Synaptics Incorporated (Nasdaq: SYNA), today reported financial
results for its first quarter of fiscal 2024 ended September 30,
2023.
Net revenue for the first quarter of fiscal 2024 was $237.7
million. GAAP net loss for the first quarter of fiscal 2024 was
$55.6 million, or a loss of $1.43 per basic share. Non-GAAP net
income for the first quarter of fiscal 2024 was $20.3 million, or
$0.52 per diluted share.
“Synaptics delivered a solid first quarter of fiscal 2024 with
revenue increasing on a sequential basis for the first time in over
a year. We are starting to see stabilization in our business and
expect recovery in calendar 2024 while we continue to work through
excess customer inventories. We are making progress
with our long-term initiative to drive growth from our Wireless and
Processor products which we highlighted at our Investor Day in
September.” said Michael Hurlston, Synaptics’ President and
CEO.
Business OutlookDean Butler, Chief Financial
Officer of Synaptics, added, “As we enter the December quarter, our
business is stabilizing and we expect to continue to work down
customer and channel inventories. As such, we expect our second
fiscal quarter revenue to be roughly at the same level
quarter-over-quarter. The company’s balance sheet is in
great shape and capable of weathering the recent macro-driven
headwinds. Synaptics continues to generate positive cash flow
enabling us to fuel the investments needed to execute on our stated
strategy.”
For the second quarter of fiscal 2024, the company expects:
|
GAAP |
Non-GAAP Adjustment |
Non-GAAP |
Revenue |
$220M to $250M |
N/A |
N/A |
Gross Margin* |
42.0 percent to 45.0 percent |
$18M to $22M |
51.0 percent to 54.0 percent |
Operating Expense** |
$135M to $140M |
$40M to $41M |
$95M to $99M |
*Projected Non-GAAP gross margin excludes $17.0 million to 20.0
million of intangible asset amortization and $1.0 million to $2.0
million of share-based compensation.
**Projected Non-GAAP operating expense excludes $34.0 million to
$35.0 million of share-based compensation, $2.0 million
restructuring costs, and $4.0 million of intangible asset
amortization.
Earnings Call and Supplementary Materials The
Synaptics first quarter 2024 teleconference and webcast is
scheduled to begin at 2:00 p.m. PT (5:00 p.m. ET), on Thursday,
November 9, 2023, during which the company will provide
forward-looking information.
Speakers:
- Michael Hurlston, President and
Chief Executive Officer
- Dean Butler, Chief Financial
Officer
To participate on the live call, analysts and investors should
pre-register at Synaptics Q1 FY2024 Earnings Call
Registration.
(https://register.vevent.com/register/BI9a69f99058c0498bb2ecef043e15caf8).
Supplementary slides, a copy of the prepared remarks, and a live
and archived webcast of the conference call will be accessible from
the “Investor Relations” section of the company’s Website at
https://investor.synaptics.com/.
About Synaptics Incorporated: Synaptics
(Nasdaq: SYNA) is changing the way humans engage with connected
devices and data, engineering exceptional experiences throughout
the home, at work, in the car and on the go. Synaptics is the
partner of choice for the world’s most innovative intelligent
system providers who are integrating multiple experiential
technologies into platforms that make our digital lives more
productive, insightful, secure and enjoyable. These customers are
combining Synaptics’ differentiated technologies in touch, display
and biometrics with a new generation of advanced connectivity and
AI-enhanced video, vision, audio, speech and security processing.
Follow Synaptics on LinkedIn, Twitter and Facebook, or visit
synaptics.com.
Use of Non-GAAP Financial Information In
evaluating its business, Synaptics considers and uses Non-GAAP Net
Income, which we define as net income excluding share-based
compensation, acquisition related costs, and certain other non-cash
or recurring and non-recurring items the company does not believe
are indicative of its core operating performance as a supplemental
measure of operating performance. Non-GAAP Net Income is not a
measurement of the company’s financial performance under GAAP and
should not be considered as an alternative to GAAP net income. The
company presents Non-GAAP Net Income because it considers it an
important supplemental measure of its performance since it
facilitates operating performance comparisons from period to period
by eliminating potential differences in net income caused by the
existence and timing of share-based compensation charges,
acquisition related costs, and certain other non-cash or recurring
and non-recurring items. Non-GAAP Net Income has limitations as an
analytical tool and should not be considered in isolation or as a
substitute for the company’s GAAP net income. The principal
limitations of this measure are that it does not reflect the
company’s actual expenses and may thus have the effect of inflating
its net income and net income per share as compared to its
operating results reported under GAAP. In addition, the company
presents components of Non-GAAP Net Income, such as Non-GAAP Gross
Margin, Non-GAAP operating expenses and Non-GAAP operating margin,
for similar reasons.
As presented in the “Reconciliation of GAAP Financial Measures
to Non-GAAP Financial Measures” tables that follow, Non-GAAP Net
Income and each of the other Non-GAAP financial measures excludes
one or more of the following items:
Acquisition related costs Acquisition related costs primarily
consist of:
- amortization of purchased intangibles, which includes acquired
intangibles such as developed technology, customer relationships,
trademarks, backlog, licensed technology, patents, and in-process
technology when post-acquisition development is determined to be
substantively complete;
- inventory adjustments affecting the carrying value of inventory
acquired in an acquisition;
- transitory post-acquisition incentive programs negotiated in
connection with an acquired business or designed to encourage
post-acquisition retention of key employees; and
- legal and consulting costs associated with acquisitions,
including non-recurring post-acquisition costs and services.
These acquisition related costs are not factored into the
company’s evaluation of its ongoing business operating performance
or potential acquisitions, as they are not considered as part of
the company’s principal operations. Further, the amount of these
costs can vary significantly from period to period based on the
terms of an earn-out arrangement, revisions to assumptions that
went into developing the estimate of the contingent consideration
associated with an earn-out arrangement, the size and timing of an
acquisition, the lives assigned to the acquired intangible assets,
and the maturity of the business acquired. Excluding acquisition
related costs from Non-GAAP measures provides investors with a
basis to compare Synaptics against the performance of other
companies without the variability and potential earnings volatility
associated with purchase accounting and acquisition related
items.
Share-based compensation Share-based compensation expense
relates to employee equity award programs and the vesting of the
underlying awards, which includes stock options, deferred stock
units, market stock units, performance stock units, phantom stock
units and the employee stock purchase plan. Share-based
compensation settled with stock, which includes stock options,
deferred stock units, market stock units, performance stock units
and the employee stock purchase plan, is a non-cash expense, while
share-based compensation settled with cash, which includes phantom
stock units, is a cash expense. Settlement of all employee equity
award programs, whether settled with cash or stock, varies in
amount from period to period and is dependent on market forces that
are often beyond the company’s control. As a result, the company
excludes share-based compensation from its internal operating
forecasts and models. The company believes that Non-GAAP measures
reflecting adjustments for share-based compensation provide
investors with a basis to compare the company’s principal operating
performance against the performance of peer companies without the
variability created by share-based compensation resulting from the
variety of equity-linked compensatory awards used by other
companies and the varying methodologies and assumptions used.
Amortization of prepaid development costs Amortization of
prepaid development costs represents the amortization of the
estimated cost to develop certain future roadmap devices designed
in advance process nodes in connection with an acquisition. The
amortization of prepaid development costs represents a non-cash
charge. As a result, the company excludes amortization of prepaid
development costs from its internal operating forecasts and models
when evaluating its ongoing business performance. The company
believes that Non-GAAP measures reflecting adjustments for
amortization of prepaid development costs provide investors with a
basis to compare the company’s principal operating performance
against the performance of other companies without the variability
created by the amortization of prepaid development costs.
Restructuring costs Restructuring costs are costs incurred to
address cost structure inefficiencies of acquired or existing
business operations and consist primarily of employee termination
and office closure costs, including the reversal of such costs.
These costs are generally cash-based. As a result, the company
excludes restructuring costs from its internal operating forecasts
and models when evaluating its ongoing business performance. The
company believes that Non-GAAP measures reflecting adjustments for
restructuring costs provide investors with a basis to compare the
company’s principal operating performance against the performance
of other companies without the variability created by restructuring
costs designed to address cost structure inefficiencies of acquired
or existing business operations.
Other non-cash items Other non-cash items include non-cash
amortization of debt discount and issuance costs. These items are
excluded from Non-GAAP results as they are non-cash. Excluding
other non-cash items from Non-GAAP measures provides investors with
a basis to compare Synaptics against the performance of other
companies without the variability associated with other non-cash
items.
Non-GAAP tax adjustments The company forecasts its long-term
Non-GAAP tax rate in order to provide investors with improved
long-term modeling accuracy and consistency across financial
reporting periods by eliminating the effects of certain items in
our Non-GAAP net income and Non-GAAP net income per share,
including the type and amount of share-based compensation, the
taxation of post-acquisition intercompany intellectual property
cross-licensing or transfer transactions, and the impact of other
acquisition items that may or may not be tax deductible. The
company intends to evaluate its long-term Non-GAAP tax rate
annually for significant events, including material tax law changes
in the major tax jurisdictions in which the company operates,
corporate organizational changes related to acquisitions or tax
planning opportunities, and substantive changes in our geographic
earnings mix.
Forward-Looking Statements This press release
contains forward-looking statements that are subject to the safe
harbors created under the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended. Forward-looking
statements give our current expectations and projections relating
to our financial condition, results of operations, plans,
objectives, future performance and business, and can be identified
by the fact that they do not relate strictly to historical or
current facts. Such forward-looking statements may include words
such as “expect,” “anticipate,” “intend,” “believe,” “estimate,”
“plan,” “target,” “strategy,” “continue,” “may,” “will,” “should,”
variations of such words, or other words and terms of similar
meaning. All forward-looking statements reflect our best judgment
and are based on several factors relating to our operations and
business environment, all of which are difficult to predict and
many of which are beyond our control. Such factors include, but are
not limited to, the risk that our business, results of operations
and financial condition and prospects may be materially and
adversely affected by the temporary reduction in demand for our
products resulting from accumulated inventories held by our
customers and channel partners; the risks as identified in the
“Risk Factors,” “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Business” sections of our
most recent Annual Report on Form 10-K and our most recent
Quarterly Report on Form 10-Q; and other risks as identified from
time to time in our Securities and Exchange Commission reports.
Forward-looking statements are based on information available to us
on the date hereof, and we do not have, and expressly disclaim, any
obligation to publicly release any updates or any changes in our
expectations, or any change in events, conditions, or circumstances
on which any forward-looking statement is based. Our actual results
and the timing of certain events could differ materially from the
forward-looking statements. These forward-looking statements do not
reflect the potential impact of any mergers, acquisitions, or other
business combinations that had not been completed as of the date of
this release.
For more information contact: Munjal ShahHead
of Investor Relationsmunjal.shah@synaptics.com
SYNAPTICS
INCORPORATED |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(In millions) |
(Unaudited) |
|
|
|
|
|
September 2023 |
|
June 2023 |
ASSETS |
|
|
|
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
801.3 |
|
|
$ |
924.7 |
|
Short-term investments |
|
23.1 |
|
|
|
9.6 |
|
Accounts receivable, net |
|
111.2 |
|
|
|
163.9 |
|
Inventories, net |
|
131.7 |
|
|
|
137.2 |
|
Prepaid expenses and other current assets |
|
41.3 |
|
|
|
36.6 |
|
Total current assets |
|
1,108.6 |
|
|
|
1,272.0 |
|
Property and
equipment at cost, net |
|
67.4 |
|
|
|
66.4 |
|
Goodwill |
|
816.4 |
|
|
|
816.4 |
|
Purchased
intangibles, net |
|
288.7 |
|
|
|
298.5 |
|
Non-current
other assets |
|
267.6 |
|
|
|
158.1 |
|
|
$ |
2,548.7 |
|
|
$ |
2,611.4 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
Liabilities: |
|
|
|
Accounts payable |
$ |
63.9 |
|
|
$ |
45.8 |
|
Accrued compensation |
|
23.5 |
|
|
|
45.9 |
|
Income taxes payable |
|
49.1 |
|
|
|
54.0 |
|
Other accrued liabilities |
|
103.0 |
|
|
|
108.4 |
|
Current portion of debt |
|
6.0 |
|
|
|
6.0 |
|
Total current liabilities |
|
245.5 |
|
|
|
260.1 |
|
Long-term
debt |
|
969.6 |
|
|
|
972.0 |
|
Other
long-term liabilities |
|
129.3 |
|
|
|
135.9 |
|
Total liabilities |
|
1,344.4 |
|
|
|
1,368.0 |
|
|
|
|
|
Stockholders' Equity: |
|
|
|
Common stock and additional paid-in capital |
|
1,025.7 |
|
|
|
1,009.3 |
|
Treasury stock |
|
(878.0 |
) |
|
|
(878.0 |
) |
Accumulated other comprehensive income |
|
0.1 |
|
|
|
— |
|
Retained earnings |
|
1,056.5 |
|
|
|
1,112.1 |
|
Total stockholders' equity |
|
1,204.3 |
|
|
|
1,243.4 |
|
|
$ |
2,548.7 |
|
|
$ |
2,611.4 |
|
|
|
|
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
SYNAPTICS
INCORPORATED |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In millions, except
per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
September 2023 |
|
September 2022 |
Net revenue |
$ |
237.7 |
|
|
$ |
448.1 |
|
Acquisition
related costs (1) |
|
17.8 |
|
|
|
23.5 |
|
Cost of
revenue |
|
112.8 |
|
|
|
168.9 |
|
Gross margin |
|
107.1 |
|
|
|
255.7 |
|
Operating
expenses: |
|
|
|
Research and development |
|
86.5 |
|
|
|
89.5 |
|
Selling, general, and administrative |
|
42.3 |
|
|
|
44.7 |
|
Acquired intangibles amortization (2) |
|
5.5 |
|
|
|
9.5 |
|
Restructuring costs (3) |
|
8.0 |
|
|
|
— |
|
Total operating expenses |
|
142.3 |
|
|
|
143.7 |
|
Operating (loss) income |
|
(35.2 |
) |
|
|
112.0 |
|
Interest and
other expense, net |
|
(5.4 |
) |
|
|
(8.3 |
) |
(Loss) income before provision for income taxes |
|
(40.6 |
) |
|
|
103.7 |
|
Provision
for income taxes |
|
15.0 |
|
|
|
39.1 |
|
Net (loss) income |
$ |
(55.6 |
) |
|
$ |
64.6 |
|
Net (loss)
income per share: |
|
|
|
Basic |
$ |
(1.43 |
) |
|
$ |
1.62 |
|
Diluted |
$ |
(1.43 |
) |
|
$ |
1.59 |
|
Shares used
in computing net (loss) income per share: |
|
|
|
Basic |
|
38.8 |
|
|
|
39.8 |
|
Diluted |
|
38.8 |
|
|
|
40.7 |
|
|
|
|
|
(1) These acquisition related costs consist primarily of
amortization of acquired intangible assets and inventory fair value
adjustments associated with acquisitions. |
|
|
|
|
(2)These acquisition related costs consist primarily of
amortization associated with certain acquired intangible
assets. |
|
|
|
|
(3) Restructuring costs primarily include severance related costs
associated with operational restructurings and acquisitions. |
|
|
|
|
SYNAPTICS
INCORPORATED |
Reconciliation of
GAAP Financial Measures to Non-GAAP Financial Measures |
(In millions, except
per share data) |
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
September 2023 |
|
September 2022 |
GAAP gross margin |
$ |
107.1 |
|
|
$ |
255.7 |
|
Acquisition related costs |
|
17.8 |
|
|
|
23.5 |
|
Share-based compensation |
|
1.1 |
|
|
|
1.1 |
|
Non-GAAP
gross margin |
$ |
126.0 |
|
|
$ |
280.3 |
|
GAAP gross
margin - percentage of revenue |
|
45.1 |
% |
|
|
57.1 |
% |
Acquisition related costs - percentage of revenue |
|
7.5 |
% |
|
|
5.3 |
% |
Share-based compensation - percentage of revenue |
|
0.4 |
% |
|
|
0.2 |
% |
Non-GAAP
gross margin - percentage of revenue |
|
53.0 |
% |
|
|
62.6 |
% |
GAAP
research and development expense |
$ |
86.5 |
|
|
$ |
89.5 |
|
Share-based compensation |
|
(15.2 |
) |
|
|
(14.0 |
) |
Amortization prepaid development costs |
|
— |
|
|
|
(2.5 |
) |
Non-GAAP
research and development expense |
$ |
71.3 |
|
|
$ |
73.0 |
|
GAAP
selling, general, and administrative expense |
$ |
42.3 |
|
|
$ |
44.7 |
|
Share-based compensation |
|
(16.9 |
) |
|
|
(17.5 |
) |
Non-GAAP
selling, general, and administrative expense |
$ |
25.4 |
|
|
$ |
27.2 |
|
GAAP
operating (loss) income |
$ |
(35.2 |
) |
|
$ |
112.0 |
|
Acquisition and integration related costs |
|
23.3 |
|
|
|
33.0 |
|
Share-based compensation |
|
33.2 |
|
|
|
32.6 |
|
Restructuring costs |
|
8.0 |
|
|
|
— |
|
Amortization prepaid development costs |
|
— |
|
|
|
2.5 |
|
Non-GAAP
operating income |
$ |
29.3 |
|
|
$ |
180.1 |
|
GAAP net
(loss) income |
$ |
(55.6 |
) |
|
$ |
64.6 |
|
Acquisition and integration related costs |
|
23.3 |
|
|
|
33.0 |
|
Share-based compensation |
|
33.2 |
|
|
|
32.6 |
|
Restructuring costs |
|
8.0 |
|
|
|
— |
|
Amortization prepaid development costs |
|
— |
|
|
|
2.5 |
|
Other non-cash items |
|
0.6 |
|
|
|
0.6 |
|
Non-GAAP tax adjustments |
|
10.8 |
|
|
|
9.8 |
|
Non-GAAP net
income |
$ |
20.3 |
|
|
$ |
143.1 |
|
GAAP net
(loss) income per share - diluted |
$ |
(1.43 |
) |
|
$ |
1.59 |
|
Acquisition/divestiture and integration related costs |
|
0.60 |
|
|
|
0.81 |
|
Share-based compensation |
|
0.86 |
|
|
|
0.80 |
|
Restructuring costs |
|
0.21 |
|
|
|
— |
|
Amortization prepaid development costs |
|
— |
|
|
|
0.06 |
|
Other non-cash items |
|
0.02 |
|
|
|
0.02 |
|
Non-GAAP tax adjustments |
|
0.28 |
|
|
|
0.24 |
|
Share adjustment |
|
(0.02 |
) |
|
|
— |
|
Non-GAAP net
income per share - diluted |
$ |
0.52 |
|
|
$ |
3.52 |
|
|
|
|
|
SYNAPTICS
INCORPORATED |
CONDENSED
CONSOLIDATED CASH FLOWS |
(In millions) |
(Unaudited) |
|
|
|
Three Months Ended |
|
September 2023 |
|
September 2022 |
Net (loss) income |
$ |
(55.6 |
) |
|
$ |
64.6 |
|
Non-cash operating items |
|
75.2 |
|
|
|
80.7 |
|
Changes in working capital |
|
25.8 |
|
|
|
(66.8 |
) |
Provided by
operating activities |
|
45.4 |
|
|
|
78.5 |
|
|
|
|
|
Net proceeds from maturities and sales of short-term investments
and other |
|
3.2 |
|
|
|
7.7 |
|
Purchase of short-term investments |
|
(16.6 |
) |
|
|
— |
|
Purchase of intangible assets |
|
(13.5 |
) |
|
|
— |
|
Advance payment on intangible assets |
|
(116.5 |
) |
|
|
— |
|
Purchase of property and equipment and other |
|
(6.7 |
) |
|
|
(6.2 |
) |
Other |
|
— |
|
|
|
0.8 |
|
(Used in)
provided by investing activities |
|
(150.1 |
) |
|
|
2.3 |
|
|
|
|
|
Proceeds from debt, net of issuance costs |
|
|
|
Repurchases of common stock |
|
— |
|
|
|
(13.4 |
) |
Equity compensation, net |
|
(16.8 |
) |
|
|
(22.9 |
) |
Payment of debt obligations |
|
(3.0 |
) |
|
|
(1.5 |
) |
Other |
|
1.7 |
|
|
|
2.8 |
|
Used in
financing activities |
|
(18.1 |
) |
|
|
(35.0 |
) |
Effect of
exchange rate changes on cash and cash equivalents |
|
(0.6 |
) |
|
|
(2.0 |
) |
Net change
in cash and cash equivalents |
|
(123.4 |
) |
|
|
43.8 |
|
Cash and
cash equivalents at beginning of period |
|
924.7 |
|
|
|
824.0 |
|
Cash and
cash equivalents at end of period |
$ |
801.3 |
|
|
$ |
867.8 |
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
|
Synaptics (NASDAQ:SYNA)
Historical Stock Chart
From Apr 2024 to May 2024
Synaptics (NASDAQ:SYNA)
Historical Stock Chart
From May 2023 to May 2024