Skyworks Exceeds Q2 FY14 Revenue and EPS Guidance
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Delivers
$481 Million in Revenue, Up 13% Y-o-Y -
Posts
$0.62 of Non-GAAP Diluted EPS ($0.40 GAAP);$0.03 Better Than Guidance and Up 29% Y-o-Y -
Generates
$214 Million in Quarterly Cash Flow from Operations -
Board of Directors Declares First Cash Dividend of
$0.11 per Share -
Guides to
$535 Million in Revenue in Q3 FY14, Up 11% Sequentially and 23% Y-o-Y -
Expects
$0.73 in Non-GAAP Diluted EPS in Q3 FY14, Up 18% Sequentially and 35% Y-o-Y
On a non-GAAP basis, operating income for the second fiscal quarter of
2014 was
"Skyworks exceeded guidance across all key metrics last quarter and is
set to substantially outpace the broader semiconductor industry as we
capitalize on increasing analog system complexity driven by the Internet
of Things," said
Q2 Business Highlights
- Enabled NetGear's newest 802.11ac MU-MIMO routers and residential gateways
- Supported Audi's Homelink programmable car system
- Captured high-reliability sockets with several aerospace and defense suppliers including Cobham, EADS, Herley and Teledyne
- Secured power management design wins with Samsung
- Ramped connected home solutions supporting security sensors, motion detectors, lighting controls and meters at Centralite and Landis+Gyr
- Leveraged infrastructure portfolio for macro base station and remote and multi-standard radio applications across Alcatel-Lucent, Ericsson, Nokia Solutions and Networks and ZTE
- Delivered analog control ICs to Medtronics for implantable heart monitors
- Developed the industry's leading dual flash driver utilizing proprietary TrueFlash™ capability enabling sophisticated LED flash management features
- Powered Microsoft, Nintendo and Sony gaming platforms with analog and connectivity solutions
- Expanded footprint in multiple 4G TD-LTE architectures at leading smartphone OEMs including Coolpad, HTC, Lenovo and ZTE
- Launched next-generation SkyOne™ platforms with carrier aggregation, additional frequency bands and MIPI® baseband interfaces
- Enabled the Moto G smartphone with five front-end devices
- Repurchased approximately two million shares of common stock
Dividend Update
Skyworks' Board of Directors has declared its first cash dividend of
Third Fiscal Quarter 2014 Outlook
"As our performance demonstrates,
For further information regarding use of non-GAAP measures in this press release, please refer to the Discussion Regarding the Use of Non-GAAP Financial Measures set forth below.
Playback of the conference call will begin at
About
Headquartered in
Safe Harbor Statement
This news release includes "forward-looking statements" intended to
qualify for the safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include without limitation information relating to future
results and expectations of
These risks, uncertainties and other important factors include, but are
not limited to: uncertainty regarding global economic and financial
market conditions; the susceptibility of the semiconductor industry and
the markets addressed by our, and our customers', products to economic
downturns; the timing, rescheduling or cancellation of significant
customer orders and our ability, as well as the ability of our
customers, to manage inventory; losses or curtailments of purchases or
payments from key customers, or the timing of customer inventory
adjustments; the availability and pricing of third-party semiconductor
foundry, assembly and test capacity, raw materials and supplier
components; changes in laws, regulations and/or policies that could
adversely affect either (i) the economy and our customers' demand for
our products or (ii) the financial markets and our ability to raise
capital; our ability to develop, manufacture and market innovative
products in a highly price competitive and rapidly changing
technological environment; economic, social, military and geo-political
conditions in the countries in which we, our customers or our suppliers
operate, including security and health risks, possible disruptions in
transportation networks and fluctuations in foreign currency exchange
rates; fluctuations in our manufacturing yields due to our complex and
specialized manufacturing processes; delays or disruptions in production
due to equipment maintenance, repairs and/or upgrades; our reliance on
several key customers for a large percentage of our sales; fluctuations
in the manufacturing yields of our third-party semiconductor foundries
and other problems or delays in the fabrication, assembly, testing or
delivery of our products; our ability to timely and accurately predict
market requirements and evolving industry standards, and to identify
opportunities in new markets; uncertainties of litigation, including
potential disputes over intellectual property infringement and rights,
as well as payments related to the licensing and/or sale of such rights;
our ability to rapidly develop new products and avoid product
obsolescence; our ability to retain, recruit and hire key executives,
technical personnel and other employees in the positions and numbers,
with the experience and capabilities, and at the compensation levels
needed to implement our business and product plans; lengthy product
development cycles that impact the timing of new product introductions;
unfavorable changes in product mix; the quality of our products and any
remediation costs; shorter-than-expected product life cycles; problems
or delays that we may face in shifting our products to smaller geometry
process technologies and in achieving higher levels of design
integration; and our ability to continue to grow and maintain an
intellectual property portfolio and obtain needed licenses from third
parties, as well as other risks and uncertainties, including, but not
limited to, those detailed from time to time in our filings with the
The forward-looking statements contained in this news release are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
Note to Editors:
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| UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
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| (in millions, except per share amounts) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Net revenue | $ | 481.0 | $ | 425.2 | $ | 986.2 | $ | 878.9 | ||||||||
| Cost of goods sold | 268.6 | 248.5 | 551.8 | 509.6 | ||||||||||||
| Gross profit | 212.4 | 176.7 | 434.4 | 369.3 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 61.6 | 56.3 | 120.0 | 114.4 | ||||||||||||
| Selling, general and administrative | 41.9 | 39.7 | 83.0 | 77.8 | ||||||||||||
| Amortization of intangibles | 6.3 | 7.2 | 12.8 | 15.4 | ||||||||||||
| Restructuring and other charges | - | 4.8 | - | 6.4 | ||||||||||||
| Total operating expenses | 109.8 | 108.0 | 215.8 | 214.0 | ||||||||||||
| Operating income | 102.6 | 68.7 | 218.6 | 155.3 | ||||||||||||
| Other expense, net | (0.1 | ) | (1.4 | ) | (0.1 | ) | (1.1 | ) | ||||||||
| Income before income taxes | 102.5 | 67.3 | 218.5 | 154.2 | ||||||||||||
| Provision for income taxes | 25.6 | 5.6 | 47.1 | 26.0 | ||||||||||||
| Net income | $ | 76.9 | $ | 61.7 | $ | 171.4 | $ | 128.2 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.41 | $ | 0.33 | $ | 0.92 | $ | 0.68 | ||||||||
| Diluted | $ | 0.40 | $ | 0.32 | $ | 0.89 | $ | 0.66 | ||||||||
| Weighted average shares: | ||||||||||||||||
| Basic | 187.4 | 188.7 | 186.8 | 189.1 | ||||||||||||
| Diluted | 192.2 | 193.1 | 191.7 | 193.6 | ||||||||||||
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| UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
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| (in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| GAAP gross profit | $ | 212.4 | $ | 176.7 | $ | 434.4 | $ | 369.3 | ||||||||
| Share-based compensation expense [a] | 2.8 | 2.7 | 5.5 | 5.1 | ||||||||||||
| Acquisition-related expenses [b] | - | - | - | 0.1 | ||||||||||||
| Non-GAAP gross profit | $ | 215.2 | $ | 179.4 | $ | 439.9 | $ | 374.5 | ||||||||
| Non-GAAP gross margin % | 44.7 | % | 42.2 | % | 44.6 | % | 42.6 | % | ||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
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| (in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| GAAP operating income | $ | 102.6 | $ | 68.7 | $ | 218.6 | $ | 155.3 | ||||||||
| Share-based compensation expense [a] | 20.8 | 18.3 | 39.6 | 36.0 | ||||||||||||
| Acquisition-related expenses [b] | 0.1 | 0.2 | 0.1 | 0.8 | ||||||||||||
| Amortization of intangibles | 6.3 | 7.2 | 12.8 | 15.4 | ||||||||||||
| Restructuring and other charges [c] | - | 4.8 | - | 6.4 | ||||||||||||
| Litigation settlement gains, losses and expenses [d] | 0.6 | 0.3 | 1.1 | 0.3 | ||||||||||||
| Deferred executive compensation | - | 0.2 | - | 0.3 | ||||||||||||
| Non-GAAP operating income | $ | 130.4 | $ | 99.7 | $ | 272.2 | $ | 214.5 | ||||||||
| Non-GAAP operating margin % | 27.1 | % | 23.4 | % | 27.6 | % | 24.4 | % | ||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
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| (in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| GAAP net income | $ | 76.9 | $ | 61.7 | $ | 171.4 | $ | 128.2 | ||||||||
| Share-based compensation expense [a] | 20.8 | 18.3 | 39.6 | 36.0 | ||||||||||||
| Acquisition-related expenses [b] | 0.1 | 0.2 | 0.1 | 0.8 | ||||||||||||
| Amortization of intangibles | 6.3 | 7.2 | 12.8 | 15.4 | ||||||||||||
| Restructuring and other charges [c] | - | 4.8 | - | 6.4 | ||||||||||||
| Litigation settlement gains, losses and expenses [d] | 0.6 | 0.3 | 1.1 | 0.3 | ||||||||||||
| Deferred executive compensation | - | 0.2 | - | 0.3 | ||||||||||||
| Tax adjustments [e] | 13.9 | (0.8 | ) | 21.3 | 11.1 | |||||||||||
| Non-GAAP net income | $ | 118.6 | $ | 91.9 | $ | 246.3 | $ | 198.5 | ||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| GAAP net income per share, diluted | $ | 0.40 | $ | 0.32 | $ | 0.89 | $ | 0.66 | ||||||||
| Share-based compensation expense [a] | 0.11 | 0.10 | 0.21 | 0.19 | ||||||||||||
| Amortization of intangibles | 0.03 | 0.04 | 0.07 | 0.08 | ||||||||||||
| Restructuring and other charges [c] | - | 0.02 | - | 0.03 | ||||||||||||
| Litigation settlement gains, losses and expenses [d] | 0.01 | - | 0.01 | - | ||||||||||||
| Tax adjustments [e] | 0.07 | - | 0.11 | 0.06 | ||||||||||||
| Non-GAAP net income per share, diluted | $ | 0.62 | $ | 0.48 | $ | 1.29 | $ | 1.02 | ||||||||
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DISCUSSION REGARDING THE USE OF NON-GAAP FINANCIAL MEASURES |
| Our earnings release contains some or all of the following financial measures that have not been calculated in accordance with United States Generally Accepted Accounting Principles ("GAAP"): (i) non-GAAP gross profit and gross margin, (ii) non-GAAP operating income and operating margin, (iii) non-GAAP net income, and (iv) non-GAAP diluted earnings per share. As set forth in the "Unaudited Reconciliation of Non-GAAP Financial Measures" table found above, we derive such non-GAAP financial measures by excluding certain expenses and other items from the respective GAAP financial measure that is most directly comparable to each non-GAAP financial measure. Management uses these non-GAAP financial measures to evaluate our operating performance and compare it against past periods, make operating decisions, forecast for future periods, compare our operating performance against peer companies and determine payments under certain compensation programs. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by eliminating certain non-recurring expenses (which may not occur in each period presented) and other items that management believes might otherwise make comparisons of our ongoing business with prior periods and competitors more difficult, obscure trends in ongoing operations or reduce management's ability to make useful forecasts. |
| We provide investors with non-GAAP gross profit and gross margin, non-GAAP operating income and operating margin, non-GAAP net income and non-GAAP diluted earnings per share because we believe it is important for investors to be able to closely monitor and understand changes in our ability to generate income from ongoing business operations. We believe these non-GAAP financial measures give investors an additional method to evaluate historical operating performance and identify trends, an additional means of evaluating period-over-period operating performance and a method to facilitate certain comparisons of our operating results to those of our peer companies. We also believe that providing non-GAAP operating income and operating margin allows investors to assess the extent to which our ongoing operations impact our overall financial performance. We further believe that providing non-GAAP net income and non-GAAP diluted earnings per share allows investors to assess the overall financial performance of our ongoing operations by eliminating the impact of share-based compensation expense, acquisition-related expenses, restructuring-related charges, litigation settlement gains, losses and expenses, certain deferred executive compensation and certain tax items which may not occur in each period presented and which may represent non-cash items unrelated to our ongoing operations. We believe that disclosing these non-GAAP financial measures contributes to enhanced financial reporting transparency and provides investors with added clarity about complex financial performance measures. |
| We calculate non-GAAP gross profit by excluding from GAAP gross profit, share-based compensation expense and acquisition-related expenses. We calculate non-GAAP operating income by excluding from GAAP operating income, share-based compensation expense, acquisition-related expenses, restructuring-related charges, litigation settlement gains, losses and expenses and certain deferred executive compensation. We calculate non-GAAP net income and diluted earnings per share by excluding from GAAP net income and diluted earnings per share, share-based compensation expense, acquisition-related expenses, restructuring-related charges, litigation settlement gains, losses and expenses, certain deferred executive compensation and certain tax items which may not occur in all periods for which financial information is presented. We exclude the items identified above from the respective non-GAAP financial measure referenced above for the reasons set forth with respect to each such excluded item below: |
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Share-Based Compensation - because (1) the total amount of expense is partially outside of our control because it is based on factors such as stock price volatility and interest rates, which may be unrelated to our performance during the period in which the expense is incurred, (2) it is an expense based upon a valuation methodology premised on assumptions that vary over time, and (3) the amount of the expense can vary significantly between companies due to factors that can be outside of the control of such companies. |
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Acquisition-Related Expenses - including such items as, when applicable, amortization of acquired intangible assets, fair value adjustments to contingent consideration, fair value charges incurred upon the sale of acquired inventory, acquisition-related professional fees and deemed compensation expenses, because they are not considered by management in making operating decisions and we believe that such expenses do not have a direct correlation to our future business operations and thereby including such charges does not accurately reflect the performance of our ongoing operations for the period in which such charges are incurred. |
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Restructuring-Related Charges - because, to the extent such charges impact a period presented, we believe that they have no direct correlation to our future business operations and including such charges does not necessarily reflect the performance of our ongoing operations for the period in which such charges are incurred. |
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Litigation Settlement Gains, Losses and Expenses - including gains, losses and expenses related to the resolution of other-than-ordinary-course threatened and actually filed lawsuits and other-than-ordinary-course contractual disputes, because (1) they are not considered by management in making operating decisions, (2) such gains, losses and expenses tend to be infrequent in nature, (3) such gains, losses and expenses are generally not directly controlled by management, (4) we believe such gains, losses and expenses do not necessarily reflect the performance of our ongoing operations for the period in which such charges are recognized and (5) the amount of such gains or losses and expenses can vary significantly between companies and make comparisons less reliable. |
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Deferred Executive Compensation - including charges related to any contingent obligation pursuant to an executive severance agreement, because we believe the period over which the obligation is amortized may not reflect the period of benefit and that such expense has no direct correlation with our recurring business operations and including such expenses does not accurately reflect the compensation expense for the period in which incurred. |
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Certain Income Tax Items - including certain deferred tax charges and benefits that do not result in a current tax payment or tax refund and other adjustments, including but not limited to, items unrelated to the current fiscal year or that are not indicative of our ongoing business operations. |
| The non-GAAP financial measures presented in the table above should not be considered in isolation and are not an alternative for, the respective GAAP financial measure that is most directly comparable to each such non-GAAP financial measure. Investors are cautioned against placing undue reliance on these non-GAAP financial measures and are urged to review and consider carefully the adjustments made by management to the most directly comparable GAAP financial measures to arrive at these non-GAAP financial measures. Non-GAAP financial measures may have limited value as analytical tools because they may exclude certain expenses that some investors consider important in evaluating our operating performance or ongoing business performance. Further, non-GAAP financial measures are likely to have limited value for purposes of drawing comparisons between companies because different companies may calculate similarly titled non-GAAP financial measures in different ways because non-GAAP measures are not based on any comprehensive set of accounting rules or principles. |
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Our earnings release contains forward looking estimates of non-GAAP
diluted earnings per share for the third quarter of our 2014 fiscal
year ("Q3 2014"). We provide these non-GAAP measures to investors on
a prospective basis for the same reasons (set forth above) that we
provide them to investors on a historical basis. We are unable to
provide a reconciliation of our forward looking estimate of Q3 2014
non-GAAP diluted earnings per share to a forward looking estimate of
Q3 2014 GAAP diluted earnings per share because certain information
needed to make a reasonable forward looking estimate of GAAP diluted
earnings per share for Q3 2014 (other than estimated share-based
compensation expense of |
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[a] |
These charges represent expense recognized in accordance with ASC 718 - Compensation, Stock Compensation. |
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| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
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| (in millions) | 2014 | 2013 | ||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 797.8 | $ | 511.1 | ||
| Accounts receivable, net | 216.3 | 292.7 | ||||
| Inventory | 216.6 | 229.5 | ||||
| Other current assets | 38.2 | 40.0 | ||||
| Property, plant and equipment, net | 343.9 | 328.6 | ||||
| Goodwill and intangible assets, net | 852.5 | 865.3 | ||||
| Other assets | 69.3 | 65.9 | ||||
| Total assets | $ | 2,534.6 | $ | 2,333.1 | ||
| Liabilities and Equity | ||||||
| Current liabilities: | ||||||
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Accounts payable |
$ | 125.8 | $ | 126.5 | ||
| Accrued and other current liabilities | 57.0 | 53.2 | ||||
| Other long-term liabilities | 60.4 | 52.3 | ||||
| Stockholders' equity | 2,291.4 | 2,101.1 | ||||
| Total liabilities and equity | $ | 2,534.6 | $ | 2,333.1 | ||
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