Freescale Semiconductor Announces Third Quarter 2015 Results

Net earnings for the third quarter were $80 million, or $0.25 per share, compared to net earnings of $122 million, or $0.38 per share, in the second quarter of 2015 and $125 million, or $0.40 per share, in the third quarter of 2014.

Adjusted operating earnings (defined in Note 1 to the Consolidated Financial Information attached to this press release) for the three months ended October 2, 2015 were $248 million compared to earnings of $258 million in the second quarter of 2015 and $243 million in the third quarter of 2014.

Adjusted net earnings (defined in Note 1 to the Consolidated Financial Information attached to this press release) for the third quarter of 2015 were $171 million, or $0.54 per share, compared to $182 million, or $0.57 per share, in the second quarter of 2015 and $150 million, or $0.49 per share, in the third quarter of 2014.

Descriptions of EBITDA excluding the effects of other items, Adjusted EBITDA, adjusted operating earnings and adjusted net earnings and the reconciliations to our GAAP results are included in the tables and notes attached to this press release.

Product Group Revenues

The company’s net sales figures for the third quarter of 2015 were as follows:

  • Microcontroller net sales were $304 million, compared to $291 million in the second quarter of 2015 and $250 million in the third quarter of last year. On a sequential and year-over-year basis, Microcontroller revenues benefitted from increased sales of its 32-bit microcontroller products into consumer and industrial markets and higher sales of applications processors into the consumer and automotive markets as well as into distribution.
  • RF net sales, which include sales of power amplifiers to the wireless infrastructure market, were $83 million, compared to $177 million in the second quarter of 2015 and $157 million in the third quarter of last year. The sequential and year-over-year decline in revenue is a result of slowing wireless capital expenditure spending in major markets, primarily in China.
  • Automotive MCU net sales were $299 million, compared to $305 million in the second quarter of 2015 and $303 million in the third quarter of last year. Automotive MCU benefitted from growth in vehicle semiconductor content offset by declines in worldwide automotive production, particularly in emerging markets.
  • Analog and Sensors net sales were $220 million, compared to $223 million in the second quarter of 2015 and $201 million in the third quarter of last year. Analog and Sensors sales benefitted from increased vehicle semiconductor content along with sales of analog and sensors sold into distribution and OEM accounts.
  • Digital Networking net sales were $195 million, compared to $184 million in the second quarter of 2015 and $281 million in the third quarter of last year. Networking net sales declined compared to the prior year primarily due to lower sales to certain service provider customers and lower sales into distribution.
  • Other net sales were $19 million, compared to $18 million in the second quarter of 2015 and $21 million in the third quarter of last year.

Capital Structure Activities

During the third quarter, the company completed the redemption of $302 million of its remaining 10.75% Notes. The company borrowed $200 million under its revolving credit facility to help fund this redemption. On October 14, 2015, the company repaid $50 million of the $200 million outstanding under the revolver. Freescale has reduced debt by approximately $1.45 billion and annualized interest expense by $160 million since January 2014.

Other Financial Information

  • Capital Expenditures for the quarter were $40 million;
  • Cash and Cash Equivalents were $552 million, inclusive of debt redemption activities during the quarter totaling $318 million, $118 million of which was funded by cash on hand;
  • Adjusted EBITDA* for the latest twelve months ended October 2, 2015 was $1.20 billion.

*Adjusted for various items as indicated and defined in Note 1 to the Notes to the Consolidated Financial Information attached to this press release.

Fourth Quarter 2015 Outlook

For the fourth quarter of 2015, the company expects:

  • Revenue to be in the range of $950 million to $1.0 billion;
  • Gross margins of 45.5 percent, plus or minus 50 basis points.

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