Skyworks Solutions Gives Investors Record Results, Boosted Buyback

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Skyworks Solutions (NASDAQ: SWKS), a maker of highly specialized semiconductor chips, reported its fiscal first-quarter results on Monday, Feb. 5. Revenue and profits came in at record levels and beat management's projections. The good performance enabled management to announce a new $1 billion stock buyback plan and significantly expand its capital return program.

Skyworks Solutions fiscal first quarter: The raw numbers

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What happened with Skyworks this quarter?

  • Revenue grew 7% sequentially and 15% year over year.
  • Non-GAAP margins expanded across the board.
  • Non-GAAP earnings per share grew by 24% to $2. This was $0.09 better than management had forecast.
  • The company recorded a one-time charge of $258 million in its GAAP results related to the recent changes to the U.S. tax code.
  • The company returned a total of $232 million to shareholders during the quarter. This included $59 million in dividend payments and $173 million spent on stock buybacks. In total, the company repurchased 1.7 million shares of its stock at an average price of roughly $102.
  • Despite the focus on returning cash to shareholders, Skyworks' cash balance at quarter's end increased by $100 million to $1.7 billion. The company continues to boast a debt-free balance sheet, too.
  • Skyworks announced that its board has authorized a new $1 billion stock repurchase plan.

What management had to say

CEO Liam Griffin credited the record results to "strong global demand for our wireless communications engines." He also reaffirmed that the company remains well-positioned to ride this trend:

On the company's call with analysts, Griffin also highlighted a number of new products and services that are being powered by Skyworks' products. This includes Amazon's newest Kindle, Alphabet's new wireless speakers and home alarm systems, and Netgear's outdoor mesh networks, among others.

CFO Kris Sennesael also shared some pleasant news with investors related to the company's capital return program: "Our Board of Directors has approved a new $1 billion stock repurchase program reflecting confidence in our business model and outlook. Our plans for sustained above market growth and strong cash generation, coupled with the benefits from the recently passed U.S. tax reform act, are enabling us to increase our targeted cash return rate to shareholders from the prior 40% to 50% range to 60% to 75% of free cash flow going forward."

Looking forward

Here's the guidance that Sennesael gave for the upcoming quarter:

What's more, he also shared the following bullish commentary with investors on the conference call related to how the rest of the year is shaping up: "Based on our expanding reach within flagship platforms, and with design win momentum across broad markets, we expect accelerated top-line growth and further margin improvements throughout the balance of the fiscal and calendar year."

All in all, Skyworks' results show that the company's products remain in demand and it is well-positioned to continue riding the global connectivity boom.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Brian Feroldi owns shares of Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Skyworks Solutions. The Motley Fool recommends Netgear. The Motley Fool has a disclosure policy.