Hittite Microwave Corporation Reports Financial Results for the Fourth Quarter of 2013

CHELMSFORD, Mass.--(BUSINESS WIRE)--February 6, 2014--Hittite Microwave Corporation (NASDAQ:HITT) today reported revenue for the fourth quarter ended December 31, 2013 of $68.8 million, comparable with $68.5 million for the fourth quarter of 2012 and $68.7 million for the third quarter of 2013. Net income for the quarter was $16.5 million, or $0.53 per diluted share, a decrease of 6.7% compared with $17.7 million, or $0.57 per diluted share, for the fourth quarter of 2012, and a decrease of 11.8% compared with $18.7 million, or $0.60 per diluted share, for the third quarter of 2013.

For the fourth quarter of 2013, revenue from customers in the United States was $28.4 million, or 41.3% of the company’s total revenue, and revenue from customers outside the United States was $40.4 million, or 58.7% of total revenue. Gross margin was 67.3% for the fourth quarter of 2013, compared with 73.3% for the fourth quarter of 2012 and 71.2% for the third quarter of 2013. Operating income for the fourth quarter of 2013 was $25.0 million, or 36.3% of revenue, compared with $28.0 million, or 40.8% of revenue, for the fourth quarter of 2012 and $28.0 million, or 40.7% of revenue, for the third quarter of 2013. Total cash and marketable securities at December 31, 2013 was $472.5 million, an increase of $15.2 million for the quarter.

“In the fourth quarter we were able to meet our revenue targets despite challenges in some of our markets,” said Rick Hess, President and CEO. “The decrease in profitability in the quarter was primarily the result of gross margins that in the aggregate were on the low end of our range, due to an unfavorable mix in products and markets, as well as several military development contracts that carry relatively low margins. These contracts, while less profitable in the near term, provide important opportunities for growth through future production contracts at higher margin levels. We are confident that our innovation and engineering leadership will continue to drive our business growth.”

For the full year 2013, revenue was $273.8 million, a 3.6% increase from $264.4 million for 2012. Net income for the year was $70.9 million, or $2.28 per diluted share, an increase of 3.4% from $68.6 million, or $2.22 per diluted share, for 2012. Net bookings for 2013 were $267.1 million, compared with $264.2 million for 2012. Backlog at December 31, 2013 was $60.5 million compared with $67.2 million at December 31, 2012.

The Company additionally announced that its Board of Directors has approved the initiation of a quarterly cash dividend, and has declared a dividend of $0.15 per share, payable on March 27, 2014, to shareholders of record as of the close of business on March 4, 2014. Future dividend declarations, as well as record and payment dates, are subject to board approval.

"Our operating model provides the financial foundation to support both a dividend and our growth plans," said Mr. Hess. “The Board's decision to initiate a quarterly dividend reflects our confidence in our financial position and in our future prospects. We are pleased that we can provide a regular quarterly dividend while maintaining a strong balance sheet.”

The company expects revenue for the first quarter ending March 31, 2014 to be in the range of $67.5 million to $69.5 million and net income to be in the range of $15.3 million to $16.5 million, or $0.49 to $0.53 per diluted share.

The company will host a conference call to discuss its financial results at 5:00 p.m. ET today. The conference call can be accessed by dialing (480) 629-9692. A live webcast of the call will be available online on the Hittite Microwave website. To listen to the live webcast, go to the Investors page of the Hittite Microwave website at www.hittite.com and click on the webcast link located under News & Events. A telephonic replay of the call also will be available for one week after the live call by dialing (303) 590-3030, access code 4659521. Following the call, a webcast replay will also be available by visiting the Investors page at www.hittite.com.

Hittite Microwave Corporation is an innovative designer and manufacturer of high performance integrated circuits, or ICs, modules, subsystems and instrumentation for technically demanding digital, RF, microwave and millimeterwave applications covering DC to 110 GHz. The company’s standard and custom products apply analog, digital and mixed-signal semiconductor technologies, which are used in a wide variety of wireless & wired communication and sensor applications for the automotive, broadband, cellular infrastructure, fiber optic, microwave & millimeterwave communications, military, space and test & measurement markets. The company is headquartered in Chelmsford, Massachusetts.

“Safe Harbor Statement” under the Private Securities Litigation Reform Act of 1995

Statements in this press release regarding Hittite Microwave Corporation that do not relate to historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, any statements regarding our expectations as to future levels of revenue, net income and earnings per share. Readers are cautioned that these forward-looking statements are subject to risks and uncertainties and are only predictions, and actual future events and results may differ materially from these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the impact of macro-economic conditions on demand for our products; our ability to effectively manage our costs and expenses in response to fluctuations in our growth rate; market acceptance of our new products; our ability to assess accurately our end market requirements; our success in maintaining the business of our significant customers; our ability to keep pace with new semiconductor processes; risks related to our dependence on third-party suppliers; regulatory, operational, financial and political risks inherent in operating internationally; competition within the semiconductor industry; product returns and warranty claims; the possibility that intellectual property claims initiated by or against us could be costly or have adverse outcomes; and other risks and uncertainties that are discussed under “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, as filed with the Securities and Exchange Commission.


Hittite Microwave Corporation
Condensed Consolidated Balance Sheets (unaudited)
(In thousands)
	December 31, 2013		December 31, 2012
Assets
Current assets:
Cash and cash equivalents	$	118,600	$	269,157
Marketable securities		353,947		140,069
Accounts receivable, net		36,186		30,921
Inventories		76,020		65,926
Income taxes receivable		5,991		1,566
Prepaid expenses and other current assets		2,997		2,761
Deferred taxes		13,399		14,988
Total current assets		607,140		525,388
Property and equipment, net		39,433		36,294
Deferred taxes		1,725		709
Other assets		8,190		11,172
Total assets	$	656,488	$	573,563

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	4,971	$	3,205
Accrued expenses		10,386		12,889
Income taxes payable		193		584
Deferred revenue and customer advances		6,735		4,699
Total current liabilities		22,285		21,377
Long-term income taxes payable		5,839		412
Deferred taxes		232		446
Other liabilities		103		124
Total liabilities		28,459		22,359
Total stockholders' equity		628,029		551,204
Total liabilities and stockholders' equity	$	656,488	$	573,563


Hittite Microwave Corporation
Condensed Consolidated Statements of Operations (unaudited)
(In thousands except per-share data)
	Three Months Ended December 31,						Twelve Months Ended December 31,
		2013			2012			2013			2012

Revenue	$	68,775		$	68,515		$	273,815		$	264,395
Cost of revenue		22,502			18,296			79,040			69,415
Gross profit		46,273			50,219			194,775			194,980
		67.3	%		73.3	%		71.1	%		73.7	%
Operating expenses:
Research and development		11,823			12,449			49,764			49,202
Sales and marketing		6,105			6,319			23,516			23,966
General and administrative		3,364			3,468			13,855			14,598
Total operating expenses		21,292			22,236			87,135			87,766
Income from operations		24,981			27,983			107,640			107,214
		36.3	%		40.8	%		39.3	%		40.6	%

Interest and other income (expense), net		(95	)		68			238			57
Income before income taxes		24,886			28,051			107,878			107,271
Provision for income taxes		8,360			10,337			36,965			38,702
Net income	$	16,526		$	17,714		$	70,913		$	68,569

Earnings per share:
Basic	$	0.54		$	0.58		$	2.32		$	2.26
Diluted	$	0.53		$	0.57		$	2.28		$	2.22

Weighted average shares outstanding:
Basic		30,672			30,401			30,609			30,359
Diluted		31,174			31,003			31,093			30,895

CONTACT:
Hittite Microwave Corporation
William W. Boecke, 978-250-3343
V.P. and Chief Financial Officer