O2Micro International Limited
Q1 2022 Earnings Call Transcript

Published: 6 May 2022

[Operator:]

Good day, and welcome to the 2022 First Quarter Earnings Release Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Daniel Meyberg. Please go ahead.

[Daniel Meyberg:]

Thank you. Good morning, everyone, and thank you for joining O2Micro's financial results conference call for the first quarter of 2022, ending March 31, 2022. This is Daniel Meyberg, Corporate Communications for O2Micro. If you would like a copy of the press release we issued this morning, you can call me at 408-987-5920, extension 8888, and we will email you a copy. It is also posted on the O2Micro website at www.o2micro.com under the heading Investors. There will be a replay available for the next 14 days by visiting the O2Micro website under the heading Investors. Following the presentation by management, the conference will be opened for questions and answers. I'd like to remind listeners that the discussion of business outlook for O2 Micro contains forward-looking statements. Statements made in this release that are not historical fact are forward-looking statements within the meanings of the federal securities laws. Actual results may differ materially due to numerous risk factors. Such risk factors are enumerated in the company's 20-F annual filings, our annual reports and other documents filed with the SEC from time-to-time. Listeners are referred to the O2Micro earnings press release, and the documents filed with the SEC to understand these forward-looking statements and the associated risk factors. The statements made herein are dated information. The company assumes no responsibility to provide updates to this information. With me today are, Perry Kuo, CFO and Director, Jim Keim, Head of marketing and Sales and Director, and Sterling Du, O2's Founder, CEO, and Chairman. After the prepared remarks from these gentlemen, floor will be open for your questions. At this point, I would like to introduce Perry Kuo, CFO of O2Micro for a discussion of the financial highlights of the first quarter of fiscal year 2022 ending March 31, 2022, Perry?

[Perry Kuo:]

Thank you, Dan. We will now review our financial results for Q1 2022. Please note that financial results will be presented on a GAAP basis unless we designate otherwise. The non-GAAP results exclude stock-based compensation expense, one-time charges, non-recurring gains, and losses. Our full GAAP results are available in our press release that was issued earlier today. GAAP revenue in the first quarter of 2022 was $21.6 million. GAAP net income in the first quarter of 2022 was $915,000, if we exclude stock-based compensation of $574,000 and one-time special project expense of $136,000, the non-GAAP net income will be $1.6 million. GAAP net income per fully diluted ADS in the first quarter of 2022 was $0.03. Non-GAAP net income per fully diluted ADS was $0.05. Gross margin was 52.6% in Q1. The gross margin reflects the current revenue level and the product mix. R&D expense was $4.8 million or 22% of revenue. This amount excludes stock-based compensation expense of $207,000. SG&A expense was $5.1 million or 23.4% of revenue. This amount is gross stock-based compensation expense of $367,000 and onetime special project expense of $136,000. The non-operating income was $285,000. Income tax was $203,000 in the first quarter is mainly based on the estimated effective tax rate of each taxable location. In Q1 2022, we repurchased 110924 ADS units at a cost of $463,000. Q1 2022 revenue by end-markets, braced now into the following percentage, industrial was 60% to 62% of revenue. Consumer was 36% to 38% of revenue. Computer was 2% to 4% of revenue. Communications was almost zero. At this moment, I would like to provide some additional information. O2Micro finished the first quarter with $48.2 million in unrestricted cash and short-term investments. This represents cash and cash equivalent of $1.65 per ADS. In addition, O2Micro has no debt. Accounts receivable at the end of Q1 was 16.2 million. Our DSO is 73 days. DSO is more than 60 days, mainly from account mix. Inventory was $21.8 million at the end of the first quarter. This represents 181 days of inventory, and inventory turnover was 2.0 times in Q1. The strategic increase in inventory is mainly for wafer, die paint