IR ends year with near-record quarter

International Rectifier has reported pro forma earnings of $36.6 million (or $0.52 per share) in the June quarter.

International Rectifier has reported pro forma earnings of $36.6 million (or $0.52 per share) in the June quarter (after including the dilutive impact of $0.01 per share from the first-time inclusion of 7.4 million shares underlying the company's convertible debenture).

This compares with $29.8 million (or $0.43 per share) in the March quarter and $15.4 million (or $0.24 per share) in the prior-year quarter.

The pro forma June quarter earnings excluded a $9.5 million pretax charge for ongoing severance and restructuring activities.

The pro forma March quarter earnings excluded $9.9 million in restructuring-related pretax charges and $5.9 million pretax gain related to the Hitachi settlement.

The prior-year June quarter pro forma earnings excluded $3.8 million in restructuring-related pretax charges.

On a GAAP basis, net income was $29.4 million (or $0.42 per share) in the June quarter versus $26.7 million (or $0.39 per share) in the March quarter and $13.2 million (or $0.20 per share) in the prior-year quarter.

The calculation of June quarter GAAP earnings per share included the dilutive impact of 7.4 million shares underlying the company's convertible debenture.

Revenues were $298.6 million in the June quarter, up 8% from $275.4 million in the March quarter, and up 31% from $228.4 million in the prior-year quarter.

In the June quarter, the company discontinued $14 million of commodity product revenues as previously announced.

If included, these revenues would have meant an overall growth rate of about 13%.

Revenues were up across all regions, led by Asia Pacific, up 14% over the March quarter and 60% from the prior-year quarter.

Sales of high performance analogue ICs and advanced circuit devices grew 10% from the prior quarter and 57% from the prior-year quarter.

Overall, orders rose 5% from the March quarter and 37% over the prior-year quarter to reach a new record level.

Chief Executive Officer Alex Lidow stated: "Orders grew steadily throughout the quarter with June being the strongest month".

"Our backlog is the highest in the company's history".

"It has grown steadily every quarter for the past seven quarters climbing to over $400 million, up 65% from $245 million in the prior year".

"Our record backlog of unfilled orders reflects, in part, the success of our proprietary products in the new generation of desktops, notebooks and servers combined with the strong growth of corporate IT spending.

Our IT revenue grew 20% sequentially and 69% from a year ago".

Distributor shipments of IR products to their customers hit a record level in the June quarter, up 11% over March and 49% from the prior-year quarter.

IR shipments to distributors increased 4% from the March quarter and 32% from the prior-year quarter, and represented 29% of revenues.

Pricing was firm in the June quarter, consistent with earlier guidance.

Royalties in the June quarter were $10.9 million, up slightly from the March quarter.

Cash from operations was $80 million for the quarter and $163 million for the fiscal year.

The company's cash and cash investments totalled $836 million at the end of the June quarter.

June quarter gross margin expanded 160 basis points from the March quarter to 41.2%, or within a fraction of IR's all-time record level.

Gross margin on incremental sales exceeded expectations at 59%, primarily resulting from a richer mix of proprietary products.

IR secured over $170 million in design wins in the June quarter reaching an all-time record.

During the quarter, IR won significant new business in target markets: For information technology applications, IR's ICs and advanced circuit devices including XPhase, DirectFET, DCBus and iPOWIR won leading positions at seven of the top PC and server companies and two of the top communications networking companies.

In notebooks and desknotes, IR won 22 new designs for Intel's latest Dothan platform and 23 P4 mobile-based designs.

In desktops, IR secured three additional designs based on Intel's new Grantsdale platform.

In high performance servers, IR won 26 new designs in platforms using Intel's Nocona processor and Lindenhurst chipset, and an additional 15 designs in other processor platforms.

IR won 27 new proprietary product designs at the leading communication networking companies.

Across each of these new platforms, IR's value and unit content is significantly higher than in previous generations.

In consumer electronics, Samsung, LG, and Matsushita chose high performance proprietary analog ICs and advanced circuit devices from IR to power their plasma, LCD and DLP digital televisions.

In energy-efficient appliances, IR won new designs for Sanyo, Miele, Hitachi and Carrier programmes.

IR was selected for upcoming Bosch, Delphi, Motorola Automotive, Siemens VDO, Continental and TRW programmes and for BMW, Volkswagen, Audi, Ford and DaimlerChrysler vehicles for integrated starter alternators, electric power steering, engine preheat systems and direct fuel injection systems.

Power systems and advanced circuit devices won new designs for satellites and defence systems for Lockheed-Martin, General Dynamics, Honeywell, NASA, and Northrop-Grumman.

Lidow noted: "In July, orders continue strong, up dramatically from the prior-year quarter, with normal seasonal business patterns being reflected on a sequential basis, most notably in the automotive and European markets".

"We have more than 90% backlog coverage of our target revenue for the September quarter".

"A PC upgrade cycle is clearly visible, fuelled by business customers as noted in the latest CIO surveys as well as by the leaders in microprocessors, software and PCs".

"Within this backdrop of very promising market prospects, IR continues to discontinue or divest commodity, nonstrategic product business".

"Looking at the September quarter, revenues are expected to grow 1 to 3% sequentially taking into account the planned divestiture of approximately $11 million of products which, if included, would translate into an equivalent of a 5 to 7% growth rate for the overall company".

"We expect our overall gross margins to increase 150 basis points or more, setting record levels in September".

"We continue to see broad end-market demand for our high performance analogue ICs and advanced circuit device orders which are up 54% year-over-year".

"IR's leading design positions will continue to drive our growth".

For the fiscal year just ended, pro forma net income was $110.8 million (or $1.61 per share) on revenues of $1.06 billion, compared with prior-year pro forma net income of $48.5 million (or $0.75 per share) on revenues of $864.4 million.

The calculation of fiscal 2004 pro forma earnings per share included a $0.01 dilutive impact from the 7.4 million shares underlying the company's convertible debenture.

On a GAAP basis, IR reported a net income of $89.8 million (or $1.31 per share) for fiscal 2004 compared with a net loss of $89.6 million (or $1.40 per share) for fiscal 2003.

Back to top