- Revenue ($187.5 million), gross margin (53.5%), pretax margin (15.0%) and earnings per share ($0.16) all met non-GAAP guidance
- Emerging Technologies Division revenue increased 40% sequentially and 153% year-on-year
- Dividend yield was 4.4% with favorable tax treatment
- Industrial and Automotive segments remained strong and combined for 45% of revenue
Fellow shareholders:
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)
NON-GAAP GAAP
---------------------------- ----------------------------
Q3 2014 Q2 2014 Q3 2013 Q3 2014 Q2 2014 Q3 2013
-------- -------- -------- -------- -------- --------
Revenue $187,516 $183,601 $188,723 $187,516 $183,601 $188,723
Gross margin 53.5% 54.0% 53.8% 51.7% 51.9% 48.6%
Pretax margin 15.0% 14.9% 12.5% 7.4% 5.2% -5.1%
Net income
(loss) $ 26,538 $ 26,723 $ 22,015 $ 12,840 $ 9,527 $ (8,358)
Diluted EPS
(loss per
share) $ 0.16 $ 0.16 $ 0.14 $ 0.08 $ 0.06 $ (0.06)
Third-quarter revenue increased 2.1% sequentially, led by growth in our Memory Products Division (MPD) and Emerging Technologies Division (ETD), which is now contributing significantly to Cypress's growth with 40% sequential growth to $7.5 million. All three of our ETD startup businesses grew sequentially and will contribute significantly to revenue growth in 2015. The revenue growth in MPD and ETD was partially offset by ongoing softness in the handset market.
Our non-GAAP pretax profit increased 18.7% year-on-year, partly driven by a 7.0% reduction in non-GAAP operating expenses.
Our cash, cash equivalents and short-term investments increased 5.8% sequentially, demonstrating the fall-through leverage of our current business model.
BUSINESS REVIEW
+ Our non-GAAP consolidated gross margin for the third quarter was 53.5%, down 0.5 percentage points from the previous quarter, primarily due to product mix. Excluding ETD, our core semiconductor gross margin was 55.3%.
+ Net inventory at the end of the third quarter was $88.8 million, flat from the second quarter.
+ 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 September 25, 2014. This dividend was paid on October 16, 2014.
NET SALES SUMMARY
(In thousands, except percentages)
(Unaudited)
THREE MONTHS ENDED
----------------------------------
Sept. 28, Jun. 29, Sept. 29, Sequential Year-over-
Business Unit 2014 2014 2013 Change Year Change
---------- ---------- ---------- ---------- -----------
PSD(1) $ 68,750 $ 74,676 $ 78,135 -8% -12%
MPD(1) $ 92,179 85,582 88,743 8% 4%
DCD(1) $ 19,091 17,989 18,884 6% 1%
ETD(2) $ 7,496 5,354 2,961 40% 153%
---------- ---------- ---------- ---------- -----------
Total $ 187,516 $ 183,601 $ 188,723 2% -1%
---------- ---------- ---------- ---------- -----------
Geographic
China and ROW 60% 62% 64% -3% -6%
Americas 17% 17% 14% 0% 21%
Europe 14% 13% 12% 8% 17%
Japan 9% 8% 10% 13% -10%
---------- ---------- ---------- ---------- -----------
Total 100% 100% 100% 0% 0%
---------- ---------- ---------- ---------- -----------
Channel
Distribution 68% 68% 74% 0% -8%
Direct 32% 32% 26% 0% 23%
---------- ---------- ---------- ---------- -----------
Total 100% 100% 100% 0% 0%
---------- ---------- ---------- ---------- -----------
1. PSD, Programmable Systems Division; DCD, Data Communications Division;
MPD, Memory Products Division.
2. ETD, Emerging Technologies Division includes businesses outside our core
semiconductor businesses outlined in Footnote 1. Includes subsidiaries
AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit.
