Investor Relations

Maxim Integrated Reports Results For The First Quarter Of Fiscal 2021

October 27, 2020
- Revenue: $619 million
- Gross Margin: 67.3% GAAP (68.4% excluding special items)
- EPS: $0.63 GAAP ($0.72 excluding special items)

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

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/maxim-integrated-reports-results-for-the-first-quarter-of-fiscal-2021-301161029.html

SOURCE Maxim Integrated Investor Relations

Contact Investor Relations

Kathy Ta Vice President, Investor Relations 408-601-5697 kathy.ta@maximintegrated.com
Evan Wang Senior Manager, Investor Relations 408-601-5451 evan.wang@maximintegrated.com
Eric Chow Senior Manager, Investor Relations 408-601-3982 eric.chow@maximintegrated.com

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