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Xilinx (XLNX) Moshe N. Gavrielov on Q4 2016 Results - Earnings Call Transcript

Q4 2016 Earnings Call

April 27, 2016 5:00 pm ET

Executives

Rick Muscha - Senior Director, Investor Relations, Xilinx, Inc.

Jon A. Olson - Chief Financial Officer & Executive Vice President

Moshe N. Gavrielov - President, Chief Executive Officer & Director

Lorenzo Flores - Vice President-Finance & Controller

Analysts

Romit J. Shah - Nomura Securities International, Inc.

William Stein - SunTrust Robinson Humphrey, Inc.

Ambrish Srivastava - BMO Capital Markets (United States)

Ian L. Ing - MKM Partners LLC

Hans C. Mosesmann - Raymond James & Associates, Inc.

Tristan Gerra - Robert W. Baird & Co., Inc. (Broker)

John William Pitzer - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Christopher Hemmelgarn - Barclays Capital, Inc.

Operator

Good day. My name is Skinner and I'll be your conference operator. I'd like to welcome everyone to the Xilinx Fourth Quarter Fiscal Year 2016 Earnings Release Conference Call. I would now like to turn the call over to Rick Muscha. Thank you. Mr. Muscha, you may begin your conference.

Rick Muscha - Senior Director, Investor Relations, Xilinx, Inc.

Thank you, and good afternoon. With me are Moshe Gavrielov, Chief Executive Officer; Jon Olson, Chief Financial Officer; and Lorenzo Flores, Vice President of Finance and Corporate Controller. As we announced in February, Jon will be retiring in May with Lorenzo succeeding him as CFO. Jon will continue to support the transition through July. Jon and Moshe will provide a financial and business review of the March quarter and fiscal 2016. Moshe will add a high level perspective on fiscal 2017, and Lorenzo will follow with June quarter and FY 2017 guidance. We look forward to providing you with more details at our upcoming analyst day on May 23.

Let me remind everyone that during our conference call today, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions based on information that is currently available, and that actual results may differ materially. We refer you to the documents the company files with the SEC including our 10-Ks, 10-Qs and 8-Ks. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. This conference call is open to all and is being webcast live. It can be accessed from our Xilinx Investor Relations website.

Let me now turn the call over to Jon.

Jon A. Olson - Chief Financial Officer & Executive Vice President

Thank you, Rick. Fiscal year 2016 was another profitable year for Xilinx although revenue did not meet our expectations going into the year. Revenue was $2.2 billion for the year, down 7% from last year but strengthening throughout FY 2016. Gross margin remained strong through the year, averaging 69.7% as our pricing and cost management efforts continued to have a positive impact. Operating margin exceeded 30% based on these margin management efforts and prudent spending.

Cash flow margin was 33%, the same as last year. So our lower revenues contributed to a lower operating cash flow of $730 million. We repurchased 9.7 million shares for $443 million and paid $319 million in dividends, a total return of $761 million. This is the second straight year we have returned over 100% of cash flow and 11th straight year of dividend increase.

Turning now to a discussion of the fourth quarter. Xilinx sales were $571 million, up 1% as new products continued to grow and we saw stabilizing trends across our end market segments. Communications was flat with a small growth in wireless offsetting a small decline in wired. Industrial and A&D was down slightly with strength in aerospace and defense offsetting declines in industrial, and test and measurement. Broadcast, consumer and automotive grew 6% powered by another record quarter in automotive, demonstrating our strength in ADAS.