MXIM
$58.13
Maxim Integrated
($.19)
(.33%)
Earnings Details
4th Quarter June 2018
Thursday, July 26, 2018 4:02:00 PM
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Summary

Maxim Integrated Sees Earnings Above Estimates

Maxim Integrated (MXIM) reported 4th Quarter June 2018 earnings of $0.73 per share on revenue of $633.2 million. The consensus earnings estimate was $0.70 per share on revenue of $630.7 million. Revenue grew 5.2% on a year-over-year basis.

The company said it expects first quarter earnings of $0.72 to $0.78 per share on revenue of $615.0 million to $655.0 million. The current consensus earnings estimate is $0.69 per share on revenue of $631.7 million for the quarter ending September 30, 2018.

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
$0.73
Earnings Whisper
-
Consensus Estimate
$0.70
Reported Revenue
$633.2 Mil
Revenue Estimate
$630.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Maxim Integrated Reports Results For The Fourth Quarter Of Fiscal 2018, Increases Dividend By 10%

SAN JOSE, Calif., July 26, 2018 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $633 million for its fourth quarter of fiscal 2018 ended June 30, 2018, a 2% decrease from the $649 million revenue recorded in the prior quarter, and a 5% increase from the same quarter of last year.

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

Tunc Doluca, President and Chief Executive Officer, commented, "We are pleased with our June quarter results.  Our power management franchise in Automotive and Industrial is producing sustainable and profitable growth." Mr. Doluca continued, "This execution against our strategy is resulting in strong and predictable cash flows, which support our industry-leading dividend and stock repurchase plans. Today, we are announcing a 10% increase in our dividend, reflecting our continued commitment to return cash to shareholders and confidence in our long-term outlook."

Fiscal Year 2018 Fourth Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the June quarter was $0.68. The results were affected by $12 million in pre-tax special items which primarily consisted of charges related to acquisitions. GAAP earnings per share, excluding special items was $0.73. An analysis of GAAP versus GAAP excluding special items is provided in the last table of this press release.

Cash Flow Items
At the end of the fourth quarter of fiscal 2018, total cash, cash equivalents and short-term investments were $2.63 billion, a decrease of $98 million from the prior quarter.

Notable items included:

  • Cash flow from operations: $147 million
  • Capital expenditures: $12 million
  • Dividends paid: $117 million ($0.42 per share)
  • Stock repurchases: $128 million

Adjusted trailing twelve months free cash flow was $932 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 September 2018 quarter was $441 million. Based on the beginning backlog and expected turns, our results for the September 2018 quarter are forecasted to be as follows:

  • Revenue: $615 to $655 million
  • Gross Margin: 65% to 67% GAAP (66.5% to 68.5% excluding special items)
  • EPS: $0.67 to $0.73 GAAP ($0.72 to $0.78 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
Our Board of Directors approved a 10% increase in the quarterly dividend. A cash dividend of $0.46 per share will be paid on September 13, 2018, to stockholders of record on August 30, 2018

Conference Call
Maxim Integrated has scheduled a conference call on July 26 at 1:15 p.m. Pacific Time to discuss its financial results for the fourth quarter of fiscal 2018 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


Year Ended




June 30,


March 31


June 24,


June 30,


June 24,




2018


2018


2017


2018


2017




(in thousands, except per share data)



Net revenues

$                    633,154


$                    648,599


$                    602,005


$     2,480,066


$                 2,295,615



Cost of goods sold (1)

214,486


224,653


208,339


853,945


849,135



Gross margin

418,668


423,946


393,666


1,626,121


1,446,480



Operating expenses:












Research and development

112,056


114,390


114,011


450,943


453,977



Selling, general and administrative

82,611


81,304


75,129


322,918


291,511



Intangible asset amortization

844


876


2,050


4,467


9,189



Impairment of long-lived assets (2)




892


7,517



Severance and restructuring expenses

833


2,272


1,175


15,060


12,453



Other operating expenses (income), net (3)

(71)


266


1,923


(1,607)


(22,944)



Total operating expenses (income), net

196,273


199,108


194,288


792,673


751,703



Operating income (loss)

222,395


224,838


199,378


833,448


694,777



Interest and other income (expense), net (4)

1,305


(2,534)


(3,798)


(8,563)


(15,188)



Income (loss) before provision for income taxes

223,700


222,304


195,580


824,885


679,589



Income tax provision (benefit) (5)

29,528


28,677


32,271


357,567


107,976



Net income (loss)

$                    194,172


$                    193,627


$                    163,309


$        467,318


$                    571,613



























Earnings (loss) per share:












Basic

$0.70


$0.69


$0.58


$1.66


$2.02



Diluted

$0.68


$0.68


$0.57


$1.64


$1.98















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












Basic

279,304


280,850


282,747


280,979


283,147



Diluted

283,934


285,881


287,494


285,674


287,974















Dividends paid per share

$0.42


$0.42


$0.33


$1.56


$1.32



























SCHEDULE OF SPECIAL ITEMS



(Unaudited)



Three Months Ended


Year Ended




June 30,


March 31


June 24,


June 30,


June 24,




2018


2018


2017


2018


2017




(in thousands)



Cost of goods sold:












Intangible asset amortization

$                      11,759


$                      12,101


$                      11,064


$          46,064


$                      46,485



Accelerated depreciation (1)





3,459



 Total 

$                      11,759


$                      12,101


$                      11,064


$          46,064


$                      49,944















 Operating expenses: 












Intangible asset amortization

$                           844


$                           876


$                        2,050


$            4,467


$                        9,189



Impairment of long-lived assets (2)




892


7,517



Severance and restructuring

833


2,272


1,175


15,060


12,453



Other operating expenses (income), net (3)

(71)


266


1,923


(1,607)


(22,944)



 Total 

$                        1,606


$                        3,414


$                        5,148


$          18,812


$                        6,215















Interest and other expense (income), net (4)

$                         (941)


$                           (97)


$                           (90)


$          (1,243)


$                      (5,661)



 Total 

$                         (941)


$                           (97)


$                           (90)


$          (1,243)


$                      (5,661)















 Provision (benefit) for income taxes: 












Impact of U.S. tax legislation (5)

$                             —


$                            —


$                            —


$        243,550


$                            —



 Total 

$                             —


$                            —


$                            —


$        243,550


$                            —















(1) Includes building and equipment accelerated depreciation related to the Dallas manufacturing facility during fiscal year 2017.



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



(3) Includes gain on sale of the micro-electromechanical systems (MEMS) business line during fiscal year 2017.



(4) Includes gain on sale of shares received for the sale of the wafer manufacturing facility in San Antonio, Texas during fiscal year 2017.



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














 










CONSOLIDATED BALANCE SHEETS



(Unaudited)




June 30,


March 31


June 24,




2018


2018


2017




(in thousands) 



ASSETS



Current assets:








Cash and cash equivalents

$ 1,543,484


$ 1,629,593


$ 2,246,121



Short-term investments

1,082,915


1,094,801


498,718



Total cash, cash equivalents and short-term investments

2,626,399


2,724,394


2,744,839



Accounts receivable, net

280,072


320,553


256,454



Inventories

282,390


273,616


247,242



Other current assets

21,548


22,275


57,059



Total current assets

3,210,409


3,340,838


3,305,594



Property, plant and equipment, net

579,364


589,177


606,581



Intangible assets, net

78,246


90,848


90,867



Goodwill

532,251


532,904


491,015



Other assets

51,291


69,428


76,176



     TOTAL ASSETS

$ 4,451,561


$ 4,623,195


$ 4,570,233



















LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:








Accounts payable

$      92,572


$      84,407


$      77,373



Income taxes payable

17,961


24,339


3,688



Accrued salary and related expenses

151,682


147,771


145,299



Accrued expenses

35,774


48,384


37,663



Deferred margin on shipments to distributors



14,974



Current portion of long-term debt

499,406


499,050




Total current liabilities

797,395


803,951


278,997



Long-term debt

991,147


990,787


1,487,678



Income taxes payable

661,336


817,969


557,498



Other liabilities

70,743


59,497


43,366



Total liabilities

2,520,621


2,672,204


2,367,539











Stockholders' equity:








Common stock and capital in excess of par value

279


283


283



Retained earnings

1,945,646


1,963,912


2,212,301



Accumulated other comprehensive loss

(14,985)


(13,204)


(9,890)



Total stockholders' equity

1,930,940


1,950,991


2,202,694



TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$ 4,451,561


$ 4,623,195


$ 4,570,233










 


CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)




Three Months Ended


Year Ended




June 30,


March 31


June 24,


June 30,


June 24,




2018


2018


2017


2018


2017




(in thousands)



Cash flows from operating activities:












Net income (loss)

$   194,172


$   193,627


$   163,309


$   467,318


$   571,613



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












Stock-based compensation

19,753


20,605


17,624


78,685


71,117



Depreciation and amortization

36,083


36,324


38,194


144,974


164,292



Deferred taxes

21,458


(2,670)


1,697


27,715


(7,895)



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

423


1,160


7,006


995


16,365



Loss (gain) on sale of business





(26,620)



Impairment of long-lived assets



665


42


1,462



Impairment of investment in privately-held companies




850


6,720



Changes in assets and liabilities:












Accounts receivable

40,480


(80,953)


1,138


(19,714)


78



Inventories

(9,450)


(11,036)


(5,715)


(32,776)


(21,215)



Other current assets

(212)


(367)


(727)


32,368


(3,547)



Accounts payable

6,131


(235)


(5,235)


9,560


(6,205)



Income taxes payable

(163,010)


30,067


22,619


117,654


60,798



Deferred margin on shipments to distributors



(20,751)


(14,974)


(23,805)



Accrued salary and related expenses

3,911


33,408


9,597


5,737


(21,399)



All other accrued liabilities

(3,080)


3,295


7,507


1,030


(8,102)



Net cash provided by (used in) operating activities

146,659


223,225


236,928


$819,464


773,657



Cash flows from investing activities:












Purchase of property, plant and equipment

(12,118)


(16,930)


(13,050)


(65,782)


(51,421)



Proceeds from sales of property, plant and equipment

62


2,844


7,576


5,823


10,792



Proceeds from sale of available-for-sale securities

7,287


60,008



107,291


50,994



Proceeds from maturity of available-for-sale securities

330,749


304,289


50,000


753,249


75,000



Proceeds from sale of business





42,199



Payment in connection with business acquisition, net of cash acquired


(57,773)



(57,773)




Purchases of available-for-sale securities

(325,063)


(268,821)


(49,891)


(1,447,354)


(450,135)



Purchases of privately-held companies' securities

(2,164)


(1,250)



(5,520)


(2,825)



Net cash provided by (used in) investing activities

(1,247)


22,367


(5,365)


(710,066)


(325,396)



Cash flows from financing activities:












Net issuance of restricted stock units

(9,148)


(9,642)


(7,471)


(30,310)


(25,183)



Repayment of notes payable





(250,000)



Issuance of debt



500,000



500,000



Debt issuance cost



(3,688)



(3,688)



Proceeds from stock options exercised

1,626


7,716


18,434


28,009


63,003



Issuance of common stock under employee stock purchase program

21,346



19,805


36,321


34,269



Repurchase of common stock

(128,024)


(127,700)


(75,853)


(407,968)


(251,799)



Dividends paid

(117,321)


(117,883)


(93,396)


(438,087)


(373,971)



Net cash provided by (used in) financing activities

(231,521)


(247,509)


357,831


(812,035)


(307,369)



Net increase (decrease) in cash and cash equivalents

(86,109)


(1,917)


589,394


(702,637)


140,892



Cash and cash equivalents:












Beginning of period

$1,629,593


$1,631,510


$1,656,727


$2,246,121


$2,105,229



End of period

$1,543,484


$1,629,593


$2,246,121


$1,543,484


$2,246,121















Total cash, cash equivalents, and short-term investments

$2,626,399


$2,724,394


$2,744,839


$2,626,399


$2,744,839














 














ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES



(Unaudited)




Three Months Ended


Year Ended




June 30,


March 31


June 24,


June 30,


June 24,




2018


2018


2017


2018


2017




(in thousands, except per share data)



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












GAAP gross profit

$   418,668


$   423,946


$   393,666


$ 1,626,121


$ 1,446,480



GAAP gross profit %

66.1%


65.4%


65.4%


65.6%


63.0%















Special items:












Intangible asset amortization 

11,759


12,101


11,064


46,064


46,485



Accelerated depreciation (1)





3,459



 Total special items 

11,759


12,101


11,064


46,064


49,944



  GAAP gross profit excluding special items 

$   430,427


$   436,047


$   404,730


$ 1,672,185


$ 1,496,424



  GAAP gross profit % excluding special items 

68.0%


67.2%


67.2%


67.4%


65.2%















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












GAAP operating expenses

$   196,273


$   199,108


$   194,288


$    792,674


$    751,703















Special items:












Intangible asset amortization

844


876


2,050


4,467


9,189



Impairment of long-lived assets (2)




892


7,517



Severance and restructuring

833


2,272


1,175


15,060


12,453



Other operating expenses (income), net (3)

(71)


266


1,923


(1,607)


(22,944)



 Total special items 

1,606


3,414


5,148


18,812


6,215



 GAAP operating expenses excluding special items 

$   194,667


$   195,694


$   189,140


$    773,862


$    745,488















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












GAAP net income (loss)

$   194,172


$   193,627


$   163,309


$    467,318


$    571,613















Special items:












Intangible asset amortization

12,603


12,977


13,114


50,531


55,674



Accelerated depreciation (1)





3,459



Impairment of long-lived assets (2)




892


7,517



Severance and restructuring

833


2,272


1,175


15,060


12,453



Other operating expenses (income), net (3)

(71)


266


1,923


(1,607)


(22,944)



Interest and other expense (income), net (4)

(941)


(97)


(90)


(1,243)


(5,661)



 Pre-tax total special items 

12,424


15,418


16,122


63,633


50,498



Other income tax effects and adjustments (5)

1,194


151


499


(898)


(11,465)



Impact of U.S. tax legislation (6)




243,550




 GAAP net income excluding special items 

$   207,790


$   209,196


$   179,930


$    773,603


$    610,646















 GAAP net income per share excluding special items: 












Basic

$0.74


$0.74


$0.64


$2.75


$2.16



Diluted

$0.73


$0.73


$0.63


$2.71


$2.12















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












Basic

279,304


280,850


282,747


280,979


283,147



Diluted

283,934


285,881


287,494


285,674


287,974















(1) Includes building and equipment accelerated depreciation related to the Dallas manufacturing facility during fiscal year 2017.



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



(3) Includes gain on sale of the micro-electromechanical systems (MEMS) business line during fiscal year 2017.



(4) Includes gain on sale of shares received for the sale of the wafer manufacturing facility in San Antonio, Texas during fiscal year 2017.



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



(6) 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; accelerated depreciation; 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 and accelerated depreciation. 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 including the tax provision impact of pre-tax special items. In fiscal year 2016, we began using a long-term tax rate to compute the GAAP provision for income taxes excluding special items. We reviewed the long-term tax rate on an annual basis and more frequently whenever events occurred that may have materially affected the long-term tax rate such as tax law changes; significant changes in our geographic earnings mix; or changes in our corporate structure. This long-term tax rate considered the income tax impact of pre-tax special items and eliminated the effects of significant non-recurring and period specific tax items which varied in size and frequency, including certain one-time tax charges resulting from U.S. tax legislation that was enacted on December 22, 2017. In the first quarter of fiscal year 2018, we began using a long-term tax rate of 14%, which was our forecast of the weighted average of our normalized fiscal year GAAP tax rate excluding special items over a four-year period, that included the past three fiscal years plus the current fiscal year projection at the beginning of fiscal year 2018. In the third quarter of fiscal year 2018, we modified our approach and began using a 12% tax rate for fiscal year 2018.  Because of the impacts of tax reform, a long-term average tax rate is no longer appropriate for the remainder of fiscal year 2018.  The tax rate of 12% best reflects the tax rate excluding special items for fiscal year 2018 as a single year.

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; accelerated depreciation; 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 first quarter of fiscal 2019 ending in September 2018, which includes revenue, gross margin and earnings per share.  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 24, 2017 (the "Form 10-K"). The Form 10-K may be found at https://www.sec.gov/Archives/edgar/data/743316/000074331617000028/maxim10-kfy2017.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