Maxim Integrated Reports Results For The First Quarter Of Fiscal 2021

Rhea-AI Summary

Maxim Integrated Products reported net revenue of $619 million for Q1 fiscal 2021, reflecting a 14% increase sequentially and 16% growth year-over-year. Key growth drivers included infotainment, driver assistance, and electric vehicles in the Automotive sector, along with strong performance in Consumer electronics. The diluted earnings per share were reported at $0.63, or $0.72 excluding special items. Cash flow from operations totaled $163 million, with total cash resources at $1.6 billion. The company announced a suspension of dividends and stock repurchases due to a merger with Analog Devices.

Positive

• Revenue increased by 14% quarter-over-quarter and 16% year-over-year.
• Strong growth in Automotive and Consumer sectors.
• Diluted EPS of $0.72 excluding special items.
• Total cash and equivalents at $1.6 billion.

Negative

• Special items affected EPS by $0.09.
• Suspension of dividends and stock repurchase program due to merger.

SAN JOSE, Calif., Oct. 27, 2020 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $619 million for its first quarter of fiscal 2021 ended September 26, 2020, a 14% increase from the $545 million revenue recorded in the prior quarter, and a 16% increase from the same quarter of last year.

"Revenue in the September quarter increased strongly in Consumer and Automotive on a sequential basis. The robust uptick was driven by infotainment, driver assistance and electric vehicle content in Automotive, and across smartphones, gaming, wearables, tablets and broad-based personal electronics in Consumer. Revenue also grew across all of our major end markets compared to the same quarter a year ago, with double-digit growth in Communications and Data Center, Industrial and Automotive. Additionally, we are progressing per plan towards closure of our merger with Analog Devices," said Tunc Doluca, President and Chief Executive Officer.

Fiscal Year 2021 First Quarter Results

Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the September quarter was $0.63. The results were affected by $30 million in pre-tax special items which primarily consisted of $15 million in charges related to the upcoming combination with Analog Devices, $9 million in restructuring costs unrelated to the merger, and $5 million of expenses related to prior acquisitions. GAAP earnings per share, excluding special items was $0.72. An analysis of GAAP versus GAAP excluding special items is provided in this press release.

Cash Flow Items

At the end of the first quarter of fiscal 2021, total cash, cash equivalents and short-term investments were $1.6 billion, down $2 million from the prior quarter.

Notable items included:

• Cash flow from operations: $163 million
• Capital expenditures: $13 million
• Dividends paid: $128 million ($0.48 per share)
• Stock repurchases: $9 million

Trailing twelve months free cash flow was $763 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 dividends that would have been paid in the upcoming months of December, March, June and September and have suspended our open market stock repurchase program.

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. 

	CONSOLIDATED STATEMENTS OF INCOME
	(Unaudited)
		Three Months Ended
		September 26, 2020		June 27, 2020		September 28, 2019
		(in thousands, except per share data)
	Net revenues	$                                619,357		$                         545,369		$                               533,040
	Cost of goods sold	202,343		183,001		189,717
	Gross margin	417,014		362,368		343,323
	Operating expenses:
	Research and development	115,466		110,173		108,989
	Selling, general and administrative	82,954		72,893		76,115
	Intangible asset amortization	919		810		756
	Severance and restructuring expenses	8,813		678		1,434
	Other operating expenses (income), net	7,428		(173)		25
	Total operating expenses	215,580		184,381		187,319
	Operating income	201,434		177,987		156,004
	Interest and other income (expense), net	(7,037)		(8,488)		1,829
	Income before taxes	194,397		169,499		157,833
	Provision for (benefit from) income taxes (1)(2)	24,883		(37,799)		17,677
	Net income	$                                169,514		$                         207,298		$                               140,156
	Earnings per share:
	Basic	$                                      0.64		$                               0.78		$                                     0.52
	Diluted	$                                      0.63		$                               0.77		$                                     0.51
	Shares used in the calculation of earnings per share:
	Basic	266,831		266,639		271,388
	Diluted	269,529		268,777		274,436
	Dividends paid per share	$                                      0.48		$                               0.48		$                                     0.48
	SCHEDULE OF SPECIAL ITEMS
	(Unaudited)
		Three Months Ended
		September 26, 2020		June 27, 2020		September 28, 2019
		(in thousands)
	Cost of goods sold:
	Intangible asset amortization	$                                    4,363		$                             3,528		$                                   3,111
	Merger related expenses (3)	1,335		—		—
	Cost of COVID-19 response programs	938		1,591		—
	Total	$                                    6,636		$                             5,119		$                                   3,111
	Operating expenses:
	Merger related expenses (3)	$                                    6,607		$                              —		$                                  —
	Intangible asset amortization	918		810		756
	Severance and restructuring	8,813		678		1,434
	Other operating expenses (income), net (3)	7,428		(173)		25
	Total	$                                  23,766		$                             1,315		$                                   2,215
	Interest and other expense (income), net	$                                     (535)		$                             1,484		$                                      207
	Total	$                                     (535)		$                             1,484		$                                      207
	Provision for (benefit from) for income taxes:
	Impact of U.S. tax legislation (1)	$                                     —		$                             6,486		$                                    —
	Impact of income tax audit settlements (2)	—		(51,197)		—
	Total	$                                     —		$                         (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 for tax withholding purposes, as well as other legal and professional services.

 

	CONSOLIDATED BALANCE SHEETS
	(Unaudited)
		September 26, 2020		June 27, 2020		September 28, 2019
		(in thousands)
	ASSETS
	Current assets:
	Cash and cash equivalents	$                      1,595,089		$                  1,578,670		$                    1,695,191
	Short-term investments	17,022		35,536		98,176
	Total cash, cash equivalents and short-term investments	1,612,111		1,614,206		1,793,367
	Accounts receivable, net	449,376		404,778		370,316
	Inventories	265,664		259,626		235,959
	Other current assets	29,816		39,219		24,982
	Total current assets	2,356,967		2,317,829		2,424,624
	Property, plant and equipment, net	542,421		550,406		574,097
	Intangible assets, net	82,679		87,959		52,376
	Goodwill	562,540		562,540		532,251
	Other assets	108,920		110,569		97,439
	TOTAL ASSETS	$                      3,653,527		$                  3,629,303		$                    3,680,787
	LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
	Accounts payable	$                           86,831		$                       91,982		$                         81,794
	Price adjustment and other revenue reserves	144,255		148,916		90,206
	Income taxes payable	53,655		43,457		31,704
	Accrued salary and related expenses	115,460		126,751		96,168
	Accrued expenses	46,119		42,228		42,644
	Total current liabilities	446,320		453,334		342,516
	Long-term debt	994,381		994,022		992,944
	Income taxes payable	360,164		385,072		446,138
	Other liabilities	141,643		139,418		117,903
	Total liabilities	1,942,508		1,971,846		1,899,501
	Stockholders' equity:
	Common stock and capital in excess of par value	12,461		266		271
	Retained earnings	1,713,153		1,671,786		1,793,012
	Accumulated other comprehensive loss	(14,595)		(14,595)		(11,997)
	Total stockholders' equity	1,711,019		1,657,457		1,781,286
	TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$                      3,653,527		$                  3,629,303		$                    3,680,787

 

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	(Unaudited)
		Three Months Ended
		September 26, 2020		June 27, 2020		September 28, 2019
		(in thousands)
	Cash flows from operating activities:
	Net income	$                       169,514		$                     207,298		$                     140,156
	Adjustments to reconcile net income to net cash provided by operating activities:
	Stock-based compensation	35,730		23,290		24,671
	Depreciation and amortization	24,199		36,384		23,921
	Deferred taxes	(1,103)		14,386		453
	Loss from sale of property, plant and equipment	63		557		376
	Other Adjustments	1,867		2,127		27
	Changes in assets and liabilities:
	Accounts receivable	(44,798)		(24,078)		(10,300)
	Inventories	(5,986)		(34,562)		10,578
	Other assets	4,159		(25,769)		(52,443)
	Accounts payable	(3,423)		5,405		1,242
	Price adjustment and other revenue reserves	(4,461)		37,681		(10,284)
	Income taxes payable	(14,710)		(45,855)		(25,341)
	All other accrued liabilities	1,460		15,465		38,214
	Net cash provided by operating activities	162,511		212,329		141,270
	Cash flows from investing activities:
	Purchases of property, plant and equipment	(12,728)		(15,680)		(20,631)
	Proceeds from sales of property, plant and equipment	4		124		43
	Proceeds from sales of available-for-sale securities	—		1,290		—
	Proceeds from maturity of available-for-sale securities	18,425		10,734		42,921
	Payment in connection with business acquisition, net of cash acquired	—		(69,270)		—
	Purchases of investments in privately-held companies	(84)		(1,840)		—
	Proceeds from sale of investments in privately-held companies	25		205		516
	Other investing activities	—		2		(35)
	Net cash provided by (used in) investing activities	5,642		(74,435)		22,814
	Cash flows from financing activities:
	Net issuance of restricted stock units and awards	(17,018)		(6,741)		(9,943)
	Proceeds from stock options exercised	2,632		2,240		7,482
	Issuance of common stock under employee stock purchase program	—		23,725		—
	Repurchase of common stock	(9,201)		(82,299)		(93,552)
	Dividends paid	(128,147)		(128,058)		(130,222)
	Net cash used in financing activities	(151,734)		(191,133)		(226,235)
	Net increase (decrease) in cash, cash equivalents and restricted cash	16,419		(53,239)		(62,151)
	Cash, cash equivalents and restricted cash
	Beginning of period	$                    1,585,428		$                  1,638,667		$                  1,757,342
	End of period	$                    1,601,847		$                  1,585,428		$                  1,695,191
	Total cash, cash equivalents, and short-term investments	$                    1,612,111		$                  1,614,206		$                  1,793,367
	Cash, cash equivalents and restricted cash:
	Cash and cash equivalents	$                    1,595,089		$                  1,578,670		$                  1,695,191
	Restricted cash in Other assets	6,758		6,758		—
	Total cash, cash equivalents and restricted cash	$                    1,601,847		$                  1,585,428		$                  1,695,191

 

	ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES
	(Unaudited)
		Three Months Ended
		September 26, 2020		June 27, 2020		September 28, 2019
		(in thousands, except per share data)
	Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:
	GAAP gross profit	$                         417,014		$                    362,368		$                       343,323
	GAAP gross profit %	67.3%		66.4%		64.4%
	Special items:
	Intangible asset amortization	4,363		3,528		3,111
	Merger related expenses (1)	1,335		—		—
	Cost of COVID-19 response programs	938		1,591		—
	Total special items	6,636		5,119		3,111
	GAAP gross profit excluding special items	$                         423,650		$                    367,487		$                       346,434
	GAAP gross profit % excluding special items	68.4%		67.4%		65.0%
	Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:
	GAAP operating expenses	$                         215,580		$                    184,381		$                       187,319
	Special items:
	Merger related expenses (1)	6,607		—		—
	Intangible asset amortization	918		810		756
	Severance and restructuring	8,813		678		1,434
	Other operating expenses (income), net (1)	7,428		(173)		25
	Total special items	23,766		1,315		2,215
	GAAP operating expenses excluding special items	$                         191,814		$                    183,066		$                       185,104
	Reconciliation of GAAP net income to GAAP net income excluding special items:
	GAAP net income	$                         169,514		$                    207,298		$                       140,156
	Special items:
	Intangible asset amortization	5,281		4,338		3,867
	Merger related expenses (1)	7,942		—		—
	Cost of COVID-19 response programs	938		1,591		—
	Severance and restructuring	8,813		678		1,434
	Other operating expenses (income), net (1)	7,428		(173)		25
	Interest and other expense (income), net	(535)		1,484		(207)
	Pre-tax total special items	29,867		7,918		5,119
	Other income tax effects and adjustments (2)	(4,272)		(14,378)		(3,506)
	Impact of U.S. tax legislation (3)	—		6,486		—
	Impact of income tax audit settlements (4)	—		(51,197)		—
	GAAP net income excluding special items	$                         195,109		$                    156,127		$                       141,769
	GAAP net income per share excluding special items:
	Basic	$                               0.73		$                          0.59		$                             0.52
	Diluted	$                               0.72		$                          0.58		$                             0.52
	Shares used in the calculation of earnings per share excluding special items:
	Basic	266,831		266,639		271,388
	Diluted	269,529		268,777		274,436
	(1) Includes ADI merger related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs for tax withholding purposes, as well as 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; 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, 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 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

FAQ

What were Maxim Integrated's earnings for Q1 fiscal 2021?

Maxim Integrated reported diluted earnings per share of $0.63 for Q1 fiscal 2021.

How much revenue did Maxim Integrated generate in Q1 fiscal 2021?

The company generated $619 million in revenue for Q1 fiscal 2021.

What factors contributed to Maxim Integrated's revenue growth?

Revenue growth was driven by strong performance in Automotive and Consumer electronics, particularly in infotainment and electric vehicles.

What is the outlook for dividends and stock repurchases at Maxim Integrated?

Due to the pending merger with Analog Devices, Maxim Integrated has suspended dividends and stock repurchases.

What is the total cash position of Maxim Integrated as of Q1 fiscal 2021?

Maxim Integrated reported total cash, cash equivalents, and short-term investments of $1.6 billion.