- Delivers Revenue of $926.8 Million, Up
15% Year-over-Year
- Expands Non-GAAP Operating Margin to
39.6% (35.7% GAAP)
- Posts $1.60 of Non-GAAP Diluted EPS
($1.82 GAAP), Up 27% Year-over-Year
- Generates $345 Million in Cash Flow
from Operations and Exits the Quarter with More than $1.2 Billion
in Cash
Skyworks Solutions, Inc. (NASDAQ: SWKS), an innovator of high
performance analog semiconductors connecting people, places and
things, today reported first fiscal quarter results for the period
ending January 1, 2016. Revenue for the first fiscal quarter was
$926.8 million, up 15 percent year-over-year and 5 percent
sequentially, exceeding the First Call consensus estimate of $915.7
million.
On a non-GAAP basis, operating income for the first fiscal
quarter of 2016 was $366.6 million, up 30 percent from $282.0
million in the first fiscal quarter of 2015. Non-GAAP diluted
earnings per share for the first fiscal quarter was $1.60, $0.02
better than the First Call consensus of $1.58, and up 27 percent
from the first fiscal quarter of 2015. On a GAAP basis, operating
income for the first fiscal quarter of 2016 was $330.5 million and
diluted earnings per share was $1.82.
“Skyworks delivered solid financial results in the first fiscal
quarter of 2016 driven by our diversification across customers,
markets and applications,” said David J. Aldrich, chairman and
chief executive officer of Skyworks. “Leveraging our proprietary
and highly integrated system solutions, we continue to increase our
addressable content, gain market share and capitalize on global
demand for ubiquitous network access. At a higher level, we are
executing on our vision of connecting everyone and everything, all
the time, and are uniquely positioned to sustainably outperform the
broader semiconductor industry.”
Q1 Business Highlights
- Commenced volume shipments of
telematics solutions at Volkswagen
- Secured first mass production of
vehicle-to-vehicle communications sockets at GM
- Supported Google Chromecast and Roku
set-top boxes for streaming applications
- Won multiple sockets in flagship
smartphone platforms at Samsung and other OEMs
- Ramped microcell radio subsystems at
leading infrastructure OEM
- Launched IP security camera solutions
at Nest
- Powered Huawei’s Mate 8 flagship LTE
platform
- Enabled the DJI Phantom 3 drone with a
suite of 14 semiconductors
- Leveraged ZigBee® and Bluetooth®
capabilities for temperature control and garage door applications
in the connected home
- Captured key smart fitness watch design
wins at Fitbit
Second Quarter 2016 Outlook
“Despite the current market environment, we expect to deliver
earnings growth in the March quarter driven by strong gross margin
performance and a disciplined approach with expenses,” said Donald
W. Palette, executive vice president and chief financial officer of
Skyworks. “Specifically, for the second fiscal quarter of 2016, we
anticipate revenue of $775 million and non-GAAP diluted earnings
per share of $1.24.”
Dividend Payment
Skyworks’ Board of Directors declared a cash dividend of $0.26
per share of the Company’s common stock, payable on March 3, 2016
to stockholders of record at the close of business on February 11,
2016.
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.
Skyworks' First Fiscal Quarter 2016 Conference Call
Skyworks will host a conference call with analysts to discuss
its first fiscal quarter 2016 results and business outlook today at
5:00 p.m. Eastern time. To listen to the conference call via the
Internet, please visit the investor relations section of Skyworks'
website. To listen to the conference call via telephone, please
call (800) 230-1085 (domestic) or (612) 234-9960 (international),
confirmation code: 383539.
Playback of the conference call will begin at 9:00 p.m. Eastern
time on January 28, and end at 9:00 p.m. Eastern time on February
4. The replay will be available on Skyworks' website or by calling
(800) 475-6701 (domestic) or (320) 365-3844 (international), access
code: 383539.
About Skyworks
Skyworks Solutions, Inc. is empowering the wireless networking
revolution. Our highly innovative analog semiconductors are
connecting people, places, and things, spanning a number of new and
previously unimagined applications within the automotive,
broadband, cellular infrastructure, connected home, industrial,
medical, military, smartphone, tablet and wearable markets.
Headquartered in Woburn, Massachusetts, Skyworks is a global
company with engineering, marketing, operations, sales, and service
facilities located throughout Asia, Europe and North America. For
more information, please visit Skyworks’ website at:
www.skyworksinc.com.
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 Skyworks (e.g.,
certain projections and business trends) and plans for dividend
payments. Forward-looking statements can often be identified by
words such as "anticipates," "expects," "forecasts," "intends,"
"believes," "plans," "may," "will," or "continue," and similar
expressions and variations or negatives of these words. All such
statements are subject to certain risks, uncertainties and other
important factors that could cause actual results to differ
materially and adversely from those projected, and may affect our
future operating results, financial position and cash flows.
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 Securities and Exchange Commission.
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: Skyworks and Skyworks Solutions are trademarks
or registered trademarks of Skyworks Solutions, Inc. or its
subsidiaries in the United States and in other countries. All other
brands and names listed are trademarks of their respective
companies.
SKYWORKS SOLUTIONS, INC. UNAUDITED CONSOLIDATED STATEMENT
OF OPERATIONS Three Months Ended
Jan. 1, Jan. 2, (in millions, except per share amounts) 2016
2015 Net revenue $ 926.8 $ 805.5 Cost of goods sold
454.7 432.5 Gross profit 472.1 373.0
Operating expenses: Research and development 81.5 68.5 Selling,
general and administrative 51.7 47.9 Amortization of intangibles
8.4 8.5 Restructuring and other charges - 1.3
Total operating expenses 141.6 126.2 Operating income 330.5
246.8 Other (expense) income, net (0.8 ) 0.7 Merger
termination fee 88.5 - Income before income
taxes 418.2 247.5 Provision for income taxes 62.9
52.3 Net income $ 355.3 $ 195.2 Earnings per
share: Basic $ 1.87 $ 1.03 Diluted $ 1.82 $ 1.01 Weighted average
shares: Basic 190.4 188.7 Diluted 194.7 194.2
SKYWORKS
SOLUTIONS, INC. UNAUDITED RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES Three Months Ended Jan.
1, Jan. 2, (in millions) 2016 2015
GAAP gross profit $ 472.1 $ 373.0 Share-based compensation
expense [a] 4.0 3.2 Acquisition-related expenses [b] -
0.2 Non-GAAP gross profit $ 476.1 $
376.4 Non-GAAP gross margin % 51.4 % 46.7 %
Three Months Ended Jan. 1, Jan. 2, (in millions) 2016
2015 GAAP operating income $ 330.5 $
246.8 Share-based compensation expense [a] 23.3 21.7
Acquisition-related expenses [b] 2.7 3.5 Amortization of
intangibles 8.4 8.5 Restructuring and other charges [c] - 1.3
Litigation settlement gains, losses and expenses [d] 1.7 0.1
Deferred executive compensation - 0.1
Non-GAAP operating income $ 366.6 $ 282.0
Non-GAAP operating margin % 39.6 % 35.0 % Three Months Ended
Jan. 1, Jan. 2, (in millions) 2016 2015
GAAP net income $ 355.3 $ 195.2 Share-based
compensation expense [a] 23.3 21.7 Acquisition-related expenses [b]
2.7 3.5 Amortization of intangibles 8.4 8.5 Restructuring and other
charges [c] - 1.3 Litigation settlement gains, losses and expenses
[d] 1.7 0.1 Deferred executive compensation - 0.1 Merger
termination fee [e] (88.5 ) - Interest expense on seller-financed
debt [f] 0.3 0.3 Tax adjustments [g] 8.0 14.1
Non-GAAP net income $ 311.2 $ 244.8
Three Months Ended Jan. 1, Jan. 2, 2016
2015 GAAP net income per share, diluted $ 1.82 $ 1.01
Share-based compensation expense [a] 0.12 0.11 Acquisition-related
expenses [b] 0.01 0.02 Amortization of intangibles 0.04 0.04
Restructuring and other charges [c] - 0.01 Litigation settlement
gains, losses and expenses [d] 0.01 - Merger termination fee [e]
(0.45 ) - Tax adjustments [g] 0.05 0.07
Non-GAAP net income per share, diluted $ 1.60 $ 1.26
SKYWORKS SOLUTIONS, INC.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, merger termination fees 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, merger termination fees 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:
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.
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, deemed compensation expenses and interest
expense on seller-financed debt, 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.
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.
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.
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.
Merger Termination Fees - because we believe such non-recurring
fees have no direct correlation to our business operations or
performance during the period in which they are received or for any
future period.
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.
Our earnings release contains forward-looking estimates of
non-GAAP gross margin and non-GAAP diluted earnings per share for
the second quarter of our 2016 fiscal year ("Q2 2016"). 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.
The following table provides a reconciliation of our
forward-looking estimate of non-GAAP gross margin to a
forward-looking estimate of GAAP gross margin for Q2 2016:
Forward-looking non-GAAP gross margin estimate
50.5 - 51.0% Less: Share-based compensation expense (0.4)
Forward-looking GAAP gross margin estimate 50.1 - 50.6%
We are unable to provide a reconciliation of our forward-looking
estimate of Q2 2016 non-GAAP diluted earnings per share to a
forward-looking estimate of Q2 2016 GAAP diluted earnings per share
because certain information needed to make a reasonable
forward-looking estimate of GAAP diluted earnings per share for Q2
2016 (other than estimated share-based compensation expense of
$0.12 per diluted share, certain tax items of $0.11 per diluted
share and estimated amortization of intangibles of $0.04 per
diluted share) is difficult to predict and estimate and is often
dependent on future events that may be uncertain or outside of our
control. Such events may include unanticipated changes in our GAAP
effective tax rate, unanticipated one-time charges related to asset
impairments (fixed assets, inventory, intangibles or goodwill),
unanticipated acquisition-related expenses, unanticipated
litigation settlement gains, losses and expenses and other
unanticipated non-recurring items not reflective of ongoing
operations. We believe the probable significance of these unknown
items, in the aggregate, to be in the range of $0.00 to $0.05 in
quarterly earnings per diluted share on a GAAP basis. Our
forward-looking estimates of both GAAP and non-GAAP measures of our
financial performance may differ materially from our actual results
and should not be relied upon as statements of fact.
[a]
These charges represent expense recognized
in accordance with ASC 718 - Compensation, Stock Compensation.
Approximately $4.0 million, $9.6 million and $9.7 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively, for
the three months ended January 1, 2016.
For the three months ended January 2,
2015, approximately $3.2 million, $9.8 million and $8.7 million
were included in cost of goods sold, research and development
expense and selling, general and administrative expense,
respectively.
[b]
The acquisition-related expenses
recognized during the three months ended January 1, 2016, include
$2.7 million in transaction costs included in general and
administrative expenses primarily associated with potential
acquisitions.
The acquisition-related expenses
recognized during the three months ended January 2, 2015, include a
$0.2 million charge to cost of sales related to the sale of
acquired inventory and $3.3 million in transaction costs included
in general and administrative expenses associated with the purchase
of an interest in a joint venture with Panasonic Corporation on
August 1, 2014.
For additional information regarding the
joint venture, please refer to the Company's Current Reports on
Form 8-K filed with the Securities and Exchange Commission on July
10, 2014, and August 7, 2014.
[c]
During the three months ended January 2,
2015, the Company incurred $1.3 million in employee severance costs
primarily related to a restructuring plan that was implemented
during the period.
[d]
During the three months ended January 1,
2016, and January 2, 2015, the Company recognized a $1.7 million
and a $0.1 million charge, respectively, primarily related to
general and administrative expenses associated with ongoing
litigation(s).
[e]
On November 23, 2015, PMC-Sierra, Inc.
("PMC") notified the Company that it had terminated the Amended and
Restated Agreement and Plan of Merger entered into between the
parties in order to accept an acquisition proposal from Microsemi
Corporation. As a result, on November 24, 2015, PMC paid the
Company an $88.5 million merger termination fee.
[f]
During the three months ended January 1,
2016, and January 2, 2015, the Company recognized $0.3 million,
respectively, in interest expense associated with the accretion of
the present value of the $76.5 million liability related to the
future purchase of the remaining 34% interest in the joint venture
between the Company and Panasonic.
[g]
During the three months ended January 1,
2016, these amounts primarily represent the use of net operating
loss and research and development tax credit carryforwards,
deferred tax expense not affecting taxes payable, tax deductible
stock compensation in excess of GAAP stock compensation expense and
non-cash expense (benefit) related to uncertain tax positions.
Included in these amounts are the adjustments related to the tax
effect of the PMC merger termination fee of $19.0 million and a net
tax benefit of $21.4 million related to the release of previously
reserved items which were included in the GAAP expense for
uncertain tax positions that are no longer required as a result of
the settlement of the IRS audits for our fiscal year 2012 and
fiscal year 2013 federal tax returns.
During the three months ended January 2,
2015, these amounts primarily represent the use of net operating
loss and research and development tax credit carryforwards,
deferred tax expense not affecting taxes payable, tax deductible
stock compensation in excess of GAAP stock compensation expense,
and non-cash expense related to uncertain tax positions.
SKYWORKS SOLUTIONS, INC. UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS Jan. 1, Oct. 2, (in
millions) 2016 2015
Assets Current assets: Cash and cash
equivalents $ 1,233.2 $ 1,043.6 Accounts receivable, net 527.6
538.0 Inventory 276.4 267.9 Other current assets 77.5 65.2
Property, plant and equipment, net 847.9 826.4 Goodwill and
intangible assets, net 893.3 901.7 Other assets 74.6
76.6 Total assets $ 3,930.5 $ 3,719.4
Liabilities and
Equity Current liabilities: Accounts payable $ 191.8 $ 291.2
Accrued and other current liabilities 176.1 172.7 Other long-term
liabilities 80.0 96.3 Stockholders' equity 3,482.6
3,159.2 Total liabilities and equity $ 3,930.5 $ 3,719.4
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160128006384/en/
Skyworks Media Relations:Pilar Barrigas(949)
231-3061orSkyworks Investor Relations:Stephen Ferranti(781)
376-3056
Skyworks Solutions (NASDAQ:SWKS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Skyworks Solutions (NASDAQ:SWKS)
Historical Stock Chart
From Apr 2023 to Apr 2024