Maxim Integrated Reports Results For The Fourth Quarter Of Fiscal 2019, Increases Dividend By 4%
SAN JOSE, Calif., July 30, 2019 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $557 million for its fourth quarter of fiscal 2019 ended June 29, 2019, a 3% increase from the $542 million revenue recorded in the prior quarter, and a 12% decrease from the same quarter of last year.
"Our June quarter results met our expectations, while we lowered both internal and distribution channel inventory. Given the soft business environment, we will continue to tightly manage inventory and spending in the September quarter," said Tunc Doluca, President and Chief Executive Officer. "Today, we are announcing a 4% increase in our dividend, reflecting our commitment to return cash to shareholders and confidence in our long-term outlook."
Fiscal Year 2019 Fourth Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the June quarter was $1.33, which benefitted from a $204 million tax reserve release. GAAP earnings per share, excluding special items was $0.57. An analysis of GAAP versus GAAP excluding special items is provided in this press release.
Cash Flow Items
At the end of the fourth quarter of fiscal 2019, total cash, cash equivalents and short-term investments were $1.9 billion, flat from the prior quarter.
Notable items included:
-- Cash flow from operations: $237 million
-- Capital expenditures: $31 million
-- Dividends paid: $125 million ($0.46 per share)
-- Stock repurchases: $102 million
Trailing twelve months free cash flow was $793 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 September 2019 quarter was $391 million. Based on the beginning backlog and expected turns, our results for the September 2019 quarter are forecasted to be as follows:
-- Revenue: $510 to $550 million
-- Gross Margin: 62% to 64% GAAP (63% to 65% excluding special items)
-- EPS: $0.45 to $0.51 GAAP ($0.46 to $0.52 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 4% increase in the quarterly dividend. A cash dividend of $0.48 per share will be paid on September 13, 2019, to stockholders of record on August 29, 2019.
Conference Call
Maxim Integrated has scheduled a conference call on July 30 at 2:00 p.m. Pacific Time to discuss its financial results for the fourth 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 Year Ended
June 29,
March 30,
June 30,
June 29,
June 30,
2019 2019 2018 2019 2018
(in thousands, except per share data)
Net revenues $556,545 $542,383 $633,154 $2,314,329 $2,480,066
Cost of goods sold 200,154 201,552 214,486 813,823 853,945
Gross margin 356,391 340,831 418,668 1,500,506 1,626,121
Operating expenses:
Research and development 105,136 107,075 112,056 435,222 450,943
Selling, general and administrative 75,130 74,116 82,611 308,617 322,918
Intangible asset amortization 756 756 844 3,041 4,467
Impairment of long-lived assets 753 892
Severance and restructuring expenses 1,715 1,744 833 5,632 15,060
Other operating expenses (income), net 83 (71) 143 (1,607)
Total operating expenses (income), net 182,820 183,691 196,273 753,408 792,673
Operating income (loss) 173,571 157,140 222,395 747,098 833,448
Interest and other income (expense), net 4,079 3,318 1,305 7,323 (8,563)
Income before taxes 177,650 160,458 223,700 754,421 824,885
Provision (benefit) for income taxes (1)
(2) (189,908) 29,845 29,528 (73,065) 357,567
Net income $367,558 $130,613 $194,172 $827,486 $467,318
Earnings per share:
Basic $1.35 $0.48 $0.70 $3.01 $1.66
Diluted $1.33 $0.47 $0.68 $2.97 $1.64
Shares used in the calculation of
earnings per share:
Basic 272,382 273,221 279,304 274,966 280,979
Diluted 275,835 276,610 283,934 278,777 285,674
Dividends paid per share $0.46 $0.46 $0.42 $1.84 $1.56
SCHEDULE OF SPECIAL ITEMS
(Unaudited)
Three Months Ended Year Ended
June 29,
March 30,
June 30,
June 29,
June 30,
2019 2019 2018 2019 2018
(in thousands)
Cost of goods sold:
Intangible asset amortization $4,038 $5,008 $11,759 $22,829 $46,064
Total $4,038 $5,008 $11,759 $22,829 $46,064
Operating expenses:
Intangible asset amortization $756 $756 $844 $3,041 $4,467
Impairment of long-lived assets 753 892
Severance and restructuring 1,715 1,744 833 5,632 15,060
Other operating expenses (income), net 83 (71) 143 (1,607)
Total $2,554 $2,500 $1,606 $9,569 $18,812
Interest and other expense (income), net $(2,980) $(857) $(941) $(4,565) $(1,243)
Total $(2,980) $(857) $(941) $(4,565) $(1,243)
Provision (benefit) for income taxes
Impact of U.S. tax legislation (1) $47,703 $(1,056)
$ - $68,729 $243,550
Impact of income tax audit settlements
(2) (251,599) (251,599)
Total $(203,896) $(1,056)
$ - $(182,870) $243,550
(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)
June 29,
March 30,
June 30,
2019 2019 2018
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $1,757,342 $1,654,563 $1,543,484
Short-term investments 140,990 243,864 1,082,915
Total cash, cash equivalents and short-term
investments 1,898,332 1,898,427 2,626,399
Accounts receivable, net 360,016 381,152 280,072
Inventories 246,512 272,832 282,390
Other current assets 34,640 24,358 21,548
Total current assets 2,539,500 2,576,769 3,210,409
Property, plant and equipment, net 577,722 571,955 579,364
Intangible assets, net 56,242 61,036 78,246
Goodwill 532,251 532,251 532,251
Other assets 38,267 61,843 51,291
TOTAL ASSETS $3,743,982 $3,803,854 $4,451,561
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $84,335 $86,798 $92,572
Price adjustment and other revenue reserves 100,490 106,011
Income taxes payable 33,765 44,179 17,961
Accrued salary and related expenses 118,704 128,365 151,682
Accrued expenses 33,873 33,644 35,774
Current portion of long-term debt 499,406
Total current liabilities 371,167 398,997 797,395
Long-term debt 992,584 992,225 991,147
Income taxes payable 469,418 688,780 661,336
Other liabilities 65,537 61,105 70,743
Total liabilities 1,898,706 2,141,107 2,520,621
Stockholders' equity:
Common stock and capital in excess of par value 272 279 279
Retained earnings 1,856,358 1,672,938 1,945,646
Accumulated other comprehensive loss (11,354) (10,470) (14,985)
Total stockholders' equity 1,845,276 1,662,747 1,930,940
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $3,743,982 $3,803,854 $4,451,561
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Year Ended
June 29, March 30,
June 30,
June 29,
June 30,
2019 2019 2018 2019 2018
(in thousands)
Cash flows from operating activities:
Net income $367,558 $130,613 $194,172 $827,486 $467,318
Adjustments to reconcile net
income to net cash provided
by operating activities:
Stock-based compensation 22,004 22,820 19,753 86,977 78,685
Depreciation and amortization 25,569 27,182 36,083 110,745 144,974
Deferred taxes 26,118 (3,955) 21,458 13,957 27,715
Loss on sale of property, plant and
equipment 643 428 423 3,967 995
Impairment of long-lived assets 42
Impairment of investment in privately-
held companies (268) (371) (3) 850
Changes in assets and liabilities:
Accounts receivable 15,615 (14,323) 40,480 21,090 (19,714)
Inventories 26,383 6,123 (9,450) 36,003 (32,776)
Other current assets (11,875) 3,561 (212) (14,901) 32,368
Accounts payable 699 (13,372) 6,131 (10,272) 9,560
Income taxes payable (229,776) 20,401 (163,010) (176,114) 117,654
Deferred margin on shipments to
distributors (14,974)
All other accrued liabilities (5,203) 27,831 831 (23,095) 6,767
Net cash provided by operating activities 237,467 206,938 146,659 875,840 819,464
Cash flows from investing activities:
Purchases of property, plant and equipment (30,653) (21,257) (12,118) (82,823) (65,782)
Proceeds from sales of property, plant and
equipment 306 32 62 340 5,823
Proceeds from sales of available-for-
sale securities 2,939 7,287 30,192 107,291
Proceeds from maturity of available-for-
sale securities 103,431 308,529 330,749 1,130,514 753,249
Payment in connection with business
acquisition, net of cash acquired (2,949) (57,773)
Purchases of available-for-sale
securities (325,063) (214,587) (1,447,354)
Purchases of privately-held companies'
securities (1,500) (770) (2,164) (3,176) (5,520)
Other investing activities (60) (540) (600)
Net cash provided by (used in) investing
activities 71,524 288,933 (1,247) 856,911 (710,066)
Cash flows from financing activities:
Contingent consideration paid (1,052) (9,052)
Net issuance of restricted stock units (6,663) (9,582) (9,148) (29,689) (30,310)
Repayment of notes payable (500,000)
Proceeds from stock options exercised 5,414 5,143 1,626 24,400 28,009
Issuance of common stock under employee
stock purchase program 22,486 21,346 40,175 36,321
Repurchase of common stock (102,104) (116,991) (128,024) (539,151) (407,968)
Dividends paid (125,345) (125,566) (117,321) (505,576) (438,087)
Net cash provided by (used in) financing
activities (206,212) (248,048) (231,521) (1,518,893) (812,035)
Net increase (decrease) in cash and cash
equivalents 102,779 247,823 (86,109) 213,858 (702,637)
Cash and cash equivalents:
Beginning of period $1,654,563 $1,406,740 $1,629,593 $1,543,484 $2,246,121
End of period $1,757,342 $1,654,563 $1,543,484 $1,757,342 $1,543,484
Total cash, cash equivalents, and short-
term investments $1,898,332 $1,898,427 $2,626,399 $1,898,332 $2,626,399
ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES
(Unaudited)
Three Months Ended Year Ended
June 29, March 30, June 30,
June 29,
June 30,
2019 2019 2018 2019 2018
(in thousands, except per share data)
Reconciliation of GAAP gross profit to
GAAP gross profit excluding special
items:
GAAP gross profit $356,391 $340,831 $418,668 $1,500,506 $1,626,121
GAAP gross profit % 64.0% 62.8% 66.1% 64.8% 65.6%
Special items:
Intangible asset amortization 4,038 5,008 11,759 22,829 46,064
Total special items 4,038 5,008 11,759 22,829 46,064
GAAP gross profit excluding special
items $360,429 $345,839 $430,427 $1,523,335 $1,672,185
GAAP gross profit % excluding special
items 64.8% 63.8% 68.0% 65.8% 67.4%
Reconciliation of GAAP operating
expenses to GAAP operating expenses
excluding special items:
GAAP operating expenses $182,820 $183,691 $196,273 $753,408 $792,674
Special items:
Intangible asset amortization 756 756 844 3,041 4,467
Impairment of long-lived assets 753 892
Severance and restructuring 1,715 1,744 833 5,632 15,060
Other operating expenses (income), net 83 (71) 143 (1,607)
Total special items 2,554 2,500 1,605 9,569 18,812
GAAP operating expenses excluding
special items $180,266 $181,191 $194,667 $743,839 $773,862
Reconciliation of GAAP net income to
GAAP net income excluding special
items:
GAAP net income $367,558 $130,613 $194,172 $827,486 $467,318
Special items:
Intangible asset amortization 4,794 5,764 12,603 25,870 50,531
Impairment of long-lived assets 753 892
Severance and restructuring 1,715 1,744 833 5,632 15,060
Other operating expenses (income), net 83 (71) 143 (1,607)
Interest and other expense (income),
net (2,980) (857) (941) (4,565) (1,243)
Pre-tax total special items 3,612 6,651 12,424 27,833 63,633
Other income tax effects and
adjustments (1) (11,271) 7,506 1,194 4,747 (898)
Impact of U.S. tax legislation (2) 47,703 (1,056) 68,729 243,550
Impact of income tax audit settlements
(3) (251,599) (251,599)
GAAP net income excluding special items $156,003 $143,714 $207,790 $677,196 $773,603
GAAP net income per share excluding
special items:
Basic $0.57 $0.53 $0.74 $2.46 $2.75
Diluted $0.57 $0.52 $0.73 $2.43 $2.71
Shares used in the calculation of earnings
per share excluding special items:
Basic 272,382 273,221 279,304 274,966 280,979
Diluted 275,834 276,610 283,934 278,777 285,674
(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; 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 first and second quarters 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 and fourth quarters of fiscal year 2018 or for 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 first quarter of fiscal 2020 ending September 2019, which includes revenue, gross margin and earnings per share, as well as the Company's plan to continue to tightly manage inventory and spending in the September quarter given the soft business environment. 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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