Silicon Labs Announces Third Quarter 2017 Results

“We are very pleased with our third quarter results, achieving record revenue in IoT and Infrastructure, and in total,” said Tyson Tuttle, CEO of Silicon Labs. “Our portfolio is well positioned in high-quality growth markets, including IoT, infrastructure, green energy, and data communications, where we generate more than 70 percent of our total revenue, offering a long runway for growth and share gains.”

Third Quarter Financial Highlights

  • IoT revenue established a record, increasing to $100 million, up 2% sequentially and 23% year-on-year.
  • Infrastructure revenue increased to $39 million, up 2% sequentially and 1% year-on-year.
  • Broadcast revenue increased to $43 million, up 17% sequentially and 6% year-on-year.
  • Access revenue declined to $17 million, down 3% sequentially and year-on-year.

On a GAAP basis:

  • GAAP gross margin was 58.7%.
  • GAAP R&D expenses were $52 million.
  • GAAP SG&A expenses were $40 million.
  • GAAP operating income as a percentage of revenue was 12.6%.
  • GAAP diluted earnings per share were $0.46.

On a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

  • Non-GAAP gross margin was 58.8%.
  • Non-GAAP R&D expenses were $41 million.
  • Non-GAAP SG&A expenses were $32 million.
  • Non-GAAP operating income as a percentage of revenue was 21.8%.
  • Non-GAAP diluted earnings per share were $0.90.

Product Highlights

  • Launched the Si72xx magnetic sensor portfolio, featuring the industry’s most flexible, configurable and feature-rich Hall-effect magnetic sensors.
  • Introduced a comprehensive USB Type-C™ reference design, simplifying the development of rechargeable battery packs used to power portable devices.
  • Launched the Si5381/82/86 wireless clock family, leveraging Silicon Labs’ DSPLL technology to deliver an advanced timing solution that combines 4G/LTE and Ethernet clocking in a single IC.
  • Introduced the high-performance Si5332 clock family, offering the industry’s most integrated timing solution for 10/25/100G networking and storage applications.
  • Launched the Si522xx PCIe clock family, providing ultra-low jitter, high integration and very low power for applications using PCI Express® (PCIe®) Gen 1/2/3/4.
  • Introduced a new portfolio of Global and Dual Eagle AM/FM receivers and digital radio tuners, and Digital Falcon coprocessors, enabling automakers and Tier 1 suppliers to address all automotive infotainment market segments.

Business Outlook

The company expects revenue in the fourth quarter to be in the range of $195 million to $201 million, and also estimates the following:

On a GAAP basis:

  • GAAP gross margin at approximately 58.5%.
  • GAAP operating expenses at approximately $91.0 million.
  • GAAP effective tax rate at 11.0%.
  • GAAP diluted earnings per share between $0.40 and $0.46.

On a non-GAAP basis, and excluding the impact of stock compensation, amortization of acquired intangible assets, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

  • Non-GAAP gross margin at 58.5%.
  • Non-GAAP operating expenses at approximately $73.5 million.
  • Non-GAAP effective tax rate at 11.0%.
  • Non-GAAP diluted earnings per share between $0.83 and $0.89.

Webcast and Conference Call        

A conference call discussing the quarterly results will follow this press release at 7:30 a.m. Central time. An audio webcast will be available on Silicon Labs’ website (www.silabs.com) under Investor Relations. A replay will be available after the call at the same website listed above or by calling 1 (855) 859-2056 or (404) 537-3406 (international) and entering conference ID 8462249. The replay will be available through November 25, 2017.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for a smarter, more connected world. Our award-winning technologies are shaping the future of the Internet of Things, Internet infrastructure, industrial automation, consumer and automotive markets. Our world-class engineering team creates products focused on performance, energy savings, connectivity and simplicity. www.silabs.com

Forward-Looking Statements

This press release contains forward-looking statements based on Silicon Labs’ current expectations. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan,” “project,” “will” and similar phrases as they relate to Silicon Labs are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Silicon Labs and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are the following: risks that Silicon Labs may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; difficulties developing new products that achieve market acceptance; dependence on a limited number of products and customers; intellectual property litigation risks; risks associated with acquisitions and divestitures; product liability risks; difficulties managing our distributors, manufacturers and subcontractors; inventory-related risks; difficulties managing international activities; risks that Silicon Labs may not be able to manage strains associated with its growth; credit risks associated with our accounts receivable; dependence on key personnel; stock price volatility; geographic concentration of manufacturers, assemblers, test service providers and customers in Asia that subjects Silicon Labs’ business and results of operations to risks of natural disasters, epidemics, war and political unrest; debt-related risks; capital-raising risks; the competitive and cyclical nature of the semiconductor industry; average selling prices of products may decrease significantly and rapidly; information technology risks; cyber-attacks against our products and our networks; conflict mineral risks and other factors that are detailed in the SEC filings of Silicon Laboratories Inc. Silicon Labs disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. References in this press release to Silicon Labs shall mean Silicon Laboratories Inc.

Note to editors: Silicon Laboratories, Silicon Labs, the “S” symbol, and the Silicon Labs logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.

CONTACT: Jalene Hoover, +1 (512) 428-1610, [email protected]

Silicon Laboratories Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,
2017

October 1,
2016

September 30,
2017

October 1,
2016

Revenues

$198,723

$178,083

$567,849

$515,016

Cost of revenues

82,149

69,880

232,922

202,988

Gross margin

116,574

108,203

334,927

312,028

Operating expenses:

   Research and development

52,000

48,437

156,756

149,118

   Selling, general and administrative

39,606

38,034

119,587

116,716

Operating expenses

91,606

86,471

276,343

265,834

Operating income

24,968

21,732

58,584

46,194

Other income (expense):

   Interest income and other, net

1,923

273

4,094

449

   Interest expense

(4,764)

(643)

(9,265)

(1,939)

Income before income taxes

22,127

21,362

53,413

44,704

Provision for income taxes

2,178

1,344

1,469

3,319

 

Net income

$  19,949

$  20,018

$  51,944

$  41,385

Earnings per share:

   Basic

$      0.47

$      0.48

$      1.23

$      0.99

   Diluted

$      0.46

$      0.47

$      1.20

$      0.98

Weighted-average common shares outstanding:

   Basic

42,553

41,614

42,376

41,673

   Diluted

43,374

42,307

43,194

42,263

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

Non-GAAP Income
Statement Items

Three Months Ended

September 30, 2017

GAAP

Measure

GAAP

Percent of
Revenue

Stock

Compensation
Expense

Intangible
Asset
Amortization

Acquisition
Related
Items

Non-GAAP

Measure

Non-GAAP

Percent of
Revenue

Revenues

$198,723

Gross margin

116,574

58.7%

$     281

$      —

$   —

$116,855

58.8%

Research and

   development

52,000

26.2%

5,411

5,187

 

41,402

20.8%

Selling, general and

   administrative

39,606

 

19.9%

5,663

1,647

161

32,135

 

16.2%

Operating income

24,968

12.6%

11,355

6,834

161

43,318

21.8%

Non-GAAP
Earnings Per Share

Three Months Ended

September 30, 2017

GAAP

Measure

Stock

Compensation
Expense*

Intangible
Asset
Amortization*

Acquisition
Related
Items*

Non-cash
Interest
Expense*

Income Tax
Adjustments

Non-GAAP

Measure

Net income

$19,949

$11,355

$6,834

$161

$2,674

$(1,796)

$39,177

Diluted shares

   outstanding

43,374

 

43,374

Diluted earnings

   per share

$    0.46

 

$    0.90

* Represents pre-tax amounts

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

Business Outlook

Three Months Ending

December 30, 2017

GAAP

Measure

Non-GAAP

Adjustments

Non-GAAP

Measure

Gross margin

58.5%

0.0%

58.5%

Operating expenses

$91.0

$17.5

$73.5

Effective tax rate

11.0%

0.0%

11.0%

Diluted earnings per share – low

$0.40

$0.43

$0.83

Diluted earnings per share – high

$0.46

$0.43

$0.89

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

September 30,

 2017

December 31,
2016

Assets

Current assets:

   Cash and cash equivalents

$   236,459

$   141,106

   Short-term investments

482,396

153,961

   Accounts receivable, net

76,188

74,401

   Inventories

72,895

59,578

   Prepaid expenses and other current assets

37,563

61,805

Total current assets

905,501

490,851

Long-term investments

5,471

5,196

Property and equipment, net

129,075

129,559

Goodwill

288,629

276,130

Other intangible assets, net

89,859

103,565

Other assets, net

59,251

76,543

Total assets

$1,477,786

$1,081,844

Liabilities and Stockholders’ Equity

Current liabilities:

   Accounts payable

$     38,857

$     39,577

   Accrued expenses

60,376

50,100

   Deferred income on shipments to distributors

56,701

45,568

   Income taxes

4,057

4,450

Total current liabilities

159,991

139,695

Long-term debt

72,500

Convertible debt

338,717

Other non-current liabilities

36,246

42,691

Total liabilities

534,954

254,886

Commitments and contingencies

Stockholders’ equity:

   Preferred stock – $0.0001 par value; 10,000 shares authorized; no

      shares issued

   Common stock – $0.0001 par value; 250,000 shares authorized;  

      42,562 and 41,889 shares issued and outstanding at

      September 30, 2017 and December 31, 2016, respectively

4

4

   Additional paid-in capital

87,004

24,463

   Retained earnings

856,159

801,999

   Accumulated other comprehensive income (loss)

(335)

492

Total stockholders’ equity

942,832

826,958

Total liabilities and stockholders’ equity

$1,477,786

$1,081,844

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended

September 30,
2017

October 1,
2016

Operating Activities

Net income

$  51,944

$  41,385

Adjustments to reconcile net income to cash provided by operating activities:

   Depreciation of property and equipment

11,068

9,912

   Amortization of other intangible assets and other assets

20,531

21,461

   Amortization of debt discount and debt issuance costs 

6,984

   Stock-based compensation expense

33,007

30,057

   Income tax shortfall from stock-based awards

(1,611)

   Deferred income taxes

(5,703)

(1,460)

   Changes in operating assets and liabilities:

      Accounts receivable

(1,587)

(11,322)

      Inventories

(13,196)

(1,558)

      Prepaid expenses and other assets

23,506

7,404

      Accounts payable

1,746

1,280

      Accrued expenses

9,720

8,930

      Deferred income on shipments to distributors

11,039

11,573

      Income taxes

(424)

1,459

      Other non-current liabilities

(7,269)

(10,891)

Net cash provided by operating activities

141,366

106,619

Investing Activities

Purchases of available-for-sale investments

(471,938)

(131,741)

Sales and maturities of available-for-sale investments

143,765

129,511

Purchases of property and equipment

(10,494)

(8,545)

Purchases of other assets

(2,622)

(4,994)

Acquisition of business, net of cash acquired

(13,658)

Net cash used in investing activities

(354,947)

(15,769)

Financing Activities

Proceeds from issuance of long-term debt, net

389,468

Payments on debt

(72,500)

(5,000)

Repurchases of common stock

(40,543)

Payment of taxes withheld for vested stock awards

(14,870)

(10,148)

Proceeds from the issuance of common stock

6,836

8,451

Payment of acquisition-related contingent consideration

(9,500)

Net cash provided by (used in) financing activities

308,934

(56,740)

Increase in cash and cash equivalents

95,353

34,110

Cash and cash equivalents at beginning of period

141,106

114,085

Cash and cash equivalents at end of period

$236,459

$148,195

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SOURCE Silicon Labs

Related Links

http://www.silabs.com

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About the Author: Carrie Brunner

Carrie Brunner grew up in a small town in northern New Brunswick. She studied chemistry in college, graduated, and married her husband one month later. They were then blessed with two baby boys within the first four years of marriage. Having babies gave their family a desire to return to the old paths – to nourish their family with traditional, homegrown foods; rid their home of toxic chemicals and petroleum products; and give their boys a chance to know a simple, sustainable way of life. They are currently building a homestead from scratch on two little acres in central Texas. There’s a lot to be done to become somewhat self-sufficient, but they are debt-free and get to spend their days living this simple, good life together with their five young children. Carrie writes mostly on provincial stories.
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