Press Releases

Silicon Labs Announces Record Revenue in Second Quarter 2017
-- IoT Grows to More Than 50 Percent of Total Revenue --

AUSTIN, Texas, July 26, 2017 /PRNewswire/ -- Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its second quarter ended July 1, 2017. Revenue in the second quarter exceeded the high end of guidance at $190 million, up from $179 million in the first quarter. Second quarter GAAP and non-GAAP earnings per share (EPS) were $0.38 and $0.79, respectively.

"Our second quarter 2017 financial results reflect outstanding year-on-year progress, with 12 percent growth in product revenue," said Tyson Tuttle, CEO of Silicon Labs. "Five years ago, we accelerated our focus on the Internet of Things through a combination of organic investment and strategic acquisitions. This quarter, IoT surpassed 50 percent of total revenue, driving target model performance in year-on-year product revenue growth, gross margin and operating income. Our strategy is coming together as we focus on core strategic growth drivers and capture share in target markets."

Second Quarter Financial Highlights

  • IoT revenue established a new record, increasing to $98 million, up 11% sequentially and 27% year-on-year.
  • Infrastructure revenue increased to $38 million, up 6% sequentially and up 7% year-on-year, exclusive of $5 million of patent sale revenue in the second quarter of 2016.
  • Broadcast revenue declined to $37 million, down 2% sequentially and 4% year-on-year.
  • Access revenue declined to $17 million, down 2% sequentially and 10% year-on-year.

On a GAAP basis:

  • GAAP gross margin was 59.5%.
  • GAAP R&D expenses were $52 million.
  • GAAP SG&A expenses were $40 million.
  • GAAP operating income as a percentage of revenue was 11.0%.
  • GAAP diluted earnings per share were $0.38.

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 59.7%.
  • Non-GAAP R&D expenses were $42 million.
  • Non-GAAP SG&A expenses were $33 million.
  • Non-GAAP operating income as a percentage of revenue was 20.5%.
  • Non-GAAP diluted earnings per share were $0.79.

Product Highlights

  • Launched the new EFM32GG11 Giant Gecko microcontroller, offering the most advanced capabilities and largest memory footprint in the low-power MCU market.
  • Introduced a comprehensive suite of software and hardware that supports the new Bluetooth® mesh specification, addressing smart home, lighting, beacons and asset tracking applications.
  • Launched the CP2615 USB-to-I2S bridge chip, providing a simple, turnkey solution for transferring digital audio data.
  • Introduced the Si54x Ultra Series™ family of high-performance crystal oscillators, offering the industry's lowest jitter frequency-flexible solution and shortest lead times for a wide range of networking and communications applications.

Business Highlights

  • Delivered the keynote at the Design Automation Conference in Austin, Texas, on the topic of "Accelerating the IoT."
  • Won Somfy's Supplier Innovation Award for providing groundbreaking Wireless Gecko silicon and software, enabling flexible control and integration of Somfy's motorized window coverings into connected living and building experiences.

Business Outlook

The company expects revenue in the third quarter to be in the range of $193 million to $199 million, and also estimates the following:

On a GAAP basis:

  • GAAP gross margin at approximately 58.5%.
  • GAAP operating expenses between $92.5 and $93 million.
  • GAAP effective tax rate at 11.0%.
  • GAAP diluted earnings per share between $0.35 and $0.41.

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 between $74.5 and $75.0 million.
  • Non-GAAP effective tax rate at 11.0%.
  • Non-GAAP diluted earnings per share between $0.78 and $0.84.

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 8461186. The replay will be available through August 26, 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, the Silicon Labs logo, and Ultra Series 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, Jalene.Hoover@silabs.com

 

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

 
 

Three Months Ended

 

Six Months Ended

 

July 1,
2017

 

July 2,
2016

 

July 1,
2017

 

July 2,
2016

Revenues

$190,098

 

$174,908

 

$369,126

 

$336,933

Cost of revenues

76,906

 

66,614

 

150,773

 

133,108

Gross margin

113,192

 

108,294

 

218,353

 

203,825

Operating expenses:

             

   Research and development

52,432

 

51,635

 

104,756

 

100,681

   Selling, general and administrative

39,826

 

39,045

 

79,981

 

78,682

Operating expenses

92,258

 

90,680

 

184,737

 

179,363

Operating income

20,934

 

17,614

 

33,616

 

24,462

Other income (expense):

             

   Interest income and other, net

1,595

 

296

 

2,171

 

176

   Interest expense

(4,699)

 

(641)

 

(4,501)

 

(1,296)

Income before income taxes

17,830

 

17,269

 

31,286

 

23,342

Provision (benefit) for income taxes

1,261

 

1,710

 

(709)

 

1,975

 

Net income

$  16,569

 

$  15,559

 

$  31,995

 

$  21,367

               

Earnings per share:

             

   Basic

$      0.39

 

$      0.37

 

$      0.76

 

$      0.51

   Diluted

$      0.38

 

$      0.37

 

$      0.74

 

$      0.51

               

Weighted-average common shares outstanding:

             

   Basic

42,478

 

41,775

 

42,287

 

41,702

   Diluted

43,178

 

42,284

 

43,104

 

42,242

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)

 

Non-GAAP Income Statement Items

 

Three Months Ended
July 1, 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

 

$190,098

                       
                             

Gross margin

 

113,192

 

59.5%

 

$     264

 

$      --

 

$   --

 

$113,456

 

59.7%

                             

Research and

  development

 

52,432

 

27.6%

 

5,503

 

5,048

 

 

--

 

41,881

 

22.1%

                             

Selling, general and

  administrative

 

39,826

 

 

20.9%

 

5,399

 

1,647

 

234

 

32,546

 

 

17.1%

                             

Operating income

 

20,934

 

11.0%

 

11,166

 

6,695

 

234

 

39,029

 

20.5%

                             
                             

Non-GAAP Earnings Per Share

 

Three Months Ended
July 1, 2017

   

GAAP

Measure

 

Stock

Compensation
Expense*

 

Intangible
Asset
Amortization*

 

Acquisition
Related
Items*

 

Non-cash
Interest
Expense*

 

Income Tax
Adjustments

 

Non-GAAP
Measure

Net income

 

$16,569

 

$11,166

 

$6,695

 

$234

 

$2,640

 

$(3,319)

 

$33,985

                             

Diluted shares

   outstanding

 

43,178

                     

 

43,178

                             

Diluted earnings

   per share

 

$    0.38

                     

 

$    0.79

 

* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook
(In millions, except per share data)

 

Business Outlook

 

Three Months Ending

September 30, 2017

   

GAAP

Measure

 

Non-GAAP

Adjustments

 

Non-GAAP

Measure

Gross margin

 

58.5%

 

0.0%

 

58.5%

             

Operating expenses

 

$92.5 - $93

 

$18

 

$74.5 - $75

             

Effective tax rate

 

11.0%

 

0.0%

 

11.0%

             

Diluted earnings per share - low

 

$0.35

 

$0.43

 

$0.78

             

Diluted earnings per share - high

 

$0.41

 

$0.43

 

$0.84

 

Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)

 
 

July 1,
 2017

 

December 31,
2016

Assets

     

Current assets:

     

   Cash and cash equivalents

$   210,615

 

$   141,106

   Short-term investments

451,114

 

153,961

   Accounts receivable, net

75,488

 

74,401

   Inventories

67,427

 

59,578

   Prepaid expenses and other current assets

46,862

 

61,805

Total current assets

851,506

 

490,851

Long-term investments

5,379

 

5,196

Property and equipment, net

130,909

 

129,559

Goodwill

288,629

 

276,130

Other intangible assets, net

96,819

 

103,565

Other assets, net

61,085

 

76,543

Total assets

$1,434,327

 

$1,081,844

       

Liabilities and Stockholders' Equity

     

Current liabilities:

     

   Accounts payable

$     39,989

 

$     39,577

   Accrued expenses

50,797

 

50,100

   Deferred income on shipments to distributors

48,914

 

45,568

   Income taxes

3,543

 

4,450

Total current liabilities

143,243

 

139,695

Long-term debt

--

 

72,500

Convertible debt

335,639

 

--

Other non-current liabilities

43,240

 

42,691

Total liabilities

522,122

 

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;  

      42,539 and 41,889  shares issued and outstanding at

      July 1, 2017 and December 31, 2016, respectively

4

 

4

   Additional paid-in capital

76,409

 

24,463

   Retained earnings

836,210

 

801,999

   Accumulated other comprehensive income (loss)

(418)

 

492

Total stockholders' equity

912,205

 

826,958

Total liabilities and stockholders' equity

$1,434,327

 

$1,081,844

 

Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 
 

Six Months Ended

 

July 1,
2017

 

July 2,
2016

 

Operating Activities

       

Net income

$  31,995

 

$  21,367

 

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

       

   Depreciation of property and equipment

7,308

 

6,675

 

   Amortization of other intangible assets and other assets

13,571

 

15,534

 

   Amortization of debt discount and debt issuance costs 

3,907

 

--

 

   Stock-based compensation expense

21,652

 

20,861

 

   Income tax benefit (shortfall) from stock-based awards

--

 

(1,218)

 

   Deferred income taxes

(6,242)

 

817

 

   Changes in operating assets and liabilities:

       

      Accounts receivable

(887)

 

1,611

 

      Inventories

(7,737)

 

(2,888)

 

      Prepaid expenses and other assets

12,539

 

3,282

 

      Accounts payable

2,363

 

(1,680)

 

      Accrued expenses

141

 

4,372

 

      Deferred income on shipments to distributors

3,251

 

3,773

 

      Income taxes

(127)

 

(1,338)

 

      Other non-current liabilities

(1,169)

 

(10,737)

 

Net cash provided by operating activities

80,565

 

60,431

 
         

Investing Activities

       

Purchases of available-for-sale investments

(389,234)

 

(92,222)

 

Sales and maturities of available-for-sale investments

92,307

 

78,950

 

Purchases of property and equipment

(8,390)

 

(5,146)

 

Purchases of other assets

(1,784)

 

(2,215)

 

Acquisition of business, net of cash acquired

(13,658)

 

--

 

Net cash used in investing activities

(320,759)

 

(20,633)

 
         

Financing Activities

       

Proceeds from issuance of long-term debt, net

389,468

 

--

 

Payments on debt

(72,500)

 

(5,000)

 

Repurchases of common stock

--

 

(36,103)

 

Payment of taxes withheld for vested stock awards

(14,101)

 

(9,308)

 

Proceeds from the issuance of common stock

6,836

 

7,362

 

Payment of acquisition-related contingent consideration

--

 

(9,500)

 

Net cash provided by (used in) financing activities

309,703

 

(52,549)

 
         

Increase (decrease) in cash and cash equivalents

69,509

 

(12,751)

 

Cash and cash equivalents at beginning of period

141,106

 

114,085

 

Cash and cash equivalents at end of period

$210,615

 

$101,334

 

 

 

SOURCE Silicon Laboratories, Inc.