Press releases

Silicon Labs Announces Third Quarter 2019 Results

23 October 2019

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

 

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SOURCE Silicon Labs