Strategic Highlights
- Grew quarterly revenue 44% year-over-year and exceeded high-point of revenue guidance by
$49 million - Recognized by top four
China -based Android 5G OEMs with 2023 awards for innovation, quality, supply, technology and strategic partnership - Signed definitive agreement to acquire Anokiwave, a leading supplier of high-performance silicon integrated circuits for intelligent active array antennas for D&A, SATCOM and 5G applications
On a GAAP basis, revenue for Qorvo’s fiscal 2024 third quarter was
Financial Commentary and Outlook
Qorvo’s current outlook for the
- Quarterly revenue of approximately
$925 million , plus or minus$25 million - Non-GAAP gross margin of approximately 42%
- Non-GAAP diluted earnings per share of approximately
$1.20 at the midpoint of revenue
See “Forward-looking non-GAAP financial measures” below. Qorvo’s actual quarterly results may differ from these expectations and projections, and such differences may be material.
Selected Financial Information
The following tables set forth selected GAAP and non-GAAP financial information for
SELECTED GAAP RESULTS | ||||||||||||||||||||
(In millions, except for percentages and EPS) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Q3 Fiscal 2024 | Q2 Fiscal 2024 | Q3 Fiscal 2023 | Sequential Change | Year-over-Year Change | ||||||||||||||||
Revenue | $ | 1,073.9 | $ | 1,103.5 | $ | 743.3 | $ | (29.6 | ) | $ | 330.6 | |||||||||
Gross profit | $ | 387.9 | $ | 489.7 | $ | 268.1 | $ | (101.8 | ) | $ | 119.8 | |||||||||
Gross margin | 36.1 | % | 44.4 | % | 36.1 | % | (8.3 | ) ppt | — | ppt | ||||||||||
Operating expenses | $ | 429.4 | $ | 338.3 | $ | 259.3 | $ | 91.1 | $ | 170.1 | ||||||||||
Operating (loss) income | $ | (41.6 | ) | $ | 151.4 | $ | 8.7 | $ | (193.0 | ) | $ | (50.3 | ) | |||||||
Net (loss) income | $ | (126.9 | ) | $ | 97.5 | $ | (15.9 | ) | $ | (224.4 | ) | $ | (111.0 | ) | ||||||
Weighted-average diluted shares | 97.2 | 98.6 | 100.9 | (1.4 | ) | (3.7 | ) | |||||||||||||
Diluted EPS | $ | (1.31 | ) | $ | 0.99 | $ | (0.16 | ) | $ | (2.30 | ) | $ | (1.15 | ) | ||||||
SELECTED NON-GAAP RESULTS(1) | ||||||||||||||||||||
(In millions, except for percentages and EPS) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Q3 Fiscal 2024 | Q2 Fiscal 2024 | Q3 Fiscal 2023 | Sequential Change | Year-over-Year Change | ||||||||||||||||
Revenue | $ | 1,073.9 | $ | 1,103.5 | $ | 743.3 | $ | (29.6 | ) | $ | 330.6 | |||||||||
Gross profit | $ | 470.5 | $ | 525.2 | $ | 304.2 | $ | (54.7 | ) | $ | 166.3 | |||||||||
Gross margin | 43.8 | % | 47.6 | % | 40.9 | % | (3.8 | ) ppt | 2.9 | ppt | ||||||||||
Operating expenses | $ | 234.0 | $ | 245.8 | $ | 205.7 | $ | (11.8 | ) | $ | 28.3 | |||||||||
Operating income | $ | 236.5 | $ | 279.4 | $ | 98.6 | $ | (42.9 | ) | $ | 137.9 | |||||||||
Net income | $ | 205.9 | 235.5 | $ | 76.5 | $ | (29.6 | ) | $ | 129.4 | ||||||||||
Weighted-average diluted shares | 97.8 | 98.6 | 101.6 | (0.8 | ) | (3.8 | ) | |||||||||||||
Diluted EPS | $ | 2.10 | $ | 2.39 | $ | 0.75 | $ | (0.29 | ) | $ | 1.35 | |||||||||
(1) Adjusted for stock-based compensation expense, amortization of intangible assets, restructuring-related charges, acquisition and integration-related costs, goodwill impairment, charges associated with a long-term capacity reservation agreement, gain (loss) on disposal of business and assets, other income (expense), loss on investments, and an adjustment of income taxes.
SELECTED GAAP RESULTS BY OPERATING SEGMENT | |||||||||||||||||||
(In millions, except percentages) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Q3 Fiscal 2024 | Q2 Fiscal 2024 | Q3 Fiscal 2023 | Sequential Change | Year-over-Year Change | |||||||||||||||
Revenue | |||||||||||||||||||
HPA | $ | 118.9 | $ | 149.8 | $ | 155.0 | (20.6 | )% | (23.3 | )% | |||||||||
CSG | 108.9 | 103.6 | 96.8 | 5.1 | % | 12.5 | % | ||||||||||||
ACG | 846.1 | 850.1 | 491.5 | (0.5 | )% | 72.1 | % | ||||||||||||
Total revenue | $ | 1,073.9 | $ | 1,103.5 | $ | 743.3 | (2.7 | )% | 44.5 | % | |||||||||
Operating (loss) income | |||||||||||||||||||
HPA | $ | 1.6 | $ | 25.4 | $ | 29.8 | (93.7 | )% | (94.6 | )% | |||||||||
CSG | (25.6 | ) | (27.7 | ) | (31.2 | ) | 7.6 | % | 17.9 | % | |||||||||
ACG | 263.8 | 284.8 | 99.9 | (7.4 | )% | 164.1 | % | ||||||||||||
All other(1) | (281.4 | ) | (131.1 | ) | (89.8 | ) | (114.6 | )% | (213.4 | )% | |||||||||
Total operating (loss) income | $ | (41.6 | ) | $ | 151.4 | $ | 8.7 | (127.5 | )% | (578.2 | )% | ||||||||
Operating (loss) income as a % of revenue | |||||||||||||||||||
HPA | 1.3 | % | 17.0 | % | 19.2 | % | (15.7 | ) ppt | (17.9 | ) ppt | |||||||||
CSG | (23.5 | ) | (26.7 | ) | (32.2 | ) | 3.2 | ppt | 8.7 | ppt | |||||||||
ACG | 31.2 | 33.5 | 20.3 | (2.3 | ) ppt | 10.9 | ppt | ||||||||||||
Total operating (loss) income as a % of revenue | (3.9 | )% | 13.7 | % | 1.2 | % | (17.6 | ) ppt | (5.1 | ) ppt | |||||||||
(1) Includes stock-based compensation expense, amortization of intangible assets, restructuring-related charges, acquisition and integration-related costs, goodwill impairment, charges associated with a long-term capacity reservation agreement, gain (loss) on disposal of business and assets, other income (expense), and other miscellaneous corporate overhead expenses.
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance with
In managing
We believe that these non-GAAP financial measures offer an additional view of
Our rationale for using these non-GAAP financial measures, as well as their impact on the presentation of
Non-GAAP gross profit and gross margin. Non-GAAP gross profit and gross margin exclude amortization of intangible assets, stock-based compensation expense, restructuring-related charges and acquisition and integration-related costs. We believe that exclusion of these costs in presenting non-GAAP gross profit and gross margin facilitates a useful evaluation of our historical performance and projected costs and the potential for realizing cost efficiencies.
We view amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, and customer relationships, as items arising from pre-acquisition activities, determined at the time of an acquisition, rather than ongoing costs of operating Qorvo’s business. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangible assets is a static expense, which is not typically affected by operations during any particular period. Although we exclude the amortization of purchased intangible assets from these non-GAAP financial measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase price accounting and contribute to revenue generation.
We believe that presentation of non-GAAP gross profit and gross margin and other non-GAAP financial measures that exclude the impact of stock-based compensation expense assists management and investors in evaluating the period-over-period performance of
For the three months ended
Non-GAAP operating expenses, operating income and operating margin. Non-GAAP operating expenses, operating income and operating margin exclude stock-based compensation expense, amortization of intangible assets, acquisition and integration-related costs, goodwill impairment, restructuring-related charges, charges associated with a long-term capacity reservation agreement, (gain) loss on disposal of business and assets and certain other expense (income). We believe that presentation of a measure of operating expenses, operating income and operating margin that excludes amortization of intangible assets and stock-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross margin. We believe that acquisition and integration-related costs, goodwill impairment, restructuring-related charges, charges associated with a long-term capacity reservation agreement, (gain) loss on disposal of business and assets and certain other expense (income) do not constitute part of
Non-GAAP net income and non-GAAP net income per diluted share. Non-GAAP net income and non-GAAP net income per diluted share exclude the effects of stock-based compensation expense, amortization of intangible assets, acquisition and integration-related costs, goodwill impairment, restructuring-related charges, charges associated with a long-term capacity reservation agreement, (gain) loss on disposal of business and assets, certain other expense (income), gain or loss on investments, and also reflect an adjustment of income taxes. The income tax adjustment primarily represents the use of research and development tax credit carryforwards, deferred tax expense (benefit) items not affecting taxes payable, adjustments related to the deemed and actual repatriation of historical foreign earnings, non-cash expense (benefit) related to uncertain tax positions and other items unrelated to the current fiscal year or that are not indicative of our ongoing business operations. We believe that presentation of measures of net income and net income per diluted share that exclude these items is useful to both management and investors for the reasons described above with respect to non-GAAP gross profit and gross margin and non-GAAP operating expenses, operating income and operating margin. We believe disclosure of non-GAAP net income and non-GAAP net income per diluted share has economic substance because the excluded expenses are either unrelated to ongoing operations or do not represent current cash expenditures.
Free cash flow.
EBITDA.
Non-GAAP ROIC. Return on invested capital (ROIC) is a non-GAAP financial measure that management believes provides useful supplemental information for management and the investor by measuring the effectiveness of our operations' use of invested capital to generate profits. We use ROIC to track how much value we are creating for our shareholders. Non-GAAP ROIC is calculated by dividing annualized non-GAAP operating income, net of an adjustment for income taxes (as described above), by average invested capital. Average invested capital is calculated by subtracting the average of the beginning balance and the ending balance of equity plus net debt, less certain goodwill.
Net debt or positive net cash. Net debt or positive net cash is defined as unrestricted cash, cash equivalents and short-term investments minus any borrowings under our credit facility and the principal balance of our senior unsecured notes. Management believes that net debt or positive net cash provides useful information regarding the level of
Inventory days on hand. Inventory days on hand is defined as (a) average net inventory for the period, divided by (b) the result of non-GAAP cost of goods sold for the period divided by the number of days in the period.
Forward-looking non-GAAP financial measures. Our earnings release contains forward-looking free cash flow, gross margin, income tax rate and diluted earnings per share. We provide these non-GAAP measures to investors on a prospective basis for the same reasons (set forth above) that we provide them to investors on a historical basis. We are unable to provide a reconciliation of the forward-looking non-GAAP financial measures to the most directly comparable forward-looking GAAP financial measures without unreasonable effort due to variability and difficulty in making accurate projections for items that would be required to be included in the GAAP measures, such as stock-based compensation, acquisition and integration-related costs, restructuring-related charges, gain or loss on disposal of business and assets, goodwill impairment, gain or loss on investments and the provision for income taxes, which could have a potentially significant impact on our future GAAP results.
Limitations of non-GAAP financial measures. The primary material limitations associated with the use of non-GAAP financial measures as an analytical tool compared to the most directly comparable GAAP financial measures are these non-GAAP financial measures (i) may not be comparable to similarly titled measures used by other companies in our industry, and (ii) exclude financial information that some may consider important in evaluating our performance, thus limiting their usefulness as a comparative tool. We compensate for these limitations by providing full disclosure of the differences between these non-GAAP financial measures and the corresponding GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the corresponding GAAP financial measures, to enable investors to perform their own analysis of our gross profit and gross margin, operating expenses, operating income, net income, net income per diluted share and net cash provided by operating activities. We further compensate for the limitations of our use of non-GAAP financial measures by presenting the corresponding GAAP measures more prominently.
About
This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions, and are not historical facts and typically are identified by terms such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "forecast", "predict," "potential," "continue" and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management's current judgment and expectations, but our actual results, events and performance could differ materially from those expressed or implied by forward-looking statements. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements, other than as is required under
Financial Tables to Follow
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
Revenue | $ | 1,073,861 | $ | 743,281 | $ | 2,828,518 | $ | 2,936,696 | |||||||
Costs and expenses: | |||||||||||||||
Cost of goods sold | 685,983 | 475,230 | 1,721,880 | 1,754,468 | |||||||||||
Research and development | 164,329 | 149,472 | 502,366 | 486,204 | |||||||||||
Selling, general and administrative | 86,914 | 76,269 | 296,033 | 275,836 | |||||||||||
Other operating expense | 178,204 | 33,581 | 246,516 | 48,038 | |||||||||||
Total costs and expenses | 1,115,430 | 734,552 | 2,766,795 | 2,564,546 | |||||||||||
Operating (loss) income | (41,569 | ) | 8,729 | 61,723 | 372,150 | ||||||||||
Interest expense | (17,581 | ) | (17,066 | ) | (51,963 | ) | (51,222 | ) | |||||||
Other income, net | 15,359 | 5,562 | 34,286 | 2,714 | |||||||||||
(Loss) income before income taxes | (43,791 | ) | (2,775 | ) | 44,046 | 323,642 | |||||||||
Income tax expense | (83,147 | ) | (13,156 | ) | (117,103 | ) | (82,074 | ) | |||||||
Net (loss) income | $ | (126,938 | ) | $ | (15,931 | ) | $ | (73,057 | ) | $ | 241,568 | ||||
Net (loss) income per share, diluted | $ | (1.31 | ) | $ | (0.16 | ) | $ | (0.75 | ) | $ | 2.33 | ||||
Weighted-average outstanding diluted shares | 97,152 | 100,943 | 97,905 | 103,812 |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||
(In thousands, except per share data) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | ||||||||||
GAAP operating (loss) income | $ | (41,569 | ) | $ | 151,428 | $ | 8,729 | |||
Stock-based compensation expense | 21,755 | 39,053 | 19,708 | |||||||
Amortization of intangible assets | 29,787 | 29,963 | 32,844 | |||||||
Restructuring-related charges | 6,075 | 8,418 | 27,385 | |||||||
Acquisition and integration-related costs | 2,529 | 852 | 6,296 | |||||||
173,414 | 48,000 | — | ||||||||
Charges associated with a long-term capacity reservation agreement | 51,864 | — | — | |||||||
Other (income) expense | (7,333 | ) | 1,712 | 3,591 | ||||||
Non-GAAP operating income | $ | 236,522 | $ | 279,426 | $ | 98,553 | ||||
GAAP net (loss) income | $ | (126,938 | ) | $ | 97,461 | $ | (15,931 | ) | ||
Stock-based compensation expense | 21,755 | 39,053 | 19,708 | |||||||
Amortization of intangible assets | 29,787 | 29,963 | 32,844 | |||||||
Restructuring-related charges | 6,075 | 8,418 | 27,385 | |||||||
Acquisition and integration-related costs | 2,529 | 852 | 6,296 | |||||||
173,414 | 48,000 | — | ||||||||
Charges associated with a long-term capacity reservation agreement | 51,864 | — | — | |||||||
Other (income) expense | (12,252 | ) | 2,616 | 1,683 | ||||||
Loss on investments | 464 | 1,574 | 5,615 | |||||||
Adjustment of income taxes | 59,161 | 7,576 | (1,145 | ) | ||||||
Non-GAAP net income | $ | 205,859 | $ | 235,513 | $ | 76,455 | ||||
GAAP weighted-average outstanding diluted shares | 97,152 | 98,590 | 100,943 | |||||||
Dilutive stock-based awards | 666 | — | 664 | |||||||
Non-GAAP weighted-average outstanding diluted shares | 97,818 | 98,590 | 101,607 | |||||||
Non-GAAP net income per share, diluted | $ | 2.10 | $ | 2.39 | $ | 0.75 | ||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | |||||||||||||||
(in thousands, except percentages) | |||||||||||||||
GAAP gross profit/margin | $ | 387,878 | 36.1 | % | $ | 489,690 | 44.4 | % | $ | 268,051 | 36.1 | % | |||
Charges associated with a long-term capacity reservation agreement | 51,864 | 4.8 | — | — | — | — | |||||||||
Amortization of intangible assets | 25,457 | 2.4 | 25,591 | 2.3 | 27,624 | 3.7 | |||||||||
Stock-based compensation expense | 5,575 | 0.5 | 7,481 | 0.7 | 4,939 | 0.6 | |||||||||
Restructuring-related charges | (250 | ) | — | 2,482 | 0.2 | 3,600 | 0.5 | ||||||||
Acquisition and integration-related costs | 1 | — | 1 | — | 28 | — | |||||||||
Non-GAAP gross profit/margin | $ | 470,525 | 43.8 | % | $ | 525,245 | 47.6 | % | $ | 304,242 | 40.9 | % |
Three Months Ended | ||
Non-GAAP Operating Income | ||
(as a percentage of revenue) | ||
GAAP operating loss | (3.9 | )% |
Charges associated with a long-term capacity reservation agreement | 4.8 | |
Stock-based compensation expense | 2.0 | |
Amortization of intangible assets | 2.8 | |
Restructuring-related charges | 0.6 | |
16.2 | ||
Acquisition and integration-related costs | 0.2 | |
Other income | (0.7 | ) |
Non-GAAP operating income | 22.0 | % |
Three Months Ended | |||
Free Cash Flow (1) | |||
(in millions) | |||
Net cash provided by operating activities | $ | 492.9 | |
Purchases of property and equipment | (26.4 | ) | |
Free cash flow | $ | 466.5 | |
(1) Free Cash Flow is calculated as net cash provided by operating activities minus property and equipment expenditures.
ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
Three Months Ended | |||||||||
GAAP research and development expense | $ | 164,329 | $ | 174,947 | $ | 149,472 | |||
Less: | |||||||||
Stock-based compensation expense | 11,830 | 11,519 | 10,343 | ||||||
Acquisition and integration-related costs | 2 | 2 | 49 | ||||||
Non-GAAP research and development expense | $ | 152,497 | $ | 163,426 | $ | 139,080 | |||
Three Months Ended | |||||||||
GAAP selling, general and administrative expense | $ | 86,914 | $ | 103,696 | $ | 76,269 | |||
Less: | |||||||||
Stock-based compensation expense | 4,336 | 20,030 | 4,426 | ||||||
Amortization of intangible assets | 4,330 | 4,372 | 5,220 | ||||||
Acquisition and integration-related costs | — | — | 13 | ||||||
Non-GAAP selling, general and administrative expense | $ | 78,248 | $ | 79,294 | $ | 66,610 | |||
Three Months Ended | |||||||||
GAAP other operating expense | $ | 178,204 | $ | 59,619 | $ | 33,581 | |||
Less: | |||||||||
Stock-based compensation expense | 14 | 23 | — | ||||||
Restructuring-related charges | 6,325 | 5,936 | 23,785 | ||||||
Acquisition and integration-related costs | 2,526 | 849 | 6,205 | ||||||
173,414 | 48,000 | — | |||||||
Other (income) expense | (7,333 | ) | 1,712 | 3,591 | |||||
Non-GAAP other operating expense | $ | 3,258 | $ | 3,099 | $ | — | |||
Three Months Ended | |||||||||
GAAP total operating expense | $ | 429,447 | $ | 338,262 | $ | 259,322 | |||
Less: | |||||||||
Stock-based compensation expense | 16,180 | 31,572 | 14,769 | ||||||
Amortization of intangible assets | 4,330 | 4,372 | 5,220 | ||||||
Restructuring-related charges | 6,325 | 5,936 | 23,785 | ||||||
Acquisition and integration-related costs | 2,528 | 851 | 6,268 | ||||||
173,414 | 48,000 | — | |||||||
Other (income) expense | (7,333 | ) | 1,712 | 3,591 | |||||
Non-GAAP total operating expense | $ | 234,003 | $ | 245,819 | $ | 205,689 |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(In thousands) | |||||
(Unaudited) | |||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 1,071,987 | $ | 808,757 | |
Accounts receivable, net | 483,810 | 304,519 | |||
Inventories | 726,687 | 796,596 | |||
Other current assets | 145,884 | 119,922 | |||
Total current assets | 2,428,368 | 2,029,794 | |||
Property and equipment, net | 1,039,439 | 1,149,806 | |||
2,540,461 | 2,760,813 | ||||
Intangible assets, net | 499,963 | 537,703 | |||
Long-term investments | 24,714 | 20,406 | |||
Other non-current assets | 166,443 | 193,381 | |||
Total assets | $ | 6,699,388 | $ | 6,691,903 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
Current liabilities: | |||||
Accounts payable and accrued liabilities | $ | 610,439 | $ | 433,164 | |
Current portion of long-term debt | 479,964 | 310 | |||
Other current liabilities | 189,930 | 122,289 | |||
Total current liabilities | 1,280,333 | 555,763 | |||
Long-term debt | 1,550,438 | 2,048,073 | |||
Other long-term liabilities | 230,270 | 185,273 | |||
Total liabilities | 3,061,041 | 2,789,109 | |||
Stockholders’ equity | 3,638,347 | 3,902,794 | |||
Total liabilities and stockholders’ equity | $ | 6,699,388 | $ | 6,691,903 |
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1.336.678.7968
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