9 November 2015

Skyworks exceeds quarterly revenue and EPS guidance

For full-year fiscal 2015 (ending 2 October), Skyworks Solutions Inc of Woburn, MA, USA (which manufactures analog and mixed-signal semiconductors) has reported record revenue of $3.26bn, up 42% on fiscal 2014's $2.29bn. For the fiscal fourth quarter, revenue was a record $880.8m, up 8.7% on $810m last quarter and up 23% on $718.2m a year ago (and exceeding the guidance of $875m).

"We delivered a strong close to fiscal 2015 producing fourth quarter financial results that once again significantly outpaced the growth of the broader semiconductor market," comments chairman & CEO David J. Aldrich.

Of total Q4 revenue, power amplifiers (PAs) have fallen further, from 36% a year ago and 24% last quarter to 20%, while integrated mobile systems have risen from 39% a year ago and 53% last quarter to 59% (with revenue up 84% year-on-year). Broad markets fell slightly from 23% last quarter to 22% (compared with 25% a year ago).

On a non-GAAP basis, gross margin has grown again, from 45.9% a year ago and 49% last quarter to 50%. Full-year gross margin has risen from 45.2% for 2014 to 48.2% for 2015.

Operating expenses have risen further, from $93.9m a year ago and $101.3m last quarter to $104.9m, consisting of research and development (R&D) expenses rising from $65.1m last quarter to $70.8m, while selling, general and administrative (SG&A) expenses fell back from $36.2m last quarter to $34.1m (compared with $35.8m a year ago).

Operating income was $335.2m (an operating margin of 38.1%), up from $295.4m (a margin of 36.5%) last quarter and $235.7m (a margin of 32.8%) a year ago. Full-year operating income has almost doubled from $687m (operating margin of 30%) for 2014 to $1170m (a margin of 36%) for 2015.

Net income was $296.1m ($1.52 per diluted share, $0.01 better than guidance), up from $262.5m ($1.34 per diluted share) last quarter and $216.1m ($1.12 of per diluted share) a year ago. Full-year net income has risen from $623m ($3.24 per diluted share) in 2014 to $1028m ($5.27 per diluted share) for 2015.

Cash flow from operations was $230m (up from $222m last quarter, and making about $1bn for full-year fiscal 2015). Capital expenditure has increased from $108m last quarter to $151m. Depreciation was $46m. During the quarter, Skyworks distributed $160m to shareholders through its dividend and stock repurchase plans. Cash and cash equivalents hence fell from $1106m to $1044m (although this is still up from $806m a year ago). "For fiscal 2015, we returned about 64% of free cash flow [$360m] to shareholders, higher than our goal of 40%, based on our recent share repurchase activity," notes chief financial officer Donald W. Palette. For the most recent quarter, Skyworks' board of directors has declared a cash dividend of $0.26 per share (payable on 10 December to stockholders of record at the close of business on 19 November). "Longer term, we continue to view an allocation of roughly 40% of free cash flow as an appropriate balance between internal investment for growth initiatives and shareholder returns," he adds.  

"Fiscal 2015 was a record year for Skyworks across all metrics," says Palette. "We are capitalizing on favorable end-market trends — leveraging our differentiated systems solutions portfolio to expand our addressable opportunity and enhance our financial returns. We continue to strategically position our business to take advantage of the tremendous growth opportunity we see ahead in our served markets."

Business highlights cited for fiscal fourth-quarter 2015 include the following:

• captured Wi-Fi, Bluetooth and ZigBee content in the Google OnHub Connected Home Gateway with a suite of 20 devices;

• launched tuning and connectivity ICs in Huawei's Nexus 6P smartphone platform;

• extended momentum in the connected home with ZigBee front-end modules in Samsung's SmartThings suite of products;

• expanded Skyworks' presence in a leading small-cell base transceiver station (BTS) platform with $25 of content;

• unveiled SkyOne and diversity receive modules in ZTE's Axon smartphone;

• secured display backlight and power management functionality in LG infotainment centers for upcoming Hyundai models;

• powered an Arris DOCSIS 3.0 cable modem for Time Warner deployments;

• supported the Moto X smartphone with five devices including the TrueFlash dual LED camera flash IC; and

• introduced ZigBee solutions for Philips' latest smart lighting hub.

"Entering fiscal 2016, we are well positioned to continue delivering growth and profitability in excess of the broader semiconductor market," says Aldrich.

For fiscal first-quarter 2016, Skyworks expects revenue of $925-930m, up 5.3% sequentially and 15% year-on-year. Gross margin should grow to 51%. Operating expenses are expected increase to about $108m, driven by ongoing investments in engineering and development teams as Skyworks expands its footprint within new verticals and further enhances its integration capabilities. Operating margin should exceed 39%. Diluted earnings per share (EPS) should reach $1.60.

Given that fiscal Q1 guidance exceeds the firm's previous gross margin target of 50% and that Skyworks is also within reach of its previous annual EPS target of $7.00, it is introducing an updated mid-term model: to achieve (within 6-8 quarters) organic annualized EPS of $8 at a revenue run-rate of about $4.5bn with gross margin of 53%. Longer term, based on internal margin initiatives, Skyworks targets gross margin of 55% on an organic basis.

See related items:

Skyworks' quarterly revenue rises a more-than-expected 38% year-on-year to $810m

Skyworks doubles quarterly dividend

Skyworks' quarterly revenue rises by more-than-expected 58% year-on-year to $762m

Skyworks exceeds quarterly revenue, margin and earnings guidance

Skyworks' quarterly revenue grows 22% to record $718m

Tags: Skyworks

Visit: www.skyworksinc.com