SAN JOSE, Calif. -- Fairchild Semiconductor (NYSE: FCS), the leading global supplier of power semiconductors, today announced results for the first quarter ended April 1, 2012. Fairchild reported first quarter sales of $352.2 million, up 4 percent from the prior quarter and 15 percent lower than the first quarter of 2011. There were 14 weeks in Fairchild’s fiscal first quarter of 2012.
Fairchild reported first quarter net income of $1.6 million or $0.01 per diluted share compared to $21.3 million or $0.17 per diluted share in the prior quarter and $43.5 million or $0.33 per diluted share in the first quarter of 2011. Gross margin was 29.8 percent compared to 30.0 percent in the prior quarter and 36.8 percent in the year ago quarter.
Fairchild reported first quarter adjusted gross margin of 29.8 percent, down 60 basis points sequentially and 710 basis points from the first quarter of 2011. Adjusted gross margin excludes the change in retirement plans, accelerated depreciation and inventory reserve releases/write offs related to fab closures. Adjusted net income was $8.3 million or $0.06 per diluted share, compared to $19.3 million or $0.15 per diluted share in the prior quarter and $51.3 million or $0.39 per diluted share in the first quarter of 2011. Adjusted net income excludes amortization of acquisition-related intangibles, restructuring and impairments, accelerated depreciation and inventory reserve releases/write offs related to fab closures, change in retirement plans, and associated net tax effects of these items and other acquisition-related intangibles.
“We saw solid improvement in bookings across all major end markets during the quarter,” said Mark Thompson, Fairchild’s president and CEO. “Our starting backlog on a 13 week basis is more than 10% higher than a quarter ago and supports our guidance for sales growth in the second quarter. We are seeing broad based reordering in all major end markets. The increase in bookings is also being driven by numerous new product launches and design wins, especially in our mobile product line, which we are ramping into production over the next few quarters.”
“First quarter sales were roughly in line with expectations as we slightly reduced channel inventory dollars,” stated Thompson. “Our first quarter results included about a one percentage point negative impact to sales due to supply disruptions with our optoelectronics products related to the flooding in Thailand that were finally resolved in late January. We posted record sales for our automotive products in the first quarter after growing 26% in 2011.
Distribution sell-through increased roughly 4 percent sequentially due primarily to strength in power conversion products and the recovery in optoelectronics.”
First Quarter Financials
“Gross margin decreased primarily due to the lower factory loadings from the holiday shutdowns at the end of Q4 and the start of Q1,” said Mark Frey, Fairchild’s executive vice president and CFO. “Margins were also impacted by the 8 inch fab start-up costs and price reductions. Effective day one of 2012, we adjusted the expected asset lives and amortization schedules for certain factory equipment to better reflect actual performance of the tools. The net effect of these changes was roughly a one point favorable impact to adjusted gross margin in the first quarter. Adjusted R&D and SG&A expenses were $94.8 million which was roughly flat sequentially on a 13 week basis. Free cash flow was a negative $33.0 million and was impacted by the payment of $49.8 million in capital expenses as well as annual bonuses during the first quarter. We decreased internal inventory dollars by 2 percent sequentially resulting in an ending level of 85 days of inventory.”
“We expect sales to be in the range of $360 to 380 million for the second quarter,” said Frey. “Our current scheduled backlog is sufficient to achieve the low end of this range. We expect adjusted gross margin to be 32.5 to 34.0 percent due primarily to higher factory utilization and better product mix. We anticipate R&D and SG&A spending to be approximately $96 to 99 million in the second quarter. The adjusted tax rate is forecast at 15 percent plus or minus 3 percent for the quarter. As with last quarter, we are not assuming any obligation to update this information, although we may choose to do so before we announce second quarter results.”
Fairchild Semiconductor International (Nasdaq: FCS)