Free Cash Flow is defined as net income of US$16.8 million (Q2 2015: US $42.9 million), before depreciation of US$6.6 million (Q2 2015: US$5.7 million), amortisation of US$8.3 million (Q2 2015: US$7.6 million) and the net interest (income) expense of US$(0.6) million (Q2 2015: US$1.1 million), plus (minus) the net decrease (increase) in working capital of US $13.7 million (Q2 2015: US$(19.4) million) and minus capital expenditure of US$12.3 million (Q2 2015: US$22.6 million).
Operational overview
Our latest generation of highly integrated PMICs will begin to ramp in high volume production during Q3 2016. Additionally, during the quarter we completed a number of sophisticated PMIC designs which are now sampling to our customers for products targeting H2 2017 production.
The company made further progress in the strategic objective of expanding its business footprint and deepening customer engagements in Asia:
- Building on the success of our R&D initiatives in Power Management, our next generation Chargers ICs will ship in volume production for a Tier 1 Korean customer's smartphones and tablets from Q3 2016.
- The on-going initiative to establish further regional strategic partnerships in Greater China and develop deeper customer engagements in the region is well under way, with a first major engagement for a 2017 platform.
- The roll-out of our RapidChargeTM solutions continued to gather momentum, enhancing Dialog's estimated 70% market share of the rapid charging adapter market for smartphones, tablets and other devices.
- Our second generation sub-PMIC was shipped during Q2 2016 to leading Chinese smartphones OEMs who entered volume production of their MediaTek based LTE platforms.
Bluetooth low energy continues to be rapidly adopted across a wide range of IoT applications. Our business made solid progress during the quarter in capturing the high-growth opportunity within IoT with our Bluetooth(R) low energy, smart LED driver ICs and ambient light and colour sensor controls:
- SmartBondTM DA14681 Wearable-on-Chip(TM) was selected to power Xiaomi's latest activity tracking wrist band, Mi Band 2, one of the most anticipated wearable devices of 2016. The DA14681 provides connectivity, application processing, sensor fusion and advanced power management functionality enabling the Mi Band 2 to be even better positioned to further grow share in the rapidly expanding wearable market.
- Launched the industry-first OpenThread Sandbox Development Platform to support the development of Home Automation applications. It provides Thread ecosystem developers with plug-and-play hardware and OpenThread software released by Nest, enabling development for the connected home. By adding Thread capability to our Bluetooth low energy portfolio, Dialog has created a unique combination of connectivity solutions for IoT and smart home applications.
- Added ambient light and colour sensor controls to our smart lighting platform of advanced LED drivers and Bluetooth controllers. This represents another significant milestone in the joint effort with Dyna Image as both companies continue to combine their core technologies to provide complete platform solutions.
In line with our diversification strategy, during the quarter we expanded into the consumer headset segment with the launch of our SmartBeat(TM) Audio IC, enabling a new immersive headset experience. Supporting both wired USB 3.0 type C and Bluetooth based headsets, the DA14195 offers a new route to next generation active headphone development. This digital SoC with built in advanced audio processing heightens performance and defines a new standard for headset functionality and sound quality.
We continued to provide effective and efficient Power Management innovation to the market, expanding our range of ASSP solutions with the DA9061 and DA9062 PMICs. These highly efficient, cost-optimized devices can power a broad range of single or dual-core ARM(R) Cortex(R) based processors in applications such as handheld consumer, industrial embedded, smart home and automotive systems.
The expansion into the smart TV and set-top box (STB) market continues to progress according to plan with a number of leading customers evaluating our recently released integrated PMICs targeted for volume production in Q1 2017.
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Dialog Semiconductor invites you today at 09.30 am (London) / 10.30 am (Frankfurt) to take part in a live conference call and to listen to management's discussion of the Company's Q2 2016 performance, as well as guidance for Q3 2016. Participants will need to register using the link below labelled 'Online Registration'. A full list of dial in numbers will also be available. To register for the webcast and receive dial in numbers, the conference PIN and a unique User ID please click on the link below:
http://members.meetingzone.com/selfregistration/registration.aspx? booking=gum7t5ZQcIR91evp5n3Pdmy0gkWFjnVKQSbOVqsTZ5s=&b=d58ae4ab-80e5-47f2- 8295-e04d92bbba83
In parallel to the call, the analyst presentation will be webcasted on
our website at
http://webcast.openbriefing.com/semiconductor_q2_results_280716/
