Xilinx Inc. (NASDAQ:XLNX) Q2 2018 Earnings Conference Call - Final Transcript

Oct 25, 2017 • 05:00 pm ET

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Xilinx Inc. (NASDAQ:XLNX) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good afternoon. My name is Skinner, and I will be your conference operator. I would like to welcome everyone to the Xilinx Second Quarter Fiscal Year 2018 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

I would now like to turn the call over to Rick Muscha. Thank you. Mr. Muscha, you may begin your conference.

Executive
Rick Muscha

Thank you, and good afternoon. With me are Moshe Gavrielov, CEO; and Lorenzo Flores, CFO. We'll provide a financial and business review of the September quarter, and then we'll open the call for questions.

(Forward-Looking Cautionary Statements)

This conference call is open to all and is being webcast live. It can be accessed from our Xilinx IR website.

Let me now turn the call over to Lorenzo.

Executive
Lorenzo Flores

Thank you, Rick, and hello, everybody. Sales in the September quarter increased for the eighth consecutive quarter to $620 million, up 1% sequentially and up 7% on a year-over-year basis. Sales for the first six months of the fiscal year were also up 7% versus the same period of the prior year. Our growth continues to be driven by our Advanced Products, which grew 21% year-over-year, supported by the overall strength of our product portfolio.

Gross margin was 70.2%, in line with our guidance. Operating expense was $249 million, less than guided as R&D came in slightly lower than expected. Operating income for the quarter increased 2.6% sequentially to $185 million, and our operating margin was 29.9%. Tax rate for the quarter was 10%, including a discrete item related to the accounting standard for the treatment of stock-based compensation. Our net income for Q2 was $168 million for $0.65 a share.

Some key points on the balance sheet and cash flows. We ended the quarter with $3.7 billion in gross cash and $1.9 billion in net cash after our debt. Operating cash flow was $202 million. We returned $257 million to shareholders during the quarter in the form of $87 million in dividends and the repurchase of approximately 2.6 million shares for $170 million, an average price of $65.04 per share. We continue to execute on our share repurchase program with the intention of exhausting our authorization over the next several quarters. We currently have $445 million remaining on that authorization.

We ended the quarter with diluted shares of 258.2 million shares, which included the impact of 7.6 million shares from the warrant associated with the convertible debt. The convertible note itself had no impact on shares for the quarter as the note was completely settled in mid-June. For a complete explanation of the impact of the outstanding warrants on share count, please refer to our Convertible FAQ on our IR website. With our stock price higher since the time we established our FY 2018 share count guidance, we are now expecting ending share count in Q4 FY 2018 to be in the range of 255 million to