Maxim Integrated Reports Results For The Fourth Quarter Of Fiscal 2021
/PRNewswire/ — Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $720 million for its fourth quarter of fiscal 2021 ended June 26, 2021,…
SAN JOSE, Calif.
,
July 27, 2021
/PRNewswire/ — Maxim Integrated Products, Inc. (NASDAQ:
MXIM
) reported net revenue of
$720 million
for its fourth quarter of fiscal 2021 ended
June 26, 2021
, an 8% increase from the
$665 million
revenue recorded in the prior quarter, and a 32% increase from the same quarter of last year.
“Maxim delivered record revenue in the June quarter, with sequential growth in all end markets, led by Industrial, Automotive, and Comms & Data Center. On the merger front, we are seeking final regulatory clearance for our combination with Analog Devices,” said
Tunc Doluca
, President and Chief Executive Officer.
Fiscal Year 2021 Fourth Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the June quarter was
$0.93
, which benefited from a
$13 million
tax reserve release. The results were affected by
$6 million
in pre-tax special items which primarily consisted of
$4 million
of expenses related to prior acquisitions and
$2 million
in charges related to our upcoming combination with Analog Devices. GAAP earnings per share, excluding special items was
$0.91
. 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 2021, total cash, cash equivalents and short-term investments were
$2.3 billion
, up
$257 million
from the prior quarter.
Notable items included:
Cash flow from operations:
$280 million
Capital expenditures:
$20 million
Trailing twelve months free cash flow was
$859 million
. Free cash flow is a non-GAAP measure and is defined by cash flow from operations less capital expenditures.
Dividend and Stock Repurchase
Per the terms of the Merger Agreement between the Company and Analog Devices, we will not declare a dividend that would have been paid in
September 2021
and our stock repurchase program remains suspended.
Due to the pending merger with Analog Devices, Maxim Integrated will not be hosting a quarterly earnings conference call and has suspended the practice of providing forward-looking guidance. Investors are requested to review our Investor Relations website for the quarterly financial highlights and SEC filings for the latest updates on the pending transaction with Analog Devices.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
Year Ended
June 26, 2021
March 27, 2021
June 27, 2020
June 26, 2021
June 27, 2020
(in thousands, except per share data)
Net revenues
$ 719,855
$ 665,029
$ 545,369
$ 2,632,529
$ 2,191,395
Cost of goods sold
235,830
222,144
183,001
872,183
758,743
Gross margin
484,025
442,885
362,368
1,760,346
1,432,652
Operating expenses:
Research and development
114,834
109,228
110,173
454,330
440,166
Selling, general and administrative
81,071
76,544
72,893
320,722
296,722
Intangible asset amortization
846
846
810
3,554
3,078
Severance and restructuring expenses
1,139
155
678
13,434
5,363
Other operating expenses (income), net
2,798
8,848
(173)
22,606
929
Total operating expenses
200,688
195,621
184,381
814,646
746,258
Operating income
283,337
247,264
177,987
945,700
686,394
Interest and other income (expense), net
(5,723)
(2)
(8,488)
(15,964)
(8,298)
Income before taxes
277,614
247,262
169,499
929,736
678,096
Provision for (benefit from) income taxes
(1)(2)
23,875
27,199
(37,799)
102,475
23,402
Net income
$ 253,739
$ 220,063
$ 207,298
$ 827,261
$ 654,694
Earnings per share:
Basic
$ 0.95
$ 0.82
$ 0.78
$ 3.09
$ 2.43
Diluted
$ 0.93
$ 0.81
$ 0.77
$ 3.05
$ 2.41
Shares used in the calculation of earnings per share:
Basic
268,160
267,892
266,639
267,546
269,341
Diluted
271,445
271,396
268,777
270,872
272,028
Dividends paid per share
$ –
$ –
$ 0.48
$ 0.48
$ 1.92
SCHEDULE OF SPECIAL ITEMS
(Unaudited)
Three Months Ended
Year Ended
June 26, 2021
March 27, 2021
June 27, 2020
June 26, 2021
June 27, 2020
(in thousands)
Cost of goods sold:
Intangible asset amortization
$ 3,047
$ 4,430
$ 3,528
$ 17,408
$ 12,860
Merger-related expenses
(3)
–
–
–
2,394
–
Cost of COVID-19 response programs
609
638
1,591
2,750
3,616
Total
$ 3,656
$ 5,068
$ 5,119
$ 22,552
$ 16,476
Operating expenses:
Merger-related expenses
(3)
$ 2,058
$ 2,546
$ –
$ 26,617
$ –
Intangible asset amortization
846
846
810
3,553
3,078
Severance and restructuring
1,139
155
678
13,434
5,363
Other operating expenses (income), net
831
6,302
(173)
7,436
928
Total
$ 4,874
$ 9,849
$ 1,315
$ 51,040
$ 9,369
Interest and other expense (income), net
$ (2,878)
$ (7,359)
$ 1,484
$ (15,903)
$ (541)
Total
$ (2,878)
$ (7,359)
$ 1,484
$ (15,903)
$ (541)
Provision for (benefit from) for income taxes:
Impact of U.S. tax legislation
(1)
$ –
$ –
$ 6,486
$ –
$ 6,486
Impact of income tax audit settlements
(2)
–
–
(51,197)
–
(51,197)
Total
$ –
$ –
$ (44,711)
$ –
$ (44,711)
(1) Includes effect of U.S. tax legislation enacted on December 22, 2017.
(2) Includes effect of income tax audit settlements.
(3) Includes ADI merger related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs and RSUs, and other legal and professional services.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 26, 2021
March 27, 2021
June 27, 2020
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$ 2,291,399
$ 2,033,973
$ 1,578,670
Short-term investments
–
–
35,536
Total cash, cash equivalents and short-term investments
2,291,399
2,033,973
1,614,206
Accounts receivable, net
658,829
571,042
404,778
Inventories
237,414
242,343
259,626
Other current assets
30,643
27,440
39,219
Total current assets
3,218,285
2,874,798
2,317,829
Property, plant and equipment, net
554,339
543,848
550,406
Intangible assets, net
66,998
70,891
87,959
Goodwill
562,540
562,541
562,540
Other assets
120,937
120,149
110,569
TOTAL ASSETS
$ 4,523,099
$ 4,172,227
$ 3,629,303
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$ 129,710
$ 102,263
$ 91,982
Price adjustment and other revenue reserves
259,411
214,366
148,916
Income taxes payable
49,568
53,694
43,457
Accrued salary and related expenses
150,656
128,553
126,751
Accrued expenses
47,967
35,627
42,228
Total current liabilities
637,312
534,503
453,334
Long-term debt
995,460
995,100
994,022
Income taxes payable
343,964
351,738
385,072
Other liabilities
130,423
141,721
139,418
Total liabilities
2,107,159
2,023,062
1,971,846
Stockholders’ equity:
Common stock and capital in excess of par value
269
268
266
Additional paid-in capital
58,055
47,801
–
Retained earnings
2,370,900
2,117,161
1,671,786
Accumulated other comprehensive loss
(13,284)
(16,065)
(14,595)
Total stockholders’ equity
2,415,940
2,149,165
1,657,457
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
$ 4,523,099
$ 4,172,227
$ 3,629,303
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
Year Ended
June 26, 2021
March 27, 2021
June 27, 2020
June 26, 2021
June 27, 2020
(in thousands, except per share data)
Cash flows from operating activities:
Net income
$ 253,739
$ 220,063
$ 207,298
$ 827,261
$ 654,694
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation
20,176
20,878
23,290
107,993
95,431
Depreciation and amortization
23,564
24,552
36,384
96,456
108,533
Deferred taxes
(4,047)
1,601
14,386
(5,331)
8,994
In Process Research and Development written-off
–
–
–
1,220
–
Loss from sale or disposal of property, plant and equipment
(611)
124
557
(260)
1,191
Fair value contingent consideration
–
5,835
–
5,835
–
Other adjustments
(95)
2,413
2,127
1,745
11,353
Changes in assets and liabilities:
Accounts receivable
(87,794)
(85,236)
(24,078)
(254,229)
(42,335)
Inventories
4,890
18,950
(34,562)
21,896
(8,671)
Other assets
(6,759)
(4,875)
(25,769)
(17,343)
(86,299)
Accounts payable
17,384
(719)
5,405
22,187
7,594
Price adjustment and other revenue reserves
45,052
34,118
37,681
110,673
48,426
Income taxes payable
(11,900)
8,021
(45,855)
(34,997)
(74,814)
All other accrued liabilities
26,211
25,715
15,465
41,154
76,758
Net cash provided by operating activities
279,810
271,440
212,329
924,260
800,855
Cash flows from investing activities:
Purchases of property, plant and equipment
(19,500)
(16,229)
(15,680)
(64,942)
(67,049)
Proceeds from sales of property, plant and equipment
11
16
124
94
392
Proceeds from sales of available-for-sale securities
–
–
1,290
1,500
1,290
Proceeds from maturity of available-for-sale securities
–
8,876
10,734
33,901
104,286
Payment in connection with business acquisition, net of cash acquired
–
–
(69,270)
–
(69,270)
Purchases of investments in privately-held companies
–
(1,235)
(1,840)
(1,345)
(1,960)
Proceeds from sale of investments in privately-held companies
242
–
205
281
378
Other investing activities
–
–
2
–
(116)
Net cash provided by (used in) investing activities
(19,247)
(8,572)
(74,435)
(30,511)
(32,049)
Cash flows from financing activities:
Contingent consideration paid
–
(10,000)
–
(10,000)
(8,000)
Net issuance of restricted stock units
(9,964)
(15,932)
(6,741)
(61,880)
(35,877)
Proceeds from stock options exercised
82
76
2,240
2,965
18,870
Issuance of common stock under employee stock purchase program
–
–
23,725
18,498
42,260
Repurchase of common stock
–
–
(82,299)
(9,201)
(440,811)
Dividends paid
–
–
(128,058)
(128,147)
(517,162)
Net cash used in financing activities
(9,882)
(25,856)
(191,133)
(187,765)
(940,720)
Net increase (decrease) in cash, cash equivalents and restricted cash
250,681
237,012
(53,239)
705,984
(171,914)
Cash, cash equivalents and restricted cash
Beginning of period
$ 2,040,731
$ 1,803,719
$ 1,638,667
$ 1,585,428
$ 1,757,342
End of period
$ 2,291,412
$ 2,040,731
$ 1,585,428
$ 2,291,412
$ 1,585,428
Total cash, cash equivalents, and short-term investments
$ 2,291,399
$ 2,033,973
$ 1,614,206
$ 2,291,399
$ 1,614,206
Cash, cash equivalents and restricted cash:
Cash and cash equivalents
$ 2,291,399
$ 2,033,973
$ 1,578,670
$ 2,291,399
$ 1,578,670
Restricted cash in Other assets
13
6,758
6,758
13
6,758
Total cash, cash equivalents and restricted cash
$ 2,291,412
$ 2,040,731
$ 1,585,428
$ 2,291,412
$ 1,585,428
ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES
(Unaudited)
Three Months Ended
Year Ended
June 26, 2021
March 27, 2021
June 27, 2020
June 26, 2021
June 27, 2020
(in thousands, except per share data)
Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:
GAAP gross profit
$ 484,025
$ 442,885
$ 362,368
$ 1,760,346
$ 1,432,652
GAAP gross profit %
67.2%
66.6%
66.4%
66.9%
65.4%
Special items:
Intangible asset amortization
3,047
4,430
3,528
17,408
12,860
Merger-related expenses
(1)
–
–
–
2,381
–
Cost of COVID-19 response programs
609
638
1,591
2,750
3,616
Severance and restructuring
–
–
–
13
–
Total special items
3,656
5,068
5,119
22,552
16,476
GAAP gross profit excluding special items
$ 487,681
$ 447,953
$ 367,487
$ 1,782,898
$ 1,449,128
GAAP gross profit % excluding special items
67.7%
67.4%
67.4%
67.7%
66.1%
Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:
GAAP operating expenses
$ 200,688
$ 195,621
$ 184,381
$ 814,646
$ 746,258
Special items:
Merger-related expenses
(1)
2,058
2,546
–
26,617
–
Intangible asset amortization
846
846
810
3,553
3,078
Severance and restructuring
1,139
155
678
13,434
5,363
Other operating expenses (income), net
831
6,302
(173)
7,436
928
Total special items
4,874
9,849
1,315
51,040
9,369
GAAP operating expenses excluding special items
$ 195,814
$ 185,772
$ 183,066
$ 763,606
$ 736,889
Reconciliation of GAAP net income to GAAP net income excluding special items:
GAAP net income
$ 253,739
$ 220,063
$ 207,298
$ 827,261
$ 654,694
Special items:
Intangible asset amortization
3,893
5,276
4,338
20,961
15,938
Merger-related expenses
(1)
2,058
2,546
–
29,011
–
Cost of COVID-19 response programs
609
638
1,591
2,750
3,616
Severance and restructuring
1,139
155
678
13,434
5,363
Other operating expenses (income), net
831
6,302
(173)
7,436
928
Interest and other expense (income), net
(2,878)
(7,359)
1,484
(15,903)
(541)
Pre-tax total special items
5,652
7,558
7,918
57,689
25,304
Other income tax effects and adjustments
(2)
(12,950)
(5,928)
(14,378)
(24,765)
(19,668)
Impact of U.S. tax legislation
(3)
–
–
6,486
–
6,486
Impact of income tax audit settlements
(4)
–
–
(51,197)
–
(51,197)
GAAP net income excluding special items
$ 246,441
$ 221,693
$ 156,127
$ 860,185
$ 615,619
GAAP net income per share excluding special items:
Basic
$ 0.92
$ 0.83
$ 0.59
$ 3.22
$ 2.29
Diluted
$ 0.91
$ 0.82
$ 0.58
$ 3.18
$ 2.26
Shares used in the calculation of earnings per share excluding special items:
Basic
268,160
267,892
266,639
267,546
269,341
Diluted
271,445
271,396
268,777
270,872
272,028
(1) Includes ADI merger related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs and RSUs, and other legal and professional services.
(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.
(4) 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 the cost of COVID-19 response programs; ADI merger-related expenses; 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 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, ADI merger-related expenses and cost of COVID-19 response programs. 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; ADI merger-related expenses 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; ADI merger-related expenses; cost of COVID-19 response programs; 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
Except for historical information, this press release may contain 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 involve risk and uncertainty. Actual results could differ materially from those forecasted, based upon, among other things, general market and economic conditions, regulatory approvals, supply constraints, 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 27, 2020 (the “Form 10-K”). The Form 10-K may be found at
https://www.sec.gov/Archives/edgar/data/743316/000074331620000025/0000743316-20-000025-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, an engineer’s engineering company, exists to solve the designer’s toughest problems in order to empower design innovation. Our broad portfolio of high-performance semiconductors, combined with world-class tools and support, delivers essential analog solutions including efficient power, precision measurement, reliable connectivity and robust protection along with intelligent processing. Designers in application areas such as automotive, communications, consumer, data center, healthcare, industrial and IoT trust Maxim to help them quickly develop smaller, smarter and more secure designs. Learn more at
https://www.maximintegrated.com
.
Contact
Kathy Ta
Vice President, Investor Relations
(408) 601-5697
SOURCE Maxim Integrated Investor Relations