Skyworks Solutions, Inc. — Q1 FY2021 Form 10-Q
Reporting period: 13 weeks ended January 1, 2021. Comparatives are the 13 weeks ended December 27, 2019, except balance-sheet comparisons, which are to October 2, 2020. Skyworks makes analog semiconductors for wireless and other applications.
Financial performance
| Metric | Q1 FY2021 | Prior-year quarter | Change / note |
|---|---|---|---|
| Net revenue | $1,510.0 million | $896.1 million | Up 68.5% |
| Gross profit / margin | $761.7 million / 50.4% | $444.3 million / 49.6% | Margin up 0.8 percentage points |
| Operating income / margin | $570.7 million / 37.7% | $277.3 million / 31.0% | Higher operating income and margin |
| Net income | $509.3 million | $257.1 million | Nearly doubled |
| Diluted EPS | $3.05 | $1.50 | Weighted-average diluted shares fell to 167.0 million from 171.6 million |
| Operating cash flow | $485.1 million | $398.4 million | Up $86.7 million |
| Capital expenditures | $118.9 million | $111.2 million | Up $7.7 million |
Revenue growth was attributed primarily to stronger wireless-connectivity demand and technology upgrades, including 5G and Wi-Fi 6, with higher average content per device. Gross profit also benefited from favorable product mix and higher unit volumes, partly offset by lower average selling prices. Operating expenses were $191.0 million versus $167.0 million; R&D and SG&A rose, primarily with employee compensation and performance-award expense. No restructuring charges were recorded in the current quarter.
Liquidity, capital allocation, and balance sheet
Cash and cash equivalents were $617.2 million; marketable securities totaled $402.1 million, for combined cash and securities of $1,019.3 million, up $39.3 million from October 2, 2020. Current assets were $2,575.2 million and current liabilities $507.6 million. Cash from operations was partly offset by $195.6 million of stock repurchases, $118.9 million of capital expenditures, and $83.0 million of dividends. Financing cash use was $323.6 million; investing cash use was $111.0 million.
The balance sheet reports no conventional borrowings. Total liabilities were $1,004.9 million and included $310.6 million of long-term tax liabilities and operating lease liabilities. Management said available liquidity and expected operating cash generation should cover anticipated requirements for at least the next 12 months, while noting future acquisitions or strategic investments could require additional capital.
Skyworks repurchased 1.4 million shares for $195.6 million under its then-current authorization. On January 26, 2021, the board approved a new stock repurchase program of up to $2.0 billion through January 26, 2023, replacing the prior program. The company declared and paid a $0.50-per-share dividend in the quarter and announced another $0.50-per-share dividend after quarter-end.
Outlook, risks, and contingencies
The filing provides no specific revenue, earnings, or margin guidance. Management cited typical seasonal strength in the fourth and first fiscal quarters. COVID-19 remained a risk: renewed suspension of operations in Mexicali or reduced production from quarantines, absenteeism, or work restrictions could disrupt supply and harm results. Management stated that the pandemic’s duration and impact remained uncertain.
Other disclosed exposures include semiconductor pricing pressure, intellectual-property disputes (including potential injunctive relief), and currency and investment-market risks. Management reported no pending legal proceedings it believed reasonably likely to result in a material loss, and no material changes to previously disclosed risk factors. There were no material off-balance-sheet arrangements, and no impairment indicators were identified in the quarter. Management concluded disclosure controls were effective at a reasonable-assurance level.
Most important facts for investors to verify
- Whether demand and elevated revenue associated with 5G, Wi-Fi 6, and higher device content persist beyond the reported quarter.
- How much of the cash-flow increase reflects earnings versus working-capital movements; receivables increased substantially with higher sales.
- Execution and funding of the new $2.0 billion repurchase authorization, alongside dividends and capital spending.
- Whether COVID-19, supply-chain constraints, or operating interruptions affect production, particularly at Mexicali.
- Tax-rate sustainability: the effective rate was 10.8%, compared with 7.8% a year earlier; the filing cites several tax benefits and offsets.