Press Releases

Silicon Labs Announces Fourth Quarter 2018 Results
- Record 2018 Revenue -
- Challenging Macro Environment Impacts Q4 and Q1 Outlook -

AUSTIN, Texas, Jan. 30, 2019 /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 fourth quarter ended December 29, 2018. Revenue in the fourth quarter fell short of the low end of guidance at $215.5 million, down from $230.2 million in the third quarter. Fourth quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.35 and $0.91, respectively.

(PRNewsfoto/Silicon Labs)

"We are proud of our performance in 2018, which was a strong year for Silicon Labs in many dimensions. We completed the successful acquisition of Z-Wave, strengthened our team, and grew our revenue and design wins to record levels," said Tyson Tuttle, CEO of Silicon Labs. "Despite current volatility, we remain confident about our longer-term ability to outperform the market. We are focused on executing on our product roadmaps and converting a large pipeline of opportunities into additional wins and share gains. The technologies we are developing are enabling our customers to transform industries and improve lives."

Fourth Quarter Financial Highlights

  • IoT revenue declined to $119 million, down 5% sequentially and up 9% year-on-year.
  • Infrastructure revenue declined to $46 million, down 13% sequentially and up 18% year-on-year.
  • Broadcast revenue declined to $35 million, down 3% sequentially and 3% year-on-year.
  • Access revenue declined to $15 million, down 7% sequentially and 8% year-on-year.

On a GAAP basis:                                                                                         

  • GAAP gross margin was 60.4%.
  • GAAP R&D expenses were $63 million.
  • GAAP SG&A expenses were $49 million.
  • GAAP operating income as a percentage of revenue was 8.5%.
  • GAAP diluted earnings per share were $0.35.

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 60.6%.
  • Non-GAAP R&D expenses were $49 million.
  • Non-GAAP SG&A expenses were $39 million.
  • Non-GAAP operating income as a percentage of revenue was 19.6%.
  • Non-GAAP diluted earnings per share were $0.91.

Product Results

  • Launched the next-generation Z-Wave® 700 on the Wireless Gecko platform, building on Z-Wave's S2 security and interoperability framework, while improving energy efficiency and adding longer range RF capabilities.
  • Released new Bluetooth® 5.1 software for the Wireless Gecko platform with a direction finding feature that enables more precise indoor navigation and location services.
  • Expanded Silicon Labs' groundbreaking low-power Wi-Fi® portfolio of modules and transceivers designed specifically for the requirements of IoT applications.
  • Announced that Xiaomi, a leading IoT ecosystem provider in China, launched new smart lighting products based on Silicon Labs' Wireless Gecko SoCs and Bluetooth mesh software.
  • Tuya, a leading artificial intelligence and IoT (AIoT) platform provider in China, announced they are using the Wireless Gecko platform to enable their smart multiprotocol products to easily connect to multi-node mesh networks deployed in smart homes.
  • Announced a collaboration with Tile, makers of the world's best-selling Bluetooth location tracker, with Silicon Labs providing enabling software to its partners to support the expansion of Tile's ecosystem.
  • Collaborated with Cognosos to create a wireless networking device using Wireless Gecko SoCs to improve the management of automotive asset tracking.

Business Highlights

  • Added Christy Wyatt, CEO of Absolute Software Corporation and a thought leader in the cybersecurity industry, to Silicon Labs' board of directors.
  • Won the Global Semiconductor Alliance's "Most Respected Public Semiconductor Company" award for the fourth year in a row.
  • Honored at the 2018 ASPENCORE World Electronics Achievement Awards (WEAA) in Shenzhen, China; Tyson Tuttle named Executive of the Year, and Wireless Gecko won in the wireless product category.

Business Outlook

In light of macro uncertainty and volatility, the company expects first quarter revenue to be in the range of $183 to $193 million, with IoT, Infrastructure, Broadcast and Access down, and estimates the following:

On a GAAP basis:

  • GAAP gross margin at approximately 60.0%.
  • GAAP operating expenses at approximately $114.0 million.
  • GAAP effective tax rate of 10.0%.
  • GAAP diluted loss per share between $(0.11) and $(0.01).

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 approximately 60.0%.
  • Non-GAAP operating expenses at approximately $90.0 million.
  • Non-GAAP effective tax rate at 13.0%.
  • Non-GAAP diluted earnings per share between $0.42 and $0.52.

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 (877) 344-7529 (US) or (412) 317-0088 (International) and entering access code 10127685. The replay will be available through March 2, 2019.

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

 

Year Ended

 

December 29,
2018

 

December 30,
2017

 

December 29,
2018

 

December 30,
2017

Revenues

$215,534

 

$201,018

 

$868,267

 

$768,867

Cost of revenues

85,291

 

81,754

 

346,868

 

314,676

Gross margin

130,243

 

119,264

 

521,399

 

454,191

Operating expenses:

             

   Research and development

62,933

 

52,735

 

238,347

 

209,491

   Selling, general and administrative

48,948

 

40,139

 

197,844

 

159,726

Operating expenses

111,881

 

92,874

 

436,191

 

369,217

Operating income

18,362

 

26,390

 

85,208

 

84,974

Other income (expense):

             

   Interest income and other, net

(273)

 

1,963

 

6,647

 

6,057

   Interest expense

(4,991)

 

(4,863)

 

(19,694)

 

(14,128)

Income before income taxes

13,098

 

23,490

 

72,161

 

76,903

Provision (benefit) for income taxes

(2,047)

 

28,342

 

(11,430)

 

29,811

Net income (loss)

$  15,145

 

$   (4,852)

 

$  83,591

 

$  47,092

               

Earnings (loss) per share:

             

   Basic

$      0.35

 

$     (0.11)

 

$      1.94

 

$      1.11

   Diluted

$      0.35

 

$     (0.11)

 

$      1.90

 

$      1.09

               

Weighted-average common shares outstanding:

             

   Basic

43,109

 

42,656

 

43,159

 

42,446

   Diluted

43,774

 

42,656

 

44,044

 

43,332

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

 

Non-GAAP Income
Statement Items

 

Three Months Ended

December 29, 2018

   
   

GAAP

Measure

 

GAAP
Percent of
Revenue

 

Stock
Compensation
Expense

 

Intangible Asset
Amortization

 

Non-GAAP
Measure

 

Non-GAAP
Percent of
Revenue

   

Revenues

 

$215,534

                       
                             

Gross margin

 

130,243

 

60.4%

 

$     323

 

$        --

 

$130,566

 

60.6%

   
                             

Research and

   development

 

62,933

 

29.2%

 

6,413

 

7,760

 

48,760

 

22.6%

   
                             

Selling, general and

   administrative

 

48,948

 

22.7%

 

6,447

 

3,020

 

39,481

 

18.4%

   
                             

Operating income

 

18,362

 

8.5%

 

13,183

 

10,780

 

42,325

 

19.6%

   
                             
                             

Non-GAAP
Earnings Per Share

 

Three Months Ended

December 29, 2018

   

GAAP
Measure

 

Stock
Compensation
Expense*

 

Intangible
Asset
Amortization*

 

Termination Costs
and Fair Value
Adjustments *

 

Non-cash
Interest
Expense*

 

Income Tax
Adjustments

 

Non-GAAP
Measure

Net income

 

$15,145

 

$13,183

 

$10,780

 

$2,785

 

$2,880

 

$(4,777)

 

$39,996

                             

Diluted shares

   outstanding

 

43,774

                     

43,774

                             

Diluted earnings

   per share

 

$    0.35

                     

$    0.91

 

* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

 

Business Outlook

 

Three Months Ending
March 30, 2019

   

GAAP
Measure

 

Non-GAAP
Adjustments

 

Non-GAAP
Measure

Gross margin

 

60.0%

 

0.0%

 

60.0%

             

Operating expenses

 

$114

 

$24

 

$90

             

Effective tax rate

 

10.0%

 

3.0%

 

13.0%

             

Diluted earnings (loss) per share - low

 

$(0.11)

 

$0.53

 

$0.42

             

Diluted earnings (loss) per share - high

 

$(0.01)

 

$0.53

 

$0.52

 

 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 
 

December 29,
2018

 

December 30,

 2017

Assets

     

Current assets:

     

   Cash and cash equivalents

$   197,043

 

$   269,366

   Short-term investments

416,779

 

494,657

   Accounts receivable, net

73,194

 

71,367

   Inventories

74,972

 

73,132

   Prepaid expenses and other current assets

64,650

 

39,120

Total current assets

826,638

 

947,642

Property and equipment, net

139,049

 

127,682

Goodwill

397,344

 

288,227

Other intangible assets, net

170,832

 

83,144

Other assets, net

90,491

 

88,387

Total assets

$1,624,354

 

$1,535,082

       

Liabilities and Stockholders' Equity

     

Current liabilities:

     

   Accounts payable

$     41,171

 

$     38,851

   Deferred revenue and returns liability

22,494

 

--

   Deferred income on shipments to distributors

--

 

50,115

   Other current liabilities

81,180

 

73,359

Total current liabilities

144,845

 

162,325

Convertible debt

354,771

 

341,879

Other non-current liabilities

57,448

 

77,862

Total liabilities

557,064

 

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;  

      43,088 and 42,707 shares issued and outstanding at

      December 29, 2018 and December 30, 2017, respectively

4

 

4

   Additional paid-in capital

107,517

 

102,862

   Retained earnings

961,343

 

851,307

   Accumulated other comprehensive loss

(1,574)

 

(1,157)

Total stockholders' equity

1,067,290

 

953,016

Total liabilities and stockholders' equity

$1,624,354

 

$1,535,082

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
 

Year Ended

 

December 29,
2018

 

December 30,
2017

Operating Activities

     

Net income

$  83,591

 

$  47,092

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

     

   Depreciation of property and equipment

15,912

 

14,766

   Amortization of other intangible assets and other assets

44,102

 

27,246

   Amortization of debt discount and debt issuance costs 

12,892

 

10,146

   Stock-based compensation expense

50,077

 

44,752

   Deferred income taxes

(8,210)

 

(26,452)

   Changes in operating assets and liabilities:

     

      Accounts receivable

3,931

 

3,234

      Inventories

7,660

 

(13,416)

      Prepaid expenses and other assets

(4,960)

 

25,266

      Accounts payable

5,952

 

(468)

      Other current liabilities and income taxes

(21,828)

 

61,924

      Deferred income, deferred revenue and returns liability

(6,202)

 

4,453

      Other non-current liabilities

(9,375)

 

(9,022)

Net cash provided by operating activities

173,542

 

189,521

       

Investing Activities

     

Purchases of available-for-sale investments

(395,904)

 

(636,363)

Sales and maturities of available-for-sale investments

474,129

 

294,452

Purchases of property and equipment

(24,462)

 

(12,252)

Purchases of other assets

(11,063)

 

(4,960)

Acquisitions of businesses, net of cash acquired

(239,729)

 

(15,168)

Net cash used in investing activities

(197,029)

 

(374,291)

       

Financing Activities

     

Proceeds from issuance of long-term debt, net

--

 

389,468

Payments on debt

--

 

(72,500)

Repurchases of common stock

(39,276)

 

--

Payment of taxes withheld for vested stock awards

(19,483)

 

(15,753)

Proceeds from the issuance of common stock

13,303

 

11,815

Payment of acquisition-related contingent consideration

(3,380)

 

--

Net cash provided by (used in) financing activities

(48,836)

 

313,030

       

Increase (decrease) in cash and cash equivalents

(72,323)

 

128,260

Cash and cash equivalents at beginning of period

269,366

 

141,106

Cash and cash equivalents at end of period

$197,043

 

$269,366

 

 

SOURCE Silicon Labs