Qorvo, Inc. (NASDAQ:QRVO) Q3 2016 Earnings Conference Call - Final Transcript

Feb 04, 2016 • 05:00 pm ET


Qorvo, Inc. (NASDAQ:QRVO) Q3 2016 Earnings Conference Call - Final Transcript


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Good day, and welcome to the Qorvo, Inc. Q3 2016 Conference Call. Today's conference is being recorded.

And at this time, I would like to turn the conference over to Doug DeLieto, Vice President of Investor Relations. Please go ahead, sir.

Douglas DeLieto

Thanks a lot, Matt. Hello everyone and welcome to Qorvo's Third Quarter Fiscal 2016 Earnings Conference Call. This call will include forward-looking statements that involve risk factors that could cause our actual results to differ materially from the management's current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release published today, as well as the risk factors associated with our business in our Annual Report on Form 10-K filed with the SEC because these risk factors may affect our operations and financial results.

In today's release and on today's call, we provide both GAAP and non-GAAP financial results. We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain non-cash expenses or other items that may obscure trends in our underlying performance.

During our call, our comments and comparisons to income statement items will be based primarily on non-GAAP results. For a complete reconciliation of GAAP to non-GAAP financial measures, please refer to our earnings release issued earlier today available on our website, qorvo.com, under Investors.

In fairness to all listeners, we ask that each participant please limit themselves to one question and a follow-up.

Sitting with me today are Bob Bruggeworth, President and CEO; Steve Buhaly, Chief Financial Officer; Eric Creviston, President of Qorvo's Mobile Products Group; and James Klein, President of Qorvo's Infrastructure & Defense Products Group. I'm also joined by other members of Qorvo's management team.

And with that, I'll hand the call over to Bob.

Robert A. Bruggeworth

Thanks, Doug. Good afternoon, everyone. Welcome to our fiscal 2016 third-quarter earnings call. Revenue in the December quarter was approximately $620 million, consistent with our pre-announcement issued January 7. Gross margin and operating margin held in at 47.9% and 25.3% respectively. Operating expenses were down sequentially, reflecting less variable compensation expense and seasonally lower spending. Qorvo generated approximately $156.5 million in free cash flow and repurchased $250 million of stock to enhance shareholder value.

In infrastructure and defense, revenue increased sequentially with improved performance in Wireless Infrastructure. We expect this business to recover further in the near-term, reinforcing our top-line growth opportunities in calendar 2016. Our IDP team continues to sharpen its focus on the highest-growth segments in its diversified business portfolio. This focus drives alignment with the growth markets of the Internet of Things, connected home, connected car and the high-growth segments within aerospace and defense.

By leveraging Qorvo's comprehensive product and technology portfolio, we are providing customers highly differentiated solutions, especially exciting is the growth rate of GaN solutions into many of IDP's key market segments, driving a compound annual growth rate of approximately 25% for the next few years. We expect growth rates in 2016 to be well