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8-K - 8-K - MONTAGE TECHNOLOGY GROUP LTDd623889d8k.htm

Exhibit 99.1

 

LOGO

Montage Technology Reports Third Quarter 2013 Financial Results

Achieves Record Revenue of $30.1 Million, 63.7% Gross Margin

and 28.8% Operating Margin

SHANGHAI, China – November 7, 2013 – Montage Technology Group Limited (Nasdaq: MONT) (“Montage”), a global fabless provider of analog and mixed-signal semiconductor solutions addressing the home entertainment and cloud computing markets, today announced financial results for the third quarter ended September 30, 2013.

Third Quarter 2013 Highlights:

 

    Attained record revenue of $30.1 million, an increase of 18.8 percent sequentially and 45.9 percent year-over-year;

 

    Reported 63.7 percent gross margin and 28.8 percent operating margin;

 

    Achieved GAAP net income per diluted share of $0.31, and non-GAAP net income of per diluted share of $0.38;

 

    Increased set-top box product revenue by 46 percent and memory interface product revenue by 44 percent over the prior year period; and

 

    Generated cash from operations of $11.2 million.

Third Quarter 2013 Results

Commenting on the quarter, Howard Yang, Montage Technology’s chairman and chief executive officer, stated, “We are pleased to report third quarter revenue increased 19% sequentially and 46% year-over-year, driven by strong growth in the set-top box market combined with improving revenue from our memory interface products. We continued to convert set-top box customers to our SoC chipset, which offers a complete solution of integrated hardware and software. The pace of set-top box adoption in emerging markets has been accelerating as disposable income and consumer demand for better entertainment are increasing. Additionally, digital transmission and HD television are only in the early stages of adoption, which we believe provides significant future growth opportunities for Montage.

“In the memory interface market, during the quarter we introduced the industry’s first production ready dual-mode DDR4 Registering Clock Driver that supports both RDIMM and LRDIMM modules for use in next generation server platforms. This product complements our existing DDR3 solutions and enhances our current product offerings. With this market in its early stages of growth and development, Montage is well established as a primary supplier to all of the largest OEMs.”

Stephen Tai, Montage Technology’s president added, “The successful completion of our initial public offering on October 1st represented a significant milestone for the Company. We believe that Montage is well positioned for growth in the coming quarters as we continue to gain market share with our existing products as well as our newly released products in both the set-top box and memory interface markets.”


Total revenue for the third quarter 2013 was $30.1 million, an increase of 18.8 percent compared to $25.3 million in the second quarter, and an increase of 45.9 percent compared to $20.6 million in the third quarter 2012. Total revenue consisted of $27.3 million from set-top box products, or 90.7 percent of revenue, and $2.8 million from memory interface products, representing 9.3 percent of revenue.

Gross profit for the third quarter 2013 was $19.1 million, or 63.7 percent of revenue, compared to $16.5 million, or 65.1 percent of revenue in the prior quarter, and $12.9 million, or 62.7 percent in the third quarter 2012. Operating expenses for the third quarter 2013 were $10.5 million, compared to $10.5 million in the prior quarter and $6.2 million in the third quarter 2012. Income from operations was $8.6 million, or 28.8 percent of revenue, compared to $6.0 million, or 23.8 percent of revenue in the prior quarter, and $6.7 million, or 32.5 percent of revenue in the third quarter 2012.

Third quarter 2013 GAAP net income was $8.0 million, or $0.31 per diluted share, compared to second quarter 2013 net income of $5.5 million, or $0.20 per diluted share, and third quarter 2012 net income of $6.4 million, or $0.24 per diluted share. The effective tax rate for the third quarter 2013 was 8 percent, compared to an effective tax rate of 10 percent in the preceding quarter.

Non-GAAP net income for the third quarter 2013 was $9.5 million, or $0.38 per diluted share, which excluded pre-tax stock-based compensation expenses of approximately $1.2 million and $0.3 million of amortization of acquired assets related to an assembled workforce in Taiwan. This compares to non-GAAP net income of $6.8 million, or $0.26 per diluted share, in the second quarter 2013 and $6.8 million, or $0.26 per diluted share, in the third quarter 2012.

Cash, cash equivalents and short-term investments totaled approximately $47.6 million as of September 30, 2013, compared to approximately $28.1 million as of December 31, 2012. Montage raised $49.5 million in net proceeds, after deducting underwriting discounts and commissions, in its initial public offering on September 26, 2013, receipt of which occurred after the close of the quarter.

Business Outlook

For the fourth quarter of 2013, the Company expects revenue to be in the range of $32 to $34 million and gross margin to be in the range of 59 percent to 61 percent.


Conference Call

Montage Technology will host a conference call on Thursday, November 7, 2013 at 8:00 a.m. Eastern Time (9:00 p.m. in Shanghai, China) to discuss its third quarter financial results. Investors and analysts may join the conference call by dialing 1-855-500-8701 and providing the confirmation code 87126286. International callers may join the teleconference by dialing 1-845-675-0438 and callers in China may join by dialing 4001200654, entering the same confirmation code at the prompt. A telephone replay of the call will be made available approximately two hours after the call and will remain available for seven days. The replay number is 1-855-452-5696 with a pass code of 87126286. International callers should dial 1-646-254-3697 and enter the same pass code at the prompt. Additionally, this conference call will be broadcast live over the Internet and can be accessed by all interested parties on the Investors section of Montage’s website at http://www.montage-tech.com. To listen to the live call, please go to the Investors section of Montage’s website and click on the conference call link at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Montage’s website for approximately 90 days.

About Montage Technology

Montage Technology is a global fabless provider of analog and mixed-signal semiconductor solutions currently addressing the home entertainment and cloud computing markets. In the home entertainment market, Montage’s technology platform enables the company to design highly integrated end-to-end solutions with customized software for set-top boxes. These solutions optimize signal processing performance under demanding operating conditions typically found in emerging marketing environments. In the cloud computing market, Montage offers high performance, low power memory interface solutions that enable memory intensive server applications. Its technology platform approach allows Montage to provide integrated solutions that meet the expanding needs of customers through continuous innovation, efficient design and rapid product development. For more information regarding Montage please visit the company’s website at www.montage-tech.com.

Forward Looking Statements

This press release contains forward-looking statements regarding our future business expectations, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: Montage’s anticipated operating results for the fourth quarter 2013; future growth opportunities in the digital transmission and HD television markets; Montage’s ability to be a primary supplier to the largest OEMs; Montage’s ability to maintain its growth in the coming quarters; Montage’s ability to continue to gain market share with its existing products as well as newly released products in both the set-top box and memory interface markets. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption “Risk Factors” in our final prospectus filed with the SEC on September 26, 2013, which is available on our Investor Relations website at www.montage-tech.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013. In addition, please note that the date of this press release is November 7, 2013, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.


Company Contact:

Montage Technology

Mark Voll, CFO

P: 408-982-2780 or 86-21-6128-5678 x8616

E: ir@montage-tech.com

Investor Relations Contact:

Shelton Group

Leanne Sievers, EVP

P: 949-224-3874

E: lsievers@sheltongroup.com

Matt Kreps, Managing Director

P: 972-239-5119 ext. 125

E: mkreps@sheltongroup.com


MONTAGE TECHNOLOGY GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollar in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2013      2012      2013      2012  

Revenues

   $ 30,056       $ 20,601       $ 75,448       $ 54,538   

Cost of revenues

     10,907         7,683         27,496         21,374   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

     19,149         12,918         47,952         33,164   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating expenses

           

Research and development

     6,623         3,835         19,096         12,304   

Sales, general and administrative

     3,880         2,382         10,681         5,614   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     10,503         6,217         29,777         17,918   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations

     8,646         6,701         18,175         15,246   

Interest income/Other income (expense), net

     132         91         347         328   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income tax expenses

     8,778         6,792         18,522         15,574   

Provision for income tax

     737         427         1,709         980   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 8,041       $ 6,365       $ 16,813       $ 14,594   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per share

           

Basic

   $ 0.34       $ 0.27       $ 0.68       $ 0.58   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.31       $ 0.24       $ 0.62       $ 0.53   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted—average shares used in computing net income per share:

           

Basic

     4,658,034         4,321,144         4,618,302         4,303,135   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     6,527,371         6,391,252         6,557,368         6,295,066   
  

 

 

    

 

 

    

 

 

    

 

 

 


MONTAGE TECHNOLOGY GROUP, LTD.

RECONCILIATION OF GAAP NET INCOME/(LOSS)

TO NON-GAAP NET INCOME

(Dollar in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2013      2012      2013      2012  

GAAP net income

   $ 8,041       $ 6,365       $ 16,813       $ 14,594   

Share-based compensation expense:

           

Cost of revenues

     34         5         62         15   

Research and development

     546         137         1,124         347   

Sales, general and administrative

     588         151         1,276         320   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total share-based compensation expense

     1,168         293         2,462         682   
  

 

 

    

 

 

    

 

 

    

 

 

 

Amortization of assembled workforce

     317         106         950         106   

Non-GAAP net income

   $ 9,526       $ 6,764       $ 20,225       $ 15,382   
  

 

 

    

 

 

    

 

 

    

 

 

 

GAAP basic net income per share

   $ 0.34       $ 0.27       $ 0.68       $ 0.58   

Effect of non-GAAP adjustments on basic net income per share

     0.07         0.02         0.16         0.04   
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP basic net income per share

   $ 0.41       $ 0.29       $ 0.84       $ 0.62   
  

 

 

    

 

 

    

 

 

    

 

 

 

GAAP diluted net income per share

   $ 0.31       $ 0.24       $ 0.62       $ 0.53   

Effect of non-GAAP adjustments on diluted net income per share

     0.07         0.02         0.15         0.04   
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP diluted net income per share

   $ 0.38       $ 0.26       $ 0.77       $ 0.57   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted—average shares used in computing net income per share:

           

Basic

     4,658,034         4,321,144         4,618,302         4,303,135   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     6,527,371         6,391,252         6,557,368         6,295,066   
  

 

 

    

 

 

    

 

 

    

 

 

 

In addition to disclosing financial results calculated in accordance with U. S. generally accepted accounting principles (GAAP), the operating results presented contain non-GAAP financial measures that exclude the income statement effects of share-based compensation expense and amortization of acquired intangible assets of assembled workforce in Taiwan.

Management believes it is useful to provide these non-GAAP financial measures and a reconciliation to comparable GAAP financial measures as we believe non-GAAP measures provide useful supplemental information for investors to evaluate our operating results in the same manner as the research analysts that follow Montage, all of whom present non-GAAP projections in their published reports. As such, non-GAAP measures provided by Montage facilitate a more direct comparison of its performance with the financial projections published by the analysts. The items reconciling GAAP financial measures to non-GAAP financial measures and additional comments and the usefulness of each item are set forth below:

 

(1) Share-based compensation is excluded by management when evaluating operating activities and for strategic decision making, forecasting future results and evaluating current performance. Management believes that utilizing non-GAAP financial measures that exclude this non-cash item is useful in providing an alternate measure that excludes the variability caused by different methodologies and subjective assumptions used in the valuation of equity awards across different companies.

 

(2) Amortization of acquired research and development workforce is excluded from internal analysis of Montage’s operations and management does not view this non-cash expense as reflective of the business’ current performance. Management believes that utilizing non-GAAP financial measures that exclude this non-cash item is useful in providing an alternate measure that excludes the variability caused by such item.

Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies’ financial information and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.


MONTAGE TECHNOLOGY GROUP, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar in thousands)

 

     September 30,
2013
    December 31,
2012
 
     (unaudited)     (audited)  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 41,181      $ 21,580   

Short-term investments

     6,443        6,472   

Accounts receivable, net

     10,413        7,903   

Inventories

     9,830        11,116   

Prepaid expenses and other current assets

     2,591        2,000   

Deferred tax assets

     343        338   
  

 

 

   

 

 

 

Total current assets

     70,801        49,409   
  

 

 

   

 

 

 

Property and equipment, net

     2,459        2,284   

Acquired intangible assets, net

     1,020        1,496   

Deferred offering costs

     3,240        283   

Deferred tax assets

     330        330   
  

 

 

   

 

 

 

Total assets

   $ 77,850      $ 53,802   
  

 

 

   

 

 

 

Liabilities, convertible preferred shares and shareholders’ equity (deficit)

    

Current liabilities:

    

Accounts payable

   $ 5,345      $ 3,719   

Short-term loans

     —          1,591   

Accrued liabilities

     11,941        9,108   

Deferred margin, net

     1,545        1,200   

Income tax payable

     1,422        261   

Deferred tax liabilities

     34        34   
  

 

 

   

 

 

 

Total current liabilities

     20,287        15,913   
  

 

 

   

 

 

 

Long-term liabilities

     4,288        4,295   
  

 

 

   

 

 

 

Total liabilities

   $ 24,575      $ 20,208   
  

 

 

   

 

 

 

Redeemable convertible preferred shares

     54,400        54,377   
  

 

 

   

 

 

 

Shareholders’ equity (deficit):

    

Ordinary shares

     58        55   

Additional paid-in capital

     3,515        1,010   

Accumulated comprehensive income

     2,148        1,811   

Statutory reserves

     740        740   

Accumulated deficit

     (7,586     (24,399
  

 

 

   

 

 

 

Total shareholders’ equity (deficit)

     (1,125     (20,783
  

 

 

   

 

 

 

Total liabilities, convertible preferred shares and shareholders’ equity (deficit)

   $ 77,850      $ 53,802