01—Abstract
Summary
Summary of the 10-Q filed July 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Skyworks Solutions, Inc. reported net revenue of $905.5 milliona for the three months ended June 28, 2024, down from $1,071.2 million in the prior-year quarter, driven primarily by lower demand for mobile and mixed-signal products.
Net income was $120.9 millionb, or $0.75 per diluted share, compared with $195.8 million, or $1.22 per diluted share, a year earlier. For the nine months, net revenue was $3,153.0 million and net income was $535.5 million, or $3.32 per diluted share. Gross margin compressed to 40.2% in the quarter from 43.3%, attributed to unfavorable product mix, lower unit volumes, and lower average selling prices.
Balance sheet and cash flow remained solid. Cash, cash equivalents, and marketable securities totaled $1,283.9 millionc as of June 28, 2024, up $545.4 million from September 29, 2023. Nine-month operating cash flow was $1,348.6 million, and the company repaid $300.0 million of Term Loan borrowings, leaving no amounts outstanding under the $1.0 billion Term Loan Facility.
Management reported a $0.07d diluted EPS benefit for the quarter from a change in the estimated useful lives of certain machinery and equipment. The company declared a $0.70 quarterly dividend on July 30, 2024, and had $1.9 billion remaining under its stock repurchase program. Management stated that disclosure controls were effective as of June 28, 2024, and that the company completed implementation of a new ERP system in the third quarter of fiscal 2024.
02—Key points
Key Highlights
- Net revenue of $905.5 million for Q3 fiscal 2024, down from $1,071.2 million a year earlier, driven primarily by lower demand for mobile and mixed-signal products.
- Gross profit of $364.1 million, with gross margin of 40.2% versus 43.3% in the prior-year quarter, due to unfavorable product mix, lower unit volumes, and lower average selling prices.
- Net income of $120.9 million ($0.75 diluted EPS) versus $195.8 million ($1.22 diluted EPS) in the prior-year quarter.
- Useful-life change for certain machinery and equipment increased quarterly net income by $11.3 million and diluted EPS by $0.07.
- Cash, cash equivalents, and marketable securities of $1,283.9 million at June 28, 2024, after $1,348.6 million of nine-month operating cash flow, $327.1 million of dividends, and $300.0 million of debt repayment.
- Declared a $0.70 per share cash dividend on July 30, 2024, payable September 10, 2024; $1.9 billion remained available under the stock repurchase program.
- Interest expense fell to $6.6 million from $16.2 million, reflecting repayment of the outstanding Term Loans; no borrowings were outstanding under the $750.0 million Revolver.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Skyworks Solutions kept $0.13.
- Revenue$905.5M100.0%
- Cost of revenue−$541.4M59.8%
- Gross profit$364.1M40.2%
- Operating costs−$233.7M25.8%
- Operating income$130.4M14.4%
- Interest, other & tax−$9.5M1.0%
- Net income$120.9M13.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed July 31, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $905.50M$1.07B | −15.5% |
| Cost of Revenue | $541.40M$607.10M | −10.8% |
| Gross Profit | $364.10M$464.10M | −21.5% |
| R&D Expenses | $160.70M$148.00M | +8.6% |
| SG&A Expenses | $71.20M$77.20M | −7.8% |
| Operating Expenses | $233.70M$233.40M | +0.1% |
| Operating Income | $130.40M$230.70M | −43.5% |
| Interest Expense | $6.60M$16.20M | −59.3% |
| Net Income | $120.90M$195.80M | −38.3% |
| EPS (Basic) | $0.75$1.23 | −39.0% |
| EPS (Diluted) | $0.75$1.22 | −38.5% |
| Shares Outstanding (Basic) | 160.40M159.20M | +0.8% |
| Shares Outstanding (Diluted) | 161.40M160.00M | +0.9% |
05—Questions
Frequently Asked Questions
Why did Skyworks' revenue and margins decline in the quarter?
The filing attributes the decline in net revenue to lower demand for mobile and mixed-signal products. Gross profit decreased mainly due to unfavorable product mix, lower unit volumes, and lower average selling prices, lowering gross margin to 40.2% from 43.3%.
How did the useful-life change affect results?
The company extended the expected useful lives of certain machinery and equipment by up to two years, reducing depreciation by $18.9 million for the quarter and $56.6 million for the nine months. This increased net income by $11.3 million for the quarter and $18.1 million for the nine months, and increased diluted EPS by $0.07 and $0.11, respectively.
How strong is the company's liquidity and balance sheet?
Cash, cash equivalents, and marketable securities totaled $1,283.9 million at June 28, 2024. Total debt was $994.0 million in carrying amount, consisting of $500.0 million of Notes Due 2026 and $500.0 million of Notes Due 2031. Management stated that existing resources, operating cash flow, and the Revolver are expected to be sufficient for short- and long-term liquidity needs.
What are the company's capital return plans?
The Board declared a $0.70 per share cash dividend on July 30, 2024, payable September 10, 2024. During the quarter, the company repurchased 0.8 million shares for $77.4 million under the January 31, 2023 program, leaving $1.9 billion available, and that program expires February 1, 2025.
Did the company report any material legal or operational changes?
The filing states that the company does not believe there are pending legal proceedings reasonably possible to result in a material loss. Management also reported completing implementation of a new ERP system in the third quarter of fiscal 2024, which it said did not materially affect internal control over financial reporting.
06—Continue