Qorvo® (Nasdaq:QRVO), a leading global provider of connectivity and
power solutions, today announced financial results for the
Company’s fiscal 2023 second quarter ended October 1, 2022.
On a GAAP basis, revenue for Qorvo’s fiscal 2023 second quarter
was $1.158 billion, gross margin was 46.5%, operating income was
$262 million and diluted earnings per share was $1.82. On a
non-GAAP basis, gross margin was 49.2%, operating income was $338
million and diluted earnings per share was $2.66.
Bob Bruggeworth, president and chief executive officer of Qorvo,
said, “Qorvo delivered a solid September quarter, supported by a
large customer launch and strength in defense and power. In the
December quarter, Qorvo is continuing to adjust to weakening
end-market demand while taking steps to significantly reduce
inventory in the channel. Across our businesses, we remain
encouraged by customer design win activity and content and
integration trends. We are introducing new technologies and new
products to drive growth and expand content in diverse markets,
including defense, power, infrastructure, automotive, IoT
connectivity and smartphones.”
Strategic Highlights
- Achieved fourth consecutive quarter of sequential growth in
Silicon Carbide (SiC) business and signed agreement with SK Siltron
for long-term supply of SiC wafers
- Released portfolio of advanced fourth-generation SiC
surface-mount FETs optimized for high-power applications such as
DC-to-DC converters, fast DC chargers, and onboard chargers
- Released 5-watt GaN power amplifier module for 4.5 - 4.6 GHz
massive-MIMO cellular base stations and announced GaN power module
for upcoming DOCSIS 4.0 broadband cable systems
- Introduced highly compact PMIC designed to enable
reconfigurability and reduce time to market in space-constrained
applications including home automation and networking systems
- Achieved Matter® 1.0 certification and commenced shipments of
Matter development kits featuring ConcurrentConnect™ technology,
simplifying design of IoT gateway and connected devices
- Broadened smart home product portfolio leveraging UWB and
Matter system solutions and expanded UWB design engagements serving
enterprise applications, including indoor navigation
- Expanded connectivity and sensing design wins supporting
top-tier automakers for applications including infotainment,
connectivity, secure car access and EV smart interiors
- Secured broad range of Wi-Fi 6 and Wi-Fi 6E design wins in
support of 2023 platforms and launched 5 GHz and 6 GHz filters for
European band Wi-Fi 6E and Wi-Fi 7 applications
- Launched commercial trials of Qorvo Omnia™ COVID-19 diagnostic
test platform with multiple retail healthcare outlets and began
production of flu A/B cartridges for clinical trials in support of
National Institutes of Health (NIH) initiatives
- Increased shipments of Phase 7 LE solutions and secured
additional design wins, including LB, MHB and UHB integrated
placements across multiple smartphone OEMs
- Commenced first production shipments of high-performance
MEMS-based antenna solutions and expanded customer engagements to
include top-tier smartphone OEMs
- Expanded content at Korea-based OEM with first LB PAD win in
their flagship smartphone, complementing wins in MHB main and
secondary transmit, tuning and Wi-Fi applications, in support of
upcoming 2023 flagship launch
- Introduced highly integrated MHB PAD combining main path and
diversity receive content, in support of future cellular
architectures
Financial Commentary and Outlook
Grant Brown, chief financial officer of Qorvo, said, “Qorvo
delivered September quarterly revenue and EPS above the high end of
our guidance while also reducing inventories. Looking forward, we
anticipate ongoing weakness across end markets, primarily consumer,
and a more acute inventory correction at our Android-based
smartphone customers. Despite the challenging environment, we
expect to deliver strong free cash flow in fiscal 2023 while
investing to drive diversified long-term growth. On this outlook
and projected free cash flow, the board of directors has approved a
$2 billion share repurchase authorization.”
Qorvo's current outlook for the December 2022 quarter is:
- Quarterly revenue of $700 million to $750 million
- Non-GAAP gross margin between 43% and 44%
- Non-GAAP diluted earnings per share in the range of $0.50 to
$0.75
Qorvo’s actual quarterly results may differ from these
expectations and projections, and such differences may be
material.
Selected Financial Information
The following tables set forth selected GAAP and non-GAAP
financial information for Qorvo for the periods indicated. See the
more detailed financial information for Qorvo, including
reconciliations of GAAP and non-GAAP financial information,
attached.
| |
|
SELECTED GAAP RESULTS |
|
| |
|
(Unaudited) |
|
| |
|
(In millions, except for percentages and EPS) |
|
| |
|
For the quarter endedOctober 1, 2022 |
|
For the quarter endedJuly 2, 2022 |
|
Change vs. Q1FY 2023 |
|
|
Revenue |
$ |
1,158.1 |
|
$ |
1,035.4 |
|
$ |
122.7 |
|
|
| Gross profit |
$ |
538.9 |
|
$ |
375.3 |
|
$ |
163.6 |
|
|
| Gross margin |
|
46.5 |
% |
|
36.2 |
% |
|
10.3 |
|
ppt |
| Operating expenses |
$ |
277.4 |
|
$ |
273.4 |
|
$ |
4.0 |
|
|
| Operating income |
$ |
261.6 |
|
$ |
101.9 |
|
$ |
159.7 |
|
|
| Net income |
$ |
188.6 |
|
$ |
68.9 |
|
$ |
119.7 |
|
|
| Weighted average diluted
shares |
|
103.7 |
|
|
106.1 |
|
|
(2.4 |
) |
|
| Diluted EPS |
$ |
1.82 |
|
$ |
0.65 |
|
$ |
1.17 |
|
|
| |
|
SELECTED NON-GAAP RESULTS1 |
|
| |
|
(Unaudited) |
|
| |
|
(In millions, except for percentages and EPS) |
|
| |
|
For the quarter endedOctober 1, 2022 |
|
For the quarter endedJuly 2, 2022 |
|
Change vs. Q1FY 2023 |
|
|
Revenue |
$ |
1,158.1 |
|
$ |
1,035.4 |
|
$ |
122.7 |
|
|
| Gross profit |
$ |
570.2 |
|
$ |
518.2 |
|
$ |
52.0 |
|
|
| Gross margin |
|
49.2 |
% |
|
50.0 |
% |
|
(0.8 |
) |
ppt |
| Operating expenses |
$ |
232.5 |
|
$ |
233.8 |
|
$ |
(1.3 |
) |
|
| Operating income |
$ |
337.7 |
|
$ |
284.4 |
|
$ |
53.3 |
|
|
| Net income |
$ |
276.2 |
|
$ |
238.4 |
|
$ |
37.8 |
|
|
| Weighted average diluted
shares |
|
103.7 |
|
|
106.1 |
|
|
(2.4 |
) |
|
| Diluted EPS |
$ |
2.66 |
|
$ |
2.25 |
|
$ |
0.41 |
|
|
| |
|
SELECTED GAAP RESULTS |
|
| |
|
(Unaudited) |
|
| |
|
(In millions, except for percentages and EPS) |
|
| |
|
For the quarter ended October 1, 2022 |
|
For the quarter ended October 2, 2021 |
|
Change vs. Q2 FY 2022 |
|
|
Revenue |
$ |
1,158.1 |
|
$ |
1,255.2 |
|
$ |
(97.1 |
) |
|
| Gross profit |
$ |
538.9 |
|
$ |
621.6 |
|
$ |
(82.7 |
) |
|
| Gross margin |
|
46.5 |
% |
|
49.5 |
% |
|
(3.0 |
) |
ppt |
| Operating expenses |
$ |
277.4 |
|
$ |
259.2 |
|
$ |
18.2 |
|
|
| Operating income |
$ |
261.6 |
|
$ |
362.4 |
|
$ |
(100.8 |
) |
|
| Net income |
$ |
188.6 |
|
$ |
319.2 |
|
$ |
(130.6 |
) |
|
| Weighted average diluted
shares |
|
103.7 |
|
|
112.4 |
|
|
(8.7 |
) |
|
| Diluted EPS |
$ |
1.82 |
|
$ |
2.84 |
|
$ |
(1.02 |
) |
|
| |
|
SELECTED NON-GAAP RESULTS1 |
|
| |
|
(Unaudited) |
|
| |
|
(In millions, except for percentages and EPS) |
|
| |
|
For the quarter ended October 1, 2022 |
|
For the quarter ended October 2, 2021 |
|
Change vs. Q2 FY 2022 |
|
|
Revenue |
$ |
1,158.1 |
|
$ |
1,255.2 |
|
$ |
(97.1 |
) |
|
| Gross profit |
$ |
570.2 |
|
$ |
657.5 |
|
$ |
(87.3 |
) |
|
| Gross margin |
|
49.2 |
% |
|
52.4 |
% |
|
(3.2 |
) |
ppt |
| Operating expenses |
$ |
232.5 |
|
$ |
222.1 |
|
$ |
10.4 |
|
|
| Operating income |
$ |
337.7 |
|
$ |
435.4 |
|
$ |
(97.7 |
) |
|
| Net income |
$ |
276.2 |
|
$ |
384.5 |
|
$ |
(108.3 |
) |
|
| Weighted average diluted
shares |
|
103.7 |
|
|
112.4 |
|
|
(8.7 |
) |
|
| Diluted EPS |
$ |
2.66 |
|
$ |
3.42 |
|
$ |
(0.76 |
) |
|
1 Excludes stock-based compensation expense, amortization of
intangible assets, acquisition and integration related costs,
charges associated with a long-term capacity reservation agreement,
loss (gain) on assets, start-up costs, restructuring related
charges, (gain) loss on investments, other expense and an
adjustment of income taxes.
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in
accordance with United States (U.S.) generally accepted accounting
principles (GAAP), this earnings release contains some or all of
the following non-GAAP financial measures: (i) non-GAAP gross
profit and gross margin, (ii) non-GAAP operating income and
operating margin, (iii) non-GAAP net income, (iv) non-GAAP net
income per diluted share, (v) non-GAAP operating expenses (research
and development; selling, general and administrative), (vi) free
cash flow, (vii) EBITDA, (viii) non-GAAP return on invested capital
(ROIC), and (ix) net debt or positive net cash. Each of these
non-GAAP financial measures is either adjusted from GAAP results to
exclude certain expenses or derived from multiple GAAP measures,
which are outlined in the “Reconciliation of GAAP to Non-GAAP
Financial Measures” tables, attached, and the “Additional Selected
Non-GAAP Financial Measures and Reconciliations” tables,
attached.
In managing Qorvo's business on a consolidated basis, management
develops an annual operating plan, which is approved by our Board
of Directors, using non-GAAP financial measures. In developing and
monitoring performance against this plan, management considers the
actual or potential impacts on these non-GAAP financial measures
from actions taken to reduce costs with the goal of increasing
gross margin and operating margin. In addition, management relies
upon these non-GAAP financial measures to assess whether research
and development efforts are at an appropriate level, and when
making decisions about product spending, administrative budgets,
and other operating expenses. Also, we believe that non-GAAP
financial measures provide useful supplemental information to
investors and enable investors to analyze the results of operations
in the same way as management. We have chosen to provide this
supplemental information to enable investors to perform additional
comparisons of our operating results, to assess our liquidity and
capital position and to analyze financial performance excluding the
effect of expenses unrelated to operations, certain non-cash
expenses and stock-based compensation expense, which may obscure
trends in Qorvo's underlying performance.
We believe that these non-GAAP financial measures offer an
additional view of Qorvo's operations that, when coupled with the
GAAP results and the reconciliations to corresponding GAAP
financial measures, provide a more complete understanding of
Qorvo's results of operations and the factors and trends affecting
Qorvo's business. However, these non-GAAP financial measures should
be considered as a supplement to, and not as a substitute for, or
superior to, the corresponding measures calculated in accordance
with GAAP.
Our rationale for using these non-GAAP financial measures, as
well as their impact on the presentation of Qorvo's operations, are
outlined below:
Non-GAAP gross profit and gross margin. Non-GAAP gross profit
and gross margin exclude amortization of intangible assets,
stock-based compensation expense and certain non-cash expenses. We
believe that exclusion of these costs in presenting non-GAAP gross
profit and gross margin facilitates a useful evaluation of our
historical performance and projected costs and the potential for
realizing cost efficiencies.
We view amortization of acquisition-related intangible assets,
such as the amortization of the cost associated with an acquired
company’s research and development efforts, trade names, and
customer relationships, as items arising from pre-acquisition
activities, determined at the time of an acquisition, rather than
ongoing costs of operating Qorvo’s business. While these intangible
assets are continually evaluated for impairment, amortization of
the cost of purchased intangible assets is a static expense, which
is not typically affected by operations during any particular
period. Although we exclude the amortization of purchased
intangible assets from these non-GAAP financial measures,
management believes that it is important for investors to
understand that such intangible assets were recorded as part of
purchase price accounting and contribute to revenue generation.We
believe that presentation of non-GAAP gross profit and gross margin
and other non-GAAP financial measures that exclude the impact of
stock-based compensation expense assists management and investors
in evaluating the period-over-period performance of Qorvo's ongoing
operations because (i) the expenses are non-cash in nature, and
(ii) although the size of the grants is within our control, the
amount of expense varies depending on factors such as short-term
fluctuations in stock price volatility and prevailing interest
rates, which can be unrelated to the operational performance of
Qorvo during the period in which the expense is incurred and
generally are outside the control of management. Moreover, we
believe that the exclusion of stock-based compensation expense in
presenting non-GAAP gross profit and gross margin and other
non-GAAP financial measures is useful to investors to understand
the impact of the expensing of stock-based compensation to Qorvo's
gross profit and gross margins and other financial measures in
comparison to prior periods. We also believe that the adjustments
to profit and margin related to certain non-cash expenses do not
constitute part of Qorvo's ongoing operations and therefore the
exclusion of these items provides management and investors with
better visibility into the actual revenue and actual costs required
to generate revenues over time and facilitates a useful evaluation
of our historical and projected performance. We believe disclosure
of non-GAAP gross profit and gross margin has economic substance
because the excluded expenses do not represent continuing cash
expenditures and, as described above, we have little control over
the timing and amount of the expenses in question.
For the three months ended July 2, 2022, non-GAAP gross profit
and gross margin also exclude charges associated with a long-term
capacity reservation agreement. Unprecedented disruption resulting
from measures taken in China to control the COVID-19 pandemic and
the conflict in Ukraine have negatively impacted demand for 5G
handsets in China and EMEA within a short period of time. As a
result of these extraordinary circumstances, we did not meet the
minimum purchase commitments under a long-term capacity reservation
agreement with a foundry supplier. This resulted in shortfall
charges that have been recorded in our cost of goods sold. We
believe these charges are not reflective of the performance of our
ongoing business as they were the result of unprecedented
disruption resulting from the COVID-19 pandemic and the conflict in
Ukraine.
Non-GAAP operating income and operating margin. Non-GAAP
operating income and operating margin exclude stock-based
compensation expense, amortization of intangible assets,
acquisition and integration related costs, gain or loss on assets,
asset impairments, start-up costs, restructuring related charges,
charges associated with a long-term capacity reservation agreement
and certain non-cash expenses. We believe that presentation of a
measure of operating income and operating margin that excludes
amortization of intangible assets and stock-based compensation
expense is useful to both management and investors for the same
reasons as described above with respect to our use of non-GAAP
gross profit and gross margin. We believe that acquisition and
integration related costs, gain or loss on assets, asset
impairments, start-up costs, restructuring related charges, charges
associated with a long-term capacity reservation agreement and
certain non-cash expenses do not constitute part of Qorvo's ongoing
operations and therefore, the exclusion of these costs provides
management and investors with better visibility into the actual
costs required to generate revenues over time and facilitates a
useful evaluation of our historical and projected performance. We
believe disclosure of non-GAAP operating income and operating
margin has economic substance because the excluded expenses are
either unrelated to ongoing operations or do not represent current
cash expenditures.
Non-GAAP net income and non-GAAP net income per diluted share.
Non-GAAP net income and non-GAAP net income per diluted share
exclude the effects of stock-based compensation expense,
amortization of intangible assets, acquisition and integration
related costs, gain or loss on assets, asset impairments, start-up
costs, restructuring related charges, charges associated with a
long-term capacity reservation agreement, certain non-cash
expenses, gain or loss on investments, other expense (income) and
also reflect an adjustment of income taxes. The income tax
adjustment primarily represents the use of research and development
tax credit carryforwards, deferred tax expense (benefit) items not
affecting taxes payable, adjustments related to the deemed and
actual repatriation of historical foreign earnings, non-cash
expense (benefit) related to uncertain tax positions and other
items unrelated to the current fiscal year or that are not
indicative of our ongoing business operations. We believe that
presentation of measures of net income and net income per diluted
share that exclude these items is useful to both management and
investors for the reasons described above with respect to non-GAAP
gross profit and gross margin and non-GAAP operating income and
operating margin. We believe disclosure of non-GAAP net income and
non-GAAP net income per diluted share has economic substance
because the excluded expenses are either unrelated to ongoing
operations or do not represent current cash expenditures.
Non-GAAP operating expenses (research and development and
selling, general and administrative). Non-GAAP research and
development and selling, general and administrative expenses
exclude stock-based compensation expense, amortization of
intangible assets and certain non-cash expenses (primarily
acquisition and integration related costs). We believe that
presentation of measures of these operating expenses that exclude
amortization of intangible assets and stock-based compensation
expense is useful to both management and investors for the same
reasons as described above with respect to our use of non-GAAP
gross profit and gross margin. We believe that acquisition and
integration related costs and certain non-cash expenses do not
constitute part of Qorvo's ongoing operations and therefore, the
exclusion of these costs provides management and investors with
better visibility into the actual costs required to generate
revenues over time and facilitates a useful evaluation of our
historical and projected performance. We believe disclosure of
these non-GAAP operating expenses has economic substance because
the excluded expenses are either unrelated to ongoing operations or
do not represent current cash expenditures.
Free cash flow. Qorvo defines free cash flow as net cash
provided by operating activities during the period minus property
and equipment expenditures made during the period, and free cash
flow margin is calculated as free cash flow as a percentage of
revenue. We use free cash flow as a supplemental financial measure
in our evaluation of liquidity and financial strength. Management
believes that this measure is useful as an indicator of our ability
to service our debt, meet other payment obligations and make
strategic investments. Free cash flow should be considered in
addition to, rather than as a substitute for, net income as a
measure of our performance and net cash provided by operating
activities as a measure of our liquidity. Additionally, our
definition of free cash flow is limited, in that it does not
represent residual cash flows available for discretionary
expenditures due to the fact that the measure does not deduct the
payments required for debt service and other contractual
obligations. Therefore, we believe it is important to view free
cash flow as a measure that provides supplemental information to
our entire statement of cash flows.
EBITDA. Qorvo adjusts GAAP net income for interest expense,
interest income, income tax expense (benefit), depreciation and
intangible amortization expense, stock-based compensation and other
charges that are not representative of Qorvo's ongoing operations
(including asset impairments, investment activity,
acquisition-related costs, certain charges associated with a
long-term capacity reservation agreement and restructuring-related
costs) when presenting EBITDA. Management believes that this
measure is useful to evaluate our ongoing operations and as a
general indicator of our operating cash flow (in conjunction with a
cash flow statement which also includes among other items, changes
in working capital and the effect of non-cash charges).
Non-GAAP ROIC. Return on invested capital (ROIC) is a non-GAAP
financial measure that management believes provides useful
supplemental information for management and the investor by
measuring the effectiveness of our operations' use of invested
capital to generate profits. We use ROIC to track how much value we
are creating for our shareholders. Non-GAAP ROIC is calculated by
dividing annualized non-GAAP operating income, net of an adjustment
for income taxes (as described above), by average invested capital.
Average invested capital is calculated by subtracting the average
of the beginning balance and the ending balance of equity plus net
debt, less certain goodwill.
Net debt or positive net cash. Net debt or positive net cash is
defined as unrestricted cash, cash equivalents and short-term
investments minus any borrowings under our credit facility and the
principal balance of our senior unsecured notes. Management
believes that net debt or positive net cash provides useful
information regarding the level of Qorvo's indebtedness by
reflecting cash and investments that could be used to repay
debt.
Inventory days on hand. Inventory days on hand is defined as (a)
average net inventory for the period, divided by (b) the result of
non-GAAP cost of goods sold for the period divided by the number of
days in the period.
Forward-looking non-GAAP financial measures. Our earnings
release contains forward-looking free cash flow, gross margin,
income tax rate and diluted earnings per share. 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 the
forward-looking non-GAAP financial measures to the most directly
comparable forward-looking GAAP financial measures without
unreasonable effort due to variability and difficulty in making
accurate projections for items that would be required to be
included in the GAAP measures, such as stock-based compensation,
acquisition and integration related costs, restructuring related
charges, gain or loss on assets, asset impairments, gain or loss on
investments and the provision for income taxes. We believe such
reconciliations would imply a degree of precision that would be
confusing or misleading to investors.
Limitations of non-GAAP financial measures. The primary material
limitations associated with the use of non-GAAP financial measures
as an analytical tool compared to the most directly comparable GAAP
financial measures are these non-GAAP financial measures (i) may
not be comparable to similarly titled measures used by other
companies in our industry, and (ii) exclude financial information
that some may consider important in evaluating our performance,
thus limiting their usefulness as a comparative tool. We compensate
for these limitations by providing full disclosure of the
differences between these non-GAAP financial measures and the
corresponding GAAP financial measures, including a reconciliation
of the non-GAAP financial measures to the corresponding GAAP
financial measures, to enable investors to perform their own
analysis of our gross profit and gross margin, operating expenses,
operating income, net income, net income per diluted share and net
cash provided by operating activities. We further compensate for
the limitations of our use of non-GAAP financial measures by
presenting the corresponding GAAP measures more prominently.
Qorvo will conduct a conference call at 5:00 p.m. ET today to
discuss today’s press release. The conference call will be
broadcast live over the Internet and can be accessed by any
interested party at https://www.qorvo.com (under “Investors”). A
telephone playback of the conference call will be available
approximately two hours after the call’s completion and can be
accessed by dialing 412-317-6671 and using the passcode 13733149.
The playback will be available through the close of business
November 9, 2022.
About QorvoQorvo (Nasdaq:QRVO) supplies
innovative semiconductor solutions that make a better world
possible. We combine product and technology leadership,
systems-level expertise and global manufacturing scale to quickly
solve our customers’ most complex technical challenges. Qorvo
serves diverse high-growth segments of large global markets,
including consumer electronics, smart home/IoT, automotive, EVs,
battery-powered appliances, network infrastructure, healthcare and
aerospace/defense. Visit www.qorvo.com to learn how our diverse and
innovative team is helping connect, protect and power our
planet.
Qorvo is a registered trademark of Qorvo, Inc. in the U.S. and
in other countries. All other trademarks are the property of their
respective owners.
This press release includes "forward-looking
statements" within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to,
statements about our plans, objectives, representations and
contentions, and are not historical facts and typically are
identified by use of terms such as "may," "will," "should,"
"could," "expect," "plan," "anticipate," "believe," "estimate,"
"predict," "potential," "continue" and similar words, although some
forward-looking statements are expressed differently. You should be
aware that the forward-looking statements included herein represent
management's current judgment and expectations, but our actual
results, events and performance could differ materially from those
expressed or implied by forward-looking statements. We do not
intend to update any of these forward-looking statements or
publicly announce the results of any revisions to these
forward-looking statements, other than as is required under U.S.
federal securities laws. Our business is subject to numerous risks
and uncertainties, including those relating to fluctuations in our
operating results; our substantial dependence on developing new
products and achieving design wins; our dependence on several large
customers for a substantial portion of our revenue; continued
volatility and uncertainty in customer demand, worldwide economies
and financial markets resulting from the impact of the COVID-19
pandemic, conflict in Ukraine or other macroeconomic factors; a
loss of revenue if defense and aerospace contracts are canceled or
delayed; our dependence on third parties; risks related to sales
through distributors; risks associated with the operation of our
manufacturing facilities; business disruptions; poor manufacturing
yields; increased inventory risks and costs, including under
long-term supply agreements, due to timing of customers’ forecasts;
our inability to effectively manage or maintain evolving
relationships with chipset suppliers; our ability to continue to
innovate in a very competitive industry; underutilization of
manufacturing facilities; unfavorable changes in interest rates,
pricing of certain precious metals, utility rates and foreign
currency exchange rates; our acquisitions and other strategic
investments failing to achieve financial or strategic objectives;
our ability to attract, retain and motivate key employees; warranty
claims, product recalls and product liability; changes in our
effective tax rate; changes in the favorable tax status of certain
of our subsidiaries; enactment of international or domestic tax
legislation, or changes in regulatory guidance; risks associated
with environmental, health and safety regulations, and climate
change; risks from international sales and operations; economic
regulation in China; changes in government trade policies,
including imposition of tariffs and export restrictions; we may not
be able to generate sufficient cash to service all of our debt;
restrictions imposed by the agreements governing our debt; our
reliance on our intellectual property portfolio; claims of
infringement of third-party intellectual property rights; security
breaches and other similar disruptions compromising our
information; theft, loss or misuse of personal data by or about our
employees, customers or third parties; provisions in our governing
documents and Delaware law may discourage takeovers and business
combinations that our stockholders might consider to be in their
best interests; and volatility in the price of our common stock.
These and other risks and uncertainties, which are described in
more detail under "Risk Factors" in Part I, Item 1A. of our Annual
Report on Form 10-K for the year ended April 2, 2022 and Qorvo's
subsequent reports and statements filed with the Securities and
Exchange Commission, could cause actual results and developments to
be materially different from those expressed or implied by any of
these forward-looking statements.
Financial Tables to Follow
QORVO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In
thousands, except per share data)(Unaudited)
| |
Three Months Ended |
|
Six Months Ended |
| |
October 1, 2022 |
|
October 2, 2021 |
|
October 1, 2022 |
|
October 2, 2021 |
|
Revenue |
$ |
1,158,057 |
|
|
$ |
1,255,248 |
|
|
$ |
2,193,415 |
|
|
$ |
2,365,599 |
|
| |
|
|
|
|
|
|
|
| Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of goods sold |
|
619,130 |
|
|
|
633,695 |
|
|
|
1,279,238 |
|
|
|
1,197,863 |
|
|
Research and development |
|
168,164 |
|
|
|
158,377 |
|
|
|
336,732 |
|
|
|
310,456 |
|
|
Selling, general and administrative |
|
97,752 |
|
|
|
93,489 |
|
|
|
199,567 |
|
|
|
183,788 |
|
|
Other operating expense |
|
11,449 |
|
|
|
7,327 |
|
|
|
14,457 |
|
|
|
14,030 |
|
|
Total costs and expenses |
|
896,495 |
|
|
|
892,888 |
|
|
|
1,829,994 |
|
|
|
1,706,137 |
|
| |
|
|
|
|
|
|
|
| Operating income |
|
261,562 |
|
|
|
362,360 |
|
|
|
363,421 |
|
|
|
659,462 |
|
| Interest expense |
|
(16,904 |
) |
|
|
(15,327 |
) |
|
|
(34,156 |
) |
|
|
(30,606 |
) |
| Other income (expense),
net |
|
2,214 |
|
|
|
4,754 |
|
|
|
(2,848 |
) |
|
|
21,545 |
|
| |
|
|
|
|
|
|
|
| Income before income taxes |
|
246,872 |
|
|
|
351,787 |
|
|
|
326,417 |
|
|
|
650,401 |
|
| Income tax expense |
|
(58,257 |
) |
|
|
(32,598 |
) |
|
|
(68,918 |
) |
|
|
(45,586 |
) |
| Net income |
$ |
188,615 |
|
|
$ |
319,189 |
|
|
$ |
257,499 |
|
|
$ |
604,815 |
|
| |
|
|
|
|
|
|
|
| Net income per share,
diluted |
$ |
1.82 |
|
|
$ |
2.84 |
|
|
$ |
2.46 |
|
|
$ |
5.35 |
|
| |
|
|
|
|
|
|
|
| Weighted average outstanding
diluted shares |
|
103,674 |
|
|
|
112,411 |
|
|
|
104,817 |
|
|
|
113,088 |
|
QORVO, INC. AND
SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES(In thousands, except per share
data)(Unaudited)
| |
Three Months Ended |
| |
October 1, 2022 |
|
July 2, 2022 |
|
October 2, 2021 |
| |
|
|
|
|
|
|
GAAP operating income |
$ |
261,562 |
|
|
$ |
101,859 |
|
|
$ |
362,360 |
|
|
Stock-based compensation expense |
|
31,789 |
|
|
|
35,414 |
|
|
|
28,691 |
|
|
Amortization of intangible assets |
|
32,787 |
|
|
|
33,652 |
|
|
|
36,577 |
|
|
Acquisition and integration related costs |
|
8,642 |
|
|
|
6,308 |
|
|
|
6,040 |
|
|
Charges associated with a long-term capacity reservation
agreement |
|
— |
|
|
|
110,000 |
|
|
|
— |
|
|
(Gain) loss on assets, start-up costs, restructuring and other
non-cash expenses |
|
2,917 |
|
|
|
(2,868 |
) |
|
|
1,750 |
|
| Non-GAAP operating income |
$ |
337,697 |
|
|
$ |
284,365 |
|
|
$ |
435,418 |
|
| |
|
|
|
|
|
| GAAP net income |
$ |
188,615 |
|
|
$ |
68,884 |
|
|
$ |
319,189 |
|
|
Stock-based compensation expense |
|
31,789 |
|
|
|
35,414 |
|
|
|
28,691 |
|
|
Amortization of intangible assets |
|
32,787 |
|
|
|
33,652 |
|
|
|
36,577 |
|
|
Acquisition and integration related costs |
|
8,642 |
|
|
|
6,308 |
|
|
|
6,040 |
|
|
Charges associated with a long-term capacity reservation
agreement |
|
— |
|
|
|
110,000 |
|
|
|
— |
|
|
(Gain) loss on assets, start-up costs, restructuring and other
non-cash expenses |
|
2,917 |
|
|
|
(2,868 |
) |
|
|
1,750 |
|
|
(Gain) loss on investments |
|
(967 |
) |
|
|
1,375 |
|
|
|
(3,673 |
) |
|
Other expense |
|
1,629 |
|
|
|
5,198 |
|
|
|
103 |
|
|
Adjustment of income taxes |
|
10,814 |
|
|
|
(19,559 |
) |
|
|
(4,133 |
) |
| Non-GAAP net income |
$ |
276,226 |
|
|
$ |
238,404 |
|
|
$ |
384,544 |
|
| |
|
|
|
|
|
| GAAP weighted average
outstanding diluted shares |
|
103,674 |
|
|
|
106,080 |
|
|
|
112,411 |
|
|
Dilutive stock-based awards |
|
— |
|
|
|
— |
|
|
|
— |
|
| Non-GAAP weighted average
outstanding diluted shares |
|
103,674 |
|
|
|
106,080 |
|
|
|
112,411 |
|
| |
|
|
|
|
|
| Non-GAAP net income per share,
diluted |
$ |
2.66 |
|
|
$ |
2.25 |
|
|
$ |
3.42 |
|
| |
|
|
|
|
|
QORVO, INC. AND
SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES(Unaudited)
| |
Three Months Ended |
| (in thousands, except
percentages) |
October 1, 2022 |
|
July 2, 2022 |
|
October 2, 2021 |
|
GAAP gross profit/margin |
$ |
538,927 |
46.5 |
% |
|
$ |
375,250 |
36.2 |
% |
|
$ |
621,553 |
49.5 |
% |
|
Amortization of intangible assets |
|
27,574 |
2.4 |
|
|
|
28,083 |
2.7 |
|
|
|
30,876 |
2.5 |
|
|
Stock-based compensation expense |
|
3,704 |
0.3 |
|
|
|
4,502 |
0.5 |
|
|
|
4,949 |
0.4 |
|
|
Charges associated with a long-term capacity reservation
agreement |
|
— |
— |
|
|
|
110,000 |
10.6 |
|
|
|
— |
— |
|
|
Other non-cash expenses |
|
35 |
— |
|
|
|
354 |
— |
|
|
|
152 |
— |
|
| Non-GAAP gross
profit/margin |
$ |
570,240 |
49.2 |
% |
|
$ |
518,189 |
50.0 |
% |
|
$ |
657,530 |
52.4 |
% |
| |
Three Months Ended |
|
Non-GAAP Operating Income |
October 1, 2022 |
|
(as a percentage of sales) |
|
| |
|
|
GAAP operating income |
22.6 |
% |
|
Stock-based compensation expense |
2.7 |
|
|
Amortization of intangible assets |
2.8 |
|
|
Acquisition and integration related costs |
0.8 |
|
|
Gain on assets, start-up costs, restructuring and other non-cash
expenses |
0.3 |
|
| Non-GAAP operating income |
29.2 |
% |
| |
Three Months Ended |
|
Free Cash Flow(1) |
October 1, 2022 |
|
(in millions) |
|
| |
|
|
Net cash provided by operating activities |
$ |
267.4 |
|
| Purchases of property and
equipment |
|
(47.0 |
) |
| Free cash flow |
$ |
220.4 |
|
(1) Free Cash Flow is calculated as net cash provided by
operating activities minus property and equipment expenditures.
QORVO, INC. AND
SUBSIDIARIESADDITIONAL SELECTED NON-GAAP FINANCIAL
MEASURES AND RECONCILIATIONS(In thousands)(Unaudited)
| |
Three Months Ended |
| |
October 1, 2022 |
|
July 2, 2022 |
|
October 2, 2021 |
|
GAAP research and development expense |
$ |
168,164 |
|
$ |
168,568 |
|
$ |
158,377 |
| Less: |
|
|
|
|
|
|
Stock-based compensation expense |
|
10,445 |
|
|
8,966 |
|
|
8,614 |
|
Other non-cash expenses |
|
58 |
|
|
61 |
|
|
235 |
| Non-GAAP research and
development expense |
$ |
157,661 |
|
$ |
159,541 |
|
$ |
149,528 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
Three Months Ended |
| |
October 1, 2022 |
|
July 2, 2022 |
|
October 2, 2021 |
| GAAP selling, general and
administrative expense |
$ |
97,752 |
|
$ |
101,815 |
|
$ |
93,489 |
| Less: |
|
|
|
|
|
|
Stock-based compensation expense |
|
17,640 |
|
|
21,946 |
|
|
15,128 |
|
Amortization of intangible assets |
|
5,213 |
|
|
5,569 |
|
|
5,701 |
|
Other non-cash expenses |
|
17 |
|
|
17 |
|
|
76 |
| Non-GAAP selling, general and
administrative expense |
$ |
74,882 |
|
$ |
74,283 |
|
$ |
72,584 |
QORVO, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands)(Unaudited)
| |
October 1, 2022 |
|
April 2, 2022 |
| ASSETS |
|
|
|
| Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
911,570 |
|
$ |
972,592 |
|
Accounts receivable, net |
|
645,125 |
|
|
568,850 |
|
Inventories |
|
840,850 |
|
|
755,748 |
|
Other current assets |
|
123,739 |
|
|
152,675 |
|
Total current assets |
|
2,521,284 |
|
|
2,449,865 |
| |
|
|
|
| Property and equipment,
net |
|
1,222,924 |
|
|
1,253,591 |
| Goodwill |
|
2,757,124 |
|
|
2,775,634 |
| Intangible assets, net |
|
585,860 |
|
|
674,786 |
| Long-term investments |
|
29,452 |
|
|
31,086 |
| Other non-current assets |
|
258,088 |
|
|
324,110 |
|
Total assets |
$ |
7,374,732 |
|
$ |
7,509,072 |
| |
|
|
|
| LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
| Current liabilities: |
|
|
|
|
Accounts payable and accrued liabilities |
$ |
621,129 |
|
$ |
568,101 |
|
Other current liabilities |
|
142,998 |
|
|
107,026 |
|
Total current liabilities |
|
764,127 |
|
|
675,127 |
| |
|
|
|
| Long-term debt |
|
2,047,398 |
|
|
2,047,098 |
| Other long-term
liabilities |
|
241,067 |
|
|
233,629 |
|
Total liabilities |
|
3,052,592 |
|
|
2,955,854 |
| |
|
|
|
| Stockholders’ equity |
|
4,322,140 |
|
|
4,553,218 |
|
Total liabilities and stockholders’ equity |
$ |
7,374,732 |
|
$ |
7,509,072 |
At Qorvo®Doug DeLietoVP, Investor Relations1.336.678.7968
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