Cypress reports second quarter 2017 results

Cypress Semiconductor Corporation has announced its second quarter 2017 results.

 

“Cypress set another revenue record in the second quarter, supported by record revenue in each of our three key growth vectors: automotive, IoT wireless connectivity and USB-C,” said Hassane El-Khoury, Cypress president and chief executive officer. “We remain laser-focused on driving revenue and earnings growth by investing in high-growth end-markets, expanding gross margins and broadening our customer base.

 

“It’s now been a year since we embarked upon our Cypress 3.0 strategy, focused on selling embedded solutions into markets that are growing faster than the overall semiconductor industry,” El-Khoury continued. “Our team has continued its strong execution of this strategy. It has been well-received by our customers, partners and employees, and it has begun to generate consistent growth in our top and bottom lines. This is a very exciting time for Cypress.”

 

Revenue and earnings for the quarter are given below, compared with those of the prior quarter:

(In thousands, except per-share data)

 

 

 

GAAP

 

NON-GAAP1

 

 

 

Q2 2017

 

Q1 2017

 

Q2 2017

 

Q1 2017

 

Revenue

 

$

593,776

 

 

$

531,874

 

 

$

593,776

 

 

$

531,874

 

 

Margin

 

39.8

%

 

37.4

%

 

40.9

%

 

39.3

%

Pretax profit margin

 

(3.1

)%

 

(7.7

)%

 

13.1

%

 

9.2

%

Net income (loss)

 

$

(22,904

)

 

$

(45,782

)

 

$

74,703

 

 

$

45,887

 

 

Diluted EPS (loss)

 

$

(0.07

)

 

$

(0.14

)

 

$

0.21

 

 

$

0.13

 

 

                                               
 

 

1.   See “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures” tables (“Non-GAAP Results” tables) included below.

 

 

Business review

At the Computex trade show in Taipei, Cypress announced additions to its USB-C and Internet of Things (IoT) wireless connectivity portfolios. Cypress’ new, highly integrated EZ-PD CCG3PA USB-C controller is optimised to streamline the design of power adapters, mobile chargers, car chargers and power banks. Cypress also demonstrated EZ-PD CCG5, the industry’s first two-port USB-C controller that supports designs with Intel’s Thunderbolt 3, earmarked to support the ramp of USB-C in notebook and desktop PCs, as well as docking stations. Cypress introduced the new CYW4373 combo solution that delivers advanced wireless coexistence combining 802.11ac high-performance Wi-Fi, Bluetooth and Bluetooth Low Energy (BLE), and it incorporates a USB 2.0 hub. The solution is ideal for smart home products and network peripherals such as home appliances and printers, and it is supported in Cypress’ easy-to-use WICED Studio IoT development platform.

 

GAAP and non-GAAP margins for the second quarter of 2017 were 39.8 per cent and 40.9 per cent, respectively, above the midpoint of guidance and in line with the Company’s margin-enhancing initiatives. 

 

Cypress paid a cash dividend of $36.3 million, or $0.11 per share, to holders of record of the Company’s common stock as of the close of business on June 29, 2017. The dividend was equivalent to a 3.2 per cent annualised yield as of June 30, 2017. This dividend was paid on July 20, 2017.

 

 

Revenue summary

(In thousands, except percentages)

(Unaudited)

 

 

Three Months Ended

 

July 2, 2017

 

April 2, 2017

 

Sequential Change

Business Unit

 

 

 

 

 

MCD

$

360,533

 

 

$

317,901

 

 

13

%

MPD

$

233,243

 

 

$

213,973

 

 

9

%

Total

$

593,776

 

 

$

531,874

 

 

12

%

 

 

 

 

 

 

Geographic

 

 

 

 

 

China & ROW

55

%

 

55

%

 

%

Americas

12

%

 

11

%

 

9

%

Europe

12

%

 

13

%

 

(8

)%

Japan

21

%

 

21

%

 

%

Total

100

%

 

100

%

 

%

 

 

 

 

 

 

Channel

 

 

 

 

 

Distribution

74

%

 

71

%

 

4

%

Direct

26

%

 

29

%

 

(10

)%

Total

100

%

 

100

%

 

%

 

 

 

 

Third quarter 2017 financial outlook

 

For the third quarter of 2017, Cypress estimates financial results as follows:

 

 

GAAP

Non-GAAP

Revenue

$585 million to $615 million

Margin %

40.0% – 41.0%

41.0% – 42.0%

Diluted EPS

$(0.05) to $(0.00)

$0.21 to $0.25

 

 

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 third quarter 2017 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 third quarter of 2017. 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 hosted its quarterly conference call on July 27, 2017 at 1:30 p.m. Pacific Daylight Time to discuss its second quarter 2017 results and provided an outlook for the third quarter of 2017.

 

The event was broadcast over the Internet and was accessible through Cypress’ website at www.cypress.com/investors. The archived presentation will be available for two weeks immediately following the event.

 

www.cypress.com

 

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