26 January 2015

Skyworks exceeds quarterly revenue, margin and earnings guidance

For fiscal first-quarter 2015 (to 2 January), Skyworks Solutions Inc of Woburn, MA, USA (which manufactures analog and mixed-signal semiconductors) has reported record revenue of $805.5m, up 12% on $718.2m last quarter and 59% on $505.2m a year ago (and exceeding guidance, given on 10 November, of rises of 7% and 52%, respectively, to $770m).

Fiscal	Q1/2014	Q2/2014	Q3/2014	Q4/2014	Q1/2015
Revenue	$505.2m	$481m	$587m	$718.2m	$805.5m

"We saw healthy growth across all product categories, with the strongest being integrated mobile systems, which benefits from strong December-quarter seasonal patterns," says executive VP & chief financial officer Donald W. Palette. "This product category includes SkyOne, SkyLiTE, and our power amplifier duplexers as well as analog products like power management, WiFi, and GPS," he adds.

As a proportion of total revenue, compared with last quarter, integrated mobile systems rose further from 39% to 48%. Consequently, power amplifiers fell further from 36% to 31% of total revenue and broad markets fell from 25% to 21%.

"Our broad markets product lines - serving the connected home, networking, media, automotive, and medical markets - grew 26% year-over-year, significantly outpacing the broader semiconductor industry," Palette adds.

Highlights during the quarter are listed as follows:

• commencing volume production of SkyLiTE integrated systems supporting Mediatek's latest system-on-chip (SoC) reference designs across multiple smartphone platforms at several OEM customers;

• delivering diversity receive modules for LTE smartphones at several OEM customers including Samsung (a new product category for Skyworks, representing "a compelling growth avenue");

• delivering switching and connectivity modules for Xiaomi's smartphone Mi4 platform;

• capturing 10 new design wins in Cisco's latest home gateway supporting multiple cable operators;

• securing multiple analog devices in a leading telematics platform for GM vehicles;

• supporting Thales avionics platforms with hi-reliability analog IC switching products;

• introduced Zigbee connectivity modules for smart lighting products at LG and Philips;

• ramping local-area connectivity ICs for Fire TV and Echo streaming media devices at a major online retailer;

• capturing over $10 of analog content supporting Technicolor's latest set-top box platform for DirecTV;

• expanding wearable designs with multiple devices in Timex's Ironman smartwatch;

• powering Linksys' 9-stream access points with 802.11ac front-end solutions.

"Our business results are being fueled by a global surge in connectivity across a wide-ranging set of applications and by the increase in analog-rich content that is required to power today's most innovative devices," says chairman & CEO David J. Aldrich. "Skyworks is at the forefront of this technology advancement — facilitating secure, high-speed, seamless connections through our integrated solutions," he adds. "As our results show, we are capitalizing on these trends."

On a non-GAAP basis, gross margin has risen further, from 44.5% a year ago and 45.9% last quarter to 46.7% (above the forecasted 46.5%). This is despite operating expenses rising further, from $82.9m a year ago and $93.9m last quarter to $94.4m, driven by R&D expenses increasing from $50.8m a year ago and $58.2m last quarter to $58.7m.

Operating income has risen further, from $235.7m (operating margin of 32.8%) last quarter to $282m (operating margin of 35%), almost double the $141.8m a year ago (operating margin of 28.1%).

Likewise, net income has grown from $127.7m ($0.67 per diluted share) a year ago and $216.1m ($1.12 of per diluted share) last quarter to $244.8m ($1.26 per diluted share, above the $1.18 guidance, and surpassing $5 in annualized EPS).

Cash flow generated from operations has risen from $201m last quarter to a record $383m (more than double the $159m a year ago). Capital expenditure has increased further, from just $16m a year ago and $83m last quarter to $87m. Depreciation was $36m (up from $30m last quarter and $21m a year ago). During the quarter, cash and cash equivalents hence rose from $806m to $1.05bn (with no debt).

Skyworks' board of directors has subsequently declared a cash dividend of $0.13 per share (payable on 3 March to stockholders of record at the close of business on 5 February).

"We have created a unique business model, combining the strong growth of connectivity and the Internet of Things with the financial returns of a diversified analog company," says executive VP & chief financial officer Donald W. Palette. "Our increasing market reach, expanding content opportunities and new product launches are enabling us to outperform normal March quarter seasonal trends," he adds.

For fiscal second-quarter 2015, Skyworks expects revenue of $750m, up 56% year-on-year (significantly better than normal seasonality). Gross margin should be 46-46.5%, with operating expenses rising slightly to $95.5m. Diluted earnings per share are expected to be $1.12.

"While March is normally a seasonal slower quarter in the mobile industry, our broadening market footprint, our new product ramps, and an expanding solutions portfolio enable us to mitigate these seasonal patterns, a clear testament to our diversification," says Aldrich. "With the design momentum we have in place today, we're poised to continue our track record of above-market revenue growth, expanding profit margins, and earnings leverage."

See related items:

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

Skyworks exceeds raised quarterly earnings and revenue guidance, up 35% year-on-year to $587m

Skyworks' reports above-target 13% year-on-year growth to $481m quarterly revenue

Skyworks quarterly revenue grows more-than-expected 6% to $505m

Tags: Skyworks

Visit: www.skyworksinc.com