Psi Tech Hldgs (MM) (NASDAQ:PSIT)
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PSi Technologies Reports First Quarter 2005 Results
SOUTH SAN FRANCISCO, Calif. and MANILA, Philippines, May 11
/PRNewswire-FirstCall/ -- PSi Technologies Holdings, Inc., (NASDAQ:PSIT), a
leading independent provider of assembly and test services for the power
semiconductor market, today announced financial results for the first quarter
ended March 31, 2005:
Highlights
* Consolidated revenues of $19.2 million, an increase of 2.0% on a
quarter-over-quarter basis, and an increase of 1.8% on year-over-year
basis.
* China revenues of $1.2 million, an increase of 59.9% on a
quarter-over-quarter basis.
* Gross margin of (1.5)%, versus (3.3)% in the previous quarter and
4.8% in 1Q04.
* Operating loss margin, of (13.2)% versus (15.8)% in the previous
quarter.
* EBITDA margin, of 7.0%, versus 5.8% in the previous quarter and
13.3% in 1Q04.
* Fully diluted EPS of $(0.17) per share, versus EPS of $(0.23) per
share in the previous quarter and $(0.10) in 1Q04.
First Quarter Financial Results
Revenues for the first quarter of 2005 totaled $19.2 million, a 2.0% sequential
increase compared to $18.8 million in the previous quarter, and a 1.8% increase
compared to revenues of $18.9 million for the first quarter of 2004. Revenues
from the Company's top 5 customers were $16.0 million, a 6.6% increase compared
to $15.0 million in the previous quarter, and a 4.2% increase over the same
period last year. During the quarter, China contributed $1.2 million in
revenues, a 59.9% sequential increase versus the previous quarter.
The Company's largest customers for the first quarter (in alphabetical order)
were Infineon Technologies, ON Semiconductor, Philips and ST Microelectronics.
Products packaged for those customers are used in a variety of end user
applications, with particular focus on automotive systems, consumer
electronics, communications equipment, industrial applications, home appliances
and PC motherboards.
Sales of power semiconductor packages comprised 96.6% of first quarter
revenues, or $18.6 million, a 6.9% sequential increase versus $17.4 million in
the previous quarter, and a 7.6% increase compared to the same period last
year.
"Our Philippine and China sites exhibited differing revenue trends during the
quarter," said Arthur J. Young, Jr., Chairman and CEO. "Following the
sequential monthly decline in loadings during the fourth quarter, loadings in
our Philippine facilities bottomed in January and subsequently posted strong
month-over-month growth, with March being the strongest month of the quarter
due to the replenishment of inventory by our customers. On the other hand,
revenues from our China facility continued to expand as we stabilized
operations and started shipping product from the lines transferred during the
third and fourth quarters of 2004."
Consolidated gross margin was (1.5)% in the first quarter, versus (3.3)% in the
previous quarter and 4.8% in the same period last year.
"We entered the quarter with the goal of setting the Philippine business up to
consistently make profits at lower run-rates," said Young. "Initial pilot
activities in the area of strategic China sourcing, improving process flow by
segmenting the production area according to package type, reducing manpower and
improving operational efficiencies mitigated a 5% sequential increase in
utilities expense and yielded about $180,000 in cost savings during the
quarter. In March, the gross margins of our Philippine operations recovered to
approximate third quarter 2004 levels."
"China benefited from higher operating leverage as loadings increased, leading
to a 59.9% expansion in sales with only a 22.5% increase in cost of goods,"
said Young. "In March, China contributed positively to consolidated gross
profits."
Operating expenses declined by more than $128,000 on a sequential basis, to
$2.5 million in the first quarter, due primarily to tighter cost controls in
Philippine operating expenses, which mitigated the 36.1% increase in Research
and Development costs attributable to the development of the Company's Power
QFN (Quad, Flat, No-Lead) Package.
Operating loss margin improved to (13.2)% in the first quarter versus (15.8)%
in the previous quarter and (7.1)% in the same period last year. Consolidated
operating loss margin for March was (5.6)%.
"We are encouraged that the cost reduction measures in the Philippines and
expansion in loadings in China resulted in a noticeable reduction in operating
loss," said Young.
EBITDA margin was 7.0% for the first quarter, up from 5.8% in the previous
quarter.
First quarter net loss was $(2.8) million or $(0.17) per diluted share,
compared to $(3.8) million in the previous quarter or $(0.23) per diluted
share.
Balance Sheet Highlights
Cash and cash equivalents totaled $0.4 million in the first quarter, versus
$2.1 million at the end of 2004.
Capital expenditures totaled $3.1 million in for the quarter, which was
partially offset by $1 million in proceeds from the sale of the Company's
unutilized third site in the Philippines. Discussions are ongoing with third
parties for the disposal of other unutilized properties and equipment.
The long-term liability account of $1.6 million as of March 31, 2005 represents
the carrying amount of the Exchangeable Note issued in July 2003, net of the
amortization of discount representing the embedded conversion feature of the
Note.
The Company is continuing discussions with its major shareholders for an equity
infusion to strengthen the Company's balance sheet.
As of March 31, 2005, tangible book value was $2.82 per share on 13,289,525
outstanding shares, or $2.23 per share on a fully diluted basis.
Business Outlook
Commenting on the Company's business outlook and going-forward strategies,
Young said: "PSi is sharply focused on reducing the cost base and improving the
efficiencies of the Philippine operations to insulate the Company from the
volatility of our customers' loadings, supporting the growth momentum of our
China operations to make it a self-sustaining business, rationalizing the
package portfolio and introducing newer and more advanced packaging
technologies. These are the drivers of our margins in future periods."
"In the Philippines, we expect to continue to streamline the layout of our main
facility and simplify our organization to allow for lower costs and faster
decision-making to respond to challenging and uncertain market conditions,"
said Young. "These initiatives are expected to yield cost savings ranging from
5 to 6 percentage points by the fourth quarter. Additionally, to improve the
profitability of poorly-performing or marginal packages and mitigate the impact
of higher commodity prices, we have successfully negotiated for selective price
increases effective April and May."
"We also expect to announce the appointment of a Chief Operating Officer with
experience in developing and implementing turn around strategies in the coming
days," said Young.
"The Company is currently in qualifications with various customers for its
Power QFN Package. The start of limited production is anticipated in the third
quarter. Similarly, we expect to file patents related to the intellectual
property developed for the Power QFN package."
About PSi Technologies
PSi Technologies is a focused independent semiconductor assembly and test
service provider to the power semiconductor market. The Company provides
comprehensive package design, assembly and test services for power
semiconductors used in telecommunications and networking systems, computers and
computer peripherals, consumer electronics, electronic office equipment,
automotive systems and industrial products. Their customers include most of
the major power semiconductor manufacturers in the world such as Fairchild
Semiconductor, Infineon Technologies, ON Semiconductor, Philips Semiconductor,
and ST Microelectronics. For more information, visit the Company's web site at
http://www.psitechnologies.com/ or call:
At PSi Technologies Holdings, Inc.:
Edison G. Yap, CFA
(63 917) 894 1335
At Financial Relations Board:
Amy Cozamanis
(310) 854 8314
Safe Harbor Statement
This press release contains forward-looking statements that involve risks and
uncertainties. Actual results and outcomes may differ materially. Factors that
might cause a difference include, but are not limited to, those relating to the
pace of development and market acceptance of PSi's products and the power
semiconductor market generally, commercialization and technological delays or
difficulties, the impact of competitive products and technologies, competitive
pricing pressures, manufacturing risks, the possibility of our products
infringing patents and other intellectual property of third parties, product
defects, costs of product development, manufacturing and government regulation,
risks inherent in emerging markets, including but not limited to, currency
volatility and depreciation, restricted access to financing and political and
social unrest and the possibility that the initiatives described herein may not
produce the intended results. PSi undertakes no responsibility to update these
forward-looking statements to reflect events or circumstances after the date
hereof. More detailed information about potential factors that could affect
PSi's financial results is included in the documents PSi files from time to
time with the Securities and Exchange Commission.
PSi Technologies Holdings, Inc.
Unaudited Income Statement
(In US Dollars)
3 Months
31-Mar-05 31-Dec-04 31-Mar-04
Sales $19,210,744 $18,824,849 $18,863,750
Cost of Sales $19,507,184 $19,443,372 $17,953,106
Gross Profit $(296,439) $(618,522) $910,643
Operating Expense
Research and Development $312,766 $229,723 $215,956
Stock compensation cost $59,988 $59,988 $77,019
Administrative Expenses $1,602,306 $1,818,999 $1,778,186
Marketing Expenses $205,013 $195,777 $182,213
Freight Out $54,359 $58,409
Subtotal $2,234,432 $2,362,897 $2,253,374
Operating Profit/(Loss) $(2,530,872) $(2,981,419) $(1,342,731)
Other Income / (Charges) $(263,529) $(839,747) $(301,925)
Income before Tax and
Minority Interest $(2,794,400) $(3,821,166) $(1,644,656)
Provision for Income Tax $(508)
Minority Interest $5,128 $(16) $(2,849)
Net Income $(2,789,272) $(3,821,691) $(1,647,505)
EBITDA 1,351,048 1,098,360 $2,499,631
No. of Shares Fully Diluted 16,767,786 16,767,786 16,767,786
EPS (0.17) (0.23) (0.10)
* Effective in the first quarter, China-related revenues and expenses
were consolidated into the Income Statement of the Company, instead
of previous quarters' practice of classifying the net result under
the heading "China Expenses" in the Operating Expense section of the
Company's Income Statement. Fourth quarter 2004 results were adjusted
to facilitate quarter-over-quarter comparison of performance.
PSi Technologies Holdings, Inc.
Unaudited Consolidated Balance Sheet
(In US Dollars)
31-Mar-05 31-Dec-04
ASSETS Unaudited Unaudited
Cash & Cash Equivalents 380,674 2,123,191
Accounts Receivable 14,256,849 11,200,262
Notes Receivable on Sale of
Land & Building 1,173,462
Inventories 7,335,039 8,292,067
Prepaid Expenses & Tax Credits 538,619 365,581
Total Current Assets 23,684,642 21,981,101
Property Plant & Equipment 137,415,954 137,789,164
Accumulated Depreciation 78,456,842 74,632,526
Property Plant & Equipment - Net 58,959,112 63,156,638
Investment & Advances 143,984 143,719
Other Assets 1,552,880 1,620,852
TOTAL ASSETS 84,340,620 86,902,310
LIABILITIES & STOCKHOLDER'S EQUITY
Accounts Payable and Other Expenses 24,835,317 22,645,617
Accounts Payable CAPEX 4,586,817 6,185,099
Bank Loans 11,800,000 11,800,000
Trust Receipts 3,096,530 3,237,411
Current Portion of Long-term Debt 615,193 885,928
Current Portion of Obligation
under Capital Lease 453,793 460,873
Total Current Liabilities 45,387,649 45,214,928
Long-term liability (net of current) 1,564,306 1,564,306
Obligation Under Capital Leases
(net of current) -- --
TOTAL LIABILITIES 46,951,955 46,779,233
Minority Interest (69,008) (63,880)
Equity
Subtotal Equity 72,098,912 72,038,923
Subtotal Retained Earnings (34,641,239) (31,851,967)
TOTAL EQUITY 37,457,673 40,186,957
TOTAL LIABILITIES & S'HOLDERS' EQUITY 84,340,620 86,902,310
For the 3
Months ended
31-Mar-05
CASH FLOWS FROM OPERATING ACTIVITIES --
Net Income (2,789,272)
Adjustments to reconcile net income to
net cash provided by operating activities:
Minority interest (5,128)
Equity in net loss (gain) of an investee 2002
Stock compensation cost 59,988
Depreciation and amortization 3,802,006
Loss on Asset Impairment
Provision for (benefit from) deferred income tax --
Equity in net loss (gain) of an investee --
Change in assets and liabilities:
Decrease (increase) in:
Accounts receivables (3,056,587)
Inventories 957,028
Other Current Assets and tax credit receivable (173,037)
Increase (decrease) in:
Accounts payable and other expenses 2,189,699
Net cash provided by operating activities 984,697
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (3,071,940)
Proceeds from sale of Property & Equipment 1,000,000
Decrease (increase) in investments and advances (265)
Decrease (increase) in other assets (236,313)
Net cash used in investing activities (2,308,518)
CASH FLOWS FROM FINANCING ACTIVITIES
Net availment/(payments) of short-term loans 0
Trust receipts and acceptances payable (140,881)
Net availment/(payments) of stock issuance cost --
Net availment/(payments) of long term loan (270,735)
Net availment/(payments) of obligation
under capital leases (7,080)
Net cash provided by (used in) financing activities (418,696)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,742,516)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 2,123,191
CASH AND CASH EQUIVALENTS AT END OF PERIOD 380,674
SUPPLEMENTAL INFORMATION ON NONCASH FINANCING & INVESTING ACTIVITIES
Property and equipment acquired (paid)
on account under accounts payable (1,598,282)
DATASOURCE: PSi Technologies Holdings, Inc.
CONTACT: Edison G. Yap, CFA of PSi Technologies Holdings, Inc.,
+(63 917) 894 1335, ; or Amy Cozamanis of
Financial Relations Board, +1-310-854-8314,
, for PSi Technologies Holdings, Inc.
Web site: http://www.psitechnologies.com/