UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 8-K



CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):  November 5, 2020



Alpha and Omega Semiconductor Limited
(Exact name of registrant as specified in its charter)

 
Bermuda
 
001-34717
 
77-0553536
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
Clarendon House
2 Church Street
Hamilton HM 11

Bermuda
(Address of principal executive offices)
(408) 830-9742
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares
AOSL
The NASDAQ Global Select Market


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02.
Results of Operations and Financial Condition.

The information in Item 2.02 of this Current Report, including the accompanying exhibit, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of Section 18. The information in Item 2.02 of this Current Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language contained in such filing.

On November 5, 2020, Alpha and Omega Semiconductor Limited (the “Company”) issued a press release regarding its financial results for the fiscal first quarter of 2021 ended September 30, 2020.  A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.


Item 9.01
Financial Statements and Exhibits.
  
(d)
Exhibits.
     
  99.1
Press Release dated November 5, 2020
  99.2
Script of Prepared Remarks for Earnings Call
          


SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: November 5, 2020
     
 
Alpha and Omega Semiconductor Limited
     
 
By:
/s/    Yifan Liang
 
Name:
Yifan Liang
 
Title:
Chief Financial Officer and Corporate Secretary

Exhibit 99.1

Alpha and Omega Semiconductor Reports Financial Results for the Fiscal First Quarter of 2021 Ended September 30, 2020

SUNNYVALE, Calif.--(BUSINESS WIRE)--November 5, 2020--Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL) today reported financial results for the fiscal first quarter of 2021 ended September 30, 2020.

The results for the fiscal first quarter of 2021 ended September 30, 2020 were as follows:

GAAP Financial Comparison

Quarterly

(in millions, except percentage and per share data)

(unaudited)

 

 

Three Months Ended

 

 

September 30,
2020

 

June 30,
2020

 

September 30,
2019

Revenue

 

$

151.6

 

 

$

122.4

 

 

$

117.8

 

Gross Margin

 

28.1

%

 

23.6

%

 

22.9

%

Operating Income (Loss)

 

$

10.3

 

 

$

(1.3

)

 

$

(0.6

)

Net Income (Loss) Attributable to AOS

 

$

9.6

 

 

$

(0.1

)

 

$

1.0

 

Net Income (Loss) Per Share Attributable to AOS - Diluted

 

$

0.36

 

 

$

(0.00

)

 

$

0.04

 

Non-GAAP Financial Comparison

Quarterly

(in millions, except percentage and per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30,
2020

 

June 30,
2020

 

September 30,
2019

Revenue

 

$

151.6

 

 

$

122.4

 

 

$

117.8

 

Non-GAAP Gross Margin

 

29.0

%

 

27.5

%

 

28.3

%

Non-GAAP Operating Income

 

$

15.4

 

 

$

8.4

 

 

$

7.7

 

Non-GAAP Net Income Attributable to AOS

 

$

14.5

 

 

$

7.4

 

 

$

6.5

 

Non-GAAP Net Income Per Share Attributable to AOS - Diluted

 

$

0.55

 

 

$

0.29

 

 

$

0.26

 

The non-GAAP financial measures in the schedule above and under the section “Financial Results for Fiscal Q1 Ended September 30, 2020” below exclude the effect of share-based compensation expenses and production ramp up costs in each of the periods presented, pre-production costs relating to Chongqing Joint Venture ("JV Company") for the three months ended September 30, 2019, legal costs related to government investigation for the three months ended September 30, 2020 and June 30, 2020, as well as amortization of purchased intangible for the three months ended September 30, 2020. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.


Financial Results for Fiscal Q1 Ended September 30, 2020

  • Revenue was $151.6 million, an increase of 23.8% from the prior quarter and an increase of 28.6% from the same quarter last year.
  • GAAP gross margin was 28.1%, up from 23.6% in the prior quarter and up from 22.9% in the same quarter last year.
  • Non-GAAP gross margin was 29.0%, up from 27.5% in the prior quarter and up from 28.3% in the same quarter last year.
  • GAAP operating expenses were $32.2 million, up from $30.3 million in the prior quarter and up from $27.6 in the same quarter last year.
  • Non-GAAP operating expenses were $28.6 million, an increase of $3.3 million from last quarter and an increase of $3.0 million from the same quarter last year.
  • GAAP operating income was $10.3 million, up from $1.3 million loss in the prior quarter and up from $0.6 million loss in the same quarter last year.
  • Non-GAAP operating income was $15.4 million as compared to $8.4 million for the prior quarter and $7.7 million for the same quarter last year.
  • GAAP net income per share attributable to AOS was $0.36, compared to $0.00 for the prior quarter and $0.04 for the same quarter a year ago.
  • Non-GAAP earnings per share attributable to AOS was $0.55 compared to $0.29 for the prior quarter and $0.26 for the same quarter a year ago.
  • Consolidated cash flow provided by operating activities was $9.8 million, compared to $40.3 million in the prior quarter. Operating cash flow provided by AOS alone (excluding the JV Company) was $12.7 million, compared to $20.2 million in the prior quarter.
  • The Company closed the quarter with $154.7 million of cash and cash equivalents, including $42.0 million cash balance at the JV Company.

AOS Chairman and Chief Executive Officer Dr. Mike Chang commented, “Business momentum accelerated in the September quarter despite the ongoing global uncertainty with the COVID-19 pandemic. We delivered solid revenue growth and robust bottom line performance. Shipments were strong across most of our product categories, particularly computing and consumer applications. Our technical expertise enables us to develop a broader variety of power discrete and power IC technology platforms and to deliver complete power solutions for more target applications. Over the years, we have evolved from a component supplier to a solution provider. We have engaged more deeply with our customers, strengthened relationships, and become their strategic partner.”

Dr. Chang continued, "We are pleased with our direction and excited about our growth trajectory. We have a strong pipeline of new products, new customers, and new design wins. We are focused on executing our growth strategy and building on the strong momentum as we continue our mission to become a leading designer, developer, and global supplier of a broad portfolio of power semiconductors. That being said, the environment in which we are operating remains highly uncertain. We are working diligently to drive growth, but are prepared to respond quickly should conditions change due to the COVID-19 pandemic, the economy, trade tensions, or other issues."

Business Outlook for Fiscal Q2 Ending December 31, 2020

The following statements are based on management's current expectations. These statements are forward-looking, and actual results may differ materially. AOS undertakes no obligation to update these statements.

Our expectations for the second quarter of fiscal year 2021 are as follows:

  • Revenue is expected to be approximately $153 million, plus or minus $3 million.
  • GAAP gross margin is expected to be approximately 28.0% plus or minus 1%. Non-GAAP gross margin is expected to be approximately 29.0% plus or minus 1%. Note that non-GAAP gross margin excludes $0.8 million amortization of acquired IP, $0.4 million of estimated share-based compensation and $0.4 million of estimated production ramp-up costs relating to the JV Company.
  • GAAP operating expenses are expected to be in the range of $32.6 million plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $28.6 million plus or minus $1 million. Non-GAAP operating expenses exclude $2.5 million of estimated share-based compensation charge and $1.5 million of estimated professional fees related to the government investigation.
  • Income tax expense is expected to be approximately $0.8 million to $1.2 million.
  • Loss attributable to noncontrolling interest is expected to be approximately $1.4 million. On a non-GAAP basis, excluding estimated production ramp-up costs relating to the JV Company, this item is expected to be approximately $1.0 million.

Conference Call and Webcast

AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal first quarter ended September 30, 2020 today, November 5, 2020 at 2:00 p.m. PT / 5:00 p.m. ET. To participate in the live call, register in advance to join the conference call using the link provided below and dial in 10 minutes before the call is scheduled to begin. Conference call access information will be provided upon registration (Participant Online Registration: http://www.directeventreg.com/registration/event/2647139). In addition, a copy of the script of management's prepared remarks and a live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com.


Forward-Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, statements relating to expected growth rate, our product portfolios, projected amount of revenue, gross margin, operating income (loss), income tax expenses, net income (loss), noncontrolling interest, and share-based compensation expenses, non-GAAP gross margin, non-GAAP operating expenses, tax expenses, and non-GAAP loss attributable to noncontrolling interest, impact of COVID-19 pandemic and related economic trends and our responses to such impact, our ability to execute growth strategies and achieve business objectives, our ability to support our customers, our ability to respond to trade tension and general economic conditions, and other information under the section entitled “Business Outlook for Fiscal Q2 Ending December 31, 2020”. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 pandemic on our business; our ability to successfully operate our joint venture in China; our ability to develop and succeed in the digital power business; difficulties and challenges in executing our diversification strategy into different market segments; new tariffs on goods from China; ordering pattern from distributors and seasonality; changes in regulatory environment and government investigation; our ability to introduce or develop new and enhanced products that achieve market acceptance; decline of PC markets; the actual product performance in volume production; the quality and reliability of our product, our ability to achieve design wins; the general business and economic conditions; the state of semiconductor industry and seasonality of our markets; our ability to maintain factory utilization at a desirable level; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 filed by AOS with the SEC and other periodic reports we filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a basis consistent with U.S. GAAP, we disclose certain non-GAAP financial measures for our historical performance, including non-GAAP gross profit, gross margin, operating income (loss), net loss attributable to noncontrolling interest, net income (loss), diluted earnings per share ("EPS") and EBITDAS. These supplemental measures exclude, among other items, share-based compensation expenses, production ramp up costs and pre-production expenses related to the JV Company, legal and profession fees related to government investigation, as well as amortization of purchased intangible. We also disclose certain non-GAAP financial measures in our guidance for the next quarter, including non-GAAP gross margin, operating expenses and loss attributable to noncontrolling interest. We believe that these historical and forecast non-GAAP financial measures provide useful information to both management and investors by excluding certain items and expenses that are not indicative of our core operating results or do not reflect our normal business operations. In addition, our management uses non-GAAP measures to compare our performance relative to forecasts and to benchmark our performance externally against competitors. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as non-GAAP net income (loss) or non-GAAP operating expenses, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. In addition, we included amount of income tax effect of non-GAAP adjustments in the non-GAAP net income of reconciliation table for all periods presented as the management believes that such non-GAAP presentation provides useful information to investors, even though the amounts are not significant. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures both in the text in this press release and in the tables attached hereto. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures.


About Alpha and Omega Semiconductor

Alpha and Omega Semiconductor Limited, or AOS, is a designer, developer and global supplier of a broad range of power semiconductors, including a wide portfolio of Power MOSFET, IGBT, IPM, TVS, HVIC, GaN/SiC, Power IC and Digital Power products. AOS has developed extensive intellectual property and technical knowledge that encompasses the latest advancements in the power semiconductor industry, which enables us to introduce innovative products to address the increasingly complex power requirements of advanced electronics. AOS differentiates itself by integrating its Discrete and IC semiconductor process technology, product design, and advanced packaging know-how to develop high performance power management solutions. AOS’ portfolio of products targets high-volume applications, including portable computers, graphic cards, flat-panel TVs, home appliances, smart phones, battery packs, consumer and industrial motor controls and power supplies for TVs, computers, servers, and telecommunications equipment. For more information, please visit www.aosmd.com.

The following unaudited consolidated financial statements are prepared in accordance with U.S. GAAP.


Alpha and Omega Semiconductor Limited

Condensed Consolidated Statements of Operations

(in thousands, except percentages and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30,
2020

 

June 30,
2020

 

September 30,
2019

 

 

 

 

 

 

 

Revenue

 

$

151,551

 

 

$

122,395

 

 

$

117,802

 

Cost of goods sold

 

109,028

 

 

93,461

 

 

90,870

 

Gross profit

 

42,523

 

 

28,934

 

 

26,932

 

Gross margin

 

28.1

%

 

23.6

%

 

22.9

%

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

14,691

 

 

13,168

 

 

12,368

 

Selling, general and administrative

 

17,505

 

 

17,093

 

 

15,185

 

Total operating expenses

 

32,196

 

 

30,261

 

 

27,553

 

Operating income (loss)

 

10,327

 

 

(1,327

)

 

(621

)

 

 

 

 

 

 

 

Interest expense and other income (loss), net

 

(549

)

 

(228

)

 

(827

)

Income (loss) before income taxes

 

9,778

 

 

(1,555

)

 

(1,448

)

 

 

 

 

 

 

 

Income tax expense

 

1,011

 

 

385

 

 

410

 

Net income (loss) including noncontrolling interest

 

8,767

 

 

(1,940

)

 

(1,858

)

Net loss attributable to noncontrolling interest

 

(807

)

 

(1,835

)

 

(2,867

)

Net income (loss) attributable to Alpha and Omega Semiconductor Limited

 

$

9,574

 

 

$

(105

)

 

$

1,009

 

 

 

 

 

 

 

 

Net income (loss) per common share attributable to Alpha and Omega Semiconductor Limited

 

 

 

 

 

 

Basic

 

$

0.38

 

 

$

(0.00

)

 

$

0.04

 

Diluted

 

$

0.36

 

 

$

(0.00

)

 

$

0.04

 

 

 

 

 

 

 

 

Weighted average number of common shares attributable to Alpha and Omega Semiconductor Limited used to compute net income (loss) per share

 

 

 

 

 

 

Basic

 

25,340

 

 

25,227

 

 

24,538

 

Diluted

 

26,314

 

 

25,227

 

 

25,130

 

 

 

 

 

 

 

 


Alpha and Omega Semiconductor Limited

Condensed Consolidated Balance Sheets

(in thousands, except par value per share)

(unaudited)

 

 

September 30, 2020

 

June 30, 2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

154,698

 

 

$

158,536

 

Restricted cash

 

2,274

 

 

2,190

 

Accounts receivable, net

 

26,317

 

 

13,272

 

Inventories

 

137,700

 

 

135,528

 

Other current assets

 

10,479

 

 

8,807

 

Total current assets

 

331,468

 

 

318,333

 

Property, plant and equipment, net

 

421,642

 

 

412,340

 

Operating lease right-of-use assets, net

 

32,407

 

 

32,948

 

Intangible assets, net

 

15,930

 

 

16,770

 

Deferred income tax assets

 

4,774

 

 

4,766

 

Restricted cash - long-term

 

2,054

 

 

1,978

 

Other long-term assets

 

3,473

 

 

5,804

 

Total assets

 

$

811,748

 

 

$

792,939

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

87,604

 

 

$

86,181

 

Accrued liabilities

 

55,875

 

 

54,986

 

Income taxes payable

 

2,100

 

 

1,360

 

Short-term debt

 

32,746

 

 

30,114

 

Finance lease liabilities

 

15,844

 

 

15,258

 

Operating lease liabilities

 

4,095

 

 

4,159

 

Total current liabilities

 

198,264

 

 

192,058

 

Long-term debt

 

99,970

 

 

99,775

 

Income taxes payable - long-term

 

912

 

 

903

 

Deferred income tax liabilities

 

521

 

 

496

 

Finance lease liabilities - long-term

 

23,913

 

 

26,842

 

Operating lease liabilities - long-term

 

29,813

 

 

30,254

 

Other long-term liabilities

 

9,133

 

 

10,723

 

Total liabilities

 

362,526

 

 

361,051

 

Equity:

 

 

 

 

Preferred shares, par value $0.002 per share:

 

 

 

 

Authorized: 10,000 shares; issued and outstanding: none at September 30, 2020 and June 30, 2020

 

 

 

 

Common shares, par value $0.002 per share:

 

 

 

 

Authorized: 100,000 shares; issued and outstanding: 32,021 shares and 25,383 shares, respectively at September 30, 2020 and 31,944 shares and 25,305 shares, respectively at June 30, 2020

 

64

 

 

64

 

Treasury shares at cost: 6,638 shares at September 30, 2020 and 6,639 shares at June 30, 2020

 

(66,171

)

 

(66,184

)

Additional paid-in capital

 

248,967

 

 

246,103

 

Accumulated other comprehensive loss

 

(2,146

)

 

(5,127

)

Retained earnings

 

128,394

 

 

118,833

 

Total Alpha and Omega Semiconductor Limited shareholder's equity

 

309,108

 

 

293,689

 

Noncontrolling interest

 

140,114

 

 

138,199

 

Total equity

 

449,222

 

 

431,888

 

Total liabilities and equity

 

$

811,748

 

 

$

792,939

 


Supplemental disclosures of financial information:

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2020

 

As of June 30, 2020

 

 

AOS

 

CQJV

 

Consolidated

 

AOS

 

CQJV

 

Consolidated

Cash and cash equivalents

 

$

112,680

 

 

$

42,018

 

 

$

154,698

 

 

$

110,346

 

 

$

48,190

 

 

$

158,536

 

Bank borrowings liabilities

 

$

30,623

 

 

$

143,129

 

*

$

173,752

 

 

$

32,708

 

 

$

140,652

 

*

$

173,360

 

Inventory

 

$

95,146

 

 

$

42,554

 

 

$

137,700

 

 

$

97,593

 

 

$

37,935

 

 

$

135,528

 

Property, plant and equipment, net

 

$

167,558

 

 

$

254,084

 

 

$

421,642

 

 

$

162,833

 

 

$

249,507

 

 

$

412,340

 

* AOS is not a guarantor of CQJV's (Chongqing Joint Venture) debts.

 

 

Three Months Ended September 30,
2020

 

Three Months Ended June 30, 2020

 

Three Months Ended September 30,
2019

 

 

AOS

 

CQJV

 

Consolidated

 

AOS

 

CQJV

 

Consolidated

 

AOS

 

CQJV

 

Consolidated

Net cash provided by (used in) operating activities

 

$

12,701

 

 

$

(2,853

)

 

$

9,848

 

 

$

20,167

 

 

$

20,125

 

 

$

40,292

 

 

$

(4,225

)

 

$

2,998

 

 

$

(1,227

)

Purchase of property and equipment, net of government grant

 

$

7,944

 

 

$

3,393

 

 

$

11,337

 

 

$

8,972

 

 

$

4,222

 

 

$

13,194

 

 

$

8,292

 

 

$

7,506

 

 

$

15,798

 

EBITDAS

 

$

22,156

 

 

$

4,609

 

**

$

27,572

 

 

$

11,979

 

 

$

1,078

 

**

$

14,892

 

 

$

13,813

 

 

$

(2,208

)

**

$

14,472

 

** CQJV EBITDAS includes amounts attributable to noncontrolling interest.


Alpha and Omega Semiconductor Limited

 

Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures

 

(in thousands, except percentages and per share data)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

September 30,
2020

 

June 30,
2020

 

September 30,
2019

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

42,523

 

 

$

28,934

 

 

$

26,932

 

 

Share-based compensation

 

385

 

 

333

 

 

436

 

 

Amortization of purchased intangible

 

812

 

 

 

 

 

 

Production ramp up costs related to joint venture

 

275

 

 

4,432

 

 

5,991

 

 

Non-GAAP gross profit

 

$

43,995

 

 

$

33,699

 

 

$

33,359

 

 

Non-GAAP gross margin as a % of revenue

 

29.0

%

 

27.5

%

 

28.3

%

 

 

 

 

 

 

 

 

 

GAAP operating expense

 

$

32,196

 

 

$

30,261

 

 

$

27,553

 

 

Share-based compensation

 

2,491

 

 

2,389

 

 

1,933

 

 

Legal costs related to government investigation

 

1,107

 

 

2,551

 

 

 

 

Non-GAAP operating expense

 

$

28,598

 

 

$

25,321

 

 

$

25,620

 

 

 

 

 

 

 

 

 

 

GAAP operating income (loss)

 

$

10,327

 

 

$

(1,327

)

 

$

(621

)

 

Share-based compensation

 

2,876

 

 

2,722

 

 

2,369

 

 

Amortization of purchased intangible

 

812

 

 

 

 

 

 

Production ramp up costs related to joint venture

 

275

 

 

4,432

 

 

5,991

 

 

Legal costs related to government investigation

 

1,107

 

 

2,551

 

 

 

 

Non-GAAP operating income

 

$

15,397

 

 

$

8,378

 

 

$

7,739

 

 

Non-GAAP operating margin as a % of revenue

 

10.2

%

 

6.8

%

 

6.6

%

 

 

 

 

 

 

 

 

 

GAAP net income (loss) attributable to AOS

 

$

9,574

 

 

$

(105

)

 

$

1,009

 

 

Share-based compensation

 

2,876

 

 

2,722

 

 

2,369

 

 

Amortization of purchased intangible

 

812

 

 

 

 

 

 

Pre-production expenses related to joint venture

 

 

 

 

 

49

 

 

Production ramp up costs related to joint venture

 

135

 

 

2,224

 

 

3,049

 

 

Legal costs related to government investigation

 

1,107

 

 

2,551

 

 

 

 

Income tax effect of non-GAAP adjustments

 

(8

)

 

(4

)

 

(5

)

 

Non-GAAP net income attributable to AOS

 

$

14,496

 

 

$

7,388

 

 

$

6,471

 

 

Non-GAAP net margin attributable to AOS as a % of revenue

 

9.6

%

 

6.0

%

 

5.5

%

 

 

 

 

 

 

 

 

 

GAAP net income (loss) attributable to AOS

 

$

9,574

 

 

$

(105

)

 

$

1,009

 

 

Share-based compensation

 

2,876

 

 

2,722

 

 

2,369

 

 

Amortization and depreciation

 

12,489

 

 

11,552

 

 

10,904

 

 

Interest expense (income), net

 

1,622

 

 

338

 

 

(220

)

 

Income tax expense

 

1,011

 

 

385

 

 

410

 

 

EBITDAS

 

$

27,572

 

 

$

14,892

 

 

$

14,472

 

 

 

 

 

 

 

 

 

 

GAAP diluted net income (loss) per share attributable to AOS

 

$

0.36

 

 

$

(0.00

)

 

$

0.04

 

 

Share-based compensation

 

0.11

 

 

0.10

 

 

0.10

 

 

Pre-production expenses related to joint venture

 

 

 

 

 

0.00

 

 

Production ramp up costs related to joint venture

 

0.01

 

 

0.09

 

 

0.12

 

 

Legal costs related to government investigation

 

0.04

 

 

0.10

 

 

 

 

Amortization of purchased intangible

 

0.03

 

 

 

 

 

 

Income tax effect of non-GAAP adjustments

 

(0.00

)

 

(0.00

)

 

(0.00

)

 

Non-GAAP diluted net income per share attributable to AOS

 

$

0.55

 

 

$

0.29

 

 

$

0.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute GAAP diluted net income (loss) per share

 

26,314

 

 

25,227

 

 

25,130

 

 

Shares used to compute Non-GAAP diluted net income per share

 

26,314

 

 

25,895

 

 

25,130

 

 

 

Contacts

Investor and media inquiries:

In the United States: The Blueshirt Group
Ralph Fong
+1 (415) 489-2195
ralph@blueshirtgroup.com

In China: The Blueshirt Group Asia
Gary Dvorchak, CFA
+86 (138) 1079-1480
gary@blueshirtgroup.com

Exhibit 99.2

Alpha and Omega Semiconductor Limited
Prepared Remarks for the Investor Conference Call
for the Quarter Ended September 30, 2020

November 5, 2020

Gary Dvorchak (Moderator)

Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor’s conference call to discuss fiscal 2021 first quarter financial results.  I am Gary Dvorchak, Investor Relations representative for AOS.  With me today are Dr. Mike Chang, our CEO, Yifan Liang, our CFO, and Stephen Chang, our executive vice president.  This call is being recorded and broadcast live over the Web.  A replay will be available for seven days following the call via the link in the Investor Relations section of our website.

Our call will proceed as follows.  Mike will begin with a review of business.  Then, Stephen will provide a detailed segment report.  After that, Yifan will review the financial results and provide guidance.  Finally, we will have the question-and-answer session.

The earnings release was distributed over wire services today, November 5, 2020, after the close of market.  The release is also posted on the company's website.  Our earnings release and this presentation include certain non-GAAP financial measures.  We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures that we provide. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release.

We remind you that during this conference call, we will make certain forward-looking statements, including discussions of the business outlook and financial projections.  These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations.  For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC.  We assume no obligations to update the information provided in today's call.
Page 1


Now, I will turn the call over to our CEO, Mike, to provide an overview of our business.  Mike?

Mike Chang (Chief Executive Officer)

Thanks, Gary.  Welcome everyone to today's call.

We are off to a great start to fiscal year 2021.  Business momentum accelerated in the September quarter despite the ongoing global uncertainty with COVID-19.  We delivered solid revenue growth and excellent profitability.  Shipments were strong across most of our product categories, particularly computing and consumer applications. Revenue was up 29% year-over-year and at the high end of the updated guidance range we issued in early October.  Better utilization and disciplined expense control drove non-GAAP gross margin of 29%.  On the bottom line, we posted non-GAAP EPS of $0.55, which more than doubled year-over year.  First fiscal quarter results continue to demonstrate the competitive strength of our business strategy, technical expertise, diversified product portfolio, and expanded customer base.

While we started our business in the computing market, we have successfully diversified our business by expanding into other market segments, including consumer, communications, power supply and industrial.  Our mission is to become a leading designer, developer, and global supplier of a broad portfolio of power semiconductors.  Our technical expertise enables us to develop a broader variety of power discrete and power IC technology platforms.  This enables us to expand our product offerings and deliver complete power solutions for more target applications.

Over the years, we have evolved from a component supplier to a solution provider.  We have engaged more deeply with our customers, strengthened relationships, and have become their trusted strategic partner.  Our multi-sockets design wins with a recently launched gaming system and new PC graphics card platforms, as well as our continuing high growth in home appliance applications, are some examples of how we have deepened strategic partnerships with tier-one OEM customers.  We will continue to drive growth by winning new ODM and OEM customer engagements with an expanding pipeline of new products.
Page 2

Our renewed business growth was made possible by our multi-year effort to strengthen our supply chain, specifically, our JV fab in Chongqing, which continued its ramp and helped in capturing the surge of demand in the September quarter.  Because of this, the Chongqing fab achieved positive EBITDAS for the second consecutive quarter, and we expect to approach its Phase I target run rate next year.  The JV fab provides us with flexible capacity management and geographic diversification of our supply chain and will support our business growth for many years to come.

I am pleased with our direction and our solid execution; even though I wish it could be a little faster.  I want to thank our customers, business partners and shareholders for their support and confidence in the company.  I also want to acknowledge our employees for an outstanding job, and for staying focused and engaged with our customers while we navigate this challenging macro environment.

We are excited about our growth trajectory, and we believe we can achieve our calendar year 2021 target of $600 million of annual revenue.  With a healthy pipeline of new products, new design wins, and new customers, we are focused on executing our growth strategy and building on the strong momentum we see now.  While our optimism is justified, we want to caution investors that the environment is still highly uncertain.  We will be working diligently to drive growth, but are prepared to respond quickly should conditions change due to COVID-19, the economy, trade tensions, or other issues.

Now, I will turn the call over to Stephen for a detailed segment report.  Stephen?

Stephen Chang (Executive Vice President)
 
Thank you, Mike, and good afternoon!  

Let me start with Computing. It represented 44.1% of our total revenue in the September quarter. Revenue was up 35.9% sequentially and up 44.7% year-over-year. End demand was stronger than expected, which we fulfilled with ramping supply from our JV fab.  The Work-From-Home trend drove high demand for PC-related products.  Our graphics card business was exceptionally strong, driven by demand in the Gaming application.  We remain excited about ramping sales of high performance DrMOS and digital power solutions in the launch of key customers’ graphics card platforms.  We expect this to continue in the December quarter.  Looking ahead, we expect overall Computing revenue to be down mid-single digits in the next quarter, as the sequential growth in the graphics card business is expected to be offset by the usual seasonal decline in PC.
Page 3

Now turning to the Consumer segment, it represented 24.2% of total revenue in the September quarter.  Revenue increased 33.0% sequentially and was up 70.8% year-over-year.  Similar to PCs, the pandemic-driven stay-at-home effect boosted sales of gaming, TVs and Home Appliances, propelling the strong growth.  Gaming grew significantly as a major game console win started to ramp.  Pre-production for the new gaming console started in the June quarter and ramped further in the September quarter. We are thrilled to have multiple sockets across several of our product lines, including Power IC and MOSFET, designed into this gaming console system.

Home Appliances continued to expand in the September quarter, primarily driven by sales of Intelligent Power Modules (IPM).  Our co-packaged IGBT and MOSFET-based motor drive modules with built-in safety features offer our customers a co-packaged solution for ease of design and robust performance.  We have been expanding our module product offering, and we are pleased to see business ramping with a new series of IPM modules designed for room air conditioners at a Japanese customer.  Looking to the December quarter, we anticipate a mid-single digit decline in the Consumer segment.  Growth in Home Appliances is likely to be offset by a seasonal decline in TV, coupled with a production ramp push-out of gaming console systems caused by a shortage of other system components.

Now let’s discuss the Power Supply and Industrial Segment. It accounted for 16.5% of total revenue, up 5.7% sequentially and down 8.5% year-over-year.  Going into the September quarter, we expected this segment to be down somewhat due to softer demand for quick chargers and DC Fans.  The upside surprise was due to a couple of factors.  First, quick chargers were flat quarter-over-quarter, better than expected.  This year’s peak season for global smartphone OEMs was delayed due to COVID.  As our smartphone customers began shipping again in the September quarter, Quick Chargers started to come back.  Second, the demand for AC-DC power supply was stronger than expected, closely tracking the surge in PC sales, which offset the decline in DC Fan demand.  Furthermore, the Industrial Drone application started to ramp, as our high-performance MOSFETs are designed to power the drones for use in applications, such as agriculture, delivery and emergency response.  Looking ahead, we expect the overall segment to be flat in the December quarter, as Quick Charger growth will be offset by a decline in AC-DC power supply.
Page 4

Finally, let’s move to the Communications segment, which was 13.4% of total revenue in the quarter, up 2.4% sequentially and down 4.5% year-over-year.  This segment played out largely as expected, given the delay in the smartphone peak season.  Looking ahead, our battery protection business is expected to be strong in the December quarter, tracking the peak season of our global major smartphone customers.  We expect Communications segment revenue to be up double digits sequentially in the December quarter.

With that, I will now turn the call over to Yifan for a discussion of our fiscal first quarter financial results and our outlook.

Yifan Liang (Chief Financial Officer)

Thank you, Stephen.  Good afternoon everyone and thank you for joining us.

Revenue for the September quarter was $151.6 million, up 23.8% from the prior quarter and up 28.6% from the same quarter last year.

In terms of product mix, MOSFET revenue was $119.4 million, up 19.4% sequentially and up 18.7% year-over-year.  Power IC revenue was $29.5 million, up 45.2% from the prior quarter and up 87.3% from a year ago.  Assembly service revenue was $2.7 million as compared to $2.1 million last quarter and $1.5 million for the same quarter last year.

Non-GAAP gross margin for the September quarter was 29.0%, up from 27.5% in the prior quarter and up from 28.3% in the same quarter last year.  The increase in non-GAAP gross margin was mainly driven by favorable product mix and higher factory utilization.  Non-GAAP gross margin excluded $0.8 million of amortization of purchased IP related to digital power for the quarter.  In addition, non-GAAP gross margin excluded $0.4 million of share-based compensation charges for the September quarter, as compared to $0.3 million and $0.4 million for the prior quarter and for the same quarter last year, respectively.  Non-GAAP gross margin also excluded $0.3 million of production ramp-up costs related to the JV Company for the quarter, as compared to $4.4 million for the prior quarter and $6.0 million for the same quarter last year.
Page 5

Non-GAAP operating expenses for the September quarter were $28.6 million, compared to $25.3 million for the prior quarter and $25.6 million for the same quarter last year.  The quarter-over-quarter increase primarily reflected higher R&D engineering expenses and variable compensation accruals.  Non-GAAP operating expenses for the quarter excluded $2.5 million of share-based compensation charges and $1.1 million of legal expenses related to the government investigation.  This compares to $2.4 million of share-based compensation charges and $2.6 million of legal expenses related to the investigation for the prior quarter, as well as $1.9 million of share-based compensation charges for the same quarter last year.  Both GAAP and non-GAAP operating expenses included $3.2 million of digital power team expenses for the quarter, as compared to $3.0 million for the prior quarter and $2.8 million for the same quarter last year.  In the September quarter, we started shipment of digital power products.  Digital Power is complementary to our Power IC operation and makes it more complete and compelling.  As our internal integration is now behind us, we will no longer break out digital power team expenses going forward.

Income tax expense for the quarter was $1.0 million, compared to $0.4 million for the prior quarter and $0.4 million for the same quarter last year.

Non-GAAP EPS attributable to AOS for the quarter was 55 cents per share as compared to 29 cents for the prior quarter and 26 cents for the same quarter last year.

AOS continued to generate positive operating cash flow.  AOS on a stand-alone basis generated $12.7 million of operating cash flow in the September quarter, as compared to $20.2 million of operating cash flow generated in the prior quarter and $4.2 million used in the operating cash flow in the same quarter last year. 

Operating cash flow used by the JV Company in the September quarter was $2.9 million, compared to $20.1 million of cash flow provided by the JV Company in the prior quarter and $3.0 million of cash flow provided by the JV company in the same quarter last year.

Consolidated EBITDAS for the September quarter was $27.6 million, compared to $14.9 million for the prior quarter and $14.5 million for the same quarter last year.  EBITDAS attributable to AOS for the quarter was $22.2 million as compared to $12.0 million for the prior quarter and $13.8 million for the same quarter last year.  EBITDAS for the JV Company was $4.6 million in the September quarter, as compared to $1.1 million for the prior quarter and negative $2.2 million for the same quarter last year.
Page 6

Now let’s look at the balance sheet.

We completed the September quarter with cash balance of $154.7 million, including $112.7 million at AOS and $42.0 million at the JV Company.  This compares to $158.5 million at the end of last quarter, which included $110.3 million at AOS and $48.2 million at the JV Company.  Our cash balance a year ago was $103.1 million, including $88.0 million at AOS and $15.1 million at the JV Company.

The bank borrowing balance at the end of September was $173.8 million, including $30.6 million at AOS and $143.1 million at the JV Company.  During the quarter, AOS and the JV Company repaid $2.1 million and $4.0 million of existing loans, respectively.

Net trade receivables were $26.3 million at the end of the September quarter, as compared to $13.3 million at the end of the prior quarter and $39.3 million for the same quarter last year.  Days Sales Outstanding for the September quarter and the prior quarter were both 18 days.

Net inventory was $137.7 million at the quarter-end, up from $135.5 million last quarter and up from $118.6 million in the prior year.  Average days in inventory were 113 days for the quarter, compared to 127 days in the prior quarter.

Net Property, Plant and Equipment was $421.6 million, up from $412.3 million last quarter and up from $404.0 million last year.  Capital expenditures were $11.3 million for the quarter, including $7.9 million at AOS and $3.4 million at the JV Company.

With that, now I would like to discuss the guidance for the next quarter.
Page 7


We expect:
-
Revenue to be approximately $153 million, plus or minus $3 million.
-
GAAP gross margin to be 28.0% plus or minus 1%.  We anticipate non-GAAP gross margin to be 29.0% plus or minus 1%.  Note that non-GAAP gross margin excludes $0.8 million amortization of acquired IP, $0.4 million of estimated share-based compensation charges and $0.4 million of estimated production ramp-up costs relating to the JV Company.
-
GAAP operating expenses to be in the range of $32.6 million plus or minus $1 million.  Non-GAAP operating expenses are expected to be in the range of $28.6 million plus or minus $1 million.  Non-GAAP operating expenses exclude $2.5 million of estimated share-based compensation charges and $1.5 million of estimated legal expenses relating to the government investigation.
-
Income tax expense to be approximately $0.8 million to $1.2 million.
-
Loss attributable to non-controlling interests to be approximately $1.4 million.  On a non-GAAP basis, excluding estimated production ramp-up costs relating to the JV company, this item is expected to be approximately $1.0 million.

As part of our normal practice, we are not obligated to update this information.

With that, we will open the call for questions.  Operator, please start the Q&A session.


Closing:
This concludes our earnings call today.  Thank you for your interest in AOS and we look forward to talking to you again next quarter.
Page 8

 Special Notes Regarding Forward Looking Statements
This script contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance.  These forward looking statements include, without limitation, statements relating to projected amount of revenues, gross margin, operating expenses, operating income, tax expenses, net income, noncontrolling interest and share-based compensation expenses, production ramp up costs and annual revenue and growth objectives; statements regarding expected financial performance of market segments, the impact of COVID-19 pandemic on market demand; expectation with respect to  ramp up activities and Phase 1 target run rate at the Chongqing Joint Venture and timeline for production and operation; our ability and strategy to develop new products; projected mid-term annual revenue target; our ability to obtain debt financing and working capital loans; expectation with respect to our digital power business; fluctuation in customer demand and market segments; the execution of our business plan; international trade tension and geopolitical environment; and other information regarding the future development of our business. Forward looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 pandemic on our business operation; our ability to successfully operate our joint venture in China; our ability to develop and succeed in the digital power business; difficulties and challenges in executing our diversification strategy into different market segments; new tariffs on goods from China; ordering pattern and seasonality; our ability to introduce or develop new and enhanced products that achieve market acceptance; decline of the PC industry and our ability to respond to such decline; the actual product performance in volume production, the quality and reliability of our product, our ability to achieve design wins, the general business and economic conditions, the state of semiconductor industry and seasonality of our markets, our ability to maintain factory utilization at a desirable level; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 filed by AOS on September 2, 2020. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements.  Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements.  You should not place undue reliance on these forward-looking statements.  All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law.
Page 9
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Document and Entity Information
Nov. 05, 2020
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Entity Registrant Name Alpha and Omega Semiconductor Limited
Entity Incorporation, State or Country Code D0
Entity File Number 001-34717
Entity Tax Identification Number 77-0553536
Entity Address, Address Line One Clarendon House
Entity Address, Address Line Two 2 Church Street
Entity Address, City or Town Hamilton
Entity Address, Country BM
Entity Address, Postal Zip Code HM 11
City Area Code 408
Local Phone Number 830-9742
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