- Delivers Revenue of $972 Million
- Posts GAAP Diluted EPS of $1.60;
Non-GAAP Diluted EPS of $1.83
- Generates Record $549 Million in Cash
Flow from Operations
- Announces New $2 Billion Stock
Repurchase Program
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
ended December 28, 2018. Revenue for the first fiscal quarter was
$972.0 million.
On a GAAP basis, operating income for the first fiscal quarter
of 2019 was $320.9 million with diluted earnings per share of
$1.60. On a non-GAAP basis, operating income was $356.4 million
with non-GAAP diluted earnings per share of $1.83.
“Despite macro weakness across our global mobile business,
Skyworks delivered solid financial results driven by content gains,
an expanding footprint in broad markets and our strong business
model,” said Liam K. Griffin, president and chief executive officer
of Skyworks. “During the quarter, we generated more than $500
million in cash flow from operations and exited the quarter with
over $1 billion in cash. Looking ahead, we are leveraging our
demonstrated technology leadership, trusted customer partnerships
and innovative Sky5™ portfolio to capitalize on compelling 5G, IoT
and automotive opportunities. We are enabling revolutionary
applications and executing towards our vision of Connecting
Everyone and Everything, All the Time.”
First Quarter Business Highlights
- Partnered with Square to power secure,
long-range retail payment systems
- Captured content in NetGear’s WiFi
6–enabled routers
- Supported remote access features for
German and Korean automotive manufacturers
- Ramped advanced wireless engines for
Philips street lighting management platforms
- Secured design wins with Bose and Sonos
supporting high fidelity, smart audio
- Shipped LPWAN connectivity devices for
building automation applications
- Expanded footprint in Nokia’s dual band
residential gateways
- Deployed 5G base station solutions for
leading European infrastructure providers
- Enabled Samsung’s Galaxy A and J Series
smartphones with multimode, multiband front-ends
- Launched antenna tuners, diversity
receive modules, GPS devices and integrated transmit portfolio
across LG’s mobile suite
Second Fiscal Quarter 2019 Outlook
We provide earnings guidance 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.
“In the March quarter, we expect diversification and momentum in
our high-growth broad markets business to partially offset unit
declines in mobile,” said Kris Sennesael, senior vice president and
chief financial officer of Skyworks. “Specifically, in the second
fiscal quarter of 2019, we anticipate revenue to be between $800
and $820 million with non-GAAP diluted earnings per share of $1.43
at the midpoint of our revenue range. Further, reflecting
confidence in our business model and ability to consistently
generate strong free cash flow, the Board of Directors has approved
a new $2 billion stock repurchase program.”
Dividend Payment
Skyworks’ Board of Directors has declared a cash dividend of
$0.38 per share of the Company's common stock, payable on March 19,
2019 to stockholders of record at the close of business on February
26, 2019.
Skyworks' First Fiscal Quarter 2019 Conference Call
Skyworks will host a conference call with analysts to discuss
its first fiscal quarter 2019 results and business outlook today at
5:00 p.m. Eastern time. To listen to the conference call via the
Internet, please visit the investor relations section of Skyworks’
website. To listen to the conference call via telephone, please
call (800) 230-1059 (domestic) or (612) 234-9959 (international),
confirmation code: 462168.
Playback of the conference call will begin at 9:00 p.m. Eastern
time on February 5, and end at 9:00 p.m. Eastern time on February
12. The replay will be available on Skyworks’ website or by calling
(800) 475-6701 (domestic) or (320) 365-3844 (international), access
code: 462168.
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 aerospace,
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, as well as plans for dividend payments and share
repurchases). 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 obtain design wins from customers; economic, social,
military and geo-political conditions in the countries in which we,
our customers or our suppliers operate, including security and
health risks, imposition of trade protection measures (e.g.,
tariffs or taxes), increased import/export restrictions and
controls, and possible disruptions in transportation networks and
fluctuations in foreign currency exchange rates; changes in laws,
regulations and/or policies that could adversely affect our
operations and financial results, the economy and our customers'
demand for our products, or the financial markets and our ability
to raise capital; fluctuations in our manufacturing yields due to
our complex and specialized manufacturing processes; our ability to
develop, manufacture and market innovative products, avoid product
obsolescence, reduce costs in a timely manner, transition our
products to smaller geometry process technologies, and achieve
higher levels of design integration; the quality of our products
and any defect 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; our ability to prevent theft
of our intellectual property, disclosure of confidential
information, or breaches of our information technology systems;
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; our ability to make
certain investments and acquisitions, integrate companies we
acquire, and/or enter into strategic alliances; 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 the Skyworks symbol are trademarks
or registered trademarks of Skyworks Solutions, Inc. or its
subsidiaries in the United States and other countries. Third-party
brands and names are for identification purposes only, and are the
property of their respective owners.
SKYWORKS SOLUTIONS, INC. UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS Three
Months Ended (in millions, except per share amounts) December
28,2018 December 29,2017 Net revenue $ 972.0 $ 1,051.9 Cost of
goods sold 486.9 515.1 Gross profit 485.1 536.8 Operating
expenses: Research and development 109.2 98.0 Selling, general and
administrative 47.8 51.3 Amortization of intangibles 7.4 4.0
Restructuring and other charges (benefits) (0.2 ) — Total operating
expenses 164.2 153.3 Operating income 320.9 383.5 Other income, net
2.9 2.1 Income before income taxes 323.8 385.6 Provision for
income taxes 38.9 315.2 Net income $ 284.9 $ 70.4
Earnings per share: Basic $ 1.61 $ 0.38 Diluted $
1.60 $ 0.38 Weighted average shares: Basic 176.6
183.1 Diluted 177.7 185.5
SKYWORKS
SOLUTIONS, INC. UNAUDITED RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES Three Months
Ended (in millions) December 28,2018 December 29,2017 GAAP gross
profit $ 485.1 $ 536.8 Share-based compensation expense [a] 3.6 4.1
Acquisition-related expenses [b] 1.9 — Amortization of
acquisition-related intangibles [c] 4.7 — Non-GAAP
gross profit $ 495.3 $ 540.9 GAAP gross margin % 49.9
% 51.0 % Non-GAAP gross margin % 51.0 % 51.4 % Three Months
Ended (in millions) December 28,2018 December 29,2017 GAAP
operating income $ 320.9 $ 383.5 Share-based compensation expense
[a] 20.8 25.8 Acquisition-related expenses [b] 2.1 0.7 Amortization
of acquisition-related intangibles [c] 12.0 4.0 Litigation
settlement, gains, losses and expenses [d] 0.7 — Deferred executive
compensation (benefit) [e] (0.1 ) — Non-GAAP operating
income $ 356.4 $ 414.0 GAAP operating margin % 33.0 %
36.5 % Non-GAAP operating margin % 36.7 % 39.4 % Three
Months Ended (in millions) December 28,2018 December 29,2017 GAAP
net income $ 284.9 $ 70.4 Share-based compensation expense [a] 20.8
25.8 Acquisition-related expenses [b] 2.1 0.7 Amortization of
acquisition-related intangibles [c] 12.0 4.0 Litigation settlement,
gains, losses and expenses [d] 0.7 — Deferred executive
compensation (benefit) [e] (0.1 ) — Tax adjustments [f] 4.2
270.6 Non-GAAP net income $ 324.6 $ 371.5
Three Months Ended December 28,2018 December 29,2017 GAAP
net income per share, diluted $ 1.60 $ 0.38 Share-based
compensation expense [a] 0.12 0.14 Acquisition-related expenses [b]
0.01 — Amortization of acquisition-related intangibles [c] 0.07
0.02 Litigation settlement, gains, losses and expenses [d] 0.01 —
Tax adjustments [f] 0.02 1.46 Non-GAAP net income per
share, diluted $ 1.83 $ 2.00
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
acquisition-related intangibles, certain impairment and
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, acquisition-related
expenses, and amortization of acquisition-related intangibles. We
calculate non-GAAP operating income by excluding from GAAP
operating income, share-based compensation expense,
acquisition-related expenses, amortization of acquisition-related
intangibles, 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, amortization of
acquisition-related intangibles, litigation settlement, gains,
losses and expenses, certain deferred executive compensation, 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
expenses, including 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 necessarily
reflect the performance of our ongoing operations for the period in
which such charges or reversals are incurred.
Impairment and Restructuring-Related Charges - these charges are
one-time in nature and 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 - because such
gains, losses and expenses (1) are not considered by management in
making operating decisions, (2) are infrequent in nature, (3) are
generally not directly controlled by management, (4) do not
necessarily reflect the performance of our ongoing operations for
the period in which such charges are recognized and/ or (5) can
vary significantly in amount between companies and make comparisons
less reliable.
Deferred Executive Compensation - including charges related to
any contingent obligation pursuant to an executive severance
agreement, because that 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 second quarter of our
2019 fiscal year (“Q2 2019”). 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 2019 GAAP diluted earnings per share to a
forward-looking estimate of Q2 2019 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
2019 (other than estimated share-based compensation expense of
$0.10 to $0.15 per diluted share, certain tax items of $0.01 to
$0.05 per diluted share and estimated amortization of intangibles
of $0.05 to $0.09 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. The probable
significance of these unknown items, in the aggregate, is estimated
to be in the range of $0.00 to $0.10 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 28, 2018, approximately $3.6 million,
$12.5 million and $4.7 million were included in cost of goods sold,
research and development expense and selling, general and
administrative expense, respectively. For the three months
ended December 29, 2017, approximately $4.1 million, $11.2 million
and $10.5 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 28, 2018, include
a $0.2 million charge to general and administrative expenses
primarily associated with acquisitions completed or contemplated
during the period and a $1.9 million charge to cost of goods sold
related to the sale of acquired inventory. The
acquisition-related expenses recognized during the three months
ended December 29, 2017, include a $0.7 million charge to general
and administrative expenses, primarily associated with acquisitions
completed or contemplated during the period. [c] During the
three months ended December 28, 2018, the Company incurred $4.7
million and $7.3 million in amortization of acquisition-related
intangibles included in cost of goods sold, and selling, general
and administrative expense, respectively. During the three
months ended December 29, 2017, the Company incurred $4.0 million
in amortization of acquisition-related intangibles included in
selling, general and administrative expense. [d] During the
three months ended December 28, 2018, the Company recognized $0.7
million in non-recurring charges. [e] During the three
months ended December 28, 2018, the Company recognized a $0.1
million benefit in deferred executive compensation expense.
[f] During the three months ended December 28, 2018, these amounts
primarily represent the use of net operating loss and credit
carryforwards, deferred tax expense not affecting taxes payable,
and non-cash expense (benefit) related to uncertain tax positions.
During the three months ended December 29, 2017, these
amounts primarily represent a one-time charge of $257.8 million
related to the mandatory deemed repatriation tax on foreign
earnings, a one-time charge of $18.5 million related to the
revaluation of deferred tax assets and liabilities related to tax
reform, use of net operating loss carryforwards, deferred tax
expense not affecting taxes payable, and non-cash expense (benefit)
related to uncertain tax positions.
SKYWORKS
SOLUTIONS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS As of (in millions) December
28,2018 September 28,2018
Assets Cash, cash equivalents and
marketable securities $ 1,101.8 $ 1,050.2 Accounts receivable, net
524.4 655.8 Inventory 493.1 490.2 Property, plant and equipment,
net 1,140.6 1,140.9 Goodwill and intangible assets, net 1,319.9
1,333.5 Other assets 159.1 158.3 Total assets $ 4,738.9
$ 4,828.9
Liabilities and Equity Accounts
payable $ 156.5 $ 229.9 Accrued and other liabilities 544.1 502.0
Stockholders’ equity 4,038.3 4,097.0 Total liabilities and
equity $ 4,738.9 $ 4,828.9
SKYWORKS
SOLUTIONS, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS Three Months Ended (in
millions) December 28,2018 December 29,2017
Cash flow from
operating activities Net income $ 284.9 $ 70.4 Adjustments to
reconcile net income to net cash provided by operating activities:
Share-based compensation 20.8 25.8 Depreciation 77.5 63.6
Amortization of intangible assets, including inventory step-up 15.5
5.5 Deferred income taxes 1.8 21.4 Other, net 1.0 — Changes in
operating assets: Receivables, net 131.4 (4.1 ) Inventory (5.0 )
34.5 Other current and long-term assets (2.6 ) (20.6 ) Accounts
payable (22.2 ) (105.4 ) Other current and long-term liabilities
45.9 269.7
Net cash provided by operations
549.0 360.8
Cash flow from investing
activities Capital expenditures (129.5 ) (28.2 ) Purchased
intangibles — (6.0 ) Purchases of marketable securities (2.2 ) —
Maturities and sales of marketable securities 303.2 —
Net cash provided by (used in) investing activities 171.5
(34.2 )
Cash flow from financing activities
Repurchase of common stock - payroll tax withholdings on equity
awards (19.4 ) (44.7 ) Repurchase of common stock - stock
repurchase program (284.0 ) (172.5 ) Dividends paid (67.1 ) (59.1 )
Net proceeds from exercise of stock options 2.4 14.4
Net cash used in financing activities (368.1 ) (261.9 ) Net
increase in cash and cash equivalents 352.4 64.7 Cash and cash
equivalents at beginning of period 733.3 1,616.8 Cash
and cash equivalents at end of period $ 1,085.7 $ 1,681.5
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Media Relations:Pilar Barrigas(949) 231-3061Investor
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