Skyworks Solutions (NASDAQ:SWKS)�reported its fiscal third-quarter results on Thursday, July 19. Sales slightly declined during the period but a lower tax rate and declining share count still allowed the company to post modest earnings-per-share growth.
Let's dig into the details to get a better sense of where the company stands today and where it is heading.
Image source: Getty Images.
Skyworks Solutions' fiscal Q3: The raw numbersRevenue | $894 million | $901 million | (0.8%) |
Non-GAAP operating income | $325 million | $333 million | (2.4%) |
Non-GAAP net income | $300 million | $293 million | 2.4% |
Non-GAAP EPS | $1.64 | $1.57 | 4.5% |
Data source: Skyworks Solutions.
What happened with Skyworks this quarter? Revenue of $894 million came in at the high end of management's guidance range.� Gross margin expanded 20 basis points to 50.9%. Non-GAAP earnings per share of $1.64 compared favorably to management's projection. 2.5 million shares were repurchased during the quarter. A total of�$298 million was returned to investors during the period through buybacks and dividends. Skywork's tax rate remained very low and was only 8.9% during the period. The minuscule tax rate was a major reason why the company was able to post year-over-year growth in net income. The quarterly dividend payment was raised 19% to $0.38 per share. Skyworks launched its new Sky5 antenna tuning portfolio during the quarter. Sky5 products have been specifically designed to work with 5G mobile networks. Cash balance at quarter's end was $1.6 billion. The balance sheet remains debt free.� What management had to sayCEO Liam Griffin reaffirmed that the company is in a great position to capitalize on several emerging technology trends:
We are gaining first-mover advantage across�Internet of Things�and rapidly emerging 5G applications with our Sky5 platform. Leveraging our scale and decades of system-level expertise, we are positioned to capitalize on increasing demand for powerful and complex connectivity engines as the global data economy accelerates.
CFO Kris Sennesael also commented that the company remains in great shape to deliver "another record year of top and bottom line results."
Looking forwardSennesael forecast that the upcoming quarter was going to return the company to year-over-year revenue growth as "design win momentum transitions to volume production."
However, while the CFO's language appears very bullish, his financial guidance suggests that growth in the current quarter is going to remain modest:
Revenue | $992 million to $1,010 million | $985 million | 1.6% |
Non-GAAP EPS | $1.91 | $1.82 | 4.9% |
Data source: Skyworks Solutions.
In spite of the tepid growth projection for the upcoming quarter,�CEO Griffin affirmed on the�conference call with investors�that Skyworks plans on delivering good financial results for the year despite the challenging macro operating environment:
We will end the fiscal year with mid-single-digit revenue growth, greater than a 10% EPS increase and record cash returns, this despite a choppy market backdrop and a government-imposed trade ban on a sizable Chinese customer.