MXIM
$54.93
Maxim Integrated
($.54)
(.97%)
Earnings Details
1st Quarter September 2019
Tuesday, October 29, 2019 4:03:00 PM
Tweet Share Watch
Summary

Maxim Integrated Beats

Maxim Integrated (MXIM) reported 1st Quarter September 2019 earnings of $0.52 per share on revenue of $533.0 million. The consensus earnings estimate was $0.49 per share on revenue of $530.6 million. The Earnings Whisper number was $0.49 per share. Revenue fell 16.5% compared to the same quarter a year ago.

The company said it expects second quarter earnings of $0.49 to $0.57 per share on revenue of $525.0 million to $565.0 million. The current consensus earnings estimate is $0.51 per share on revenue of $538.8 million for the quarter ending December 31, 2019.

Maxim Integrated Products Inc designs, develops, manufactures and markets a range of linear and mixed-signal integrated circuits, commonly referred to as analog circuits, for number of customers in diverse geographical locations.

Results
Reported Earnings
$0.52
Earnings Whisper
$0.49
Consensus Estimate
$0.49
Reported Revenue
$533.0 Mil
Revenue Estimate
$530.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Maxim Integrated Reports Results For The First Quarter Of Fiscal 2020

SAN JOSE, Calif., Oct. 29, 2019 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $533 million for its first quarter of fiscal 2020 ended September 28, 2019, a 4% decrease from the $557 million revenue recorded in the prior quarter, and a 17% decrease from the same quarter of last year.

Logo for Maxim Integrated Products, Inc. (PRNewsfoto/Maxim Integrated)

"Our September quarter results met our expectations, while also maintaining lean inventory levels," said Tunc Doluca, President and Chief Executive Officer. "Looking forward to the December quarter, we expect sequential growth in Communications and Data Center, Automotive and Industrial, partially offset by smartphone-related headwinds and holiday seasonality in Consumer."

Fiscal Year 2020 First Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the September quarter was $0.51. The results were affected by $5 million in pre-tax special items which primarily consisted of charges related to acquisitions. GAAP earnings per share, excluding special items was $0.52. An analysis of GAAP versus GAAP excluding special items is provided in this press release.

Cash Flow Items
At the end of the first quarter of fiscal 2020, total cash, cash equivalents and short-term investments were $1.8 billion, down $105 million from the prior quarter.

Notable items included:

  • Cash flow from operations: $141 million
  • Capital expenditures: $21 million
  • Dividends paid: $130 million ($0.48 per share)
  • Stock repurchases: $94 million

Trailing twelve months free cash flow was $725 million. Free cash flow is a non-GAAP measure and is defined by cash flow from operations less capital expenditures.

Business Outlook
The Company's 90-day backlog at the beginning of the December 2019 quarter was $402 million. Based on the beginning backlog and expected turns, our results for the December 2019 quarter are forecasted to be as follows:

  • Revenue: $525 to $565 million
  • Gross Margin: 63.5% to 65.5% GAAP (64% to 66% excluding special items)
  • EPS: $0.47 to $0.55 GAAP ($0.49 to $0.57 excluding special items)

Maxim Integrated's business outlook does not include the potential impact of any special items related to restructuring activity, acquisitions, or other business combinations that may be completed during the quarter.

Dividend
A cash dividend of $0.48 per share will be paid on December 13, 2019, to stockholders of record on November 27, 2019. 

Conference Call
Maxim Integrated has scheduled a conference call on October 29 at 2:00 p.m. Pacific Time to discuss its financial results for the first quarter of fiscal 2020 and its business outlook. This call will be webcast by Shareholder.com and can be accessed at the Company's website at investor.maximintegrated.com.

A presentation summarizing financial information to be discussed on the conference call is posted at investor.maximintegrated.com.

 


CONSOLIDATED STATEMENTS OF INCOME



(Unaudited)




Three Months Ended




September 28, 2019


June 29, 2019


September 29, 2018




(in thousands, except per share data)



Net revenues

$                    533,040


$         556,545


$                    638,495



Cost of goods sold

189,717


200,154


208,259



Gross margin

343,323


356,391


430,236



Operating expenses:








Research and development

108,989


105,136


112,708



Selling, general and administrative

76,115


75,130


81,518



Intangible asset amortization

756


756


773



Severance and restructuring expenses

1,434


1,715


994



Other operating expenses (income), net

25


83


60



Total operating expenses (income), net

187,319


182,820


196,053



Operating income (loss)

156,004


173,571


234,183



Interest and other income (expense), net

1,829


4,079


(546)



Income (loss) before provision for income taxes

157,833


177,650


233,637



Income tax provision (benefit)

17,677


(189,908)


36,214



Net income (loss)

$                    140,156


$         367,558


$                    197,423



Earnings (loss) per share:








Basic

$                          0.52


$               1.35


$                          0.71



Diluted

$                          0.51


$               1.33


$                          0.70



Shares used in the calculation of earnings (loss) per share:








Basic

271,388


272,382


278,045



Diluted

274,436


275,834


282,454











Dividends paid per share

$                          0.48


$               0.46


$                          0.46











SCHEDULE OF SPECIAL ITEMS



(Unaudited)




Three Months Ended




September 28, 2019


June 29, 2019


September 29, 2018




(in thousands)



Cost of goods sold:








Intangible asset amortization

$                        3,111


$             4,038


$                        6,915



Total

$                        3,111


$             4,038


$                        6,915



Operating expenses:








Intangible asset amortization

$                           756


$                756


$                           773



Severance and restructuring

1,434


1,715


994



Other operating expenses (income), net

25


83


60



Total

$                        2,215


$             2,554


$                       1,827



Interest and other expense (income), net

$                          (207)


$            (2,980)


$                         (378)



Total

$                          (207)


$            (2,980)


$                         (378)



Income tax provision (benefit):








Impact of U.S. tax legislation (1)

$                                -


$           47,703


$                               -



Impact of income tax audit settlements (2)

-


(251,599)


-



 Total 

$                               -


$       (203,896)


$                               -











(1) Includes effect of U.S. tax legislation enacted on December 22, 2017.



(2) Includes effect of income tax audit settlements.










 


CONSOLIDATED BALANCE SHEETS



(Unaudited)




September 28, 2019


June 29, 2019


September 29, 2018




(in thousands)



ASSETS



Current assets:








Cash and cash equivalents

$                 1,695,191


$      1,757,342


$                 1,598,772



Short-term investments

98,176


140,990


964,643



Total cash, cash equivalents and short-term investments

1,793,367


1,898,332


2,563,415



Accounts receivable, net

370,316


360,016


439,407



Inventories

235,959


246,512


275,374



Other current assets

24,982


34,640


33,329



Total current assets

2,424,624


2,539,500


3,311,525



Property, plant and equipment, net

574,097


577,722


573,014



Intangible assets, net

52,376


56,242


74,785



Goodwill

532,251


532,251


532,251



Other assets

97,439


38,267


56,977



TOTAL ASSETS

$                 3,680,787


$      3,743,982


$                 4,548,552











LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:








Accounts payable

$                      81,794


$           84,335


$                      84,087



Price adjustment and other revenue reserves

90,206


100,490


135,187



Income taxes payable

31,704


33,765


60,877



Accrued salary and related expenses

96,168


118,704


106,273



Accrued expenses

42,644


33,873


42,091



Current portion of debt

-


-


499,762



Total current liabilities

342,516


371,167


928,277



Long-term debt

992,944


992,584


991,506



Income taxes payable

446,138


469,418


652,163



Other liabilities

117,903


65,537


64,283



Total liabilities

1,899,501


1,898,706


2,636,229











Stockholders' equity:








Common stock and capital in excess of par value

271


272


279



Retained earnings

1,793,012


1,856,358


1,924,764



Accumulated other comprehensive loss

(11,997)


(11,354)


(12,720)



Total stockholders' equity

1,781,286


1,845,276


1,912,323



TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$                 3,680,787


$      3,743,982


$                 4,548,552










 


CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)




Three Months Ended




September 28, 2019


June 29, 2019


September 29, 2018




(in thousands)



Cash flows from operating activities:








Net income (loss)

$                    140,156


$         367,558


$                    197,423



Adjustments to reconcile net income (loss) to net cash provided by operating activities:








Stock-based compensation

24,671


22,004


20,497



Depreciation and amortization

23,921


25,569


31,191



Deferred taxes

453


26,118


(3,032)



Loss (gain) from disposal of property, plant and equipment

376


643


621



Other adjustments

27


(268)


(117)



Changes in assets and liabilities:








Accounts receivable

(20,584)


15,615


(23,604)



Inventories

10,578


26,383


7,002



Other current assets

(52,443)


(11,875)


(12,625)



Accounts payable

1,242


699


(5,263)



Income taxes payable

(25,341)


(229,776)


33,743



Accrued salary and related expenses

(22,536)


-


(45,408)



All other accrued liabilities

60,750


(5,203)


6,757



Net cash provided by (used in) operating activities

141,270


237,467


207,185



Cash flows from investing activities:








Purchase of property, plant and equipment

(20,631)


(30,653)


(18,316)



Proceeds from sales of property, plant and equipment

43


306


1



Proceeds from sale of available-for-sale securities

-


-


8,438



Proceeds from maturity of available-for-sale securities

42,921


103,431


301,834



Payment in connection with business acquisition, net of cash acquired

-


-


(2,949)



Purchases of available-for-sale securities

-


-


(190,880)



Purchases of private company investments

-


(1,500)


(750)



Proceeds from private company investments

516


-


-



Other investing activities

(35)


(60)


-



Net cash provided by (used in) investing activities

22,814


71,524


97,378



Cash flows from financing activities:








Contingent consideration paid

-


-


(8,000)



Net issuance of restricted stock units

(9,943)


(6,663)


(7,528)



Proceeds from stock options exercised

7,481


5,414


6,608



Issuance of common stock under employee stock purchase program

-


22,486


-



Repurchase of common stock

(93,551)


(102,104)


(112,498)



Dividends paid

(130,222)


(125,345)


(127,857)



Net cash provided by (used in) financing activities

(226,235)


(206,212)


(249,275)



Net increase (decrease) in cash and cash equivalents

(62,151)


102,779


55,288



Cash and cash equivalents:








Beginning of period

$                 1,757,342


$      1,654,563


$                 1,543,484



End of period

$                 1,695,191


$      1,757,342


$                 1,598,772



Total cash, cash equivalents, and short-term investments

$                 1,793,367


$      1,898,332


$                 2,563,415










 


ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES



(Unaudited)





Three Months Ended





September 28, 2019


June 29, 2019


September 29, 2018





(in thousands, except per share data)



Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:









GAAP gross profit


$                    343,323


$         356,391


$                    430,236



GAAP gross profit %


64.4%


64.0%


67.4%



Special items:









Intangible asset amortization


3,111


4,038


6,915



 Total special items 


3,111


4,038


6,915



 GAAP gross profit excluding special items 


$                    346,434


$         360,429


$                    437,151



 GAAP gross profit % excluding special items 


65.0%


64.8%


68.5%



Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:









GAAP operating expenses


$                    187,319


$         182,820


$                    196,053



Special items:









Intangible asset amortization


756


756


773



Severance and restructuring


1,434


1,715


994



Other operating expenses (income), net


25


83


60



 Total special items 


2,215


2,554


1,827



 GAAP operating expenses excluding special items 


$                    185,104


$         180,266


$                    194,226



Reconciliation of GAAP net income (loss) to GAAP net income excluding special items:









GAAP net income (loss)


$                    140,156


$         367,558


$                    197,423



Special items:









Intangible asset amortization


3,867


4,794


7,688



Severance and restructuring


1,434


1,715


994



Other operating expenses (income), net


25


83


60



Interest and other expense (income), net


(207)


(2,980)


(378)



Total pre-tax special items


5,119


3,612


8,364



Other income tax effects and adjustments (1)


(3,506)


(11,271)


4,754



Impact of U.S. tax legislation (2)


-


47,703


-



Impact of income tax audit settlement (3)


-


(251,599)


-



GAAP net income excluding special items


$                    141,769


$         156,003


$                    210,541












GAAP net income per share excluding special items:









Basic


$                          0.52


$               0.57


$                          0.76



Diluted


$                          0.52


$               0.57


$                          0.75



Shares used in the calculation of earnings per share excluding special items:







Basic


271,388


272,382


278,045



Diluted


274,436


275,834


282,454












(1) Includes tax effect of pre-tax special items and miscellaneous tax adjustments.



(2) Includes effect of U.S. tax legislation enacted on December 22, 2017.



(3) Includes effect of income tax audit settlements.











Non-GAAP Measures
To supplement the consolidated financial results prepared under GAAP, Maxim Integrated uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude special items related to intangible asset amortization; severance and restructuring; other operating expenses (income), net; interest and other expense (income), net; and other income tax effects and adjustments. We defined free cash flow as net cash provided from operations less gross capital expenditures. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate Maxim Integrated's current performance. Many analysts covering Maxim Integrated use the non-GAAP measures as well. Given management's use of these non-GAAP measures, Maxim Integrated believes these measures are important to investors in understanding Maxim Integrated's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in Maxim Integrated's core business across different time periods. These non-GAAP measures are not in accordance with or an alternative to GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized it may not be possible to compare these financial measures with other companies' non-GAAP financial measures, even if they have similar names. The non-GAAP measures displayed in the table above include the following:

GAAP Gross Profit Excluding Special Items
The use of GAAP gross profit excluding special items allows management to evaluate the gross margin of the Company's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization. In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP gross profit excluding special items to enable investors and analysts to evaluate our revenue generation performance relative to the direct costs of revenue of Maxim Integrated's core businesses.

GAAP Operating Expenses Excluding Special Items
The use of GAAP operating expenses excluding special items allows management to evaluate the operating expenses of the Company's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; severance and restructuring, and other operating expenses (income), net. In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP operating expenses excluding special items to enable investors and analysts to evaluate our core business and its direct operating expenses.

GAAP Provision for Income Taxes Excluding Special Items
The use of a GAAP provision for income taxes excluding special items allows management to evaluate the provision for income taxes across different reporting periods on a consistent basis, independent of special items.  Special items include the tax impact of pre-tax special items, significant tax audit settlements, significant prior year tax reserve adjustments, significant tax legislation, and significant non-recurring and period specific tax items, which vary in size and frequency.

GAAP Net Income and GAAP Net Income per Share Excluding Special Items
The use of GAAP net income and GAAP net income per share excluding special items allow management to evaluate the operating results of Maxim Integrated's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; severance and restructuring; other operating expenses (income), net; interest and other expense (income), net; and other income tax effects and adjustments. In addition, they are important components of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP net income and GAAP net income per share excluding special items to enable investors and analysts to understand the results of operations of Maxim Integrated's core businesses and to compare our results of operations on a more consistent basis against that of other companies in our industry.

"Safe Harbor" Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include the Company's business outlook and financial projections for its second quarter of fiscal 2020 ending December 2019, which includes revenue, gross margin and earnings per share, as well as the Company's expectation of sequential growth in the second fiscal quarter in Communications and Data Center, Automotive and Industrial, partially offset by smartphone-related headwinds and holiday seasonality in Consumer.  These statements involve risk and uncertainty. Actual results could differ materially from those forecasted, based upon, among other things, general market and economic conditions, market developments that could adversely affect the growth of the mixed-signal analog market, product mix shifts, the loss of all or a substantial portion of our sales to one or more of our large customers, customer cancellations and price competition, as well as other risks described in the Company's Annual Report on Form 10-K for the fiscal year ended June 29, 2019 (the "Form 10-K"). The Form 10-K may be found at https://www.sec.gov/Archives/edgar/data/743316/000074331619000024/0000743316-19-000024-index.htm.

All forward-looking statements included in this news release are made as of the date hereof and based on the information available to the Company as of the date hereof. The Company assumes no obligation to update any forward-looking statement except as required by law.

About Maxim Integrated
Maxim Integrated develops innovative analog and mixed-signal products and technologies to make systems smaller and smarter, with enhanced security and increased energy efficiency. We are empowering design innovation for our automotive, industrial, healthcare, mobile consumer, and cloud data center customers to deliver industry-leading solutions that help change the world. Learn more at http://www.maximintegrated.com.

Contact
Kathy Ta
Vice President, Investor Relations 
(408) 601-5697

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/maxim-integrated-reports-results-for-the-first-quarter-of-fiscal-2020-300947517.html

SOURCE Maxim Integrated Investor Relations