27 November 2014

SemiLEDs' quarterly revenue halved as fabs consolidated

For its fiscal full-year 2014 (to end-August), LED chip and component maker SemiLEDs Corp of Hsinchu, Taiwan has reported revenue of $14.5m, down 19% on $18m in fiscal 2013 (with LED chips falling 12%, LED components 23%, and lighting product 18%).

Most recently, for fiscal fourth-quarter 2014, revenue was $2.3m, down by a third from $3.4m a year ago and by a half from $4.6m last quarter (with LED chips falling by 57% sequentially, lighting products by 56%, and LED components by 42%).

“We experienced a reduction in production capacity as we consolidated manufacturing facilities [including closing the Sinwu Facility] and relocated the related manufacturing equipment to our other facilities [involving reducing headcount and exploring opportunities to reduce idle capacity, in an effort to conserve cash],” says chairman, president & CEO Trung Doan.

Gross margin for full-year 2014 was negative 78%, better than the negative 82% in full-year 2013. However, in fiscal Q4/2014, gross margin has worsened to negative 134%, compared with negative 61% last quarter and negative 103% a year ago.

Selling, general & administrative (SG&A) expenses have fallen further, from $4.1m a year ago and $2.5m last quarter to $1.8m in fiscal Q4. R&D expenses have been cut further, from $1.5m a year ago and $1m last quarter to $0.8m. Total operating expenses have been cut further, from $4.1m a year ago and $3.6m last quarter to $2.7m. Nevertheless, although better than negative 523% a year ago, operating margin worsened from negative 138% last quarter to negative 251%.

On a non-GAAP basis, net loss was $5m ($0.17 per diluted share), cut from $7.3m ($0.26 per diluted share) a year ago. Net loss for fiscal 2014 was $22.5m ($0.80 per diluted share), cut from $27.8m ($1.01 per diluted share) for fiscal 2013.

Cash used in operations has risen from $14.5m in full-year 2013 to $15.7m in full-year 2014. Including capital expenditures of $2.7m (level with last year), free cash flow for full-year 2014 was negative $18.4m, compared to negative $17.2m for full-year 2013.

For fiscal Q4/2014, cash used in operating activities has been cut from $4.1m last quarter to $1.9m. Hence, despite capital expenditure rising from $500,000 last quarter to $771,000, free cash flow has improved from $4.6m to negative $2.7m. During the quarter, cash and cash equivalents fell from $16.1m to $12.6m. As of end-August, working capital was $16.5m.

With consolidation activities now largely complete, SemiLEDs expects revenue to return to growth in its target markets. For fiscal first-quarter 2015 (to end-November), SemiLEDs’ revenue should rise to $2.9-3.1m. The firm also expect further sequential growth in fiscal Q2/2015 (to end-February).

“While relocation efforts were largely complete by the end of the fourth quarter, we continued to experience lingering effects of these activities in the first fiscal quarter as we completed the hook-up and start-up of this equipment,” says Doan. “We expect to realize the full benefits of operating cost reductions and operational efficiencies from these efforts starting in the second quarter of our fiscal 2015,” he adds.

“Looking beyond our operational activities in the quarter, we continue to see strength in our target markets including UV applications, particularly for component products,” Doan continues. “By leveraging the combination of our new product developments and the integration of LED component technology and manufacturing capacity we acquired, we believe we are well positioned to take advantage of the opportunity ahead of us.”

See related items:

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SemiLEDs' quarterly revenue rebounds by 22%, but losses still rising

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SemiLEDs’ revenue falls 29% from last quarter

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