Press Releases

Silicon Labs Announces Third Quarter 2019 Results
- Wireless Strength Drives Record IoT Revenue -

AUSTIN, Texas, Oct. 23, 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 third quarter ended September 28, 2019. Revenue was at the high end of guidance at $223.3 million, up from $206.7 million in the second quarter. Third quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.45 and $0.96, respectively.

(PRNewsfoto/Silicon Labs)

"Third quarter revenue was up eight percent sequentially, with growth across all major product categories, and following the ten percent sequential increase we realized in the second quarter," said Tyson Tuttle, CEO of Silicon Labs. "Despite macro headwinds, ongoing trade policy uncertainties and current semiconductor industry market conditions, we are pleased to deliver two consecutive quarters of strong revenue growth and a return to target operating model profitability."  

Third Quarter Financial Highlights

  • IoT revenue increased to a record $129 million, up 4% sequentially and 3% year-on-year.
  • Infrastructure revenue increased to $45 million, up 3% sequentially and down 14% year-on-year.
  • Broadcast revenue increased to $34 million, up 30% sequentially and down 5% year-on-year.
  • Access revenue increased to $15 million, up 23% sequentially and down 10% year-on-year.

On a GAAP basis:                                                                                         

  • GAAP gross margin was 60.1%.
  • GAAP R&D expenses were $63 million.
  • GAAP SG&A expenses were $48 million.
  • GAAP operating income as a percentage of revenue was 10.7%.
  • GAAP diluted earnings per share were $0.45.

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 60.2%.
  • Non-GAAP R&D expenses were $49 million.
  • Non-GAAP SG&A expenses were $38 million.
  • Non-GAAP operating income as a percentage of revenue was 21.1%.
  • Non-GAAP diluted earnings per share were $0.96.

Product Results

  • Launched a new portfolio of pre-certified Series 2 wireless modules to simplify the development of smart LED lighting, home automation and industrial IoT applications.
  • Announced a collaboration with Allegion, a pioneer in security solutions, to expand IoT wireless capabilities to security products for smart homes and commercial buildings.
  • Announced the industry's broadest portfolio of automotive grade timing solutions including AEC-Q100-qualified clock generators, buffers and PCIe devices.
  • Introduced the Si834x isolated smart switch family designed to optimize performance in harsh industrial environments while offering best-in-class protection and diagnostic reporting features.
  • Enhanced Silicon Labs' Si479xx automotive tuner family with software-defined radio technology addressing the market need to support all global digital radio standards with a common platform.

Business Highlights

  • Hosted the Z-Wave Alliance's Fall Summit in Austin, convening members, partners and thought leaders for a series of presentations, panels and workshops on the future of Z-Wave technology and the smart home market.
  • Announced the acquisition of Qulsar's IEEE 1588 precision time protocol (PTP) software and module assets enabling Silicon Labs to address the fast-growing IEEE 1588 market with turnkey, carrier-grade solutions simplifying integration and accelerating time to market for a wide range of applications.
  • Awarded the Chamberlain Group's "Innovation and Technology Solutions" supplier award.
  • Added Megan Lueders to Silicon Labs' executive team as Chief Marketing Officer to lead the company's global marketing team responsible for brand management, sales pipeline acceleration and customer experience.

Business Outlook

The company expects fourth quarter revenue to be in the range of $217 to $227 million, with Infrastructure up, IoT flat, and a decline in Broadcast and Access, and estimates the following:

On a GAAP basis:

  • GAAP gross margin at approximately 60.3%.
  • GAAP operating expenses at approximately $113 million.
  • GAAP effective tax rate of 8.0%.
  • GAAP diluted earnings per share between $0.33 and $0.43.

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 60.5%.
  • Non-GAAP operating expenses at approximately $90 million.
  • Non-GAAP effective tax rate at 11.5%.
  • Non-GAAP diluted earnings per share between $0.84 and $0.94.

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 10135403. The replay will be available through November 23, 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

 

Nine Months Ended

 

September 28,
2019

 

September 29,
2018

 

September 28,
2019

 

September 29,
2018

Revenues

$223,294

 

$230,243

 

$618,116

 

$652,733

Cost of revenues

89,204

 

94,616

 

241,103

 

261,577

Gross profit

134,090

 

135,627

 

377,013

 

391,156

Operating expenses:

             

   Research and development

62,552

 

61,091

 

187,974

 

175,414

   Selling, general and administrative

47,718

 

49,406

 

145,571

 

148,896

Operating expenses

110,270

 

110,497

 

333,545

 

324,310

Operating income

23,820

 

25,130

 

43,468

 

66,846

Other income (expense):

             

   Interest income and other, net

3,172

 

2,109

 

9,691

 

6,920

   Interest expense

(5,126)

 

(4,932)

 

(15,128)

 

(14,703)

Income before income taxes

21,866

 

22,307

 

38,031

 

59,063

Provision (benefit) for income taxes

1,685

 

(5,454)

 

28,481

 

(9,383)

Net income

$  20,181

 

$  27,761

 

$    9,550

 

$  68,446

               

Earnings per share:

             

   Basic

$      0.47

 

$      0.64

 

$      0.22

 

$      1.59

   Diluted

$      0.45

 

$      0.63

 

$      0.22

 

$      1.55

               

Weighted-average common shares outstanding:

             

   Basic

43,358

 

43,256

 

43,311

 

43,177

   Diluted

44,634

 

44,194

 

44,120

 

44,135

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

 

Non-GAAP Income
Statement Items

 

Three Months Ended

September 28, 2019

   

GAAP

Measure

 

GAAP

Percent of
Revenue

 

Stock

Compensation
Expense

 

Intangible
Asset
Amortization

 

Non-GAAP

Measure

 

Non-GAAP

Percent of
Revenue

Revenues

 

$223,294

                   
                         

Gross profit

 

134,090

 

60.1%

 

$    344

 

$      --

 

$134,434

 

60.2%

                         

Research and

   development

 

62,552

 

28.0%

 

6,474

 

6,946

 

49,132

 

22.0%

                         

Selling, general and

   administrative

 

47,718

 

21.4%

 

6,970

 

2,469

 

38,279

 

17.1%

                         

Operating income

 

23,820

 

10.7%

 

13,788

 

9,415

 

47,023

 

21.1%

                         
                         

Non-GAAP

Earnings Per Share

 

Three Months Ended

September 28, 2019

   

GAAP

Measure

 

Stock

Compensation
Expense*

 

Intangible
Asset
Amortization*

 

Non-cash
Interest
Expense*

 

Income Tax
Adjustments

 

Non-GAAP

Measure

Net income

 

$20,181

 

$13,788

 

$9,415

 

$2,930

 

$(3,627)

 

$42,687

                         

Diluted shares

   outstanding

 

44,634

                 

44,634

                         

Diluted earnings

   per share

 

$    0.45

                 

$    0.96

 

* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

 

Business Outlook

 

Three Months Ending

December 28, 2019

   

GAAP

Measure

 

Non-GAAP

Adjustments

 

Non-GAAP

Measure

Gross margin

 

60.3%

 

0.2%

 

60.5%

             

Operating expenses

 

$113

 

$23

 

$90

             

Effective tax rate

 

8.0%

 

3.5%

 

11.5%

             

Diluted earnings per share - low

 

$0.33

 

$0.51

 

$0.84

             

Diluted earnings  per share - high

 

$0.43

 

$0.51

 

$0.94

 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 
 

September 28,
2019

 

December 29,
2018

Assets

     

Current assets:

     

   Cash and cash equivalents

$   237,056

 

$   197,043

   Short-term investments

457,879

 

416,779

   Accounts receivable, net

76,169

 

73,194

   Inventories

71,453

 

74,972

   Prepaid expenses and other current assets

52,609

 

64,650

Total current assets

895,166

 

826,638

Property and equipment, net

136,601

 

139,049

Goodwill

397,344

 

397,344

Other intangible assets, net

140,941

 

170,832

Other assets, net

67,126

 

90,491

Total assets

$1,637,178

 

$1,624,354

       

Liabilities and Stockholders' Equity

     

Current liabilities:

     

   Accounts payable

$     38,724

 

$     41,171

   Deferred revenue and returns liability

21,827

 

22,494

   Other current liabilities

71,485

 

81,180

Total current liabilities

132,036

 

144,845

Convertible debt

364,802

 

354,771

Other non-current liabilities

56,586

 

57,448

Total liabilities

553,424

 

557,064

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;  

      43,373 and 43,088 shares issued and outstanding at

      September 28, 2019 and December 29, 2018, respectively

4

 

4

   Additional paid-in capital

112,251

 

107,517

   Retained earnings

970,893

 

961,343

   Accumulated other comprehensive income (loss)

606

 

(1,574)

Total stockholders' equity

1,083,754

 

1,067,290

Total liabilities and stockholders' equity

$1,637,178

 

$1,624,354

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
 

Nine Months Ended

 

September 28,
2019

 

September 29,
2018

Operating Activities

     

Net income

$    9,550

 

$  68,446

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

     

   Depreciation of property and equipment

12,675

 

11,781

   Amortization of other intangible assets and other assets

29,891

 

33,322

   Amortization of debt discount and debt issuance costs 

10,031

 

9,578

   Stock-based compensation expense

40,042

 

36,893

   Deferred income taxes

24,531

 

(2,994)

   Changes in operating assets and liabilities:

     

      Accounts receivable

(2,975)

 

2,518

      Inventories

3,512

 

5,066

      Prepaid expenses and other assets

23,401

 

6,349

      Accounts payable

6,419

 

8,675

      Other current liabilities and income taxes

(15,602)

 

(23,814)

      Deferred income, deferred revenue and returns liability

(667)

 

(2,816)

      Other non-current liabilities

(5,957)

 

(7,878)

Net cash provided by operating activities

134,851

 

145,126

       

Investing Activities

     

Purchases of available-for-sale investments

(306,645)

 

(253,973)

Sales and maturities of available-for-sale investments

268,140

 

371,885

Purchases of property and equipment

(12,773)

 

(18,267)

Purchases of other assets

(7,132)

 

(9,088)

Acquisition of business, net of cash acquired

--

 

(239,729)

Net cash used in investing activities

(58,410)

 

(149,172)

       

Financing Activities

     

Payment of debt issuance costs

(1,127)

 

--

Repurchases of common stock

(26,716)

 

(24,272)

Payment of taxes withheld for vested stock awards

(15,693)

 

(18,927)

Proceeds from the issuance of common stock

7,108

 

6,585

Payment of acquisition-related contingent consideration

--

 

(3,380)

Net cash used in financing activities

(36,428)

 

(39,994)

       

Increase (decrease) in cash and cash equivalents

40,013

 

(44,040)

Cash and cash equivalents at beginning of period

197,043

 

269,366

Cash and cash equivalents at end of period

$237,056

 

$225,326

 

 

SOURCE Silicon Labs