Press Releases

Silicon Labs Announces Second Quarter 2020 Results
-- Strong Results Led by Accelerating Trends in Connectivity --

AUSTIN, Texas, July 29, 2020 /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 4, 2020. Revenue was near the top end of the guidance range at $207.5 million, down from $214.9 million in the first quarter. Second quarter GAAP and non-GAAP diluted earnings (loss) per share (EPS) were $(0.04) and $0.74, respectively.

"Second quarter revenue was at the high end of our guidance range at $207.5 million," said Tyson Tuttle, CEO of Silicon Labs. "Clearly, the global pandemic has and will continue to impact the way people live, work and play. We are well-positioned to execute our strategy in IoT connectivity and internet infrastructure in light of recent trends in the market, which we see accelerating as the world moves even faster to becoming more connected."

Second Quarter Financial Highlights

  • IoT revenue declined to $115.1 million, down 3% sequentially and 8% year-on-year.
  • Infrastructure and Automotive revenue declined to $92.5 million, down 5% sequentially and up 13% year-on-year.

On a GAAP basis:                                                                                         

  • GAAP gross margin was 60.9%.
  • GAAP R&D expenses were $71 million.
  • GAAP SG&A expenses were $48 million.
  • GAAP operating income as a percentage of revenue was 3.4%.
  • GAAP diluted loss per share was $(0.04).

On a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, restructuring charges, non-cash interest expense and other costs associated with convertible notes, and certain other items as set forth in the reconciliation tables below:

  • Non-GAAP gross margin was 61.4%.
  • Non-GAAP R&D expenses were $52 million.
  • Non-GAAP SG&A expenses were $37 million.
  • Non-GAAP operating income as a percentage of revenue was 18.0%.
  • Non-GAAP diluted earnings per share were $0.74.

Product Results

  • Announced the EFP01 PMIC family, a new line of energy-friendly power management ICs serving as dedicated companion chips for EFR32 wireless devices and EFM32 microcontrollers. The EFP01 PMIC family provides a flexible, system-level power management solution enhancing the energy efficiency of battery-powered applications including IoT sensors, asset tags, smart meters, home and building automation, security, and health and wellness products.

Business Highlights

  • Successfully completed the operational integration of Redpine Signals' connectivity business and Hyderabad, India design center.
  • Joined the Wi-SUN Alliance's board of directors to accelerate the global adoption of Wi-SUN. The Wi-SUN Alliance aims to advance seamless, ubiquitous LPWAN connectivity via a standards-based, interoperable solution for global markets.
  • Continued preparation for our first-ever Works With smart home developer conference September 9th – 10th, a two-day virtual event where smart home developers will learn how to connect our platforms, devices and protocols to work with ecosystems from industry leaders including Amazon, Apple HomeKit, Google, Samsung and many others.
  • Migrated marketing and customer engagement initiatives to a virtual environment, holding weekly virtual Tech Talks and BG22 workshops with more attendees, repeat views and more accounts engaged than in-person events of this nature.
  • Added Karuna Annavajjala to Silicon Labs' executive team as Chief Information Officer to lead the company's global IT team responsible for strategic planning, business application platforms, cyber security and service delivery.

Business Outlook

The company expects third quarter revenue to be in the range of $208 to $218 million, with IoT up and Infrastructure & Automotive down, and estimates the following:

On a GAAP basis:

  • GAAP gross margin at approximately 60%.
  • GAAP operating expenses at approximately $118 million.
  • GAAP effective tax rate of 0.0%.
  • GAAP diluted earnings (loss) per share between $(0.01) and $0.09.

On a non-GAAP basis, and excluding the impact of stock compensation, amortization of acquired intangible assets, acquisition related charges, restructuring charges, non-cash interest expense and other costs associated with 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 $92 million.
  • Non-GAAP effective tax rate at 11.5%.
  • Non-GAAP diluted earnings per share between $0.67 and $0.77.

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 10145993. The replay will be available through August 29, 2020.

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: the impact of COVID-19 on the U.S. and global economy, including the restrictions on travel and transportation and other actions taken by governmental authorities and disruptions to the business of our customers or our global supply chain that have occurred or may occur in the future, the ongoing impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs; 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; risks associated with international activities (including trade barriers); intellectual property litigation risks; risks associated with acquisitions and divestitures;  product liability risks; difficulties managing Silicon Labs' distributors, manufacturers and subcontractors; dependence on a limited number of products; absence of long-term commitments from customers; 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 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 or pandemics, 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.

 

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

 
 

Three Months Ended

 

Six Months Ended

 

July 4,
2020

 

June 29,
2019

 

July 4,
2020

 

June 29,
2019

Revenues

$207,533

 

$206,709

 

$422,410

 

$394,822

Cost of revenues

81,222

 

79,660

 

166,933

 

151,899

Gross profit

126,311

 

127,049

 

255,477

 

242,923

Operating expenses:

             

   Research and development

70,838

 

63,856

 

142,061

 

125,422

   Selling, general and administrative

48,404

 

48,637

 

102,400

 

97,853

Operating expenses

119,242

 

112,493

 

244,461

 

223,275

Operating income

7,069

 

14,556

 

11,016

 

19,648

Other income (expense):

             

   Interest income and other, net

3,267

 

3,696

 

6,518

 

6,519

   Interest expense

(11,778)

 

(5,005)

 

(17,319)

 

(10,002)

Income (loss) before income taxes

(1,442)

 

13,247

 

215

 

16,165

Provision (benefit) for income taxes

381

 

29,276

 

(206)

 

26,796

 

Net income (loss)

$   (1,823)

 

$ (16,029)

 

$       421

 

$ (10,631)

               

Earnings (loss) per share:

             

   Basic

$     (0.04)

 

$     (0.37)

 

$      0.01

 

$     (0.25)

   Diluted

$     (0.04)

 

$     (0.37)

 

$      0.01

 

$     (0.25)

               

Weighted-average common shares outstanding:

             

   Basic

43,761

 

43,386

 

43,699

 

43,287

   Diluted

43,761

 

43,386

 

44,219

 

43,287

 

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

 

Non-GAAP Income
Statement Items

 

Three Months Ended

July 4, 2020

   

GAAP

Measure

 

GAAP
Percent of
Revenue

 

Stock

Compensation Expense

 

Intangible Asset Amortization

 

Acquisition Related

 Items

 

Restructuring Charges

 

Non-GAAP

Measure

 

Non-GAAP

Percent of
Revenue

Revenues

 

$207,533

                           
                                 

Gross margin

 

126,311

 

60.9%

 

$     376

 

$       --

 

$   608

 

$     44

 

$127,339

 

61.4%

                                 

Research and

   development

 

70,838

 

34.1%

 

7,072

 

8,454

 

 

2,017

 

844

 

52,451

 

25.3%

                                 

Selling, general and

   administrative

 

48,404

 

 

23.4%

 

7,009

 

2,764

 

 

767

 

397

 

37,467

 

 

18.1%

                                 

Operating income

 

7,069

 

3.4%

 

14,457

 

11,218

 

3,392

 

1,285

 

37,421

 

18.0%

 

Non-GAAP
Earnings Per Share

 

Three Months Ended
July 4, 2020

   

GAAP

Measure

 

Stock

Compensation Expense*

 

Intangible Asset Amortization*

 

Acquisition Related Items*

 

Restructuring Charges*

 

Interest Expense

Adjustments*

 

Income

Tax

Adjustments

 

Non-GAAP
Measure

Net income (loss)

 

$ (1,823)

 

$14,457

 

$11,218

 

$3,392

 

$1,285

 

$8,692

 

$(4,533)

 

$32,688

                                 
   

GAAP

Measure

 

Dilutive Securities Excluded From GAAP Measure Due to Net Loss

 

Non-GAAP
Measure

Diluted shares    outstanding

 

43,761

 

293

 

 

44,054

                                 

Diluted earnings

   (loss) per share

 

$  (0.04)

                         

 

$    0.74

   

*

 Represents pre-tax amounts

 

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

 

Business Outlook

 

Three Months Ending

October 3, 2020

   

GAAP

Measure

 

Non-GAAP

Adjustments*

 

Non-GAAP

Measure

Gross margin

 

60%

 

0.5%

 

60.5%

             

Operating expenses

 

$118

 

$26

 

$92

             

Effective tax rate

 

0.0%

 

11.5%

 

11.5%

             

Diluted earnings (loss) per share - low

 

$(0.01)

 

$0.68

 

$0.67

             

Diluted earnings per share - high

 

$0.09

 

$0.68

 

$0.77

   

*

Non-GAAP adjustments include the following estimates: stock compensation expense of $14.9 million, intangible asset amortization of $11.8 million, acquisition related items of $1.2 million, restructuring charges of $0.04 million, and interest expense adjustments of $6.1 million, and associated tax impact from the aforementioned items. 

 

 

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

 
 

July 4,
2020

 

December 28,
2019

Assets

     

Current assets:

     

   Cash and cash equivalents

$   277,659

 

$   227,146

   Short-term investments

445,685

 

498,825

   Accounts receivable, net

70,487

 

75,639

   Inventories

70,022

 

73,057

   Prepaid expenses and other current assets

53,584

 

69,192

Total current assets

917,437

 

943,859

Property and equipment, net

140,200

 

135,939

Goodwill

631,932

 

398,402

Other intangible assets, net

189,923

 

134,279

Other assets, net

44,215

 

62,374

Total assets

$1,923,707

 

$1,674,853

       

Liabilities and Stockholders' Equity

     

Current liabilities:

     

   Accounts payable

$     40,245

 

$     38,899

   Deferred revenue and returns liability

26,358

 

19,251

   Other current liabilities

68,397

 

79,551

Total current liabilities

135,000

 

137,701

Convertible debt

571,774

 

368,257

Other non-current liabilities

59,287

 

53,844

Total liabilities

766,061

 

559,802

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;  

      43,796 and 43,496 shares issued and outstanding at

      July 4, 2020 and December 28, 2019, respectively

4

 

4

   Additional paid-in capital

173,477

 

133,793

   Retained earnings

981,554

 

980,608

   Accumulated other comprehensive income

2,611

 

646

Total stockholders' equity

1,157,646

 

1,115,051

Total liabilities and stockholders' equity

$1,923,707

 

$1,674,853

 

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

 
 

Six Months Ended

 
 

July 4,
2020

 

June 29,
2019

 

Operating Activities

       

Net income (loss)

$       421

 

$ (10,631)

 

Adjustments to reconcile net income (loss) to cash provided by operating activities:

       

   Depreciation of property and equipment

8,428

 

8,447

 

   Amortization of other intangible assets and other assets

21,568

 

20,476

 

   Amortization of debt discount and debt issuance costs 

8,359

 

6,659

 

   Loss on extinguishment of convertible debt

3,685

 

--

 

   Stock-based compensation expense

29,770

 

26,253

 

   Deferred income taxes

1,177

 

24,043

 

   Changes in operating assets and liabilities:

       

      Accounts receivable

7,070

 

893

 

      Inventories

6,767

 

1,118

 

      Prepaid expenses and other assets

21,821

 

11,326

 

      Accounts payable

(769)

 

5,321

 

      Other current liabilities and income taxes

(15,442)

 

(18,101)

 

      Deferred revenue and returns liability

6,678

 

(1,228)

 

      Other non-current liabilities

970

 

(3,222)

 

Net cash provided by operating activities

100,503

 

71,354

 
         

Investing Activities

       

Purchases of available-for-sale investments

(199,347)

 

(184,170)

 

Sales and maturities of available-for-sale investments

255,112

 

151,428

 

Purchases of property and equipment

(10,394)

 

(9,402)

 

Purchases of other assets

(820)

 

(2,588)

 

Acquisition of business, net of cash acquired

(316,809)

 

--

 

Net cash used in investing activities

(272,258)

 

(44,732)

 
         

Financing Activities

       

Proceeds from issuance of debt

845,000

 

--

 

Payments on debt

(597,446)

 

--

 

Repurchases of common stock

(16,287)

 

(26,716)

 

Payment of taxes withheld for vested stock awards

(16,756)

 

(14,509)

 

Proceeds from the issuance of common stock

7,757

 

7,109

 

Net cash provided by (used in) financing activities

222,268

 

(34,116)

 
         

Increase (decrease) in cash and cash equivalents

50,513

 

(7,494)

 

Cash and cash equivalents at beginning of period

227,146

 

197,043

 

Cash and cash equivalents at end of period

$277,659

 

$189,549

 

 

 

SOURCE Silicon Labs

For further information: George Lane, +1 (512) 712-0019, George.Lane@silabs.com