Revenue
4q12 1q13 2q13 3q13 4q13 1q14 2q14
137607 127041 143,040 163324 230183 222607 205763
Cost of Revenue
4q12 1q13 2q13 3q13 4q13 1q14 2q14
74203 66471 74010 82,241 115062 113328 109048
Gross Margin
4q12 1q13 2q13 3q13 4q13 1q14 2q14
63404 60570 69030 81083 115121 109279 94545
Net Income
4q12 1q13 2q13 3q13 4q13 1q14 2q14
12300 6053 11114 36446 45320 34939 17334
EPS
4q12 1q13 2q13 3q13 4q13 1q14 2q14
.36 .18 .33 1.07 1.29 1.00 .48
Diluted Shares
4q12 1q13 2q13 3q13 4q13 1q14 2q14
34505 34014 33313 34135 35150 35020 36059
Inventories
4q12 1q13 2q13 3q13 4q13 1q14 2q14
31667 31236 32124 43911 49948 57293 51746
Cash
4q12 1q13 2q13 3q13 4q13 1q14 2q14
305005 312889 292531 315513 355303 331572 369424
Debt
4q12 1q13 2q13 3q13 4q13 1q14 2q14
0 0 0 0 0 0 2.3
Cashflow
4q12 1q13 2q13 3q13 4q13 1q14 2q14
19130 13532 10460 15618 14028 18906 49726
I would like to thank Seekingalpha.com for the use of their transcripts.
Subject: Synaptics Incorporated (SYNA)
Author: Buynholdisdead
Date: 03/07/2014
Sector: Technology
Industry: Computer Hardware
Synaptics Incorporated (SYNA) Closing Price $64.54
Price: $64.54
Dow:16,452.72
Nasdaq:4,336.22
SP500:1,878.04
Oil: $102.58
Nat Gas: $4.62
Gold: $1338.20
Silver: $20.93
Copper: $3.08
Corn: $489.00
Lean Hogs: $113.00
Feeder Cattle: $174.40
Coffee: $196.85
Cotton: $91.27
Lumber: $358.60
Today the Price is $64.54: The P/E ratio is 16.87
**August 2nd, 2012 4Q:2012 earnings highlights:
**Revenues were $137.6 million down 4% from $143.4 million
**TTM Revenues were $548.2 million down 8% from $598.5 million
**Cost of Revenues were $74.2 million down 10% from $82.8 million
**Gross Profit were $63.4 million up 4% from $60.6 million
**Gross Profit Margin were 46%
**TTM Gross Profit were $255.6 million up 4% from 246.1 million
**TTM Gross Profit Margin were 47%
**Net Income were $12.3 million down 12% from $13.9 million
**4Q Earnings per share were $.36 down 10% from $.40
**TTM Earnings per share were $1.57 down 13% from $1.80
**Diluted share count were 34,505,000 down 1% from 35,011,000 Quarter over Quarter
**Cash Flow for the quarter was $19.1 million up 218% from $6 million
**TTM cash flow was $91 million up 17% from $78 million
**Cash $305 million up from 247.2 million
**Debt 0
**Inventory for the quarter were 31,667,000 up 10% from 28,850,000
**R & D for the quarter were $30.5 million up 11% from $27.5 million
**Percentage of R&D to revenue 22%
**Trading range between $24.78 to $31.31
**P/E range 10.61 to 16.26
**P/S range 2.96 to 4.26
** Stock went up $4.40 the day after the report
**Purchased Pacinian Corporation
**Purchased IDT, video display, for $5.0 million
**Introduced ForcePad, ThinTouch Technology, and expanded ClearPad capabilities
**Revenue mix from PC and non-PC applications was approximately 56% and 44% respectively
**Backlog of approximately 50 million
**October 25th, 2012 1Q:2013 earnings highlights:
**Revenues were $127 million down 5% from $133.4 million
**TTM Revenues were $541.8 million down 6% from $578.7 million
**Cost of Revenues were $66.5 million down 8% from $72.2 million
**Gross Profit were $60.6 million down 1% from $61.3 million
**Gross Profit Margin were 48%
**TTM Gross Profit were $254.9 million up 4% from 244.6 million
**TTM Gross Profit Margin were 47%
**Net Income were $6.1 million down 53% from $13 million
**1Q Earnings per share were $.18 down 54% from $.39
**TTM Earnings per share were $1.57 down 13% from $1.80
**Diluted share count were 34,014,000 down 1% from 34,505,000 Quarter over Quarter
**Cash Flow for the quarter was $13.5 million down 51% from $27.4 million
**TTM cash flow was $77.1 million down 14% from $90.1 million
**Cash $312.9 million up from 305 million
**Debt 0
**Inventory for the quarter were 31,236,000 down from 31,667,000
**R & D for the quarter were $32.8 million up 16% from $28.2 million
**Percentage of R&D to revenue 26%
**Trading range between $22.60 to 31.56
**P/E range 14.39 to 20.10
**P/S range 1.42 to 1.98
** Stock went up $1.68 the day after the report
**Received Windows certification through oem’s such as Lenovo and Razer
**Revenue mix from PC and non-PC applications was approximately 49% and 51% respectively
**First Quarter non-pc sold more than pc
**Backlog of $74 million
**January 24th, 2013 2Q:2013 earnings highlights:
**Revenues were $143 million down 2% from $145.5 million
**TTM Revenues were $539.4 million down 4% from $564.7 million
**Cost of Revenues were $74 million down 4% from $76.7 million
**Gross Profit were $69 million up from $68.7 million
**Gross Profit Margin were 48%
**TTM Gross Profit were $254.9 million up 4% from 244.6 million
**TTM Gross Profit Margin were 47%
**Net Income were $11.1 million down 36% from $17.4 million
**2Q Earnings per share were $.33 down 35% from $.51
**TTM Earnings per share were $1.19 down 29% from $1.67
**Diluted share count were 33,313,000 down 2% from 34,005,000 Quarter over Quarter
**Cash Flow for the quarter was $10.5 million down 61% from $26.9 million
**TTM cash flow was $75.6 million down 8% from $81.9 million
**Cash $292.5 million down from 312.9 million
**Debt 0
**Inventory for the quarter were 32,124,000 down from 31,236,000
**R & D for the quarter were $34.3 million up 15% from $29.8 million
**Percentage of R&D to revenue 24%
**Trading range between $22.94 to $39.75
**P/E range 19.27 to 33.40
**P/S range 1.42 to 2.45
** Stock went up $3.88 the day after the report
**continue to shift into many of the flagship smartphones on the market
**Revenue mix from PC and non-PC applications was approximately 43% and 57% respectively
**Non-pc (mobile) continues to gain traction
**Net income continues to reflect additional operating expense from recent acquisitions
**Rick Bergman (CEO) on conference call states that topline growth is number one priority.
**Unidentified analyst said a competitor suggested that in 6 quarters the touch market will be monetized and declines may begin to flow. Rick Bergman states they have a several year roadmap and doesn’t see peer price play in that time frame.
**Backlog of approximately $79 million
**April 25th, 3Q:2013 earnings highlights:
**Revenues were $163.3 million up 24% from $131.7 million
**TTM Revenues were $571.3 million up 3% from $554 million
**Cost of Revenues were $82.2 million up 18% from $69.5 million
**Gross Profit were $81.1 million up 30% from $62.2 million
**Gross Profit Margin were 50%
**TTM Gross Profit were $274.1 million up 8% from 252.8 million
**TTM Gross Profit Margin were 48%
**Net Income were $36.4 million up 219% from $11.4 million
**3Q Earnings per share were $1.07 up 224% from $.33
**TTM Earnings per share were $1.94 up 20% from $1.62
**Diluted share count were 34,135,000 up 2% from 33,313,000 Quarter over Quarter
**Cash Flow for the quarter was $15.6 million down 11% from $17.6 million
**TTM cash flow was $58.7 million down 25% from $77.9 million
**Cash $315.5 million up from 292.5 million
**Debt 0
**Inventory for the quarter were 43,911,000 up from 32,124,000
**R & D for the quarter were $36.7 million up 37% from $29.4 million
**Percentage of R&D to revenue 22%
**Trading range between $33.56 to $45.40
**P/E range 17.30 to 23.40
**P/S range 2.00 to 2.71
** Stock went up $5.59 the day after the report
**One time non-recurring , non-cash item of $15.8 million driving up net income
**Revenue from mobile products totaled $104.7 million and was up 57.2% YoY.
**Mobile products revenue includes all touchscreen and video display products
**Revenue mix from PC and non-PC applications was approximately 36% and 64% respectively
**Non-pc (mobile) continues to gain traction
**Backlog of approximately $124 million
**Samsung AirView capabilities take advantage of next-gen ClearPad with patented 3d touch
**Kathy Bayless CFO Tablets growing nicely but not 10% yet
**August 1st, 4Q:2013 earnings highlights:
**Revenues were $230.2 million up 67% from $137.6 million
**TTM Revenues were $663.6 million up 21% from $548.2 million
**Cost of Revenues were $115.1 million up 55% from $74.2 million
**Gross Profit were $115.1 million up 82% from $63.4 million
**Gross Profit Margin were 50%
**TTM Gross Profit were $325.8 million up 27% from 255.6 million
**TTM Gross Profit Margin were 49%
**Net Income were $45.3 million up 268% from $12.3 million
**4Q Earnings per share were $1.29 up 258% from $.36
**TTM Earnings per share were $2.89 up 84% from $1.57
**Diluted share count were 35,150,000 up 3% from 34,135,000 Quarter over Quarter
**Cash Flow for the quarter was $14 million down 27% from $19.1 million
**TTM cash flow was $53.6 million down 41% from $91 million
**Cash $355.3 million up from 315.5 million
**Debt 0
**Inventory for the quarter were 49,948,000 up 14% from 43,911,000
**R & D for the quarter were $40.9 million up 34% from $30.5 million
**Percentage of R&D to revenue 18%
**Trading range between $34.98 to $44.99
**P/E range 12.10 to 15.57
**P/S range 1.85 to 2.38
**Increased buyback of stock by 100 million for a total authorization of $160 million
**Revenue mix from PC and non-PC applications was approximately 25% and 75% respectively
**Non-pc (mobile) continues to gain traction
**Backlog of approximately $96 million
**$46.3 million was used to repurchase 1.6 million shares bringing repurchases of shares to approximately 5% of shares outstanding.
**China vendors continue to edge up with Syna being well represented in 2nd tier phones
**With addition of Single Layer On-Cell multi-touch they are able to address the entry-level market.
**Launched ClearPad s7500 for large touchscreens up to 15.6 inches
**Smartphone market is huge with total units over 1 billion and unit growth forecast in excess of 20% over the next several years
**Given the technology advantages they see a long runway ahead in mobile.
**Pc’s are declining but they see growth rate in business for 2014 the same as 2013.
**Tablets are 5% of revenue expect that to grow
**China a little over 10% of revenue
**October 24th, 1Q:2014 earnings highlights:
**Revenues were $222.6 million up 75% from $127 million
**TTM Revenues were $759.2 million up 40% from $541.8 million
**Cost of Revenues were $113.3 million up 41% from $66.5 million
**Gross Profit were $109.3 million up 80% from $60.6 million
**Gross Profit Margin were 49%
**TTM Gross Profit were $374.5 million up 47% from 254.9 million
**TTM Gross Profit Margin were 49%
**Net Income were $34.9 million up 481% from $6 million
**1Q Earnings per share were $1.00 up 455% from $.18
**TTM Earnings per share were $3.71 up 173% from $1.36
**Diluted share count were 35,020,000 down from 35,150,000 Quarter over Quarter
**Cash Flow for the quarter was $18.9 million up 40% from $13.5 million
**TTM cash flow was $59 million down 23% from $77.1 million
**Cash $331.6 million up from 355.3 million
**Debt 0
**Inventory for the quarter were 57,293,000 up 15% from 49,948,000
**R & D for the quarter were $40.4 million up 19% from $32.8 million
**Percentage of R&D to revenue 18%
**Trading range between $38.33 to $56.55
**P/E range 10.33 to 15.24
**P/S range 1.77 to 2.6
**Stock went down $7.59 the day after the report
**Significant Mobile and Tablet design wins
**Revenue mix from PC and non-PC applications was approximately 27% and 73% respectively
**Backlog of approximately $117 million
**Announced acquisition of Validity which enters them into the fingerprint id market.
**Syna expects topline growth of over 50% over the same period last year.
**Rick Bergman states that volumes get really large in Q2 and Q3.
**Bought back 3.5% of shares outstanding but paid for the Validity transaction with stock. They used 50 million in stock buyback and still have 110 million authorization left.
**January 23rd, 2Q:2014 earnings highlights:
**Revenues were $205.8 million up 44% from $143 million
**TTM Revenues were $821.9 million up 52% from $539.4 million
**Cost of Revenues were $109 million up 47% from $74 million
**Gross Profit were $94.5 million up 37% from $69 million
**Gross Profit Margin were 46%
**TTM Gross Profit were $400 million up 57% from 255.2 million
**TTM Gross Profit Margin were 49%
**Net Income were $17.3 million up 56% from $11.1 million
**2Q Earnings per share were $.48 up 45% from $.33
**TTM Earnings per share were $3.83 up 219% from $1.20
**Diluted share count were 36,059,000 up 3% from 35,020,000 Quarter over Quarter
**Cash Flow for the quarter was $49.7 million up 373% from $10.5 million
**TTM cash flow was $98.2 million up 62% from $60.7 million
**Cash $369.4 million up 11% from 331.6 million
**Debt 2.3 million
**Inventory for the quarter were 51,746,000 down 10% from 57,293,000
**R & D for the quarter were $45.9 million up 34% from $34.3 million
**Percentage of R&D to revenue 22%
**Trading range between $43.94 to $63.76
**P/E range 11.47 to 16.65
**P/S range 1.93 to 2.80
**The stock went up $5.42 the day after the report
**Expect Validity acquisition to be accretive by end of fiscal year, earlier than previously anticipated.
**Revenue mix from PC and non-PC applications was approximately 35% and 65% respectively
**PC mix starting to come back a little.
**Backlog of approximately $117 million
**GAAP eps was impacted by additional operating costs and acquisition of Validity which closed November 7th
**Recent design wins with Amazon, Dell, Lenovo, Acer. ClearPad series 7 solution provided the most accurate finger and small object detection on the market.
**Finger print solution alone should grow from 30 million units last year to .5 billion units in two years. They essentially have full share in the market for enterprise notebooks incorporating fingerprint solutions.
**Expect to see a number of solutions in the second half of the year built around fingerprint technology on cellphones.
**They paid approximately $90.3 million in a combination of cash and 1.6 million shares of common stock for Validity. They also may pay up to an additional $162.5 million in earn-out payment primarily in cash
**They expect 20% fiscal growth per year and whatever Validity can add upon that.
Review:
Their Revenue is growing Nicely although the comps from the 2nd quarter of 2013 were just starting to come back. The last 3 quarters they have been gaining on revenue and the next two quarters should have some impressive growth. They are really pushing into Mobile and it is now the majority of their business. They are having a hard time keeping up with the orders for the fingerprint technology so they are adding more people on.
Synpa is keeping their Gross Profits in the high 40’s to low 50 percent range. That is pretty unbelievable but shows that they are keeping costs under control. Their earnings per share is growing nicely YoY but quarter to quarter it is down. This is mainly due to the cycles of the business they ramp up in the 2nd and 3rd quarters to sell for the Christmas season. Also this quarter they spent more money on R&D, spending 5 million more than last quarter and nearly 12 million more than last quarter. Another thing that hurt their Net Income was the little more than 7 million dollars of Acquisition costs. They also have been buying back shares. Although they just paid for Validity partially in shares. I think this CEO is a pretty shrewd man. Not only is he keeping a good amount of cash on hand but he uses the shares to go out and acquire great companies. I think the Validity purchase was an exceptional one and fits directly into their core competence. This and other acquisitions that he has made proves that he is a great capital allocator and knows where he is heading. The cash grew this quarter and they gained a small portion of debt. I would call it a wash, more cash and a little bit of debt. I would expect that we will see more acquisitions down the road so I wouldn’t be surprised to see the cash flow on and off the balance sheet. This quarter the CEO did state though that the company will see good organic growth. I am keeping track of the R&D because that is the lifeblood of a company like this. They have to spend money in order to make it and if they skimp on the R&D down the road the competition will catch up.
Red Flags:
**They slow down on their R&D spending. Letting the competition catch up.
**They get under 20% fiscal growth per year.
**Samsung stays the number 1 android cell phone company and they lose them as a customer.
Conclusion:
Syna has been growing themselves out of a hole. They were mostly involved in human interface to the PC but now in 2 years they have grown to be mostly in Tablets and Smartphones. They still command a big portion of laptops and PC’s it’s just that the market has shrunk. Right now I am typing this on a Surface 2 device with windows 8. I usually do not use my desktop computer I would rather be more mobile, although at times it is easier to type and work at a desk. But one thing about mobile it is harder to interface with smaller devices and that is where Syna shines. They are able to let your fingers manipulate the screen. Zooming, moving the screen with swipe and touching the screen. These are all things that Syna is able to excel at. They also have the only ability to have your finger hover over a screen and to be able to read text and emails without touching your screen. They also have the only product that allows you to wear a glove in cold weather and still be able to interact with a phone. I am sure people in any cold part of the world would like that ability. Also the phone screen will recalibrate itself whether you are using your finger, fingernail, or gloved hand. Finally, with their acquisition of Validity, going forward we should see a lot more revenue coming in from fingerprint identification technology. This alone will be huge. Thinking about all of this, and their goal to be the “Leading Developer of human interface Solutions” you begin to understand just how big the growth could be in this company. Everything is going digital and people need better ways to interact with objects. Sure we will have people interacting with their voices, and we could see Syna get into that, but just in manipulation with your digits it is going to be huge. How many people want to be in a crowd with everyone talking to their phones. No they will be using their fingers. Syna excels at making that easier. With the fingerprint technology, now instead of using codes we could see everything go to using your finger to access anything. Interesting company with a long way to grow, but it needs to be watched closely for their competition. Overall this is a really nice company but will need to be watched closely because in their market they could be here today and gone tomorrow. Although I doubt that will happen since Syna has been around for almost 2 decades. The CEO claims that they are twice as big as the next two companies in the interface business.
Andy
Long Syna