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 | |||||
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 | |||||
(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