Skyworks Solutions, Inc. (NASDAQ: SWKS), an innovator of high
performance analog semiconductors enabling a broad range of end
markets, today reported second fiscal quarter 2013 results for the
period ending March 29, 2013. Revenue for the quarter was $425.2
million, up 17 percent when compared to $364.7 million in the
second fiscal quarter of 2012 and exceeding the Company’s guidance
of $420 million.
On a non-GAAP basis, operating income for the second fiscal
quarter of 2013 was $99.7 million, up 19 percent over the
comparable period a year ago. Non-GAAP diluted earnings per share
for the second fiscal quarter of 2013 was $0.48, a penny better
than the Company’s guidance. On a GAAP basis, operating income for
the second fiscal quarter of 2013 was $68.7 million and diluted
earnings per share was $0.32.
“As our better than seasonal results and growth outlook
demonstrate, Skyworks is gaining margin-rich content and share
across mobile applications while capitalizing on adjacent home
automation, networking, medical, smart grid and machine-to-machine
vertical markets,” said David J. Aldrich, president and chief
executive officer of Skyworks. “Leveraging our product innovation,
scale and strong customer relationships, we are solidifying our
position as a highly diversified analog semiconductor market
leader. Further to that end, we are increasingly migrating our
product portfolio to differentiated, system-level solutions that
provide greater value to our customers and command higher
margins.”
Q2 Business Highlights
- Repurchased 1.4 million shares of
common stock
- Ramped advanced infrastructure
solutions for Aclara’s smart gas meters
- Enabled vehicle infotainment systems
for Ford, Lincoln and Kia with industry leading
silicon-on-insulator (SOI) switching technology
- Introduced several new backlight LED
drivers for next-generation smartphones and tablets with display
panels ranging in size from 4 to 12 inches
- Partnered with Texas Instruments on
utility metering, street lighting, telematics and tracking system
solutions
- Expanded customer engagements with
SkyOne™, a highly customizable, fully optimized front-end
platform
- Commenced volume production of antenna
tuning solutions to increase data throughput in multiband LTE
applications
- Secured an innovative power management
design win enabling photovoltaic battery charging of
smartphones
- Supported Samsung’s GALAXY S 4
platforms with 802.11ac devices, DC/DC converters, antenna switch
modules and MMMB power amplifiers
- Increased market share in emerging
802.11ac applications including access points, routers, USB data
cards, Blu-Ray® players, smartphones and tablets
- Launched dielectric filters for
homeland security applications
Third Fiscal Quarter 2013 Outlook
“We expect solid top and bottom line growth in the current
quarter driven by specific program ramps and a more diversified,
margin-accretive product mix,” said Donald W. Palette, vice
president and chief financial officer of Skyworks. “Specifically,
for the third fiscal quarter of 2013, we anticipate revenue of
approximately $435 million with gross margin expansion to the 43.5
to 44.0 percent range, a 130 to 180 basis point sequential
improvement, operating margin in excess of 25 percent and diluted
earnings per share of $0.53, each on a non-GAAP basis.”
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 2013 Conference Call
Skyworks will host a conference call with analysts to discuss
its second fiscal quarter 2013 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 800-230-1074 (domestic) or 612-234-9959 (international),
confirmation code: 287428.
Playback of the conference call will begin at 9:00 p.m. Eastern
time on April 25, and end at 9:00 p.m. Eastern time on May 2. The
replay will be available on Skyworks' Web site or by calling
800-475-6701 (domestic) or 320-365-3844 (international), access
code: 287428.
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, circulators,
demodulators, detectors, diodes, directional couplers, front-end
modules, hybrids, infrastructure RF subsystems, isolators, lighting
and display solutions, mixers, modulators, optocouplers,
optoisolators, phase shifters, PLLs/synthesizers/VCOs, power
dividers/combiners, power management devices, receivers, switches
and technical ceramics.
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 29, March 30,
March 29, March 30, (in millions, except per share amounts) 2013
2012 2013 2012 Net revenue $ 425.2 $ 364.7 $ 878.9 $ 758.4
Cost of goods sold 248.5 212.4 509.6 434.3
Gross profit 176.7 152.3 369.3 324.1 Operating
expenses: Research and development 56.3 53.0 114.4
99.9
Selling, general and administrative 39.7 40.2 77.8 83.2
Amortization of intangibles 7.2 9.3 15.4 15.6 Restructuring and
other charges 4.8 6.0 6.4 6.6 Total
operating expenses 108.0 108.5 214.0 205.3 Operating income
68.7 43.8 155.3 118.8 Interest expense - (0.1 ) - (0.6 )
Other expense, net (1.4 ) (0.3 ) (1.1 ) (0.1 ) Income before income
taxes 67.3 43.4 154.2 118.1 Provision for income taxes 5.6
9.4 26.0 26.9 Net income $ 61.7 $ 34.0
$ 128.2 $ 91.2 Earnings per share:
Basic $ 0.33 $ 0.18 $ 0.68 $ 0.49 Diluted $ 0.32 $ 0.18 $ 0.66 $
0.48 Weighted average shares: Basic 188.7 185.2 189.1 184.6 Diluted
193.1 191.0 193.6 190.3
SKYWORKS SOLUTIONS, INC. UNAUDITED RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
Three Months Ended Six
Months Ended March 29, March 30, March 29, March 30, (in
millions) 2013 2012 2013 2012
GAAP gross profit $ 176.7 $ 152.3 $ 369.3 $ 324.1 Share-based
compensation expense [a] 2.7 2.4 5.1 4.9 Acquisition-related
expense [b] - 2.8 0.1 2.9 Non-GAAP
gross profit $ 179.4 $ 157.5 $ 374.5 $ 331.9
Non-GAAP gross margin % 42.2 % 43.2 % 42.6 % 43.8 %
Three Months Ended Six Months Ended March 29, March 30,
March 29, March 30, (in millions) 2013 2012 2013
2012 GAAP operating income $ 68.7 $ 43.8 $
155.3 $ 118.8 Share-based compensation expense [a] 18.3 19.3 36.0
35.1 Acquisition-related expense [b] 0.2 4.8 0.8 12.1 Amortization
of intangibles 7.2 9.3 15.4 15.6 Restructuring and other charges
[c] 4.8 6.0 6.4 6.6 Litigation settlement gains and losses [d] 0.3
0.5 0.3 0.5 Deferred executive compensation 0.2 0.2 0.3 0.3
Non-GAAP operating income $ 99.7 $ 83.9
$ 214.5 $ 189.0 Non-GAAP operating
margin % 23.4 % 23.0 % 24.4 % 24.9 %
Three Months Ended Six Months
Ended March 29, March 30, March 29, March 30, (in millions)
2013 2012 2013 2012 GAAP net
income $ 61.7 $ 34.0 $ 128.2 $ 91.2 Share-based compensation
expense [a] 18.3 19.3 36.0 35.1 Acquisition-related expense [b] 0.2
4.8 0.8 12.1 Amortization of intangibles 7.2 9.3 15.4 15.6
Restructuring and other charges [c] 4.8 6.0 6.4 6.6 Litigation
settlement gains and losses [d] 0.3 0.5 0.3 0.5 Deferred executive
compensation 0.2 0.2 0.3 0.3 Amortization of discount on
convertible debt [e] - 0.1 - 0.3 Tax adjustments [f] (0.8 ) 5.6
11.1 14.3 Non-GAAP net income $ 91.9 $
79.8 $ 198.5 $ 176.0
Three Months Ended Six
Months Ended March 29, March 30, March 29, March 30, 2013
2012 2013 2012 GAAP net income
per share, diluted $ 0.32 $ 0.18 $ 0.66 $ 0.48 Share-based
compensation expense [a] 0.10 0.10 0.19 0.18 Acquisition-related
expense [b] - 0.03 - 0.06 Amortization of intangibles 0.04 0.05
0.08 0.08 Restructuring and other charges [c] 0.02 0.03 0.03 0.04
Tax adjustments [f] - 0.03 0.06 0.08
Non-GAAP net income per share, diluted $ 0.48 $ 0.42
$ 1.02 $ 0.92
SKYWORKS SOLUTIONS, INC.DISCUSSION
REGARDING THE USE OF NON-GAAP FINANCIAL MEASURES
Our earnings release contains some or all of the following
financial measures which 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 net income per share (diluted). 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 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 and non-GAAP
net income 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,
additional means of evaluating period-over-period operating
performance and a method to facilitate certain comparisons of
operating results to peer companies. We also believe that providing
non-GAAP operating income and operating margin allows investors to
assess the extent to which ongoing operations impact our overall
financial performance. We further believe that providing non-GAAP
net income and non-GAAP net income per share (diluted) allows
investors to assess the overall financial performance of ongoing
operations by eliminating the impact of certain financing
decisions, amortization of discount on convertible 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, restructuring-related
charges and acquisition-related expenses. We calculate non-GAAP
operating income by excluding from GAAP operating income,
share-based compensation expense, restructuring-related charges,
acquisition-related expenses, litigation settlement gains and
losses and certain deferred executive compensation. We calculate
non-GAAP net income and net income per share (diluted) by excluding
from GAAP net income and net income per share (diluted),
share-based compensation expense, restructuring-related charges,
acquisition-related expenses, litigation settlement gains and
losses, amortization of discount on convertible debt, and certain
deferred executive compensation, as well as 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
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.
Litigation Settlement Gains and Losses - including gains and
losses 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 and losses
tend to be infrequent in nature, (3) such gains and losses are
generally not directly controlled by management, (4) we believe
such gains and losses 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 can vary
significantly between companies and make comparisons difficult.
Restructuring-Related Charges - because, to the extent such
charges impact a period presented, we believe that they have no
direct correlation to 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.
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.
Amortization of Discount on Convertible Debt - comprised of the
amortization of the debt discount recorded at inception of the
convertible debt borrowing related to the adoption of ASC 470-20,
because the expense is dependent on fair value assessments and is
not considered by management when making operating decisions.
Certain Income Tax Items - including certain deferred tax
charges and benefits which do not result in a current tax payment
or tax refund and other adjustments which are not indicative of
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 operating
performance or ongoing business. Further, non-GAAP financial
measures are likely to have limited value for purposes of drawing
comparisons between companies because different companies may
calculate similarly titled non-GAAP financial measures in different
ways because non-GAAP measures are not based on any comprehensive
set of accounting rules or principles.
Our earnings release contains forward looking estimates of
non-GAAP gross margin, non-GAAP operating margin and non-GAAP
diluted earnings per share for the third quarter of our 2013 fiscal
year ("Q3 2013"). We provide these non-GAAP measures to investors
on a prospective basis for the same reasons (set forth above) that
we provide them to investors on a historical basis.
The following table provides a reconciliation of our forward
looking estimate of non-GAAP gross margin to a forward looking
estimate of GAAP gross margin for Q3 2013:
Forward looking non-GAAP gross
margin estimate 43.5 - 44.0%
Less: Share-based compensation expense (0.6%) Forward looking GAAP
gross margin estimate 42.9 - 43.4%
The following table provides a reconciliation of our forward
looking estimate of non-GAAP operating margin to a forward looking
estimate of GAAP operating margin for Q3 2013:
Forward looking non-GAAP
operating margin estimate
>25.0% Less: Share-based compensation expense (4.5%)
Amortization of intangibles (1.6%)
Forward looking GAAP operating margin
estimate
>18.9%
We are unable to provide a reconciliation of our forward looking
estimate of Q3 2013 non-GAAP diluted earnings per share to a
forward looking estimate of Q3 2013 GAAP diluted earnings per share
because certain information needed to make a reasonable forward
looking estimate of GAAP diluted earnings per share for Q3 2013
(other than estimated share-based compensation expense of $0.10 per
diluted share, certain tax items of $0.05 per diluted share,
estimated amortization of intangibles of $0.04 per diluted share
and estimated deferred executive compensation expense with a de
minimis impact on diluted earnings per share) is difficult to
predict and estimate and is often dependent on future events which
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,
intangibles or goodwill), unanticipated acquisition related costs,
unanticipated litigation settlement gains and losses 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.
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 three 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, for the six months ended
March 29, 2013. For the three months ended March 30, 2012,
approximately $2.4 million, $7.5 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 30, 2012, approximately $4.9 million,
$13.1 million and $17.1 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 $0.2 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 acquisitions.
The acquisition-related expense recognized
during the three months and six months ended March 30, 2012
includes a $2.8 million and $2.9 million charge to cost of sales
related to the sale of acquired inventory, respectively. Also
included in acquisition-related expense is $2.0 million and $9.2
million in transaction costs included in general and administrative
expense associated with acquisitions, and an arbitration, completed
or contemplated during the three months and six months ended March
30, 2012, respectively.
[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 $6.4 million charge was recorded
during the three months and six months ended March 29, 2013,
respectively, related to these plans.
During the three months and six months
ended March 30, 2012, the Company implemented a restructuring plan
to reduce headcount associated with its acquisition of Advanced
Analogic Technologies, Inc. and recorded a $6.0 and $6.6 million
charge, respectively, primarily related to this plan.
[d] 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 expense associated with
ongoing litigations. During the three months and six months
ended March 30, 2012, the Company recognized a $0.5 million charge
primarily related to the resolution of a contractual dispute.
[e] These charges represent the amortization expense
recognized in accordance with ASC 470-20. Approximately $0.1
million and $0.3 million of amortization expense was recognized
during the three months and six months ended March 30, 2012,
respectively. [f] During the three months and six months
ended March 29, 2013, these amounts primarily represent the
utilization 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. During the three months and six
months ended March 30, 2012, these amounts primarily represent the
utilization of net operating loss and research and development tax
credit carryforwards and non-cash expense related to uncertain tax
positions.
SKYWORKS SOLUTIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
March 29, Sept. 28, (in millions) 2013 2012
Assets Current assets: Cash and cash equivalents $ 458.8 $
307.1 Accounts receivable, net 234.6 297.6 Inventory 226.8 232.9
Other current assets 43.5 45.7 Property, plant and equipment, net
294.3 279.4 Goodwill and intangible assets, net 879.0 894.5 Other
assets 79.9 79.4 Total assets $ 2,216.9 $ 2,136.6
Liabilities and Equity Current liabilities: Accounts payable
$ 111.5 $ 140.6 Accrued and other current liabilities 51.1 42.1
Other long-term liabilities 54.3 48.4 Stockholders' equity 2,000.0
1,905.5 Total liabilities and equity $ 2,216.9 $ 2,136.6
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