Rf Micro Devices Inc. (NASDAQ:RFMD)

First Quarter Fiscal 2015 Results:

• Quarterly Revenue was 316.3 million, an increase of 8.0% quarter over quarter, as compared to 293.0 million in the same quarter last year.
• Non-GAAP Diluted EPS was $0.24 versus $0.09 in prior year.

"In the September quarter, RFMD anticipates broad-based revenue growth supported by new smartphone ramps, content increases in LTE, deepening penetration of 802.11 ac, and continued broad market strength. We expect our diversified revenue growth to outpace the growth rate of our underlying markets and drive continued robust growth in RFMD's gross profit, operating profit, and earnings per share."

Dean Priddy, CFO and vice president of administration of RFMD, said, "On the strength of a 24% sequential increase in quarterly revenue, non-GAAP gross profit expanded 38% sequentially to a record $149 million and non-GAAP operating profit expanded 135% sequentially to a record $78.9 million. Non-GAAP gross margin was 47.1%, up 510 basis points versus the prior quarter.

"RFMD is executing to a financial model, and we are committed to delivering gross margin that is consistently industry-leading with operating expenses at twenty percent of revenue. We continue to unlock new opportunities to expand margin, and we anticipate continued robust improvements in operating income, earnings per share, and free cash flow."

Third Quarter Fiscal 2014 Results

• The company reported quarterly revenue of $288.5 million, compared to $271.2 million in the same quarter of the prior year, an increase of 6% Year-Over-Year.
• The company reported non-GAAP EPS of $0.13 compared to $0.08 for the same quarter of the prior year.

Bob Bruggeworth, president and CEO of RFMD, said, "RFMD is executing on multiple opportunities to increase our dollar content generation-over-generation in the world's leading smartphones and tablets while materially enhancing our operating model. In the March quarter, we anticipate another quarter of margin expansion and year-over-year improvements in operating income and earnings per share.

"While the launch of marquee smartphones and tablets is weighted toward the back-half of this calendar year, our visibility into design win activity gives us confidence in delivering double-digit revenue growth, gross margin of greater than 40%, expanding operating margin, and significant EPS growth. With this, RFMD expects to deliver robust growth in operating income along with ROIC well above our cost of capital."

Dean Priddy, CFO and vice president of administration of RFMD, said, "RFMD's non-GAAP gross margin of 39.7% in the December 2013 quarter represents 530 basis points of margin expansion since we announced our margin improvement initiatives three quarters ago. In our current quarter, we anticipate continued margin expansion to 40%, and longer term we are targeting gross margin at the top of our industry with more predictability and less volatility in our operating results.

"In the December 2013 quarter, RFMD's non-GAAP operating margin increased 400 basis points year-over-year to 13.9%, supporting cash flow from operations of $70.4 million and free cash flow of $54.8 million. In the coming year, we expect revenue growth and expanding gross margin and plan to manage expenses to our financial model, which we project will support substantial operating leverage and robust growth in EPS."

Third Quarter 2013 Results

• September quarterly revenue increased approximately 48% year-over-year to a record $310.7 million, compared to $209.7 million in the corresponding quarter of the prior year.
• Non-GAAP Gross Margin Is 36.2% and non-GAAP Diluted EPS Is $0.12, Versus $0.03 In Q2 Fiscal 2013.

Bob Bruggeworth, president and CEO of RFMD, said, "During the September quarter, RFMD continued to leverage our product and technology leadership to help differentiate our customers' products and satisfy the accelerating demand for always-on broadband connectivity. In the December quarter, RFMD anticipates another quarter of significantly improved financial performance, given our expectations for continued dollar content growth, expansion into new categories, and the benefit of ongoing new product ramps.

"We are increasing our participation on the industry's most critical reference designs and highest volume devices, across all tiers, and we are executing on multiple opportunities to further expand our dollar content next year."

Dean Priddy, CFO and vice president of administration of RFMD, said, "RFMD is delivering diversified revenue growth and executing on our margin expansion initiatives. In the current quarter, we expect to achieve approximately 120 basis points of gross margin expansion. Beyond December, our confidence in margin expansion allows us to project margin improvement in a seasonally down March quarter. In calendar 2014, we currently expect to achieve our quarterly non-GAAP gross margin model of 40%."

Business Outlook

RFMD's markets continue to grow with the expanding demand for high-performance, broadband connectivity. This is increasing RFMD's dollar content opportunities and enabling RFMD to expand its dollar content generation-over-generation in the highest tier smartphones as well as in the highest volume entry-level phones and reference designs.

RFMD currently believes the demand environment in its end markets supports the following expectations and projections for the December 2013 quarter:

• RFMD expects sequential revenue growth in CPG, partially offset by a sequential decline in MPG
• RFMD expects quarterly revenue to be approximately flat to up 5% sequentially
• RFMD expects non-GAAP gross margin to expand sequentially by approximately 120 basis points
• RFMD expects a non-GAAP tax rate of approximately 15%
• RFMD expects non-GAAP EPS of approximately $0.13--$0.14