Blaqclouds Inc (OTC:BCDS)

The results for the fiscal second quarter ended June 30, 2012 were as follows:

• Revenue was $36.8 million, an increase of 18.7% from the first quarter of fiscal year 2012 and a decrease of 4.2% from the second quarter of fiscal year 2011.
   
• Gross margin was 29.1%, compared to 23.6% for the first quarter of fiscal year 2012 and 30.0% for the second quarter of fiscal year 2011.
   
• Operating expenses were $8.3 million, compared to $7.3 million for the first quarter of fiscal year 2012 and $6.9 million for the second quarter of fiscal year 2011. Operating expenses for the second quarter of fiscal year 2012 included $452 thousand in share-based compensation expenses and $109 thousand in amortization of acquired intangible assets, as compared to $269 thousand and $105 thousand, respectively, for the first quarter of fiscal year 2012, and $359 thousand and $69 thousand, respectively, for the second quarter of fiscal year 2011.
   
• Income from operations after share-based compensation expenses and amortization of acquired intangible assets was $2.4 million, compared to income from operations of $4 thousand for the first quarter of fiscal year 2012 and income from operations of $4.6 million for the second quarter of fiscal year 2011.
   
• GAAP net income was $2.1 million, compared to $292 thousand for the first quarter of fiscal year 2012 and $5.1 million for the second quarter of fiscal year 2011.
   
• Non-GAAP adjusted net income was $2.5 million, compared to $715 thousand for the first quarter of fiscal year 2012 and $5.5 million for the second quarter of fiscal year 2011. 
   
• GAAP earnings per diluted American Depositary Share ("ADS") (EPS) was $0.11, compared to $0.02 for the first quarter of fiscal year 2012 and $0.26 for the second quarter of fiscal 2011.
   
• Non-GAAP earnings per diluted ADS share (non-GAAP EPS) was $0.13, compared to $0.04 for the first quarter of fiscal year 2012 and $0.28 for the second quarter of fiscal year 2011.
   
• Number of weighted average fully diluted ADSs was 19,031,141.
   
• Cash balance was $49.9 million as of June 30, 2012, compared to $53.0 million as of March 31, 2012 and $72.0 million as of June 30, 2011. 
   
• Cash flow from operating activities was a net inflow of $3.8 million, compared to a net outflow of $2.9 million for the first quarter of fiscal year 2012 and a net inflow of $3.4 million for the second quarter of fiscal year 2011.
   
• Capital expenditures were $7.9 million, compared to $10.1 million for the first quarter of fiscal year 2012 and $6.0 million for the second quarter of fiscal year 2011. 
   
• We used $732 thousand of cash to repurchase 151,204 ADSs at an average price of $4.84 per ADS under our authorized share re-purchase program.

"We are encouraged by our second quarter financial results as all of our product lines have achieved substantial sequential growth with improved gross margins," said Chieh Chang, Chief Executive Officer of BCD Semiconductor. "While the global economic environment remains uncertain, we will stay focused on our business model and are confident that we will continue to gain market in our industry through competitive products and services to our customers."

Business Outlook

Revenue for the third quarter of fiscal year 2012 is expected to be in the range of $37 to $41 million, representing a growth of approximately 0.5% to 11.4% compared to the second quarter of fiscal year 2012 and a decline of approximately 5.4% to a growth of 4.9% compared to the third quarter of fiscal year 2011. Gross margins are expected to be in the range of 27.0% to 30.0% of revenue. Operating expenses exclusive of share based compensation expenses and amortization of acquired intangible assets are expected to be approximately $7.8 million. We expect our effective income tax rate to range between 9.0% and 11.0%. We expect our capital expenditures to be approximately $7.0 million in the third quarter of fiscal year 2012. The number of ADSs used to calculate GAAP earnings per share for the third quarter of fiscal year 2012 is anticipated to be approximately 19.0 million.

First Quarter 2012 Results

• Revenue was $31.0 million, a slight decrease from $31.3 million for the fourth quarter of fiscal year 2011 and approximately flat from $31.0 million for the first quarter of fiscal year 2011.
• Gross margin was 23.6%, compared to 26.2% for the fourth quarter of fiscal year 2011 and 29.1% for the first quarter of fiscal year 2011.
• GAAP earnings per diluted American Depositary Share ("ADS") (EPS) was $0.02, compared to $0.03 for the fourth quarter of fiscal year 2011 and a loss per ADS of $(0.40) for the first quarter of fiscal 2011.
• Non-GAAP earnings per diluted ADS share (non-GAAP EPS) was $0.04, compared to $0.13 for the fourth quarter of fiscal year 2011 and $0.19 for the first quarter of fiscal year 2011.

"Our first quarter financial results caught the high end of our expectations and we are pleased to see market demand strengthening in our core communications, computing and consumer end markets in Asia," said Chieh Chang, Chief Executive Officer of BCD Semiconductor. "While market visibility remains limited, we are confident that we will continue to grow our business in the multi-billion dollar analog power management industry."

Business Outlook

Revenue for the second quarter of fiscal year 2012 is expected to be in the range of $35 to $39 million, representing a growth of approximately 12.9% to 25.8% compared to the first quarter of fiscal year 2012 and a decline of approximately 9.0% to a growth of 1.4% compared to the second quarter of fiscal year 2011. Gross margins are expected to be in the range of 25.5% to 27.0% of revenue. Operating expenses exclusive of share based compensation expenses and amortization of acquired intangible assets are expected to be approximately $7.6 million. We expect our effective income tax rate to range between 9.0% and 10.0%. We expect our capital expenditures to be approximately $8.0 million in the second quarter of fiscal year 2012. The number of ADSs used to calculate GAAP diluted earnings per share for the second quarter of fiscal year 2012 is anticipated to be approximately 19.4 million.

Fourth Quarter 2011 Results

• Revenue was $31.3 million, a sequential decrease of 19.8% from $39.1 million for the third quarter of fiscal year 2011, and approximately flat from $31.6 million for the fourth quarter of fiscal year 2010.
   
• Gross margin was 26.2%, compared to 27.4% for the third quarter of fiscal year 2011 and 31.8% for the fourth quarter of fiscal year 2010.
   
• Operating expenses were $8.6 million, compared to $7.6 million for the third quarter of fiscal year 2011 and $5.9 million for the fourth quarter of fiscal year 2010. Operating expenses for the fourth quarter of fiscal year 2011 included $445 thousand in share-based compensation expenses, $798 thousand in impairment loss on acquired intangible asset and $140 thousand in amortization of acquired intangible assets, as compared to $643 thousand, $0 and $205 thousand, respectively, for the third quarter of fiscal year 2011, and $508 thousand in share-based compensation for the fourth quarter of fiscal year 2010.
   
• Operating loss after share-based compensation, impairment loss and amortization of acquired intangible assets was $(360) thousand, or (1.1)% of revenue, compared to the operating profit of $3.1 million, or 7.9% of revenue, for the third quarter of fiscal year 2011 and $4.1 million, or 13.0% of revenue, for the fourth quarter of fiscal year 2010.
   
• GAAP net income was $569 thousand compared to $4.0 million for the third quarter of fiscal year 2011, and $3.8 million for the fourth quarter of fiscal year 2010.
   
• Non-GAAP adjusted net income was $2.4 million, compared to $4.7 million for the third quarter of fiscal year 2011 and $4.5 million for the fourth quarter of fiscal year 2010.
   
• GAAP earnings per diluted ADS share (EPS) was $0.03 compared to $0.21 for the third quarter of fiscal year 2011.
   
• Non-GAAP earnings per ADS share (non-GAAP EPS) was $0.13 compared to $0.25 for the third quarter of fiscal 2011.

"As we expected, we experienced more than a typical seasonal decline in the quarter due to continued soft demand in our core communications, computing and consumer end markets in Asia," said Chieh Chang, Chief Executive Officer of BCD Semiconductor. "While market demand was below our expectations in 2011, we have demonstrated our ability to grow within an industry that looks to have declined. This gives us confidence in our business model and we are optimistic that we will continue to gain share in the multi-billion dollar analog power management industry."

Business Outlook

Revenue for the first quarter of fiscal year 2012 is expected to be in the range of $28 to $32 million, representing a decline of approximately 10.5% to a growth of 2.2% when compared to the fourth quarter of 2011 and a decline of approximately 9.7% to a growth of 3.2% when compared to the first quarter of 2011. Gross margins are expected to decrease to approximately 22% of revenue, mainly due to our plans to reduce our fab utilization in the first quarter of 2012, in part for annual maintenance during the Chinese New Year holiday. Operating expenses exclusive of the share based compensation expenses and amortization of acquired intangible assets are expected to be approximately $7.0 million. We expect our effective income tax rate to range between 8.0% and 9.0%. We expect our capital expenditures to be approximately $10.0 million in the first quarter. The number of ADS shares used to calculate GAAP earnings per share for the first quarter is anticipated to be approximately 18.8 million.

First Quarter Results:  

• Revenue was $31.0 million, a sequential decrease of 1.9% from $ 31.6 million for the fourth quarter of fiscal year 2010, and an 8.2% increase from $28.6 million for the first quarter of fiscal year 2010. 
• Gross margin was 29.1%, compared to 31.8% for the fourth quarter of fiscal year 2010 and 29.9% for the first quarter of fiscal year 2010. 
•  Operating expenses were $6.0 million, compared to $5.9 million for the fourth quarter of fiscal year 2010 and $4.8 million for the first quarter of fiscal year 2010. Operating expenses for the first quarter of fiscal year 2011 included share-based compensation expenses of $319 thousand, as compared to $508 thousand and $263 thousand for the fourth quarter of fiscal year 2010 and for the first quarter of fiscal year 2010, respectively. 
• Operating profit was $3.0 million, or 9.6% of revenue, compared to $4.1 million, or 13% of revenue, for the fourth quarter of fiscal year 2010 and $3.7 million, or 13% of revenue, for the first quarter of fiscal year 2010.
• Net income was $3.8 million, compared to $3.8 million for the fourth quarter of fiscal year 2010 and $2.7 million for the first quarter of fiscal year 2010. Net income on a non-GAAP basis, or non-GAAP net income, was $3.5 million, compared to $4.5 million for the fourth quarter of fiscal year 2010 and $3.8 million for the first quarter of fiscal year 2010. 

"Demand for our power IC products in the first quarter tracked mostly in line with our expectations entering 2011," said Chieh Chang, Chief Executive Officer of BCD Semiconductor. "Our linear products performed slightly ahead of expectations while shipments of our AC/DC products were slightly below our expectations. In terms of gross margins, we fell below our target range mainly as a result of higher costs associated with the maintenance of our facility in Shanghai."

Revenue for the second quarter of fiscal year 2011 is expected to be in the range of $36 to $38 million, representing growth of approximately 5.6% to 11.5% when compared to the second quarter of 2010 and growth of approximately 16.3% to 22.8% when compared to the first quarter of 2011. Gross margin on a non-GAAP basis is expected to be in the range of 30.0% to 31.0% for the second quarter of fiscal year 2011.