First Quarter 2013 results

Transcription

1 First Quarter 2013 results Joep van Beurden, CEO Will Gardiner, CFO May 8, 2013

2 Cautionary note This presentation contains, or may contain, forward looking statements in relation to the future financial and operating performance and outlook of CSR, as well as other future events and their potential effects on CSR. Generally, the words will, may, should, continue, believes, targets, plans, expects, estimates, aims, intends, anticipates, or similar expressions or negatives thereof identify forward-looking statements. Forward-looking statements include statements relating to the following: expected developments in our product portfolio, expected revenues in both our Core and Legacy businesses, expected margins, expected trends, expected growth, including growth prospects in our Core business (including each of Auto, Voice & Music, and Consumer), expected annualised operating costs savings, expected annualised operating expenses, expected future cash generation, expected future design wins and increase in market share, expected timing of product releases and expected timing of product development milestones, expected incorporation of our products in those of our customers, expected adoption of new technologies, the expectation of volume shipments of our products, expected product markets and their expansion or contraction, opportunities in our industry and our ability to take advantage of those opportunities, the potential success to be derived from strategic partnerships, the potential impact of capacity constraints, the effect of our financial performance on our share price, the impact of government regulation, expected performance against adverse economic conditions, and other expectations and beliefs of our management. Actual results and developments could differ materially from those expressed or implied by these forward looking statements as a result of numerous risks and uncertainties. These factors include, but are not limited to: a continuing or worsening economic downturn, which could reduce demand for consumer products; risks associated with the development of new products in response to market demand and CSR s ability to ensure timely delivery of such products; increased expenses associated with new product introductions, masks, or process changes; risks relating to forecasting consumer demand for and market acceptance of CSR s products and the products that use CSR s products; declines in the average selling prices of CSR s products; cancellation of existing orders or the failure to secure new orders; risks associated with securing sufficient capacity from the third-parties that manufacture, assemble and test CSR s products and other risks relating to CSR s fabless business model; difficulties related to distributors who supply our products to customers; risks associated with existing or future litigation, including the risk that the Company will be enjoined from shipping or selling its products; errors or failures in the hardware or software components of CSR s products; risks associated with acquiring and protecting intellectual property and other commercially sensitive information; the cyclicality of the semiconductor industry; the potential for disruption in the supply of wafers or assembly or testing services due to changes in business conditions, natural disasters, terrorist activities, public health concerns or other factors; CSR s ability to manage past and future acquisitions and realise the expected commercial benefits and synergies from such acquisitions and other strategic transactions in the amounts or timeframes anticipated; CSR s ability to attract and retain key personnel, including engineers and technical personnel; the difficulty in predicting future results; and other risks and uncertainties discussed, without limitation, under the heading Risk Factors in our 2012 Annual Report filed on Form 20-F and other filings with the US Securities and Exchange Commission. The reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Neither CSR nor any other person undertakes any obligation to update or revise publicly any of the forward-looking statements set out herein, whether as a result of new information, future events or otherwise, except to the extent required under applicable law. Page 2

3 First quarter 2013 results: agenda Overview of Q Financial review and outlook Summary Q&A Page 3

4 Highlights Financial performance Q1 revenue $237.9m (Q1 2012: $227.0m) Growth in Q1 Core revenue of 24% to $171.8m (Q1 2012: $138.9m) Underlying operating profit of $19.1m (Q1 2012: $2.7m) Revenue momentum in platform strategy Introduced Bluecore CSR8605 single chip ROM Bluetooth music streaming device Platform-related revenue in Q1 2013, 60% of total revenue (Q1 2012: 57%) Focus on returns $50 million share buyback commenced; expected to complete by end Q2 Meaningful progress made towards target operating model Page 4

5 Core: Auto Revenues Q $55.1m 16% increase compared to Q ($47.5m) Design win momentum Increasing demand with Tier One customers for auto connectivity products Continued to ship SiRFatlasVI and SiRFprimaII Q112 LTM includes 5 months of the combined revenue for Zoran and CSR, for the period prior to the acquisition of Zoran. Q112, Q113 and Q113 LTM show the reported revenues for CSR only. Page 5

6 Core: Consumer gaming, printers, cameras, BT Smart and location Revenues Q $42.6m 24% decrease compared to Q ($56.0m) Gaming and camera revenues under pressure from smartphones Bluetooth Smart gaining momentum Platform progression Customers evaluating COACH 16 Imaging technology adopted by Tier One for auto drive recorder Design win momentum Bluetooth Smart at Mad Catz Q112 LTM includes 5 months of the combined revenue for Zoran and CSR, for the period prior to the acquisition of Zoran. Q112, Q113 and Q113 LTM show the reported revenues for CSR only. Page 6

7 Core: Voice & Music Revenues Q $74.1m 109% increase compared to Q ($35.4m) Benefit from continued market leadership and growth in Bluetooth music streaming Chinese driving legislation enforcement uplift to conclude in Q2/13 Platform progression aptx has c.150 licensees, enhancing V&M platform Introduced CSR8605 single-chip ROM Bluetooth music streaming device Design win momentum SIG stereo product registrations with CSR product in Q of c.420 (Q4 2012: c.350) Page 7

8 Legacy: Handset and Home Entertainment Revenues Q $66.1m 25% decrease compared to Q ($88.1m) Currently more resilient than expected but broadly expect remainder of 2013 Legacy revenues to decline c.50% compared to 2012 Q112 LTM includes 5 months of the combined revenue for Zoran and CSR, for the period prior to the acquisition of Zoran. Q112, Q113 and Q113 LTM show the reported revenues for CSR only. Page 8

9 Financial review Will Gardiner, Chief Financial Officer

10 Financial achievements Core revenue growth improved to 24% year-on-year in Q1 Core gross margins, 57.6%, in the middle of target range Underlying EPS of $0.07, an increase of $0.06 compared to Q1 12 Page 10

11 Q1 financial summary Q Q Change Q to Q Revenue $237.9m $227.0m 4.8% Underlying gross margin 51.5% 50.6% 0.9% Underlying gross profit $122.4m $114.8m 6.6% Underlying R&D expenditure $66.7m $67.8m (1.6%) Underlying SG&A expenditure $36.6m $44.3m (17.4%) Underlying operating profit $19.1m $2.7m n/a Operating margin 8.0% 1.2% 6.8% Underlying diluted earnings per share $0.07 $0.01 $0.06 Underlying results are based on IFRS, adjusted for amortisation of intangibles (Q1 2013: $4.7m, Q1 2012: $5.7m), share option charges (Q1 2013: $11.9m, Q1 2012: $6.0m), integration & restructuring costs (Q1 2013: $5.3m, Q1 2012: $6.8m), other operating income (Q1 2013: $0.7m, Q1 2012; $nil), the release of litigation provisions (Q1 2013: $9.8m, Q1 2012: $nil), the unwinding of discount on non-underlying items (Q1 2013: $0.4m, Q1 2012: $0.6m) and prior year adjustments and movements on uncertain tax positions (Q1 2013: $0.5m, Q1 2012: $nil). Underlying diluted earnings per share also adds back the tax effects associated with the above items. Page 11

12 Underlying gross margins and ongoing core business gross margins Ongoing Core Business 59.2% 57.6% 58.0% 57.6% 57.6% Current Business 51.0% 50.6% 52.0% 51.5% 49.8% 49.2% 50.4% 49.9% Q Q Q Q Q Q Q Q Page 12

13 Delivering on underlying cost reductions Q Q Q R&D ($m) Q Q Q SG&A ($m) Page 13

14 Working capital analysis Inventory Days Debtor Days Q Q Q Significant Improvement since Q Q Q Q Strong cash collection Page 14

15 Strong cash position $m Q Q Change Operating profit 7.7 (15.8) 23.5 Non-cash items Cash flow from operations 16.9 (9.2) 26.1 Working capital (28.7) (10.6) (18.1) Capital expenditure (11.4) (6.0) (5.4) Free cash flow (23.2) (25.8) 2.6 Other (0.6) 0.1 (0.7) Taxation (4.1) Net interest (0.1) Proceeds of issue of share capital Purchase of treasury shares (2.2) (5.4) 3.2 Net increase/(decrease) in cash and cash equivalents (14.0) (26.1) 12.1 Cash and cash equivalents at beginning of period Effect of foreign exchange rate changes (1.3) (0.4) (0.9) Cash and cash equivalents at end of period Page 15

16 Q1 Litigation update Litigation is commonplace in our industry. CSR will continue to take steps that we believe are in the overall interests of CSR and CSR s stockholders. See public filings for more information concerning litigation. 28 March 2013, US Supreme Court dismissal of Bartek/Richardson litigation: $9.8M litigation provision released. Settled lawsuits with Advanced Processor Technologies and Mosaid. Multiple Freescale cases ongoing with no trial dates set Other cases ongoing: Azure and Tri-County Excelsior Foundation (Filed 22 March 2011 in the US District Court for the Eastern District of Texas; Trial scheduled for Q4 2013) HSM Portfolio and Technology Property Limited (Filed 1 September 2011 in the US District Court for Delaware; Trial scheduled for Q1 2015) Innovus Prime (Filed 26 August 2011 in the US District Court for Northern District of California; No trial date set) Page 16

17 Outlook Good start to the year Growth in Bluetooth audio and Auto Share buyback commenced Outlook $245m $265m Capital Market Day June 27, in Cambridge Page 17

18 Q & A Joep van Beurden, CEO Will Gardiner, CFO