly dividend payments.  During the first six months of 2014, Micrel invested $5.9 million to repurchase approximately 0.6 million shares of common stock, and we also maintained our quarterly dividend of $0.05 per common share payable to shareholders of record as of August 14, 2014."

Outlook

Mr. Zinn continued, "Micrel continues to strategically invest in research and development and I am excited about the growth potential of new products introduced this past quarter.  While we have increased our R&D expenses as a percent of sales over the past couple of years, we believe that this increased investment in R&D will help improve revenue growth going forward.  Based on our current projections, revenue in the third quarter of 2014 is anticipated to be in the range of up 7% to 14% on a sequential basis.  These projections include $3 million to $5 million of revenue we expect to realize when we transition certain of our distributors from a sell-through to a sell-in revenue recognition method during the third quarter.  Gross margins are expected to be in the range of 53% to 54%, resulting in GAAP earnings per share within the range of $0.08 to $0.12 per diluted share.  For comparison purposes, we expect revenue in the range of up 1% to 6%, gross margin in the range of 52% to 53% and earnings within the range of $0.06 to $0.09 per diluted share without the one-time $3 million to $5 million of revenue and related cost of goods sold impact," Mr. Zinn concluded.

Dividend

The Company announced today that Micrel's Board of Directors has authorized a quarterly cash dividend of $0.05 per share of common stock.  The payment of this dividend will be made on August 28, 2014 to shareholders of record as of August 14, 2014.

Share Repurchase Plan

In the second quarter of 2014, the Company repurchased 0.3 million shares for a total of $2.9 million.  On June 30, 2014, Micrel had approximately $19.9 million remaining under the current repurchase authorization.  Stock repurchases may occur from time to time in the open market or in privately negotiated transactions; provided that the repurchases are made in accordance with the terms of Rule 10b-18 under the Securities Exchange Act of 1934, as amended.  The timing and amount of any repurchase of shares will be determined by the Company's management, based on its evaluation of market conditions, cash on hand and other factors.  The authorization will stay in effect until the aggregate authorized amount is expended or the authorization is modified by the Board of Directors.

Conference Call

The Company will host a conference call today, July 24, 2014, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time).  President and Chief Executive Officer, Raymond Zinn, and Chief Financial Officer, Bob DeBarr, will present an overview of the 2014 second quarter financial results, discuss current business conditions and then respond to questions.

The call is available, live, to any interested party, on a listen-only basis, by dialing (877) 407-0789.  For international callers, please dial (201) 689-8562.  A live webcast will also be available on the 'Investors' section of Micrel's website at: www.micrel.com.  An audio replay of the conference call will be available for all interested parties through July 31, 2014, by dialing (877) 870-5176 and entering the participant code 13585282.  For international callers, please dial (858) 384-5517 and enter participant code 13585282.  The webcast replay will also be available on the Company's website.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release includes statements that qualify as forward-looking statements under the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include statements about the following topics: future financial results, including revenues, customer demand and inventories, order lead times, backlog, turns-fill requirements, net income, earnings per share, gross margin, average selling prices, the effect of cost-control efforts, use of free cash flow, stock buyback and dividend programs, supply chain constraints, channel inventory levels and trends, capacity utilization, development of new products, design wins and customer order patterns, and the nature and extent of macro-economic and industry trends.  Forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially.  Those risks and uncertainties include, but are not limited to, such factors as: softness in demand for our products; customer decisions to cancel, reschedule, or delay orders for our products; the effect that lead times and channel inventories have on the demand for our products; distributor acceptance of changing contract terms; economic or financial difficulties experienced by our customers; the effect of business conditions in the computing, wireless, telecommunications and industrial markets; the impact of any previous or future acquisitions; challenges involving integration of acquired businesses and utilization of acquired technology, market adoption, revenue growth and margins of acquired products; changes in demand for the Company's products; the impact of competitive products and pricing and alternative technological advances; the accuracy of estimates used to prepare the Company's financial statements and forecasts; the global economic situation; the ability of the Company's vendors and subcontractors to supply or manufacture the Company's products in a timely manner; the timely and successful development and market acceptance of new products and upgrades to existing products; softness in the economy and the U.S. stock markets as a whole; fluctuations in the market price of Micrel's common stock and other market conditions; the difficulty of predicting our future cash needs; the nature of other investment opportunities available to the Company from time to time; Micrel's operating cash flow, and economic and industry projections.  For further discussion of these risks and uncertainties, please refer to the documents the Company files with the SEC from time to time, including the Company's Annual Report on Form 10-K for the year ended December 31, 2013.  All forward-looking statements are made as of today, and the Company disclaims any duty to update such statements.

Non-GAAP Reporting

The Company presents non-GAAP financial measures only because investors and financial analysts use non-GAAP results in their analysis of historical results and projections of the Company's future operating results.  In order to facilitate the computation of non-GAAP results for the financial analyst community and investors, the Company makes reference to non-GAAP net income and earnings per share.  These non-GAAP results exclude the impact of share-based compensation and amortization of acquisition-related intangible assets with related income tax effects.  Micrel references those results in order to allow a better comparison of results in the current period to those in prior periods as well as to provide insight to the Company's on-going operating performance after exclusion of these items.  The Company has reconciled such non-GAAP results to the most directly comparable GAAP financial measures in the financial tables at the end of this press release.

Reference to these non-GAAP results should be considered in addition to results that are prepared under current accounting standards, but should not be considered a substitute for results that are presented in accordance with GAAP.  It should also be noted that Micrel's non-GAAP information may differ from the non-GAAP information provided by other companies.

About Micrel

Micrel, Inc. is a leading global manufacturer of IC solutions for the worldwide high-performance linear and power, LAN and timing and communications markets.  The Company's products include advanced mixed-signal, analog and power semiconductors; high performance communication, clock management, MEMs-based clock oscillators and crystal-less clock generators, Ethernet switch and physical layer transceiver ICs.  Company customers include leading manufacturers of enterprise, consumer, industrial, mobile, telecommunications, automotive, and computer products.  Corporation headquarters and state-of-the-art wafer fabrication facilities are located in San Jose, CA, with regional sales and support offices and advanced technology design centers situated throughout the Americas, Europe and Asia.  In addition, the Company maintains an extensive network of distributors and reps worldwide.  Web: www.micrel.com.

-Financial Tables to Follow-

SOURCE Micrel, Inc.