Cypress earnings beat by 3 cents a solid revenue growth of 12.7% yoy.
IoT, Automotive UBS-C all doing nicely.
investors.cypress.com
Cypress Reports Fourth Quarter and Year End 2017 Results
SAN JOSE, Calif.--(BUSINESS WIRE)-- Cypress Semiconductor Corporation (NASDAQ: CY), a leader in embedded solutions, today announced its fourth quarter and fiscal 2017 results with the following highlights:
Record fiscal 2017 revenue of $2.33 billion driven by automotive and IoT wireless business performanceFourth quarter revenue was $597.5 million, a 12.7% year-over-year increaseFourth quarter GAAP and non-GAAP margin were 44.6% and 45.4%, respectively, and represent a 650bps and 530bps increase year over yearFourth quarter GAAP EPS and non-GAAP diluted EPS improved by 55% and 87% year over year, respectivelyFiscal 2017 cash from operations of $403.5 million increased 86% year over year. "We had a record fiscal 2017 with strong business performance," said Hassane El-Khoury, Cypress president and chief executive officer. "The Cypress 3.0 strategy we set in 2016 of focusing on the fast-growing automotive, industrial and consumer markets, fueled by the proliferation of IoT, contributed to strong revenue growth and earnings growing more than four times revenue in 2017. We have established Cypress as an embedded solutions leader for the IoT. This success was built on the strength of our unmatched IoT connectivity solutions, along with our broad portfolio of microcontrollers and high-performance memory solutions, in our target end-markets."
Revenue and earnings for the fourth quarter and fiscal 2017 are shown below with comparable periods:
(In thousands, except per-share data)
| | | | | | | | GAAP | | NON-GAAP1 | | | Q4 2017 | | Q3 2017 | | Q4 2017 | | Q3 2017 | | Revenue | | $ | 597,547 | | | $ | 604,574 | | | $ | 597,547 | | | $ | 604,574 | | | Margin | | 44.6 | % | | 41.8 | % | | | 45.4 | % | | | 43.0 | % | | Pretax profit margin | | (6.5)
| %
| | 2.6 | % | | | 17.9 | % | | | 16.9 | % | | Net income (loss) | | $ | (35,998)
|
| | $ | 11,033 | | | $ | 104,685 | | | $ | 98,980 | | | Diluted EPS (loss) | | $ | (0.10)
|
| | $ | 0.03 | | | $ | 0.28 | | | $ | 0.27 | | | | | | | | | GAAP | | NON-GAAP1 | | | FY 2017 | | FY 20162 | | FY 2017 | | FY 20162,3 | | Revenue | | $ | 2,327,771 | | | $ | 1,923,108 | | | $ | 2,327,771 | | | $ | 1,941,858 | | | Margin | | 41.0 | % | | 35.6 | % | | | 42.2 | % | | | 39.0 | % | | Pretax profit margin | | (3.5)
| %
| | (35.6)
| %
| | | 14.4 | % | | | 9.4 | % | | Net income (loss) | | $ | (93,650)
|
| | $ | (686,251)
|
| | $ | 324,257 | | | $ | 170,471 | | | Diluted EPS (loss) | | $ | (0.28)
|
| | $ | (2.15)
|
| | $ | 0.89 | | | $ | 0.49 | | | | | | | | | | | | | | | | | | |
| 1. | | See "Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures" tables ("Non-GAAP Results" tables) included below. | | 2. | | 2016 includes results from the IoT business acquired from Broadcom on July 5, 2016. | | 3. | | Revenue for the twelve months ended 2016 includes $18.75 million of legacy Spansion non-GAAP licensing revenue. | | | |
BUSINESS REVIEW
+ Cypress expanded its automotive infotainment solution portfolio with the introduction of two new products. The Company announced production availability of the industry's first Real Simultaneous Dual Band (RSDB) automotive-grade Wi-Fi® and Bluetooth® combo solution, which enables multiple users to connect and stream unique content to their devices simultaneously. In parallel, Cypress introduced a new automotive capacitive touchscreen controller family that delivers the market's most advanced feature set for next-generation infotainment systems, including the capability to detect a finger up to 35 mm above the screen and provide accurate measurement of the pressure applied by multiple fingers.
+ At the recent Consumer Electronics Show in Las Vegas, Cypress showed products based on its PSoC® 6 microcontroller (MCU), the industry's lowest power, most flexible dual-core MCU with built-in Bluetooth Low Energy (BLE) wireless connectivity. PSoC 6 is targeted for a variety of smart home, wearables, smart speakers, audio and other IoT applications.
+ Cypress' single-chip wireless MCU and combo solutions for the IoT are the world's first to deliver certified Bluetooth mesh connectivity to a consumer product—SYLVANIA SMART+ Bluetooth lighting products from LEDVANCE. Cypress announced three of its wireless combo chips and the latest version of its WICED® software development kit support state-of-the-art Bluetooth connectivity with mesh networking capability. Cypress' solutions enable a low-cost, low-power mesh network of devices that can communicate with each other—and with smartphones, tablets and voice-controlled home assistants—via simple, secure and ubiquitous Bluetooth connectivity.
+ Cypress paid a cash dividend of $38.7 million, or $0.11 per share, to holders of record of the Company's common stock as of the close of business on December 28, 2017. The dividend was equivalent to a 2.9% annualized yield as of December 28, 2017. This dividend was paid on January 18, 2018.
REVENUE SUMMARY
(In thousands, except percentages)
(Unaudited)
| | | | | | Three Months Ended | | | December 31,
2017
| | October 1,
2017
| | Sequential
Change
| Business Unit1
| | | | | | | | MCD | | $ | 357,247 | | | $ | 373,584 | | | (4) | % | | MPD | | $ | 240,300 | | | $ | 230,990 | | | 4 | % | | Total | | $ | 597,547 | | | $ | 604,574 | | | (1) | % | | | | | | | | Geographic
| | | | | | | | China & ROW | | 55 | % | | 53 | % | | 4 | % | | Americas | | 10 | % | | 12 | % | | (17) | % | | Europe | | 12 | % | | 13 | % | | (8) | % | | Japan | | 23 | % | | 22 | % | | 5 | % | | Total | | 100 | % | | 100 | % | | — | % | | | | | | | | Channel
| | | | | | | | Distribution | | 72 | % | | 73 | % | | (1) | % | | Direct | | 28 | % | | 27 | % | | 4 | % | | Total | | 100 | % | | 100 | % | | — | % | | | | | | | | | | |
| | Twelve Months Ended | | Twelve Months Ended | | | (GAAP)3 | | (Non-GAAP)2,3 | | | December 31,
2017
| | January 1,
2017
| | Sequential
Change
| | December 31,
2017
| | January 1,
2017
| | Sequential
Change
| Business Unit1
| | | | | | | | | | | | | MCD4,5
| | $ | 1,409,265 | | $ | 994,482 | | 42% | | $ | 1,409,265 | | $ | 1,013,232 | | 39% | | MPD | | 918,506 | | 928,626 | | (1)% | | 918,506 | | 928,626 | | (1)% | | Total | | $ | 2,327,771 | | $ | 1,923,108 | | 21% | | $ | 2,327,771 | | $ | 1,941,858 | | 20% | | | | | | | | | | | | | | Geographic
| | | | | | | | | | | | | | China & ROW4 | | 54% | | 53% | | 2% | | 54% | | 53% | | 2% | | Americas | | 11% | | 12% | | (8)% | | 11% | | 12% | | (8)% | | Europe | | 13% | | 13% | | 0% | | 13% | | 13% | | 0% | | Japan | | 22% | | 22% | | 0% | | 22% | | 22% | | 0% | | Total | | 100% | | 100% | | 0% | | 100% | | 100% | | 0% | | | | | | | | | | | | | | Channel
| | | | | | | | | | | | | | Distribution | | 73% | | 73% | | 0% | | 73% | | 72% | | 1% | | Direct4 | | 27% | | 27% | | 0% | | 27% | | 28% | | (4)% | | Total | | 100% | | 100% | | 0% | | 100% | | 100% | | 0% | | | | | | | | | | | | | |
| 1. | | The Microcontroller and Connectivity Division ("MCD") includes microcontroller, automotive and connectivity products and the Memory Products Division ("MPD") includes RAM, Flash and AgigA Techproducts. | | 2. | | See "Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures" tables ("Non-GAAP Results" tables) included below. | | 3. | | 2016 includes results from the IoT business acquired from Broadcom on July 5, 2016. | | 4. | | Revenue for the twelve months ended 2016 includes $18.75 million of legacy Spansion non-GAAP licensing revenue in MCD, APAC region and direct channel, respectively. | | 5. | | Historical results of MCD through July 29, 2016 include Deca Technologies. | | | |
FIRST QUARTER 2018 FINANCIAL OUTLOOK
For the first quarter of 2018, Cypress estimates financial results as follows:
| | | | GAAP | | | Non-GAAP | | Revenue | | | $565 million to $595 million | | Margin % | | | 43.0% to 44.0% | | | 44.5% to 45.5% | | Diluted EPS | | | $(0.03) to $0.01 | | | $0.22 to $0.26 | | | | | | | |
A reconciliation of GAAP forward-looking estimates to non-GAAP forward-looking estimates may be found in the tables at the end of this earnings report.
The timing and amount of certain material items, including restructuring charges, asset impairments, changes in value of deferred compensation assets and liabilities, impact of stock-based compensation from modification of equity awards, and the tax impact of non-GAAP adjustments, which are needed to estimate GAAP financial measures are either inherently unpredictable or outside the control of the Company, and may have a significant impact on the Company's financial results. Accordingly, Cypress cannot provide a full quantitative reconciliation for such non-GAAP financial measures included as part of the first quarter 2018 financial outlook to the most directly comparable GAAP measure without unreasonable effort and additional adjustments may be reflected in our non-GAAP results for the first quarter of 2018. Cypress has qualitatively described below, under the section "Non-GAAP Financial Measures," the anticipated differences between the non-GAAP financial measures and the most directly comparable GAAP measures.
CONFERENCE CALL AND WEBCAST INFORMATION
Cypress will host its quarterly conference call on February 1, 2018 at 1:30 p.m. Pacific Standard Time to discuss its fourth quarter and fiscal year 2017 results and outlook for the first quarter of 2018.
All interested parties may dial 517-308-9119 and provide the passcode "Cypress" to listen to the call. The event will be broadcast over the Internet and may be accessed through Cypress' website at www.cypress.com/investors. The archived presentation will be available for two weeks imme |
