Form 8-K ALPHA & OMEGA SEMICONDUC For: Aug 11

August 11, 2021 4:02 PM

Exhibit 99.1

Alpha and Omega Semiconductor Reports Financial Results for Fiscal Fourth Quarter and Fiscal Year Ended June 30, 2021

SUNNYVALE, Calif.--(BUSINESS WIRE)--August 11, 2021--Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL) today reported financial results for the fiscal fourth quarter and the fiscal year ended June 30, 2021.

The results for the fiscal fourth quarter ended June 30, 2021 were as follows:

GAAP Financial Comparison
Quarterly
(in millions, except percentage and per share data)
(unaudited)
	Three Months Ended
	June 30, 2021			March 31, 2021			June 30, 2020
Revenue	$	177.3		$	169.2		$	122.4
Gross Margin	34.2		%	31.1		%	23.6		%
Operating Income (Loss)	$	22.4		$	17.8		$	(1.3	)
Net Income (Loss) Attributable to AOS	$	19.5		$	16.1		$	(0.1	)
Net Income (Loss) Per Share Attributable to AOS - Diluted	$	0.71		$	0.58		$	(0.00	)

Non-GAAP Financial Comparison
Quarterly
(in millions, except percentage and per share data)
(unaudited)
	Three Months Ended
	June 30, 2021			March 31, 2021			June 30, 2020
Revenue	$	177.3		$	169.2		$	122.4
Non-GAAP Gross Margin	34.9		%	31.9		%	27.5		%
Non-GAAP Operating Income	$	29.1		$	23.0		$	8.4
Non-GAAP Net Income Attributable to AOS	$	26.3		$	21.4		$	7.4
Non-GAAP Net Income Per Share Attributable to AOS - Diluted	$	0.95		$	0.77		$	0.29

The non-GAAP financial measures in the schedule above exclude the effect of share-based compensation expenses, legal costs related to government investigation and income tax effect of non-GAAP adjustments in each of the periods presented, production ramp up costs for the quarter ended June 30, 2020, as well as amortization of purchased intangible for the quarters ended June 30, 2021 and March 31, 2021. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.

The results for the fiscal year ended June 30, 2021 were as follows:

GAAP Financial Comparison
Annually
(in millions, except percentage and per share data)
(unaudited)
	Year Ended June 30,
	2021			2020
Revenue	$	656.9		$	464.9
Gross Margin	31.1		%	22.1		%
Operating Income (Loss)	$	64.1		$	(13.9	)
Net Income (Loss) Attributable to AOS	$	58.1		$	(6.6	)
Net Income (Loss) Per Share attributable to AOS - Diluted	$	2.13		$	(0.27	)

Non-GAAP Financial Comparison
Annually
(in millions, except percentage and per share data)
(unaudited)
	Year Ended June 30,
	2021			2020
Revenue	$	656.9		$	464.9
Non-GAAP Gross Margin	31.9		%	27.9		%
Non-GAAP Operating Income	$	86.0		$	27.3
Non-GAAP Net Income Attributable to AOS	$	79.9		$	22.5
Non-GAAP Net Income Per Share Attributable to AOS - Diluted	$	2.93		$	0.88

The non-GAAP financial measures in the schedule above exclude the effect of share-based compensation expenses, legal costs related to government investigation, production ramp up costs related to joint venture, and income tax effect of non-GAAP adjustments for fiscal years ended June 30, 2021 and 2020, as well as amortization of purchased intangible for fiscal year ended June 30, 2021 and pre-production expenses and impairment of privately-held investment for fiscal year ended June 30, 2020. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.

Financial Results for Fiscal Q4 Ended June 30, 2021

Revenue was $177.3 million, an increase of 4.8% quarter-over-quarter and an increase of 44.9% from the same quarter last year.
GAAP gross margin was 34.2%, up from 31.1% in the prior quarter and 23.6% year-over-year.
Non-GAAP gross margin was 34.9%, up from 31.9% in the prior quarter and up from 27.5% from the same quarter last year.
GAAP operating expenses were $38.2 million, up from $34.9 million in the prior quarter and up from $30.3 million from the same quarter last year.
Non-GAAP operating expenses were $32.8 million, an increase of $1.9 million from last quarter and an increase of $7.5 million from the same quarter last year.
GAAP operating income was $22.4 million, as compared to $17.8 million in the prior quarter and a loss of $1.3 million from the same quarter last year.
Non-GAAP operating income was $29.1 million as compared to $23.0 million for the prior quarter and $8.4 million for the same quarter last year.
GAAP net income per share attributable to AOS was $0.71, compared to $0.58 for the prior quarter and $0.00 earnings per share for the same quarter last year.
Non-GAAP earnings per share attributable to AOS was $0.95, compared to $0.77 for the prior quarter and $0.29 for the same quarter last year.
Consolidated cash flow provided by operating activities was $44.2 million, compared to $38.6 million in prior quarter. Operating cash flow provided by AOS alone (excluding the JV Company) was $32.6 million, compared to $33.3 million in the prior quarter.
The Company closed the quarter with $202.4 million of cash and cash equivalents, including $37.5 million cash balance at the JV Company.

AOS Chairman and Chief Executive Officer Dr. Mike Chang commented, "Our fourth fiscal quarter continued the momentum we saw throughout the year. We delivered strong year-over-year performance in each of our market segments with record revenue and significantly improved profitability. We also benefited from solid end market demand, enabling us to optimize our product mix. Our fourth quarter results demonstrated the strength of our market diversification strategy, expanding product portfolio, deepening customer relationships and growing production scale. Our strong fourth quarter performance capped an outstanding fiscal year 2021, where we delivered 41% revenue growth year-over-year, expanded both gross margins and operating margins, and increased net income substantially. Importantly, we had previously set a target of $600 million in annual revenue for calendar year 2021, and I am pleased to report that we achieved $657 million in fiscal year 2021 and successfully surpassed that target ahead of plan."

Dr. Chang continued, "As we enter fiscal year 2022, there are plenty of opportunities and much work to be done to continue to grow and scale our business. I am confident that we have the right leadership and the right products in place to capitalize on these opportunities. Our mission to be a trusted technology partner and a global supplier of a broad portfolio of power semiconductors remains on track. Looking ahead, our goal is to grow our annual revenue to $1 billion in the next few years.”

Business Outlook for Fiscal Q1 Ending September 30, 2021

The following statements are based on management's current expectations. These statements are forward-looking, and actual results may differ materially. AOS undertakes no obligation to update these statements.

Revenue is expected to be $180 million plus or minus $3 million.
Gross margin is expected to be 33.7% plus or minus 1%. Non-GAAP gross margin is expected to be 34.5% plus or minus 1%. Note that non-GAAP gross margin excludes $0.6 million of estimated share-based compensation charges and $0.8 million of amortization of purchased intangible.
GAAP operating expenses are expected to be in the range of $37.7 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $33.5 million plus or minus $1 million. Non-GAAP operating expenses exclude $0.5 million of estimated legal expenses related to the government investigation and $3.9 million of estimated share-based compensation charges.
Tax expense is expected to be $1.0 million to $1.4 million.
Loss attributable to noncontrolling interest is expected to be around $0.5 million.

Conference Call and Webcast

AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal fourth quarter and the fiscal year ended June 30, 2021 today, August 11, 2021 at 2:00 p.m. PT / 5:00 p.m. ET. To listen to the live conference call, please dial 877-683-1095 (or 647-689-5445 if dialing from outside the United States and Canada). The conference ID number is 8255364. A live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com/. The webcast replay will be available for seven days after the live call on the same website. In addition, a copy of the script of management's prepared remarks and a live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com.

Forward Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, statements relating to growth opportunities and new markets, targeted annual revenue in future years, opportunities for growth and sales and our ability to capitalize on these opportunities, projected amount of revenue, gross margin, operating income (loss), income tax expenses, net income (loss), noncontrolling interest, and share-based compensation expenses, non-GAAP gross margin, non-GAAP operating expenses, tax expenses, and non-GAAP loss attributable to noncontrolling interest, our objectives to achieve long-term success, and other information under the section entitled “Business Outlook for Fiscal Q1 Ending September 30, 2021”. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 pandemic on our business; our ability to successfully operate our joint venture in China; our ability to develop and succeed in the digital power business; difficulties and challenges in executing our diversification strategy into different market segments; new tariffs on goods from China; ordering pattern from distributors and seasonality; changes in regulatory environment and government investigation; our ability to introduce or develop new and enhanced products that achieve market acceptance; decline of PC markets; the actual product performance in volume production; the quality and reliability of our product, our ability to achieve design wins; the general business and economic conditions; the state of semiconductor industry and seasonality of our markets; our ability to maintain factory utilization at a desirable level; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 to be filed by AOS with the SEC and other periodic reports we filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a basis consistent with U.S. GAAP, we disclose certain non-GAAP financial measures for our historical performance, including non-GAAP gross profit, gross margin, operating expenses, operating income, earnings per share attributable to AOS, diluted earnings per share ("EPS") and EBITDAS. These supplemental measures exclude, among other items, share-based compensation expenses, legal and profession fees related to government investigation, amortization of purchased intangible, and impairment of privately-held investment, as well as production ramp up costs related to the JV Company. We also disclose certain non-GAAP financial measures in our guidance for the next quarter, including non-GAAP gross margin, operating expenses and loss attributable to noncontrolling interest. We believe that these historical and forecast non-GAAP financial measures provide useful information to both management and investors by excluding certain items and expenses that are not indicative of our core operating results or do not reflect our normal business operations. In addition, our management uses non-GAAP measures to compare our performance relative to forecasts and to benchmark our performance externally against competitors. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as non-GAAP net income (loss) or non-GAAP operating expenses, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. In addition, we included amount of income tax effect of non-GAAP adjustments in the non-GAAP net income of reconciliation table for all periods presented as the management believes that such non-GAAP presentation provides useful information to investors, even though the amounts are not significant. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures both in the text in this press release and in the tables attached hereto. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures.

About Alpha and Omega Semiconductor

Alpha and Omega Semiconductor Limited, or AOS, is a designer, developer and global supplier of a broad range of power semiconductors, including a wide portfolio of Power MOSFET, IGBT, IPM, TVS, HVIC, GaN/SiC, Power IC and Digital Power products. AOS has developed extensive intellectual property and technical knowledge that encompasses the latest advancements in the power semiconductor industry, which enables us to introduce innovative products to address the increasingly complex power requirements of advanced electronics. AOS differentiates itself by integrating its Discrete and IC semiconductor process technology, product design, and advanced packaging know-how to develop high performance power management solutions. AOS’ portfolio of products targets high-volume applications, including personal and portable computers, graphic cards, flat panel TVs, home appliances, smart phones, battery packs, quick chargers, home appliances, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment. For more information, please visit www.aosmd.com.

The following unaudited consolidated financial statements are prepared in accordance with U.S. GAAP.

Alpha and Omega Semiconductor Limited
Condensed Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)

	Three Months Ended										Fiscal Year Ended
	June 30, 2021			March 31, 2021			June 30, 2020				June 30, 2021			June 30, 2020

Revenue	$	177,309		$	169,212		$	122,395			$	656,902		$	464,909
Cost of goods sold	116,729			116,521			93,461				452,359			362,178
Gross profit	60,580			52,691			28,934				204,543			102,731
Gross margin	34.2		%	31.1		%	23.6		%		31.1		%	22.1		%

Operating expenses:
Research and development	17,282			15,557			13,168				62,953			51,252
Selling, general and administrative	20,935			19,338			17,093				77,514			64,816
Impairment of privately-held investment	—			—			—				—			600
Total operating expenses	38,217			34,895			30,261				140,467			116,668
Operating income (loss)	22,363			17,796			(1,327		)		64,076			(13,937		)

Interest expense and other income (loss), net	(1,107		)	(1,815		)	(228		)		(3,852		)	(3,972		)
Income (loss) before income taxes	21,256			15,981			(1,555		)		60,224			(17,909		)

Income tax expense	1,241			1,014			385				3,935			348
Net income (loss) including noncontrolling interest	20,015			14,967			(1,940		)		56,289			(18,257		)
Net income (loss) attributable to noncontrolling interest	476			(1,133		)	(1,835		)		(1,827		)	(11,661		)
Net income (loss) attributable to Alpha and Omega Semiconductor Limited	$	19,539		$	16,100		$	(105	)		$	58,116		$	(6,596	)

Net income (loss) per common share attributable to Alpha and Omega Semiconductor Limited
Basic	$	0.74		$	0.62		$ (0.00			)	$	2.25		$	(0.27	)
Diluted	$	0.71		$	0.58		$ (0.00			)	$	2.13		$	(0.27	)

Weighted average number of common share attributable to Alpha and Omega Semiconductor Limited used to compute net income (loss) per share:
Basic	26,251			25,882			25,227				25,786			24,840
Diluted	27,705			27,716			25,227				27,272			24,840

Alpha and Omega Semiconductor Limited
Condensed Consolidated Balance Sheets
(in thousands, except par value per share)
(unaudited)
	June 30, 2021			June 30, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	202,412		$	158,536
Restricted cash	233			2,190
Accounts receivable, net	35,789			13,272
Inventories	154,293			135,528
Other current assets	14,595			8,807
Total current assets	407,322			318,333
Property, plant and equipment, net	436,977			412,340
Operating lease right-of-use assets, net	34,660			32,948
Intangible assets, net	13,410			16,770
Deferred income tax assets	5,167			4,766
Restricted cash - long-term	2,168			1,978
Other long-term assets	18,869			5,804
Total assets	$	918,573		$	792,939
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	80,699		$	86,181
Accrued liabilities	69,494			54,986
Income taxes payable	2,604			1,360
Short-term debt	58,030			30,114
Finance lease liabilities	16,724			15,258
Operating lease liabilities	5,679			4,159
Total current liabilities	233,230			192,058
Long-term debt	77,990			99,775
Income taxes payable - long-term	1,319			903
Deferred income tax liabilities	2,448			496
Finance lease liabilities - long-term	12,698			26,842
Operating lease liabilities - long-term	30,440			30,254
Other long-term liabilities	44,123			10,723
Total liabilities	402,248			361,051
Equity:
Preferred shares, par value $0.002 per share:
Authorized: 10,000 shares; issued and outstanding: none at June 30, 2021 and 2020	—			—
Common shares, par value $0.002 per share:
Authorized: 100,000 shares; issued and outstanding: 32,975 shares and 26,350 shares, respectively at June 30, 2021 and 31,944 shares and 25,305 shares, respectively at June 30, 2020	66			64
Treasury shares at cost; 6,625 shares at June 30, 2021 and 6,639 shares at June 30, 2020	(66,064		)	(66,184		)
Additional paid-in capital	259,993			246,103
Accumulated other comprehensive income (loss)	2,315			(5,127		)
Retained earnings	176,895			118,833
Total Alpha and Omega Semiconductor Limited shareholders’ equity	373,205			293,689
Noncontrolling interest	143,120			138,199
Total equity	516,325			431,888
Total liabilities and equity	$	918,573		$	792,939

Supplemental disclosures of financial information:
(in thousands)

	As of June 30, 2021							As of June 30, 2020
	AOS		CQJV			Consolidated		AOS		CQJV			Consolidated
Cash and cash equivalents	$	164,933	$	37,479		$	202,412	$	110,346	$	48,190		$	158,536
Bank borrowings liabilities	$	24,307	$	141,135	*	$	165,442	$	32,594	$	139,395	*	$	171,989
Inventory	$	100,246	$	54,047		$	154,293	$	97,593	$	37,935		$	135,528
Property, plant and equipment, net	$	174,507	$	262,470		$	436,977	$	162,833	$	249,507		$	412,340

* AOS is not a guarantor of CQJV's (Chongqing Joint Venture) debts.

	Three Months Ended June 30, 2021							Three Months Ended March 31, 2021							Three Months Ended June 30, 2020
	AOS		CQJV			Consolidated		AOS		CQJV			Consolidated		AOS		CQJV			Consolidated
Net cash provided by operating activities	$	32,646	$	11,574		$	44,220	$	33,313	$	5,278		$	38,591	$	20,167	$	20,125		$	40,292
Purchase of property and equipment, net of government grant	$	25,072	$	7,087		$	32,159	$	10,071	$	5,702		$	15,773	$	8,972	$	4,222		$	13,194
EBITDAS	$	33,602	$	7,780	^**	$	40,906	$	30,610	$	4,503	^**	$	36,246	$	11,979	$	1,078	**	$	14,892

	Year Ended June 30, 2021							Year Ended June 30, 2020
	AOS		CQJV			Consolidated		AOS		CQJV				Consolidated
Net cash provided by operating activities	$	114,338	$	14,406		$	128,744	$	57,957	$	4,358			$	62,315
Purchase of property and equipment, net of government grant	$	49,985	$	22,715		$	72,700	$	42,389	$	20,009			$	62,398
EBITDAS	$	111,698	$	22,843	^**	$	136,368	$	44,817	$	(4,439	)	**	$	52,039

** CQJV EBITDAS includes amounts attributable to noncontrolling interest.


Alpha and Omega Semiconductor Limited
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)

	Three Months Ended									Fiscal Year Ended
	June 30, 2021			March 31, 2021			June 30, 2020			June 30, 2021			June 30, 2020

GAAP gross profit	$	60,580		$	52,691		$	28,934		$	204,543		$	102,731
Share-based compensation	561			427			333			1,756			1,530
Amortization of purchased intangible	812			812			—			3,247			—
Production ramp up costs related to joint venture	—			—			4,432			275			25,461
Non-GAAP gross profit	$	61,953		$	53,930		$	33,699		$	209,821		$	129,722
Non-GAAP gross margin as a % of revenue	34.9		%	31.9		%	27.5		%	31.9		%	27.9		%

GAAP operating expense	$	38,217		$	34,895		$	30,261		$	140,467		$	116,668
Share-based compensation	4,838			3,398			2,389			13,568			8,924
Legal costs related to government investigation	553			563			2,551			3,066			4,684
Impairment of privately-held investment	—			—			—			—			600
Non-GAAP operating expense	$	32,826		$	30,934		$	25,321		$	123,833		$	102,460

GAAP operating income (loss)	$	22,363		$	17,796		$	(1,327	)	$	64,076		$	(13,937	)
Share-based compensation	5,399			3,825			2,722			15,324			10,454
Amortization of purchased intangible	812			812			—			3,247			—
Production ramp up costs related to joint venture	—			—			4,432			275			25,461
Legal costs related to government investigation	553			563			2,551			3,066			4,684
Impairment of privately-held investment	—			—			—			—			600
Non-GAAP operating income	$	29,127		$	22,996		$	8,378		$	85,988		$	27,262
Non-GAAP operating margin as a % of revenue	16.4		%	13.6		%	6.8		%	13.1		%	5.9		%

GAAP net income (loss) attributable to AOS	$	19,539		$	16,100		$	(105	)	$	58,116		$	(6,596	)
Share-based compensation	5,399			3,825			2,722			15,324			10,454
Amortization of purchased intangible	812			812			—			3,247			—
Pre-production expenses related to joint venture	—			—			—			—			24
Production ramp up costs related to joint venture	—			—			2,224			135			13,356
Legal costs related to government investigation	553			563			2,551			3,066			4,684
Impairment of privately-held investment	—			—			—			—			600
Income tax effect of non-GAAP adjustments	(2		)	64			(4		)	53			(11		)
Non-GAAP net income attributable to AOS	$	26,301		$	21,364		$	7,388		$	79,941		$	22,511
Non-GAAP net margin attributable to AOS as a % of revenue	14.8		%	12.6		%	6.0		%	12.2		%	4.8		%

GAAP net income (loss) attributable to AOS	$	19,539		$	16,100		$	(105	)	$	58,116		$	(6,596	)
Share-based compensation	5,399			3,825			2,722			15,324			10,454
Amortization and depreciation	13,251			13,745			11,552			52,685			45,090
Interest expense (income), net	1,476			1,562			338			6,308			2,743
Income tax expense (income)	1,241			1,014			385			3,935			348
EBITDAS	$	40,906		$	36,246		$	14,892		$	136,368		$	52,039

GAAP diluted net income (loss) per share attributable to AOS	$	0.71		$	0.58		$	(0.00	)	$	2.13		$	(0.27	)
Share-based compensation	0.19			0.14			0.10			0.56			0.41
Pre-production expenses related to joint venture	—			—			—			—			0.00
Production ramp up costs related to joint venture	—			—			0.09			0.01			0.54
Legal costs related to government investigation	0.02			0.02			0.10			0.11			0.18
Amortization of purchased intangible	0.03			0.03			—			0.12			—
Impairment of privately-held investment	—			—			—			—			0.02
Income tax effect of non-GAAP adjustments	0.00			0.00			0.00			0.00			0.00
Non-GAAP diluted net income per share attributable to AOS	$	0.95		$	0.77		$	0.29		$	2.93		$	0.88



Shares used to compute GAAP diluted net income (loss) per share	27,705			27,716			25,227			27,272			24,840
Shares used to compute Non-GAAP diluted net income per share	27,705			27,716			25,895			27,272			25,627

Contacts

In the United States: The Blueshirt Group
Ralph Fong
+1 (415) 489-2195
[email protected]

In China: The Blueshirt Group Asia
Gary Dvorchak, CFA
+86 (138) 1079-1480
[email protected]

Exhibit 99.2

Alpha and Omega Semiconductor Limited

Prepared Remarks for the Investor Conference Call

for the Quarter and Fiscal Year Ended June 30, 2021

August 11, 2021

Gary Dvorchak (Moderator)

Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor’s conference call to discuss fiscal 2021 fourth quarter and year-end financial results. I am Gary Dvorchak, Investor Relations representative for AOS. With me today are Dr. Mike Chang, our CEO, Stephen Chang, our President, and Yifan Liang, our CFO. This call is being recorded and broadcast live over the Web. A replay will be available for seven days following the call via the link in the Investor Relations section of our website.

Our call will proceed as follows. Mike will begin with strategic highlights. Then, Stephen will provide business updates and a detailed segment report. After that, Yifan will review the financial results and provide guidance for the September quarter. Finally, we will have the question-and-answer session.

The earnings release was distributed over wire services today, August 11, 2021, after the close of market. The release is also posted on the company's website. Our earnings release and this presentation include certain non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures that we provide. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release.

We remind you that during this conference call, we will make certain forward-looking statements, including discussions of the business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligations to update the information provided in today's call.

Now, I will turn the call over to our CEO, Mike, to provide strategic highlights. Mike?

Mike Chang (Chief Executive Officer)

Thanks, Gary. I would like to welcome everyone to today's call. I am excited to be speaking with all of you again today.

We have been dealing with the COVID-19 pandemic for over one and a half years, and we continue to take strict precaution to ensure the safety and well-being of all our employees and their families.

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Our fourth fiscal quarter continued the strength and momentum we saw throughout the year. We once again delivered strong year-over-year performance in each of our market segments with record revenue and excellent profitability. We benefited from strong end market demand, enabling us to optimize our product mix. Fourth quarter results demonstrate the strength of our market diversification strategy, broadening product portfolio, deepening customer relationships and growing production scale.

Total revenue for the fourth quarter grew 45% year-over-year to $177 million, as we continued to see broad-based strength across our business. Non-GAAP gross margin was 34.9%, up 300 basis points from last quarter, and 740 basis points higher than the same quarter a year ago. Non-GAAP EPS for the fourth quarter was $0.95, which more than tripled year-over-year. Yifan will go into more details on our financial performance later.

The strong fourth quarter capped an outstanding fiscal year 2021. Revenue grew 41% year-over-year to $657 million. On the bottom line, we achieved non-GAAP EPS of $2.93, up from $0.88 last year. Previously, we had set a target of $600 million in annual revenue for calendar year 2021, and I am pleased that we successfully surpassed that target ahead of plan.

While we are not immune to some of the supply chain constraints in the broader semiconductor industry, we are doing a good job managing them to mitigate any interruptions to our customers. First, we are making investments to expand capacity and further enhance our technological capability at our Oregon fab. We believe the investments will strengthen our competitive advantage in our target markets, and it is a part of our long-term strategic plan for sustainable growth and continuous technology improvement. In the current business conditions and the shortage of capacity, it’s increasingly important to have the ability to own and control our supply chain. Second, we continue to ramp our capacity at our JV fab in Chongqing according to plan. I am pleased with the progress we are making, and we are on track to approach the Phase I target run rate in the September quarter. Third, we continue to maintain close relationships with multiple foundry partners, and are working with them for additional wafer supply. Overall, although our supply is tight, I am thankful to be able to have both internal and external capacity to support our business and minimize the stress at our customers in this time of shortage.

In summary, I am very proud and appreciative of our team's execution in fiscal year 2021. In addition to the traction we gained from the successful implementation of our strategy, we saw strong industry tailwinds during an unprecedented time. And as we enter fiscal year 2022, there are plenty of opportunities and much work to be done to continue to grow and scale our business. I am confident that we have the right leadership and the right products in place to ensure we are successful to capitalize on these opportunities. Our mission to be a trusted technology partner and a global supplier of a broad portfolio of power semiconductors remains on track. Looking ahead, we plan to grow our annual revenue to $1 billion in the next few years.

Now, I will turn the call over to Stephen for an update on our business and a detailed segment report. Stephen?

Stephen Chang (President)

Thank you, Mike, and good afternoon, everyone. I will start with an update on our business and then provide detailed segment highlights for the June quarter.

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As we have stated all along, the core of our business strategy is technology and volume. Technology and innovation in our business derives from repetitive volume manufacturing, which often inspires opportunity for improvement. This is the origin of technology development.

We invest in core competences of silicon, packaging, and ICs as the foundation of our product technology. Best-in-class technology leads to competitive advantage in our products and success in the markets we address. Our product strategy is to create advanced total solution products in close partnership with our customers. These products demonstrate our expertise in power, and move beyond commodity parts into multi-socket optimized solutions that make our customer end products more reliable and efficient. We continue to accelerate growth by winning new customer engagements with an expanding pipeline of new products and increasing BOM content with our application specific solutions. An example of this is our intelligent power modules designed specifically to address motor drives used in home appliance applications. The modules combine the function of up to 17 discrete devices into a single solution to provide performance and ease of use to our customer. Another example is our series of DrMOS products where we optimized the IC to bring the best out of the co-packaged MOSFETs to deliver high efficiency in Vcore and graphics applications. Even our advanced discrete MOSFETs are built on specialized platforms that address the performance needs of target applications such as battery protection and graphics.

Supply remains tight in the marketplace while demand continues to be strong across all our core market segments. In times like these, supporting customers through uninterrupted supply of our products is more important than ever. As such, we are sharpening our focus on customer engagement. Our continued focus on strategic customers enables us to take advantage of the current environment to stay closer to tier-one customers, optimize product mix and capacity allocation, and deliver strategic value to those customers. While we are managing longer lead times and component availability, our competitive market position, strong customer relationships and supply chain responsiveness enable us to deliver on our commitments.

Our backlog in the June quarter continued to far exceed our capacity. We have been actively allocating capacity to avoid interruptions to our customers’ production lines, optimize our factory utilization and support our strategic initiatives. At the same time, demand has been dynamic while not always following normal seasonality. Fortunately, the majority of our production is in-house, which allows us to better serve our customers in such severe shortage period. As a result, we are able to focus on our core market growth that follows our strategic business direction.

Now, let me drill down into each of the business segments.

Let’s start with Computing. Revenue was up 57.3% year over year and up 10.2% sequentially, outpacing the industry. This segment represented 43.7% of our total revenue. End demand for our products remained strong with record revenue in the June quarter as our major customers were still facing component shortages. While we were on allocation, we elected to allocate more capacity and resources to support the Computing segment, including the notebook, tablet and motherboard applications. Conversely, the graphic card business was down double-digits sequentially due to a customer's order pull-in from the June quarter to the March quarter. Looking ahead, we expect Computing revenue to be flat to modestly down sequentially in the September quarter due to allocation, but up double-digits on a year-over-year basis. We expect solid demand at our ODM customers for motherboards and our graphic card business to rebound following a customer's production trending upward to a more normal level. This will be offset by a temporary decline in notebook as we allocate our production capacity to support growth in our motherboard and graphic cards.

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Turning to the Consumer segment, which was 21.1% of total revenue in the June quarter, up 36% year-over-year and up 4.4% sequentially. This segment played out better than expected. Gaming remained strong as we continued to gain share at a major customer with both our MOSFET and Power IC products in multiple sockets. Our overall home appliances business was slightly down due to temporary allocation. That said, compared to the March quarter, we shipped higher volumes of module solutions to key home appliance customers in Asia in the June quarter. And we intend to further increase shipments of module solutions in the next couple of quarters. Looking to the September quarter, we expect the Consumer segment to increase by a high single-digit percentage, with strength in gaming and home appliances.

Next, let’s discuss the Communications segment, which was 12.8% of total revenue in the quarter, up 14% year-over-year and down 17.4% sequentially. This segment played out as expected, as smartphone business performed in line with normal seasonality. Having said that, demand for battery protection resumed at one of our global smartphone customers to support the upcoming launch of a new model. We expect our Communications segment to increase by mid double-digits in the September quarter as all major smartphone players in China, Korea and the U.S. are entering peak production. With that, we believe we are in an excellent position to resume battery protection growth in the September quarter with designs secured at our key global customers.

Finally, let’s talk about the Power Supply and Industrial segment, which accounted for 20.4% of total revenue. This segment was up 53.1% year-over-year and up 11.5% sequentially. The solid growth was due to several factors. First, the demand for AC-DC power supplies for laptop adaptors was extremely robust, with incremental design activity with major power supply customers in Taiwan. Second, momentum of our quick-charger business remained solid, driven by demand for travel adaptors used for tablets as well as quick-charger solutions for smartphones. Third, demand for DC fans from our major fan manufacturers in Japan was strong. We expect this segment to grow by high single-digits in the September quarter driven largely by our AC-DC power supply and power tool businesses.

Overall, business momentum accelerated in the June quarter, and we are making solid progress towards our mission to position AOS as a leading global supplier of a broad portfolio of power semiconductors.

With that, I will now turn the call over to Yifan for a discussion of our fiscal fourth quarter financial results and our outlook for the next quarter.

Yifan Liang (Chief Financial Officer)

Thank you, Stephen. Good afternoon everyone and thank you for joining us.

Revenue for the June quarter was $177.3 million, up 4.8% from the prior quarter and up 44.9% from the same quarter last year.

In terms of product mix, DMOS revenue was $127.2 million, up 3.8% sequentially and up 31.2% year-over-year. Power IC revenue was $46.5 million, up 7.2% from the prior quarter and up 99.7% from a year ago. Assembly service revenue was $3.6 million as compared to $3.2 million last quarter and $2.1 million for the same quarter last year.

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For the fiscal year 2021, revenue was $656.9 million, up 41.3% from last year.

Non-GAAP gross margin for the June quarter was 34.9%, up from 31.9% in the prior quarter and up from 27.5% in the same quarter last year. The quarter-over-quarter increase in non-GAAP gross margin was mainly driven by better product mix. Non-GAAP gross margin excluded $0.8 million of amortization of purchased IP for both the June quarter and the prior quarter and $4.4 million of production ramp-up costs related to the JV Company for the same quarter last year. In addition, non-GAAP gross margin excluded $0.6 million of share-based compensation charges for the June quarter, as compared to $0.4 million for the prior quarter and $0.3 million for the same quarter last year.

For the fiscal year 2021, non-GAAP gross margin was 31.9%, as compared to 27.9% for the prior year.

Non-GAAP operating expenses for the June quarter were $32.8 million, compared to $30.9 million for the prior quarter and $25.3 million for the same quarter last year. The quarter-over-quarter increase was primarily due to higher variable compensation accruals this quarter. Non-GAAP operating expenses for the quarter excluded $4.8 million of share-based compensation charges and $0.6 million of legal expenses related to the government investigation. This compares to $3.4 million of share-based compensation charges and $0.6 million of legal expenses related to the investigation for the prior quarter, as well as $2.4 million of share-based compensation charges and $2.6 million of legal expenses related to the investigation for the same quarter last year.

Non-GAAP operating expenses for the fiscal year 2021 was $123.8 million, compared to $102.5 million for the prior year. Non-GAAP operating expenses excluded $13.6 million of share-based compensation charges and $3.1 million of legal expenses related to the investigation in the current fiscal year, as compared to $8.9 million of share-based compensation charges, $4.7 million of legal expenses related to the investigation, and $0.6 million for an impairment charge in the prior fiscal year.

Income tax expense for the quarter was $1.2 million, compared to $1.0 million for the prior quarter and $0.4 million for the same quarter last year.

Income tax expense for the fiscal year was $3.9 million, compared to $0.4 million for the prior fiscal year.

Non-GAAP EPS attributable to AOS for the quarter was 95 cents per share as compared to 77 cents for the prior quarter and 29 cents for the same quarter last year.

Non-GAAP EPS attributable to AOS for the fiscal year was $2.93 as compared to $0.88 for the prior fiscal year.

AOS continued to generate positive operating cash flow. AOS on a stand-alone basis generated $32.6 million of operating cash flow in the June quarter, as compared to $33.3 million in the prior quarter and $20.2 million in the same quarter last year. In the June and March quarters, we received $10 million and $20 million customer deposits for securing supply, respectively. The JV Company generated positive operating cash flow of $11.6 million in the June quarter compared to $5.3 million in the prior quarter and $20.1 million in the same quarter last year.

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Cash flow from operations attributable to AOS for the fiscal year was $114.3 million as compared to $58.0 million for the prior year. Cash flow provided by operations attributable to the JV Company was $14.4 million for the year, compared to $4.4 million in the prior year.

Consolidated EBITDAS for the June quarter was $40.9 million, compared to $36.2 million for the prior quarter and $14.9 million for the same quarter last year. EBITDAS attributable to AOS for the quarter was $33.6 million as compared to $30.6 million for the prior quarter and $12.0 million for the same quarter last year. EBITDAS for the JV Company was $7.8 million in the June quarter, as compared to $4.5 million for the prior quarter and $1.1 million for the same quarter last year.

Consolidated EBITDAS for the fiscal year was $136.4 million as compared to $52.0 million in the prior fiscal year. EBITDAS attributable to AOS for the year was $111.7 million as compared to $44.8 million a year ago.

Now let’s look at the balance sheet.

We completed the June quarter with cash balance of $202.4 million, including $164.9 million at AOS and $37.5 million at the JV Company. This compares to $192.1 million at the end of last quarter, which included $158.3 million at AOS and $33.8 million at the JV Company. Our cash balance a year ago was $158.5 million, including $110.3 million at AOS and $48.2 million at the JV Company.

The bank borrowing balance at the end of June was $165.4 million, including $24.3 million at AOS and $141.1 million at the JV Company. During the quarter, AOS and the JV Company repaid $2.1 million and $4.2 million of existing term loans, respectively.

Net trade receivables were $35.8 million at the end of the June quarter, as compared to $33.7 million at the end of the prior quarter and $13.3 million for the same quarter last year. Days Sales Outstanding for the June quarter were 26 days, compared to 22 days in the prior quarter.

Net inventory was $154.3 million at quarter-end, up from $145.1 million last quarter and up from $135.5 million in the prior year. Average days in inventory were 115 days for the quarter, compared to 112 days in the prior quarter.

Net Property, Plant and Equipment was $437.0 million, slightly up from $432.6 million last quarter and up from $412.3 million last year. Capital expenditures were $32.2 million for the quarter, including $25.1 million at AOS and $7.1 million at the JV Company. In the June quarter, AOS commenced a plan to expand our Oregon fab with an investment of approximately $100 million, including $20 million to advance our capability and $80 million to expand capacity. We believe this expansion, when fully completed, will enable us to generate an additional $70 million in annual revenue. We expect the capacity to come on line in the December quarter of 2022.

During the June quarter, the JV Company continued to ramp its 12” fab. It’s on track to achieve the Phase I target run rate in the September quarter. As discussed, the JV Company is in the process of pursuing additional financing for its Phase II capacity expansion. We will provide more details when available.

With that, now I would like to discuss the guidance for the September quarter.

We expect:

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•	Revenue to be approximately $180 million, plus or minus $3 million.

•	GAAP gross margin to be 33.7% plus or minus 1%. We anticipate non-GAAP gross margin to be 34.5% plus or minus 1%. Non-GAAP gross margin excludes $0.8 million amortization of acquired IP and $0.6 million of estimated share-based compensation charges.

•

GAAP operating expenses to be in the range of $37.7 million plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $33.5 million plus or minus $1 million. Non-GAAP operating expenses exclude $3.9 million of estimated share-based compensation charges and $0.5 million of estimated legal expenses relating to the government investigation.

•	Income tax expense to be approximately $1.0 million to $1.4 million.

•	Loss attributable to non-controlling interests to be approximately $0.5 million.

As part of our normal practice, we are not obligated to update this information. With that, we will open the call for questions. Operator, please start the Q&A session.

Closing:

This concludes our earnings call today. Thank you for your interest in AOS, and we look forward to talking to you again next quarter.

Special Notes Regarding Forward Looking Statements

This script contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward looking statements include, without limitation, statements relating to projected amount of revenues, gross margin, operating expenses, operating income, tax expenses, net income, noncontrolling interest and share-based compensation expenses, production ramp up costs and annual revenue and growth objectives; statements regarding expected financial performance of market segments,; expectation with respect to ramp up activities and target run rate at the JV Company and timeline for production and operation; the global capacity constraint; the ability of the JV Company to support market demand and growth; the expansion plan at the Oregon fab; the JV Company’s financing plans; anticipated sales for each product segment; our ability and strategy to develop new products; projected annual revenue target in future years; fluctuation in customer demand and market segments; the execution of our business plan and strategies; and other information regarding the future development of our business. Forward looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 pandemic on our business operation; our ability to successfully operate our joint venture in China; our ability to develop and succeed in the digital power business; difficulties and challenges in executing our diversification strategy into different market segments; new tariffs on goods from China; ordering pattern and seasonality; our ability to introduce or develop new and enhanced products that achieve market acceptance; decline of the PC industry and our ability to respond to such decline; the actual product performance in volume production, the quality and reliability of our product, our ability to achieve design wins, the general business and economic conditions, the state of semiconductor industry and seasonality of our markets, our ability to maintain factory utilization at a desirable level; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 filed by AOS on September 2, 2020. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law.

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Form 8-K ALPHA & OMEGA SEMICONDUC For: Aug 11

Alpha and Omega Semiconductor Reports Financial Results for Fiscal Fourth Quarter and Fiscal Year Ended June 30, 2021

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