MXIM
$53.66
Maxim Integrated
$1.03
1.96%
Earnings Details
3rd Quarter March 2019
Tuesday, April 30, 2019 4:05:00 PM
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Summary

Maxim Integrated Guides In-line

Maxim Integrated (MXIM) reported 3rd Quarter March 2019 earnings of $0.52 per share on revenue of $542.4 million. The consensus earnings estimate was $0.52 per share on revenue of $540.0 million. Revenue fell 16.4% compared to the same quarter a year ago.

The company said it expects fourth quarter earnings of $0.54 to $0.60 per share on revenue of $540.0 million to $580.0 million. The current consensus earnings estimate is $0.58 per share on revenue of $567.4 million for the quarter ending June 30, 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
-
Consensus Estimate
$0.52
Reported Revenue
$542.4 Mil
Revenue Estimate
$540.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Maxim Integrated Reports Results For The Third Quarter Of Fiscal 2019

SAN JOSE, Calif., April 30, 2019 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $542 million for its third quarter of fiscal 2019 ended March 30, 2019, a 6% decrease from the $577 million revenue recorded in the prior quarter, and a 16% decrease from the same quarter of last year.

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

Tunc Doluca, President and Chief Executive Officer, commented, "Our March quarter results met our expectations and end market demand appears to have stabilized.  Looking ahead to the June quarter, we expect a return to seasonality in Industrial and Automotive, with both end markets trending up sequentially from the soft March quarter. Our profitability remains at industry-leading levels in this cycle due to our flexible manufacturing structure and overall business model."

Fiscal Year 2019 Third Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the March quarter was $0.47. The results were affected by $7 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 third quarter of fiscal 2019, total cash, cash equivalents and short-term investments were $1.90 billion, a decrease of $62 million from the prior quarter.

Notable items included:

  • Cash flow from operations: $207 million
  • Capital expenditures: $21 million
  • Dividends paid: $126 million ($0.46 per share)
  • Stock repurchases: $117 million

Adjusted trailing twelve months free cash flow was $899 million, which excludes a one-time tax payment of $178 million in the fourth quarter of fiscal 2018. 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 June 2019 quarter was $399 million. Based on the beginning backlog and expected turns, our results for the June 2019 quarter are forecasted to be as follows:

  • Revenue: $540 to $580 million
  • Gross Margin: 63% to 66% GAAP (64% to 67% excluding special items)
  • EPS: $0.53 to $0.59 GAAP ($0.54 to $0.60 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 $0.46 per share will be paid on June 14, 2019, to stockholders of record on May 30, 2019. 

Conference Call
Maxim Integrated has scheduled a conference call on April 30 at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal 2019 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




March 30,
2019


December 29,
2018


March 31,
2018




(in thousands, except per share data)



Net revenues

$

542,383



$

576,906



$

648,599




Cost of goods sold

201,552



203,858



224,653




Gross margin

340,831



373,048



423,946




Operating expenses:








Research and development

107,075



110,303



114,390




Selling, general and administrative

74,116



77,853



81,304




Intangible asset amortization

756



756



876




Impairment of long-lived assets



753






Severance and restructuring expenses

1,744



1,179



2,272




Other operating expenses (income), net





266




Total operating expenses (income), net

183,691



190,844



199,108




Operating income (loss)

157,140



182,204



224,838




Interest and other income (expense), net

3,318



472



(2,534)




Income (loss) before provision for income taxes

160,458



182,676



222,304




Income tax provision (benefit)

29,845



50,784



28,677




Net income (loss)

$

130,613



$

131,892



$

193,627




Earnings (loss) per share:








Basic

$

0.48



$

0.48



$

0.69




Diluted

$

0.47



$

0.47



$

0.68




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








Basic

273,221



276,252



280,850




Diluted

276,610



280,008



285,881




Dividends paid per share

$

0.46



$

0.46



$

0.42












SCHEDULE OF SPECIAL ITEMS



(Unaudited)




Three Months Ended




March 30,
2019


December 29,
2018


March 31,
2018




(in thousands)



Cost of goods sold:








Intangible asset amortization

$

5,008



$

6,868



$

12,101




 Total

$

5,008



$

6,868



$

12,101




Operating expenses:








Intangible asset amortization

756



$

756



$

876




Impairment of long-lived assets  (1)



753






Severance and restructuring

1,744



1,179



2,272




Other operating expenses (income), net





266




 Total

$

2,500



$

2,688



$

3,414




Interest and other expense (income), net

$

(857)



$

(351)



$

(97)




Total

$

(857)



$

(351)



$

(97)




Income tax provision (benefit):








Impact of U.S. tax legislation  (2)

$

(1,056)



$

22,082



$




Total

$

(1,056)



$

22,082



$












(1) Includes impairment of investments in privately-held companies and other equipment charges.



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










 


CONSOLIDATED BALANCE SHEETS



(Unaudited)




March 30,
2019


December 29,
2018


March 31,
2018




(in thousands)



ASSETS



Current assets:








Cash and cash equivalents

$

1,654,563



$

1,406,740



$

1,629,593




Short-term investments

243,864



553,901



1,094,801




Total cash, cash equivalents and short-term investments

1,898,427



1,960,641



2,724,394




Accounts receivable, net

381,152



391,419



320,553




Inventories

272,832



278,925



273,616




Other current assets

24,358



26,933



22,275




Total current assets

2,576,769



2,657,918



3,340,838




Property, plant and equipment, net

571,955



571,983



589,177




Intangible assets, net

61,036



67,161



90,848




Goodwill

532,251



532,251



532,904




Other assets

61,843



59,614



69,428




TOTAL ASSETS

$

3,803,854



$

3,888,927



$

4,623,195












LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:








Accounts payable

$

86,798



$

99,577



$

84,407




Price adjustment and other revenue reserves

106,011



130,601



24,339




Income taxes payable

44,179



39,507



147,771




Accrued salary and related expenses

128,365



102,427



48,384




Accrued expenses

33,644



34,368






Current portion of debt





499,050




Total current liabilities

398,997



406,480



803,951




Long-term debt

992,225



991,866



990,787




Income taxes payable

688,780



673,051



817,969




Other liabilities

61,105



62,116



59,497




Total liabilities

2,141,107



2,133,513



2,672,204












Stockholders' equity:








Common stock and capital in excess of par value

279



279



283




Retained earnings

1,672,938



1,766,471



1,963,912




Accumulated other comprehensive loss

(10,470)



(11,336)



(13,204)




Total stockholders' equity

1,662,747



1,755,414



1,950,991




TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

3,803,854



$

3,888,927



$

4,623,195











 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)




Three Months Ended




March 30,
2019


December 29,
2018


March 31,
2018




(in thousands)



Cash flows from operating activities:








Net income (loss)

$

130,613



$

131,892



$

193,627




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








Stock-based compensation

22,820



21,656



20,605




Depreciation and amortization

27,182



26,803



37,201




Deferred taxes

(3,955)



(5,174)



(2,670)




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

428



2,275



1,160




Impairment of investments in privately-held companies

(371)



753






Changes in assets and liabilities:








Accounts receivable

(14,323)



43,402



(80,953)




Inventories

6,123



(3,505)



(11,036)




Other current assets

3,561



6,038



(1,244)




Accounts payable

(13,372)



7,664



(235)




Income taxes payable

20,401



(482)



30,067




Accrued salary and related expenses

25,938



(375)



33,408




All other accrued liabilities

1,893



(6,697)



3,295




Net cash provided by (used in) operating activities

206,938



224,250



223,225




Cash flows from investing activities:








Purchase of property, plant and equipment

(21,257)



(12,597)



(16,930)




Proceeds from sales of property, plant and equipment

32



1



2,844




Proceeds from sale of available-for-sale securities

2,939



18,815



60,008




Proceeds from maturity of available-for-sale securities

308,529



416,720



304,289




Payment in connection with business acquisition, net of cash acquired





(57,773)




Purchases of available-for-sale securities



(23,707)



(268,821)




Purchases of privately-held companies' securities

(770)



(156)



(1,250)




Other investing activities

(540)








Net cash provided by (used in) investing activities

288,933



399,076



22,367




Cash flows from financing activities:








Repayment of debt



(500,000)






Contingent consideration paid

(1,052)








Net issuance of restricted stock units

(9,582)



(5,916)



(9,642)




Proceeds from stock options exercised

5,143



7,235



7,716




Issuance of common stock under employee stock purchase program



17,689






Repurchase of common stock

(116,991)



(207,558)



(127,700)




Dividends paid

(125,566)



(126,808)



(117,883)




Net cash provided by (used in) financing activities

(248,048)



(815,358)



(247,509)




Net increase (decrease) in cash and cash equivalents

247,823



(192,032)



(1,917)




Cash and cash equivalents:








Beginning of period

$

1,406,740



$

1,598,772



$

1,631,510




End of period

$

1,654,563



$

1,406,740



$

1,629,593




Total cash, cash equivalents, and short-term investments

$

1,898,427



$

1,960,641



$

2,724.394











 


ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES



(Unaudited)





Three Months Ended





March 30,
2019


December 29,
2018


March 31,
2018





(in thousands, except per share data)



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









GAAP gross profit


$

340,831



$

373,048



$

423,946




GAAP gross profit %


62.8

%


64.7

%


65.4

%



Special items:









Intangible asset amortization


5,008



6,868



12,101




Total special items


5,008



6,868



12,101




 GAAP gross profit excluding special items


$

345,839



$

379,916



$

436,047




 GAAP gross profit % excluding special items


63.8

%


65.9

%


67.2

%



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









GAAP operating expenses


$

183,691



$

190,844



$

199,108




Special items:









Intangible asset amortization


756



756



876




Impairment of long-lived assets




753






Severance and restructuring


1,744



1,179



2,272




Other operating expenses (income), net






266




 Total special items


2,500



2,688



3,414




 GAAP operating expenses excluding special items


$

181,191



$

188,156



$

195,694




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









GAAP net income (loss)


$

130,613



$

131,892



$

193,627




Special items:









Intangible asset amortization


5,764



7,624



12,977




Impairment of long-lived assets (1)




753






Severance and restructuring


1,744



1,179



2,272




Other operating expenses (income), net






266




Interest and other expense (income), net


(857)



(351)



(97)




 Total pre-tax special items


6,651



9,205



15,418




Other income tax effects and adjustments (2)


7,506



3,758



151




Impact of U.S. tax effects and adjustments (3)


(1,056)



22,082






 GAAP net income excluding special items


$

143,714



$

166,937



$

209,196













GAAP net income per share excluding special items:









Basic


$

0.53



$

0.60



$

0.74




Diluted


$

0.52



$

0.60



$

0.73




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









Basic


273,221



276,252



280,850




Diluted


276,610



280,008



285,881













(1) Includes impairment of investments in privately-held companies and other equipment impairment charges.



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



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











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; impairment of long-lived assets; 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; impairment of long-lived assets; 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, and significant non-recurring and period specific tax items, which vary in size and frequency, including certain tax charges resulting from U.S. tax legislation that was enacted on December 22, 2017.   We used a long-term average tax rate to compute the GAAP tax provision excluding special items for the second quarter of fiscal year 2018; that long-term average tax rate was the weighted average of our normalized fiscal year GAAP tax rate, excluding special items over a four-year period, that included fiscal year 2018 and the three prior fiscal years.  A long-term average tax rate was not used for the third quarter of fiscal year 2018 or for the first, second and third quarters of fiscal year 2019 because, due to the impacts of tax reform, a long-term average tax rate was no longer appropriate.

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; impairment of long-lived assets; 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?fourth quarter of fiscal 2019 ending June 2019, which includes revenue, gross margin and earnings per share as well as the Company's?expectation of a return to seasonality in Industrial and Automotive in the June quarter, with both end markets trending up sequentially from the soft March quarter.? 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?30, 2018 (the "Form 10-K"). The Form 10-K may be found at https://www.sec.gov/Archives/edgar/data/743316/000074331618000031/maxim10-kfy2018.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

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SOURCE Maxim Integrated Investor Relations