- Delivers Revenue of $914.3 Million, Up
9.4% Sequentially
- GAAP Operating Margin 35.2%; Non-GAAP
Operating Margin 38.8%
- GAAP Diluted EPS $1.38; Record Non-GAAP
Diluted EPS $1.61
- Generates Record Cash Flow from
Operations of $495.9 Million
- Guides to Q2 FY17 Revenue and Non-GAAP
Diluted EPS above Consensus
- Initiates New $500 Million Stock
Buyback Plan
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 December 30, 2016. Revenue for the first fiscal quarter was
$914.3 million, up 9.4 percent sequentially and exceeding consensus
estimates of $902.7 million.
On a GAAP basis, operating income for the first fiscal quarter
of 2017 was $321.9 million with diluted earnings per share of
$1.38. On a non-GAAP basis, operating income was $354.3 million
with record non-GAAP diluted earnings per share of $1.61, $0.03
better than the Company’s guidance and consensus estimates. Cash
flow from operations for the quarter was also a record $495.9
million.
“Skyworks delivered exceptional financial results in the first
fiscal quarter of 2017 fueled by global demand for ubiquitous
mobile connectivity and the Internet of Things,” said Liam K.
Griffin, president and chief executive officer of Skyworks. “We are
enabling the next phase of the wireless revolution, powering new
and previously unimagined applications. With the proliferation of
4G/LTE and advent of 5G, system-level performance requirements are
intensifying, driving the need for substantially higher data rates,
improved efficiency and reduced latency across an exponentially
growing scope of networked devices. Leveraging our innovative
portfolio, carrier aggregation leadership, operational scale and
demonstrated ability to deliver highly integrated solutions,
Skyworks is uniquely positioned to capitalize on this connectivity
megatrend.”
First Fiscal Quarter Business Highlights
- Secured SkyOne®, custom diversity
receive system and high band PAD wins across tier-one OEMs
- Leveraged SkyBlue™ enabling technology
for Huawei’s Mate9 smartphones
- Enabled Wi-Fi mesh solutions at Linksys
and Ubiquiti Networks
- Delivered low noise amplifiers to
leading networking OEMs for MIMO architectures
- Shipped front-end modules for Comcast’s
DOCSIS 3.1 broadband gateways
- Expanded LTE content across Oppo, Vivo,
Meizu and Xiaomi platforms
- Powered telematics modems for U.S.
electric auto manufacturer
- Captured sockets across leading drone
customers
- Supported Amazon’s Alexa, Google Home
and Microsoft’s Cortana virtual assistants
- Designed into Alps’ vehicle-to-vehicle
intelligent transportation system
- Deployed automotive solutions with
Samsung for remote diagnostic applications
- Launched ZigBee® modules for remote
temperature monitoring devices
- Ramped multiple solutions enabling
NetGear’s home security cameras
Second Fiscal Quarter 2017 Outlook
We provide earnings guidance solely on a non-GAAP basis because
certain information necessary to reconcile such guidance to GAAP is
difficult to estimate and dependent on future events outside of our
control. Please refer to the attached Discussion Regarding the Use
of Non-GAAP Financial Measures in this press release for a further
discussion of our use of non-GAAP measures, including
quantification of known expected adjustment items.
“Given our expanding product pipeline and accelerating design
win momentum, we expect to outperform industry seasonality in the
March quarter,” said Kris Sennesael, senior vice president and
chief financial officer of Skyworks. “Specifically, for the second
fiscal quarter of 2017, we anticipate revenue of $840 million, up 8
percent year-over-year, with non-GAAP diluted earnings per share of
$1.40. Further, given the confidence in our business model and
plans to enhance cash returns to our shareholders, today we are
separately announcing that our Board of Directors has authorized a
new $500 million stock repurchase program.”
Dividend Payment
Skyworks’ Board of Directors declared a cash dividend of $0.28
per share of the Company’s common stock, payable on February 23,
2017, to stockholders of record at the close of business on
February 2, 2017.
Skyworks' First Fiscal Quarter 2017 Conference Call
Skyworks will host a conference call with analysts to discuss
its first fiscal quarter 2017 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 at www.skyworksinc.com. To listen to the conference call
via telephone, please call (800) 288-8976 (domestic) or (612)
332-0107 (international), confirmation code: 413464.
Playback of the conference call will begin at 9:00 p.m. Eastern
time on January 19, and end at 9:00 p.m. Eastern time on January
26. The replay will be available on Skyworks' website or by calling
(800) 475-6701 (domestic) or (320) 365-3844 (international), access
code: 413464.
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.
Skyworks is a global company with engineering, marketing,
operations, sales and support facilities located throughout Asia,
Europe and North America and is a member of the S&P 500® and
Nasdaq-100® market indices (NASDAQ: SWKS). 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: the susceptibility of the semiconductor
industry and the markets addressed by our, and our customers',
products to economic downturns; our reliance on several key
customers for a large percentage of our sales; the volatility of
our stock price; declining selling prices, decreased gross margins,
and loss of market share as a result of increased competition; our
ability to develop, manufacture and market innovative products and
avoid product obsolescence; fluctuations in our manufacturing
yields due to our complex and specialized manufacturing processes;
problems or delays that we may face in shifting our products to
smaller geometry process technologies and in achieving higher
levels of design integration; the quality of our products and any
remediation costs; the availability and pricing of third-party
semiconductor foundry, assembly and test capacity, raw materials
and supplier components; 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; the timing, rescheduling or cancellation of
significant customer orders and our ability, as well as the ability
of our customers, to manage inventory; 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 continue to
grow and maintain an intellectual property portfolio and obtain
needed licenses from third parties; 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; 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
make certain investments and acquisitions, integrate companies we
acquire, and/or enter into strategic alliances; our ability to
prevent theft of our intellectual property, disclosure of
confidential information, or breaches of our information technology
systems; and 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
STATEMENTS OF OPERATIONS Three
Months Ended (in millions, except per share amounts) December
30,2016 January 1,2016 Net revenue $ 914.3 $ 926.8 Cost of goods
sold 450.4 454.7 Gross profit 463.9 472.1 Operating
expenses: Research and development 82.0 81.5 Selling, general and
administrative 50.9 51.7 Amortization of intangibles 8.5 8.4
Restructuring and other charges 0.6 — Total operating
expenses 142.0 141.6 Operating income 321.9 330.5 Other expense,
net (0.8 ) (0.8 ) Merger termination fee — 88.5
Income before income taxes 321.1 418.2 Provision for income taxes
63.3 62.9 Net income $ 257.8 $ 355.3
Earnings per share: Basic $ 1.39 $ 1.87
Diluted $ 1.38 $ 1.82 Weighted average shares: Basic
184.8 190.4 Diluted 187.3 194.7
SKYWORKS SOLUTIONS, INC. UNAUDITED RECONCILIATIONS OF
NON-GAAP FINANCIAL MEASURES Three
Months Ended (in millions) December 30,2016 January 1,2016 GAAP
gross profit $ 463.9 $ 472.1 Share-based compensation expense [a]
3.8 4.0 Non-GAAP gross profit $ 467.7 $ 476.1
GAAP gross margin % 50.7 % 50.9 % Non-GAAP gross margin %
51.2 % 51.4 % Three Months Ended (in millions) December
30,2016 January 1,2016 GAAP operating income $ 321.9 $ 330.5
Share-based compensation expense [a] 21.6 23.3 Acquisition-related
expenses [b] 1.7 2.7 Amortization of intangibles [c] 8.5 8.4
Restructuring and other charges [d] 0.6 — Litigation settlement
gains, losses and expenses [e] — 1.7 Non-GAAP
operating income $ 354.3 $ 366.6 GAAP operating
margin % 35.2 % 35.7 % Non-GAAP operating margin % 38.8 % 39.6 %
Three Months Ended (in millions) December 30,2016 January
1,2016 GAAP net income $ 257.8 $ 355.3 Share-based compensation
expense [a] 21.6 23.3 Acquisition-related expenses [b] 1.7 2.7
Amortization of intangibles [c] 8.5 8.4 Restructuring and other
charges [d] 0.6 — Litigation settlement gains, losses and expenses
[e] — 1.7 Merger termination fee [f] — (88.5 ) Interest expense on
seller-financed debt [g] — 0.3 Tax adjustments [h] 11.4 8.0
Non-GAAP net income $ 301.6 $ 311.2
Three Months Ended December 30,2016 January 1,2016 GAAP net income
per share, diluted $ 1.38 $ 1.82 Share-based compensation expense
[a] 0.11 0.12 Acquisition-related expenses [b] 0.01 0.01
Amortization of intangibles [c] 0.05 0.04 Litigation settlement
gains, losses and expenses [e] — 0.01 Merger termination fee [f] —
(0.45 ) Tax adjustments [h] 0.06 0.05 Non-GAAP net
income per share, diluted $ 1.61 $ 1.60
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
Reconciliations 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 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 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, amortization of intangibles,
restructuring-related charges, litigation settlement gains, losses
and expenses, merger termination fees, interest expense on
seller-financed debt 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, amortization of intangibles,
restructuring-related charges, and litigation settlement gains,
losses and expenses. 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, amortization of intangibles,
restructuring-related charges, litigation settlement gains, losses
and expenses, merger termination fees, interest expense on
seller-financed debt and certain tax items. 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 litigation has been 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.
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 diluted earnings per share for the second quarter of our
2017 fiscal year (“Q2 2017”). We provide this non-GAAP measure to
investors on a prospective basis for the same reasons (set forth
above) that we provide it to investors on a historical basis. We
are unable to provide a reconciliation of our forward-looking
estimate of Q2 2017 GAAP diluted earnings per share to a
forward-looking estimate of Q2 2017 non-GAAP diluted earnings per
share because certain information needed to make a reasonable
forward-looking estimate of GAAP diluted earnings per share for Q2
2017 (other than estimated share-based compensation expense of
$0.11 to $0.13 per diluted share, certain tax items of $0.04 to
$0.08 per diluted share and estimated amortization of intangibles
of $0.04 to $0.06 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. For the three
months ended December 30, 2016, approximately $3.8 million, $8.3
million and $9.5 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, 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. [b] The acquisition-related expenses
recognized during the three months ended December 30, 2016, include
a $1.7 million charge to general and administrative expenses,
primarily associated with expenses related to acquisitions
completed or contemplated during the period. The
acquisition-related expenses recognized during the three months
ended January 1, 2016, include a $2.7 million charge to general and
administrative expenses, primarily associated with expenses related
to acquisitions completed or contemplated during the period.
[c] During the three months ended December 30, 2016 and January 1,
2016, the Company incurred $8.5 million and $8.4 million,
respectively, in amortization of intangibles. [d] During the
three months ended December 30, 2016, the Company incurred a $0.6
million charge in employee severance costs primarily related to
restructuring plans that were implemented during the period.
[e] During the three months ended January 1, 2016, the Company
recognized a $1.7 million charge primarily related to general and
administrative expenses associated with ongoing litigation(s).
[f] During the three months ended January 1, 2016,
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 a superior
proposal. As a result, on November 24, 2015, PMC paid the Company a
$88.5 million merger termination fee. [g] During the three
months ended January 1, 2016, the Company recognized $0.3 million
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. [h] During the three months ended
December 30, 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 share-based compensation expense in excess of GAAP
share-based compensation expense, the release of previously
reserved items that are no longer required as a result of audits,
and non-cash expense (benefit) related to uncertain tax positions.
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 share-based compensation
expense in excess of GAAP share-based compensation expense, the tax
attributable to the merger termination fee, the release of
previously reserved items that are no longer required as a result
of the IRS audits, and non-cash expense (benefit) related to
uncertain tax positions.
SKYWORKS SOLUTIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of (in millions) December 30,2016 September
30,2016
Assets Current assets: Cash and cash equivalents $
1,350.5 $ 1,083.8 Accounts receivable, net 368.4 416.6 Inventory
422.8 424.0 Other current assets 56.8 77.7 Property, plant and
equipment, net 801.5 806.3 Goodwill and intangible assets, net
955.3 940.3 Other assets 110.4 106.7 Total assets $ 4,065.7
$ 3,855.4
Liabilities and Equity Current
liabilities: Accounts payable $ 161.5 $ 110.4 Accrued and other
current liabilities 141.9 99.8 Other long-term liabilities 102.0
103.8 Stockholders’ equity 3,660.3 3,541.4 Total liabilities
and equity $ 4,065.7 $ 3,855.4
SKYWORKS SOLUTIONS,
INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended (in millions)
December 30,2016 January 1,2016
Cash flow from operating
activities Net income $ 257.8 $ 355.3 Adjustments to reconcile
net income to net cash provided by operating activities:
Share-based compensation 21.6 23.3 Depreciation 55.3 51.5
Amortization of intangible assets 8.5 8.4 Contribution of common
shares to savings and retirement plans — 2.7 Deferred income taxes
1.2 2.0 Excess tax benefit from share-based compensation (21.5 )
(37.3 ) Changes in operating assets: Receivables, net 49.3 3.1
Inventory 0.6 (19.0 ) Other current and long-term assets 12.3 11.8
Accounts payable 50.9 (96.2 ) Other current and long-term
liabilities 59.9 39.7
Net cash provided by
operations 495.9 345.3
Cash flow from
investing activities Capital expenditures (50.1 ) (79.5 )
Payments for acquisitions, net of cash acquired (13.7 ) — Maturity
of investments 3.2 —
Net cash used in investing
activities (60.6 ) (79.5 )
Cash flow from financing
activities Payments of contingent consideration (1.7 ) — Excess
tax benefit from share-based compensation 21.5 37.3 Dividends paid
(52.2 ) (50.2 ) Repurchase of common stock — share repurchase
program (106.5 ) — Repurchase of common stock — payroll tax
withholdings on equity awards (44.4 ) (71.9 ) Net proceeds from
exercise of stock options 14.7 8.6
Net cash used
in financing activities (168.6 ) (76.2 ) Net increase in cash
and cash equivalents 266.7 189.6 Cash and cash equivalents at
beginning of period 1,083.8 1,043.6 Cash and cash
equivalents at end of period $ 1,350.5 $ 1,233.2
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170119006150/en/
Skyworks Solutions, Inc.Media Relations:Pilar Barrigas,
(949) 231-3061orInvestor Relations:Mitch Haws, (949)
231-3223
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