Cypress Reports Fourth-Quarter and Year-End 2013 Results | Cypress Semiconductor
Cypress Reports Fourth-Quarter and Year-End 2013 Results
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SAN JOSE, Calif., January 23, 2014—Cypress Semiconductor Corp. (NASDAQ: CY) today announced its fourth-quarter 2013 and fiscal year 2013 results, which included the remarks below from its president and CEO, T.J. Rodgers. Highlights for the quarter included:
• Earnings came in at high end of guidance
• Book-to-bill increased to 1.08, its highest level in almost two years
• Non-GAAP operating expenses at a 14-year low
• Dividend yield was 4.3% with favorable tax treatment
Our revenue and earnings for the quarter are given below, compared with those of the prior quarter and prior year:
(In thousands, except per-share data)
Our revenue and earnings for the fiscal year are given below, compared with those of the prior year:
(In thousands, except percentages)
Our fourth-quarter revenue of $167.8 million was above the midpoint of our guidance, but down 11% from the $188.7 million in revenue of the prior quarter. All divisions experienced normal seasonal declines. We continued to execute very well on our operating expense management initiatives, enabling us to deliver earnings at the high end of our guidance. We thus are prepared to deliver strong operating leverage as we return to revenue growth in 2014.
We exited 2013 with a book-to-bill ratio of 1.08, a high point since the first quarter of 2012. The book-to-bill ratio of all divisions was above unity with our Programmable Systems Division leading the way at 1.15. Lead times remain low; our distributors decreased their inventories to their lowest levels in three years. As such, we expect less-than-normal seasonal revenue declines in the first quarter of 2014. Our design win pipeline for our new TrueTouch® touchscreen products is finally beginning to recover. We expect our revenue to remain in a seasonal trough in the first quarter and then to increase during the rest of 2014.
Note that we produced $167.8 million in revenue in the fourth quarter of 2013 vs. $180.3 million in the fourth quarter of 2012, down $12.5 million, but that our pretax profit was still up $7.9 million. This was due to record-low operating expenses.
+ Our non-GAAP consolidated gross margin for the fourth quarter was 51.0%, down 2.8 percentage points from the previous quarter, due primarily to reduced amortization of manufacturing expenses by lower revenue. Excluding our Emerging Technologies Division (ETD), our core semiconductor gross margin was 52.3%. ETD revenue is growing rapidly (see Net Sales Summary table) and will contribute significantly to revenue growth in 2014.
+ Net inventory at the end of the fourth quarter was $100.6 million, down from the third quarter.
NET SALES SUMMARY
(In thousands, except percentages)
1. PSD, Programmable Systems Division; DCD, Data Communications Division; MPD, Memory Products Division: ETD, Emerging Technology Division.
2. “Emerging Technology” includes businesses outside our core semiconductor businesses outlined in Footnote 1. Includes subsidiaries AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit.
FOURTH-QUARTER 2013 HIGHLIGHTS
+ Cypress was issued its one-hundredth patent for its TrueTouch® capacitive touchscreen controllers. The patent relates to the TrueTouch Gen5 family’s unmatched immunity to electrical noise from chargers and displays, which can render touchscreens unusable. The company continues to expand its touch patent portfolio, with more than 200 patents pending.
+ Cypress announced that its partnership with Fujifilm of Japan has created new TrueTouch controllers that support Fujifilm’s metal mesh sensors. Cypress believes these sensors to be the most advanced and cost-effective on the market. Metal mesh sensors deliver significantly better scanning performance than traditional indium tin oxide (ITO) sensors.
+ Cypress shipped its one-billionth CapSense® capacitive touch-sensing controller. Cypress's CapSense solutions have replaced more than five billion mechanical buttons, producing four times the revenue of its nearest competitor.
+ The research and analytics firm Chipworks noted the use of a Cypress CapSense controller in a recent teardown of the Samsung Galaxy Note 3 smartphone. The teardown also determined that the controller enables the ability to register touches from users wearing gloves.
+ Cypress held a global design competition promoting the use of its new PSoC® 4 programmable system-on-chip to develop intelligent, forward-looking embedded systems for homes, offices and cars. The design challenge was based on the easy-to-use PSoC 4 Pioneer Kit, which just won distributor element14’s development kit of the year award, beating entries from Texas Instruments and Freescale.
+ Digital multimedia supplier AVerMedia Technologies selected Cypress’s EZ-USB® FX3™ (USB 3.0) controller for its new high-definition (HD) video capture card. AVerMedia’s ExtremeCap U3 card records and streams game play at full HD resolution. The card uses the 5-Gbps FX3 solution to capture HD video without compression, improving image quality.
+ Cypress announced production availability of the CYFB0072 high-density video frame buffer, which addresses the increasing demand for high-bandwidth video buffering. The device contains 72 Mbits of high-performance SRAM in an interface that simplifies implementation and debugging.
+ Seiko Epson selected Cypress’s CY5077C programmable clock generator die for its new SG-8003CG programmable crystal oscillator. The die delivers precise, programmable frequency output to the ultra-small oscillator. The flexible combination provides fast time-to-market and low power consumption for a wide variety of electronics equipment. Cypress has shipped a cumulative 880 million crystal oscillator chips.
+ L-3 Cincinnati Electronics, a division of L-3 Communications, selected Cypress to manufacture its Readout Integrated Circuits (ROICs). L-3 will use the proprietary process technology of Cypress’s wafer fabrication facility in Bloomington, Minnesota to design and manufacture these ROICs for its cooled infrared detectors.
+ D-Wave Systems successfully transferred its proprietary process technology for building quantum computing microprocessors to Cypress’s wafer foundry in Bloomington.
+ Cypress announced that its Board of Directors approved a quarterly cash dividend of $0.11 per share, payable to holders of record of the company’s common stock as of the close of business on December 26, 2013. This dividend was paid on January 16, 2014.
Cypress delivers high-performance, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value. Cypress offerings include the flagship PSoC 1, PSoC 3, PSoC 4 and PSoC 5LP programmable system-on-chip families. Cypress is the world leader in capacitive user interface solutions including CapSense touch sensing, TrueTouch touchscreens, and trackpad solutions for notebook PCs and peripherals. Cypress is a world leader in USB controllers, which enhance connectivity and performance in a wide range of consumer and industrial products. Cypress is also the world leader in SRAM and nonvolatile RAM memories. Cypress serves numerous major markets, including consumer, mobile handsets, computation, data communications, automotive, industrial and military. Cypress trades on the NASDAQ Global Select Market under the ticker symbol CY. Visit Cypress online at https://www.cypress.com.
Statements herein that are not historical facts and that refer to Cypress or its subsidiaries’ plans and expectations for Q1 2014 and the remainder of fiscal year 2014 and beyond are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may use words such as “believe,” “expect,” “future,” “plan,” “intend” and similar expressions to identify such forward-looking statements that include, but are not limited to, statements related to the semiconductor market; the strength and growth of our proprietary and programmable products; our expectation that we will experience a less than normal seasonal revenue decline in Q1 2014 and then increase during the rest of 2014; our expectation related to our earnings leverage, margins, profit, cash flow and cost-saving measures; our expectation that our ETD division will contribute to our 2014 revenue; our expectations regarding the demand for our products and how our products are expected to perform, including the expected recovery of our TrueTouch touchscreen design win pipeline, as well as our future design win expectations for other products and market share gains. Such statements reflect our current expectations, which are based on information and data available to our management as of the date of this release. Our actual results may differ materially due to a variety of uncertainties and risk factors, including, but not limited to, the state of and future of the global economy, business conditions and growth trends in the semiconductor market, whether our products perform as expected, whether the demand for our proprietary and programmable products is fully realized, whether our product and design wins and kit sales result in increased sales, our ability to manage our business to have strong earnings, reduce operating expenses, factory utilization, the strength or softness of the markets we serve, our ability to maintain and improve our gross margins and realize our bookings, the seasonality of the markets we serve, the financial performance of our subsidiaries and Emerging Technology Division, and other risks described in our filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.
Cypress, the Cypress logo, PSoC, TrueTouch, EZ-USB and CapSense are registered trademarks and FX3 is a trademark of Cypress Semiconductor Corp. All other trademarks or registered trademarks are the property of their respective owners.