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Maxim (MXIM) Beats Q1 Earnings Estimates, Outlook Strong
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Maxim Integrated Products, Inc. reported first-quarter fiscal 2018 adjusted earnings of 60 cents per share, surpassing the Zacks Consensus Estimate by 5 cents. Also, earnings were up 25.0% from the year-ago quarter.
Following fiscal-first quarter results, share price was up 3.61% in after-hours trading, driven by strong growth in automotive and industrial markets. The company’s strong outlook for the upcoming quarter also led to the spike in the share price.
Also, shares of Maxim have returned 34.3% year to date, outperforming the industry’s gain of 25.0%.
Revenues
Revenues of $576 million were down 4.4% sequentially but up 2.5% year over year. The year-over-year increase was driven by major strength in the automotive and industrial end markets.
The top line was within the company’s guidance range of $555-$595 million and above the Zacks Consensus Estimate of $575 million.
Revenues by End Market
The revenue mix in terms of major markets is discussed below.
Industrial end market remained the largest revenue contributor, accounting for approximately 28%. The segment’s revenues were down sequentially but up year over year. The increase was driven primarily by factory automation products.
Consumer, Maxim’s second-largest segment, also generated 28% of the revenues, up sequentially and driven by growth across all major product segments.
The Communications and Data Center end market accounted for 20% of the revenues, down both sequentially as well as from the year-ago quarter. The strong growth of 100G optical products used in high-speed data center applications was offset by broad based softness in communications infrastructure.
The Automotive end market also generated 20% of revenues, flat sequentially but up year over year. The increase was driven by growth in infotainment content. Power management products for infotainment applications helped in strengthening customer relationships in automotive and earning new design wins.
The Computing business contributed the remaining 4%.
Margins
Non-GAAP gross margin was 66.9%, up 30 basis points (bps) sequentially and 290 bps year over year. The increase was due to higher revenues, a favorable mix and strong operational execution.
Non-GAAP operating expenses of $182.3 million decreased 0.7% year over year. The decrese was due to higher employee profit sharing. As a percentage of sales, research and development expenses decreased, while selling, general and administrative expenses increased.
Operating margin was 35.2%, up 390 bps year over year. The improvement was driven by revenue growth and manufacturing transformation.
Net Income
GAAP net income was $154.5 million compared with $137.6 million a year ago.
Pro forma net income was $170.6 million compared with $138.2 million a year ago. Our pro forma calculation excludes restructuring, intangibles amortization, asset impairments and other one-time charges on a tax-adjusted basis.
Balance Sheet & Cash Flow
During the reported quarter, cash flow from operations was $220 million compared with $237 million in the earlier quarter. Important usages of cash in the quarter included $14 million on capex, $75 million for share repurchases and $101 million paid as dividends.
Total cash, cash equivalents and short-term investments were $2.77 billion in the fiscal first quarter, up from $2.74 billion in the earlier quarter.
2Q Guidance
For the fiscal second quarter, Maxim expects revenues in the range of $600-$640 million based on a quarter-end backlog of $426 million. The Zacks Consensus Estimate is pegged at $581.2 million.
Gross margin is expected in the range of 66-68% on an adjusted basis (excluding special items). Earnings per share are expected in the range of 61-67 cents on an adjusted basis. The Zacks Consensus Estimate stands at 56 cents.
Going Forward
Maxim delivered strong fiscal first-quarter 2017 results with both earnings and revenues exceeding the Zacks Consensus Estimate.
For the upcoming fiscal first quarter, the company expects the automotive market to grow well above the seasonal, driven by continued growth in ADAS and infotainment products. The industrial market will be up sequentially and from the year-ago quarter, driven by strength from factory automation content. Also, the Communications and Data Center market is likely to be modestly up in the upcoming quarter. However, Consumer revenue is expected to be down in the December quarter, due to cyclicality.
Maxim remains financially strong with convincing margin expansion opportunities through its cost-saving initiatives and R&D focus on high-return investments.
The company is expanding its manufacturing footprint to enhance flexibility and profitability, while lowering capital expenditure. Management also plans to optimize product lines and organization for better returns on R&D investments. These efforts are likely to enable Maxim in improving future utilization rates, reducing costs and improving gross-margin performance.
Maxim is shifting to advanced node process technology development through a recent collaboration with its foundry partners. Products launched under this initiative should expand margins.
Maxim Integrated Products, Inc. Price, Consensus and EPS Surprise
Long-term earnings per share growth rate for Applied Materials, NVIDIA Corporation and ASML Holding N.V. is projected to be 17.1%, 10.3% and 21.4%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Maxim (MXIM) Beats Q1 Earnings Estimates, Outlook Strong
Maxim Integrated Products, Inc. reported first-quarter fiscal 2018 adjusted earnings of 60 cents per share, surpassing the Zacks Consensus Estimate by 5 cents. Also, earnings were up 25.0% from the year-ago quarter.
Following fiscal-first quarter results, share price was up 3.61% in after-hours trading, driven by strong growth in automotive and industrial markets. The company’s strong outlook for the upcoming quarter also led to the spike in the share price.
Also, shares of Maxim have returned 34.3% year to date, outperforming the industry’s gain of 25.0%.
Revenues
Revenues of $576 million were down 4.4% sequentially but up 2.5% year over year. The year-over-year increase was driven by major strength in the automotive and industrial end markets.
The top line was within the company’s guidance range of $555-$595 million and above the Zacks Consensus Estimate of $575 million.
Revenues by End Market
The revenue mix in terms of major markets is discussed below.
Industrial end market remained the largest revenue contributor, accounting for approximately 28%. The segment’s revenues were down sequentially but up year over year. The increase was driven primarily by factory automation products.
Consumer, Maxim’s second-largest segment, also generated 28% of the revenues, up sequentially and driven by growth across all major product segments.
The Communications and Data Center end market accounted for 20% of the revenues, down both sequentially as well as from the year-ago quarter. The strong growth of 100G optical products used in high-speed data center applications was offset by broad based softness in communications infrastructure.
The Automotive end market also generated 20% of revenues, flat sequentially but up year over year. The increase was driven by growth in infotainment content. Power management products for infotainment applications helped in strengthening customer relationships in automotive and earning new design wins.
The Computing business contributed the remaining 4%.
Margins
Non-GAAP gross margin was 66.9%, up 30 basis points (bps) sequentially and 290 bps year over year. The increase was due to higher revenues, a favorable mix and strong operational execution.
Non-GAAP operating expenses of $182.3 million decreased 0.7% year over year. The decrese was due to higher employee profit sharing. As a percentage of sales, research and development expenses decreased, while selling, general and administrative expenses increased.
Operating margin was 35.2%, up 390 bps year over year. The improvement was driven by revenue growth and manufacturing transformation.
Net Income
GAAP net income was $154.5 million compared with $137.6 million a year ago.
Pro forma net income was $170.6 million compared with $138.2 million a year ago. Our pro forma calculation excludes restructuring, intangibles amortization, asset impairments and other one-time charges on a tax-adjusted basis.
Balance Sheet & Cash Flow
During the reported quarter, cash flow from operations was $220 million compared with $237 million in the earlier quarter. Important usages of cash in the quarter included $14 million on capex, $75 million for share repurchases and $101 million paid as dividends.
Total cash, cash equivalents and short-term investments were $2.77 billion in the fiscal first quarter, up from $2.74 billion in the earlier quarter.
2Q Guidance
For the fiscal second quarter, Maxim expects revenues in the range of $600-$640 million based on a quarter-end backlog of $426 million. The Zacks Consensus Estimate is pegged at $581.2 million.
Gross margin is expected in the range of 66-68% on an adjusted basis (excluding special items). Earnings per share are expected in the range of 61-67 cents on an adjusted basis. The Zacks Consensus Estimate stands at 56 cents.
Going Forward
Maxim delivered strong fiscal first-quarter 2017 results with both earnings and revenues exceeding the Zacks Consensus Estimate.
For the upcoming fiscal first quarter, the company expects the automotive market to grow well above the seasonal, driven by continued growth in ADAS and infotainment products. The industrial market will be up sequentially and from the year-ago quarter, driven by strength from factory automation content. Also, the Communications and Data Center market is likely to be modestly up in the upcoming quarter. However, Consumer revenue is expected to be down in the December quarter, due to cyclicality.
Maxim remains financially strong with convincing margin expansion opportunities through its cost-saving initiatives and R&D focus on high-return investments.
The company is expanding its manufacturing footprint to enhance flexibility and profitability, while lowering capital expenditure. Management also plans to optimize product lines and organization for better returns on R&D investments. These efforts are likely to enable Maxim in improving future utilization rates, reducing costs and improving gross-margin performance.
Maxim is shifting to advanced node process technology development through a recent collaboration with its foundry partners. Products launched under this initiative should expand margins.
Maxim Integrated Products, Inc. Price, Consensus and EPS Surprise
Maxim Integrated Products, Inc. Price, Consensus and EPS Surprise | Maxim Integrated Products, Inc. Quote
Zacks Rank & Stocks to Consider
Currently, Maxim carries a Zacks Rank #3 (Hold). A few other better-ranked stocks in the broader technology sector are Applied Materials, Inc. (AMAT - Free Report) and NVIDIA Corporation (NVDA - Free Report) , both sporting a Zacks Rank #1 (Strong Buy), while ASML Holding (ASML - Free Report) holding a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings per share growth rate for Applied Materials, NVIDIA Corporation and ASML Holding N.V. is projected to be 17.1%, 10.3% and 21.4%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>