Xilinx Reports Second Quarter Fiscal Year 2021 Results

Conference Call

A conference call will be held today at 2:00 p.m. Pacific Time to discuss the September quarter financial results and management's outlook for the December quarter. The webcast and subsequent replay will be available in the investor relations section of the Company's web site at investor.xilinx.com. A telephonic replay of the call may be accessed later in the day by calling (800) 585-8367 and referencing confirmation code 7964802. The telephonic replay will be available for two weeks following the live call.

Non-GAAP Financial Information

Fiscal second quarter 2021 results and business outlook for the December 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, other than free cash flow, 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, as described below:

M&A related expenses: These expenses mainly consist of legal and consulting fees associated with acquisition activities. The Company believes these costs do not reflect its 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.

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 other significant tax effects of post-acquisition tax integration transactions. The Company believes excluding post-acquisition tax integration items will facilitate a comparable evaluation of its current performance to its past performance. The third quarter of fiscal 2021 outlook does not reflect other tax related items which the Company is not able to predict without unreasonable efforts due to their inherent uncertainty.

In addition, free cash flow, which is cash flow from operations adjusted to exclude additions to software, property, plant, and equipment, is used by management when assessing the Company’s sources of liquidity, capital resources, and quality of earnings. The Company believes that this non-GAAP financial measure is helpful in understanding the Company’s capital requirements and provides an additional means to evaluate the cash flow trends of the Company’s business.

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 December 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, among others, the impact of the ongoing COVID-19 pandemic and related mitigation measures (which, in addition to presenting its own risks and uncertainties, may also heighten the other risks and uncertainties faced by our business and decrease our visibility into all aspects of our business), customer acceptance of our new products, changing global economic conditions, our dependence on certain customers, trade and export restrictions, the condition and performance 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, our reliance on third parties (including distributors), variability in wafer pricing, costs and liabilities associated with current and future litigation, our ability to generate cost and operating expense savings in an efficient and timely manner, 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, Inc. develops highly flexible and adaptive computing platforms that enable rapid innovation across a variety of technologies - from the cloud, to the edge, to the endpoint. Xilinx is the inventor of the FPGA and Adaptive SoCs (including our Adaptive Compute Acceleration Platform, or ACAP), designed to deliver the most dynamic computing technology in the industry. We collaborate with our customers to create scalable, differentiated and intelligent solutions that enable the adaptable, intelligent and connected world of the future. For more information, visit xilinx.com.

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

XLNX-F

XILINX, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
September 26,
2020
June 27,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Net revenues

$

766,535

 

$

726,673

 

$

833,366

 

$

1,493,208

 

$

1,682,998

Cost of revenues:
Cost of products sold

 

218,120

 

 

226,103

 

 

287,372

 

 

444,223

 

 

570,872

Amortization of acquisition-related intangibles

 

6,696

 

 

6,697

 

 

5,734

 

 

13,393

 

 

9,003

Total cost of revenues

 

224,816

 

 

232,800

 

 

293,106

 

 

457,616

 

 

579,875

Gross margin

 

541,719

 

 

493,873

 

 

540,260

 

 

1,035,592

 

 

1,103,123

Operating expenses:
Research and development

 

219,647

 

 

210,113

 

 

222,979

 

 

429,760

 

 

427,079

Selling, general and administrative

 

113,793

 

 

105,383

 

 

111,596

 

 

219,176

 

 

219,021

Amortization of acquisition-related intangibles

 

2,862

 

 

2,862

 

 

2,169

 

 

5,724

 

 

2,569

Total operating expenses

 

336,302

 

 

318,358

 

 

336,744

 

 

654,660

 

 

648,669

Operating income

 

205,417

 

 

175,515

 

 

203,516

 

 

380,932

 

 

454,454

Interest and other income (expense), net

 

(10,771

)

 

(12,153

)

 

12,329

 

 

(22,924

)

 

23,941

Income before income taxes

 

194,646

 

 

163,362

 

 

215,845

 

 

358,008

 

 

478,395

Provision (benefit) for income taxes

 

830

 

 

69,526

 

 

(11,148

)

 

70,356

 

 

9,943

Net income

$

193,816

 

$

93,836

 

$

226,993

 

$

287,652

 

$

468,452

Net income per common share:
Basic

$

0.79

 

$

0.39

 

$

0.90

 

$

1.18

 

$

1.85

Diluted

$

0.79

 

$

0.38

 

$

0.89

 

$

1.17

 

$

1.83

Cash dividends per common share

$

0.38

 

$

0.38

 

$

0.37

 

$

0.76

 

$

0.74

Shares used in per share calculations:
Basic

 

244,837

 

 

243,180

 

 

252,399

 

 

243,602

 

 

252,728

Diluted

 

246,763

 

 

245,543

 

 

255,269

 

 

245,847

 

 

256,509

 
XILINX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 26,
2020
March 28,
2020*
(unaudited)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments

$

3,095,936

$

2,267,216

Accounts receivable, net

 

362,497

 

273,028

Inventories

 

282,048

 

304,340

Other current assets

 

73,034

 

64,557

Total current assets

 

3,813,515

 

2,909,141

Net property, plant and equipment

 

357,480

 

372,574

Other assets

 

1,404,936

 

1,411,619

Total Assets

$

5,575,931

$

4,693,334

 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities

$

590,909

$

586,421

Current portion of long-term debt

 

499,662

 

499,260

Total current liabilities

 

1,090,571

 

1,085,681

Long-term debt

 

1,492,066

 

747,110

Other long-term liabilities

 

540,457

 

545,494

Stockholders' equity

 

2,452,837

 

2,315,049

Total Liabilities and Stockholders' Equity

$

5,575,931

$

4,693,334

 
* Fiscal 2020 balances are derived from audited financial statements.
XILINX, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
(In thousands)
Three Months Ended Six Months Ended
September 26,
2020
June 27,
2020
September 28,
2019
September 26,
2020
September 28,
2019
SELECTED CASH FLOW INFORMATION:
Depreciation and amortization of software

$

30,249

$

31,749

$

22,438

$

61,998

$

42,551

Amortization - others

 

15,316

 

15,059

 

12,965

 

30,375

 

22,050

Stock-based compensation

 

58,439

 

50,383

 

49,822

 

108,822

 

92,575

Net cash provided by operating activities

 

247,583

 

245,471

 

223,694

 

493,054

 

521,910

Purchases of property, plant and equipment and software

 

15,331

 

15,461

 

33,641

 

30,792

 

62,842

Payment of dividends to stockholders

 

93,105

 

92,414

 

93,484

 

185,519

 

187,445

Repurchases of common stock

 

-

 

53,682

 

32,250

 

53,682

 

477,245

Taxes paid related to net share settlement of restricted stock units, net of proceeds from issuance of common stock

 

30,072

 

3,239

 

47,857

 

33,311

 

51,976

 
 
STOCK-BASED COMPENSATION INCLUDED IN:
Cost of revenues

$

2,963

$

2,721

$

2,812

$

5,684

$

5,425

Research and development

 

36,110

 

30,369

 

29,702

 

66,479

 

54,576

Selling, general and administrative

 

19,366

 

17,293

 

17,308

 

36,659

 

32,574

 
XILINX, INC.
RECONCILIATIONS OF GAAP ACTUALS TO NON-GAAP ACTUALS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended

September 26,
2020

 

June 27,
2020

 

September 28,
2019

 

September 26,
2020

 

September 28,
2019

GAAP gross margin

$

541,719

 

$

493,873

 

$

540,260

 

$

1,035,592

 

$

1,103,123

 

Inventory valuation adjustment

 

-

 

 

-

 

 

1,741

 

 

-

 

 

1,741

 

Amortization of acquisition-related intangibles

 

6,696

 

 

6,697

 

 

5,734

 

 

13,393

 

 

9,003

 

Non-GAAP gross margin

$

548,415

 

$

500,570

 

$

547,735

 

$

1,048,985

 

$

1,113,867

 

 
GAAP operating income

$

205,417

 

$

175,515

 

$

203,516

 

$

380,932

 

$

454,454

 

Inventory valuation adjustment

 

-

 

 

-

 

 

1,741

 

 

-

 

 

1,741

 

Amortization of acquisition-related intangibles

 

9,558

 

 

9,559

 

 

7,903

 

 

19,117

 

 

11,572

 

Acquisition-related costs

 

1,506

 

 

1,563

 

 

3,979

 

 

3,069

 

 

9,350

 

Non-GAAP operating income

$

216,481

 

$

186,637

 

$

217,139

 

$

403,118

 

$

477,117

 

 
GAAP net income

$

193,816

 

$

93,836

 

$

226,993

 

$

287,652

 

$

468,452

 

Inventory valuation adjustment

 

-

 

 

-

 

 

1,741

 

 

-

 

 

1,741

 

Amortization of acquisition-related intangibles

 

9,558

 

 

9,559

 

 

7,903

 

 

19,117

 

 

11,572

 

Acquisition-related costs

 

1,506

 

 

1,563

 

 

3,979

 

 

3,069

 

 

9,350

 

Income tax effect of tax-related items

 

-

 

 

56,801

 

 

-

 

 

56,801

 

 

-

 

Income tax effect of non-GAAP adjustments

 

(1,470

)

 

(1,590

)

 

(536

)

 

(3,060

)

 

(1,959

)

Non-GAAP net income

$

203,410

 

$

160,169

 

$

240,080

 

$

363,579

 

$

489,156

 

 
GAAP diluted EPS

$

0.79

 

$

0.38

 

$

0.89

 

$

1.17

 

$

1.83

 

Inventory valuation adjustment

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Amortization of acquisition-related intangibles

 

0.03

 

 

0.04

 

 

0.03

 

 

0.08

 

 

0.05

 

Acquisition-related costs

 

0.01

 

 

0.01

 

 

0.02

 

 

0.01

 

 

0.04

 

Income tax effect of tax-related items

 

-

 

 

0.23

 

 

-

 

 

0.23

 

 

-

 

Income tax effect of non-GAAP adjustments

 

(0.01

)

 

(0.01

)

 

-

 

 

(0.01

)

 

(0.01

)

Non-GAAP diluted EPS

$

0.82

 

$

0.65

 

$

0.94

 

$

1.48

 

$

1.91

 

 
GAAP cash flow from operations

$

247,583

 

$

245,471

 

$

223,694

 

$

493,054

 

$

521,910

 

Capital expenditures (including software)

 

(15,331

)

 

(15,461

)

 

(33,641

)

 

(30,792

)

 

(62,842

)

Free cash flow

$

232,252

 

$

230,010

 

$

190,053

 

$

462,262

 

$

459,068

 

 

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