Press Releases

Silicon Labs Announces Record Revenue for Third Quarter 2016
Exceeds Guidance on Revenue, Gross Margin and EPS
We are executing on our growth strategy targeting the IoT and Infrastructure markets, and are seeing our efforts translate into strong financial results.

AUSTIN, Texas--(BUSINESS WIRE)--Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its third quarter ended October 1, 2016. Revenue in the third quarter established a new record, exceeding the high end of guidance at $178.1 million, up from $174.9 million in the second quarter. Third quarter GAAP and non-GAAP earnings per share (EPS) exceeded the high end of guidance at $0.47 and $0.77, respectively.

Third Quarter Financial Highlights

  • IoT revenue established a new record, increasing to $81.5 million, or 6.2% sequentially.
  • Infrastructure revenue established a new record, increasing to $38.3 million, or 7.5% sequentially, exclusive of $5 million of patent sale revenue in the second quarter.
  • Broadcast increased to $40.7 million, or 7.1% sequentially.
  • Access revenue declined to $17.5 million, or 10.0% sequentially.

On a GAAP basis:

  • GAAP gross margin was 60.8%.
  • GAAP R&D expenses were $48.4 million.
  • GAAP SG&A expenses were $38.0 million.
  • GAAP operating income as a percentage of revenue was 12.2%.
  • GAAP diluted earnings per share were $0.47.

On a non-GAAP basis (results exclude the impact of stock compensation, amortization of acquired intangible assets and certain other items as set forth in the reconciliation tables below):

  • Non-GAAP gross margin was 61.0%.
  • Non-GAAP R&D expenses were $39.6 million.
  • Non-GAAP SG&A expenses were $31.4 million.
  • Non-GAAP operating income as a percentage of revenue was 21.1%.
  • Non-GAAP diluted earnings per share were $0.77.

Product Highlights

  • Acquired Micrium, the leading supplier of real-time operating system (RTOS) software for embedded computing, supporting more than 50 processor architectures and providing a commercial-grade RTOS solution across key embedded markets.
  • Launched the MGM111 mesh networking module, leveraging Silicon Labs’ multiprotocol Mighty Gecko SoC, ZigBee® and Thread mesh protocol stacks, and Simplicity Studio™ development tools.
  • Shipped more than 100 million ZigBee mesh networking devices worldwide to date, reaching a new milestone.
  • Released a major update of the award-winning Simplicity Studio software development tools, giving IoT developers more capabilities and easier access to Silicon Labs’ full range of IoT products, including its latest multiprotocol wireless SoCs.
  • Launched the CP2102N bridge device, a smaller, lower-power offering of Silicon Labs’ USBXpress™ family providing a highly integrated, turnkey solution for adding USB connectivity to embedded designs.
  • Introduced the Si875x isolated gate drivers offering an innovative capability to transfer power across an integrated CMOS isolation barrier, and providing a replacement solution for antiquated electromechanical relays and optocoupler-based solid-state relays in switching applications.
  • Launched the Si828x isolated gate driver family targeting industrial and green energy designs requiring state-of-the-art signal isolation technology with superior timing, lower emissions and higher reliability.
  • Introduced the Si838x isolator family of high-speed, multi-channel digital isolation products designed to outperform and outlive legacy optocouplers in programmable logic controllers for factory automation.

Business Outlook

The company expects revenue in the fourth quarter to be in the range of $176 million to $181 million. Fourth quarter diluted earnings per share are expected to be between $0.30 and $0.36 on a GAAP basis, and between $0.62 and $0.68 on a non-GAAP basis.

“We are delighted to report record revenue, including five percent sequential and 14 percent year-on-year growth in product revenue," said Tyson Tuttle, CEO of Silicon Labs. “We are executing on our growth strategy targeting the IoT and Infrastructure markets, and are seeing our efforts translate into strong financial results.”

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 83473959. The replay will be available through November 26, 2016.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for the Internet of Things, Infrastructure, industrial automation, consumer and automotive markets. We solve the electronics industry’s toughest problems, providing customers with significant advantages in performance, energy savings, connectivity and design simplicity. Backed by our world-class engineering teams with strong software and mixed-signal design expertise, Silicon Labs empowers developers with the tools and technologies they need to advance quickly and easily from initial idea to final product. 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, the Silicon Labs logo, Simplicity Studio, and USBXpress are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.

               
               
Silicon Laboratories Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
               
      Three Months Ended       Nine Months Ended
     

October 1, 
2016

   

October 3, 
2015

     

October 1, 
2016

   

October 3, 
2015

Revenues     $ 178,083       $ 156,194         $ 515,016       $ 484,755  
Cost of revenues       69,880         62,759           202,988         197,523  
Gross margin       108,203         93,435           312,028         287,232  
Operating expenses:                          
Research and development       48,437         46,483           149,118         140,805  
Selling, general and administrative       38,034         35,729           116,716         118,989  
Operating expenses       86,471         82,212           265,834         259,794  
Operating income       21,732         11,223           46,194         27,438  
Other income (expense):                          
Interest income       331         186           880         544  
Interest expense       (643 )       (687 )         (1,939 )       (2,160 )
Other, net       (58 )       (280 )         (431 )       218  
Income before income taxes       21,362         10,442           44,704         26,040  
Provision for income taxes       1,344         467           3,319         2,112  
                                           

Net income

    $ 20,018       $ 9,975         $ 41,385       $ 23,928  
                           
Earnings per share:                          
Basic     $ 0.48       $ 0.24         $ 0.99       $ 0.56  
Diluted     $ 0.47       $ 0.23         $ 0.98       $ 0.55  
                           
Weighted-average common shares outstanding:                          
Basic       41,614         42,331           41,673         42,522  
Diluted       42,307         42,795           42,263         43,135  
                                           
       
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
       
       

Non-GAAP Income 
Statement Items

    Three Months Ended

October 1, 2016

     

GAAP 
Measure

 

GAAP 
Percent of 
Revenue

 

Stock 
Compensation
Expense

 

Intangible 
Asset 
Amortization

 

Acquisition 
Related 
Items

 

Termination 
Costs

 

Non- 
GAAP 
Measure

 

Non-GAAP 
Percent of 
Revenue

Revenues     $ 178,083                            
                                   
Gross margin       108,203     60.8 %   $ 272   $ 130   $ --   $ --     $ 108,605   61.0 %
                                   

Research and development

      48,437     27.2 %     4,580     4,257    

--

   

--

     

39,600

  22.2 %
                                   

Selling, general and administrative

      38,034    

21.4

%

    4,343     1,420     311     552      

31,408

 

17.7

%

                                   
Operating income       21,732     12.2 %     9,195     5,807     311     552       37,597   21.1 %
                                   
           
Non-GAAP

Earnings Per Share

    Three Months Ended

October 1, 2016

   
     

GAAP 
Measure

 

Stock 
Compensation
Expense*

 

Intangible 
Asset 
Amortization*

 

Acquisition 
Related 
Items*

 

Termination
Costs*

 

Income Tax 
Adjustments

 

Non- 
GAAP 
Measure

   
Net income     $ 20,018   $ 9,195     $ 5,807   $ 311   $ 552   $ (3,467 )   $ 32,416    
                                   

Diluted shares outstanding

      42,307                        

42,307

   
                                   

Diluted earnings per share

    $ 0.47                      

$

0.77

   
                                   

* Represents pre-tax amounts

                                   
       

Unaudited Forward-Looking Statements Regarding Business Outlook

       
       
Business Outlook    

Three Months Ending 
December 31, 2016

      High     Low
Estimated GAAP diluted earnings per share     $ 0.36     $ 0.30
             
Estimated non-GAAP charges       0.32       0.32
             
Estimated non-GAAP diluted earnings per share     $ 0.68     $ 0.62
             
             
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
             
      October 1,     January 2,
      2016     2016
Assets            
Current assets:            
Cash and cash equivalents     $ 148,195       $ 114,085  
Short-term investments       131,139         128,901  
Accounts receivable, net       84,923         73,601  
Inventories       55,051         53,895  
Prepaid expenses and other current assets       49,087         52,658  
Total current assets       468,395         423,140  
Long-term investments       6,980         7,126  
Property and equipment, net       130,318         131,132  
Goodwill       272,722         272,722  
Other intangible assets, net       100,320         121,354  
Other assets, net       51,481         55,989  
Total assets     $ 1,030,216       $ 1,011,463  
             
Liabilities and Stockholders’ Equity            
Current liabilities:            
Accounts payable     $ 39,591       $ 42,127  
Current portion of long-term debt       --         10,000  
Accrued expenses       51,561         52,131  
Deferred income on shipments to distributors       47,057         35,448  
Income taxes       5,638         2,615  
Total current liabilities       143,847         142,321  
Long-term debt       72,500         67,500  
Other non-current liabilities       26,240         40,528  
Total liabilities       242,587         250,349  
Commitments and contingencies            
Stockholders' equity:            

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

      --         --  

Common stock – $0.0001 par value; 250,000 shares authorized; 41,651 and 41,727 shares issued and outstanding at October 1, 2016 and January 2, 2016, respectively

      4         4  
Additional paid-in capital       6,344         13,868  
Retained earnings       781,890         747,749  
Accumulated other comprehensive loss       (609 )       (507 )
Total stockholders' equity       787,629         761,114  
Total liabilities and stockholders' equity     $ 1,030,216       $ 1,011,463  
                     
       
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
       
      Nine Months Ended
     

October 1,

   

October 3,

      2016     2015
Operating Activities            
Net income     $ 41,385       $ 23,928  
Adjustments to reconcile net income to cash provided by operating activities:            
Depreciation of property and equipment       9,912         9,293  
Amortization of other intangible assets and other assets       21,461         21,686  
Stock-based compensation expense       30,057         30,798  
Income tax benefit (shortfall) from stock-based awards       (1,238 )       1,727  
Excess income tax benefit from stock-based awards       (373 )       (2,118 )
Deferred income taxes       (1,460 )       1,571  
Changes in operating assets and liabilities:            
Accounts receivable       (11,322 )       12,097  
Inventories       (1,558 )       2,259  
Prepaid expenses and other assets       7,404         8,409  
Accounts payable       1,280         (5,686 )
Accrued expenses       8,930         (280 )
Deferred income on shipments to distributors       11,573         (2,825 )
Income taxes       1,459         (3,413 )
Other non-current liabilities       (10,891 )       (10,031 )
Net cash provided by operating activities       106,619         87,415  
             
Investing Activities            
Purchases of available-for-sale investments       (131,741 )       (55,433 )
Sales and maturities of available-for-sale investments       129,511         136,262  
Purchases of property and equipment       (8,545 )       (7,281 )
Purchases of other assets       (4,994 )       (5,291 )
Acquisition of business, net of cash acquired       --         (76,899 )
Net cash used in investing activities       (15,769 )       (8,642 )
             
Financing Activities            
Proceeds from issuance of long-term debt, net       --         81,238  
Payments on debt       (5,000 )       (92,206 )
Repurchases of common stock       (40,543 )       (71,448 )
Payment of taxes withheld for vested stock awards       (10,521 )       (12,652 )
Proceeds from the issuance of common stock       8,451         12,575  
Excess income tax benefit from stock-based awards       373         2,118  
Payment of acquisition-related contingent consideration       (9,500 )       (4,464 )
Net cash used in financing activities       (56,740 )       (84,839 )
             
Decrease in cash and cash equivalents       34,110         (6,066 )
Cash and cash equivalents at beginning of period       114,085         141,706  
Cash and cash equivalents at end of period     $ 148,195       $ 135,640  

 

Contact:

Silicon Labs
Jalene Hoover, +1 512-428-1610
Jalene.Hoover@silabs.com