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Synaptics Reports Results for Fourth Quarter and Fiscal 2014

SAN JOSE, Calif., July 31, 2014 /PRNewswire/ -- Synaptics (NASDAQ: SYNA), a leading developer of human interface solutions, today reported financial results for its fourth quarter and year ended June 30, 2014. 

"Synaptics posted a stellar fourth quarter and a phenomenal fiscal year.  We greatly outpaced our growth objectives by extending our leadership in touch and generating significant contributions from our fingerprint ID business," stated Rick Bergman, President and CEO.  "We are clearly executing on our key growth levers with the adoption of our fingerprint authentication platform, expanding penetration within large touchscreens, growing traction for our display integrated solutions and continued expansion in China. Our acquisition of Renesas SP Drivers is progressing as anticipated, and we are excited to broaden our expertise in mobile display, which we believe will enhance our ability to continue to deliver and sustain strong, profitable growth."

Net revenue for fiscal 2014 reached a record $947.5 million, an increase of 43% over fiscal 2013.  Net income for fiscal 2014 was $46.7 million, or $1.26 per diluted share, and includes an expense for change to contingent consideration liability of $69.9 million primarily related to the acquisition of the company's fingerprint ID business, which is performing significantly above expectations.

Non-GAAP net income for fiscal 2014 increased 48% from the prior year to a record $157.6 million, or $4.25 per diluted share. (See attached table for a reconciliation of GAAP to non-GAAP results.)

Net revenue for the fourth quarter of fiscal 2014 grew 37% over the comparable quarter last year to a record $314.9 million. Net income for the fourth quarter of fiscal 2014 was $34.5 million, or $0.89 per diluted share, and includes an expense for change to contingent consideration liability of $13.1 million. 

Non-GAAP net income for the fourth quarter of fiscal 2014 grew 16% over the prior year period to a record $56.8 million, or $1.46 per diluted share.  (See attached table for a reconciliation of GAAP to non-GAAP financial measures.) 

Fourth Quarter 2014 Business Metrics

  • Revenue mix from mobile and PC products was approximately 77% and 23%, respectively. Fingerprint ID products have been classified according to type of device.
  • Revenue from mobile products of $242.9 million was up 40% year-over-year. Mobile products revenue includes all touchscreen, video display, and applicable fingerprint ID products.
  • Revenue from PC products totaled $72.0 million, an increase of 26% year-over-year, and includes applicable fingerprint ID products.
  • Cash at June 30, 2014 was $447.2 million.

Kathy Bayless, CFO, added, "Our outperformance in the June quarter reflected a steep initial ramp of new designs. Considering our backlog of $132 million entering the typically back-end loaded September quarter, customer forecasts and product sell-in and sell-through timing patterns, and the resulting expected product mix, we anticipate a record September quarter with revenue in the range of $275 to $295 million, an increase of 24% to 33% over the prior year period.  We expect the revenue mix from mobile and PC to be similar to the preceding quarter."

Mr. Bergman added, "As we look ahead to fiscal 2015, we see signs of stability in the PC market, coupled with strong but moderating growth rates for smartphones. With continued strength in our core focus areas and fingerprint ID solutions now successfully incorporated into our platform, we feel confident that we can achieve another year of very strong annual revenue growth in the mid-20% range, excluding revenue from our impending acquisition of Renesas SP Drivers."

During fiscal 2014, Synaptics repurchased approximately 5% of its outstanding shares, similar to levels repurchased during each of the past several years.  The company also announced that in July, its board of directors increased and extended the authorization for stock repurchases by $110 million, for a total current authorization of $200 million available through July 2016. 

Earnings Call Information
The Synaptics fourth quarter fiscal 2014 teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, July 31, 2014, during which the company will provide forward-looking information. To participate on the live call, analysts and investors should dial 1- 888-280-4443 (conference ID: 8116033) at least ten minutes prior to the call.  Synaptics will also offer a live and archived webcast of the conference call, accessible from the "Investor Relations" section of the company's Web site at www.synaptics.com.

About Synaptics Incorporated
The leading developer of human interface solutions which enhance the user experience, Synaptics provides the broadest solutions portfolio in the industry. The ClearPad® family supports touchscreen solutions for devices ranging from entry-level mobile phones to flagship premium smartphones, tablets and notebook PCs. The TouchPad™ family, including ClickPad™ and ForcePad®, is integrated into the majority of today's notebook PCs. LiveFlex® fingerprint sensor technology enables authentication, mobile payments, and touch-based navigation for smartphones, tablets, and notebook computers. Synaptics' wide portfolio also includes ThinTouch® supporting thin and light keyboard solutions, as well as key technologies for next generation touch-enabled video and display applications. (NASDAQ: SYNA) www.synaptics.com.

Use of Non-GAAP Financial Information
In evaluating its business, Synaptics considers and uses net income excluding share-based compensation, change in contingent consideration, and certain non-cash or non-recurring items as a supplemental measure of operating performance.  Net income excluding share-based compensation, change in contingent consideration, and certain non-cash or non-recurring items is not a measurement of the company's financial performance under GAAP and should not be considered as an alternative to GAAP net income. The company presents net income excluding share-based compensation, change in contingent consideration, and certain non-cash or non-recurring items because it considers it an important supplemental measure of its performance. The company believes this measure facilitates operating performance comparisons from period to period by eliminating potential differences in net income caused by the existence and timing of share-based compensation charges, change in contingent consideration, and certain non-cash or non-recurring items. Net income excluding share-based compensation, change in contingent consideration liability, and certain non-cash or non-recurring items has limitations as an analytical tool and should not be considered in isolation or as a substitute for the company's GAAP net income.  The principal limitations of this measure are that it does not reflect the company's actual expenses and may thus have the effect of inflating its net income and net income per share. 

Forward-Looking Statements
This press release contains "forward-looking" statements about Synaptics, as that term is defined under the federal securities laws.  Synaptics intends such forward-looking statements to be subject to the safe harbor created by those laws. Such forward-looking statements include, but are not limited to, statements regarding future operating and financial performance, including revenue and gross margin for the Company's first fiscal quarter of 2015 and full 2015 fiscal year.  Synaptics cautions that these statements are not guarantees of future performance and are qualified by important factors that could cause actual results to differ materially from our current expectations.  Such factors include, but are not limited to, (a) demand for Synaptics' products, (b) market demand for OEMs' products using Synaptics' solutions, (c) changing market demand trends in the markets Synaptics serves, (d) the success of Synaptics' customers' products that utilize Synaptics' product solutions, (e) the development and launch cycles of Synaptics' customers' products, (f) market pressures on selling prices, (g) changes in product mix, (h) the market acceptance of Synaptics' product solutions compared with competitors' solutions, (i) general economic conditions, including consumer confidence and demand, and (j) other risks as identified from time to time in Synaptics'SEC reports, including Synaptics' Annual Report on Form 10-K for the fiscal year ended June 29, 2013, and subsequent quarterly and periodic reports, registration statements, amendments and other reports that we may file from time to time with the SEC and/or make available on our website. All forward-looking statements are based on information available to Synaptics on the date hereof, and Synaptics assumes no obligation to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.

For more information contact:

 Jennifer Jarman
 The Blueshirt Group
 415-217-5866 
 jennifer@blueshirtgroup.com

(Tables to Follow)

 

SYNAPTICS INCORPORATED

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

June 30,

June 30,

2014

2013


Assets


Current assets:



Cash and cash equivalents

$ 447,205

$ 355,303

Accounts receivables, net of allowances of $883

195,057

148,454

Inventories

82,311

49,948

Prepaid expenses and other current assets

17,858

6,715

Total current assets

742,431

560,420


Property and equipment at cost, net

80,849

58,035

Goodwill

61,030

20,695

Purchased intangibles

82,111

13,110

Non-current auction rate securities

19,785

16,969

Other assets

34,127

22,037

Total assets

$ 1,020,333

$ 691,266


Liabilities and stockholders' equity


Current liabilities:



Accounts payable

$ 97,109

$ 83,710

Accrued compensation

30,682

23,728

Income taxes payable

12,538

10,751

Current portion of contingent consideration

57,388

196

Other accrued liabilities

56,691

31,241

Total current liabilities

254,408

149,626


Notes payable

-

2,305

Other liabilities

64,768

17,480


Commitments and contingencies






Stockholders' equity:



Preferred stock;





$.001 par value; 10,000,000 shares authorized;





no shares issued and outstanding

-

-

Common stock;



$.001 par value; 120,000,000 shares authorized;





55,911,513 and 50,673,758 shares issued, and 36,863,802 and





33,289,826 shares outstanding, respectively

56

51

Additional paid in capital

740,282

539,170

Less: 19,047,711 and 17,383,932 treasury shares, respectively, at cost

(530,422)

(460,160)

Accumulated other comprehensive income

8,560

6,802

Retained earnings

482,681

435,992

Total stockholders' equity

701,157

521,855

Total liabilities and stockholders' equity

$ 1,020,333

$ 691,266

 


SYNAPTICS INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)













Three Months Ended

Twelve Months Ended


June 30,

June 30,


2014

2013

2014

2013









Net revenue                                                 

$ 314,898

$ 230,183

$ 947,539

$ 663,588

Acquisition related costs (1)

2,378

-

6,926

-

Cost of revenue                             

172,694

115,062

504,533

337,784

Gross margin                                                  

139,826

115,121

436,080

325,804

Operating expenses








Research and development               

56,896

40,900

192,681

144,699

Selling, general, and administrative

26,541

21,521

94,244

79,620

Acquisition related costs (2)

17,031

509

76,669

2,372

Gain on sale of building

-

(1,578)

-

(1,578)

Total operating expenses                                       

100,468

61,352

363,594

225,113









Operating income                                   

39,358

53,769

72,486

100,691

Interest income

253

225

924

865

Non-cash interest income

307

194

1,058

194

Interest expense                                                

-

(4)

(9)

(17)

Income before provision for income taxes                 

39,918

54,184

74,459

101,733

Provision for income taxes             

5,446

8,864

27,770

2,800

Net income                                         

$  34,472

$  45,320

$  46,689

$  98,933









Net income per share:








Basic                                                      

$    0.95

$    1.37

$    1.34

$    3.03

Diluted                                                     

$    0.89

$    1.29

$    1.26

$    2.89









Shares used in computing net income per share:








Basic                                                          

36,411

32,979

34,761

32,658

Diluted                                                      

38,817

35,150

37,105

34,239

 

(1)

These acquisition related costs consist primarily of amortization associated with certain acquired intangible assets.

(2)

These acquisition related costs consist primarily of changes in contingent consideration, non-recurring legal and consulting costs associated with acquisitions, and amortization associated with certain acquired intangible assets.

 

SYNAPTICS INCORPORATED

Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures

(In thousands, except per share data)

(Unaudited)













Three Months Ended

Twelve Months Ended


June 30,

June 30,


2014

2013

2014

2013









GAAP gross margin

$139,826

$115,121

$436,080

$325,804

Acquisition related costs

2,378

-

6,926

-

Share-based compensation

298

221

1,142

911

Non-GAAP gross margin

$142,502

$115,342

$444,148

$326,715




















GAAP gross margin - percentage of revenue

44.4%

50.0%

46.0%

49.1%

Acquisition related costs - percentage of revenue

0.8%

0.0%

0.8%

0.0%

Share-based compensation - percentage of revenue

0.1%

0.1%

0.1%

0.1%

Non-GAAP gross margin - percentage of revenue

45.3%

50.1%

46.9%

49.2%




















GAAP research and development expense

$ 56,896

$ 40,900

$192,681

$144,699

Share-based compensation

(5,336)

(3,992)

(18,455)

(15,775)

Non-GAAP research and development expense

$ 51,560

$ 36,908

$174,226

$128,924




















GAAP selling, general, and administrative expense

$ 26,541

$ 21,521

$ 94,244

$ 79,620

Share-based compensation

(3,788)

(3,291)

(13,264)

(15,524)

Non-GAAP selling, general, and administrative expense

$ 22,753

$ 18,230

$ 80,980

$ 64,096




















GAAP operating income

$ 39,358

$ 53,769

$ 72,486

$100,691

Acquisition related costs

19,409

509

83,595

2,372

Share-based compensation

9,422

7,504

32,861

32,210

Gain on sale of building

-

(1,578)

-

(1,578)

Non-GAAP operating income

$ 68,189

$ 60,204

$188,942

$133,695




















GAAP net income

$ 34,472

$ 45,320

$ 46,689

$ 98,933

Acquisition related costs

19,409

509

83,595

2,372

Share-based compensation

9,422

7,504

32,861

32,210

Non-cash interest income

(307)

(194)

(1,058)

(194)

Gain on sale of building

-

(1,578)

-

(1,578)

Tax adjustments

(6,189)

(2,620)

(4,506)

(25,365)

Non-GAAP net income

$ 56,807

$ 48,941

$157,581

$106,378




















GAAP net income per share - diluted

$   0.89

$   1.29

$   1.26

$   2.89

Acquisition related costs

0.50

0.02

2.25

0.07

Share-based compensation

0.24

0.21

0.89

0.94

Non-cash interest income

(0.01)

(0.01)

(0.03)

(0.01)

Gain on sale of building

-

(0.05)

-

(0.05)

Tax adjustments

(0.16)

(0.07)

(0.12)

(0.73)

Non-GAAP net income per share - diluted

$   1.46

$   1.39

$   4.25

$   3.11

 

SOURCE Synaptics Inc.

News Provided by Acquire Media

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This website contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business, and can be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements may include words such as "expect," "anticipate," "intend," "believe," "estimate," "plan," "target," "strategy," "continue," "may," "will," "should," variations of such words, or other words and terms of similar meaning. All forward-looking statements reflect our best judgment and are based on several factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Such factors include, but are not limited to, the risks as identified in the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" sections of our Annual Report on Form 10-K for our most recent fiscal year, and other risks as identified from time to time in our Securities and Exchange Commission reports. Forward-looking statements are based on information available to us on the date hereof, and we do not have, and expressly disclaim, any obligation to publicly release any updates or any changes in our expectations, or any change in events, conditions, or circumstances on which any forward-looking statement is based. Our actual results and the timing of certain events could differ materially from the forward-looking statements. These forward-looking statements do not reflect the potential impact of any mergers, acquisitions, or other business combinations that had not been completed as of the date of this filing.

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