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Skyworks (SWKS) Beats Q4 Earnings as Revenues Fall Y/Y
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Skyworks Solutions Inc. (SWKS - Free Report) reported fourth-quarter fiscal 2016 non-GAAP earnings (including stock-based compensation) of $1.37 per share, which beat the Zacks Consensus Estimate by 4 cents but declined 1.7% from the year-ago quarter.
Earnings (excluding stock-based compensation) were $1.47 per share better than management’s guidance of $1.43.
Revenues of $835.4 million were down 5.2% year over year but ahead of its guidance and Zacks Consensus Estimate of $832 million.
Fiscal 2016 earnings (including stock-based compensation) increased 8.4% year over year to $5.16 per share. Revenues increased almost 1% to $3.29 billion.
Quarter Details
Skyworks continues to capitalize on global mobile connectivity and demand for high-performance solutions across a diverse set of verticals and the Internet of Things market. As customers implement the next level of functionality for higher bandwidth, consequently demand for system-level solutions and higher levels of integration are increasing. These in turn are playing directly into Skyworks' strengths and generating huge demand for its products.
Moreover, the company’s dominant position in the transmit chain with Power Amplifier and Power Amplifier plus Duplex or SkyOne-like systems is benefiting results. Syworks noted that it currently has almost 30% to 40% market penetration with adoption increasing from the likes of Huawei, Oppo and Vivo in China.
Skyworks stated that it is focused on addressing the needs of top-four or five players in China. According to the company, it is looking to continue partnerships with MediaTek, Spreadtrum, HiSilicon and even Qualcomm (QCOM - Free Report) that diversifies its business model in the country.
Skyworks continued to gain broad market traction during the quarter. The company stated that Huawei used SkyOne architecture across its Honor 8 smartphone platform. Skyworks also powered Google’s flagship Pixel 4G LTE smartphone.
In the Internet of Things (IoT) market the company continues to win orders from customers like Amazon.com (AMZN - Free Report) . Netgear (NTGR - Free Report) is also using Skyworks to support its Orbi home router system. Additionally, the company is deploying small-cell solutions for several leading infrastructure providers in China.
In the automotive market, Skyworks delivered 4G LTE solutions for use in both Land Rover and Jaguar models.
During the quarter, Skyworks had two more than 10% customers, Foxconn at about 40% and Samsung at about 10%.
Operating Details
Non-GAAP gross margin improved 120 basis points (bps) on a year-over-year basis to 50.8%, driven by new product launches, enhancements in the filter business and superior operational efficiencies.
Research & development (R&D) expense declined 60 bps, while selling, general & administrative (SG&A) expense increased 100 bps from the year-ago quarter.
As a result, non-GAAP operating margin expanded 60 bps to 35.8% in the reported quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2016, cash & cash equivalents were $1.08 billion. Cash flow from operating activities was $455 million in the quarter.
In the fourth quarter, Skyworks repurchased 3 million shares at an average price of roughly $66 a share. Notably, in fiscal 2016, Skyworks returned almost $727 million (81% of free cash flow) to shareholders in the form of dividends and share repurchases.
Guidance
For first-quarter fiscal 2017, revenues are expected to be up 7–9% sequentially to $902 million at the midpoint. Gross margin is expected to be in the low 51% range, while operating expenses to be $112 million. Non-GAAP earnings are anticipated to be $1.58 per share.
Skyworks believe that year-over-year growth momentum will resume from second-quarter fiscal 2017, driven by increasing adoption of its solutions in flagship products of global smartphone makers.
Skyworks expects gross margin to expand an additional 100 bps in fiscal 2017. Notably, gross margin expanded almost 300 bps in fiscal 2016. The expansion is expected to be driven by above market revenue and volume growth, in-sourcing of filters and improving operational efficiency.
Regarding capital expenditure, Skyworks expects to spend in the range of $200–$220 million for fiscal 2017, higher than $189 million in fiscal 2016.
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Skyworks (SWKS) Beats Q4 Earnings as Revenues Fall Y/Y
Skyworks Solutions Inc. (SWKS - Free Report) reported fourth-quarter fiscal 2016 non-GAAP earnings (including stock-based compensation) of $1.37 per share, which beat the Zacks Consensus Estimate by 4 cents but declined 1.7% from the year-ago quarter.
Earnings (excluding stock-based compensation) were $1.47 per share better than management’s guidance of $1.43.
Revenues of $835.4 million were down 5.2% year over year but ahead of its guidance and Zacks Consensus Estimate of $832 million.
Fiscal 2016 earnings (including stock-based compensation) increased 8.4% year over year to $5.16 per share. Revenues increased almost 1% to $3.29 billion.
Quarter Details
Skyworks continues to capitalize on global mobile connectivity and demand for high-performance solutions across a diverse set of verticals and the Internet of Things market. As customers implement the next level of functionality for higher bandwidth, consequently demand for system-level solutions and higher levels of integration are increasing. These in turn are playing directly into Skyworks' strengths and generating huge demand for its products.
Moreover, the company’s dominant position in the transmit chain with Power Amplifier and Power Amplifier plus Duplex or SkyOne-like systems is benefiting results. Syworks noted that it currently has almost 30% to 40% market penetration with adoption increasing from the likes of Huawei, Oppo and Vivo in China.
Skyworks stated that it is focused on addressing the needs of top-four or five players in China. According to the company, it is looking to continue partnerships with MediaTek, Spreadtrum, HiSilicon and even Qualcomm (QCOM - Free Report) that diversifies its business model in the country.
Skyworks continued to gain broad market traction during the quarter. The company stated that Huawei used SkyOne architecture across its Honor 8 smartphone platform. Skyworks also powered Google’s flagship Pixel 4G LTE smartphone.
In the Internet of Things (IoT) market the company continues to win orders from customers like Amazon.com (AMZN - Free Report) . Netgear (NTGR - Free Report) is also using Skyworks to support its Orbi home router system. Additionally, the company is deploying small-cell solutions for several leading infrastructure providers in China.
In the automotive market, Skyworks delivered 4G LTE solutions for use in both Land Rover and Jaguar models.
SKYWORKS SOLUTN Price, Consensus and EPS Surprise
SKYWORKS SOLUTN Price, Consensus and EPS Surprise | SKYWORKS SOLUTN Quote
During the quarter, Skyworks had two more than 10% customers, Foxconn at about 40% and Samsung at about 10%.
Operating Details
Non-GAAP gross margin improved 120 basis points (bps) on a year-over-year basis to 50.8%, driven by new product launches, enhancements in the filter business and superior operational efficiencies.
Research & development (R&D) expense declined 60 bps, while selling, general & administrative (SG&A) expense increased 100 bps from the year-ago quarter.
As a result, non-GAAP operating margin expanded 60 bps to 35.8% in the reported quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2016, cash & cash equivalents were $1.08 billion. Cash flow from operating activities was $455 million in the quarter.
In the fourth quarter, Skyworks repurchased 3 million shares at an average price of roughly $66 a share. Notably, in fiscal 2016, Skyworks returned almost $727 million (81% of free cash flow) to shareholders in the form of dividends and share repurchases.
Guidance
For first-quarter fiscal 2017, revenues are expected to be up 7–9% sequentially to $902 million at the midpoint. Gross margin is expected to be in the low 51% range, while operating expenses to be $112 million. Non-GAAP earnings are anticipated to be $1.58 per share.
Skyworks believe that year-over-year growth momentum will resume from second-quarter fiscal 2017, driven by increasing adoption of its solutions in flagship products of global smartphone makers.
Skyworks expects gross margin to expand an additional 100 bps in fiscal 2017. Notably, gross margin expanded almost 300 bps in fiscal 2016. The expansion is expected to be driven by above market revenue and volume growth, in-sourcing of filters and improving operational efficiency.
Regarding capital expenditure, Skyworks expects to spend in the range of $200–$220 million for fiscal 2017, higher than $189 million in fiscal 2016.
Zacks Rank
Skyworks currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
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