Investor Relations

Maxim Integrated Reports Results For The Second Quarter Of Fiscal 2021

January 26, 2021
- Revenue: $628 million
- Gross Margin: 66.3% GAAP (67.4% excluding special items)
- EPS: $0.68 GAAP ($0.73 excluding special items)

SAN JOSE, Calif., Jan. 26, 2021 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $628 million for its second quarter of fiscal 2021 ended December 26, 2020, a 1% increase from the $619 million revenue recorded in the prior quarter, and a 14% increase from the same quarter of last year.

"Our strong performance in the December quarter relative to the same quarter last year benefitted from robust demand from automotive, industrial and consumer customers. Automotive and Industrial reached a record revenue level and comprised 63 percent of Maxim's total revenue. 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 Second Quarter Results

Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the December quarter was $0.68. The results were affected by $15 million in pre-tax special items which primarily consisted of $9 million in charges related to the upcoming combination with Analog Devices, $3 million in restructuring costs unrelated to the merger, and $7 million of expenses related to prior acquisitions, which were partially offset by $5 million of unrealized other income from private company investments. GAAP earnings per share, excluding special items was $0.73. An analysis of GAAP versus GAAP excluding special items is provided in this press release.

Cash Flow Items

At the end of the second quarter of fiscal 2021, total cash, cash equivalents and short-term investments were $1.8 billion, up $194 million from the prior quarter.

Notable items included:

  • Cash flow from operations: $210 million
  • Capital expenditures: $16 million

Trailing twelve months free cash flow was $733 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 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




December 26, 2020


September 26, 2020


December 28, 2019




(in thousands, except per share data)



Net revenues

$                       628,288


$                        619,357


$                       551,070



Cost of goods sold

211,866


202,343


190,546



Gross margin

416,422


417,014


360,524



Operating expenses:








Research and development

114,802


115,466


111,914



Selling, general and administrative

80,153


82,954


76,071



Intangible asset amortization

943


919


756



Severance and restructuring expenses

3,327


8,813


2,728



Other operating expenses (income), net

3,532


7,428


(1)



Total operating expenses

202,757


215,580


191,468



Operating income

213,665


201,434


169,056



Interest and other income (expense), net

(3,202)


(7,037)


(17)



Income before taxes

210,463


194,397


169,039



Provision for (benefit from) income taxes

26,518


24,883


22,989



Net income

$                       183,945


$                        169,514


$                       146,050











Earnings per share:








Basic

$                             0.69


$                              0.64


$                             0.54



Diluted

$                             0.68


$                              0.63


$                             0.53











Shares used in the calculation of earnings per share:








Basic

267,299


266,831


270,330



Diluted

270,792


269,529


273,269











Dividends paid per share

$                                -


$                              0.48


$                             0.48











SCHEDULE OF SPECIAL ITEMS



(Unaudited)




Three Months Ended




December 26, 2020


September 26, 2020


December 28, 2019




(in thousands)



Cost of goods sold:








Intangible asset amortization

$                           5,569


$                            4,363


$                           3,111



Merger-related expenses (1)

1,059


1,335


-



Cost of COVID-19 response programs

565


938


-



Total

$                           7,193


$                            6,636


$                           3,111











Operating expenses:








Merger-related expenses (1)

$                           4,750


$                            6,607


$                                -



Intangible asset amortization

943


918


756



Severance and restructuring

3,327


8,813


2,728



Other operating expenses (income), net (1)

3,531


7,428


(1)



Total

$                         12,551


$                          23,766


$                           3,483











Interest and other expense (income), net

$                         (5,131)


$                             (535)


$                         (1,230)



Total

$                         (5,131)


$                             (535)


$                         (1,230)



















(1) Includes ADI merger-related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs and RSUs, and other legal and professional services.





 



CONSOLIDATED BALANCE SHEETS



(Unaudited)




December 26, 2020


September 26, 2020


December 28, 2019




(in thousands)



ASSETS



Current assets:








Cash and cash equivalents

$                  1,796,961


$                   1,595,089


$                  1,720,194



Short-term investments

8,879


17,022


63,006



Total cash, cash equivalents and short-term investments

1,805,840


1,612,111


1,783,200



Accounts receivable, net

485,773


449,376


348,342



Inventories

261,476


265,664


223,958



Other current assets

36,004


29,816


23,797



Total current assets

2,589,093


2,356,967


2,379,297



Property, plant and equipment, net

541,013


542,421


571,359



Intangible assets, net

76,166


82,679


48,509



Goodwill

562,540


562,540


532,251



Other assets

114,058


108,920


95,413



TOTAL ASSETS

$                  3,882,870


$                   3,653,527


$                  3,626,829











LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:








Accounts payable

$                       96,959


$                        86,831


$                       89,449



Price adjustment and other revenue reserves

180,215


144,255


105,237



Income taxes payable

35,197


53,655


38,307



Accrued salary and related expenses

99,057


115,460


94,739



Accrued expenses

44,969


46,119


32,739



Total current liabilities

456,397


446,320


360,471



Long-term debt

994,741


994,381


993,303



Income taxes payable

362,214


360,164


433,743



Other liabilities

143,457


141,643


112,803



Total liabilities

1,956,809


1,942,508


1,900,320











Stockholders' equity:








Common stock and capital in excess of par value

43,231


12,461


270



Retained earnings

1,897,098


1,713,153


1,737,528



Accumulated other comprehensive loss

(14,268)


(14,595)


(11,289)



Total stockholders' equity

1,926,061


1,711,019


1,726,509



TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$                  3,882,870


$                   3,653,527


$                  3,626,829










 



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)




Three Months Ended




December 26, 2020


September 26, 2020


December 28, 2019




(in thousands)



Cash flows from operating activities:








Net income

$                       183,945


$                         169,514


$                       146,050



Adjustments to reconcile net income to net cash provided by operating activities:








Stock-based compensation

31,209


35,730


24,067



Depreciation and amortization

24,141


24,199


24,087



Deferred taxes

(1,782)


(1,103)


(2,684)



Loss from disposal of property, plant and equipment

164


63


113



Other adjustments

(1,220)


1,867


5,934



Changes in assets and liabilities:








Accounts receivable

(36,401)


(44,798)


21,974



Inventories

4,042


(5,986)


12,005



Other assets

(9,868)


4,159


(3,377)



Accounts payable

8,945


(3,423)


3,602



Price adjustment and other revenue reserves

35,964


(4,461)


15,031



Income taxes payable

(16,408)


(14,710)


(5,792)



All other accrued liabilities

(12,232)


1,460


(3,545)



Net cash provided by operating activities

210,499


162,511


237,465



Cash flows from investing activities:








Purchases of property, plant and equipment

(16,485)


(12,728)


(13,670)



Proceeds from sales of property, plant and equipment

63


4


128



Proceeds from sales of available-for-sale securities

1,500


-


-



Proceeds from maturity of available-for-sale securities

6,600


18,425


35,146



Purchases of investments in privately-held companies

(26)


(84)


(516)



Proceeds from sale of investments in privately-held companies

14


25


-



Other investing activities

-


-


(33)



Net cash provided by (used in) investing activities

(8,334)


5,642


21,055



Cash flows from financing activities:








Contingent consideration paid

-


-


(8,000)



Net issuance of restricted stock units and awards

(18,966)


(17,018)


(7,623)



Proceeds from stock options exercised

175


2,632


1,338



Issuance of common stock under employee stock purchase program

18,498


-


18,535



Repurchase of common stock

-


(9,201)


(107,957)



Dividends paid

-


(128,147)


(129,810)



Net cash used in financing activities

(293)


(151,734)


(233,517)



Net increase (decrease) in cash, cash equivalents and restricted cash

201,872


16,419


25,003



Cash, cash equivalents and restricted cash








Beginning of period

$                    1,601,847


$                      1,585,428


$                    1,695,191



End of period

$                    1,803,719


$                      1,601,847


$                    1,720,194











Total cash, cash equivalents, and short-term investments

$                    1,805,840


$                      1,612,111


$                    1,783,200











Cash, cash equivalents and restricted cash:








Cash and cash equivalents

$                    1,796,961


$                      1,595,089


$                    1,720,194



Restricted cash in Other assets

6,758


6,758


-



Total cash, cash equivalents and restricted cash

$                    1,803,719


$                      1,601,847


$                    1,720,194










 



ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES



(Unaudited)




Three Months Ended




December 26, 2020


September 26, 2020


December 28, 2019




(in thousands, except per share data)



Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:








GAAP gross profit

$                     416,422


$                      417,014


$                     360,524



GAAP gross profit %

66.3%


67.3%


65.4%



Special items:








Intangible asset amortization

5,569


4,363


3,111



Merger-related expenses (1)

1,059


1,335


-



Cost of COVID-19 response programs

565


938


-



 Total special items 

7,193


6,636


3,111



 GAAP gross profit excluding special items 

$                     423,615


$                      423,650


$                     363,635



 GAAP gross profit % excluding special items 

67.4%


68.4%


66.0%



Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:








GAAP operating expenses

$                     202,757


$                      215,580


$                     191,468



Special items:








Merger-related expenses (1)

4,750


6,607


-



Intangible asset amortization

943


918


756



Severance and restructuring

3,327


8,813


2,728



Other operating expenses (income), net (1)

3,531


7,428


(1)



 Total special items 

12,551


23,766


3,483



 GAAP operating expenses excluding special items 

$                     190,206


$                      191,814


$                     187,985



Reconciliation of GAAP net income to GAAP net income excluding special items:








GAAP net income

$                     183,945


$                      169,514


$                     146,050











Special items:








Intangible asset amortization

6,512


5,281


3,867



Merger-related expenses (1)

5,809


7,942


-



Cost of COVID-19 response programs

565


938


-



Severance and restructuring

3,327


8,813


2,728



Other operating expenses (income), net (1)

3,531


7,428


(1)



Interest and other expense (income), net

(5,131)


(535)


(1,230)



Pre-tax total special items

14,613


29,867


5,364



Other income tax effects and adjustments (2)

(1,616)


(4,272)


317



GAAP net income excluding special items

$                     196,942


$                      195,109


$                     151,731











GAAP net income per share excluding special items:








Basic

$                           0.74


$                            0.73


$                           0.56



Diluted

$                           0.73


$                            0.72


$                           0.56











Shares used in the calculation of earnings per share excluding special items:






Basic

267,299


266,831


270,330



Diluted

270,792


269,529


273,269











(1) Includes ADI merger-related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs and RSUs, and 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, 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

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/maxim-integrated-reports-results-for-the-second-quarter-of-fiscal-2021-301215522.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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