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 2, 2016. Revenue in the second quarter exceeded the high end of guidance at $174.9 million, up from $162.0 million in the first quarter. Second quarter GAAP and non-GAAP earnings per share (EPS) exceeded the high end of guidance at $0.37 and $0.75, respectively.
Second Quarter Financial Highlights
- IoT revenue established a new record, increasing to $76.7 million, or 8.3% sequentially
- Infrastructure revenue established a new record, increasing to $35.7 million, or 12.9% sequentially, exclusive of $5 million in patent sale revenue recognized during the quarter
- Broadcast revenue exceeded expectations, declining slightly to $38.0 million, or 1.2% sequentially
- Access revenue declined to $19.5 million, or 7.7% sequentially
On a GAAP basis:
- Gross margin was 61.9%
- R&D expenses were $51.6 million
- SG&A expenses were $39.0 million
- Operating income as a percentage of revenue was 10.1%
- Diluted earnings per share were $0.37
On a non-GAAP basis (results exclude the impact of stock compensation, amortization of acquired intangible assets and certain other items as set forth in the reconciliation tables below):
- Gross margin was 62.3%
- R&D expenses were $40.6 million
- SG&A expenses were $32.5 million
- Operating income as a percentage of revenue was 20.5%
- Diluted earnings per share were $0.75
Product Highlights
- Launched the industry’s first multiband, multiprotocol wireless system-on-chip (SoC) devices, optimized for ultra-low-energy IoT applications and expanding the Wireless Gecko portfolio.
- Released the new Connect networking stack simplifying the development of broad-based, proprietary wireless applications for the IoT.
- Launched the new EZR32HG Happy Gecko family of wireless MCUs optimized for ultra-low-energy, battery-powered wireless applications in the sub-GHz band.
- Introduced industrial-grade Busy Bee 8-bit MCUs designed to operate reliably in harsh industrial environments with temperatures up to 125 °C.
- Released a comprehensive USB Type-C reference design, enabling developers to design USB-C cables and adapters quickly, easily and at minimal cost.
- Introduced a new family of Si534xH clocks providing high-frequency clock synthesis, jitter attenuation and ultra-low phase noise required by coherent optical applications.
Business Outlook
The company expects revenue in the third quarter to be in the range of $171 million to $176 million. Third quarter diluted earnings per share are expected to be between $0.27 and $0.33 on a GAAP basis, and between $0.61 and $0.67 on a non-GAAP basis.
“We are pleased to report exceptional second quarter financial performance, including record revenue in all of our strategic growth products,” said Tyson Tuttle, CEO of Silicon Labs. “We have a 20-year history of leveraging our mixed-signal and RF design expertise to deliver highly integrated solutions, and we have consistently demonstrated our ability to pioneer innovation and achieve market leadership. Our vision is to connect people, devices and data across multiple markets and applications. We are beginning a new chapter in the creation of a more connected world, where the intersection of cloud computing and the proliferation of connected devices will transform our lives and economy in dramatic ways, and Silicon Labs is at the heart of it.”
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 ID 83472104. The replay will be available through August 27, 2016.
About Silicon Labs
Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for the Internet of Things, Infrastructure, industrial automation, consumer and automotive markets. We solve the electronics industry’s toughest problems, providing customers with significant advantages in performance, energy savings, connectivity and design simplicity. Backed by our world-class engineering teams with strong software and mixed-signal design expertise, Silicon Labs empowers developers with the tools and technologies they need to advance quickly and easily from initial idea to final product. www.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 our distributors, manufacturers and subcontractors; 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 our 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 our products and our 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 Income | |||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
July 2, | July 4, | July 2, | July 4, | ||||||||||||||||||
| Revenues | $ | 174,908 | $ | 164,856 | $ | 336,933 | $ | 328,561 | |||||||||||||
| Cost of revenues | 66,614 | 67,428 | 133,108 | 134,764 | |||||||||||||||||
| Gross margin | 108,294 | 97,428 | 203,825 | 193,797 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Research and development | 51,635 | 47,465 | 100,681 | 94,322 | |||||||||||||||||
| Selling, general and administrative | 39,045 | 40,960 | 78,682 | 83,260 | |||||||||||||||||
| Operating expenses | 90,680 | 88,425 | 179,363 | 177,582 | |||||||||||||||||
| Operating income | 17,614 | 9,003 | 24,462 | 16,215 | |||||||||||||||||
| Other income (expense): | |||||||||||||||||||||
| Interest income | 278 | 166 | 549 | 358 | |||||||||||||||||
| Interest expense | (641 | ) | (728 | ) | (1,296 | ) | (1,473 | ) | |||||||||||||
| Other, net | 18 | 90 | (373 | ) | 498 | ||||||||||||||||
| Income before income taxes | 17,269 | 8,531 | 23,342 | 15,598 | |||||||||||||||||
| Provision for income taxes | 1,710 | 956 | 1,975 | 1,645 | |||||||||||||||||
Net income | $ | 15,559 | $ | 7,575 | $ | 21,367 | $ | 13,953 | |||||||||||||
| Earnings per share: | |||||||||||||||||||||
| Basic | $ | 0.37 | $ | 0.18 | $ | 0.51 | $ | 0.33 | |||||||||||||
| Diluted | $ | 0.37 | $ | 0.17 | $ | 0.51 | $ | 0.32 | |||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||
| Basic | 41,775 | 42,823 | 41,702 | 42,617 | |||||||||||||||||
| Diluted | 42,284 | 43,461 | 42,242 | 43,305 | |||||||||||||||||
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures | |||||||||||||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||||||||||||
Non-GAAP Income | Three Months Ended July 2, 2016 | ||||||||||||||||||||||||||||||
GAAP | GAAP | Stock | Intangible | Termination | Non- | Non-GAAP | |||||||||||||||||||||||||
| Revenues | $ | 174,908 | |||||||||||||||||||||||||||||
| Gross margin | 108,294 | 61.9 | % | $ | 269 | $ | 389 | $ | -- | $ | 108,952 | 62.3 | % | ||||||||||||||||||
|
Research and
development | 51,635 | 29.5 | % | 5,205 | 5,616 | 236 | 40,578 | 23.2 | % | ||||||||||||||||||||||
|
Selling, general and
administrative | 39,045 | 22.3 | % | 5,044 | 1,419 | 63 | 32,519 | 18.6 | % | ||||||||||||||||||||||
| Operating income | 17,614 | 10.1 | % | 10,518 | 7,424 | 299 | 35,855 | 20.5 | % | ||||||||||||||||||||||
Non-GAAP | Three Months Ended July 2, 2016 | ||||||||||||||||||||||||||||||
GAAP | Stock | Intangible | Termination | Income Tax | Non- | ||||||||||||||||||||||||||
| Net income | $ | 15,559 | $ | 10,518 | $ | 7,424 | $ | 299 | $ | (2,046 | ) | $ | 31,754 | ||||||||||||||||||
|
Diluted shares
outstanding | 42,284 | 42,284 | |||||||||||||||||||||||||||||
|
Diluted earnings
per share | $ | 0.37 | $ | 0.75 | |||||||||||||||||||||||||||
* Represents pre-tax amounts
Unaudited Forward-Looking Statements Regarding Business Outlook | |||||||||
| Business Outlook | Three Months Ending | ||||||||
| High | Low | ||||||||
| Estimated GAAP diluted earnings per share | $ | 0.33 | $ | 0.27 | |||||
| Estimated non-GAAP charges | 0.34 | 0.34 | |||||||
| Estimated non-GAAP diluted earnings per share | $ | 0.67 | $ | 0.61 | |||||
| Silicon Laboratories Inc. | |||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||
| (In thousands, except per share data) | |||||||||||
| (Unaudited) | |||||||||||
July 2, | January 2, | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 101,334 | $ | 114,085 | |||||||
| Short-term investments | 142,326 | 128,901 | |||||||||
| Accounts receivable, net | 71,990 | 73,601 | |||||||||
| Inventories | 56,388 | 53,895 | |||||||||
| Prepaid expenses and other current assets | 53,326 | 52,658 | |||||||||
| Total current assets | 425,364 | 423,140 | |||||||||
| Long-term investments | 6,921 | 7,126 | |||||||||
| Property and equipment, net | 130,498 | 131,132 | |||||||||
| Goodwill | 272,722 | 272,722 | |||||||||
| Other intangible assets, net | 106,246 | 121,354 | |||||||||
| Other assets, net | 50,837 | 55,989 | |||||||||
| Total assets | $ | 992,588 | $ | 1,011,463 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 41,152 | $ | 42,127 | |||||||
| Current portion of long-term debt | 10,000 | 10,000 | |||||||||
| Accrued expenses | 47,004 | 52,131 | |||||||||
| Deferred income on shipments to distributors | 39,257 | 35,448 | |||||||||
| Income taxes | 3,567 | 2,615 | |||||||||
| Total current liabilities | 140,980 | 142,321 | |||||||||
| Long-term debt | 62,500 | 67,500 | |||||||||
| Other non-current liabilities | 27,959 | 40,528 | |||||||||
| Total liabilities | 231,439 | 250,349 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity: | |||||||||||
|
Preferred stock – $0.0001 par value; 10,000 shares authorized; no
shares issued and outstanding | -- | -- | |||||||||
|
Common stock – $0.0001 par value; 250,000 shares authorized;
41,637 and 41,727 shares issued and outstanding at July 2, 2016 and January 2, 2016, respectively | 4 | 4 | |||||||||
| Additional paid-in capital | -- | 13,868 | |||||||||
| Retained earnings | 761,872 | 747,749 | |||||||||
| Accumulated other comprehensive loss | (727 | ) | (507 | ) | |||||||
| Total stockholders' equity | 761,149 | 761,114 | |||||||||
| Total liabilities and stockholders' equity | $ | 992,588 | $ | 1,011,463 | |||||||
| Silicon Laboratories Inc. | |||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||
| (In thousands) | |||||||||||
| (Unaudited) | |||||||||||
| Six Months Ended | |||||||||||
July 2, | July 4, | ||||||||||
| Operating Activities | |||||||||||
| Net income | $ | 21,367 | $ | 13,953 | |||||||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
| Depreciation of property and equipment | 6,675 | 6,029 | |||||||||
| Amortization of other intangible assets and other assets | 15,534 | 14,697 | |||||||||
| Stock-based compensation expense | 20,861 | 21,576 | |||||||||
| Income tax benefit (shortfall) from stock-based awards | (1,127 | ) | 2,781 | ||||||||
| Excess income tax benefit from stock-based awards | (91 | ) | (2,056 | ) | |||||||
| Deferred income taxes | 817 | 3,892 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | 1,611 | 1,724 | |||||||||
| Inventories | (2,888 | ) | (6,534 | ) | |||||||
| Prepaid expenses and other assets | 3,282 | 452 | |||||||||
| Accounts payable | (1,680 | ) | (3,359 | ) | |||||||
| Accrued expenses | 4,372 | (1,027 | ) | ||||||||
| Deferred income on shipments to distributors | 3,773 | (2,132 | ) | ||||||||
| Income taxes | (1,338 | ) | (7,171 | ) | |||||||
| Other non-current liabilities | (10,737 | ) | (5,622 | ) | |||||||
| Net cash provided by operating activities | 60,431 | 37,203 | |||||||||
| Investing Activities | |||||||||||
| Purchases of available-for-sale investments | (92,222 | ) | (46,908 | ) | |||||||
| Sales and maturities of available-for-sale investments | 78,950 | 92,759 | |||||||||
| Purchases of property and equipment | (5,146 | ) | (4,714 | ) | |||||||
| Purchases of other assets | (2,215 | ) | (1,871 | ) | |||||||
| Acquisition of business, net of cash acquired | -- | (76,899 | ) | ||||||||
| Net cash used in investing activities | (20,633 | ) | (37,633 | ) | |||||||
| Financing Activities | |||||||||||
| Payments on debt | (5,000 | ) | (5,083 | ) | |||||||
| Repurchases of common stock | (36,103 | ) | (10,418 | ) | |||||||
| Payment of taxes withheld for vested stock awards | (9,399 | ) | (10,783 | ) | |||||||
| Proceeds from the issuance of common stock | 7,362 | 12,467 | |||||||||
| Excess income tax benefit from stock-based awards | 91 | 2,056 | |||||||||
| Payment of acquisition-related contingent consideration | (9,500 | ) | (4,464 | ) | |||||||
| Net cash used in financing activities | (52,549 | ) | (16,225 | ) | |||||||
| Decrease in cash and cash equivalents | (12,751 | ) | (16,655 | ) | |||||||
| Cash and cash equivalents at beginning of period | 114,085 | 141,706 | |||||||||
| Cash and cash equivalents at end of period | $ | 101,334 | $ | 125,051 | |||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160727005252/en/
Contacts:
Jalene Hoover, +1-512-428-1610
Jalene.Hoover@silabs.com
