4% sequential rise in 2nd Q 2013 revenues of Fairchild Semiconductor
Fairchild Semiconductor has reported second quarter sales of $356.5 million, up 4 percent from the prior quarter and 1 percent lower than the second quarter of 2012.
Fairchild reported a second quarter net loss of $7.5 million or $0.06 per diluted share compared to a net loss of $0.5 million or $0.00 per diluted share in the prior quarter and net income of $11.9 million or $0.09 per diluted share in the second quarter of 2012. Gross margin was 29.1 percent compared to 26.9 percent in the prior quarter and 32.6 percent in the year-ago quarter.
Fairchild reported second quarter adjusted gross margin of 29.8 percent, up 200 basis points from the prior quarter and 280 basis points lower than the second quarter of 2012. Adjusted gross margin excludes accelerated depreciation related to a line closure. Adjusted net income was $1.7 million or $0.01 per diluted share, compared to a net loss of $2.0 million or $0.02 per diluted share in the prior quarter and net income of $17.6 million or $0.14 per diluted share in the second quarter of 2012. See the Reconciliation of Net Income to Adjusted Net Income exhibit included in this press release for more details on the other adjustment items.
"We grew sales 4 percent sequentially in the second quarter and 7 percent through the first half of 2013," said Mark Thompson, Fairchild’s chairman and CEO. "Our high voltage product sales supporting the industrial and appliance markets were up 15 percent sequentially. We posted record quarterly sales for our products serving the automotive market. Power conversion products also recorded solid sales growth in the second quarter. We saw some incremental demand weakness from the notebook PC market and at a couple of large mobile customers that impacted Q2 sales and our backlog heading into the third quarter. We expect the weakness in notebooks to persist but have limited impact on our future results now that it accounts for less than 3 percent of total sales. Mobile sales are expected to increase in the third quarter due largely to one major customer and continued growth from our Chinese customers. Our guidance reflects some conservatism given how difficult it has been for our customers to forecast actual mobile demand."
"Adjusted gross margin increased 2 points sequentially due to higher factory loadings and better mix primarily in our high voltage products," said Mark Frey, Fairchild’s executive vice president and CFO. "We expect the impact of higher factory utilization and improved product mix to drive continued improvement in gross margin going forward. R&D and SG&A expenses came in at the low end of guidance at $98.2 million. The increase from the prior quarter was due primarily to the annual merit raise and higher variable compensation accruals. Free cash flow was $30 million for the second quarter which was driven by favorable changes in working capital and continued lower capital spending."
"We expect sales to be in the range of $355 to $370 million for the third quarter," said Frey. "Our current scheduled backlog is nearly sufficient to achieve the low end of this range. We expect adjusted gross margin to be 31.5 to 33.0 percent due primarily to improved factory utilization and better product mix. We anticipate R&D and SG&A spending to be $97 to $99 million. The adjusted tax rate is forecast at 15 percent plus or minus 3 percentage points for the quarter. Consistent with our usual practices, we are not assuming any obligation to update this information, although we may choose to do so before we announce third quarter results."
Adjusted gross margin, adjusted net income and free cash flow are non-GAAP financial measures and should not be considered replacements for GAAP results. See additional information on our non-GAAP financial measures and reconciliations to the most comparable GAAP measures in the appropriate reconciliation exhibit included in this press release as well as our SEC filings related to this announcement.
Fairchild Semiconductor has opened an eight-inch wafer fabrication line in Bucheon, Korea. The facility, completed ahead of schedule, begin production on July 1.
"Since our purchase of the Bucheon site in 1999, Fairchild has invested nearly $800 million USD in our Korean facilities," said Vijay Ullal, President and COO of Fairchild Semiconductor. "The new eight-inch Fab is a sign of our commitment to the Korean and greater Asian markets. The execution during the start-up of this fab has been flawless and we look forward to carrying this momentum into further delighting our customers."