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Qorvo (QRVO) Q4 Earnings Meet, Revenues Miss Estimates
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Qorvo Inc. (QRVO - Free Report) reported fourth-quarter fiscal 2017 non-GAAP earnings of 74 cents per share (including stock-based compensation), which was in line with the Zacks Consensus Estimate.
Earnings (excluding stock-based compensation) were 85 cents per share, which plunged 18.3% from the year-ago quarter and was within the company’s guided range of 70–90 cents per share.
Revenues improved 5.7% year over year to $643 million, which lagged the Zacks Consensus Estimate of $645 million. Further, the figure was within management’s guided range of $610–$650 million.
Revenues increased 16% over fiscal 2016 to $3.03 billion in fiscal 2017. However, Qorvo reported loss of 13 cents per share as compared with loss of 20 cents in fiscal 2016. Non-GAAP earnings were $4.57 per share in fiscal 2017.
Shares fell more than 2% in after-hour trading following the result. We note that Qorvo has outperformed the S&P 500 Index on a year-to-date basis. While the stock has returned 25.6%, the index gained 7%.
Quarter Details
Segment-wise, Mobile Products (MP) revenues increased 2% year over year to $474 million. Strong customer adoption was observed for the company’s recently launched BAW 5-based products.
Revenues from IDP grew 18% year over year to $168 million on the back of growth in WiFi, defense and IoT markets. In the defense and aerospace markets, revenues grew more than 20% year-over-year, driven by GaN-based products. In WiFi, IDP grew more than 40% year over year, with notable strength in 5 gigahertz PAs and 802.11ac FEMs.
Non-GAAP gross margin contracted 330 basis points (bps) from the year-ago quarter to 45.6%. The figure includes stock-based compensation expense.
Both non-GAAP research & development (R&D) and selling, general & administrative (SG&A) expense as percentage of revenues increased 30 bps, respectively.
As a result, operating margin contracted 390 bps to 18.3%. The figure includes stock-based compensation expense.
Balance Sheet & Cash Flow
As of Apr 1, 2017, cash and cash equivalents were $545.5 million up from $495.8 million as of Dec 31, 2016. Long-term debt was $989.2 million as compared with $988.9 million at the end of the previous quarter.
Net cash provided by operating activities was $247.1 million (up from $220 million in the previous quarter) with free cash flow of $81.3 million (down from $83.9 million in the previous quarter) at the end of the quarter.
Further, Qorvo returned $51 million to shareholders under its ongoing $500 million repurchase program.
Guidance
Qorvo expects non-GAAP revenues in first-quarter fiscal 2018 to be approximately $610–$650 million. The company expects to expand revenue share at its largest customer later this year. Management expects BAW-based revenues to represent approximately 40% of mobile's revenues in fiscal 2019.
Qorvo anticipates gross margin of approximately 47%. Management expects operating expenses to increase almost $5 million sequentially on higher R&D costs. Earnings are expected to be in the range of 70–90 cents per share.
Qorvo forecasts revenues to strengthen through fiscal 2018. Management expects strong revenue growth, along with higher BAW-based product mix, higher utilization rates and ongoing productivity and quality improvements to help it achieve 50% gross margin target exiting fiscal 2018.
The company anticipates operating expense efficiency to continue to improve and forecast operating expenses to be approximately 20% of sales for the year. The company is confident that it will hit target of 30% operating margin during the fiscal year.
Capital expenditure is currently forecast to decline to almost $400 million. The company expects free cash flow to double from fiscal year 2017 to 2018.
Long-term earnings growth for Applied Optoelectronics, Texas Instruments and AMD are currently pegged at 20%, 9.6% and 6.3%, respectively.
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Qorvo (QRVO) Q4 Earnings Meet, Revenues Miss Estimates
Qorvo Inc. (QRVO - Free Report) reported fourth-quarter fiscal 2017 non-GAAP earnings of 74 cents per share (including stock-based compensation), which was in line with the Zacks Consensus Estimate.
Earnings (excluding stock-based compensation) were 85 cents per share, which plunged 18.3% from the year-ago quarter and was within the company’s guided range of 70–90 cents per share.
Revenues improved 5.7% year over year to $643 million, which lagged the Zacks Consensus Estimate of $645 million. Further, the figure was within management’s guided range of $610–$650 million.
Qorvo, Inc. Price, Consensus and EPS Surprise
Qorvo, Inc. Price, Consensus and EPS Surprise | Qorvo, Inc. Quote
Revenues increased 16% over fiscal 2016 to $3.03 billion in fiscal 2017. However, Qorvo reported loss of 13 cents per share as compared with loss of 20 cents in fiscal 2016. Non-GAAP earnings were $4.57 per share in fiscal 2017.
Shares fell more than 2% in after-hour trading following the result. We note that Qorvo has outperformed the S&P 500 Index on a year-to-date basis. While the stock has returned 25.6%, the index gained 7%.
Quarter Details
Segment-wise, Mobile Products (MP) revenues increased 2% year over year to $474 million. Strong customer adoption was observed for the company’s recently launched BAW 5-based products.
Revenues from IDP grew 18% year over year to $168 million on the back of growth in WiFi, defense and IoT markets. In the defense and aerospace markets, revenues grew more than 20% year-over-year, driven by GaN-based products. In WiFi, IDP grew more than 40% year over year, with notable strength in 5 gigahertz PAs and 802.11ac FEMs.
Non-GAAP gross margin contracted 330 basis points (bps) from the year-ago quarter to 45.6%. The figure includes stock-based compensation expense.
Both non-GAAP research & development (R&D) and selling, general & administrative (SG&A) expense as percentage of revenues increased 30 bps, respectively.
As a result, operating margin contracted 390 bps to 18.3%. The figure includes stock-based compensation expense.
Balance Sheet & Cash Flow
As of Apr 1, 2017, cash and cash equivalents were $545.5 million up from $495.8 million as of Dec 31, 2016. Long-term debt was $989.2 million as compared with $988.9 million at the end of the previous quarter.
Net cash provided by operating activities was $247.1 million (up from $220 million in the previous quarter) with free cash flow of $81.3 million (down from $83.9 million in the previous quarter) at the end of the quarter.
Further, Qorvo returned $51 million to shareholders under its ongoing $500 million repurchase program.
Guidance
Qorvo expects non-GAAP revenues in first-quarter fiscal 2018 to be approximately $610–$650 million. The company expects to expand revenue share at its largest customer later this year. Management expects BAW-based revenues to represent approximately 40% of mobile's revenues in fiscal 2019.
Qorvo anticipates gross margin of approximately 47%. Management expects operating expenses to increase almost $5 million sequentially on higher R&D costs. Earnings are expected to be in the range of 70–90 cents per share.
Qorvo forecasts revenues to strengthen through fiscal 2018. Management expects strong revenue growth, along with higher BAW-based product mix, higher utilization rates and ongoing productivity and quality improvements to help it achieve 50% gross margin target exiting fiscal 2018.
The company anticipates operating expense efficiency to continue to improve and forecast operating expenses to be approximately 20% of sales for the year. The company is confident that it will hit target of 30% operating margin during the fiscal year.
Capital expenditure is currently forecast to decline to almost $400 million. The company expects free cash flow to double from fiscal year 2017 to 2018.
Stocks to Consider
Applied Optoelectronics (AAOI - Free Report) , Texas Instruments (TXN - Free Report) and Advanced Micro Devices (AMD - Free Report) are stocks worth watching in the broader industry. While Applied Optoelectronics and Texas Instruments sport a Zacks Rank #1 (Strong Buy), AMD carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Applied Optoelectronics, Texas Instruments and AMD are currently pegged at 20%, 9.6% and 6.3%, respectively.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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