Maxim Integrated Reports Results For The Fourth Quarter Of Fiscal 2020

Rhea-AI Summary

Maxim Integrated Products reported a net revenue of $545 million for Q4 FY2020, marking a 3% decrease from the previous quarter and a 2% decrease year-over-year. Despite these declines, diluted earnings per share (EPS) were $0.77, bolstered by a $45 million tax reserve release. The company faced $9 million in special charges primarily related to acquisitions and COVID-19 expenses. Cash flow from operations stood at $212 million with free cash flow at $734 million. A dividend of $0.48 per share is scheduled for September 11, 2020.

Positive

• Diluted EPS of $0.77 benefiting from a $45 million tax reserve release.
• Trailing twelve months free cash flow reached $734 million.

Negative

• Net revenue decreased by 3% quarter-over-quarter.
• Net revenue declined by 2% year-over-year.
• Suspension of dividends and stock repurchase program due to pending merger with Analog Devices.

SAN JOSE, Calif., July 28, 2020 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $545 million for its fourth quarter of fiscal 2020 ended June 27, 2020, a 3% decrease from the $562 million revenue recorded in the prior quarter, and a 2% decrease from the same quarter of last year.

"Strong performance by our manufacturing operations, including our test facilities in the Philippines, resulted in better-than-expected June quarter revenue and earnings per share. I'm very proud of the resilience of our company, as shown by our ability to navigate these unprecedented times. We remain highly profitable due to our diversified business model and outstanding product portfolio," said Tunc Doluca, President and Chief Executive Officer.

Fiscal Year 2020 Fourth Quarter Results

Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the June quarter was $0.77, which benefitted from a net tax reserve release of $45 million. The results were affected by $9 million in pre-tax special items which primarily consisted of charges related to acquisitions and expenses related to COVID-19 response programs. GAAP earnings per share, excluding special items was $0.58. 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 2020, total cash, cash equivalents and short-term investments were $1.6 billion, down $72 million from the prior quarter.

Notable items included:

• Cash flow from operations: $212 million
• Capital expenditures: $16 million
• Dividends paid: $128 million ($0.48 per share)
• Stock repurchases: $82 million

Trailing twelve months free cash flow was $734 million. Free cash flow is a non-GAAP measure and is defined by cash flow from operations less capital expenditures.

Dividend and Stock Repurchase

A cash dividend of $0.48 per share will be paid on September 11, 2020, to stockholders of record on August 27, 2020.  We will not declare or pay a dividend in any of the next succeeding four fiscal quarters and have suspended our open market stock repurchase program as the Merger Agreement between the Company and Analog Devices restricts our ability to declare dividends and repurchase shares of our common stock.

Due to the pending transaction 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						Year Ended
		June 27, 2020		March 28, 2020		June 29, 2019		June 27, 2020		June 29, 2019
		(in thousands, except per share data)
	Net revenues	$              545,369		$              561,916		$               556,545		$            2,191,395		$            2,314,329
	Cost of goods sold	183,001		195,479		200,154		758,743		813,823
	Gross margin	362,368		366,437		356,391		1,432,652		1,500,506
	Operating expenses:
	Research and development	110,173		109,091		105,136		440,166		435,222
	Selling, general and administrative	72,893		71,643		75,130		296,722		308,617
	Intangible asset amortization	810		756		756		3,078		3,041
	Impairment of long-lived assets	-		-		-		-		753
	Severance and restructuring expenses	678		523		1,715		5,363		5,632
	Other operating expenses (income), net	(173)		1,077		83		929		143
	Total operating expenses	184,381		183,090		182,820		746,258		753,408
	Operating income	177,987		183,347		173,571		686,394		747,098
	Interest and other income (expense), net	(8,488)		(1,622)		4,079		(8,298)		7,323
	Income before taxes	169,499		181,725		177,650		678,096		754,421
	Provision for (benefit from) income taxes (1)(2)	(37,799)		20,535		(189,908)		23,402		(73,065)
	Net income	$              207,298		$              161,190		$               367,558		$               654,694		$               827,486
	Earnings per share:
	Basic	$                     0.78		$                     0.60		$                      1.35		$                      2.43		$                      3.01
	Diluted	$                     0.77		$                     0.59		$                      1.33		$                      2.41		$                      2.97
	Shares used in the calculation of earnings per share:
	Basic	266,639		269,003		272,382		269,341		274,966
	Diluted	268,777		271,579		275,834		272,028		278,777
	Dividends paid per share	$                     0.48		$                     0.48		$                      0.46		$                      1.92		$                      1.84
	SCHEDULE OF SPECIAL ITEMS
	(Unaudited)
		Three Months Ended						Year Ended
		June 27, 2020		March 28, 2020		June 29, 2019		June 27, 2020		June 29, 2019
		(in thousands)
	Cost of goods sold:
	Intangible asset amortization	$                   3,528		$                   3,111		$                   4,038		$                 12,860		$                 22,829
	Cost of COVID-19 response programs	1,591		2,025		-		3,616		-
	Total	$                   5,119		$                   5,136		$                 11,759		$                 16,476		$                 22,829
	Operating expenses:
	Intangible asset amortization	$                      810		$                      756		$                       756		$                   3,078		$                   3,041
	Impairment of long-lived assets	-		-		-		-		753
	Severance and restructuring	678		523		1,715		5,363		5,632
	Other operating expenses (income), net	(173)		1,077	(3)	83		928		143
	Total	$                   1,315		$                   2,356		$                   2,554		$                   9,369		$                   9,569
	Interest and other expense (income), net	$                   1,484		$                    (587)		$                 (2,980)		$                     (541)		$                 (4,565)
	Total	$                   1,484		$                    (587)		$                 (2,980)		$                     (541)		$                 (4,565)
	Provision for (benefit from) for income taxes:
	Impact of U.S. tax legislation (1)	$                   6,486		$                         -		$                 47,703		$                   6,486		$                 68,729
	Impact of income tax audit settlements (2)	(51,197)		-		(251,599)		(51,197)		(251,599)
	Total	$               (44,711)		$                         -		$             (203,896)		$               (44,711)		$             (182,870)
	(1) Includes effect of U.S. tax legislation enacted on December 22, 2017.
	(2) Includes effect of income tax audit settlements.
	(3) Includes approximately $0.5 million of acquisition-related costs and $0.5 million of cost related to COVID-19 response programs.

 

 

	CONSOLIDATED  BALANCE SHEETS
	(Unaudited)
		June 27, 2020		March 28, 2020		June 29, 2019
		(in thousands)
	ASSETS
	Current assets:
	Cash and cash equivalents	$        1,578,670		$        1,638,667		$        1,757,342
	Short-term investments	35,536		47,109		140,990
	Total cash, cash equivalents and short-term investments	1,614,206		1,685,776		1,898,332
	Accounts receivable, net	404,778		378,273		360,016
	Inventories	259,626		220,686		246,512
	Other current assets	39,219		25,288		34,640
	Total current assets	2,317,829		2,310,023		2,539,500
	Property, plant and equipment, net	550,406		564,636		577,722
	Intangible assets, net	87,959		44,642		56,242
	Goodwill	562,540		532,251		532,251
	Other assets	110,569		97,383		38,267
	TOTAL ASSETS	$        3,629,303		$        3,548,935		$        3,743,982
	LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
	Accounts payable	$             91,982		$             83,519		$              84,335
	Price adjustment and other revenue reserves	148,916		111,235		100,490
	Income taxes payable	43,457		39,809		33,765
	Accrued salary and related expenses	126,751		122,220		118,704
	Accrued expenses	42,228		31,143		33,873
	Total current liabilities	453,334		387,926		371,167
	Long-term debt	994,022		993,663		992,584
	Income taxes payable	385,072		434,415		469,418
	Other liabilities	139,418		112,988		65,537
	Total liabilities	1,971,846		1,928,992		1,898,706
	Stockholders' equity:
	Common stock and capital in excess of par value	266		267		272
	Retained earnings	1,671,786		1,632,325		1,856,358
	Accumulated other comprehensive loss	(14,595)		(12,649)		(11,354)
	Total stockholders' equity	1,657,457		1,619,943		1,845,276
	TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$        3,629,303		$        3,548,935		$        3,743,982

 

 

	CONSOLIDATED STATEMENTS OF CASH FLOWS
	(Unaudited)
		Three Months Ended						Year Ended
		June 27, 2020		March 28, 2020		June 29, 2019		June 27, 2020		June 29, 2019
		(in thousands, except per share data)
	Cash flows from operating activities:
	Net income	$          207,298		$            161,190		$          367,558		$          654,694		$          827,486
	Adjustments to reconcile net income to net cash provided by operating activities:
	Stock-based compensation	23,290		23,403		22,004		95,431		86,977
	Depreciation and amortization	36,384		24,141		25,569		108,533		110,745
	Deferred taxes	14,386		(3,161)		26,118		8,994		13,957
	Loss from sale or disposal of property, plant and equipment	557		145		643		1,191		3,967
	Other adjustments	2,127		3,265		(268)		11,353		(3)
	Changes in assets and liabilities:
	Accounts receivable, price adjustment and other revenue reserves	13,603		(23,933)		15,615		6,091		21,090
	Inventories	(34,562)		3,308		26,383		(8,671)		36,003
	Other assets	(25,769)		(4,710)		(11,875)		(86,299)		(14,901)
	Accounts payable	5,405		(2,655)		699		7,594		(10,272)
	Income taxes payable	(45,855)		2,174		(229,776)		(74,814)		(176,114)
	All other accrued liabilities	15,465		26,624		(5,203)		76,758		(23,095)
	Net cash provided by operating activities	212,329		209,791		237,467		800,855		875,840
	Cash flows from investing activities:
	Purchases of property, plant and equipment	(15,680)		(17,068)		(30,653)		(67,049)		(82,823)
	Proceeds from sales of property, plant and equipment	124		97		306		392		340
	Proceeds from sales of available-for-sale securities	1,290		-		-		1,290		30,192
	Proceeds from maturity of available-for-sale securities	10,734		15,485		103,431		104,286		1,130,514
	Payment in connection with business acquisition, net of cash acquired	(69,270)		-		-		(69,270)		(2,949)
	Purchases of available-for-sale securities	-		-		-		-		(214,587)
	Purchases of investments in privately-held companies	(1,840)		(120)		(1,500)		(1,960)		(3,176)
	Proceeds from sale of investments in privately-held companies	205		173		-		378		-
	Other investing activities	2		(50)		(60)		(116)		(600)
	Net cash provided by (used in) investing activities	(74,435)		(1,483)		71,524		(32,049)		856,911
	Cash flows from financing activities:
	Contingent consideration paid	-		-		-		(8,000)		(9,052)
	Net issuance of restricted stock units	(6,741)		(11,570)		(6,663)		(35,877)		(29,689)
	Repayment of notes payable	-		-		-		-		(500,000)
	Proceeds from stock options exercised	2,240		7,810		5,414		18,870		24,400
	Issuance of common stock under employee stock purchase program	23,725		-		22,486		42,260		40,175
	Repurchase of common stock	(82,299)		(157,003)		(102,104)		(440,811)		(539,151)
	Dividends paid	(128,058)		(129,072)		(125,345)		(517,162)		(505,576)
	Net cash used in financing activities	(191,133)		(289,835)		(206,212)		(940,720)		(1,518,893)
	Net increase (decrease) in cash, cash equivalents and restricted cash	(53,239)		(81,527)		102,779		(171,914)		213,858
	Cash, cash equivalents and restricted cash
	Beginning of period	$       1,638,667		$        1,720,194		$       1,654,563		$       1,757,342		$       1,543,484
	End of period	$       1,585,428		$        1,638,667		$       1,757,342		$       1,585,428		$       1,757,342
	Total cash, cash equivalents, and short-term investments	$       1,614,206		$        1,685,776		$       1,898,332		$       1,614,206		$       1,898,332
	Cash, cash equivalents and restricted cash:
	Cash and cash equivalents	$       1,578,670		$        1,638,667		$       1,757,342		$       1,578,670		$       1,757,342
	Restricted cash in Other assets	6,758		-		-		6,758		-
	Total cash, cash equivalents and restricted cash	$       1,585,428		$        1,638,667		$       1,757,342		$       1,585,428		$       1,757,342

 

 

	ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES
	(Unaudited)
			Three Months Ended						Year Ended
			June 27, 2020		March 28, 2020		June 29, 2019		June 27, 2020		June 29, 2019
			(in thousands, except per share data)
	Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:
	GAAP gross profit		$                 362,368		$                 366,437		$                 356,391		$             1,432,652		$             1,500,506
	GAAP gross profit %		66.4%		65.2%		64.0%		65.4%		64.8%
	Special items:
	Intangible asset amortization		3,528		3,111		4,038		12,860		22,829
	Cost of COVID-19 response programs		1,591		2,025		-		3,616		-
	Total special items		5,119		5,136		4,038		16,476		22,829
	GAAP gross profit excluding special items		$                 367,487		$                 371,573		$                 360,429		$             1,449,128		$             1,523,335
	GAAP gross profit % excluding special items		67.4%		66.1%		64.8%		66.1%		65.8%
	Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:
	GAAP operating expenses		$                 184,381		$                 183,090		$                 182,820		$                 746,258		$                 753,408
	Special items:
	Intangible asset amortization		810		756		756		3,078		3,041
	Impairment of long-lived assets		-		-		-		-		753
	Severance and restructuring		678		523		1,715		5,363		5,632
	Other operating expenses (income), net		(173)		1,077	(1)	83		928		143
	Total special items		1,315		2,356		2,554		9,369		9,569
	GAAP operating expenses excluding special items		$                 183,066		$                 180,734		$                 180,266		$                 736,889		$                 743,839
	Reconciliation of GAAP net income to GAAP net income excluding special items:
	GAAP net income		$                 207,298		$                 161,190		$                 367,558		$                 654,694		$                 827,486
	Special items:
	Intangible asset amortization		4,338		3,867		4,794		15,938		25,870
	Cost of COVID-19 response programs		1,591		2,025		-		3,616		-
	Impairment of long-lived assets		-		-		-		-		753
	Severance and restructuring		678		523		1,715		5,363		5,632
	Other operating expenses (income), net		(173)		1,077	(1)	83		928		143
	Interest and other expense (income), net		1,484		(587)		(2,980)		(541)		(4,565)
	Pre-tax total special items		7,918		6,905		3,612		25,304		27,833
	Other income tax effects and adjustments (2)		(14,378)		(2,101)		(11,271)		(19,668)		4,747
	Impact of U.S. tax legislation (3)		6,486		-		47,703		6,486		68,729
	Impact of income tax audit settlements (4)		(51,197)		-		(251,599)		(51,197)		(251,599)
	GAAP net income excluding special items		$                 156,127		$                 165,994		$                 156,003		$                 615,619		$                 677,196
	GAAP net income per share excluding special items:
	Basic		$                       0.59		$                       0.62		$                       0.57		$                       2.29		$                       2.46
	Diluted		$                       0.58		$                       0.61		$                       0.57		$                       2.26		$                       2.43
	Shares used in the calculation of earnings per share excluding special items:
	Basic		266,639		269,003		272,382		269,341		274,966
	Diluted		268,777		271,579		275,834		272,028		278,777
	(1) Includes approximately $0.5 million of acquisition-related costs and $0.5 million of cost related to COVID-19 response programs.
	(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; 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 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; 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 29, 2019 (the "Form 10-K"). The Form 10-K may be found at https://www.sec.gov/Archives/edgar/data/743316/000074331619000024/0000743316-19-000024-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 was Maxim Integrated's revenue for the fourth quarter of fiscal 2020?

Maxim Integrated reported a net revenue of $545 million for Q4 FY2020.

What is the diluted EPS for Maxim Integrated in Q4 FY2020?

The diluted EPS for Q4 FY2020 was $0.77.

How did Maxim Integrated perform compared to the previous quarters?

Revenue decreased by 3% from the previous quarter and 2% from the same quarter last year.

When is Maxim Integrated's dividend payment scheduled?

A cash dividend of $0.48 per share is scheduled for September 11, 2020.

What are the special charges reported by Maxim Integrated for Q4 FY2020?

The company faced $9 million in pre-tax special items related to acquisitions and COVID-19 expenses.