Qorvo® (Nasdaq:QRVO), a leading global provider of connectivity and
power solutions, today announced financial results for the
Company’s fiscal 2024 third quarter ended December 30, 2023.
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 $1.074 billion, gross margin was 36.1%, operating loss was $42
million, and loss per share was $1.31. On a non-GAAP basis, gross
margin was 43.8%, operating income was $237 million, and diluted
earnings per share was $2.10.
Bob Bruggeworth, president and chief executive officer of Qorvo,
said, “Strong execution by the Qorvo team resulted in robust
December quarterly financial performance. During the quarter we
continued to bring channel inventories down, and Qorvo shipments
are now more closely aligned to end market demand. We are seeing
incremental improvement in end market demand in the Android
ecosystem, and we expect to achieve year-over-year revenue growth
in all of Qorvo’s operating segments in the March quarter.”
Financial Commentary and Outlook
Grant Brown, chief financial officer of Qorvo, said, “Qorvo
exceeded the mid-point of December quarterly guidance for revenue,
gross margin and EPS, reflecting strong content on customer
programs and improving channel inventories. During the quarter,
Qorvo generated record cash flow from operations of $493 million
and free cash flow of $467 million. Looking forward, we are
capitalizing on global macro trends and multiyear technology
upgrade cycles, and we expect this to support durable long-term
growth.”
Qorvo’s current outlook for the March 2024 quarter is:
- 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 Qorvo for the periods indicated. See the
more detailed financial information for Qorvo, including
reconciliations of GAAP and non-GAAP financial information,
attached.
|
SELECTED GAAP RESULTS |
(In millions, except for percentages and EPS) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Q3 Fiscal 2024 |
Q2 Fiscal 2024 |
|
Q3 Fiscal 2023 |
|
SequentialChange |
|
Year-over-YearChange |
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 |
|
SequentialChange |
|
Year-over-YearChange |
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 |
|
SequentialChange |
|
Year-over-YearChange |
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 United States (U.S.) generally accepted accounting
principles (GAAP), this earnings release contains some or all of
the following non-GAAP financial measures: (i) non-GAAP gross
profit and gross margin, (ii) non-GAAP operating expenses,
operating income and operating margin, (iii) non-GAAP net income,
(iv) non-GAAP net income per diluted share, (v) free cash flow,
(vi) EBITDA, (vii) non-GAAP return on invested capital (ROIC), and
(viii) net debt or positive net cash. Each of these non-GAAP
financial measures is either adjusted from GAAP results to exclude
certain expenses or derived from multiple GAAP measures, which are
outlined in the “Reconciliation of GAAP to Non-GAAP Financial
Measures” tables, attached, and the “Additional Selected Non-GAAP
Financial Measures and Reconciliations” tables, attached.
In managing Qorvo's business on a consolidated basis, management
develops an annual operating plan, which is approved by our Board
of Directors, using non-GAAP financial measures. In developing and
monitoring performance against this plan, management considers the
actual or potential impacts on these non-GAAP financial measures
from actions taken to reduce costs with the goal of increasing
gross margin and operating margin. In addition, management relies
upon these non-GAAP financial measures to assess whether research
and development efforts are at an appropriate level, and when
making decisions about product spending, administrative budgets,
and other operating expenses. Also, we believe that non-GAAP
financial measures provide useful supplemental information to
investors and enable investors to analyze the results of operations
in the same way as management. We have chosen to provide this
supplemental information to enable investors to perform additional
comparisons of our operating results, to assess our liquidity and
capital position and to analyze financial performance excluding the
effect of expenses unrelated to operations, and stock-based
compensation expense, which may obscure trends in Qorvo's
underlying performance.
We believe that these non-GAAP financial measures offer an
additional view of Qorvo's operations that, when coupled with the
GAAP results and the reconciliations to corresponding GAAP
financial measures, provide a more complete understanding of
Qorvo's results of operations and the factors and trends affecting
Qorvo's business. However, these non-GAAP financial measures should
be considered as a supplement to, and not as a substitute for, or
superior to, the corresponding measures calculated in accordance
with GAAP.
Our rationale for using these non-GAAP financial measures, as
well as their impact on the presentation of Qorvo's operations, are
outlined below:
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
Qorvo's ongoing operations because (i) the expenses are non-cash in
nature, and (ii) although the size of the grants is within our
control, the amount of expense varies depending on factors such as
short-term fluctuations in stock price volatility and prevailing
interest rates, which can be unrelated to the operational
performance of Qorvo during the period in which the expense is
incurred and generally are outside the control of management.
Moreover, we believe that the exclusion of stock-based compensation
expense in presenting non-GAAP gross profit and gross margin and
other non-GAAP financial measures is useful to investors to
understand the impact of the expensing of stock-based compensation
to Qorvo's gross profit and gross margins and other financial
measures in comparison to prior periods. We also believe that the
adjustments to profit and margin related to restructuring-related
charges and acquisition and integration-related costs do not
constitute part of Qorvo's ongoing operations and therefore the
exclusion of these items provides management and investors with
better visibility into the actual revenue and actual costs required
to generate revenues over time and facilitates a useful evaluation
of our historical and projected performance. We believe disclosure
of non-GAAP gross profit and gross margin has economic substance
because the excluded expenses do not represent continuing cash
expenditures and, as described above, we have little control over
the timing and amount of the expenses in question.
For the three months ended December 30, 2023, non-GAAP gross
profit and gross margin also exclude charges associated with a
long-term capacity reservation agreement. In October 2023, a
long-term capacity reservation agreement with a foundry supplier
was amended. Pursuant to the amendment, the Company is no longer
obligated to order silicon wafers from the foundry supplier and the
agreement was terminated effective December 31, 2023. Included in
the charges to our cost of goods sold for the third quarter of
fiscal 2024 is a contract termination fee which is expected to be
paid by the Company during the fourth quarter of fiscal 2024. We
believe these charges are not reflective of the performance of our
ongoing business.
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 Qorvo's ongoing operations and therefore, the exclusion of
these costs provides management and investors with better
visibility into the actual costs required to generate revenues over
time and facilitates a useful evaluation of our historical and
projected performance. We believe disclosure of non-GAAP operating
expenses, operating income and operating margin has economic
substance because the excluded expenses are either unrelated to
ongoing operations or do not represent current cash
expenditures.
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. Qorvo defines free cash flow as net cash
provided by operating activities during the period minus property
and equipment expenditures made during the period, and free cash
flow margin is calculated as free cash flow as a percentage of
revenue. We use free cash flow as a supplemental financial measure
in our evaluation of liquidity and financial strength. Management
believes that this measure is useful as an indicator of our ability
to service our debt, meet other payment obligations and make
strategic investments. Free cash flow should be considered in
addition to, rather than as a substitute for, net income as a
measure of our performance and net cash provided by operating
activities as a measure of our liquidity. Additionally, our
definition of free cash flow is limited, in that it does not
represent residual cash flows available for discretionary
expenditures due to the fact that the measure does not deduct the
payments required for debt service and other contractual
obligations. Therefore, we believe it is important to view free
cash flow as a measure that provides supplemental information to
our entire statement of cash flows.
EBITDA. Qorvo adjusts GAAP net income for interest expense,
interest income, income tax expense (benefit), depreciation and
intangible amortization expense, stock-based compensation and other
charges that are not representative of Qorvo's ongoing operations
(including goodwill impairment, investment activity,
acquisition-related costs and restructuring-related costs and
certain charges associated with a long-term capacity reservation
agreement) when presenting EBITDA. Management believes that this
measure is useful to evaluate our ongoing operations and as a
general indicator of our operating cash flow (in conjunction with a
cash flow statement which also includes among other items, changes
in working capital and the effect of non-cash charges).
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 Qorvo's indebtedness by
reflecting cash and investments that could be used to repay
debt.
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.
Qorvo will conduct a conference call at 5:00 p.m. ET today to
discuss today’s press release. The conference call will be
broadcast live over the Internet and can be accessed by any
interested party at the following URL: https://ir.qorvo.com (under
“Events & Presentations”). A telephone playback of the
conference call will be available approximately two hours after the
call’s completion and can be accessed by dialing 1-412-317-0088 and
using the passcode 4787814. The playback will be available through
the close of business February 7, 2024.
About Qorvo
Qorvo (Nasdaq:QRVO) supplies innovative semiconductor solutions
that make a better world possible. We combine product and
technology leadership, systems-level expertise and global
manufacturing scale to quickly solve our customers’ most complex
technical challenges. Qorvo serves diverse high-growth segments of
large global markets, including consumer electronics, smart
home/IoT, automotive, EVs, battery-powered appliances, network
infrastructure, and aerospace/defense. Visit www.qorvo.com to learn
how our diverse and innovative team is helping connect, protect and
power our planet.
Qorvo is a registered trademark of Qorvo, Inc. in the U.S. and
in other countries. All other trademarks are the property of their
respective owners.
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 U.S. federal securities laws. Our business is
subject to numerous risks and uncertainties, including those
relating to fluctuations in our operating results on a quarterly
and annual basis; our substantial dependence on developing new
products and achieving design wins; our dependence on several large
customers for a substantial portion of our revenue; a loss of
revenue if defense and aerospace contracts are canceled or delayed;
continued effects of the COVID-19 pandemic; our dependence on third
parties; risks related to sales through distributors; risks
associated with the operation of our manufacturing facilities;
business disruptions; poor manufacturing yields; increased
inventory risks and costs, including under long-term supply
agreements, due to timing of customers' forecasts; our inability to
effectively manage or maintain evolving relationships with chipset
suppliers; our ability to continue to innovate in a very
competitive industry; underutilization of manufacturing facilities;
unfavorable changes in interest rates, pricing of certain precious
metals, utility rates and foreign currency exchange rates; our
acquisitions and other strategic investments failing to achieve
financial or strategic objectives; our ability to attract, retain
and motivate key employees; warranty claims, product recalls and
product liability; changes in our effective tax rate; enactment of
international or domestic tax legislation, or changes in regulatory
guidance; changes in the favorable tax status of certain of our
subsidiaries; risks associated with environmental, health and
safety regulations, and climate change; risks from international
sales and operations; economic regulation in China; changes in
government trade policies, including imposition of tariffs and
export restrictions; we may not be able to generate sufficient cash
to service all of our debt; restrictions imposed by the agreements
governing our debt; our reliance on our intellectual property
portfolio; claims of infringement of third-party intellectual
property rights; security breaches and other similar disruptions;
theft, loss or misuse of personal data by or about our employees,
customers or third parties; provisions in our governing documents
and Delaware law may discourage takeovers and business combinations
that our stockholders might consider to be in their best interests;
and volatility in the price of our common stock. These and other
risks and uncertainties, which are described in more detail under
“Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K
for the fiscal year ended April 1, 2023, and Qorvo’s subsequent
reports and statements that we file with the SEC, could cause
actual results and developments to be materially different from
those expressed or implied by any of these forward-looking
statements.
Financial Tables to Follow
|
QORVO, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share data) |
(Unaudited) |
|
|
Three Months Ended |
|
Nine Months Ended |
|
December 30, 2023 |
|
December 31, 2022 |
|
December 30, 2023 |
|
December 31, 2022 |
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 |
|
|
QORVO, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES |
(In thousands, except per share data) |
(Unaudited) |
|
|
Three Months Ended |
|
December 30, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
|
|
|
|
|
|
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 |
|
Goodwill impairment |
|
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 |
|
Goodwill impairment |
|
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 |
|
|
|
|
|
|
|
|
QORVO, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES |
(Unaudited) |
|
|
Three Months Ended |
(in thousands, except
percentages) |
December 30, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
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 |
December 30, 2023 |
(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 |
|
Goodwill impairment |
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) |
December 30, 2023 |
(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.
|
QORVO, INC. AND SUBSIDIARIES |
ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND
RECONCILIATIONS |
(In thousands) |
(Unaudited) |
|
|
Three Months Ended |
|
December 30, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
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 |
|
December 30, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
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 |
|
December 30, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
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 |
Goodwill impairment |
|
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 |
|
December 30, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
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 |
Goodwill impairment |
|
173,414 |
|
|
|
48,000 |
|
|
— |
Other (income) expense |
|
(7,333 |
) |
|
|
1,712 |
|
|
3,591 |
Non-GAAP total operating
expense |
$ |
234,003 |
|
|
$ |
245,819 |
|
$ |
205,689 |
|
QORVO, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands) |
(Unaudited) |
|
|
December 30, 2023 |
|
April 1, 2023 |
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 |
Goodwill |
|
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 |
At Qorvo®Doug DeLietoVP, Investor Relations1.336.678.7968
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