AVGO Q2 2019 Earnings

Call Details

• Call Title: Broadcom Q2 2019 Earnings Call
• Date: June 13, 2019 at 9:00 PM UTC
• Management Team:
  • Beatrice Rosado (Director, Investor Relations)
  • Hock Tan (Chief Executive Officer)
  • Tom Krause (President and Chief Financial Officer)

Call Summary

Financial Performance

• Consolidated net revenue for the second quarter was $5.5B, up 10% year-over-year on a comparable basis.
• Earnings per share for the quarter were $5.21, up 7% year-over-year using a $448M weighted average diluted share count.
• Record free cash flow for the quarter was $2.54B, which represented 46% of revenue and was up 20% year-over-year.
• Semiconductor Solutions segment revenue was $4.1B, representing 74% of total revenue and down 10% year-over-year on a comparable basis.
• Infrastructure Software segment revenue was $1.4B, representing 26% of total revenue.
• Operating income from continuing operations was $2.95B, representing 53.5% of net revenue, and adjusted EBITDA was $3.11B or 56.4% of net revenue excluding $142M of depreciation.
• Receivables decreased $193M and inventory decreased $40M from the prior quarter according to reported quarterly changes.
• The company ended the quarter with $5.3B of cash and $37.5B of total debt, and reported 399M outstanding shares and 447M fully diluted shares outstanding.

Guidance

• Full-year fiscal 2019 revenue guidance was updated to $22.5B, including approximately $17.5B from Semiconductor Solutions and approximately $5.0B from Infrastructure Software.
• The updated Semiconductor Solutions outlook of $17.5B reflects a year-over-year decline in the high single digits versus prior expectations.
• Non-GAAP operating margins are expected to be approximately 52.5%, which the company stated is an increase of approximately 150 basis points from prior guidance.
• Net interest expense and other items are expected to be approximately $1.3B for fiscal 2019, and no debt pay down is contemplated for the year.
• The effective tax rate is forecast to be approximately 11% and depreciation is expected to be approximately $600M for fiscal 2019.
• Capital expenditures for fiscal 2019 are expected to be approximately $500M and free cash flow is expected to be approximately $9.0B, which incorporates projected restructuring and integration charges of approximately $1.1B.
• Stock-based compensation expense is expected to be approximately $2.2B and IP licensing is not expected to generate a material amount of revenue in fiscal 2019.