Fairchild Semiconductor (Nasdaq:FCS), a leading global supplier of power semiconductors, today announced results for the fourth quarter and full year 2014 ended December 28, 2014. Fairchild reported fourth quarter sales of $336.6 million, down 12 percent from the prior quarter and 1 percent from the fourth quarter of 2013.
Fairchild reported a fourth quarter net loss of $42.7 million or $0.36 per diluted share compared to a net loss of $1.0 million or $0.01 per diluted share in the prior quarter and net income of $0.9 million or $0.01 per diluted share in the fourth quarter of 2013. Gross margin was 31.0 percent compared to 34.8 percent in the prior quarter and 30.9 percent in the year-ago quarter. The fourth quarter 2014 net loss included the impact of a $36.8 million non-cash valuation reserve for deferred tax assets in Korea.
Fairchild reported fourth quarter adjusted gross margin of 32.4 percent, down 290 basis points from the prior quarter and 110 basis points higher than the fourth quarter of 2013. Adjusted gross margin excludes accelerated depreciation related to factory closures. Adjusted net income was $11.9 million or $0.10 per diluted share, compared to $34.4 million or $0.28 per diluted share in the prior quarter and $13.5 million or $0.11 per diluted share in the fourth quarter of 2013. See the Reconciliation of Net Income (Loss) to Adjusted Net Income exhibit included in this press release for more details on the other adjustment items.
Full year revenue for 2014 was 2 percent higher than 2013 at $1.43 billion. Fairchild reported a net loss of $35.2 million or $0.29 per diluted share in 2014, compared to net income of $5.0 million or $0.04 per diluted share in 2013. Adjusted net income for 2014 was $76.4 million or $0.62 per diluted share, compared to $34.6 million or $0.27 per diluted share in 2013.
“Incoming order volume increased in December and has accelerated so far in January,” said Mark Thompson, Fairchild’s chairman, president and CEO. “Distributors decreased inventory of our products by approximately $8 million sequentially resulting in a lean 9 weeks of inventory which impacted our fourth quarter results but positions us well for the first half of 2015. We expect seasonally higher sales for our products serving the automotive, industrial and appliance end markets offset by normal weakness for consumer-related products in the first quarter. We also forecast modest sequential sales growth for our products supporting the mobile end market.”
“Our sales growth in 2014 was driven by strong demand for products serving the automotive, battery charging, lighting, communications infrastructure and data center end markets,” stated Thompson. “This growth was partially offset by lower demand across the year from one large customer. Looking forward, 2015 promises to be an exciting year for Fairchild as we complete our manufacturing consolidation which we expect will significantly improve our manufacturing flexibility and profitability.”
Fourth Quarter and Full Year Financials
“Adjusted gross margin decreased sequentially due primarily to lower factory loadings in the prior quarter and higher excess inventory adjustments,” said Mark Frey, Fairchild’s executive vice president and CFO. “R&D and SG&A expenses were down 4 percent sequentially to less than $92 million due to further cost reductions and lower variable compensation. We reduced factory utilization in the fourth quarter to adjust to the lower sales level which was partially offset by the $12 million inventory build to support our manufacturing consolidation. Free cash flow was $33 million for the fourth quarter and up 38 percent for the full year 2014 to $139 million. We repurchased 10 million shares of our stock for $142 million in 2014 to end the year with total cash and securities exceeding our debt by $155 million.”
“We expect sales to be in the range of $340 to $360 million for the first quarter,” said Frey. “We expect adjusted gross margin to be 31.0 to 32.0 percent due primarily to lower factory loadings from the prior quarter and the resumption of some payroll related taxes. We anticipate R&D and SG&A spending to be $94 to $96 million due primarily to the resumption of FICA and other payroll related taxes. The adjusted tax rate is forecast at 12 percent plus or minus 3 percentage points for the quarter. Consistent with our usual practices, we are not assuming any obligation to update this information, although we may choose to do so before we announce first quarter results.”
Adjusted gross margin, adjusted net income and free cash flow are non-GAAP financial measures and should not be considered replacements for GAAP results. See additional information on our non-GAAP financial measures and reconciliations to the most comparable GAAP measures in the appropriate reconciliation exhibit included in this press release as well as our SEC filings related to this announcement.
– See more at: http://globenewswire.com/news-release/2015/01/22/699184/10116372/en/Fairchild-Semiconductor-Reports-Results-for-the-Fourth-Quarter-and-Full-Year-2014.html?f=22&fvtc=5&fvtv=26807205#sthash.KgluFxMF.dpuf