Alpha and Omega Semiconductor Reports Financial Results for the Fiscal Third Quarter of 2018 Ended March 31, 2018

“We posted solid results for the March quarter and delivered all key financial metrics above the mid points of our guidance ranges. Underpinned by a record level of design ins and design wins, our core business momentum continues to gain strong traction,” stated Dr. Mike Chang, chairman and CEO of the company, “While consistently delivering quality results, we have been carefully planning and investing in the capacity expansion of our Oregon fab, which we expect to be substantially completed by the end of the June quarter. The increased capacity in the second half of calendar 2018 will enable us to not only realize more of our revenue potential, but also cultivate deeper relationships with key customers. We are optimistic about the opportunities in front of us, and remain committed to execute our business plans to invigorate our earnings power.”

Business Outlook for Fiscal Q4 Ending June 30, 2018

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. The following statements contain non-GAAP financial measures and please see the section below “Use of Non-GAAP Financial Measures” for more information.

The construction of cleanrooms of our Chongqing joint venture was completed during the March quarter. We are now in the process of increasing headcount, installing equipment, conducting qualification processes, and performing trial productions. As previously announced, a substantial portion of our pre-production costs cannot be capitalized under GAAP accounting. Because these expenses do not reflect our normal business and operations, we exclude such pre-production expenses in our non-GAAP operating expenses. The following sets forth our expectations for the fourth quarter of fiscal year 2018:

  • Revenue is expected to be in the range of $106 million to $110 million.
  • Gross margin is expected to be approximately 26.5% plus or minus 1%. Non-GAAP gross margin is expected to be approximately 26.8% plus or minus 1%. Non-GAAP gross margin excludes $0.3 million of estimated share-based compensation charge.
  • Operating expenses are expected to be in the range of $29.3 million plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $23.0 million plus or minus $1 million. Both GAAP and non-GAAP operating expenses include $1.6 million to $1.8 million of estimated expenses relating to the development of our digital power team. Non-GAAP operating expenses exclude an estimated share-based compensation charge of approximately $2.3 million and estimated pre-production expenses relating to the Chongqing joint venture of $4.0 million.
  • Tax expenses are expected to be in the range of $1.0 million to $1.2 million.
  • Loss attributable to noncontrolling interest is expected to be around $2.6 million. On a non-GAAP basis, excluding estimated pre-production expenses, this item is expected to be approximately $0.5 million. The $2.1 million difference is due to the exclusion of estimated pre-production expenses in non-GAAP operating expenses.

Conference Call and Webcast

AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal third quarter of 2018 ended March 31, 2018 today, May 2, 2018 at 2:00 p.m. PT / 5:00 p.m. ET. To participate in the live call, analysts and investors should dial 877-312-8797 (or 253-237-1194 if outside the U.S.). To access the live webcast and the subsequent replay of the conference call, which will be available for seven days after the live call, go to the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com. In addition, a copy of the script of prepared remarks by CEO and CFO at the investor teleconference and webcast is available prior to the call at the Company’s investor relations website.

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 projected amount of revenue, gross margin, operating income (loss), income tax expenses, net income (loss), 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 ability and strategy to develop new products, including digital power controller products, the ability to expand our sales, increase our capacity and achieve sustained growth and profitability, the pre-production phase of our Chongqing joint venture, the relationship with key customers, and other information under the section entitled “Business Outlook for Fiscal Q4 Ending June 30, 2018”. 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 decline of the PC industry and our ability to respond to such decline; difficulties and challenges in executing our diversification strategy into different market segments; ordering pattern from distributors and seasonality; our ability to introduce or develop new and enhanced products that achieve market acceptance, 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, our ability to successfully operate our joint venture in China, and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2017 filed on September 5, 2017. 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.

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