O2Micro Reports Third Quarter 2018 Financial Results

Oct 31, 2018

GEORGE TOWN, Grand Cayman, Oct. 31, 2018 (GLOBE NEWSWIRE) --

Operational and Strategic Highlights:

  • Q3 2018 Revenue was up 10.6% sequentially and within the range of guidance provided on August 1, 2018.

  • GAAP net loss per fully diluted ADS in the third quarter of 2018 was 13 cents, with non-GAAP net loss of 5 cents per fully diluted ADS.

  • Revenue growth in the fourth quarter of 2018 is expected to range between -5% and 5% compared to Q3 2018. 

O2Micro® International Limited (NASDAQ: OIIM), a global leader in the design, development and marketing of high-performance integrated circuits and solutions, reported its financial results today for the third quarter ending September 30, 2018.

Financial Highlights for the Third Quarter ending September 30, 2018:
O2Micro International Limited (the “Company”) reported Q3 2018 revenue of $16.8 million. Revenue was up 10.6% sequentially, and up 8.3% from the same quarter in the previous year. The gross margin in the third quarter of 2018 was 50.5%, which was down from 52.1% in the prior quarter, and up from 50.3% in the third quarter of 2017. The gross margin remains in our target range and varies primarily with the quarterly revenue and product mix. During the third quarter of 2018, the Company recorded total GAAP operating expenses of $10.2 million, compared to $9.7 million in the second quarter of 2018, and $9.5 million in the year-ago Q3 period. The GAAP operating margins for the third quarter of 2018, the second quarter of 2018, and third quarter of 2017 were (10.1%), (11.9%), and (11.1%), respectively.

GAAP net loss was $3.5 million in Q3 2018. This compares to a GAAP net income of $1.5 million in the second quarter of 2018 and a GAAP net loss of $1.4 million in Q3 2017. GAAP net loss per fully diluted ADS was $0.13 in Q3 2018. This compares to a GAAP net income per fully diluted ADS of $0.06 in Q2 2018 and a GAAP net loss per fully diluted ADS of $0.05 in Q3 2017.

Supplementary Data:
The Company ended the third quarter of 2018 with $41.2 million in unrestricted cash and short-term investments or $1.58 per outstanding ADS. The accounts receivable balance was $11.3 million and represented 60 days sales outstanding at the end of Q3 2018. Inventory was $10.0 million or 108 days and turned over 3.3 times during Q3 2018. As of September 30, 2018, the Company had $54.6 million in working capital and the book value was $82.0 million, or $3.15 per outstanding ADS. As of September 30, 2018, O2Micro International Limited had a total of 395 employees worldwide, including 249 engineers.

Management Commentary:
“Our Fourth quarter of 2018 revenue guidance reflects continued positive design activity momentum in the consumer and industrial market growth drivers. We are pleased to see our battery products group continuing to have new product introductions to the market supporting automotive, power tools and household appliance sectors. We also see strong growth drivers for higher end panel backlighting markets utilizing our innovative IC as consumer trends move toward 4K and HDR, as well as our intelligent, high performance power solutions for mobile devices,” said Sterling Du, O2Micro’s Chairman and CEO. “We believe our solutions design wins for these product segments will enable ongoing growth despite the dynamic consumer market and lead O2Micro back to long term profitability.”

Conference Call:
O2Micro will hold its third quarter conference call today, October 31, 2018, at 6:00AM Pacific, 9:00AM Eastern. You may participate using the following dial-in information.

Conference Code: 3590026
Participants, Int'l Toll: +1 334-323-0522
Participants, US/CAN: 877-260-1479

The Call-in Audio Replay will be available from November 2nd, 2018, 12:00 Eastern Time (US & Canada) through November 10th, 2018 12:00 Eastern Time (US & Canada)
https://event.mymeetingroom.com/Public/WebRegistration/Y29uZmVyZW5jZUlkPTM1OTAwMjYmdHlwZT1yZXBsYXkmbGFuZ3VhZ2U9ZW5nbGlzaA==
A live webcast will also be available on the Company's website at http://ir.o2micro.com, and an online replay will be available on the website for one week.

About O2Micro:
Founded in April 1995, O2Micro develops and markets innovative power management components for the Computer, Consumer, Industrial, Automotive and Communications markets. Products include LED General Lighting, Backlighting, Battery Management, and Power Management. The Company maintains offices worldwide. Additional Company and product information can be found on the Company website at www.o2micro.com.

O2Micro, the O2Micro logo, and combinations thereof are registered trademarks of O2Micro. All other trademarks or registered trademarks are the property of their respective owners.

Statements made in this release that are not historical, including statements regarding O2Micro or its management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal Securities Laws. Such statements involve risks, speculation and uncertainties that may cause actual results to differ materially from those set forth in these statements or from management's current views and expectations. Risks and uncertainties in this release may include, without limitation, any one or combination of the following: the effect of competitive and economic factors; real property value fluctuations and market demand; legal changes in any relevant rules and regulations pertaining to O2Micro's business; changes in technology and industry standards, and O2Micro's reaction to those factors; consumer and business buying decisions with respect to our customers' products incorporating O2Micro's products; continued competitive pressures in the marketplace; the ability of O2Micro to deliver to the marketplace, and stimulate customer demand therein, for new products and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on O2Micro's gross margins; the inventory risk associated with O2Micro's need to order, or commit to order, product components and product capacity in advance of forecast customer orders; the continued availability of acceptable terms of certain components and services essential to O2Micro's business which are currently obtained by the Company from sole or limited sources; the effect that O2Micro's dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity, availability or cost of products manufactured or services rendered; risks associated with O2Micro's international operations; the potential impact of a finding that O2Micro has infringed on the intellectual property rights of others, or that any third party may have infringed on O2Micro's intellectual property that may negatively affect O2Micro's business; O2Micro's legal classifications with governmental and regulatory agencies; O2Micro's dependency on the performance of distributors, carriers, independent sales representatives, and other resellers of O2Micro's products; the effect that product and service quality problems could have on O2Micro's sales ability and operating profits; the ability of O2Micro to deliver its products in a timely fashion to its customers, and the possible negative ramifications if such is not possible; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of other legal proceedings. Actual results may differ materially due to numerous risk factors. Such risk factors are more fully enumerated in O2Micro's 20-F Annual Filings, Annual Report(s), 6-K's, the Form F-1 filed in connection with the Company's initial public offering in August 2000, information posted on our website at www.o2micro.com, and other documents filed with the SEC, NASDAQ or any other public agency from time to time. The statements herein are based on dated information on the dates mentioned herein, which is subject to change. O2Micro assumes no obligation to update or revise the information provided on today, or any other forward-looking information, whether as a result of new information, future events or any other information that may arise. This information only speaks to the respective dates mentioned in said information.

     
O2MICRO INTERNATIONAL LIMITED AND SUBSIDIARIES
     
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
 (In Thousand U.S. Dollars, Except Per Share Amounts)
                   
    Three Months Ended       Nine Months Ended  
    September 30,       September 30,  
       2018       2017       2018       2017  
                               
NET SALES $ 16,815     $ 15,520     $ 46,128     $ 44,988  
                               
COST OF SALES   8,322       7,707       22,498       21,901  
                               
GROSS PROFIT   8,493       7,813       23,630       23,087  
                               
OPERATING EXPENSES                              
Research and development (1)   5,245       4,662       14,746       13,215  
Selling, general and administrative (1)   4,947       4,880       14,946       14,374  
Litigation Income   -       -       -       (19 )
                               
Total Operating Expenses   10,192       9,542       29,692       27,570  
                               
LOSS FROM OPERATIONS   (1,699 )     (1,729 )     (6,062 )     (4,483 )
                               
NON-OPERATING INCOME                              
Interest income   87       88       298       257  
Net gain (loss) recognized on long-term investments   (1,687 )     -       11,287       -  
Foreign exchange gain – net   3       296       32       137  
Other – net   122       199       430       504  
Total Non-operating Income (Loss)   (1,475 )     583       12,047       898  
                               
INCOME (LOSS) BEFORE INCOME TAX   (3,174 )     (1,146 )     5,985       (3,585 )
                               
INCOME TAX EXPENSE   281       229       811       681  
                               
NET INCOME (LOSS)   (3,455 )     (1,375 )     5,174       (4,266 )
                               
OTHER COMPREHENSIVE INCOME                              
Foreign currency translation adjustments   (290 )     (128 )     (583 )     665  
Unrealized loss on available-for-sale securities   -       -       -       (1 )
Unrealized pension gain   1       -       5       2  
Total Other Comprehensive Income (Loss)   (289 )     (128 )     (578 )     666  
                               
COMPREHENSIVE INCOME (LOSS) $ (3,744 )   $ (1,503 )   $ 4,596     $ (3,600 )
                               
EARNINGS (LOSS) PER ADS                              
Basic $ (0.13 )   $ (0.05 )   $ 0.20     $ (0.17 )
Diluted $ (0.13 )   $ (0.05 )   $ 0.19     $ (0.17 )
                               
ADS UNITS USED IN EARNINGS (LOSS) PER ADS CALCULATION:                              
Basic (in thousands)   26,039       25,718       26,015       25,807  
Diluted (in thousands)   26,039       25,718       26,579       25,807  
                               
(1) INCLUDES STOCK-BASED COMPENSATION CHARGE AS FOLLOWS:                              
Research and development $ 60     $ 54     $ 182     $ 168  
Selling, general and administrative $ 290     $ 336     $ 886     $ 1,033  
         



     
O2MICRO INTERNATIONAL LIMITED AND SUBSIDIARIES
     
CONSOLIDATED BALANCE SHEETS
(In Thousand U.S. Dollars, Except Share Amounts)
     
    September 30,       December 31,  
    2018       2017  
ASSETS   (Unaudited)       (Audited)  
               
CURRENT ASSETS              
Cash and cash equivalents $ 33,856     $ 28,520  
Restricted cash   34       35  
Short-term investments   7,331       17,601  
Accounts receivable – net   11,291       9,184  
Inventories   9,960       9,330  
Prepaid expenses and other current assets   2,326       1,245  
Total Current Assets   64,798       65,915  
               
LONG-TERM INVESTMENTS   13,104       3,112  
               
PROPERTY AND EQUIPMENT – NET   13,703       13,755  
               
OTHER ASSETS   2,132       2,300  
               
TOTAL ASSETS $ 93,737     $ 85,082  
               
LIABILITIES AND SHAREHOLDERS’ EQUITY              
               
CURRENT LIABILITIES              
Notes and accounts payable $ 5,138     $ 2,460  
Income tax payable   435       341  
Accrued expenses and other current liabilities   4,654       4,379  
Total Current Liabilities   10,227       7,180  
               
OTHER LONG-TERM LIABILITIES              
Accrued pension liabilities   333       355  
Deferred income tax liabilities   1,099       906  
Other liabilities   86       86  
Total Other Long-Term Liabilities   1,518       1,347  
               
Total Liabilities   11,745       8,527  
               
COMMITMENTS AND CONTINGENCIES              
               
SHAREHOLDERS’ EQUITY              
Preference shares at $0.00002 par value per share              
Authorized – 250,000,000 shares   -       -  
Ordinary shares at $0.00002 par value per share              
Authorized – 4,750,000,000 shares              
Issued – 1,669,036,600 shares as of September 30, 2018 and December 31, 2017
Outstanding –1,301,978,200 and 1,284,146,100 shares as of September 30, 2018 and
  December 31, 2017, respectively
  33       33  
Additional paid-in capital   142,794       142,946  
Accumulated deficits   (42,780 )     (47,517 )
Accumulated other comprehensive income   4,759       5,337  
Treasury stock – 367,058,400 and 384,890,500 shares as of September 30, 2018 and
  December 31, 2017, respectively
  (22,814 )     (24,244 )
Total Shareholders’ Equity   81,992       76,555  
               
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 93,737     $ 85,082  
               


O2MicroDaniel Meyberg
Investor Relations
ir@o2micro.com

O2Micro International Limited Logo

Source: O2Micro, Inc.