Xilinx's (XLNX) Q4 Earnings & Revenues Top Estimates, Up Y/Y

Xilinx Inc. XLNX delivered fourth-quarter fiscal 2021 adjusted earnings of 82 cents per share, beating the Zacks Consensus Estimate by 9.33%. Moreover, the bottom line comes in 5% higher than the prior-year quarter.

Revenues of $851 million surpassed the Zacks Consensus Estimate of $813 million and increased 13% year on year. This double-digit growth in the top line was mainly driven by strength in automotive, 5G and industrial end markets.

However, an expected decline in TME (AIT), weakness in Aerospace & Defense sales and soft demand in the Wired sector were headwinds in the fiscal fourth quarter.

Importantly, Advanced Micro Devices, Inc. AMD is set to acquire Xilinx for $35 billion by the end of this year.

Xilinx, Inc. Price, Consensus and EPS Surprise

Xilinx, Inc. Price, Consensus and EPS Surprise

Xilinx, Inc. price-consensus-eps-surprise-chart | Xilinx, Inc. Quote

Quarter in Detail

Product-wise, advanced product revenues climbed 16% year over year, contributing 73% to total revenues. Moreover, revenues from core products (27% of total revenues) moved up 3% from the year-ago quarter.

On the basis of end markets, AIT revenues (41% of total revenues) declined 6% on a year-over-year basis and 2% sequentially, chiefly due to an expected decline in TME and weak sales in Aerospace & Defense. However, strength in the industrial end market was a breather.

ABC (18% of total revenues) grew 30% year over year but declined 1% quarter on quarter. This year-over-year uptick mainly resulted from record performance at the Automotive end market, partially offset by seasonal declines in Broadcast and Consumer end markets.

WWG revenues (31% of total revenues) increased 43% year over year and 13% sequentially on ramped-up 5G deployments across multiple regions.

DCG revenues (9% of total) slid 5% from the year-ago period but increased 28% quarter on quarter.

Revenues from the recently added Channel group constituted 1% of total revenues.

Geographically, the company registered a year-over-year decrease of 16% in North America, 49% year-over-year jump in the Asia Pacific, 3% year-over-year decline in Europe and 13% year-over-year increase in Japan.

Margins

Non-GAAP gross profit increased 8% year over year to $579 million, while the gross margin contracted 280 basis points (bps) to 68%.

The company posted a non-GAAP operating income of $228 million during the fiscal fourth quarter, up 4% from the year-ago quarter. Operating margin contracted 200 bps to 26.8%, chiefly due to a lower gross margin. However, lower operating expenses as a percentage of revenues were a positive.

Balance Sheet and Cash Flow

Xilinx exited the fiscal fourth quarter with cash, cash equivalents and short-term investments of $3.08 billion compared with the prior quarter’s $3.32 billion.

The company’s total long-term debt (excluding current maturities) was $1.49 billion as of Apr 3. Long-term debt was significantly higher from the $747.1 million witnessed at the end of fiscal 2020. This upswing reflects the senior notes issuance of $750 million in May 2020.

Xilinx generated $240 million of cash from operations and $227.2 million of free cash flow during the reported quarter.

Due to the pending acquisition, the company has suspended its quarterly dividend and stock repurchase program. It also refrained from providing any outlook.

Zacks Rank & Stocks to Consider

Xilinx currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Lam Research Corp. LRCX and LG Display Co., Ltd. LPL, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Lam Research and LG Display is currently projected at 32.8% and 29.8%, respectively.

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