RF (radio frequency) solutions provider and technology innovator TriQuint Semiconductor Inc. (TQNT) reported a net loss of $8.7 million or loss of 5 cents per share in the fourth quarter of 2013 compared with a net loss of $3.8 million or loss of 2 cents per share in the year-ago quarter. The wider loss in the reported quarter was primarily attributable to high research and development expenses.
Excluding non-recurring items, non-GAAP earnings in the reported quarter were $26.3 million or 16 cents per share versus $6.2 million or 4 cents per share in the prior-year quarter. Adjusted quarterly earnings well exceeded the Zacks Consensus Estimate of 9 cents.
For full year 2013, TriQuint reported a net loss of $38.0 million or loss of 24 cents per share compared with a net loss of $26.2 million or loss of 16 cents per share in 2012. However, non-GAAP earnings improved to $14.5 million or 9 cents per share in 2013 from a net loss of $2.2 million or loss of a penny per share in the previous year. Adjusted earnings for 2013 comfortably beat the Zacks Consensus Estimate of a loss of 12 cents.
Revenues & Margins
Revenues for the reported quarter were $267.7 million, up 15% year over year with strong performance across all markets. Quarterly revenues marginally missed the Zacks Consensus Estimate of $268 million. For full year 2013, revenues were $892.9 million, up 8% from 2012 due to an increase in revenue from Mobile Devices and Defense markets.
On an end-market basis, quarterly revenues in the Mobile Devices market improved 26.2% year over year to $190.0 million (71% of total revenue) driven by healthy demand for new LTE (Long Term Evolution) products and a significant product ramp up in the quarter. Mobile Device revenues for the second half of the year were at a record high of $371 million, increasing 66% over the first half. However, revenues from the Networks market decreased 3.4% year over year to $48.7 million (18% of total revenue) and Defense revenues were down 10.7% to $29.1 million (11% of total revenue). The book-to-bill ratio for the reported quarter was 0.71.
During 2013, TriQuint introduced 190 new products, strengthening its strategic position in the RF industry. The company recorded less revenue from lower margin products, including commodity power amplifiers and transmit modules as it focused more on high-margin products. Sales of high-margin products increased 36% in 2013 (growing faster than the overall market) due to solid demand for premium filters and high-performance broadband amplifiers. On the other hand, revenue from lower margin amplifiers and transmit modules declined 25% year over year in 2013.
Gross profit (non-GAAP) was $99.6 million versus $74.1 million in the prior-year period. Non-GAAP gross margin improved to 37.2% from 31.7% in the year-ago period. The increase in margin was driven by higher revenues, higher factory utilization and better yields. Operating expenses (GAAP) for the fourth quarter of 2013 increased to $78.5 million from $72.0 million in the year-ago quarter, primarily due to higher R&D spending.
Balance Sheet
At year-end 2013, cash and cash equivalents aggregated $79.0 million compared with $116.6 million in the prior-year period. TriQuint closed the year with no debt on its balance sheet. Cash flow from operation for full year 2013 was $46.7 million.
Outlook
Going forward, TriQuint expects first quarter 2014 revenues in the range of $170 million to $180 million due to seasonality factors. Non-GAAP loss is expected to be between 11 cents and 13 cents per share. For full year 2014, non-GAAP gross margin is expected to grow 500 basis points year over year driven by product mix changes and lower operating costs. Non-GAAP earnings for the year are expected to be 49 cents per share.
TriQuint is expanding its capacity for high-performance filters as it anticipates strong demand in 2014 and beyond. This is likely to improve its performance in the coming quarters. The company is well positioned in each of its markets to build on its margin momentum. Bracing itself up for the next and larger LTE expansion, TriQuint has restructured its factories and aligned its mobile product strategy around premium filters, high-efficiency amplifiers and densely integrated solutions.
TriQuint currently has a Zacks Rank #3 (Hold). Notable companies in the sector that are worth mentioning include Broadcom Corp. (BRCM), Himax Technologies, Inc. (HIMX) and Freescale Semiconductor, Ltd. (FSL), all of which carry a Zacks Rank #2 (Buy).
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