Press Releases

Silicon Labs Announces Third Quarter 2018 Results
- Record Revenue in IoT and Infrastructure -

AUSTIN, Texas, Oct. 24, 2018 /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 third quarter ended September 29, 2018. Revenue in the third quarter established a new, all-time record, exceeding the high end of guidance at $230.2 million, up from $217.1 million in the second quarter. Third quarter GAAP and non-GAAP diluted earnings per share (EPS) established eight-year record highs at $0.63 and $1.01, respectively.

"We are delighted to report outstanding third quarter 2018 financial performance, including 16 percent year-on-year revenue growth," said Tyson Tuttle, CEO of Silicon Labs. "We saw sequential growth in all core business categories in Q3 and delivered record performance in IoT and Infrastructure. We have delivered target operating model performance in top line revenue growth, non-GAAP gross margin, non-GAAP opex and non-GAAP operating margin for the past five quarters."

Third Quarter Financial Highlights

  • IoT revenue increased to $125 million, up 8% sequentially and 25% year-on-year.
  • Infrastructure revenue increased to $53 million, up 2% sequentially and 35% year-on-year.
  • Broadcast revenue increased to $36 million, up 6% sequentially and down 16% year-on-year.
  • Access revenue increased to $16 million, up 5% sequentially and down 4% year-on-year.

On a GAAP basis:

  • GAAP gross margin was 58.9%
  • GAAP R&D expenses were $61 million
  • GAAP SG&A expenses were $49 million
  • GAAP operating income as a percentage of revenue was 10.9%
  • GAAP diluted earnings per share were $0.63

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 60.8%
  • Non-GAAP R&D expenses were $47 million
  • Non-GAAP SG&A expenses were $40 million
  • Non-GAAP operating income as a percentage of revenue was 23.0%
  • Non-GAAP diluted earnings per share were $1.01

Product Highlights

  • Released Wireless Xpress modules, enabling developers to move from product concept to prototyping in a matter of hours instead of weeks, and without firmware development.
  • Collaborated with Q-Free to create the ParQSense outdoor parking sensor solution using Silicon Labs' Wonder Gecko wireless MCU, making it faster and easier for drivers in urban areas to locate open parking spots.
  • Introduced new any-frequency clocks with an integrated quartz crystal, simplifying board design and guaranteeing reliable start-up and operation over the lifetime of end products.

Business Highlights

  • Reached a milestone with one billion cumulative units of TV tuners shipped.

Business Outlook

The company expects revenue in the fourth quarter to be in the range of $221 to $227 million, with IoT up and declines in Infrastructure, Broadcast and Access, and estimates the following:

On a GAAP basis:

  • GAAP gross margin at approximately 60.0%
  • GAAP operating expenses at approximately $111.0 million
  • GAAP effective tax rate at approximately 10.0%
  • GAAP diluted earnings per share between $0.39 and $0.45

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 between 60.0% and 60.5%
  • Non-GAAP operating expenses at approximately $88.0 million
  • Non-GAAP effective tax rate at 13.0%
  • Non-GAAP diluted earnings per share between $0.91 and $0.97

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 88340293. The replay will be available through November 20, 2018.

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. 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 Silicon Labs' distributors, manufacturers and subcontractors; inventory-related risks; difficulties managing international activities; risks associated with international activities (including trade barriers); risks that Silicon Labs may not be able to manage strains associated with its growth; credit risks associated with its 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 Silicon Labs' products and its 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, Jalene.Hoover@silabs.com

Silicon Laboratories Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

 
 

Three Months Ended

 

Nine Months Ended

 

September 29,
2018

 

September 30,
2017

 

September 29,
2018

 

September 30,
2017

Revenues

$230,243

 

$198,723

 

$652,733

 

$567,849

Cost of revenues

94,616

 

82,149

 

261,577

 

232,922

Gross margin

135,627

 

116,574

 

391,156

 

334,927

Operating expenses:

             

   Research and development

61,091

 

52,000

 

175,414

 

156,756

   Selling, general and administrative

49,406

 

39,606

 

148,896

 

119,587

Operating expenses

110,497

 

91,606

 

324,310

 

276,343

Operating income

25,130

 

24,968

 

66,846

 

58,584

Other income (expense):

             

   Interest income and other, net

2,109

 

1,923

 

6,920

 

4,094

   Interest expense

(4,932)

 

(4,764)

 

(14,703)

 

(9,265)

Income before income taxes

22,307

 

22,127

 

59,063

 

53,413

Provision (benefit) for income taxes

(5,454)

 

2,178

 

(9,383)

 

1,469

Net income

$  27,761

 

$  19,949

 

$  68,446

 

$  51,944

               

Earnings per share:

             

   Basic

$      0.64

 

$      0.47

 

$      1.59

 

$      1.23

   Diluted

$      0.63

 

$      0.46

 

$      1.55

 

$      1.20

               

Weighted-average common shares outstanding:

             

   Basic

43,256

 

42,553

 

43,177

 

42,376

   Diluted

44,194

 

43,374

 

44,135

 

43,194

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

 

Non-GAAP Income
Statement Items

 

Three Months Ended
September 29, 2018

   

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

 

$230,243

                           
                                 

Gross margin

 

135,627

 

58.9%

 

$     324

 

$       --

 

$3,967

 

$   --

 

$139,918

 

60.8%

                                 

Research and

  development

 

61,091

 

26.5%

 

6,016

 

7,810

 

--

 

--

 

47,265

 

20.5%

                                 

Selling, general and

  administrative

 

49,406

 

21.5%

 

6,242

 

3,179

 

--

 

256

 

39,729

 

17.3%

                                 

Operating income

 

25,130

 

10.9%

 

12,582

 

10,989

 

3,967

 

256

 

52,924

 

23.0%

                                 
                                 

Non-GAAP

Earnings Per Share

 

Three Months Ended

September 29, 2018

   

GAAP

Measure

 

Stock

Compensation
Expense*

 

Intangible
Asset
Amortization*

 

Acquisition
Related

 Items*

 

Termination

 Costs *

 

Non-cash
Interest

 Expense*

 

Income Tax
Adjustments

 

Non-GAAP

Measure

Net income

 

$27,761

 

$12,582

 

$10,989

 

$3,967

 

$256

 

$2,801

 

$(13,700)

 

$44,656

                                 

Diluted shares

   outstanding

 

44,194

                         

44,194

                                 

Diluted earnings

   per share

 

$    0.63

                         

$    1.01

 

* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

 

Business Outlook

 

Three Months Ending

December 29, 2018

   

GAAP

Measure

 

Non-GAAP

Adjustments

 

Non-GAAP

Measure

Gross margin

 

60.0%

 

0.0% - 0.5%

 

60.0% - 60.5%

             

Operating expenses

 

$111

 

$23

 

$88

             

Effective tax rate

 

10.0%

 

3.0%

 

13.0%

             

Diluted earnings per share - low

 

$0.39

 

$0.52

 

$0.91

             

Diluted earnings per share - high

 

$0.45

 

$0.52

 

$0.97

 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 
 

September 29,
2018

 

December 30,
2017

Assets

     

Current assets:

     

   Cash and cash equivalents

$   225,326

 

$   269,366

   Short-term investments

376,603

 

494,657

   Accounts receivable, net

74,607

 

71,367

   Inventories

77,563

 

73,132

   Prepaid expenses and other current assets

46,952

 

39,120

Total current assets

801,051

 

947,642

Property and equipment, net

135,566

 

127,682

Goodwill

396,689

 

288,227

Other intangible assets, net

181,611

 

83,144

Other assets, net

89,372

 

88,387

Total assets

$1,604,289

 

$1,535,082

       

Liabilities and Stockholders' Equity

     

Current liabilities:

     

   Accounts payable

$     43,647

 

$     38,851

   Deferred revenue and returns liability

25,880

 

--

   Deferred income on shipments to distributors

--

 

50,115

   Other current liabilities

77,821

 

73,359

Total current liabilities

147,348

 

162,325

Convertible debt

351,457

 

341,879

Other non-current liabilities

57,777

 

77,862

Total liabilities

556,582

 

582,066

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;  

      43,147 and 42,707 shares issued and outstanding at

      September 29, 2018 and December 30, 2017, respectively

4

 

4

   Additional paid-in capital

103,169

 

102,862

   Retained earnings

946,201

 

851,307

   Accumulated other comprehensive loss

(1,667)

 

(1,157)

Total stockholders' equity

1,047,707

 

953,016

Total liabilities and stockholders' equity

$1,604,289

 

$1,535,082

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
 

Nine Months Ended

 

September 29,
2018

 

September 30,
2017

Operating Activities

     

Net income

$  68,446

 

$  51,944

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

     

   Depreciation of property and equipment

11,781

 

11,068

   Amortization of other intangible assets and other assets

33,322

 

20,531

   Amortization of debt discount and debt issuance costs 

9,578

 

6,984

   Stock-based compensation expense

36,893

 

33,007

   Deferred income taxes

(2,994)

 

(5,703)

   Changes in operating assets and liabilities:

     

      Accounts receivable

2,518

 

(1,587)

      Inventories

5,066

 

(13,196)

      Prepaid expenses and other assets

6,349

 

23,506

      Accounts payable

8,675

 

1,746

      Other current liabilities and income taxes

(23,814)

 

9,296

      Deferred income, deferred revenue and returns liability

(2,816)

 

11,039

      Other non-current liabilities

(7,878)

 

(7,269)

Net cash provided by operating activities

145,126

 

141,366

       

Investing Activities

     

Purchases of available-for-sale investments

(253,973)

 

(471,938)

Sales and maturities of available-for-sale investments

371,885

 

143,765

Purchases of property and equipment

(18,267)

 

(10,494)

Purchases of other assets

(9,088)

 

(2,622)

Acquisition of business, net of cash acquired

(239,729)

 

(13,658)

Net cash used in investing activities

(149,172)

 

(354,947)

       

Financing Activities

     

Proceeds from issuance of long-term debt, net

--

 

389,468

Payments on debt

--

 

(72,500)

Repurchases of common stock

(24,272)

 

--

Payment of taxes withheld for vested stock awards

(18,927)

 

(14,870)

Proceeds from the issuance of common stock

6,585

 

6,836

Payment of acquisition-related contingent consideration

(3,380)

 

--

Net cash provided by (used in) financing activities

(39,994)

 

308,934

       

Increase (decrease) in cash and cash equivalents

(44,040)

 

95,353

Cash and cash equivalents at beginning of period

269,366

 

141,106

Cash and cash equivalents at end of period

$225,326

 

$236,459

 

 

SOURCE Silicon Labs