Investor Relations

Maxim Integrated Reports Results For The Third Quarter Of Fiscal 2021

April 27, 2021
- Revenue: $665 million
- Gross Margin: 66.6% GAAP (67.4% excluding special items)
- EPS: $0.81 GAAP ($0.82 excluding special items)

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

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/maxim-integrated-reports-results-for-the-third-quarter-of-fiscal-2021-301278337.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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