01—Abstract
Summary
Summary of the 10-K filed November 13, 2017. Cited figures are marked; the original filing is the authoritative source.
Skyworks Solutions, Inc. reported net revenue of $3,651.4 milliona for the fiscal year ended September 29, 2017, up from $3,289.0 million in fiscal 2016, an increase the filing describes as 11.0%.
Operating income rose to $1,253.8 millionb (34.3% of net revenue, versus 34.0% in fiscal 2016), and net income reached $1,010.2 million, or $5.41 per diluted share. The company attributed growth to higher RF and analog content per smartphone, emerging-market strength, IoT applications, and its expanding analog portfolio in automotive, industrial, medical and military markets. Cash flow and capital return were strong.
Cash from operations was $1,471.3 millionc, and cash and cash equivalents ended at $1,616.8 million. During the year the company repurchased 4.7 million shares for $432.3 million and paid $214.6 million in dividends, and it declared a $0.32 quarterly dividend on November 6, 2017. Capital expenditures were $303.3 million.
The filing also states that three customers, Foxconn, Samsung and Huawei, each exceeded ten percent of net revenue, and that Company A accounted for 39%d of fiscal 2017 net revenue, which underscores concentration risk. Risks the filing highlights include cyclicality in the semiconductor industry, pricing erosion, reliance on sole-source suppliers, dependence on a small number of customers, and exposure to international operations, particularly China. The auditor, KPMG LLP, issued an unqualified opinion on the financial statements and on internal control over financial reporting.
02—Key points
Key Highlights
- Net revenue rose 11.0% to $3,651.4 million in fiscal 2017 from $3,289.0 million in fiscal 2016.
- Operating income was $1,253.8 million, or 34.3% of net revenue, compared with 34.0% in fiscal 2016.
- Net income was $1,010.2 million, with diluted EPS of $5.41 versus $5.18 in fiscal 2016.
- Gross margin was 50.4% of net revenue, down from 50.6% in fiscal 2016, as average selling price erosion and product mix offset volume gains.
- Cash and cash equivalents increased to $1,616.8 million, with operating cash flow of $1,471.3 million.
- Shareholder returns in fiscal 2017 totaled $647 million, including $432.3 million in buybacks and $214.6 million in dividends; the Board declared a $0.32 quarterly dividend on November 6, 2017.
- Customer concentration remains high: Company A represented 39% of fiscal 2017 net revenue, and Foxconn, Samsung and Huawei each exceeded ten percent.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Skyworks Solutions kept $0.28.
- Revenue$3.65B100.0%
- Cost of revenue−$1.81B49.6%
- Gross profit$1.84B50.4%
- Operating costs−$588.0M16.1%
- Operating income$1.25B34.3%
- Interest, other & tax−$243.6M6.7%
- Net income$1.01B27.7%
Where FY2017 revenue went
$3.65B- Cost of revenue: $1.81B, 50% of revenue
- Net income: $1.01B, 28% of revenue
- R&D: $355.2M, 9.7% of revenue
- SG&A: $204.6M, 5.6% of revenue
- Other operating costs: $28.2M, 0.8% of revenue
- Interest, other & tax: $243.6M, 6.7% of revenue
Kept 28% as net incomeOther operating costs $28.2M · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed November 13, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $3.65B$3.29B | +11.0% |
| Cost of Revenue | $1.81B$1.62B | +11.4% |
| Gross Profit | $1.84B$1.67B | +10.6% |
| R&D Expenses | $355.20M$312.40M | +13.7% |
| SG&A Expenses | $204.60M$195.90M | +4.4% |
| Operating Expenses | $588.00M$546.50M | +7.6% |
| Operating Income | $1.25B$1.12B | +12.1% |
| Net Income | $1.01B$995.20M | +1.5% |
| EPS (Basic) | $5.48$5.27 | +4.0% |
| EPS (Diluted) | $5.41$5.18 | +4.4% |
| Shares Outstanding (Basic) | 184.30M188.70M | −2.3% |
| Shares Outstanding (Diluted) | 186.70M192.10M | −2.8% |
05—Questions
Frequently Asked Questions
What drove revenue growth in fiscal 2017?
The filing attributes the $362.4 million increase to capturing a higher share of RF and analog content per smartphone, stronger demand in emerging markets, growth in IoT applications, and an expanding analog portfolio serving automotive, industrial, medical and military markets.
How concentrated is the customer base?
Three customers, Foxconn, Samsung and Huawei, each accounted for more than ten percent of fiscal 2017 net revenue. The filing's segment note shows Company A at 39% of net revenue, Company B at 12% and Company C at 10%.
How much cash did the company return to shareholders?
In fiscal 2017 the company repurchased 4.7 million shares for $432.3 million and paid $214.6 million in cash dividends, for a total of $647 million. As of September 29, 2017, $174.1 million remained under the January 17, 2017 repurchase authorization.
Did gross margin improve?
Gross margin was 50.4% of net revenue, slightly below 50.6% in fiscal 2016. Volume gains and lower per-unit costs added $306.6 million to gross profit, but average selling price erosion and product mix reduced it by $130.0 million.
What are the main risks highlighted in the filing?
Key risks include industry cyclicality and rapid demand declines, quarterly and annual earnings volatility, reliance on a few large customers, intense competition and pricing pressure, dependence on third-party foundries and sole-source suppliers, manufacturing yield and disruption risks, and international operations, including significant exposure to China.
06—Continue