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

Related Links


https://www.maximintegrated.com

1 2

Share