01—Abstract
Summary
Summary of the 10-K filed November 15, 2018. Cited figures are marked; the original filing is the authoritative source.
Skyworks Solutions, Inc. reported fiscal 2018 (year ended September 28, 2018) net revenue of $3,868.0 milliona, up from $3,651.4 million in fiscal 2017, with operating income of $1,319.3 million and net income of $918.4 million, compared with $1,010.2 million in fiscal 2017.
Diluted EPS was $5.01b, versus $5.41 a year earlier. Results were weighed down by a one-time $224.6 million charge for the mandatory deemed repatriation tax and an $18.3 million charge for revaluing deferred tax assets and liabilities under the Tax Reform Act. Gross margin held at 50.4%, and research and development rose to $404.5 million from $355.2 million.
The company acquired Avnera Corporation in August 2018 for $404.0 millionc in cash, net of cash acquired, plus contingent payments, with a total estimated fair value of $407.1 million and goodwill of $306.8 million. Cash and marketable securities declined to $1,050.2 million from $1,616.8 million, as the company returned $1,002.7 million to shareholders through $759.5 million of buybacks and $243.2 million of dividends. Apple accounted for 47% of net revenue in fiscal 2018, up from 39% in fiscal 2017, which underscores customer concentration risk.
The board declared a $0.38d quarterly dividend on November 8, 2018, and $413.0 million remained available under the January 31, 2018 repurchase authorization. The filing describes a company that positions itself across mobile, IoT and emerging analog markets, with 9,400 employees and a stated plan to expand into automotive, industrial, medical and military markets. Management states that cash on hand and operating cash flow should be sufficient for at least the next 12 months.
02—Key points
Key Highlights
- Net revenue rose to $3,868.0 million in fiscal 2018 from $3,651.4 million in fiscal 2017, driven by higher RF and analog content per device and IoT applications.
- Net income fell to $918.4 million from $1,010.2 million, held back by a one-time $224.6 million deemed repatriation tax charge and an $18.3 million deferred tax revaluation charge.
- Operating income was $1,319.3 million with an operating margin of 34.1%, compared with 34.3% in fiscal 2017.
- Diluted EPS was $5.01, down from $5.41; the company paid $1.34 in dividends per share for the year.
- The Avnera Corporation acquisition closed in August 2018 for $404.0 million in net cash, with $306.8 million of goodwill recognized.
- Apple represented 47% of fiscal 2018 net revenue, up from 39% in fiscal 2017, a significant customer concentration.
- Cash, cash equivalents and marketable securities fell to $1,050.2 million from $1,616.8 million after $1,002.7 million in shareholder returns and $422.3 million in capital expenditures.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Skyworks Solutions kept $0.24.
- Revenue$3.87B100.0%
- Cost of revenue−$1.92B49.6%
- Gross profit$1.95B50.4%
- Operating costs−$631.4M16.3%
- Operating income$1.32B34.1%
- Interest, other & tax−$400.9M10.4%
- Net income$918.4M23.7%
Where FY2018 revenue went
$3.87B- Cost of revenue: $1.92B, 50% of revenue
- Net income: $918.4M, 24% of revenue
- R&D: $404.5M, 10% of revenue
- SG&A: $207.8M, 5.4% of revenue
- Interest, other & tax: $400.9M, 10% of revenue
Kept 24% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed November 15, 2018Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $3.87B$3.65B | +5.9% |
| Cost of Revenue | $1.92B$1.81B | +6.0% |
| Gross Profit | $1.95B$1.84B | +5.9% |
| R&D Expenses | $404.50M$355.20M | +13.9% |
| SG&A Expenses | $207.80M$204.60M | +1.6% |
| Operating Expenses | $631.40M$588.00M | +7.4% |
| Operating Income | $1.32B$1.25B | +5.2% |
| Net Income | $918.40M$1.01B | −9.1% |
| EPS (Basic) | $5.06$5.48 | −7.7% |
| EPS (Diluted) | $5.01$5.41 | −7.4% |
| Shares Outstanding (Basic) | 181.30M184.30M | −1.6% |
| Shares Outstanding (Diluted) | 183.20M186.70M | −1.9% |
05—Questions
Frequently Asked Questions
How did Skyworks perform financially in fiscal 2018?
Net revenue grew to $3,868.0 million from $3,651.4 million, and operating income reached $1,319.3 million. Net income declined to $918.4 million from $1,010.2 million, mainly because of one-time Tax Reform Act charges totaling $224.6 million and $18.3 million.
What drove the decline in net income despite higher revenue?
The filing attributes the decline primarily to a one-time $224.6 million charge for the mandatory deemed repatriation tax on foreign earnings and an $18.3 million charge from revaluing deferred tax assets and liabilities at the new corporate tax rate. The effective tax rate rose to 31.1% from 19.6%.
What was the Avnera acquisition and what did it cost?
Skyworks acquired Avnera Corporation on August 17, 2018, to add ultra-low power analog circuits for audio, sensor and smart-interface applications. The total cash consideration, net of cash acquired, was $404.0 million, with a total estimated fair value of $407.1 million including contingent payments of up to $20.0 million.
How much capital did the company return to shareholders?
In fiscal 2018 Skyworks returned $1,002.7 million to shareholders, consisting of $759.5 million to repurchase 7.7 million shares and $243.2 million in cash dividends. As of September 28, 2018, $413.0 million remained under the January 31, 2018 repurchase program, and the board declared a $0.38 per share dividend on November 8, 2018.
How concentrated is the customer base?
Apple accounted for 47% of net revenue in fiscal 2018, up from 39% in fiscal 2017. Samsung accounted for 12% and Huawei for 10% in fiscal 2017. The filing notes that the loss of or reduced orders from a major customer could materially affect the business.
06—Continue