- 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
Skyworks Solutions, Inc. (NASDAQ: SWKS) an innovator of high
performance analog semiconductors enabling a broad range of end
markets, today reported second fiscal quarter results for the
period ending March 28, 2014. Revenue for the quarter was $481.0
million, up 13 percent year-over-year and better than the Company’s
previous guidance for $470.0 million.
On a non-GAAP basis, operating income for the second fiscal
quarter of 2014 was $130.4 million, up 31 percent from $99.7
million in the year ago period. Non-GAAP diluted earnings per share
for the second fiscal quarter was $0.62 versus guidance of $0.59
and compared to $0.48 for the prior year second fiscal quarter. On
a GAAP basis, operating income for the second fiscal quarter of
2014 was $102.6 million and diluted earnings per share was
$0.40.
“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 David J. Aldrich, president
and chief executive officer of Skyworks. “By providing custom
solutions that help our customers solve increasingly complex design
challenges, we are enabling connectivity across a number of new and
previously unimagined end markets and applications. Our expanding
market footprint, customer relationships and design win pipeline
are translating into accelerating growth and improving financial
returns.”
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 $0.11 per share of the Company’s common stock. The
dividend is payable on May 22, 2014 to stockholders of record at
the close of business on May 13, 2014.
Third Fiscal Quarter 2014 Outlook
“As our performance demonstrates, Skyworks is executing to our
strategy of gaining semiconductor content through system-level
integration, diversifying into adjacent vertical applications and
relentlessly pursuing operational excellence,” said Donald W.
Palette, vice president and chief financial officer of Skyworks.
“Looking forward, we are on track to deliver strong, sustainable
top line growth with continued operating leverage. Specifically,
for the third fiscal quarter of 2014, we anticipate revenue to be
up 23 percent year-over-year to $535 million with non-GAAP diluted
earnings per share up 35 percent year-over-year to $0.73.”
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' Second Fiscal Quarter 2014 Conference Call
Skyworks will host a conference call with analysts to discuss
its second fiscal quarter 2014 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'
Web site. To listen to the conference call via telephone, please
call 800-230-1085 (domestic) or 612-234-9959 (international),
confirmation code: 323125.
Playback of the conference call will begin at 9:00 p.m. Eastern
time on April 22, and end at 9:00 p.m. Eastern time on April 29.
The replay will be available on Skyworks' Web site or by calling
800-475-6701 (domestic) or 320-365-3844 (international), access
code: 323125.
About Skyworks
Skyworks Solutions, Inc. is an innovator of high performance
analog semiconductors. Leveraging core technologies, Skyworks
supports automotive, broadband, cellular infrastructure, energy
management, GPS, industrial, medical, military, wireless
networking, smartphone and tablet applications. The Company’s
portfolio includes amplifiers, attenuators, battery chargers,
circulators, DC/DC converters, demodulators, detectors, diodes,
directional couplers, front-end modules, hybrids, infrastructure RF
subsystems, isolators, LED drivers, mixers, modulators,
optocouplers, optoisolators, phase shifters,
PLLs/synthesizers/VCOs, power dividers/combiners, power management
devices, receivers, switches, technical ceramics and voltage
regulators.
Headquartered in Woburn, Mass., Skyworks is worldwide with
engineering, manufacturing, sales and service facilities throughout
Asia, Europe and North America. For more information, please visit
Skyworks’ Web site 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). 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
Six Months Ended March 28, March 29, March 28, March
29, (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
SKYWORKS SOLUTIONS, INC. UNAUDITED RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES Three
Months Ended Six Months Ended March 28, March 29,
March 28, March 29, (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 March 28,
March 29, March 28, March 29, (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 March 28, March
29, March 28, March 29, (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
March 28, March 29, March 28, March 29, 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
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 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:
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 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.
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.
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 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 $0.10 per diluted share,
certain tax items of $0.11 per diluted share and estimated
amortization of intangibles of $0.03 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 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 March 28, 2014,
approximately $2.8 million, $8.6 million and $9.4 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively.
For the six months ended March 28, 2014,
approximately $5.5 million, $16.1 million and $18.0 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively.
For the three months ended March 29, 2013,
approximately $2.7 million, $7.5 million and $8.1 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively.
For the six months ended March 29 2013,
approximately $5.1 million, $14.9 million and $16.0 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively.
[b]
The acquisition-related expense of $0.1
million recognized during the three months and six months ended
March 28, 2014, primarily relates to general and administrative
expenses associated with potential acquisitions.
The acquisition-related expense of $0.2
million and $0.8 million recognized during the three months and six
months ended March 29, 2013, respectively, primarily relates to
general and administrative expenses associated with past
acquisitions.
[c]
During the three months and six months
ended March 29, 2013, the Company implemented restructuring plans
to reduce global headcount. A $4.8 million and a $6.4 million
charge were recorded during the three months and six months ended
March 29, 2013, respectively, related to these plans.
[d]
During the three months and six months
ended March 28, 2014, the Company recognized a $0.6 million and a
$1.1 million charge, respectively, primarily related to general and
administrative expense associated with ongoing litigations.
During the three months and six months
ended March 29, 2013, the Company recognized a $0.3 million charge
primarily related to general and administrative expenses associated
with ongoing litigations.
[e]
During the three months and six months
ended March 28, 2014, these amounts primarily represent the use of
net operating loss and research and development tax credit
carryforwards, deferred tax expense not affecting taxes payable,
and non-cash expense related to uncertain tax positions.
During the three months and six months
ended March 29, 2013, these amounts primarily represent the use of
net operating loss and research and development tax credit
carryforwards and non-cash expense related to uncertain tax
positions. As a result of the passage of the American Taxpayer
Relief Act of 2012, the GAAP tax rate includes a discrete
adjustment for the retroactive recognition of research and
development tax credits.
SKYWORKS SOLUTIONS, INC. UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS March 28, Sept. 27,
(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:
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
Skyworks Solutions, Inc.Media Relations:Pilar Barrigas,
949-231-3061orInvestor Relations:Stephen Ferranti,
781-376-3056
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