On a GAAP basis, revenue for Qorvo’s fiscal 2022 second quarter was
Strategic Highlights
- Commenced shipments of MHB and UHB PADs, antenna tuners and multiple connectivity solutions to support the ramp of the
Google Pixel 6 - Received initial production orders for MHB and UHB PADs,
Wi-Fi FEMs , and high-performance discrete solutions enabling advanced functionality in upcomingKorea -based 5G mass-market smartphone platform - Expanded UWB engagement with leading provider of consumer IoT products covering a broad range of connected home devices and secured UWB design wins with multiple OEMs supporting enterprise access points and home mesh networks
- Selected to supply UWB and Zigbee solutions with ConcurrentConnect™ technology to automaker in
Korea , streamlining manufacturing automation - Began sampling 5.2 GHz/5.6 GHz Wi-Fi 6 iFEMs with an integrated BAW filter, enabling higher capacity and improved efficiency in a reduced form factor
- Selected by a major base station OEM to supply all RF transmit and receive path content, including BAW filters, for 5G small cells
- Expanded defense product portfolio with industry-leading 125-watt S-band power amplifier module and 1.8-kilowatt L-band radar pallet for commercial and defense radar applications
- Received first orders and commenced shipments of Qorvo Omnia™ Antigen Test Platform, including cartridges
- After the quarter, acquired United Silicon Carbide to expand power franchise and enter higher voltage electrification applications
Financial Commentary and Outlook
- Quarterly revenue of
$1.09 billion to$1.12 billion - Non-GAAP gross margin between 52% and 52.5%
- Non-GAAP diluted earnings per share of
$2.75 at the midpoint of guidance
Qorvo’s actual quarterly results may differ from these expectations and projections, and such differences may be material.
Selected Financial Information
The following tables set forth selected GAAP and non-GAAP financial information for
SELECTED GAAP RESULTS | ||||||||||
(Unaudited) | ||||||||||
(In millions, except for percentages and EPS) | ||||||||||
For the quarter ended | For the quarter ended | Change vs. Q1 FY 2022 | ||||||||
Revenue | $ | 1,255.2 | $ | 1,110.4 | $ | 144.8 | ||||
Gross profit | $ | 621.6 | $ | 546.2 | $ | 75.4 | ||||
Gross margin | 49.5 | % | 49.2 | % | 0.3 | ppt | ||||
Operating expenses | $ | 259.2 | $ | 249.1 | $ | 10.1 | ||||
Operating income | $ | 362.4 | $ | 297.1 | $ | 65.3 | ||||
Net income | $ | 319.2 | $ | 285.6 | $ | 33.6 | ||||
Weighted average diluted shares | 112.4 | 113.9 | (1.5 | ) | ||||||
Diluted EPS | $ | 2.84 | $ | 2.51 | $ | 0.33 |
SELECTED NON-GAAP RESULTS1 | ||||||||||
(Unaudited) | ||||||||||
(In millions, except for percentages and EPS) | ||||||||||
For the quarter ended | For the quarter ended | Change vs. Q1 FY 2022 | ||||||||
Revenue | $ | 1,255.2 | $ | 1,110.4 | $ | 144.8 | ||||
Gross profit | $ | 657.5 | $ | 582.7 | $ | 74.8 | ||||
Gross margin | 52.4 | % | 52.5 | % | (0.1 | ) | ppt | |||
Operating expenses | $ | 222.1 | $ | 215.6 | $ | 6.5 | ||||
Operating income | $ | 435.4 | $ | 367.0 | $ | 68.4 | ||||
Net income | $ | 384.5 | $ | 322.6 | $ | 61.9 | ||||
Weighted average diluted shares | 112.4 | 113.9 | (1.5 | ) | ||||||
Diluted EPS | $ | 3.42 | $ | 2.83 | $ | 0.59 |
SELECTED GAAP RESULTS | ||||||||||
(Unaudited) | ||||||||||
(In millions, except for percentages and EPS) | ||||||||||
For the quarter ended | For the quarter ended | Change vs. Q2 FY 2021 | ||||||||
Revenue | $ | 1,255.2 | $ | 1,060.3 | $ | 194.9 | ||||
Gross profit | $ | 621.6 | $ | 491.6 | $ | 130.0 | ||||
Gross margin | 49.5 | % | 46.4 | % | 3.1 | ppt | ||||
Operating expenses | $ | 259.2 | $ | 269.9 | $ | (10.7 | ) | |||
Operating income | $ | 362.4 | $ | 221.6 | $ | 140.8 | ||||
Net income | $ | 319.2 | $ | 136.9 | $ | 182.3 | ||||
Weighted average diluted shares | 112.4 | 116.2 | (3.8 | ) | ||||||
Diluted EPS | $ | 2.84 | $ | 1.18 | $ | 1.66 |
SELECTED NON-GAAP RESULTS1 | ||||||||||
(Unaudited) | ||||||||||
(In millions, except for percentages and EPS) | ||||||||||
For the quarter ended | For the quarter ended | Change vs. Q2 FY 2021 | ||||||||
Revenue | $ | 1,255.2 | $ | 1,060.3 | $ | 194.9 | ||||
Gross profit | $ | 657.5 | $ | 547.9 | $ | 109.6 | ||||
Gross margin | 52.4 | % | 51.7 | % | 0.7 | ppt | ||||
Operating expenses | $ | 222.1 | $ | 218.6 | $ | 3.5 | ||||
Operating income | $ | 435.4 | $ | 329.4 | $ | 106.0 | ||||
Net income | $ | 384.5 | $ | 282.3 | $ | 102.2 | ||||
Weighted average diluted shares | 112.4 | 116.2 | (3.8 | ) | ||||||
Diluted EPS | $ | 3.42 | $ | 2.43 | $ | 0.99 |
1 Excludes stock-based compensation expense, amortization of intangible assets, acquisition and integration related costs, loss (gain) on assets, start-up costs, restructuring related charges, (gain) loss on investments, other expense (income) expense and an adjustment of income taxes.
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance with
In managing
We believe that these non-GAAP financial measures offer an additional view of
Our rationale for using these non-GAAP financial measures, as well as their impact on the presentation of
Non-GAAP gross profit and gross margin. Non-GAAP gross profit and gross margin exclude amortization of intangible assets, stock-based compensation expense and certain non-cash expenses. We believe that exclusion of these costs in presenting non-GAAP gross profit and gross margin facilitates a useful evaluation of our historical performance and projected costs and the potential for realizing cost efficiencies.
We view amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, and customer relationships, as items arising from pre-acquisition activities, determined at the time of an acquisition, rather than ongoing costs of operating Qorvo’s business. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangible assets is a static expense, which is not typically affected by operations during any particular period. Although we exclude the amortization of purchased intangible assets from these non-GAAP financial measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase price accounting and contribute to revenue generation.
We believe that presentation of non-GAAP gross profit and gross margin and other non-GAAP financial measures that exclude the impact of stock-based compensation expense assists management and investors in evaluating the period-over-period performance of
Non-GAAP operating income and operating margin. Non-GAAP operating income and operating margin exclude stock-based compensation expense, amortization of intangible assets, acquisition and integration related costs, loss (gain) on assets, start-up costs, restructuring related charges and certain non-cash expenses. We believe that presentation of a measure of operating income and operating margin that excludes amortization of intangible assets and stock-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross margin. We believe that acquisition and integration related costs, loss (gain) on assets, start-up costs, restructuring related charges and certain non-cash expenses do not constitute part of
Non-GAAP net income and non-GAAP net income per diluted share. Non-GAAP net income and non-GAAP net income per diluted share exclude the effects of stock-based compensation expense, amortization of intangible assets, acquisition and integration related costs, loss (gain) on assets, start-up costs, restructuring related charges and certain non-cash expenses, (gain) loss on investments, other expense (income) and also reflect an adjustment of income taxes. The income tax adjustment primarily represents the use of research and development tax credit carryforwards, deferred tax expense (benefit) items not affecting taxes payable, adjustments related to the deemed and actual repatriation of historical foreign earnings, non-cash expense (benefit) related to uncertain tax positions and other items unrelated to the current fiscal year or that are not indicative of our ongoing business operations. We believe that presentation of measures of net income and net income per diluted share that exclude these items is useful to both management and investors for the reasons described above with respect to non-GAAP gross profit and gross margin and non-GAAP operating income and operating margin. We believe disclosure of non-GAAP net income and non-GAAP net income per diluted share has economic substance because the excluded expenses are either unrelated to ongoing operations or do not represent current cash expenditures.
Non-GAAP operating expenses (research and development and selling, general and administrative). Non-GAAP research and development and selling, general and administrative expenses exclude stock-based compensation expense, amortization of intangible assets and certain non-cash expenses (primarily acquisition and integration related costs). We believe that presentation of measures of these operating expenses that exclude amortization of intangible assets and stock-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross margin. We believe that acquisition and integration related costs and certain non-cash expenses do not constitute part of
Free cash flow.
EBITDA.
Non-GAAP ROIC. Return on invested capital (ROIC) is a non-GAAP financial measure that management believes provides useful supplemental information for management and the investor by measuring the effectiveness of our operations' use of invested capital to generate profits. We use ROIC to track how much value we are creating for our shareholders. Non-GAAP ROIC is calculated by dividing annualized non-GAAP operating income, net of an adjustment for income taxes (as described above), by average invested capital. Average invested capital is calculated by subtracting the average of the beginning balance and the ending balance of equity plus net debt, less certain goodwill.
Net debt or positive net cash. Net debt or positive net cash is defined as unrestricted cash, cash equivalents and short-term investments minus any borrowings under our credit facility and the principal balance of our senior unsecured notes. Management believes that net debt or positive net cash provides useful information regarding the level of
Forward-looking non-GAAP financial measures. Our earnings release contains forward-looking free cash flow, gross margin, income tax rate and diluted earnings per share. We provide these non-GAAP measures to investors on a prospective basis for the same reasons (set forth above) that we provide them to investors on a historical basis. We are unable to provide a reconciliation of the forward-looking non-GAAP financial measures to the most directly comparable forward-looking GAAP financial measures without unreasonable effort due to variability and difficulty in making accurate projections for items that would be required to be included in the GAAP measures, such as stock-based compensation, acquisition and integration related costs, restructuring related charges, asset impairments and the provision for income taxes. We believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors.
Limitations of non-GAAP financial measures. The primary material limitations associated with the use of non-GAAP financial measures as an analytical tool compared to the most directly comparable GAAP financial measures are these non-GAAP financial measures (i) may not be comparable to similarly titled measures used by other companies in our industry, and (ii) exclude financial information that some may consider important in evaluating our performance, thus limiting their usefulness as a comparative tool. We compensate for these limitations by providing full disclosure of the differences between these non-GAAP financial measures and the corresponding GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the corresponding GAAP financial measures, to enable investors to perform their own analysis of our gross profit and gross margin, operating expenses, operating income, net income, net income per diluted share and net cash provided by operating activities. We further compensate for the limitations of our use of non-GAAP financial measures by presenting the corresponding GAAP measures more prominently.
About
This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions, and are not historical facts and typically are identified by use of terms such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management's current judgment and expectations, but our actual results, events and performance could differ materially from those expressed or implied by forward-looking statements. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements, other than as is required under
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
Revenue | $ | 1,255,248 | $ | 1,060,292 | $ | 2,365,599 | $ | 1,847,743 | |||||||
Costs and expenses: | |||||||||||||||
Cost of goods sold | 633,695 | 568,742 | 1,197,863 | 1,030,404 | |||||||||||
Research and development | 158,377 | 156,342 | 310,456 | 286,413 | |||||||||||
Selling, general and administrative | 93,489 | 109,372 | 183,788 | 195,976 | |||||||||||
Other operating expense | 7,327 | 4,192 | 14,030 | 20,594 | |||||||||||
Total costs and expenses | 892,888 | 838,648 | 1,706,137 | 1,533,387 | |||||||||||
Operating income | 362,360 | 221,644 | 659,462 | 314,356 | |||||||||||
Interest expense | (15,327 | ) | (23,486 | ) | (30,606 | ) | (42,335 | ) | |||||||
Other income, net | 4,754 | 1,920 | 21,545 | 25,057 | |||||||||||
Income before income taxes | 351,787 | 200,078 | 650,401 | 297,078 | |||||||||||
Income tax expense | (32,598 | ) | (63,161 | ) | (45,586 | ) | (63,239 | ) | |||||||
Net income | $ | 319,189 | $ | 136,917 | $ | 604,815 | $ | 233,839 | |||||||
Net income per share, diluted | $ | 2.84 | $ | 1.18 | $ | 5.35 | $ | 2.01 | |||||||
Weighted average outstanding diluted shares | 112,411 | 116,177 | 113,088 | 116,395 |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share data) (Unaudited) | |||||||||||
Three Months Ended | |||||||||||
GAAP operating income | $ | 362,360 | $ | 297,102 | $ | 221,644 | |||||
Stock-based compensation expense | 28,691 | 25,238 | 30,048 | ||||||||
Amortization of intangible assets | 36,577 | 37,223 | 72,147 | ||||||||
Acquisition and integration related costs | 6,040 | 3,993 | 7,259 | ||||||||
Loss (gain) on assets, start-up costs, restructuring and other non-cash expenses | 1,750 | 3,473 | (1,745 | ) | |||||||
Non-GAAP operating income | $ | 435,418 | $ | 367,029 | $ | 329,353 | |||||
GAAP net income | $ | 319,189 | $ | 285,626 | $ | 136,917 | |||||
Stock-based compensation expense | 28,691 | 25,238 | 30,048 | ||||||||
Amortization of intangible assets | 36,577 | 37,223 | 72,147 | ||||||||
Acquisition and integration related costs | 6,040 | 3,993 | 7,259 | ||||||||
Loss (gain) on assets, start-up costs, restructuring and other non-cash expenses | 1,750 | 3,473 | (1,745 | ) | |||||||
(Gain) loss on investments | (3,673 | ) | (12,724 | ) | 450 | ||||||
Other expense (income) | 103 | (1,937 | ) | (2,051 | ) | ||||||
Adjustment of income taxes | (4,133 | ) | (18,264 | ) | 39,262 | ||||||
Non-GAAP net income | $ | 384,544 | $ | 322,628 | $ | 282,287 | |||||
GAAP weighted average outstanding diluted shares | 112,411 | 113,872 | 116,177 | ||||||||
Dilutive stock-based awards | — | — | — | ||||||||
Non-GAAP weighted average outstanding diluted shares | 112,411 | 113,872 | 116,177 | ||||||||
Non-GAAP net income per share, diluted | $ | 3.42 | $ | 2.83 | $ | 2.43 | |||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited) | |||||||||||||||||
Three Months Ended | |||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||
GAAP gross profit/margin | $ | 621,553 | 49.5 | % | $ | 546,183 | 49.2 | % | $ | 491,550 | 46.4 | % | |||||
Amortization of intangible assets | 30,876 | 2.5 | 31,821 | 2.9 | 52,149 | 4.9 | |||||||||||
Stock-based compensation expense | 4,949 | 0.4 | 4,401 | 0.4 | 3,600 | 0.3 | |||||||||||
Other non-cash expenses | 152 | — | 247 | — | 627 | 0.1 | |||||||||||
Non-GAAP gross profit/margin | $ | 657,530 | 52.4 | % | $ | 582,652 | 52.5 | % | $ | 547,926 | 51.7 | % |
Three Months Ended | ||
Non-GAAP Operating Income | ||
(as a percentage of sales) | ||
GAAP operating income | 28.9 | % |
Stock-based compensation expense | 2.3 | |
Amortization of intangible assets | 2.9 | |
Acquisition and integration related costs | 0.5 | |
Loss on assets, start-up costs, restructuring and other non-cash expenses | 0.1 | |
Non-GAAP operating income | 34.7 | % |
Three Months Ended | |||
Free Cash Flow (1) | |||
(in millions) | |||
Net cash provided by operating activities | $ | 244.8 | |
Purchases of property and equipment | (47.3 | ) | |
Free cash flow | $ | 197.5 |
(1) Free Cash Flow is calculated as net cash provided by operating activities minus property and equipment expenditures.
ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (In thousands) (Unaudited) | |||||||||||
Three Months Ended | |||||||||||
GAAP research and development expense | $ | 158,377 | $ | 152,079 | $ | 156,342 | |||||
Less: | |||||||||||
Stock-based compensation expense | 8,614 | 7,823 | 8,445 | ||||||||
Other non-cash expenses | 235 | 394 | 526 | ||||||||
Non-GAAP research and development expense | $ | 149,528 | $ | 143,862 | $ | 147,371 | |||||
Three Months Ended | |||||||||||
GAAP selling, general and administrative expense | $ | 93,489 | $ | 90,299 | $ | 109,372 | |||||
Less: | |||||||||||
Stock-based compensation expense | 15,128 | 13,014 | 18,001 | ||||||||
Amortization of intangible assets | 5,701 | 5,402 | 19,998 | ||||||||
Other non-cash expenses | 76 | 122 | 171 | ||||||||
Non-GAAP selling, general and administrative expense | $ | 72,584 | $ | 71,761 | $ | 71,202 |
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,153,172 | $ | 1,397,880 | |||
Accounts receivable, net | 662,787 | 457,431 | |||||
Inventories | 597,563 | 507,787 | |||||
Other current assets | 127,745 | 120,706 | |||||
Total current assets | 2,541,267 | 2,483,804 | |||||
Property and equipment, net | 1,276,810 | 1,266,031 | |||||
2,734,116 | 2,642,708 | ||||||
Intangible assets, net | 615,486 | 611,155 | |||||
Long-term investments | 36,908 | 35,370 | |||||
Other non-current assets | 371,869 | 182,402 | |||||
Total assets | $ | 7,576,456 | $ | 7,221,470 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 806,258 | $ | 568,928 | |||
Other current liabilities | 96,237 | 112,653 | |||||
Total current liabilities | 902,495 | 681,581 | |||||
Long-term debt | 1,740,552 | 1,742,550 | |||||
Other long-term liabilities | 205,655 | 167,914 | |||||
Total liabilities | 2,848,702 | 2,592,045 | |||||
Stockholders’ equity | 4,727,754 | 4,629,425 | |||||
Total liabilities and stockholders’ equity | $ | 7,576,456 | $ | 7,221,470 |
At Qorvo®
VP, Investor Relations
1.336.678.7968
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