Silicon Labs Announces Record Revenue in Second Quarter 2017
AUSTIN, Texas, July 26, 2017 /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 1, 2017. Revenue in the second quarter exceeded the high end of guidance at $190 million, up from $179 million in the first quarter. Second quarter GAAP and non-GAAP earnings per share (EPS) were $0.38 and $0.79, respectively.
"Our second quarter 2017 financial results reflect outstanding year-on-year progress, with 12 percent growth in product revenue," said Tyson Tuttle, CEO of Silicon Labs. "Five years ago, we accelerated our focus on the Internet of Things through a combination of organic investment and strategic acquisitions. This quarter, IoT surpassed 50 percent of total revenue, driving target model performance in year-on-year product revenue growth, gross margin and operating income. Our strategy is coming together as we focus on core strategic growth drivers and capture share in target markets."
Second Quarter Financial Highlights
-- IoT revenue established a new record, increasing to $98 million, up 11%
sequentially and 27% year-on-year.
-- Infrastructure revenue increased to $38 million, up 6% sequentially and
up 7% year-on-year, exclusive of $5 million of patent sale revenue in
the second quarter of 2016.
-- Broadcast revenue declined to $37 million, down 2% sequentially and 4%
year-on-year.
-- Access revenue declined to $17 million, down 2% sequentially and 10%
year-on-year.
On a GAAP basis:
-- GAAP gross margin was 59.5%.
-- GAAP R&D expenses were $52 million.
-- GAAP SG&A expenses were $40 million.
-- GAAP operating income as a percentage of revenue was 11.0%.
-- GAAP diluted earnings per share were $0.38.
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 59.7%.
-- Non-GAAP R&D expenses were $42 million.
-- Non-GAAP SG&A expenses were $33 million.
-- Non-GAAP operating income as a percentage of revenue was 20.5%.
-- Non-GAAP diluted earnings per share were $0.79.
Product Highlights
-- Launched the new EFM32GG11 Giant Gecko microcontroller, offering the
most advanced capabilities and largest memory footprint in the low-power
MCU market.
-- Introduced a comprehensive suite of software and hardware that supports
the new Bluetooth® mesh specification, addressing smart home, lighting,
beacons and asset tracking applications.
-- Launched the CP2615 USB-to-I2S bridge chip, providing a simple, turnkey
solution for transferring digital audio data.
-- Introduced the Si54x Ultra Series(TM) family of high-performance crystal
oscillators, offering the industry's lowest jitter frequency-flexible
solution and shortest lead times for a wide range of networking and
communications applications.
Business Highlights
-- Delivered the keynote at the Design Automation Conference in Austin,
Texas, on the topic of "Accelerating the IoT."
-- Won Somfy's Supplier Innovation Award for providing groundbreaking
Wireless Gecko silicon and software, enabling flexible control and
integration of Somfy's motorized window coverings into connected living
and building experiences.
Business Outlook
The company expects revenue in the third quarter to be in the range of $193 million to $199 million, and also estimates the following:
On a GAAP basis:
-- GAAP gross margin at approximately 58.5%.
-- GAAP operating expenses between $92.5 and $93 million.
-- GAAP effective tax rate at 11.0%.
-- GAAP diluted earnings per share between $0.35 and $0.41.
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 58.5%.
-- Non-GAAP operating expenses between $74.5 and $75.0 million.
-- Non-GAAP effective tax rate at 11.0%.
-- Non-GAAP diluted earnings per share between $0.78 and $0.84.
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 8461186. The replay will be available through August 26, 2017.
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. 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, the Silicon Labs logo, and Ultra Series 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 Six Months Ended
------------------ ----------------
July 1, July 2, July 1, July 2,
2017 2016 2017 2016
---- ---- ---- ----
Revenues $190,098 $174,908 $369,126 $336,933
Cost of revenues 76,906 66,614 150,773 133,108
------ ------ ------- -------
Gross margin 113,192 108,294 218,353 203,825
Operating expenses:
Research and
development 52,432 51,635 104,756 100,681
Selling, general
and administrative 39,826 39,045 79,981 78,682
------ ------
Operating expenses 92,258 90,680 184,737 179,363
------ ------ ------- -------
Operating income 20,934 17,614 33,616 24,462
Other income (expense):
Interest income and
other, net 1,595 296 2,171 176
Interest expense (4,699) (641) (4,501) (1,296)
Income before
income taxes 17,830 17,269 31,286 23,342
Provision (benefit)
for income taxes 1,261 1,710 (709) 1,975
----- ----- ---- -----
$16,569 $15,559 $31,995 $21,367
Net income
===
Earnings per share:
Basic $0.39 $0.37 $0.76 $0.51
Diluted $0.38 $0.37 $0.74 $0.51
Weighted-average common shares outstanding:
Basic 42,478 41,775 42,287 41,702
Diluted 43,178 42,284 43,104 42,242
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
Non-GAAP Income Statement
Items Three Months Ended
July 1, 2017
--- ------------
GAAP GAAP Stock Intangible Acquisition Non-GAAP Non-GAAP
Measure Percent of Compensation Asset Related Measure Percent of
Revenue Expense Amortization Items Revenue
------- ------- ------------ ----- -------
Revenues $190,098
Gross margin 113,192 59.5% $264 $ -- $ -- $113,456 59.7%
Research and 52,432 27.6% 5,503 5,048 41,881 22.1%
development --
Selling, general and 39,826 5,399 1,647 234 32,546
administrative 20.9% 17.1%
Operating income 20,934 11.0% 11,166 6,695 234 39,029 20.5%
Non-GAAP Earnings Per Share Three Months Ended
July 1, 2017
------------
GAAP Stock Intangible Acquisition Non-cash Income Tax Non-GAAP
Asset Related Interest Adjustments Measure
Measure Compensation Amortization* Items* Expense*
Expense*
-------
Net income $16,569 $11,166 $6,695 $234 $2,640 $(3,319) $33,985
Diluted shares 43,178
outstanding 43,178
Diluted earnings $0.38
per share $0.79
* Represents pre-tax amounts
Unaudited Forward-Looking Statements Regarding Business Outlook
(In millions, except per share data)
Business
Outlook Three Months Ending
September 30, 2017
------------------
GAAP Non-GAAP Non-GAAP
Measure Adjustments Measure
------- ----------- -------
Gross margin 58.5% 0.0% 58.5%
Operating
expenses $92.5 - $93 $18 $74.5 - $75
Effective tax
rate 11.0% 0.0% 11.0%
Diluted
earnings per
share -low $0.35 $0.43 $0.78
Diluted
earnings per
share -high $0.41 $0.43 $0.84
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
July 1, December 31,
2017 2016
---- ----
Assets
Current assets:
Cash and cash
equivalents $210,615 $141,106
Short-term investments 451,114 153,961
Accounts receivable,
net 75,488 74,401
Inventories 67,427 59,578
Prepaid expenses and
other current assets 46,862 61,805
------ ------
Total current assets 851,506 490,851
Long-term investments 5,379 5,196
Property and equipment,
net 130,909 129,559
Goodwill 288,629 276,130
Other intangible
assets, net 96,819 103,565
Other assets, net 61,085 76,543
------ ------
Total assets $1,434,327 $1,081,844
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $39,989 $39,577
Accrued expenses 50,797 50,100
Deferred income on
shipments to
distributors 48,914 45,568
Income taxes 3,543 4,450
----- -----
Total current
liabilities 143,243 139,695
Long-term debt -- 72,500
Convertible debt 335,639 --
Other non-current
liabilities 43,240 42,691
------ ------
Total liabilities 522,122 254,886
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; 4 4
42,539 and 41,889 shares issued
and outstanding at
July 1, 2017 and December 31, 2016,
respectively
Additional paid-in
capital 76,409 24,463
Retained earnings 836,210 801,999
Accumulated other
comprehensive income
(loss) (418) 492
---- ---
Total stockholders'
equity 912,205 826,958
------- -------
Total liabilities and
stockholders' equity $1,434,327 $1,081,844
========== ==========
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
----------------
July 1, July 2,
2017 2016
---- ----
Operating Activities
Net
income $31,995 $21,367
Adjustments to reconcile net
income to cash provided by
operating activities:
Depreciation
of
property
and
equipment 7,308 6,675
Amortization
of
other
intangible
assets
and
other
assets 13,571 15,534
Amortization
of
debt
discount
and
debt
issuance
costs 3,907 --
Stock-
based
compensation
expense 21,652 20,861
Income
tax
benefit
(shortfall)
from
stock-
based
awards -- (1,218)
Deferred
income
taxes (6,242) 817
Changes in operating assets and
liabilities:
Accounts
receivable (887) 1,611
Inventories (7,737) (2,888)
Prepaid
expenses
and
other
assets 12,539 3,282
Accounts
payable 2,363 (1,680)
Accrued
expenses 141 4,372
Deferred
income
on
shipments
to
distributors 3,251 3,773
Income
taxes (127) (1,338)
Other
non-
current
liabilities (1,169) (10,737)
------ -------
Net
cash
provided
by
operating
activities 80,565 60,431
Investing Activities
Purchases
of
available-
for-
sale
investments (389,234) (92,222)
Sales
and
maturities
of
available-
for-
sale
investments 92,307 78,950
Purchases
of
property
and
equipment (8,390) (5,146)
Purchases
of
other
assets (1,784) (2,215)
Acquisition
of
business,
net
of
cash
acquired (13,658) --
Net
cash
used
in
investing
activities (320,759) (20,633)
Financing Activities
Proceeds
from
issuance
of
long-
term
debt,
net 389,468 --
Payments
on
debt (72,500) (5,000)
Repurchases
of
common
stock -- (36,103)
Payment
of
taxes
withheld
for
vested
stock
awards (14,101) (9,308)
Proceeds
from
the
issuance
of
common
stock 6,836 7,362
Payment
of
acquisition-
related
contingent
consideration -- (9,500)
Net
cash
provided
by
(used
in)
financing
activities 309,703 (52,549)
------- -------
Increase
(decrease)
in
cash
and
cash
equivalents 69,509 (12,751)
Cash
and
cash
equivalents
at
beginning
of
period 141,106 114,085
------- -------
Cash
and
cash
equivalents
at
end
of
period $210,615 $101,334
======== ========
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SOURCE Silicon Laboratories, Inc.
