Renesas Electronics Reports Third Quarter 2018 Financial Results

Third Quarter Sales Decreased Year-on-Year, from Weakening End Demand
Mainly in Industrial Business.
Temporary Decrease in Gross Margin Due to Optimization of Inventory Levels

Q3 2018: Non-GAAP⁽¹⁾semiconductor sales of 175.6 billion yen, down 8.7% year-on-year. Non-GAAP gross margin of 44.4%, down 3.3 points year-on-year and Non-GAAP operating profits (margin) of 24.1 billion yen (13.4%), down 11.8 billion yen (5.0 points) year-on-year.
Outlook for Q4 2018: Non-GAAP semiconductor sales of 181.1 billion yen, down 12.3% year-on-year. Non-GAAP gross margin of 40.0%, down 7.9 points year-on-year and Non-GAAP operating margin of 7.3%, down 8.9 points year-on-year.

TOKYO — (BUSINESS WIRE) — October 30, 2018 — Renesas Electronics Corporation (TSE:6723, “Renesas”), a premier supplier of advanced semiconductor solutions, today reported the financial results for the third quarter ended September 30, 2018 (July 1, 2018 to September 30, 2018).

“Our third quarter non-GAAP semiconductor sales decreased by 8.7% year-on-year, and our efforts to restrain our production volume as part of our improvement measures to achieve optimal inventory levels led to our non-GAAP gross margin to decrease by 3.3 points on a year-on-year basis,” said Bunsei Kure, Representative Director, President and CEO, Renesas Electronics Corporation. “For the fourth quarter ending December 31, 2018, in light of the weakening end demand mainly in the Industrial business, we expect semiconductor sales to decrease year-on-year and also foresee a drop in gross margin from a year-ago quarter to continuously promote optimization of inventory levels. As for our growth strategy, will continue our efforts to realize our mid- to long-term targets.”

Quarterly Financial Summary (Billion yen)


Non-GAAP Basis	Q3 FY2018	Q2 FY2018	Q3 FY2017	QoQ	YoY
	(Jul-Sep 2018)	(Apr-Jun 2018)	(Jul-Sep 2017)
Net Sales	180.2	203.5	195.5	-11.4%	-7.8%
Semi. Sales	175.6	199.1	192.3	-11.8%	-8.7%
Gross Margin	44.4%	45.4%	47.7%	-1.0pt	-3.3pts
Operating Income	24.1	33.9	35.9	-9.8	-11.8
Operating Margin	13.4%	16.7%	18.4%	-3.3pts	-5.0pts
EBITDA ⁽²⁾	46.8	56.5	54.9	-9.7	-8.2

Japan GAAP Basis	Q3 FY2018	Q2 FY2018	Q3 FY2017	QoQ	YoY
	(Jul-Sep 2018)	(Apr-Jun 2018)	(Jul-Sep 2017)
Net Sales	180.2	203.5	195.5	-11.4%	-7.8%
Semi. Sales	175.6	199.1	192.3	-11.8%	-8.7%
Gross Margin	44.1%	45.2%	47.6%	-1.0pt	-3.4pts
Operating Income	13.1	23.0	25.0	-9.9	-11.9
Operating Margin	7.3%	11.3%	12.8%	-4.0pts	-5.5pts
EBITDA	45.0	54.8	54.1	-9.8	-9.1

(1)		Non-GAAP Basis: Results excluding non-recurring and certain other items. Following the completion of the purchase of Intersil in February 2017, Non-GAAP figures exclude amortization of goodwill, amortization of purchased intangible assets, costs related to the Intersil acquisition, stock-based compensation cost, costs related to the offering, and PPA (purchase price allocation) effects associated with the acquisition. See page 5 for reconciliation of Japan GAAP and Non-GAAP.
(2)		EBITDA: Sum of operating income, depreciation and amortization, and amortization of long-term prepaid expenses. Amortization of goodwill is also included for Japan GAAP-based EBITDA.

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