SunEdison Semiconductor Reports First Quarter 2015 Results
May 07 2015 - 4:40PM
SunEdison Semiconductor Limited (Nasdaq:SEMI) ("SunEdison
Semiconductor" or the "Company") today reported financial results
for the first quarter ended March 31, 2015.
Highlights:
- Operating cash flow of $34.6 million, up compared to $8.9
million in the prior quarter
- Gross profit dollars and margin up significantly year-over-year
despite a decline in pricing
- SOI continues strong sequential growth trajectory
Results Review
Net sales for the 2015 first quarter were $199.4 million, down
3.2% sequentially compared to $205.9 million in the 2014 fourth
quarter and down 3.3% compared to the prior year. The primary
driver of both sequential and year-over-year declines was lower
prices. Sequential declines were partially offset by an improved
sales mix as EPI and SOI revenue grew.
Gross profit for the 2015 first quarter fell 26.8% to $17.2
million, or 8.6% of net sales, compared to $23.5 million, or 11.4%
of net sales, for the 2014 fourth quarter. Compared to the prior
year, gross profit grew 107.2%, representing 460 basis points of
margin expansion year-over-year. Gross profit and gross margin
percentage declined sequentially primarily due to lower pricing and
increased year-over-year due to higher unit volume and lower
manufacturing cost which more than offset lower pricing.
"I am pleased with our financial performance over the past
quarter. Although we have made excellent progress lowering our cost
structure since our IPO last year, we have not yet seen the
improvement in the industry pricing that we have been
expecting. Pricing appears to be stabilizing and utilization
remains high across the industry and in our plants," said Shaker
Sadasivam, SunEdison Semiconductor's President and Chief Executive
Officer. "We will continue to focus on factors under our
control such as growing our SOI business, where growth and margins
are above average, and evaluating opportunities to further reduce
costs and improve plant efficiencies while supplying our customers
with the high quality products they need."
First quarter 2015 operating loss was $12.7 million, compared to
an operating loss of $3.7 million in the 2014 fourth quarter and an
operating loss of $16.9 million in the 2014 first
quarter. First quarter 2015 included $1.2 million of
additional severance liability associated with the 2014
restructuring activities. The fourth and first quarters of
2014 included net favorable restructuring related reversals of $8.4
million and $4.6 million, respectively. The 2014 fourth
quarter also included $6.1 million of loss on sale of property,
plant and equipment and asset impairments.
First quarter 2015 operating cash flow was $34.6 million
compared to $8.9 million for the 2014 fourth quarter. The increase
was primarily due to improved working capital management and
various cash tax and restructuring payments in the 2014 fourth
quarter which did not recur in the 2015 first quarter. Capital
spending was $28.8 million and total cash generated was $2.4
million. The Company ended the quarter with cash and cash
equivalents of $90.6 million.
First quarter 2015 Adjusted EBITDA was $31.6 million, up 12.9%
compared to fourth quarter 2014 Adjusted EBITDA of $28.0 million,
and up significantly compared to 2014 first quarter Adjusted EBITDA
of $15.0 million. First quarter 2015 and first quarter 2014
Adjusted EBITDA included $10.8 million and $5.5 million,
respectively, related to foreign exchange gains associated with the
re-measurement of intra-company balances and derivative foreign
currency forward contracts. Please see the reconciliation and
a description of Adjusted EBITDA in the attached financial
tables.
Conference Call
SunEdison Semiconductor will host a conference call tomorrow,
May 8, 2015, at 9:00 a.m. ET to discuss the Company's first quarter
2015 results and other related business matters. A live webcast
will be available on the Company's web site at
www.sunedisonsemi.com. Interested investors should go to the
Company's web site at least fifteen minutes prior to the call to
register and download any necessary audio software.
A replay of the conference call will be available from 10:30
a.m. ET on May 8, 2015, until 11:59 p.m. ET on May 22, 2015. To
access the replay, please dial (320) 365-3844 at any time during
that period, using passcode 357967. A replay will also be available
on the Company's web site at www.sunedisonsemi.com.
About SunEdison Semiconductor
SunEdison Semiconductor is a global leader in the manufacture
and sale of silicon wafers to the semiconductor industry. For
over 55 years, SunEdison Semiconductor has been a pioneer in the
design and development of silicon wafer technologies. With R&D
and manufacturing facilities in the U.S., Europe, and Asia,
SunEdison Semiconductor enables the next generation of high
performance semiconductor devices. SunEdison Semiconductor's common
stock is listed on the NASDAQ OMX Global Select Market under the
symbol "SEMI."
-tables to follow-
SUNEDISON SEMICONDUCTOR
LIMITED AND SUBSIDIARIES |
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In millions, except
per share data) |
|
|
|
Three Months
Ended |
|
March 31, 2015 |
December 31,
2014 |
March 31, 2014 |
Net sales to non-affiliates |
$ 199.0 |
$ 204.9 |
$ 205.8 |
Net sales to affiliates |
0.4 |
1.0 |
0.3 |
Cost of goods sold |
182.2 |
182.4 |
197.8 |
Gross profit |
17.2 |
23.5 |
8.3 |
Operating expenses (income): |
|
|
|
Marketing and
administration |
20.5 |
21.1 |
21.8 |
Research and development |
8.1 |
8.4 |
8.0 |
Restructuring charges
(reversals) |
1.2 |
(8.4) |
(4.6) |
Loss on sale of property,
plant, and equipment |
— |
4.7 |
— |
Long-lived asset impairment
charges |
0.1 |
1.4 |
— |
Operating loss |
(12.7) |
(3.7) |
(16.9) |
Non-operating expenses (income): |
|
|
|
Interest expense |
3.5 |
3.7 |
0.2 |
Interest income |
(0.1) |
(0.1) |
(0.1) |
Interest, net - affiliates |
— |
— |
(0.1) |
Other, net |
(10.4) |
(2.0) |
(5.3) |
Total non-operating (income) expense |
(7.0) |
1.6 |
(5.3) |
Loss before income tax
expense |
(5.7) |
(5.3) |
(11.6) |
Income tax expense |
3.3 |
4.9 |
3.6 |
Loss before equity in loss of
equity method investments |
(9.0) |
(10.2) |
(15.2) |
Equity in loss of equity method investments,
net of tax |
(0.3) |
(0.3) |
— |
Net loss |
(9.3) |
(10.5) |
(15.2) |
Net loss attributable to noncontrolling
interests |
— |
— |
0.6 |
Net loss attributable to SunEdison
Semiconductor Limited shareholders |
$ (9.3) |
$ (10.5) |
$ (14.6) |
Basic loss per share |
$ (0.22) |
$ (0.25) |
$ (0.35) |
Diluted loss per share |
$ (0.22) |
$ (0.25) |
$ (0.35) |
Weighted-average shares used in computing
basic loss per share |
41.5 |
41.5 |
41.5 |
Weighted-average shares used in computing
diluted loss per share |
41.5 |
41.5 |
41.5 |
|
SUNEDISON SEMICONDUCTOR
LIMITED AND SUBSIDIARIES |
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS |
(In
millions) |
|
March 31, |
December 31, |
|
2015 |
2014 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 90.6 |
$ 88.2 |
Accounts receivable, net |
100.2 |
98.6 |
Accounts receivable,
affiliate |
9.4 |
4.3 |
Inventories |
112.9 |
122.1 |
Deferred tax asset |
27.3 |
27.3 |
Prepaid and other current
assets |
28.3 |
28.3 |
Total current assets |
368.7 |
368.8 |
Property, plant, and equipment, net |
585.3 |
598.8 |
Investments |
129.4 |
130.3 |
Other assets |
78.3 |
86.3 |
Total assets |
$ 1,161.7 |
$ 1,184.2 |
|
|
|
Liabilities and Equity |
|
|
Current liabilities: |
|
|
Current portion of long-term
debt |
$ 2.1 |
$ 2.1 |
Short-term borrowings |
7.6 |
— |
Accounts payable |
94.7 |
94.6 |
Accounts payable,
affiliate |
22.9 |
9.4 |
Accrued liabilities |
48.6 |
57.6 |
Accrued wages and salaries |
27.1 |
23.6 |
Restructuring liabilities |
12.5 |
14.0 |
Total current liabilities |
215.5 |
201.3 |
Long-term debt, less current portion |
204.6 |
205.0 |
Pension and post-employment liabilities |
54.5 |
54.7 |
Restructuring liabilities |
3.5 |
3.9 |
Other liabilities |
19.6 |
27.8 |
Total liabilities |
497.7 |
492.7 |
|
|
|
Shareholders' equity: |
|
|
Ordinary shares |
946.7 |
943.1 |
Accumulated deficit |
(88.0) |
(78.7) |
Accumulated other comprehensive
loss |
(195.9) |
(174.1) |
Total SunEdison Semiconductor
Limited shareholders' equity |
662.8 |
690.3 |
Noncontrolling interests |
1.2 |
1.2 |
Total shareholders' equity |
664.0 |
691.5 |
Total liabilities and
shareholders' equity |
$ 1,161.7 |
$ 1,184.2 |
|
SUNEDISON SEMICONDUCTOR
LIMITED AND SUBSIDIARIES |
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In
millions) |
|
|
|
Three Months
Ended |
|
March 31, 2015 |
December 31,
2014 |
March 31, 2014 |
Cash flows from operating activities: |
|
|
|
Net loss |
$ (9.3) |
$ (10.5) |
$ (15.2) |
Adjustments to reconcile net
loss to net cash provided by operating activities: |
|
|
|
Depreciation and
amortization |
29.7 |
28.6 |
28.3 |
Long lived asset impairment
charges |
0.1 |
1.4 |
— |
Loss on sale of property,
plant, and equipment |
— |
4.7 |
— |
Stock-based compensation |
3.6 |
4.0 |
2.3 |
Provision (benefit) for
deferred taxes |
3.5 |
5.3 |
(2.2) |
Other |
(0.2) |
0.2 |
(0.4) |
Changes in operating assets and
liabilities: |
|
|
|
Accounts receivable |
(3.9) |
5.1 |
(0.5) |
Inventories |
5.7 |
4.1 |
4.9 |
Amounts due from
affiliates |
(11.1) |
(6.7) |
(5.0) |
Amounts due to affiliates |
11.9 |
6.9 |
16.1 |
Prepaid and other current
assets |
(0.4) |
(0.8) |
3.6 |
Accounts payable and accrued
liabilities |
7.8 |
(5.1) |
18.7 |
Income taxes payable |
3.1 |
(17.6) |
5.4 |
Pension and post-employment
liabilities |
(0.1) |
(0.5) |
(1.5) |
Restructuring liabilities |
(0.6) |
(13.0) |
(5.0) |
Other |
(5.2) |
2.8 |
(5.2) |
Net cash provided by operating
activities |
34.6 |
8.9 |
44.3 |
Cash flows from investing activities: |
|
|
|
Capital expenditures |
(28.8) |
(23.1) |
(19.6) |
Notes receivable from
affiliates |
— |
— |
3.0 |
Disbursements made for notes
receivable |
(9.1) |
— |
— |
Other |
— |
1.6 |
— |
Net cash used in investing
activities |
(37.9) |
(21.5) |
(16.6) |
Cash flows from financing activities: |
|
|
|
Principal payments on long-term
debt |
(0.5) |
(0.5) |
— |
Proceeds from short-term debt
borrowings |
7.6 |
— |
— |
Deferred financing costs and
original issuance discount |
— |
(0.2) |
— |
Net Parent investment |
— |
— |
(30.7) |
Other |
0.1 |
— |
— |
Net cash provided by (used in)
financing activities |
7.2 |
(0.7) |
(30.7) |
Effect of exchange rate changes on cash and
cash equivalents |
(1.5) |
(1.6) |
(0.1) |
Net increase (decrease) in cash
and cash equivalents |
2.4 |
(14.9) |
(3.1) |
Cash and cash equivalents at beginning of
period |
88.2 |
103.1 |
40.8 |
Cash and cash equivalents at end of
period |
$ 90.6 |
$ 88.2 |
$ 37.7 |
|
SUNEDISON SEMICONDUCTOR
LIMITED AND SUBSIDIARIES |
UNAUDITED SUPPLEMENTAL
INFORMATION |
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURE |
(In
millions) |
|
|
|
|
ADJUSTED EBITDA CALCULATION
[*] |
|
|
Three Months
Ended |
|
March 31, 2015 |
December 31,
2014 |
March 31, 2014 |
Net loss attributable to SunEdison
Semiconductor Limited shareholders |
$ (9.3) |
$ (10.5) |
$ (14.6) |
Interest, net |
3.4 |
3.6 |
— |
Income tax expense |
3.3 |
4.9 |
3.6 |
Depreciation and
amortization |
29.0 |
28.0 |
28.3 |
Restructuring expense
(reversals) and other non-recurring items |
1.2 |
(8.4) |
(4.6) |
Loss on sale of property,
plant, and equipment |
— |
4.7 |
— |
Long-lived asset impairment
charges |
0.1 |
1.4 |
— |
Stock compensation expense |
3.6 |
4.0 |
2.3 |
Equity in loss of equity method
investments |
0.3 |
0.3 |
— |
Adjusted EBITDA [*] |
$ 31.6 |
$ 28.0 |
$ 15.0 |
[*] Adjusted EBITDA is a non-GAAP financial
measure. This measurement should not be viewed as an alternative to
GAAP measures of performance. The presentation of Adjusted EBITDA
should not be construed as an inference that our future results
will be unaffected by unusual or non-recurring items.
We define Adjusted EBITDA as earnings before net interest
expense, income tax expense (benefit), depreciation and
amortization, restructuring expense (reversals) and other
non-recurring items, loss on sale of property, plant, and
equipment, long-lived asset impairment charges, stock compensation
expense, and equity in loss of equity method investments. All of
the omitted items are either (i) non-cash items or (ii) items that
we do not consider in assessing our on-going operating performance.
Because it omits non-cash items, we feel that Adjusted EBITDA is
less susceptible to variances in actual performance resulting from
depreciation, amortization and other non-cash charges and more
reflective of other factors that affect our operating performance.
Because it omits the other items, we believe Adjusted EBITDA is
also more reflective of our on-going operating performance. We
believe Adjusted EBITDA is useful to investors in evaluating our
operating performance because:
- securities analysts and other interested parties use such
calculations as a measure of financial performance and debt service
capabilities, and
- it is used by our management for internal planning purposes,
including aspects of our operating budget and capital
expenditures.
Adjusted EBITDA has limitations as an analytical tool, and you
should not consider it in isolation or as a substitute for analysis
of our results as reported under GAAP. Some of these limitations
include:
- it does not reflect our cash expenditures or future
requirements for capital expenditures or contractual
commitments,
- it does not reflect changes in, or cash requirements for,
working capital,
- it does not reflect interest expense or the cash requirements
necessary to service interest or principal payments on our
outstanding debt,
- it does not reflect payments made or future requirements for
income taxes,
- it adjusts for restructuring expense (reversals) and other
non-recurring items, loss on sale of property, plant, and
equipment, and long-lived asset impairments which are factors that
we do not consider indicative of future performance,
- it adjusts for non-cash stock compensation expense and equity
in loss of equity method investments to more clearly reflect
comparable period-over-period cash operating performance,
- although it reflects adjustments for factors that we do not
consider indicative of future performance, we may, in the future,
incur expenses similar to the adjustments reflected in our
calculation of Adjusted EBITDA, and
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future and Adjusted EBITDA does not reflect cash
requirements for such replacements.
Investors are encouraged to evaluate each adjustment and the
reasons we consider it appropriate for supplemental analysis.
CONTACT: Investor & Media Contact
Chris Chaney
Director, Investor Relations & Corporate Communications
SunEdison Semiconductor Limited
cchaney@sunedisonsemi.com
+1 636 474 5226
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