Qorvo® Reports Fiscal 2016 Third Quarter Results


Financial Highlights

  • GAAP quarterly revenue was $620.7 million
  • Other GAAP results were gross margin of 37.2%, operating loss of $13.2 million, and a loss of $0.08 per share
  • On a Non-GAAP basis, revenue was $619.7 million, gross margin was 47.9%, operating income was $156.9 million, and diluted EPS was $1.03
  • Cash flow from operations was $218.0 million with free cash flow of $156.5 million
  • Qorvo repurchased 4.6 million shares of common stock for $250 million

Strategic Highlights

  • Grew dollar content in the marquee smartphones launching this year at Qorvo’s three largest mobile customers
  • Expanded leadership in filter solutions, releasing industry’s first six-inch TC-SAW wafers in Florida fab, qualifying six-inch SAW wafers in North Carolina fab, and demonstrating Qorvo’s first eight-inch BAW wafers in Texas fab
  • Commenced shipments of BAW-based quadplexers enabling carrier aggregation in 4G LTE devices and demonstrated BAW-based hexaplexer prototypes
  • Commenced shipments of next-generation Envelope Tracking power management IC to large global smartphone OEM
  • Expanded shipments of antenna control solutions into China smartphone market
  • Delivered 18% sequential growth in Wireless Infrastructure, indicating initial recovery in China base station market
  • Supplied a suite of critical microwave components for 5G “massive MIMO” demonstration performed by leading base station OEM at 2016 CES
  • Expanded presence in the connected home with key design wins in gateways and access points
  • Secured multi-year contract for next-generation electronic warfare system using Qorvo’s patented Spatium® solid state RF power technology with GaN MMICs

Qorvo® (Nasdaq:QRVO), a leading provider of core technologies and RF solutions for mobile, infrastructure and defense applications, today announced financial results for the Company’s fiscal 2016 third quarter, ended January 2, 2016.

On a GAAP basis, December quarterly revenue was $620.7 million, gross margin was 37.2%, operating loss was $13.2 million, and net loss was $11.1 million or a loss of $0.08 per share based on 139.3 million shares outstanding.

On a non-GAAP basis, December quarterly revenue was $619.7 million and gross margin declined sequentially by 180 basis points to 47.9%, reflecting lower yields and inventory adjustments. Operating expenses declined sequentially to $139.8 million, reflecting less variable compensation expense and seasonally lower spending. Operating income was $156.9 million, or 25.3% of sales, and net income was $148.0 million, or $1.03 per diluted share based on 144.1 million shares outstanding. Cash flow from operations was $218.0 million, with free cash flow of $156.5 million.

Financial Outlook

Qorvo currently believes the demand environment in its end markets supports the following non-GAAP expectations for the March 2016 quarter:

  • Quarterly revenue of approximately $600 million
  • Gross margin of approximately 50%
  • Net interest expense of approximately $15 million
  • Tax rate of approximately 3%
  • Diluted EPS of $0.90 to $0.95 based on approximately 142 million shares

Qorvo’s actual quarterly results may differ from these expectations and projections, and such differences may be material.

Comments from Management

Bob Bruggeworth, president and chief executive officer of Qorvo, said, “The Qorvo team executed extremely well in our first full year versus calendar 2014, growing annual revenue 12%, expanding gross margin more than 400 basis points and achieving more than 40% growth in operating income. In the December quarter, Qorvo generated $218 million in cash flow from operations and repurchased $250 million in stock to enhance shareholder value.

“Qorvo is winning by leveraging our comprehensive portfolio of tightly integrated, world-class RF solutions. We are growing our dollar content at our three largest mobile customers in the most anticipated marquee smartphones being released this year, and we anticipate strong growth in IDP.”

Steve Buhaly, chief financial officer of Qorvo, said, “As we enter Qorvo’s second year, I continue to be excited about our prospects, including a significant cost-reduction roadmap and great new products, including our rapidly growing BAW-based multiplexer business and other highly integrated solutions leveraging the full breadth of our product and technology portfolio.

“Qorvo’s total cash and investments at the end of the December quarter exceeded $1 billion, and Qorvo has $750 million remaining in our share repurchase program. We are pleased our balance sheet and strong cash flow provide the opportunity to create value for our shareholders through share repurchases while continuing to invest in internal and external opportunities to drive long-term diversified growth.”

The following tables set forth selected GAAP and non-GAAP financial information for Qorvo and its predecessor companies, RF Micro Devices, Inc. (RFMD) and TriQuint Semiconductor, Inc. (TriQuint) for their respective December 2015, September 2015, and December 2014 quarters.  See the more detailed financial information for Qorvo, including reconciliation of GAAP and non-GAAP financial information, attached.

  (In millions, except for percentages and EPS) 
   Qorvo  Qorvo   
   For the quarter
ended January 2,
  For the quarter
ended October 3,
  Change vs. Q2
FY 2016
Revenue$       620.7 $       708.3 $        (87.6) 
Gross profit$231.0 $284.8 $(53.8) 
Gross margin 37.2% 40.2% -3.0    ppt
Operating expenses$244.2 $266.8 $(22.6) 
Operating (loss) income$(13.2)$18.0 $(31.2 )  
Net (loss) income $ (11.1 ) $ 4.4   $ (15.5 )  
Weighted average diluted shares   139.3     150.8     (11.5 )  
Diluted EPS $ (0.08 ) $ 0.03   $ (0.11 )  

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