<< Back
Synaptics Reports Results for Fourth Quarter and Fiscal 2017
- Fiscal 2017 revenue of
$1.72 billion , GAAP net income per diluted share of$1.37 and non-GAAP net income per diluted share of$4.88 - Fourth quarter revenue of
$426.5 million , GAAP net income per diluted share of$0.51 and non-GAAP net income per diluted share of$1.18
Net revenue for fiscal 2017 totaled
Net revenue for the fourth quarter of fiscal 2017 increased 32 percent from the comparable quarter last year to
"Synaptics was able to achieve modest top-line growth for fiscal 2017 on the strength of our TDDI and fingerprint solutions despite the headwinds in our discrete display driver business," stated
Fourth Quarter 2017 Business Metrics
- Revenue mix from mobile and PC products was approximately 87 percent and 13 percent respectively. Fingerprint products have been classified according to type of device.
- Revenue from mobile products of
$369.2 million was down 6 percent sequentially and up 29 percent year-over-year. Mobile products revenue includes all touchscreen, display driver, and applicable fingerprint products. - Revenue from PC products totaled
$57.3 million , a sequential increase of 8 percent and an increase of 49 percent year-over-year, and includes applicable fingerprint products.
Cash at June 30, 2017 was $368 million. In the fourth quarter of fiscal 2017, the company generated
Earnings Call Information
The
About
Join
Use of Non-GAAP Financial Information
In evaluating its business,
As presented in the "Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures" tables that follow, each of the non-GAAP financial measures excludes one or more of the following items:
Acquisition related costs.
Acquisition related costs primarily consist of:
- amortization of purchased intangibles, which includes acquired intangibles such as developed technology, customer relationships, backlog, licensed technology, patents, and in-process technology when post-acquisition development is determined to be substantively complete,
- changes in contingent consideration,
- inventory adjustments affecting the carrying value of inventory acquired in an acquisition, and
- legal and consulting costs associated with acquisitions that have been announced and are expected to close or have closed, including non-recurring post-acquisition services.
These acquisition related costs are not factored into the company's evaluation of its ongoing business operating performance or potential acquisitions, as they are not considered as part of the company's principal operations. Further, the amount of these costs can vary significantly from period to period based on the terms of an earn-out arrangement, revisions to assumptions that went into developing the estimate of the contingent consideration associated with an earn-out arrangement, the size and timing of an acquisition, the lives assigned to the acquired intangible assets, and the maturity of the business acquired. Excluding acquisition related costs from non-GAAP measures provides investors with a basis to compare
Share-based compensation.
Share-based compensation expense relates to employee equity award programs and the vesting of the underlying awards, which includes stock options, deferred stock units, market stock units and the employee stock purchase plan. Share-based compensation is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond the company's control. As a result, the company excludes this item from its internal operating forecasts and models. The company believes that non-GAAP measures reflecting adjustments for share-based compensation provide investors with a basis to compare the company's principal operating performance against the performance of peer companies without the variability created by share-based compensation resulting from the variety of equity awards used by other companies and the varying methodologies and assumptions used.
Restructuring costs.
Restructuring costs consist primarily of employee severance and office closure costs. These costs are generally infrequent, cash-based, and designed to address cost structure inefficiencies. As a result, the company excludes restructuring costs from its internal operating forecasts and models when evaluating its ongoing business performance. The company believes that non-GAAP measures reflecting adjustments for restructuring costs provide investors with a basis to compare the company's principal operating performance against the performance of other companies without the variability created by infrequent restructuring costs designed to address cost structure inefficiencies in its business.
Other non-cash items, net.
Other non-cash items, net includes non-cash amortization of debt issuance costs and the gain on redemption or the accretion of interest income on certain of the company's investments in auction rate securities, in which the cost basis was previously written down in value. These items are excluded from non-GAAP results as either the previous write-down was excluded from non-GAAP results or the item is non-cash. Excluding other non-cash items, net from non-GAAP measures provides investors with a basis to compare
Impairment of intangible assets
Impairment of intangible assets represents the write-down in value of intangible assets that the company has determined are impaired. These impairment write-downs are generally infrequent and non-cash. As a result, the company excludes impairment of intangible assets from its internal operating forecasts and models when evaluating its ongoing business performance. The company believes that non-GAAP measures reflecting adjustments for impairment write-downs provide investors with a basis to compare the company's principal operating performance against the performance of other companies without the variability created by infrequent, non-cash charges for impairment of intangible assets.
Equity investment loss
Equity investment loss represents an adjustment in the book value of an equity investment in a minority owned company. The equity investment loss is a non-cash item. As a result, the company excludes equity investment loss from its internal operating forecasts and models when evaluating its ongoing business performance. The company believes that non-GAAP measures reflecting adjustments for equity investment loss provide investors with a basis to compare the company's principal operating performance against the performance of other companies without the variability created by non-cash item.
Litigation settlement charge.
Litigation settlement charge represents our estimated or actual cost of settling material litigation claims that are unusual or infrequent. As a result, the company will exclude litigation settlement charge from its internal operating forecasts and models when evaluating its ongoing business performance. The company believes that non-GAAP measures reflecting an adjustment for litigation settlement charge provide investors with a basis to compare the company's principal operating performance against the performance of other companies without the variability created by an infrequent litigation settlement charge designed to address non-recurring or non-routine costs.
Non-GAAP tax adjustments.
The company forecasts its long-term non-GAAP tax rate in order to provide investors with improved long-term modeling accuracy and consistency across financial reporting periods by eliminating the effects of certain items in our Non-GAAP net income and Non-GAAP net income per share, including the type and amount of deductible stock options, delivery of shares under deferred stock unit awards and market stock unit awards, the taxation of post-acquisition intercompany intellectual property cross-licensing or transfer transactions, and the impact of other acquisition items that may or may not be tax deductible. The company intends to evaluate its long-term non-GAAP tax rate annually for significant events, including material tax law changes in the major tax jurisdictions in which the company operates, corporate organizational changes related to acquisitions or tax planning opportunities, and substantive changes in our geographic earnings mix.
Forward-Looking Statements
This press release 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 the fiscal year ended
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| (In millions except share data) | |||||||||||
| (Unaudited) | |||||||||||
| 2017 | 2016 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 367.8 | $ | 352.2 | |||||||
| Accounts receivables, net of allowances of |
255.2 | 252.6 | |||||||||
| Inventories | 131.4 | 146.4 | |||||||||
| Prepaid expenses and other current assets | 37.6 | 28.9 | |||||||||
| Total current assets | 792.0 | 780.1 | |||||||||
| Property and equipment at cost, net | 113.8 | 112.7 | |||||||||
| 206.8 | 206.8 | ||||||||||
| Purchased intangibles, net | 101.0 | 160.3 | |||||||||
| Non-current other assets | 53.1 | 40.3 | |||||||||
| Total assets | $ | 1,266.7 | $ | 1,300.2 | |||||||
| Liabilities and stockholders' equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 135.8 | $ | 172.8 | |||||||
| Accrued compensation | 31.9 | 39.9 | |||||||||
| Income taxes payable | 17.2 | 11.5 | |||||||||
| Acquisition-related liabilities | 8.7 | 25.5 | |||||||||
| Other accrued liabilities | 101.8 | 82.3 | |||||||||
| Current portion of long-term debt | 15.0 | 18.8 | |||||||||
| Total current liabilities | 310.4 | 350.8 | |||||||||
| Long-term debt | 202.0 | 216.7 | |||||||||
| Non-current portion of acquisition-related liabilities | - | 6.2 | |||||||||
| Deferred tax liabilities | - | 9.0 | |||||||||
| Other long-term liabilities | 14.1 | 12.5 | |||||||||
| Total liabilities | 526.5 | 595.2 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock; | |||||||||||
| no shares issued and outstanding | - | - | |||||||||
| Common stock; | |||||||||||
| 60,579,911 and 59,532,148 shares issued, and 34,638,435 and | |||||||||||
| 35,212,141 shares outstanding, respectively | 0.1 | 0.1 | |||||||||
| Additional paid in capital | 1,004.8 | 928.6 | |||||||||
| Less: 25,941,476 and 24,320,007 treasury shares, respectively, at cost | (980.3 | ) | (892.3 | ) | |||||||
| Accumulated other comprehensive income | 1.5 | 3.3 | |||||||||
| Retained earnings | 714.1 | 665.3 | |||||||||
| Total stockholders' equity | 740.2 | 705.0 | |||||||||
| Total liabilities and stockholders' equity | $ | 1,266.7 | $ | 1,300.2 | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
| (In millions except per share data) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Net revenue | $ | 426.5 | $ | 323.9 | $ | 1,718.2 | $ | 1,666.9 | ||||||||||
| Acquisition related costs (1) | 11.7 | 12.8 | 47.6 | 54.4 | ||||||||||||||
| Cost of revenue | 288.0 | 203.0 | 1,147.0 | 1,031.0 | ||||||||||||||
| Gross margin | 126.8 | 108.1 | 523.6 | 581.5 | ||||||||||||||
| Operating expenses | ||||||||||||||||||
| Research and development | 73.8 | 78.2 | 292.3 | 311.2 | ||||||||||||||
| Selling, general, and administrative | 32.6 | 36.9 | 137.6 | 161.7 | ||||||||||||||
| Impairment of intangible assets | - | 6.7 | - | 6.7 | ||||||||||||||
| Acquisition related costs, net (2) | 2.4 | 4.6 | 11.7 | 18.1 | ||||||||||||||
| Restructuring costs (3) | - | 6.7 | 7.3 | 8.6 | ||||||||||||||
| Litigation settlement charge | - | - | 10.0 | - | ||||||||||||||
| Total operating expenses | 108.8 | 133.1 | 458.9 | 506.3 | ||||||||||||||
| Operating income/(loss) | 18.0 | (25.0 | ) | 64.7 | 75.2 | |||||||||||||
| Interest and other income/(expense), net | (1.6 | ) | 1.2 | (3.4 | ) | 0.4 | ||||||||||||
| Income before provision for income taxes and equity investment gain/(loss) | 16.4 | (23.8 | ) | 61.3 | 75.6 | |||||||||||||
| (Benefit)/Provision for income taxes | (1.7 | ) | (16.7 | ) | 12.2 | 3.4 | ||||||||||||
| Equity investment loss | (0.3 | ) | - | (0.3 | ) | - | ||||||||||||
| Net income/(loss) | $ | 17.8 | $ | (7.1 | ) | $ | 48.8 | $ | 72.2 | |||||||||
| Net income/(loss) per share: | ||||||||||||||||||
| Basic | $ | 0.52 | $ | (0.19 | ) | $ | 1.40 | $ | 1.97 | |||||||||
| Diluted | $ | 0.51 | $ | (0.19 | ) | $ | 1.37 | $ | 1.91 | |||||||||
| Shares used in computing net income per share: | ||||||||||||||||||
| Basic | 34.4 | 36.6 | 34.8 | 36.6 | ||||||||||||||
| Diluted | 35.2 | 36.6 | 35.6 | 37.9 | ||||||||||||||
| (1 | ) | These acquisition related costs consist primarily of amortization | ||||||||||||||||
| of acquired intangible assets associated with acquisitions. | ||||||||||||||||||
| (2 | ) | These acquisition related costs, net consist primarily of changes in contingent | ||||||||||||||||
| consideration and amortization associated with certain acquired intangible assets. | ||||||||||||||||||
| (3 | ) | Restructuring costs primarily include severance costs and facility consolidation | ||||||||||||||||
| costs associated with operational restructurings. | ||||||||||||||||||
| Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures | |||||||||||||||||
| (In millions except per share data) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| GAAP gross margin | $ | 126.8 | $ | 108.1 | $ | 523.6 | $ | 581.5 | |||||||||
| Acquisition related costs | 11.7 | 12.8 | 47.6 | 54.4 | |||||||||||||
| Share-based compensation | 0.5 | 0.5 | 2.2 | 1.8 | |||||||||||||
| Non-GAAP gross margin | $ | 139.0 | $ | 121.4 | $ | 573.4 | $ | 637.7 | |||||||||
| GAAP gross margin - percentage of revenue | 29.7 | % | 33.4 | % | 30.5 | % | 34.9 | % | |||||||||
| Acquisition related costs - percentage of revenue | 2.6 | % | 4.0 | % | 2.7 | % | 3.3 | % | |||||||||
| Share-based compensation - percentage of revenue | 0.1 | % | 0.2 | % | 0.1 | % | 0.1 | % | |||||||||
| Non-GAAP gross margin - percentage of revenue | 32.6 | % | 37.5 | % | 33.4 | % | 38.3 | % | |||||||||
| GAAP research and development expense | $ | 73.8 | $ | 78.2 | $ | 292.3 | $ | 311.2 | |||||||||
| Share-based compensation | (8.1 | ) | (8.5 | ) | (33.1 | ) | (30.6 | ) | |||||||||
| Non-GAAP research and development expense | $ | 65.7 | $ | 69.7 | $ | 259.2 | $ | 280.6 | |||||||||
| GAAP selling, general, and administrative expense | $ | 32.6 | $ | 36.9 | $ | 137.6 | $ | 161.7 | |||||||||
| Acquisition and integration related costs | (1.3 | ) | - | (1.3 | ) | - | |||||||||||
| Share-based compensation | (6.9 | ) | (6.9 | ) | (26.5 | ) | (24.4 | ) | |||||||||
| Non-GAAP selling, general, and administrative expense | $ | 24.4 | $ | 30.0 | $ | 109.8 | $ | 137.3 | |||||||||
| GAAP operating income/(loss) | $ | 18.0 | $ | (25.0 | ) | $ | 64.7 | $ | 75.2 | ||||||||
| Impairment of intangible assets | - | 6.7 | - | 6.7 | |||||||||||||
| Acquisition related costs | 15.4 | 17.4 | 60.6 | 72.5 | |||||||||||||
| Share-based compensation | 15.5 | 15.9 | 61.8 | 56.8 | |||||||||||||
| Restructuring costs | - | 6.7 | 7.3 | 8.6 | |||||||||||||
| Litigation settlement charge | - | - | 10.0 | - | |||||||||||||
| Non-GAAP operating income | $ | 48.9 | $ | 21.7 | $ | 204.4 | $ | 219.8 | |||||||||
| GAAP net income/(loss) | $ | 17.8 | $ | (7.1 | ) | $ | 48.8 | $ | 72.2 | ||||||||
| Impairment of intangible assets | - | 6.7 | - | 6.7 | |||||||||||||
| Acquisition related costs | 15.4 | 17.4 | 60.6 | 72.5 | |||||||||||||
| Share-based compensation | 15.5 | 15.9 | 61.8 | 56.8 | |||||||||||||
| Restructuring costs | - | 6.7 | 7.3 | 8.6 | |||||||||||||
| Litigation settlement charge | - | - | 10.0 | - | |||||||||||||
| Other non-cash items, net | 0.3 | (2.0 | ) | (1.1 | ) | (2.7 | ) | ||||||||||
| Equity investment loss | 0.3 | - | 0.3 | - | |||||||||||||
| Non-GAAP tax adjustments | (7.9 | ) | (20.3 | ) | (13.8 | ) | (33.6 | ) | |||||||||
| Non-GAAP net income | $ | 41.4 | $ | 17.3 | $ | 173.9 | $ | 180.5 | |||||||||
| GAAP net income/(loss) per share - diluted | $ | 0.51 | $ | (0.19 | ) | $ | 1.37 | $ | 1.91 | ||||||||
| Impairment of intangible assets | - | 0.18 | - | 0.18 | |||||||||||||
| Acquisition related costs | 0.44 | 0.48 | 1.70 | 1.91 | |||||||||||||
| Share-based compensation | 0.44 | 0.43 | 1.74 | 1.50 | |||||||||||||
| Restructuring costs | - | 0.18 | 0.21 | 0.23 | |||||||||||||
| Litigation settlement charge | - | - | 0.28 | - | |||||||||||||
| Other non-cash items, net | 0.01 | (0.05 | ) | (0.03 | ) | (0.07 | ) | ||||||||||
| Equity investment loss | 0.01 | - | - | - | |||||||||||||
| Non-GAAP tax adjustments | (0.23 | ) | (0.55 | ) | (0.39 | ) | (0.90 | ) | |||||||||
| Non-GAAP share adjustment | - | (0.02 | ) | - | - | ||||||||||||
| Non-GAAP net income per share - diluted | $ | 1.18 | $ | 0.46 | $ | 4.88 | $ | 4.76 | |||||||||
| CONDENSED CONSOLIDATED CASH FlOWS | ||||||||
| (In millions) | ||||||||
| (Unaudited) | ||||||||
| Twelve Months Ended | ||||||||
| 2017 | 2016 | |||||||
| Net Income | $ | 48.8 | $ | 72.2 | ||||
| Non-cash operating items | 135.7 | 154.4 | ||||||
| Changes in working capital | (31.6 | ) | 30.0 | |||||
| Provided by operations | 152.9 | 256.6 | ||||||
| Fixed asset & intangible asset purchases | (31.4 | ) | (33.2 | ) | ||||
| Proceeds from sales and maturities of investments | 7.5 | 6.6 | ||||||
| Investment in direct financing lease, net | - | - | ||||||
| Equity method investment | (18.4 | ) | - | |||||
| Used in investing | (42.3 | ) | (26.6 | ) | ||||
| (88.0 | ) | (240.6 | ) | |||||
| Equity compensation, net | 19.2 | 28.3 | ||||||
| Acquisition related | (5.3 | ) | (60.9 | ) | ||||
| Debt related, net | (20.0 | ) | (7.9 | ) | ||||
| Used in financing | (94.1 | ) | (281.1 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (0.9 | ) | 3.4 | |||||
| Net change in cash and cash equivalents | 15.6 | (47.7 | ) | |||||
| Cash and cash equivalents at beginning of period | 352.2 | 399.9 | ||||||
| Cash and cash equivalents at end of period | $ | 367.8 | $ | 352.2 | ||||
| Cash paid for taxes | $ | 22.1 | $ | 46.9 | ||||
| Cash refund on taxes | $ | 10.0 | $ | 18.0 | ||||
For more information contact:Jennifer Jarman The Blueshirt Group 415-217-5866 jennifer@blueshirtgroup.com
Source:
News Provided by Acquire Media