Intel can't fab processors enough - posts Record Financials

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Intel reported fourth-quarter and full-year 2019 financial results. The company also announced that its board of directors approved a five percent cash dividend increase to $1.32 per share on an annual basis. 



"The board declared a quarterly dividend of $0.33 per share on the company's common stock, which will be payable on March 1 to shareholders of record on February 7. In 2019, we gained share in an expanded addressable market that demands more performance to process, move and store data," said Bob Swan, Intel CEO. "One year into our long-term financial plan, we have outperformed our revenue and EPS expectations. Looking ahead, we are investing to win the technology inflections of the future, play a bigger role in the success of our customers and increase shareholder returns."

Intel's collection of data-centric businesses achieved record revenue in the fourth quarter, led by record Data Center Group (DCG) revenue. DCG revenue grew 19 percent YoY in the fourth quarter, driven by robust demand from cloud service provider customers and a continued strong mix of high-performance 2nd-Generation Intel Xeon Scalable processors. Intel acquired Habana Labs in the fourth quarter, strengthening its artificial intelligence portfolio for the data center. Internet of Things Group (IOTG) revenue was up 13 percent on strength in retail and transportation. Mobileye achieved record revenue, up 31 percent YoY on increasing ADAS adoption. Intel's memory business (NSG) was up 10 percent YoY on continued NAND and Intel Optane bit growth. PSG fourth-quarter revenue was down 17 percent YoY.

In the fourth quarter, the PC-centric business (CCG) was up 2 percent on higher modem sales and desktop platform volumes. Major PC manufacturers have introduced 44 systems featuring the new, 10 nm-based 10th Gen Intel Core processors (previously referred to as "Ice Lake"), and momentum continues to build for Project Athena. Project Athena-verified devices have been tuned, tested and verified to deliver fantastic system-level innovation and benefits spanning battery life, consistent responsiveness, instant wake, application compatibility and more. Intel has verified 26 Project Athena designs to date.

Q4 2019 Financial Highlights

GAAP

Non-GAAP

Q4 2019

Q4 2018

vs. Q4 2018

Q4 2019

Q4 2018

vs. Q4 2018

Revenue ($B)

$20.2

$18.7

up 8%

$20.2^

$18.7^

up 8%

Gross Margin

58.8%

60.2%

down 1.4 pts

60.1%

61.7%

down 1.6 pts

R&D and MG&A ($B)

$4.9

$5.0

down 1%

$4.9^

$5.0^

down 1%

Operating Income ($B)

$6.8

$6.2

up 9%

$7.2

$6.6

up 10%

Tax Rate

14.4%

7.8%

up 6.6 pts

13.6%

8.8%

up 4.8 pts

Net Income ($B)

$6.9

$5.2

up 33%

$6.7

$5.9

up 13%

Earnings Per Share

$1.58

$1.12

up 40%

$1.52

$1.28

up 19%

In the fourth quarter, the company generated approximately $9.9 billion in cash from operations, paid dividends of $1.4 billion and used $3.5 billion to repurchase 63 million shares of stock.

Full-Year 2019 Financial Highlights

Intel achieved record revenue while investing $13.4 billion in research and development and reducing spending to 27 percent of total revenue.

GAAP

Non-GAAP

2019

2018

vs. 2018

2019

2018

vs. 2018

Revenue ($B)

$72.0

$70.8

up 2%

$72.0^

$70.8^

up 2%

Gross Margin

58.6%

61.7%

down 3.2 pts

60.1%

63.3%

down 3.2 pts

R&D and MG&A ($B)

$19.5

$20.3

down 4%

$19.5^

$20.3^

down 4%

Operating Income ($B)

$22.0

$23.3

down 5%

$23.8

$24.5

down 3%

Tax Rate

12.5%

9.7%

up 2.8 pts

12.2%

11.0%

up 1.2 pts

Net Income ($B)

$21.0

$21.1

flat

$21.8

$21.5

up 1%

Earnings Per Share

$4.71

$4.48

up 5%

$4.87

$4.58

up 6%

For the full year, the company generated a record $33.1 billion cash from operations, paid dividends of $5.6 billion and used $13.6 billion to repurchase 272 million shares of stock.

Business Unit Summary

Key Business Unit Revenue and Trends

Q4 2019

vs. Q4 2018

2019

vs. 2018

DCG

$7.2 billion

up

19%

$23.5 billion

up

2%

Internet of Things

IOTG

$920 million

up

13%

$3.8 billion

up

11%

Data-centric

Mobileye

$240 million

up

31%

$879 million

up

26%

NSG

$1.2 billion

up

10%

$4.4 billion

up

1%

PSG

$505 million

down

17%

$2.0 billion

down

6%

up

15%*

up

3%*

PC-centric

CCG

$10.0 billion

up

2%

$37.1 billion

flat

Fourth-quarter revenue set an all-time quarterly record of $20.2 billion, which was $1 billion higher than October guidance led by record data-centric revenue, up 15 percent YoY. PC-centric revenue was up 2 percent YoY.

Intel's collection of data-centric businesses achieved record revenue in the fourth quarter, led by record Data Center Group (DCG) revenue. DCG revenue grew 19 percent YoY in the fourth quarter, driven by robust demand from cloud service provider customers and a continued strong mix of high-performance 2nd-Generation Intel® Xeon® Scalable processors. Intel acquired Habana Labs in the fourth quarter, strengthening its artificial intelligence portfolio for the data center. Internet of Things Group (IOTG) revenue was up 13 percent on strength in retail and transportation. Mobileye achieved record revenue, up 31 percent YoY on increasing ADAS adoption. Intel's memory business (NSG) was up 10 percent YoY on continued NAND and Intel® Optane™ bit growth. PSG fourth-quarter revenue was down 17 percent YoY.

In the fourth quarter, the PC-centric business (CCG) was up 2 percent on higher modem sales and desktop platform volumes. Major PC manufacturers have introduced 44 systems featuring the new, 10nm-based 10th Gen Intel® Core™ processors (previously referred to as "Ice Lake"), and momentum continues to build for Project Athena. Project Athena-verified devices have been tuned, tested and verified to deliver fantastic system-level innovation and benefits spanning battery life, consistent responsiveness, instant wake, application compatibility and more. Intel has verified 26 Project Athena designs to date.

Additional information regarding Intel’s results can be found in the Q4'19 Earnings Presentation available at: www.intc.com/results.cfm.

Business Outlook


Intel's guidance for the first-quarter and full-year 2020 includes both GAAP and non-GAAP estimates. Reconciliations between these GAAP and non-GAAP financial measures are included below.

Q1 2020

GAAP

Non-GAAP

Approximately

Approximately

Revenue

$19.0 billion

$19.0 billion^

Operating margin

33%

35%

Tax rate

13%

13%^

Earnings per share

$1.23

$1.30

Full-Year 2020

GAAP

Non-GAAP

Approximately

Approximately

Revenue

$73.5 billion

$73.5 billion^

Operating margin

31%

33%

Tax rate

13%

13%^

Earnings per share

$4.71

$5.00

Cash from operations

$33.5 billion

N/A

Full-year capital spending

$17.0 billion

$17.0 billion^

Free cash flow

N/A

$16.5 billion

Intel's Business Outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments and other significant transactions that may be completed after January 23, 2020. Actual results may differ materially from Intel’s Business Outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below.


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