SemiLEDs Corp (LEDS) 2013 Q4 法說會逐字稿

Welcome to the SemiLEDs Fiscal Fourth Quarter Financial Results Conference Call, for the quarter ending August 31, 2013. This call is being webcast live on the events and presentations page of the Investor's section of SemiLEDs website at www.semileds.com.

This call is property of SemiLEDs and any recording, reproduction, or transmission of this call without the express written consent of SemiLEDs is strictly prohibited.

As a reminder today's call is being recorded. You may listen to a webcast replay of this call by going to the investor's section of the SemiLEDs website and visiting the events and presentation page.

I would like to turn the call over the Erica Mannion of Sapphire Investor Relations, Investor Relations for SemiLEDs. Please go ahead.

Good morning, thank you for joining us to discuss SemiLEDs financial and operating results for the fiscal fourth quarter 2013. With me today are Trung Doan, Chairman and President and CEO and Tim Lin, Interim Chief Financial Officer. Today Trung will begin with a brief overview of industry dynamics and details of the fourth quarter and Tim will close the call with a review of the fiscal Q4 financial results. We will not be taking questions on today's call.

On the call today you may hear forward-looking statement about events and circumstances that have not yet occurred. Actual outcomes and results may differ materially from the expectations contained in these statements due to a number of risks and uncertainties. Please refer to the company's recent SEC filings at the SEC's website at www.sec.gov for detailed discussions and relevant risks and uncertainties. The company undertakes no responsibility to update this information in the conference call under any circumstance.

The press release distributed today that announced the company's results is available on the company's website at www.semileds.com in the Investor Section under Financial Press Releases. The current report on form 8k furnished with respect to our press release is available on the company's website, in the Investor's section under SEC filings and on the SEC website.

You will also hear discussions of non-GAAP financial measures, reconciliation of these non-GAAP measures to the most comparable GAAP financial measures are contained in the press release distributed today and available on the company's website. Now I will turn the call over to Trung Doan, Chairman, President and CEO. Trung, please go ahead.

Good morning and thank you for joining our call today to discuss our fiscal fourth quarter and full year 2013 results. As you saw in the press release we distributed earlier this morning our revenues came in at $3.4 million. About a year ago we made a conscious decision to change our strategy and refocus the business on profitable segments within niche markets, such as UV while we still sell chips and components, we continue to lower our dependence on general lighting chips.

As this market is becoming increasing (inaudible) is that we have focused business on more profitable segment of the value change such as components and lightings products. We believe the change in strategy will allow us to steadily improve our bottom line and gross margin. Over the past year we have been working at insuring our human and financial resources and assets are focused on achieving this long-term goal.

Upgrading our Chinese distribution channel by adding several new service agents and distancing ourselves from unprofitable business by focusing on niche market opportunities, with regard to manufacturing resources as our product mix evolves. We have and will continue to invest in our component manufacturing assets.

In an effort to help evaluate this confusion we recently acquired an additional LED component production line and added an array of new LED component products and related technology to our existing products and technology portfolios.

We believe we are (inaudible) LED technology together with this new LED component technology we will provide an advantage in the niche market we are targeting.

As an example of the steps we are taking to divert new products for these higher value markets, we announced our 10 watt and M63 RGBW integrated 6363 LED which deliver over 4,010 total lumens of combined red, green, blue and white light output.

Besides our wide range of color changing applications including entertainment, black scale displays, and architectural lighting. The M63 RGBW bring together for the first time SemiLEDs vertical, (inaudible) chip, and ceramic packaging technologies. With the industry trends to high integrations to reduce component count and simplify designs, the M63 RGBW represents a great example of how SemiLED is drawing on this technology and system level expertise to create unique products for the market.

As we look out to the next quarter and the year ahead we remain optimistic about opportunity in the market and the prospect it presents. Above all our strategy remains the same. We are committed to a profitable growth by focusing on niche markets like UV and architectural lighting, where our different share of products offering enable us to earn high margins on our products.

I thank you for your time today and your interest in SemiLED. Now I will turn the call over to Tim so he can review the financial results in more detail.

Thank you Trung, and thank you everyone for joining us today. As a reminder I am referring to our fiscal quarters and fiscal full year as I walk through the financials. I will begin by walking through the details for our fiscal fourth quarter and provide a summary of the year end financials.

For the fourth quarter of 2013 the revenue was $3.4 million. For the full year 2013 revenues were $18 million. Revenues attributable to the sale of our LED chips decreased 7% sequentially and decreased 30% for the full year compared to 2012.

LED chip revenue represented approximately 27% of our total revenues in the fourth quarter and 30% of our total revenues for the full year. Revenues attributable to the sale of our LED components decreased 25% sequentially and decreased 53% year over year. Representing approximately 34% of our revenues in the fourth quarter and 39% of our revenues for the full year.

Revenues from our lighting products increased 13% sequentially but decreased 5% year over year, representing approximately 29% of our revenues in the fourth quarter and 23% of our revenues for the full year.

GAAP net loss attributable to some of the stock holders was $17.9 million for the quarter which compares to a loss of $11 million in the third quarter of 2013, and a loss of $24.6 million in the fourth quarter of 2012.

GAAP diluted net loss per share for the fourth quarter was $0.64 which compared to a loss of $0.40 in the third quarter of 2013 and to a loss of $0.90 in fourth quarter of 2012.

This quarter GAAP net loss attributable to some of the stockholders includes an impairment charge on long-lived assets of $10.1 million. The impairment charge was triggered, mainly, by significant under utilization of our manufacturing facilities of a succinct period of time. This required us to required us to reassess our long-lived assets for potential further impairments.

Taking into consideration a third-party independent evaluation we determined the revised fair value of our long-lived assets. The impairment change was primarily allocated to machinery and equipment used in the manufacturing of LED (inaudible) wafers and chips.

GAAP net loss attributable to some of the stockholders for the full year of 2013 was $43.7 million, which compared to the loss of $49.5 million for the full year of 2012. GAAP diluted net loss per share for the full year was $1.58 compared to a loss of $1.80 for the full year of 2012.

On a non-GAAP basis net loss attributable to some of the stockholders was $7.3 million for the quarter, which compared to a loss of $6.6 million in the third quarter of 2013 and a loss of $16.6 million in the fourth quarter of 2012.

Non-GAAP diluted net loss per share for the quarter was $0.26 compared to a loss of $0.24 last quarter and a loss of $0.60 for the fourth quarter of 2012. Non-GAAP net loss for the fourth quarter of 2013 excludes stock based compensation expense of $523,000 and an impairment change on long-lived assets of $10.1 million net of related taxes.

On a non-GAAP basis net loss attributable to some of the stockholders for the full year of 2013 was $27.8 million, which compared to a net loss of $37.8 million for the full year 2012. Non-GAAP diluted net loss per share for the full year was $1.01 compared to a loss of $1.38 for the full year of 2012.

Non-GAAP net loss for the full year of 2013 excludes stock based compensation expense of $2 million and impairment charges on long-lived assets go well and [investment] of the aggregate of $13.9 million net of related taxes.

SG&A expenses were $2.9 million for the quarter which represents a $752,000 sequential increase due to the write off of certain property, plants, and equipment and increasing that debt expense. SG&A expenses were $11.4 million for the full year of 2013, which represents a decrease of $2.9 million compared to the full year of 2012.

Primarily due to lower professional service expenses for legal and advisory services, a decrease in stock based compensation expense for our directors and decreases in various other expenses as a result of our cost reduction initiative.

R&D expenses were $1.2 million for the quarter, which is approximately flat compared to the third quarter 2013. R&D expenses were $4.6 million for the full year of 2013 which represents a decrease of $2.9 million compared to the full year of 2012.

Growth margin for the fourth quarter was negative 103%, which compares to negative 129% in the previous quarter. Growth margins for the full year was negative 82% compared to negative 19% for the same time period last year.

Moving to the balance sheet. As of August 31, 2013, working capital was $37.4 million. Cash and cash equivalents were $36.3 million, compared to the cash and cash equivalent of $41.4 million in the third quarter of 2013.

Next quarter we expect cash use to increase due to the recent acquisition of an additional LED component production line and an added array of new LED component products and related technology as Trung mentioned earlier.

Days sales outstanding were 59 days as compared to 66 days for the prior quarter. Inventory days on hand were 137 days compared to 106 days at the end of the prior quarter. Inventory was $10.5 million at August 31, 2013 a sequential increase of $1 million from the third quarter, primarily as we carry a higher level of component inventories.

Cash using operations during the fourth quarter was $4.7 million compared to $2.3 million in the previous quarter. We spent approximately $83,000 on capital expenditures in the fourth quarter. This resulted in free cash flow of negative $4.7 million. As a reminder we define free cash flow as cash provided by operations, less capital expenditures.

Cash using operations during the full year of 2013 was $14.5 million compared to $15.8 million for the full year 2012. Including capital expenditures of $2.7 million the free cash flow for the full year of 2013 was negative $17.2 million compared to negative $27.3 million for the full year 2012.

Now I will provide guidance for our fiscal first quarter. We expect revenue to be approximately $3.5 million plus or minus 10% and GAAP growth margin to continue to be negative for the quarter as we will not fully utilize our production capacity.

GAAP net loss attributable to some of the stock holders for the first quarter is expected to be approximately $7.5 million. GAAP EPS is expected to be approximately negative $0.27 per diluted share. The diluted share outstanding count is estimated at $27.8 million.

This concludes our formal comments. Thank you everyone for your continued interest and taking the time to join the call today. I will now hand the call over to the operator for closing -- operator.

This does conclude today's conference thank you for your participation.