Premium analog semiconductor manufacturer Skyworks Solutions Inc. (SWKS) reported strong first-quarter fiscal 2015 results, driven by superior execution of operational plans and healthy demand pull. GAAP net income for the reported quarter more than doubled to $195.2 million or $1.01 per share from $94.5 million or 49 cents per share in the year-earlier quarter. The healthy year-over-year increase in earnings was primarily driven by higher revenues.
Excluding non-recurring items, non-GAAP earnings for the reported quarter came in at $1.26 per share versus 67 cents in the year-ago quarter. The recurring earnings (with stock-based compensation adjustments) of $1.15 per share beat the Zacks Consensus Estimate by 5 cents.
Quarter Details
Skyworks reported net revenues of $805.5 million in the reported quarter, significantly up from $505.2 million in the year-ago quarter. The reported revenues were well ahead of the Zacks Consensus Estimate of $774 million. Skyworks continues to capitalize on the global mobile connectivity and demand for high-performance solutions across a diverse set of vertical markets and Internet of Things.
Gross profit in the reported quarter was $373.0 million compared with $222.0 million in the year-ago period. Operating income increased over two-fold to $246.8 million from $116.0 million in the prior year.
The company ended the quarter with cash and cash equivalents of $1,049.9 million and zero debt balance. Skyworks generated $383 million cash from operations during the quarter.
During the quarter, the company unveiled a new stock repurchase program under which it plans to buy back up to $300 million of its common stock. The new buyback program, which is valid till Nov 11, 2016, completely replaced the $250 million stock repurchase program, which was approved by the board in Jul 2013, and had $63.9 million remaining at its disposal.
Under the new repurchase program, Skyworks plans to buy shares through open-market transactions or in privately negotiated transactions. The stock buyback will be funded from available working capital funds and the repurchased stock will be accessible for use in relation to its stock plans and for other corporate purposes.
Outlook
Moving forward, Skyworks is well positioned to capitalize on the Internet of Things with a healthy demand for high-performance wireless solutions in new markets and offered a bullish guidance for second-quarter fiscal 2015. Management identified four key factors behind its growth momentum. These include its leading market position for high-performance integrated solutions; significant growth opportunities for 4G devices in emerging markets of China, India and Latin America; proliferation of the Internet of Things market; and aggressive expansion in vertical markets.
Based on broad customer demand and operational execution, the company expects $750 million in revenues in second-quarter fiscal 2015, up 56% year over year. Non-GAAP earnings are expected in the vicinity of $1.12 per share.
The company believes that its strategy of diversifying its business and expanding into new verticals will drive growth in the long term. Leveraging on product innovation and broad-based customer demand, the company appears poised for sustainable above-market growth in the near term. We remain impressed with the robust quarterly results and bullish guidance of the company.
Skyworks currently has a Zacks Rank #2 (Buy). Other stocks in the industry that also look promising include AXT Inc. (AXTI), Rambus Inc. (RMBS) and Cirrus Logic Inc. (CRUS), each carrying the same Zacks Rank as Skyworks.
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