01—Abstract
Summary
Summary of the 10-K filed November 24, 2021. Cited figures are marked; the original filing is the authoritative source.
Skyworks Solutions, Inc. reported fiscal 2021 (year ended October 1, 2021) net revenue of $5,109.1 milliona, up 52.3% from $3,355.7 million in fiscal 2020, with net income of $1,498.3 million (diluted EPS $8.97) versus $814.8 million (diluted EPS $4.80) a year earlier.
Growth was attributed to higher demand for wireless connectivity products and technology upgrade cycles, including 5G and Wi-Fi 6, along with higher average content per device. Gross margin rose to 49.2% of net revenue from 48.1%, and operating income reached $1,612.7 millionb versus $891.8 million. Apple accounted for 59% of net revenue in fiscal 2021, up from 56% in fiscal 2020.
The company completed its acquisition of Silicon Laboratories' Infrastructure and Automotive business on July 26, 2021, for total cash consideration of $2.75 billionc. To fund it, Skyworks issued $1.5 billion of senior notes in May 2021 and borrowed $1.0 billion under a term loan, of which $750.0 million remained outstanding at year-end. Long-term debt totaled $2,235.6 million at October 1, 2021, compared with none a year earlier.
Cash, cash equivalents, and marketable securities ended the year at $1,027.2 milliond, and cash generated from operations was $1,772.0 million. Capital returns continued during the year, with dividends paid of $340.6 million and $195.6 million spent repurchasing 1.4 million shares, leaving $2.0 billion available under the January 2021 repurchase program.
The company also retired 68.5 million treasury shares at a historical cost of $4,342.6 million. Risk factors highlighted ongoing COVID-19 supply chain disruption, customer concentration, US-China trade restrictions affecting Huawei and other Entity List customers, and the integration and debt-service demands of the acquisition.
02—Key points
Key Highlights
- Net revenue rose 52.3% to $5,109.1 million, driven by demand for wireless connectivity products and 5G and Wi-Fi 6 upgrade cycles.
- Net income increased to $1,498.3 million (diluted EPS $8.97) from $814.8 million (diluted EPS $4.80) in fiscal 2020.
- Gross profit was $2,512.4 million, or 49.2% of net revenue, compared with 48.1% in fiscal 2020.
- Acquired Silicon Labs' Infrastructure and Automotive business on July 26, 2021, for $2.75 billion in cash, adding $1,708.3 million of identified intangible assets and $986.2 million of goodwill.
- Long-term debt of $2,235.6 million at year-end, including $1.5 billion of senior notes and $750.0 million of outstanding term loans.
- Apple accounted for 59% of fiscal 2021 net revenue, up from 56% in fiscal 2020, indicating significant customer concentration.
- Paid $340.6 million in dividends and repurchased $195.6 million of stock; $2.0 billion remained under the repurchase authorization at year-end.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Skyworks Solutions kept $0.29.
- Revenue$5.11B100.0%
- Cost of revenue−$2.60B50.8%
- Gross profit$2.51B49.2%
- Operating costs−$899.7M17.6%
- Operating income$1.61B31.6%
- Interest, other & tax−$114.4M2.2%
- Net income$1.50B29.3%
Where FY2021 revenue went
$5.11B- Cost of revenue: $2.60B, 51% of revenue
- Net income: $1.50B, 29% of revenue
- R&D: $532.3M, 10% of revenue
- SG&A: $322.5M, 6.3% of revenue
- Other operating costs: $44.9M, 0.9% of revenue
- Interest, other & tax: $114.4M, 2.2% of revenue
Kept 29% as net incomeOther operating costs $44.9M · 0.9%Interest, other & tax $114.4M · 2.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed November 24, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $5.11B$3.36B | +52.3% |
| Cost of Revenue | $2.60B$1.74B | +49.0% |
| Gross Profit | $2.51B$1.61B | +55.8% |
| R&D Expenses | $532.30M$464.10M | +14.7% |
| SG&A Expenses | $322.50M$231.40M | +39.4% |
| Operating Expenses | $899.70M$721.10M | +24.8% |
| Operating Income | $1.61B$891.80M | +80.8% |
| Interest Expense | -$13.40M$0 | — |
| Net Income | $1.50B$814.80M | +83.9% |
| EPS (Basic) | $9.07$4.84 | +87.4% |
| EPS (Diluted) | $8.97$4.80 | +86.9% |
| Shares Outstanding (Basic) | 165.20M168.50M | −2.0% |
| Shares Outstanding (Diluted) | 167.00M169.90M | −1.7% |
05—Questions
Frequently Asked Questions
What drove Skyworks' revenue growth in fiscal 2021?
The filing attributes the 52.3% increase in net revenue to higher overall demand for wireless connectivity products, the onset of technology upgrade cycles including 5G and Wi-Fi 6 solutions, and higher average content per device for these next-generation solutions.
How was the Silicon Labs acquisition financed?
The acquisition, completed July 26, 2021, for $2.75 billion in cash, was financed through $1.5 billion of senior notes issued in May 2021, which were due in 2023, 2026 and 2031, and a $1.0 billion term loan of which $750.0 million was outstanding at October 1, 2021. A $750.0 million revolving credit facility was also established and was undrawn at year-end.
How concentrated is Skyworks' customer base?
Apple, through distributors, contract manufacturers and direct sales, accounted for 59% of net revenue in fiscal 2021, 56% in fiscal 2020 and 51% in fiscal 2019. The filing also states that three largest accounts receivable balances comprised 70% of gross accounts receivable at October 1, 2021.
What risks does the filing highlight for investors?
Key risks include ongoing COVID-19 supply chain disruptions and cost increases, dependence on a limited number of major customers, US-China trade restrictions including Entity List limits affecting Huawei shipments, integration of the acquired business, and the covenants and debt service obligations associated with the new borrowings.
What capital return actions did Skyworks take in fiscal 2021?
Skyworks paid $340.6 million in dividends, or $2.06 per share for the year, and repurchased 1.4 million shares for $195.6 million. It also retired 68.5 million treasury shares at an aggregate historical cost of $4,342.6 million, and $2.0 billion remained available under its January 2021 repurchase authorization.
06—Continue