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Alpha and Omega Semiconductor Reports Financial Results for the Fiscal Second Quarter of 2022 Ended December 31, 2021

Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL) today reported financial results for the fiscal second quarter of 2022 ended December 31, 2021.

The results for the fiscal second quarter of 2022 ended December 31, 2021 were as follows:

GAAP Financial Comparison

Quarterly

(in millions, except percentage and per share data)

(unaudited)

 

 

 

 

 

Three Months Ended

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

Revenue

 

$

193.3

 

 

$

187.0

 

 

$

158.8

 

Gross Margin

 

 

35.4

%

 

 

34.5

%

 

 

30.7

%

Operating Income

 

$

27.7

 

 

$

24.9

 

 

$

13.6

 

Net Income Attributable to AOS

 

$

383.0

 

 

$

23.4

 

 

$

12.9

 

Net Income Per Share Attributable to AOS - Diluted

 

$

13.54

 

 

$

0.85

 

 

$

0.47

 

 

Non-GAAP Financial Comparison

Quarterly

(in millions, except percentage and per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

Revenue

 

$

193.3

 

 

$

187.0

 

 

$

158.8

 

Non-GAAP Gross Margin

 

 

36.7

%

 

 

35.3

%

 

 

31.4

%

Non-GAAP Operating Income

 

$

37.4

 

 

$

30.8

 

 

$

18.5

 

Non-GAAP Net Income Attributable to AOS

 

$

34.0

 

 

$

29.3

 

 

$

17.8

 

Non-GAAP Net Income Per Share Attributable to AOS - Diluted

 

$

1.20

 

 

$

1.06

 

 

$

0.65

 

The non-GAAP financial measures in the schedule above and under the section “Financial Results for Fiscal Q2 Ended December 31, 2021” below exclude the effect of share-based compensation expenses, amortization of purchased intangible, legal costs related to government investigation, and income tax effect of non-GAAP adjustments in each of the periods presented, as well as gain on deconsolidation and changes of equity interest in the JV Company for the three months ended December 31, 2021. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.

Financial Results for Fiscal Q2 Ended December 31, 2021

  • Revenue was $193.3 million, an increase of 3.4% from the prior quarter and an increase of 21.7% from the same quarter last year.
  • GAAP gross margin was 35.4%, up from 34.5% in the prior quarter and up from 30.7% in the same quarter last year.
  • Non-GAAP gross margin was 36.7%, up from 35.3% in the prior quarter and up from 31.4% in the same quarter last year.
  • GAAP operating expenses were $40.6 million, up from $39.6 million in the prior quarter and up from $35.2 million in the same quarter last year.
  • Non-GAAP operating expenses were $33.5 million, a decrease of $1.6 million from last quarter and an increase of $2.0 million from the same quarter last year.
  • GAAP operating income was $27.7 million, up from $24.9 million in the prior quarter and up from $13.6 million in the same quarter last year.
  • Non-GAAP operating income was $37.4 million as compared to $30.8 million for the prior quarter and $18.5 million for the same quarter last year.
  • GAAP net income per diluted share attributable to AOS was $13.54 primarily due to gain on deconsolidation and changes of equity interest in the JV Company, compared to $0.85 net income per share for the prior quarter and $0.47 net income per share for the same quarter a year ago.
  • Non-GAAP net income per share attributable to AOS was $1.20 compared to $1.06 for the prior quarter and $0.65 for the same quarter a year ago.
  • Consolidated cash flow provided by operating activities was $50.8 million, compared to $80.6 million in the prior quarter.
  • The Company closed the quarter with $269.3 million of cash and cash equivalents.

AOS Chairman and Chief Executive Officer Dr. Mike Chang commented, “Last quarter, we crossed an important milestone of $1 quarterly non-GAAP EPS. This quarter, we are happy to report $1.20 non-GAAP EPS, which further reinforces our Company’s strong earnings power of $4.00 to $5.00 per share.”

Dr. Chang continued, “Looking back, calendar 2021 was an exceptional year for AOS. A few years ago, we set out to achieve a target annual revenue of $600 million in calendar year 2021. Today, the business that we have built has the product portfolio, customer relationships and production capacity to deliver well over our original revenue target, and our confidence in our business model and strategic positioning has never been greater. As we look to the future, we now have our sights set on actively planning and marching towards $1 billion annual revenues with much stronger and more sophisticated R&D capabilities and supply chain operations, and with most of our customers being the world’s leading OEMs in the markets that we serve.”

Business Outlook for Fiscal Q3 Ending March 31, 2022

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 third quarter of fiscal year 2022 are as follows:

  • Revenue is expected to be approximately $194 million, plus or minus $3 million.
  • GAAP gross margin is expected to be approximately 35.1% plus or minus 1%. Non-GAAP gross margin is expected to be approximately 36.0% plus or minus 1%. Non-GAAP gross margin excludes $0.8 million amortization of acquired IP and $1.0 million of estimated share-based compensation charge.
  • GAAP operating expenses are expected to be in the range of $41.9 million plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $34.5 million plus or minus $1 million. Non-GAAP operating expenses exclude $7.0 million of estimated share-based compensation charge and $0.4 million of estimated professional fees related to the government investigation.
  • Interest expense is expected to be approximately $0.5 million.
  • Income tax expense is expected to be in the range of $1.2 million to $1.4 million.

Conference Call and Webcast

AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal second quarter ended December 31, 2021 today, February 7, 2022 at 2:00 p.m. PT / 5:00 p.m. ET. To listen to the live conference call, please dial +1 (844) 200-6205 or +1 (929) 526-1599 if dialing from outside the United States and Canada. The access code is 522169. 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, statements relating to anticipated earnings power and Non-GAAP EPS on an annual basis, our growth opportunities and new markets, our annual revenue target, projected amount of revenue, gross margin, operating income, income tax expenses, net income, noncontrolling interest, and share-based compensation expenses, non-GAAP gross margin, non-GAAP operating expenses, tax expenses, and non-GAAP loss attributable to noncontrolling interest, our objectives to achieve long-term success, our ability to gain new customers and design wins, strategic partnership with customers, and other information under the section entitled “Business Outlook for Fiscal Q3 Ending March 31, 2022”. 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 impact of COVID-19 pandemic on our business; our lack of control over the joint venture in China; difficulties and challenges in executing our diversification strategy into different market segments; new 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; the state of semiconductor industry and seasonality of our markets; 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, 2021 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 income, net loss attributable to noncontrolling interest, net income, 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, as well as gain on deconsolidation and changes of equity interest in the JV Company. We also disclose certain non-GAAP financial measures in our guidance for the next quarter, including non-GAAP gross margin, operating expenses and earnings/loss in equity method investment. 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 amount of income tax effect of non-GAAP adjustments in the non-GAAP net income 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 technology, product design, and advanced packaging know-how to develop high performance power management solutions. AOS’ portfolio of products targets high-volume applications, including personal and 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 consolidated financial statements are prepared in accordance with U.S. GAAP.

 

Condensed Consolidated Statements of Operations

(in thousands, except percentages and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

 

 

 

 

 

 

Revenue

$

193,319

 

$

187,035

 

$

158,830

 

$

380,354

 

$

310,381

 

Cost of goods sold

 

124,954

 

 

122,468

 

 

110,081

 

 

247,422

 

 

219,109

 

Gross profit

 

68,365

 

 

64,567

 

 

48,749

 

 

132,932

 

 

91,272

 

Gross margin

 

35.4

%

 

34.5

%

 

30.7

%

 

34.9

%

 

29.4

%

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Research and development

 

16,516

 

 

17,812

 

 

15,423

 

 

34,328

 

 

30,114

 

Selling, general and administrative

 

24,132

 

 

21,806

 

 

19,736

 

 

45,938

 

 

37,241

 

Total operating expenses

 

40,648

 

 

39,618

 

 

35,159

 

 

80,266

 

 

67,355

 

Operating income

 

27,717

 

 

24,949

 

 

13,590

 

 

52,666

 

 

23,917

 

 

 

 

 

 

 

Interest expense and other income (loss), net

 

(68

)

 

(2,192

)

 

(381

)

 

(2,260

)

 

(930

)

Gain on deconsolidation of the JV Company

 

399,093

 

 

 

 

 

 

399,093

 

 

 

Loss on changes of equity interest in the JV Company, net

(7,641

)

(7,641

)

Net income before income taxes

 

419,101

 

 

22,757

 

 

13,209

 

 

441,858

 

 

22,987

 

 

 

 

 

 

 

 

Income tax expense

 

34,096

 

 

1,320

 

 

669

 

 

35,416

 

 

1,680

 

Net income

 

385,005

 

 

21,437

 

 

12,540

 

 

406,442

 

 

21,307

 

Net gain (loss) attributable to noncontrolling interest

 

2,007

 

 

(1,987

)

 

(363

)

 

20

 

 

(1,170

)

Net income attributable to Alpha and Omega Semiconductor Limited

$

382,998

 

$

23,424

 

$

12,903

 

$

406,422

 

$

22,477

 

 

 

 

 

 

 

Net income per common share attributable to Alpha and Omega Semiconductor Limited

 

 

 

 

 

Basic

$

14.40

 

$

0.89

 

$

0.50

 

$

15.35

 

$

0.88

 

Diluted

$

13.54

 

$

0.85

 

$

0.47

 

$

14.53

 

$

0.84

 

 

 

 

 

 

 

Weighted average number of common shares attributable to Alpha and Omega Semiconductor Limited used to compute net income per share

 

 

 

 

 

Basic

 

26,593

 

 

26,365

 

 

25,672

 

 

26,479

 

 

25,506

 

Diluted

 

28,287

 

 

27,638

 

 

27,353

 

 

27,963

 

 

26,834

 

 

 

 

 

 

 

Alpha and Omega Semiconductor Limited

Condensed Consolidated Balance Sheets

(in thousands, except par value per share)

(unaudited)

 

 

 

 

 

 

 

December 31, 2021

 

June 30, 2021

ASSETS

 

 

Current assets:

 

 

Cash and cash equivalents

$

269,306

 

$

202,412

 

Restricted cash

 

314

 

 

233

 

Accounts receivable, net

 

31,661

 

 

35,789

 

Other receivable, equity investee

 

25,030

 

 

 

Inventories

 

129,084

 

 

154,293

 

Other current assets

 

11,312

 

 

14,595

 

Total current assets

 

466,707

 

 

407,322

 

Property, plant and equipment, net

 

196,743

 

 

436,977

 

Operating lease right-of-use assets, net

 

22,263

 

 

34,660

 

Intangible assets, net

 

11,730

 

 

13,410

 

Equity method investment

 

376,061

 

 

 

Deferred income tax assets

 

440

 

 

5,167

 

Restricted cash - long-term

 

 

 

2,168

 

Other long-term assets

 

37,931

 

 

18,869

 

Total assets

$

1,111,875

 

$

918,573

 

LIABILITIES AND EQUITY

 

 

Current liabilities:

 

 

Accounts payable

$

62,175

 

$

80,699

 

Accrued liabilities

 

95,212

 

 

69,494

 

Income taxes payable

 

7,337

 

 

2,604

 

Short-term debt

 

8,960

 

 

58,030

 

Finance lease liabilities

 

 

 

16,724

 

Operating lease liabilities

 

4,293

 

 

5,679

 

Total current liabilities

 

177,977

 

 

233,230

 

Long-term debt

 

13,707

 

 

77,990

 

Income taxes payable - long-term

 

1,345

 

 

1,319

 

Deferred income tax liabilities

 

27,742

 

 

2,448

 

Finance lease liabilities - long-term

 

 

 

12,698

 

Operating lease liabilities - long-term

 

19,430

 

 

30,440

 

Other long-term liabilities

 

77,684

 

 

44,123

 

Total liabilities

 

317,885

 

 

402,248

 

Equity:

 

 

Preferred shares, par value $0.002 per share:

 

 

Authorized: 10,000 shares; issued and outstanding: none at December 31, 2021 and June 30, 2021

 

 

 

 

Common shares, par value $0.002 per share:

 

 

Authorized: 100,000 shares; issued and outstanding: 33,329 shares and 26,706 shares, respectively at December 31, 2021 and 32,975 shares and 26,350 shares, respectively at June 30, 2021

 

67

 

 

66

 

Treasury shares at cost: 6,623 shares at December 31, 2021 and 6,625 shares at June 30, 2021

 

(66,046

)

 

(66,064

)

Additional paid-in capital

 

275,410

 

 

259,993

 

Accumulated other comprehensive income

 

1,260

 

 

2,315

 

Retained earnings

 

583,299

 

 

176,895

 

Total Alpha and Omega Semiconductor Limited shareholder's equity

 

793,990

 

 

373,205

 

Noncontrolling interest

 

 

 

143,120

 

Total equity

 

793,990

 

 

516,325

 

Total liabilities and equity

$

1,111,875

 

$

918,573

 

 
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

 

Six Months Ended

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

 

 

 

 

 

 

GAAP gross profit

$

68,365

 

$

64,567

 

$

48,749

 

$

132,932

 

$

91,272

 

Share-based compensation

 

1,709

 

 

569

 

 

383

 

 

2,278

 

 

768

 

Amortization of purchased intangible

 

811

 

 

812

 

 

811

 

 

1,623

 

 

1,623

 

Production ramp up costs related to joint venture

 

 

 

 

 

 

 

 

 

275

 

Non-GAAP gross profit

$

70,885

 

$

65,948

 

$

49,943

 

$

136,833

 

$

92,315

 

Non-GAAP gross margin as a % of revenue

 

36.7

%

 

35.3

%

 

31.4

%

 

36.0

%

 

30.3

%

 

 

 

 

 

 

GAAP operating expense

$

40,648

 

$

39,618

 

$

35,159

 

$

80,266

 

$

67,355

 

Share-based compensation

 

6,838

 

 

4,066

 

 

2,841

 

 

10,904

 

 

5,332

 

Legal costs related to government investigation

 

293

 

 

431

 

 

843

 

 

724

 

 

1,950

 

Non-GAAP operating expense

$

33,517

 

$

35,121

 

$

31,475

 

$

68,638

 

$

60,073

 

 

 

 

 

 

 

GAAP operating income

$

27,717

 

$

24,949

 

$

13,590

 

$

52,666

 

$

23,917

 

Share-based compensation

 

8,547

 

 

4,635

 

 

3,224

 

 

13,182

 

 

6,100

 

Amortization of purchased intangible

 

811

 

 

812

 

 

811

 

 

1,623

 

 

1,623

 

Production ramp up costs related to joint venture

 

 

 

 

 

 

 

 

 

275

 

Legal costs related to government investigation

 

293

 

 

431

 

 

843

 

 

724

 

 

1,950

 

Non-GAAP operating income

$

37,368

 

$

30,827

 

$

18,468

 

$

68,195

 

$

33,865

 

Non-GAAP operating margin as a % of revenue

 

19.3

%

 

16.5

%

 

11.6

%

 

17.9

%

 

10.9

%

 

 

 

 

 

 

GAAP net income attributable to AOS

$

382,998

 

$

23,424

 

$

12,903

 

$

406,422

 

$

22,477

 

Share-based compensation

 

8,547

 

 

4,635

 

 

3,224

 

 

13,182

 

 

6,100

 

Amortization of purchased intangible

 

811

 

 

812

 

 

811

 

 

1,623

 

 

1,623

 

Gain on deconsolidation and changes of the equity interest in the JV Company

 

(391,452

)

 

 

 

 

 

(391,452

)

 

 

Production ramp up costs related to joint venture

 

 

 

 

 

 

 

 

 

135

 

Legal costs related to government investigation

 

293

 

 

431

 

 

843

 

 

724

 

 

1,950

 

Income tax effect of non-GAAP adjustments

 

32,800

 

 

1

 

 

(1

)

 

32,801

 

 

(9

)

Non-GAAP net income attributable to AOS

$

33,997

 

$

29,303

 

$

17,780

 

$

63,300

 

$

32,276

 

Non-GAAP net margin attributable to AOS as a % of revenue

 

17.6

%

 

15.7

%

 

11.2

%

 

16.6

%

 

10.4

%

 

 

 

 

 

 

GAAP net income attributable to AOS

$

382,998

 

$

23,424

 

$

12,903

 

$

406,422

 

$

22,477

 

Share-based compensation

 

8,547

 

 

4,635

 

 

3,224

 

 

13,182

 

 

6,100

 

Gain on deconsolidation and changes of the equity interest in the JV Company

 

(391,452

)

 

 

 

 

 

(391,452

)

 

 

Amortization and depreciation

 

11,938

 

 

13,722

 

 

13,200

 

 

25,660

 

 

25,689

 

Interest expense (income), net

 

541

 

 

2,176

 

 

1,649

 

 

2,717

 

 

3,271

 

Income tax expense

 

34,096

 

 

1,320

 

 

669

 

 

35,416

 

 

1,680

 

EBITDAS

$

46,668

 

$

45,277

 

$

31,645

 

$

91,945

 

$

59,217

 

 

 

 

 

 

 

GAAP diluted net income per share attributable to AOS

$

13.54

 

$

0.85

 

$

0.47

 

$

14.53

 

$

0.84

 

Share-based compensation

 

0.30

 

 

0.16

 

 

0.12

 

 

0.47

 

 

0.23

 

Gain on deconsolidation and changes of the equity interest in the JV Company

 

(13.84

)

 

 

 

 

 

(14.00

)

 

 

Production ramp up costs related to joint venture

 

 

 

 

 

 

 

 

 

0.01

 

Legal costs related to government investigation

 

0.01

 

 

0.02

 

 

0.03

 

 

0.03

 

 

0.07

 

Amortization of purchased intangible

 

0.03

 

 

0.03

 

 

0.03

 

 

0.06

 

 

0.06

 

Income tax effect of non-GAAP adjustments

 

1.16

 

 

0.00

 

 

(0.00

)

 

1.17

 

 

(0.00

)

Non-GAAP diluted net income per share attributable to AOS

$

1.20

 

$

1.06

 

$

0.65

 

$

2.26

 

$

1.20

 

 

 

 

 

 

 

Shares used to compute GAAP diluted net income (loss) per share

 

28,287

 

 

27,638

 

 

27,353

 

 

27,963

 

 

26,834

 

Shares used to compute Non-GAAP diluted net income per share

 

28,287

 

 

27,638

 

 

27,353

 

 

27,963

 

 

26.834

 

 

 

 

 

 

 

 

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