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Qorvo Shares Drop 6.6 Percent With Release Of Q3 Results

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Despite 33 percent improvement in revenue, market is underwhelmed

Qorvo, the company formed by the merger of RFMD and Triquint, has today announced 2015 third quarter financial results, ended December 2014. The market responded with a share price fall of 6.6 percent.

TriQuint and RFMD posted a combined $742.0 million in revenues in the quarter, their last as separate companies. That's 33 percent up from the results TriQuint and RFMD posted a year earlier, which were $272.1 million and $288.5 million respectively. 

On a GAAP basis for Qorvo (RFMD only), December quarterly revenue was $397.1 million, gross margin was 48.0 percent, operating income was $103.6 million, and net income was $87.9 million, or $1.18 per diluted share based on 74.5 million shares outstanding. The GAAP share count and GAAP earnings per share for the December 2014 quarter reflect the 0.25 merger conversion ratio for RFMD.

On a non-GAAP basis, December quarterly revenue was $396.1 million, gross margin was 49.3 percent, and operating income was $121.5 million, or 30.7 percent of sales. Net income was $108.4 million, or $0.36 per diluted share based on 297.8 million shares outstanding, compared to RFMD's original guidance of $0.33 per diluted share. Revenue, gross profit, operating income, operating margin, and earnings per share were RFMD quarterly records.

December quarterly revenue for TriQuint was $344.9 million. On a GAAP basis, gross margin was 46.8 percent, operating income was $76.3 million, and net income was $61.6 million, or $0.78 per diluted share based on 78.9 million shares outstanding. The GAAP share count and GAAP earnings per share for the December 2014 quarter reflect the 0.4187 merger conversion ratio for TriQuint.

On a non-GAAP basis, gross margin was 48.8 percent, operating income was $91.4 million, and net income was $89.6 million, or $0.48 per diluted share based on 188.4 million shares outstanding. This compares to TriQuint's original guidance of $0.40 to $0.45. Revenue, gross profit, operating income, operating margin and earnings per share were TriQuint quarterly records.

Bob Bruggeworth, president and chief executive officer of Qorvo, said: "We have assembled a world-class team with a legacy of innovation and a sharp focus on superior financial results. Our expectations are to outpace the industry growth rate of 10 percent-15 percent and achieve our target operating model of 50 percent gross margin, 20 percent operating expenses, and 30 percent operating margin."

Steve Buhaly, chief financial officer of Qorvo, said: "RFMD and TriQuint delivered outstanding December quarterly results, and we're proud to be launching Qorvo on the strength of such exceptional performance. We believe we can outpace our markets in 2015, and our March 2015 quarterly guidance implies year-over-year revenue growth of greater than 40 percent."

Financial Outlook

Qorvo currently believes the demand environment in its end markets supports the following non-GAAP expectations for the March 2015 quarter: quarterly revenue in the range of $615 million to $625 million; gross margin in the range of 46 percent to 48 percent; a tax rate in the range of 5 percent to 10 percent; and diluted EPS in the range of $0.80 to $0.90.



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