- Delivers Revenue of $762 Million, up
58% Year-over-Year
- Increases Non-GAAP Operating Income by
99% Year-over-Year
- Posts $1.15 of Non-GAAP Diluted EPS
($0.85 GAAP), up 85% Year-over-Year
- Guides to Q3 Revenue of $800 Million
with 130 Basis Point Sequential Increase in Gross Margin, Driving
Non-GAAP Diluted EPS of $1.28
Skyworks Solutions, Inc. (NASDAQ: SWKS) an innovator of high
performance analog semiconductors connecting people, places and
things, today reported second fiscal quarter results for the period
ending April 3, 2015. Revenue for the second fiscal quarter was
$762.1 million, up over 58 percent year-over-year and exceeding the
Company’s original guidance of $750 million.
On a non-GAAP basis, operating income for the second fiscal
quarter of 2015 was $258.9 million, up 99 percent from $130.4
million in the second fiscal quarter of 2014. Non-GAAP diluted
earnings per share for the second fiscal quarter was $1.15, three
cents better than guidance and up more than 85 percent from the
$0.62 reported for the second fiscal quarter of 2014. On a GAAP
basis, operating income for the second fiscal quarter of 2015 was
$219.9 million and diluted earnings per share was $0.85.
“Skyworks’ outperformance underscores the success of our
diversification strategy, as positive momentum across our customer
base, end markets and product lines helped to mitigate normal March
quarter seasonality,” said David J. Aldrich, chairman and chief
executive officer of Skyworks. “Our business continues to perform
at a high level, as we capitalize on a number of powerful global
trends driving the proliferation of connectivity in all of its
forms. By leveraging our architectural and integration leadership,
we continue to enhance our competitive differentiation, expanding
profitability and creating greater value for our customers and
shareholders.”
Q2 Business Highlights
- Powered Sierra Wireless’ M2M modules
for use in industrial applications
- Enabled Samsung’s Galaxy S6 platform
with SkyOne® Ultra, switching and connectivity products
- Launched integrated Wi-Fi module for
the leading video monitoring provider
- Secured multiple design wins for OnStar
telematics platform in GM’s global fleet
- Ramped switching and connectivity
solutions for Nexus 6 smartphones
- Gained high reliability analog content
in public safety radios for Harris and Sepura
- Expanded diversity receive portfolio to
support multiple device configurations
- Delivered Zigbee® front-end modules for
Kwikset’s intelligent security products
- Captured over 20 sockets in a
next-generation small cell LTE base station
- Introduced 802.11ac front-end solutions
for Xiaomi’s latest home router platform
Third Fiscal Quarter 2015 Outlook
“As the market leader in complex analog and RF integration, we
are the primary beneficiary of the industry’s increasing adoption
of systems solutions,” said Donald W. Palette, executive vice
president and chief financial officer of Skyworks. “This is
transforming our business model, as evidenced by our margin
expansion, driving strong financial returns. For the third fiscal
quarter of 2015, we anticipate revenue to be $800 million with
gross margin of 48 percent, creating a new baseline of
profitability and resulting in diluted earnings per share of $1.28
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.
Dividend Declaration
Skyworks’ Board of Directors has declared a cash dividend of
$0.13 per share of the Company’s common stock. The dividend is
payable on June 4, 2015 to stockholders of record at the close of
business on May 14, 2015.
Skyworks' Second Fiscal Quarter 2015 Conference Call
Skyworks will host a conference call with analysts to discuss
its second fiscal quarter 2015 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 800-230-1092 (domestic) or 612-288-0337 (international),
confirmation code: 357740.
Playback of the conference call will begin at 9:00 p.m. Eastern
time on April 30, and end at 9:00 p.m. Eastern time on May 8. The
replay will be available on Skyworks' website or by calling
800-475-6701 (domestic) or 320-365-3844 (international), access
code: 357740.
About Skyworks
Skyworks Solutions, Inc. is empowering the wireless networking
revolution, connecting virtually everyone and everything, all the
time. Our highly innovative analog semiconductors are linking
people, places, and things spanning a number of new and previously
unimagined applications within automotive, broadband, cellular
infrastructure, the connected home, industrial, medical, military,
smartphone, tablet and wearable markets.
Headquartered in Woburn, Massachusetts, Skyworks is a global
company with engineering, marketing, operations, sales, and service
facilities located throughout Asia, Europe and North America. 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). 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 April 3,
March 28, April 3, March 28, (in millions, except per share
amounts) 2015 2014 2015 2014 Net revenue $
762.1 $ 481.0 $ 1,567.6 $ 986.2 Cost of goods sold 409.9 268.6
842.4 551.8 Gross profit 352.2 212.4 725.2 434.4
Operating expenses: Research and development 75.5 61.6 144.0
120.0 Selling, general and administrative 47.4 41.9 95.3 83.0
Amortization of intangibles 8.3 6.3 16.8 12.8 Restructuring and
other charges 1.1 - 2.4 - Total operating expenses
132.3 109.8 258.5 215.8 Operating income 219.9 102.6 466.7
218.6 Other income (expense), net 0.6 (0.1 ) 1.3 (0.1 )
Income before income taxes 220.5 102.5 468.0 218.5 Provision for
income taxes 54.0 25.6 106.3 47.1 Net income $ 166.5
$ 76.9 $ 361.7 $ 171.4 Earnings per share:
Basic $ 0.88 $ 0.41 $ 1.91 $ 0.92 Diluted $ 0.85 $ 0.40 $ 1.86 $
0.89 Weighted average shares: Basic 189.9 187.4 189.3 186.8 Diluted
195.2 192.2 194.7 191.7
SKYWORKS SOLUTIONS,
INC. UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
Three Months Ended Six Months Ended
April 3, March 28, April 3, March 28, (in millions)
2015 2014 2015 2014 GAAP gross profit $ 352.2 $ 212.4 $
725.2 $ 434.4 Share-based compensation expense [a] 3.8 2.8 7.0 5.5
Acquisition-related expenses [b] - - 0.2 - Non-GAAP gross profit $
356.0 $ 215.2 $ 732.4 $ 439.9 Non-GAAP gross margin % 46.7%
44.7% 46.7% 44.6%
Three Months Ended Six Months Ended April 3, March
28, April 3, March 28, (in millions) 2015 2014 2015 2014
GAAP operating income $ 219.9 $ 102.6 $ 466.7 $ 218.6 Share-based
compensation expense [a] 26.8 20.8 48.5 39.6 Acquisition-related
expenses [b] 1.8 0.1 5.3 0.1 Amortization of intangibles 8.3 6.3
16.8 12.8 Restructuring and other charges [c] 1.1 - 2.4 -
Litigation settlement gains, losses and expenses [d] 1.0 0.6 1.1
1.1 Non-GAAP operating income $ 258.9 $ 130.4 $ 540.8 $ 272.2
Non-GAAP operating margin % 34.0% 27.1% 34.5% 27.6%
Three Months Ended
Six Months Ended April 3, March 28, April 3, March 28, (in
millions) 2015 2014 2015 2014 GAAP net income $ 166.5 $ 76.9
$ 361.7 $ 171.4 Share-based compensation expense [a] 26.8 20.8 48.5
39.6 Acquisition-related expenses [b] 1.8 0.1 5.3 0.1 Amortization
of intangibles 8.3 6.3 16.8 12.8 Restructuring and other charges
[c] 1.1 - 2.4 - Litigation settlement gains, losses and expenses
[d] 1.0 0.6 1.1 1.1 Interest expense on seller-financed debt [e]
0.3 - 0.6 - Tax adjustments [f] 18.8 13.9 32.9 21.3 Non-GAAP net
income $ 224.6 $ 118.6 $ 469.3 $ 246.3
Three Months Ended Six Months Ended
April 3, March 28, April 3, March 28, 2015 2014 2015 2014
GAAP net income per share, diluted $ 0.85 $ 0.40 $ 1.86 $
0.89 Share-based compensation expense [a] 0.14 0.11 0.25 0.21
Acquisition-related expenses [b] 0.01 - 0.03 - Amortization of
intangibles 0.04 0.03 0.09 0.07 Restructuring and other charges [c]
0.01 - 0.01 - Litigation settlement gains, losses and expenses [d]
0.01 0.01 0.01 0.01 Tax adjustments [f] 0.09 0.07 0.16 0.11
Non-GAAP net income per share, diluted $ 1.15 $ 0.62 $ 2.41 $ 1.29
SKYWORKS SOLUTIONS, INC.
DISCUSSION REGARDING THE USE OF NON-GAAP
FINANCIAL MEASURES
Our earnings release contains some or all of the following
financial measures that have not been calculated in accordance with
United States Generally Accepted Accounting Principles ("GAAP"):
(i) non-GAAP gross profit and gross margin, (ii) non-GAAP operating
income and operating margin, (iii) non-GAAP net income, and (iv)
non-GAAP diluted earnings per share. As set forth in the "Unaudited
Reconciliation of Non-GAAP Financial Measures" table found above,
we derive such non-GAAP financial measures by excluding
certain expenses and other items from the respective GAAP
financial measure that is most directly comparable to each non-GAAP
financial measure. Management uses these non-GAAP financial
measures to evaluate our operating performance and compare it
against past periods, make operating decisions, forecast for future
periods, compare our operating performance against peer companies
and determine payments under certain compensation programs. These
non-GAAP financial measures provide management with additional
means to understand and evaluate the operating results and trends
in our ongoing business by eliminating certain non-recurring
expenses (which may not occur in each period presented) and other
items that management believes might otherwise make comparisons of
our ongoing business with prior periods and competitors more
difficult, obscure trends in ongoing operations or reduce
management's ability to make useful forecasts.
We provide investors with non-GAAP gross profit and gross
margin, non-GAAP operating income and operating margin, non-GAAP
net income and non-GAAP diluted earnings per share because we
believe it is important for investors to be able to closely monitor
and understand changes in our ability to generate income from
ongoing business operations. We believe these non-GAAP financial
measures give investors an additional method to evaluate historical
operating performance and identify trends, an additional means of
evaluating period-over-period operating performance and a method to
facilitate certain comparisons of our operating results to those of
our peer companies. We also believe that providing non-GAAP
operating income and operating margin allows investors to assess
the extent to which our ongoing operations impact our overall
financial performance. We further believe that providing non-GAAP
net income and non-GAAP diluted earnings per share allows investors
to assess the overall financial performance of our ongoing
operations by eliminating the impact of share-based compensation
expense, acquisition-related expenses, restructuring-related
charges, litigation settlement gains, losses and expenses, certain
deferred executive compensation and certain tax items which may not
occur in each period presented and which may represent non-cash
items unrelated to our ongoing operations. We believe that
disclosing these non-GAAP financial measures contributes to
enhanced financial reporting transparency and provides
investors with added clarity about complex financial performance
measures.
We calculate non-GAAP gross profit by excluding from GAAP gross
profit, share-based compensation expense and acquisition-related
expenses. We calculate non-GAAP operating income by excluding from
GAAP operating income, share-based compensation expense,
acquisition-related expenses, restructuring-related charges,
litigation settlement gains, losses and expenses and certain
deferred executive compensation. We calculate non-GAAP net income
and diluted earnings per share by excluding from GAAP net income
and diluted earnings per share, share-based compensation expense,
acquisition-related expenses, restructuring-related charges,
litigation settlement gains, losses and expenses, certain deferred
executive compensation and certain tax items which may not occur in
all periods for which financial information is presented. We
exclude the items identified above from the respective non-GAAP
financial measure referenced above for the reasons set forth with
respect to each such excluded item below:
Share-Based Compensation - because (1) the total amount of
expense is partially outside of our control because it is based on
factors such as stock price volatility and interest rates, which
may be unrelated to our performance during the period in which the
expense is incurred, (2) it is an expense based upon a valuation
methodology premised on assumptions that vary over time, and (3)
the amount of the expense can vary significantly between companies
due to factors that can be outside of the control of such
companies.
Acquisition-Related Expenses - including such items as, when
applicable, amortization of acquired intangible assets, fair value
adjustments to contingent consideration, fair value charges
incurred upon the sale of acquired inventory, acquisition-related
professional fees, deemed compensation expenses and interest
expense on seller-financed debt, because they are not considered by
management in making operating decisions and we believe that such
expenses do not have a direct correlation to our future business
operations and thereby including such charges does not accurately
reflect the performance of our ongoing operations for the period in
which such charges are incurred.
Restructuring-Related Charges - because, to the extent such
charges impact a period presented, we believe that they have no
direct correlation to our future business operations and including
such charges does not necessarily reflect the performance of our
ongoing operations for the period in which such charges are
incurred.
Litigation Settlement Gains, Losses and Expenses- including
gains, losses and expenses related to the resolution of
other-than-ordinary-course threatened and actually filed lawsuits
and other-than-ordinary-course contractual disputes, because (1)
they are not considered by management in making operating
decisions, (2) such gains, losses and expenses tend to be
infrequent in nature, (3) such gains, losses and expenses are
generally not directly controlled by management, (4) we believe
such gains, losses and expenses do not necessarily reflect the
performance of our ongoing operations for the period in which such
charges are recognized and (5) the amount of such gains or losses
and expenses can vary significantly between companies and make
comparisons less reliable.
Deferred Executive Compensation - including charges related to
any contingent obligation pursuant to an executive severance
agreement, because we believe the period over which the obligation
is amortized may not reflect the period of benefit and that such
expense has no direct correlation with our recurring business
operations and including such expenses does not accurately reflect
the compensation expense for the period in which incurred.
Certain Income Tax Items - including certain deferred tax
charges and benefits that do not result in a current tax payment or
tax refund and other adjustments, including but not limited to,
items unrelated to the current fiscal year or that are not
indicative of our ongoing business operations.
The non-GAAP financial measures presented in the table above
should not be considered in isolation and are not an alternative
for the respective GAAP financial measure that is most directly
comparable to each such non-GAAP financial measure. Investors are
cautioned against placing undue reliance on these non-GAAP
financial measures and are urged to review and consider carefully
the adjustments made by management to the most directly comparable
GAAP financial measures to arrive at these non-GAAP financial
measures. Non-GAAP financial measures may have limited value as
analytical tools because they may exclude certain expenses that
some investors consider important in evaluating our operating
performance or ongoing business performance. Further, non-GAAP
financial measures are likely to have limited value for purposes of
drawing comparisons between companies because different companies
may calculate similarly titled non-GAAP financial measures in
different ways because non-GAAP measures are not based on any
comprehensive set of accounting rules or principles.
Our earnings release contains forward-looking estimates of
non-GAAP gross margin and diluted earnings per share for the third
quarter of our 2015 fiscal year ("Q3 2015"). 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 2015:
Forward-looking non-GAAP gross margin
estimate 48.0 % Less: Share-based compensation expense (0.5
) Forward-looking GAAP gross margin estimate 47.5 %
We are unable to provide a reconciliation of our forward-looking
estimate of Q3 2015 non-GAAP diluted earnings per share to a
forward-looking estimate of Q3 2015 GAAP diluted earnings per share
because certain information needed to make a reasonable
forward-looking estimate of GAAP diluted earnings per share for Q3
2015 (other than estimated share-based compensation expense of
$0.14 per diluted share, certain tax items of $0.12 per diluted
share and estimated amortization of intangibles of $0.04 per
diluted share) is difficult to predict and estimate and is often
dependent on future events that may be uncertain or outside of our
control. Such events may include unanticipated changes in our GAAP
effective tax rate, unanticipated one-time charges related to asset
impairments (fixed assets, inventory, intangibles or goodwill),
unanticipated acquisition-related expenses, unanticipated
litigation settlement gains, losses and expenses and other
unanticipated non-recurring items not reflective of ongoing
operations. We believe the probable significance of these unknown
items, in the aggregate, to be in the range of $0.00 to $0.05 in
quarterly earnings per diluted share on a GAAP basis. Our
forward-looking estimates of both GAAP and non-GAAP measures of our
financial performance may differ materially from our actual results
and should not be relied upon as statements of fact.
[a]
These charges represent expense recognized
in accordance with ASC 718 - Compensation, Stock Compensation.
For the three months ended April 3,2015,
approximately $3.8 million, $12.4 million and $10.6 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively.
For the six months ended April 3, 2015,
approximately $7.0 million, $22.3 million and $19.2 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 28, 2014,
approximately $2.8 million, $8.6 million and $9.4 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively.
For the six months ended March 28, 2014,
approximately $5.5 million, $16.1 million and $18.0 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively.
[b]
The acquisition-related expense recognized
during the six months ended April 3, 2015, includes a $0.2 million
charge to cost of sales related to the sale of acquired inventory.
The acquisition-related expense recognized during the three months
and six months ended April 3, 2015, includes $1.8 million and $5.1
million in transaction costs, respectively, included in general and
administrative expenses associated with the purchase of an interest
in a joint venture with Panasonic Corporation on August 1, 2014.
For additional information regarding the joint venture, please
refer to the Company's Current Reports on Form 8-K filed with the
Securities and Exchange Commission on July 10, 2014 and August 7,
2014.
The acquisition-related expense of $0.1
million recognized during the three months and six months ended
March 28, 2014, primarily relates to general and administrative
expenses associated with potential acquisitions.
[c]
During the three months and six months
ended April 3, 2015, the Company incurred $1.1 million and $2.4
million, respectively, in employee severance costs primarily
related to restructuring plans that were implemented during the
periods.
[d]
During the three months and six months
ended April 3, 2015, the Company recognized a $1.0 million and $1.1
million charge, respectively, primarily related to general and
administrative expenses associated with ongoing litigation(s).
During the three months and six months
ended March 28, 2014, the Company recognized a $0.6 million and a
$1.1 million charge, respectively, primarily related to general and
administrative expense associated with ongoing litigations.
[e]
During the three months and six months
ended April 3, 2015, the Company recognized $0.3 million and $0.6
million, respectively, in interest expense associated with the
accretion of the present value of the $76.5 million liability
related to the future purchase of the remaining 34% interest in the
joint venture between the Company and Panasonic.
[f]
During the three months and six months
ended April 3, 2015, these amounts primarily represent the use of
net operating loss carryforwards, deferred tax expense not
affecting taxes payable, tax deductible share-based compensation
expense in excess of GAAP share-based compensation expense, and
non-cash expense related to uncertain tax positions.
During the three months and six months
ended March 28, 2014, these amounts primarily represent the use of
net operating loss and research and development tax credit
carryforwards, deferred tax expense not affecting taxes payable,
and non-cash expense related to uncertain tax positions.
SKYWORKS SOLUTIONS, INC. UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS April 3, Oct.
3, (in millions) 2015 2014
Assets Current assets: Cash and
cash equivalents $ 1,054.2 $ 805.8 Accounts receivable, net 277.1
317.6 Inventory 276.2 270.8 Other current assets 71.4 35.0
Property, plant and equipment, net 655.8 555.9 Goodwill and
intangible assets, net 909.2 926.0 Other assets 69.3 62.7 Total
assets $ 3,313.2 $ 2,973.8
Liabilities and Equity
Current liabilities: Accounts payable $ 231.0 $ 200.6 Accrued and
other current liabilities 67.6 97.0 Other long-term liabilities
151.1 143.8 Stockholders' equity 2,863.5 2,532.4 Total liabilities
and equity $ 3,313.2 $ 2,973.8
Skyworks Media Relations:Pilar Barrigas(949)
231-3061orSkyworks Investor Relations:Stephen Ferranti(781)
376-3056
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