Maxim Integrated Reports Results For The Third Quarter Of Fiscal 2021

Rhea-AI Summary

Maxim Integrated Products (MXIM) reported a net revenue of $665 million for Q3 FY2021, reflecting a 6% sequential increase and an 18% year-over-year increase. Significant growth in automotive and industrial sectors accounted for 64% of total revenue, up from 58% a year ago. Diluted earnings per share (EPS) was $0.81, impacted by $8 million in special pre-tax items. The company ended the quarter with $2.0 billion in cash and investments. Due to the merger with Analog Devices, dividend payments and stock repurchase programs are currently suspended.

Positive

• Record revenue of $665 million for Q3, up 6% from the prior quarter.
• 18% year-over-year revenue growth with strong performance in automotive and industrial sectors.

Negative

• Diluted EPS impacted by $8 million in pre-tax special items.
• Dividends suspended and stock repurchase program on hold due to pending merger.

SAN JOSE, Calif., April 27, 2021 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $665 million for its third quarter of fiscal 2021 ended March 27, 2021, a 6% increase from the $628 million revenue recorded in the prior quarter, and a 18% increase from the same quarter of last year.

"Maxim delivered record revenue in the March quarter, with sequential growth in all end markets. On a year-over-year basis, Automotive and Industrial revenue grew the strongest and comprised 64 percent of the total, up from 58 percent in the same quarter last year. In addition, progress toward closure of our merger with Analog Devices is on track," said Tunc Doluca, President and Chief Executive Officer.

Fiscal Year 2021 Third Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the March quarter was $0.81. The results were affected by $8 million in pre-tax special items which primarily consisted of $3 million in charges related to the upcoming combination with Analog Devices, and $11 million of expenses related to prior acquisitions, which were partially offset by $7 million of other income from settlement of extinguished debt. GAAP earnings per share, excluding special items was $0.82. An analysis of GAAP versus GAAP excluding special items is provided in this press release.

Cash Flow Items
At the end of the third quarter of fiscal 2021, total cash, cash equivalents and short-term investments were $2.0 billion, up $228 million from the prior quarter.

Notable items included:

• Cash flow from operations: $271 million
• Capital expenditures: $16 million

Trailing twelve months free cash flow was $796 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 June and September 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
	March 27, 2021		December 26, 2020		March 28, 2020
	(in thousands, except per share data)
Net revenues	$                                665,029		$                         628,288		$                               561,916
Cost of goods sold	222,144		211,866		195,479
Gross margin	442,885		416,422		366,437
Operating expenses:
Research and development	109,228		114,802		109,091
Selling, general and administrative	76,544		80,153		71,643
Intangible asset amortization	846		943		756
Severance and restructuring expenses	155		3,327		523
Other operating expenses (income), net	8,848		3,532		1,077
Total operating expenses	195,621		202,757		183,090
Operating income	247,264		213,665		183,347
Interest and other income (expense), net	(2)		(3,202)		(1,622)
Income before taxes	247,262		210,463		181,725
Provision for (benefit from) income taxes	27,199		26,518		20,535
Net income	$                                220,063		$                         183,945		$                               161,190
Earnings per share:
Basic	$                                      0.82		$                               0.69		$                                     0.60
Diluted	$                                      0.81		$                               0.68		$                                     0.59
Shares used in the calculation of earnings per share:
Basic	267,892		267,299		269,003
Diluted	271,396		270,792		271,579
Dividends paid per share	$                                         -		$                                   -		$                                     0.48
SCHEDULE OF SPECIAL ITEMS
(Unaudited)
	Three Months Ended
	March 27, 2021		December 26, 2020		March 28, 2020
	(in thousands)
Cost of goods sold:
Intangible asset amortization	$                                    4,430		$                             5,569		$                                   3,111
Merger-related expenses (1)	-		1,059		-
Cost of COVID-19 response programs	638		565		2,025
Total	$                                    5,068		$                             7,193		$                                   5,136
Operating expenses:
Merger-related expenses(1)	$                                    2,546		$                             8,161		$                                           -
Intangible asset amortization	846		943		756
Severance and restructuring	155		3,327		523
Other operating expenses (income), net	6,302		120		1,077
Total	$                                    9,849		$                           12,551		$                                   2,356
Interest and other expense (income), net	$                                  (7,359)		$                           (5,131)		$                                    (587)
Total	$                                  (7,359)		$                           (5,131)		$                                    (587)
(1) Includes ADI merger related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs and RSUs for tax withholding purposes, as well as other legal and professional services.

   

CONSOLIDATED BALANCE SHEETS
(Unaudited)
	March 27, 2021		December 26, 2020		March 28, 2020
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$          2,033,973		$                 1,796,961		$          1,638,667
Short-term investments	-		8,879		47,109
Total cash, cash equivalents and short-term investments	2,033,973		1,805,840		1,685,776
Accounts receivable, net	571,042		485,773		378,273
Inventories	242,343		261,476		220,686
Other current assets	27,440		36,004		25,288
Total current assets	2,874,798		2,589,093		2,310,023
Property, plant and equipment, net	543,848		541,013		564,636
Intangible assets, net	70,891		76,166		44,642
Goodwill	562,541		562,540		532,251
Other assets	120,149		114,058		97,383
TOTAL ASSETS	$          4,172,227		$                 3,882,870		$          3,548,935
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$             102,263		$                      96,959		$               83,519
Price adjustment and other revenue reserves	214,366		180,215		111,235
Income taxes payable	53,694		35,197		39,809
Accrued salary and related expenses	128,553		99,057		122,220
Accrued expenses	35,627		44,969		31,143
Total current liabilities	534,503		456,397		387,926
Long-term debt	995,100		994,741		993,663
Income taxes payable	351,738		362,214		434,415
Other liabilities	141,721		143,457		112,988
Total liabilities	2,023,062		1,956,809		1,928,992
Stockholders' equity:
Common stock	268		268		267
Additional paid-in capital	47,801		42,963		-
Retained earnings	2,117,161		1,897,098		1,632,325
Accumulated other comprehensive loss	(16,065)		(14,268)		(12,649)
Total stockholders' equity	2,149,165		1,926,061		1,619,943
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$          4,172,227		$                 3,882,870		$          3,548,935

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Three Months Ended
	March 27, 2021		December 26, 2020		March 28, 2020
	(in thousands, except per share data)
Cash flows from operating activities:
Net income	$                       220,063		$                     183,945		$                     161,190
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	20,878		31,209		23,403
Depreciation and amortization	24,552		24,141		24,141
Deferred taxes	1,601		(1,782)		(3,161)
Loss from disposal of property, plant and equipment	124		164		145
Fair value of contingent consideration	5,835		-		-
Other adjustments	2,413		(1,220)		3,265
Changes in assets and liabilities:
Accounts receivable	(85,236)		(36,401)		(29,931)
Inventories	18,950		4,042		3,308
Other assets	(4,875)		(9,868)		(4,710)
Accounts payable	(719)		8,945		(2,655)
Price adjustment and other revenue reserves	34,118		35,964		5,998
Income taxes payable	8,021		(16,408)		2,174
All other accrued liabilities	25,715		(12,232)		26,624
Net cash provided by operating activities	271,440		210,499		209,791
Cash flows from investing activities:
Purchases of property, plant and equipment	(16,229)		(16,485)		(17,068)
Proceeds from sales of property, plant and equipment	16		63		97
Proceeds from sales of available-for-sale securities	-		1,500		-
Proceeds from maturity of available-for-sale securities	8,876		6,600		15,485
Purchases of investments in privately-held companies	(1,235)		(26)		(120)
Proceeds from sale of investments in privately-held companies	-		14		173
Other investing activities	-		-		(50)
Net cash provided by (used in) investing activities	(8,572)		(8,334)		(1,483)
Cash flows from financing activities:
Contingent consideration paid	(10,000)		-		-
Net issuance of restricted stock units and awards	(15,932)		(18,966)		(11,570)
Proceeds from stock options exercised	76		175		7,810
Issuance of common stock under employee stock purchase program	-		18,498		-
Repurchase of common stock	-		-		(157,003)
Dividends paid	-		-		(129,072)
Net cash used in financing activities	(25,856)		(293)		(289,835)
Net increase (decrease) in cash, cash equivalents and restricted cash	237,012		201,872		(81,527)
Cash, cash equivalents and restricted cash
Beginning of period	$                    1,803,719		$                  1,601,847		$                  1,720,194
End of period	$                    2,040,731		$                  1,803,719		$                  1,638,667
Total cash, cash equivalents, and short-term investments	$                    2,033,973		$                  1,805,840		$                  1,685,776
Cash, cash equivalents and restricted cash:
Cash and cash equivalents	$                    2,033,973		$                  1,796,961		$                  1,638,667
Restricted cash in Other assets	6,758		6,758		-
Total cash, cash equivalents and restricted cash	$                    2,040,731		$                  1,803,719		$                  1,638,667

 

ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES
(Unaudited)
	Three Months Ended
	March 27, 2021		December 26, 2020		March 28, 2020
	(in thousands, except per share data)
Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:
GAAP gross profit	$                      442,885		$                416,422		$                    366,437
GAAP gross profit %	66.6%		66.3%		65.2%
Special items:
Intangible asset amortization	4,430		5,569		3,111
Merger-related expenses(1)	-		1,059		-
Cost of COVID-19 response programs	638		565		2,025
Total special items	5,068		7,193		5,136
GAAP gross profit excluding special items	$                      447,953		$                423,615		$                    371,573
GAAP gross profit % excluding special items	67.4%		67.4%		66.1%
Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:
GAAP operating expenses	$                      195,621		$                202,757		$                    183,090
Special items:
Merger-related expenses(1)	2,546		8,161		-
Intangible asset amortization	846		943		756
Severance and restructuring	155		3,327		523
Other operating expenses (income), net	6,302		120		1,077
Total special items	9,849		12,551		2,356
GAAP operating expenses excluding special items	$                      185,772		$                190,206		$                    180,734
Reconciliation of GAAP net income to GAAP net income excluding special items:
GAAP net income	$                      220,063		$                183,945		$                    161,190
Special items:
Intangible asset amortization	5,276		6,512		3,867
Merger-related expenses (1)	2,546		9,220		-
Cost of COVID-19 response programs	638		565		2,025
Severance and restructuring	155		3,327		523
Other operating expenses (income), net	6,302		120		1,077
Interest and other expense (income), net	(7,359)		(5,131)		(587)
Pre-tax total special items	7,558		14,613		6,905
Other income tax effects and adjustments(2)	(5,928)		(1,616)		(2,101)
GAAP net income excluding special items	$                      221,693		$                196,942		$                    165,994
GAAP net income per share excluding special items:
Basic	$                            0.83		$                      0.74		$                          0.62
Diluted	$                            0.82		$                      0.73		$                          0.61
Shares used in the calculation of earnings per share excluding special items:
Basic	267,892		267,299		269,003
Diluted	271,396		270,792		271,579
(1) Includes ADI merger related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs and RSUs 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.

 

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, including but not limited to the Company's belief that progress toward closure of its merger with Analog Devices is on track.  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

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SOURCE Maxim Integrated Investor Relations

FAQ

What are Maxim Integrated's Q3 FY2021 earnings results?

Maxim Integrated reported Q3 FY2021 earnings of $665 million in revenue and $0.81 in diluted EPS.

How did Maxim Integrated's revenue compare year-over-year?

Revenue increased by 18% compared to the same quarter last year.

What impact did the Analog Devices merger have on Maxim Integrated's dividends?

Dividends have been suspended due to the pending merger with Analog Devices.

What is the current cash position of Maxim Integrated?

As of the end of Q3 FY2021, Maxim Integrated reported $2.0 billion in cash, cash equivalents, and short-term investments.