Fairchild Semiconductor International Inc. (NASDAQ:FCS) Q1 2015 Earnings Conference Call - Final Transcript
Apr 16, 2015 • 09:00 am ET
Good day, and welcome to the Fairchild First Quarter 2015 Earnings Conference Call. Just a reminder that today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Dan Janson. Please go ahead.
Good morning, and thank you for dialing into Fairchild's first quarter 2015 financial results conference call. With me today is Mark Thompson Fairchild's Chairman, President and CEO; and Mark Frey, our Executive Vice President and CFO.
Let me begin by mentioning that we'll be attending the Robert Baird Growth Conference by May 6 in Chicago, the Deutsche Bank Semiconductor 101 Day in San Francisco on May 12, and the JPMorgan Tech, Media and Telecom Conference on May 18 in Boston.
We'll start today's call with Mark Frey, who'll review our first quarter financial results and discuss the current status of second quarter business. Mark Thompson will then discuss our product line results, end-markets and operational performance in more detail. Finally, we'll reserve time for questions and answers.
This call is scheduled to allow for approximately 60 minutes and is being simultaneously webcast from the Investor Relations section of our website at fairchildsemi.com. The replay for this call will be publicly available for approximately 30 days.
(Forward-Looking Cautionary Statements)
In addition, during this call, we may refer to adjusted or other financial measures that are not prepared according to generally accepted accounting principles. We use non-GAAP measures because we believe they provide useful information about the operating performance of our businesses that should be considered by investors in conjunction with the GAAP measures that we also provide.
You can find a reconciliation of non-GAAP to comparable GAAP measures at the Investor Relations section of our website at investor.fairchildsemi.com. The website also contains a variety of useful information for investors, including an extensive financial section to facilitate your investment analysis.
Now, I'll turn the call over to Mark Frey.
Thanks Dan. Good morning, and thank you for joining us. I'm sure most of you had a chance to review our earnings press release, so I'll focus on just the key points in my comments. For the first quarter of 2014(ph), Fairchild reported sales of $356 million, up 6% sequentially and 3% from the first quarter of 2014. Adjusted gross margin was down 80 basis points to 31.6%, due primarily to higher inventory unit costs attributable to lower factory loadings in the prior quarter. R&D and SG&A expenses were $94 million, which were up 3% from the prior quarter, but at the low end of our guidance range due to higher payroll-related expenses, partially offset by ongoing cost controls and lower equity compensation. First quarter adjusted net income was $13 million and adjusted EPS was $0.11. The adjusted tax expense was $4 million for the quarter.
Now, I'd like to review our first quarter sales and gross margin performance for our two major business segments. We changed our reporting segments effective at the start of this year to better reflect the way we manage