Xilinx Reports Record Revenues And EPS In Fiscal Third Quarter

January 23, 2019 4:20 PM

SAN JOSE, Calif., Jan. 23, 2019 /PRNewswire/ -- Xilinx, Inc. (Nasdaq: XLNX) today announced record revenues of $800 million for the third quarter of fiscal year 2019, up 7% from the prior quarter and up 34% year over year. GAAP net income for the December quarter was $239 million, or $0.93 per diluted share. Non-GAAP net income for the December quarter was $237 million, or $0.92 per diluted share.

Xilinx logo (PRNewsFoto/Xilinx) (PRNewsfoto/Xilinx, Inc.)

The Xilinx Board of Directors declared a quarterly cash dividend of $0.36 per outstanding share of common stock payable on February 21, 2019 to all stockholders of record at the close of business on February 6, 2019.

Additional third quarter of fiscal year 2019 comparisons are represented in the charts below. Due to the adoption of the new revenue recognition standard in the first quarter of fiscal year 2019, all fiscal 2018 results have been restated to conform to the new standard:

Q3 2019 Financial Highlights

(In millions, except EPS)

GAAP

Q3

Q2

Q3

FY 2019

FY 2019

FY 2018

Q-T-Q

Y-T-Y

Net revenues*

$800

$746

$599

7%

34%

Operating income

$258

$233

$161

11%

60%

Net income (loss)

$239

$216

$(12)

11%

NM

Diluted earnings (loss) per share

$0.93

$0.84

$(0.05)

11%

NM

Non-GAAP

Q3

Q2

Q3

FY 2019

FY 2019

FY 2018

Q-T-Q

Y-T-Y

Net revenues*

$800

$746

$599

7%

34%

Operating income

$263

$236

$162

12%

63%

Net income

$237

$221

$167

7%

42%

Diluted earnings per share

$0.92

$0.87

$0.65

6%

42%

*No adjustment between GAAP and Non-GAAP

"I am very excited to report yet another record revenue and earnings quarter. During the third fiscal quarter, we delivered revenues of $800 million, representing 34% year over year growth. Based on the guidance we are providing for the fiscal fourth quarter, we expect to exceed $3 billion in annual revenues for the first time in our history. In addition to the robust revenue growth, we also demonstrated strong profitability by posting over 60% growth in non-GAAP operating income and over 40% growth in non-GAAP diluted earnings per share year over year. We continue to execute to our strategy and drive growth across our portfolio," said Victor Peng, President and Chief Executive Officer.

Net Revenues by Geography:

Percentages

Growth Rates

Q3

FY 2019

Q2

FY 2019

Q3

FY 2018

Q-T-Q

Y-T-Y

North America

28%

28%

31%

9%

24%

Asia Pacific

46%

44%

41%

12%

47%

Europe

18%

20%

20%

(5%)

24%

Japan

8%

8%

8%

4%

26%

Net Revenues by End Market:

Percentages

Growth Rates

Q3

FY 2019

Q2

FY 2019

Q3

FY 2018

Q-T-Q

Y-T-Y

Data Center and TME

21%

21%

25%

5%

14%

Automotive, Broadcast and Consumer

15%

16%

17%

2%

20%

Communications

35%

35%

33%

8%

41%

Industrial, Aerospace & Defense

27%

25%

31%

16%

17%

Channel

2%

3%

(6%)

NM

NM

Net Revenues by Product:

Percentages

Growth Rates

Q3

FY 2019

Q2

FY 2019

Q3

FY 2018

Q-T-Q

Y-T-Y

Advanced Products

66%

64%

58%

9%

51%

Core Products

34%

36%

42%

3%

9%

Products are classified as follows:

Advanced Products: Alveo, UltraScale+, Ultrascale and 7-series products. Core Products: Virtex-6, Spartan-6, Virtex‐5, CoolRunner‐II, Virtex-4, Virtex-II, Spartan-3, Spartan-2, XC9500 products, configuration solutions, software & support/services.

Key Statistics:

(Dollars in millions)

Q3

FY 2019

Q2

FY 2019

Q3

FY 2018

Annual Return on Equity (%)*

34

34

17

Operating Cash Flow

$314

$313

$185

Depreciation Expense (including software amortization)

$18

$16

$11

Capital Expenditures (including software)

$20

$14

$7

Combined Inventory Days

109

100

124

Revenue Turns (%)

40

48

43

*Return on equity calculation: Annualized year to date net income/average stockholders' equity

Product and Financial Highlights – Fiscal Third Quarter 2019

  • Data Center and Test, Measurement & Emulation (TME) revenues grew 14% year over year driven primarily by the Data Center business (ex-Cryptocurrency) and TME business, which both experienced double digit growth during the quarter. Xilinx continued its strong design win momentum in Data Center across multiple applications including big data acceleration, machine learning inference, video transcoding, network acceleration and storage controllers. The Company also has won designs for SmartNIC applications with multiple hyperscalers. Further developing its platform ecosystem, the Company significantly increased the cumulative number of Xilinx community developers trained on SDAccel to over 2,250. FaaS engagement momentum continued to build with Amazon, Alibaba, Huawei and other hyperscalers. TME revenues were strong across both the Test & Measurement area and Emulation & Prototyping, reflecting strong product leadership position in those markets.
  • Communications revenues increased 41% year over year, driven by strength in the Wireless Communications business. Wireless Communications benefitted from 5G deployment in South Korea and preparation for 5G deployment in both China and North America as well as ongoing LTE upgrades. Wireless Communications also saw continued momentum across both radio and baseband applications with OEM customers across multiple geographies. Wired business grew year over year with strength from Optical/Data Center Interconnect applications.
  • Xilinx continued engagement momentum with several leading automotive customers during the quarter with the goal of enabling their roadmap toward automated driving. During the Xilinx Developer Forum in Frankfurt, Daimler showcased its AI solution in the new Mercedes GLE Sport Utility Vehicle that is powered by Xilinx machine learning algorithms and MPSoCs. In addition, ZF Friedrichshafen AG, a global leader and Tier-1 automotive supplier, recently announced a strategic collaboration in which Xilinx technology will power their highly-advanced AI based automotive control unit to enable automated driving applications.
  • The Advanced Products category increased 51% year over year during the quarter. Revenue from 16nm products continued its strong ramp with broad-based adoption, increasing approximately 4x during the same period. Zynq-based revenues, grew approximately 80% year over year driven by a broad set of applications across multiple end markets, served in particular by MPSoC. Zynq MPSoC revenues grew over 3x compared to fiscal third quarter 2018.
  • Extending its significant technology leadership, Xilinx taped out Versal – the industry's first Adaptive Compute Acceleration Platform (ACAP) at the end of fiscal third quarter. Built on TSMC's 7nm FinFET process technology, the Versal portfolio is the first platform to combine software programmability with domain-specific hardware acceleration and the adaptability essential for today's rapid pace of innovation.

Business Outlook – Fiscal Fourth Quarter 2019

The following statements are based on current expectations, and as indicated, are presented on a GAAP and non-GAAP basis. These statements are forward-looking and actual results may differ materially, as a result of, among other things, the important factors discussed at the end of this release.

Fiscal Fourth Quarter 2019

GAAP

Non-GAAPAdjustments

Non-GAAP

Revenues

$815M - $835M

-

$815M - $835M

Gross Margin

~68.5%

-

~68.5%

Operating Expenses

~$310M

$5M (1)

~$305M

Other Income

~$4M

-

~$4M

Tax Rate

6% - 8%

-

6% - 8%

Notes regarding Non-GAAP Adjustments:

(1)

Excludes an estimated amount of $5 million in M&A related expenses and amortization of acquisition related intangibles

Conference Call

A conference call will be held today at 2:00 p.m. Pacific Time to discuss the December quarter financial results and management's outlook for the March quarter. The webcast and subsequent replay will be available in the investor relations section of the Company's web site at www.investor.xilinx.com. A telephonic replay of the call may be accessed later in the day by calling (855) 859-2056 and referencing confirmation code 6696387. The telephonic replay will be available for two weeks following the live call.

Non-GAAP Financial Information

Fiscal third quarter 2019 results and business outlook for the March quarter include financial measures which are not determined in accordance with the United States generally accepted accounting principles (GAAP), as indicated. Non-GAAP measures should not be considered as a substitute for, or superior to, financial measures determined in accordance with GAAP. The presentation of non-GAAP financial measures has been reconciled, in each case, to the most directly-comparable GAAP measure, as indicated in the accompanying tables. The Company's calculation of such non-GAAP measures may not be comparable to similarly-titled measures used by other companies.

Management uses the non-GAAP financial measures disclosed herein to evaluate the Company's financial results from continuing operations (excluding the impact of acquisitions) and compare to operating performance in past periods. Similarly, Management believes presentation of these non-GAAP measures is useful to investors because it enables investors and analysts to evaluate operating expenses of the Company's core business, excluding the impact of non-core business expenses such as acquisition-related amortization and non-recurring items.

M&A related expenses: These expenses mainly consist of legal and consulting fees associated with due diligence review of acquired companies. We believe that these costs do not reflect the Company's current operating performance. Consequently, the non-GAAP adjustments exclude these charges to facilitate an evaluation of the Company's current operating performance and comparisons to its past operating performance.

Amortization of acquisition-related intangibles: Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology acquired in connection with business combinations. The non-GAAP adjustments exclude these charges to facilitate an evaluation of the Company's current operating performance and comparisons to its past operating performance.

Gains on investment related to acquisition: The Company excludes the accounting gain resulting from revaluation of its prior minority investment in DeePhi Tech. The Company believes excluding this gain will facilitate a comparable evaluation of its current operating performance to its past operating performance.

Income taxes: The Company excludes the income tax effects of non-GAAP adjustments reflected in Operating Expenses and Other Income, as detailed above. It also excludes U.S. tax reform related items. The Company believes excluding U.S. tax reform related items will facilitate a comparable evaluation of its current performance to its past performance. The fourth quarter of fiscal 2019 outlook does not reflect other tax related items which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

Forward Looking Statements

This release contains forward-looking statements and projections. Forward-looking statements and projections can often be identified by the use of forward-looking words such as "expect," "believe," "may," "will," "could," "anticipate," "estimate," "continue," "plan," "intend," "project" or other similar expressions. Statements that refer to or are based on projections, uncertain events or assumptions also identify forward-looking statements. Such forward looking statements include, but are not limited to, statements related to the semiconductor market, the growth and acceptance of our products, expected revenue growth, the demand and growth in the markets we serve, opportunity for expansion into new markets, and our expectations regarding our business outlook for the March quarter. Undue reliance should not be placed on such forward-looking statements and projections, which speak only as of the date they are made. We undertake no obligation to update such forward-looking statements. Actual events and results may differ materially from those in the forward-looking statements and are subject to risks and uncertainties including customer acceptance of our new products, current global economic conditions, the health of our customers and the end markets in which they participate, our ability to forecast end customer demand, a high dependence on turns business, more customer volume discounts than expected, greater product mix changes than anticipated, fluctuations in manufacturing yields, our ability to deliver product in a timely manner, our ability to successfully manage production at multiple foundries, variability in wafer pricing, costs and liabilities associated with current and future litigation, our ability to realize the goals contemplated by our acquisitions and strategic investments, the impact of current and future legislative and regulatory changes, the impact of new accounting pronouncements and tax laws, including the U.S. Tax Cuts and Jobs Act, and interpretations thereof, and other risk factors described in our most recent Forms 10-Q and 10-K.

About Xilinx

Xilinx develops highly flexible and adaptive processing platforms that enable rapid innovation across a variety of technologies – from the endpoint to the edge to the cloud. Xilinx is the inventor of the FPGA, hardware programmable SoCs and the ACAP, designed to deliver the most dynamic processor technology in the industry and enable the adaptable, intelligent and connected world of the future. For more information, visit www.xilinx.com.

Xilinx, the Xilinx logo, Artix, ISE, Kintex, Spartan, Virtex, Zynq, Vivado, Alveo, Versal and other designated brands included herein are trademarks of Xilinx in the United States and other countries. All other trademarks are the property of their respective owners.

XLNX-F

Investor Relations Contact:Suresh Bhaskaran Xilinx, Inc.(408) 879-4784 ir@xilinx.com

XILINX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended

Nine Months Ended

December 29, 2018

September 29, 2018

December 30, 2017*

December 29, 2018

December 30, 2017*

Net revenues

$ 800,057

$ 746,252

$ 598,603

$ 2,230,678

$ 1,828,832

Cost of revenues

247,903

231,620

177,969

686,411

554,478

Gross margin

552,154

514,632

420,634

1,544,267

1,274,354

Operating expenses:

Research and development

189,329

183,372

166,231

543,527

477,267

Selling, general and administrative

103,039

97,685

92,753

291,256

272,981

Amortization of acquisition-related intangibles

1,866

839

353

3,064

1,568

Total operating expenses

294,234

281,896

259,337

837,847

751,816

Operating income

257,920

232,736

161,297

706,420

522,538

Interest and other income (expense), net

(1,330)

6,408

5,469

2,231

9,138

Income before income taxes

256,590

239,144

166,766

708,651

531,676

Provision for income taxes

17,230

23,432

179,251

63,542

213,166

Net income (loss)

$ 239,360

$ 215,712

$ (12,485)

$ 645,109

$ 318,510

Net income (loss) per common share:

Basic

$ 0.95

$ 0.85

$ (0.05)

$ 2.55

$ 1.28

Diluted

$ 0.93

$ 0.84

$ (0.05)

$ 2.53

$ 1.23

Cash dividends per common share

$ 0.36

$ 0.36

$ 0.35

$ 1.08

$ 1.05

Shares used in per share calculations:

Basic

253,060

252,988

254,089

252,634

248,671

Diluted

256,374

255,522

254,089

255,227

258,995

* Fiscal 2018 balances have been restated to conform to the new revenue recognition standard (ASC 606).

XILINX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

December 29, 2018

March 31, 2018*

(unaudited)

ASSETS

Current assets:

Cash, cash equivalents and short-term investments

$ 3,469,652

$ 3,447,570

Accounts receivable, net

359,367

382,246

Inventories

283,329

236,077

Other current assets

60,004

88,695

Total current assets

4,172,352

4,154,588

Net property, plant and equipment

317,260

304,117

Long-term investments

83,803

97,896

Other assets

781,349

503,946

Total Assets

$ 5,354,764

$ 5,060,547

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$ 453,018

$ 412,759

Current portion of long-term debt

499,851

499,186

Total current liabilities

952,869

911,945

Long-term debt

1,221,438

1,214,440

Other long-term liabilities

543,262

573,809

Stockholders' equity

2,637,195

2,360,353

Total Liabilities and Stockholders' Equity

$ 5,354,764

$ 5,060,547

* Fiscal 2018 balances have been restated to conform to the new revenue recognition standard (ASC 606).

XILINX, INC.

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In thousands)

Three Months Ended

Nine Months Ended

December 29, 2018

September 29, 2018

December 30, 2017

December 29, 2018

December 30, 2017

SELECTED CASH FLOW INFORMATION:

Depreciation and amortization of other intangibles

$ 17,974

$ 16,048

$ 11,452

$ 49,097

$ 34,416

Amortization - others

7,984

8,144

5,458

23,461

12,619

Stock-based compensation

38,641

34,945

36,801

109,194

105,209

Net cash provided by operating activities

313,917

313,123

184,686

803,208

577,734

Purchases of property, plant and equipment and other intangibles

20,270

14,174

6,791

60,803

28,940

Payment of dividends to stockholders

91,108

91,077

89,491

272,860

263,751

Repurchases of common stock

1,015

23,236

73,290

161,551

310,806

STOCK-BASED COMPENSATION INCLUDED IN:

Cost of revenues

$ 2,366

$ 2,249

$ 2,188

$ 6,650

$ 6,486

Research and development

22,352

20,047

20,217

63,329

57,779

Selling, general and administrative

13,923

12,649

14,396

39,215

40,944

XILINX, INC.

RECONCILIATIONS OF GAAP ACTUALS TO NON-GAAP ACTUALS

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended

Nine Months Ended

December 29, 2018

September 29, 2018

December 30, 2017*

December 29, 2018

December 30, 2017*

GAAP operating income

$ 257,920

$ 232,736

$ 161,297

$ 706,420

$ 522,538

Acquisition-related costs

3,208

2,206

6,909

Amortization of acquisition-related intangibles

1,866

839

353

3,064

1,568

Non-GAAP operating income

$ 262,994

$ 235,781

$ 161,650

$ 716,393

$ 524,106

GAAP net income

$ 239,360

$ 215,712

$ (12,485)

$ 645,109

$ 318,510

Acquisition-related costs

3,208

2,206

6,909

Amortization of acquisition-related intangibles

1,866

839

353

3,064

1,568

Gain from private investments

(6,503)

(6,503)

Income tax effect of changes in applicable U.S. tax laws

(6,949)

9,355

178,880

2,406

178,880

Income tax effect of non-GAAP adjustments

(559)

(160)

(719)

Non-GAAP net income

$ 236,926

$ 221,449

$ 166,748

$ 650,266

$ 498,958

GAAP diluted earnings (loss) per share

$ 0.93

$ 0.84

$ (0.05)

$ 2.53

$ 1.23

Acquisition-related costs

0.01

0.01

0.02

Amortization of acquisition-related intangibles

0.01

0.01

0.01

Gain from private investments

(0.02)

(0.02)

Income tax effect of changes in applicable U.S. tax laws

(0.03)

0.04

0.70

0.01

0.69

Income tax effect of non-GAAP adjustments

Non-GAAP diluted EPS

$ 0.92

$ 0.87

$ 0.65

$ 2.55

$ 1.93

* Fiscal 2018 balances have been restated to conform to the new revenue recognition standard (ASC 606).

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SOURCE Xilinx, Inc.

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