FY16Q2 Earnings Presentation
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- Net revenue for the second quarter of fiscal 2016 was $511 million, down 10% from the previous year. Earnings per share were $0.32 excluding special items, down 3% from the previous year. - Free cash flow on a trailing twelve month basis was $703 million, up 6% from the previous year and representing 32% of revenue. - Guidance for the third quarter of fiscal 2016 forecasts revenue between $535-575 million and earnings per share between $0.38-0.44 excluding special items.
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FY16Q2 Earnings Presentation
- 1. Fiscal 2016 Second Quarter Results January 21st, 2016
- 2. Safe Harbor 2 This presentation contains 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. These forward-looking statements include, without limitation, the Company’s projections and statements regarding revenue, gross margin, earnings per share, capital expenditures and other financial and business metrics. These statements involve risks and uncertainties that could cause actual results to differ materially from expectations. Please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 2015 for a description of some of the risk factors that could cause actual results to differ materially from such forward-looking statements. All forward-looking statements included in this presentation are made as of the date hereof, based on the information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.
- 3. Fiscal 2016 Second Quarter Results Summary • Net Revenue of $511 million • Gross Margin of 60.5% (excluding special items); 57.2% (GAAP) • Earnings Per Share of $0.32 profit (excluding special items); $0.23 profit (GAAP) • Returned $109 million to shareholders • Dividend payout: $86 million • Stock repurchases: $23 million • TTM1 Free Cash Flow of $703 million, 32% of TTM revenue 3 1TTM: Trailing Twelve Months Note: Free Cash Flow = Cash Flow from Operations – Net Capital Expenditures Net Capital Expenditures = Gross Capital Expenditures – Asset Sales
- 5. $662M $703M Fiscal 2016 Second Quarter Results vs. Last Year 5 $567M $511M -10% FY15 Q2 FY16 Q2 Revenue $0.33 $0.32 -3% FY15 Q2 FY16 Q2 Earnings per Share (Excluding Special Items2) TTM1 Free Cash Flow3 1TTM: Trailing Twelve Months 2Special Items definition in appendix Note: Free Cash Flow: Cash Flow from Operations – Net Capital Expenditures Net Capital Expenditures: Gross Capital Expenditures – Asset Sales FY15 Q2 FY16 Q2 +6%
- 6. Comms & Data Center Computing Consumer Industrial Automotive -18% -5% FY15 Q2 vs. FY16 Q2 Revenue -19% -23% Fiscal 2016 Second Quarter Results by End Market 6 +34% 28% 29% 21% 17% 5% FY16 Q2 Revenue: $511M Consumer Automotive Industrial Communications & Data CenterComputing Note: Due to nature of our general purpose products, estimates by Major Markets are imprecise
- 7. Fiscal 2016 Third Quarter Guidance FY16 Q3 Guidance Revenue $535M – $575M Gross Margin 60% – 63% GAAP excl. Special Items2 (57% – 60% GAAP) Earnings Per Share $0.38 – $0.44 GAAP excl. Special Items2 ($0.35 – $0.41 GAAP) Capital Expenditures Target range of 1 – 3% of revenue 7 1”Strongly up” is normalized for impact of energy meter business divestiture; revenue guidance includes impact of divestiture 2Special Items definition in Appendix Note: Maxim Integrated’s business outlook does not include the potential impact of any restructuring activity, acquisitions, or other business combinations that may be completed during the quarter. FY16 Q3 End Market Guidance vs. FY16 Q2 Automotive strongly up Industrial strongly up1 Data Center & Comms strongly up Consumer strongly up Computing down
- 9. 0% 10% 20% 30% $0 $300 $600 $900 FY11 Q2 FY12 Q2 FY13 Q2 FY14 Q2 FY15 Q2 FY16 Q2 TTM1 Free Cash Flow 9 1TTM: Trailing Twelve Months Note: Free Cash Flow: Cash from Operations – Net Capital Expenditures Net Capital Expenditures: Gross Capital Expenditures – Asset Sales $M As % of Revenue 32%
- 10. $0 $300 $600 $900 FY11 Q2 FY12 Q2 FY13 Q2 FY14 Q2 FY15 Q2 FY16 Q2 Free Cash Flow, TTM Net Income (ex-SI), TTM TTM1 Free Cash Flow vs. Net Income (excluding Special Items) 10 1TTM: Trailing Twelve Month Note: Free Cash Flow = Cash from Operations – Net Capital Expenditures Net Capital Expenditures = Gross Capital Expenditures – Asset Sales $M
- 11. 0% 3% 6% 9% 12% 15% FY11 Q2 FY12 Q2 FY13 Q2 FY14 Q2 FY15 Q2 FY16 Q2 Series3 Depreciation Capital Expenditures Capital Expenditures vs. Depreciation (excluding Special Items) 11 % of Revenue CapEx Target: 1 to 3% of Revenue Accelerated Depreciation
- 12. $0.20 $0.22 $0.24 $0.26 $0.28 $0.30 FY12 Q1 FY14Q1 FY16 Q1 Quarterly Cash Dividend Per Share 12 $0 $50 $100 $150 $200 $250 FY12 Q2 FY14 Q2 FY16 Q2 Dividends & Share Repurchases Dividend Return of Cash to Shareholders Buyback +5% +9% +8% +8% $504M remaining in share repurchase program as of FY16 Q2 end $0.30 +7%
- 14. 14 Appendix 2Special Items: intangible asset amortization; accelerated depreciation; acquisition-related inventory write-up; impairment of long-lived assets; impairment of goodwill and intangible assets; severance and restructuring; acquisition-related costs; contingent consideration adjustments relating to certain acquisitions; expected loss on rent expense for vacated office space; loss related to sale of land and buildings; impairment of investments in privately-held companies; tax provision impacts due to fixed asset tax basis adjustment relating to prior year depreciation expense.
- 15. Reconciliation of GAAP vs. GAAP Excluding Special Items (Unaudited) 15 December 26, September 26, December 27, 2015 2015 2014 Reconciliation of GAAP gross profit to GAAP gross profit excluding special items: GAAP gross profit 292,169$ 286,351$ 314,077$ GAAP gross profit % 57.2% 50.9% 55.4% Special items: Intangible asset amortization 14,734 16,638 18,750 Accelerated depreciation (1) 2,032 43,631 8,895 Total special items 16,766 60,269 27,645 GAAP gross profit excluding special items 308,935$ 346,620$ 341,722$ GAAP gross profit % excluding special items 60.5% 61.6% 60.3% Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items: GAAP operating expenses 202,636$ 362,116$ 378,153$ Special items: Intangible asset amortization 3,538 3,591 4,155 Impairment of long-lived assets (2) 1,950 157,697 50,745 Impairment of goodwill and intangible assets (3) - - 93,010 Severance and restructuring (4) 10,652 7,126 13,635 Other operating expenses (income), net (247) 315 885 Total special items 15,893 168,729 162,430 GAAP operating expenses excluding special items 186,743$ 193,387$ 215,723$ Reconciliation of GAAP net income (loss) to GAAP net income excluding special items: GAAP net income (loss) 67,469$ (72,143)$ (72,034)$ Special items: Intangible asset amortization 18,272 20,229 22,905 Accelerated depreciation (1) 2,032 43,631 8,895 Impairment of long-lived assets (2) 1,950 157,697 50,745 Impairment of goodwill and intangible assets (3) - - 93,010 Severance and restructuring (4) 10,652 7,126 13,635 Other operating expenses (income), net (247) 315 885 Interest and other expense (income), net 595 (109) (217) Pre-taxtotal special items 33,254 228,889 189,858 Fiscal year 2015 & 2014 research & development taxcredits (2,475) - (2,863) Other income taxeffects and adjustments (5) (5,428) (36,434) (21,283) GAAP net income excluding special items 92,820$ 120,312$ 93,678$ GAAP net income per share excluding special items: Basic 0.33$ 0.42$ 0.33$ Diluted 0.32$ 0.42$ 0.33$ Shares used in the calculation of earnings per share excluding special items: Basic 285,526 284,588 282,992 Diluted (6) 290,521 288,897 287,954 ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES (Unaudited) (in thousands, except per share data) Three Months Ended (1) Building and equipment accelerated depreciation related to San Jose and Dallas manufacturing facilities. Accelerated depreciation (1) 2,032 43,631 8,895 Total special items 16,766 60,269 27,645 GAAP gross profit excluding special items 308,935$ 346,620$ 341,722$ GAAP gross profit % excluding special items 60.5% 61.6% 60.3% Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items: GAAP operating expenses 202,636$ 362,116$ 378,153$ Special items: Intangible asset amortization 3,538 3,591 4,155 Impairment of long-lived assets (2) 1,950 157,697 50,745 Impairment of goodwill and intangible assets (3) - - 93,010 Severance and restructuring (4) 10,652 7,126 13,635 Other operating expenses (income), net (247) 315 885 Total special items 15,893 168,729 162,430 GAAP operating expenses excluding special items 186,743$ 193,387$ 215,723$ Reconciliation of GAAP net income (loss) to GAAP net income excluding special items: GAAP net income (loss) 67,469$ (72,143)$ (72,034)$ Special items: Intangible asset amortization 18,272 20,229 22,905 Accelerated depreciation (1) 2,032 43,631 8,895 Impairment of long-lived assets (2) 1,950 157,697 50,745 Impairment of goodwill and intangible assets (3) - - 93,010 Severance and restructuring (4) 10,652 7,126 13,635 Other operating expenses (income), net (247) 315 885 Interest and other expense (income), net 595 (109) (217) Pre-taxtotal special items 33,254 228,889 189,858 Fiscal year 2015 & 2014 research & development taxcredits (2,475) - (2,863) Other income taxeffects and adjustments (5) (5,428) (36,434) (21,283) GAAP net income excluding special items 92,820$ 120,312$ 93,678$ GAAP net income per share excluding special items: Basic 0.33$ 0.42$ 0.33$ Diluted 0.32$ 0.42$ 0.33$ Shares used in the calculation of earnings per share excluding special items: Basic 285,526 284,588 282,992 Diluted (6) 290,521 288,897 287,954 (2) Includes impairment charges related to the San Antonio wafer manufacturing facility, MEMS wafer manufacturing equipment, end of line test equipment and certain research and development equipment. (4) Includes severance charges associated with several reorganizations, primarily various business units and manufacturing operations. (1) Building and equipment accelerated depreciation related to San Jose and Dallas manufacturing facilities. (5) Includes taxeffect of pre-taxspecial items and miscellaneous taxadjustments. (3) Includes impairment of goodwill and write-off of in-process research and development related to MEMS business unit. (6) Shares used in diluted earnings per share excluding special items differs fromGAAP loss per share due to net income on a non-GAAP basis.