Silicon Labs Announces Third Quarter 2018 Results
AUSTIN, Texas, Oct. 24, 2018 /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 29, 2018. Revenue in the third quarter established a new, all-time record, exceeding the high end of guidance at $230.2 million, up from $217.1 million in the second quarter. Third quarter GAAP and non-GAAP diluted earnings per share (EPS) established eight-year record highs at $0.63 and $1.01, respectively.
"We are delighted to report outstanding third quarter 2018 financial performance, including 16 percent year-on-year revenue growth," said Tyson Tuttle, CEO of Silicon Labs. "We saw sequential growth in all core business categories in Q3 and delivered record performance in IoT and Infrastructure. We have delivered target operating model performance in top line revenue growth, non-GAAP gross margin, non-GAAP opex and non-GAAP operating margin for the past five quarters."
Third Quarter Financial Highlights
-- IoT revenue increased to $125 million, up 8% sequentially and 25%
year-on-year.
-- Infrastructure revenue increased to $53 million, up 2% sequentially and
35% year-on-year.
-- Broadcast revenue increased to $36 million, up 6% sequentially and down
16% year-on-year.
-- Access revenue increased to $16 million, up 5% sequentially and down 4%
year-on-year.
On a GAAP basis:
-- GAAP gross margin was 58.9%
-- GAAP R&D expenses were $61 million
-- GAAP SG&A expenses were $49 million
-- GAAP operating income as a percentage of revenue was 10.9%
-- GAAP diluted earnings per share were $0.63
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 60.8%
-- Non-GAAP R&D expenses were $47 million
-- Non-GAAP SG&A expenses were $40 million
-- Non-GAAP operating income as a percentage of revenue was 23.0%
-- Non-GAAP diluted earnings per share were $1.01
Product Highlights
-- Released Wireless Xpress modules, enabling developers to move from
product concept to prototyping in a matter of hours instead of weeks,
and without firmware development.
-- Collaborated with Q-Free to create the ParQSense outdoor parking sensor
solution using Silicon Labs' Wonder Gecko wireless MCU, making it faster
and easier for drivers in urban areas to locate open parking spots.
-- Introduced new any-frequency clocks with an integrated quartz crystal,
simplifying board design and guaranteeing reliable start-up and
operation over the lifetime of end products.
Business Highlights
-- Reached a milestone with one billion cumulative units of TV tuners
shipped.
Business Outlook
The company expects revenue in the fourth quarter to be in the range of $221 to $227 million, with IoT up and declines in Infrastructure, Broadcast and Access, and estimates the following:
On a GAAP basis:
-- GAAP gross margin at approximately 60.0%
-- GAAP operating expenses at approximately $111.0 million
-- GAAP effective tax rate at approximately 10.0%
-- GAAP diluted earnings per share between $0.39 and $0.45
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 between 60.0% and 60.5%
-- Non-GAAP operating expenses at approximately $88.0 million
-- Non-GAAP effective tax rate at 13.0%
-- Non-GAAP diluted earnings per share between $0.91 and $0.97
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 88340293. The replay will be available through November 20, 2018.
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 29,
September 30,
September 29,
September 30,
2018 2017 2018 2017
---
Revenues $230,243 $198,723 $652,733 $567,849
Cost of revenues 94,616 82,149 261,577 232,922
Gross margin 135,627 116,574 391,156 334,927
Operating expenses:
Research and development 61,091 52,000 175,414 156,756
Selling, general and administrative 49,406 39,606 148,896 119,587
Operating expenses 110,497 91,606 324,310 276,343
Operating income 25,130 24,968 66,846 58,584
Other income (expense):
Interest income and other, net 2,109 1,923 6,920 4,094
Interest expense (4,932) (4,764) (14,703) (9,265)
Income before income taxes 22,307 22,127 59,063 53,413
Provision (benefit) for income taxes (5,454) 2,178 (9,383) 1,469
Net income $27,761 $19,949 $68,446 $51,944
===
Earnings per share:
Basic $0.64 $0.47 $1.59 $1.23
Diluted $0.63 $0.46 $1.55 $1.20
Weighted-average common shares outstanding:
Basic 43,256 42,553 43,177 42,376
Diluted 44,194 43,374 44,135 43,194
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
Non-GAAP Income
Three Months Ended
Statement Items
September 29
, 2018
GAAP
GAAP
Stock
Intangible Acquisition Termination
Non-GAAP Non-GAAP
Measure Percent of Asset Related Costs
Revenue
Compensation Amortization Items
Measure Percent of
Expense Revenue
Revenues $230,243
Gross margin 135,627 58.9% $324
$ -- $3,967
$ -- $139,918 60.8%
Research and 61,091 26.5% 6,016 7,810 47,265 20.5%
development
Selling, general and 49,406 21.5% 6,242 3,179 256 39,729 17.3%
administrative
Operating income 25,130 10.9% 12,582 10,989 3,967 256 52,924 23.0%
Non-GAAP
Three Months Ended
Earnings Per Share
September 29
, 2018
---
GAAP
Stock
Intangible Acquisition Termination
Non-cash
Income Tax Non-GAAP
Asset Related Interest Adjustments
Measure
Compensation Amortization*
Costs * Measure
Expense*
Items* Expense*
Net income $27,761 $12,582 $10,989 $3,967 $256 $2,801 $(13,700) $44,656
Diluted shares 44,194 44,194
outstanding
Diluted earnings $0.63 $1.01
per share
* Represents pre-tax amounts
Unaudited Forward-Looking Statements Regarding Business Outlook
(In millions, except per share data)
Business Outlook
Three Months Ending
December 29, 2018
GAAP
Non-GAAP
Non-GAAP
Measure Adjustments
Measure
Gross margin 60.0% 0.0% - 0.5% 60.0% - 60.5%
Operating expenses $111 $23 $88
Effective tax rate 10.0% 3.0% 13.0%
Diluted earnings per share - low $0.39 $0.52 $0.91
Diluted earnings per share - high $0.45 $0.52 $0.97
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
September 29,
December 30,
2018 2017
---
Assets
Current assets:
Cash and cash equivalents $225,326 $269,366
Short-term investments 376,603 494,657
Accounts receivable, net 74,607 71,367
Inventories 77,563 73,132
Prepaid expenses and other current assets 46,952 39,120
Total current assets 801,051 947,642
Property and equipment, net 135,566 127,682
Goodwill 396,689 288,227
Other intangible assets, net 181,611 83,144
Other assets, net 89,372 88,387
Total assets $1,604,289 $1,535,082
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $43,647 $38,851
Deferred revenue and returns liability 25,880 --
Deferred income on shipments to distributors -- 50,115
Other current liabilities 77,821 73,359
Total current liabilities 147,348 162,325
Convertible debt 351,457 341,879
Other non-current liabilities 57,777 77,862
Total liabilities 556,582 582,066
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
43,147 and 42,707 shares issued and outstanding at
September 29, 2018 and December 30, 2017, respectively
Additional paid-in capital 103,169 102,862
Retained earnings 946,201 851,307
Accumulated other comprehensive loss (1,667) (1,157)
Total stockholders' equity 1,047,707 953,016
Total liabilities and stockholders' equity $1,604,289 $1,535,082
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
September 29, September 30,
2018 2017
---
Operating Activities
Net income $68,446 $51,944
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment 11,781 11,068
Amortization of other intangible assets and other assets 33,322 20,531
Amortization of debt discount and debt issuance costs 9,578 6,984
Stock-based compensation expense 36,893 33,007
Deferred income taxes (2,994) (5,703)
Changes in operating assets and liabilities:
Accounts receivable 2,518 (1,587)
Inventories 5,066 (13,196)
Prepaid expenses and other assets 6,349 23,506
Accounts payable 8,675 1,746
Other current liabilities and income taxes (23,814) 9,296
Deferred income, deferred revenue and returns liability (2,816) 11,039
Other non-current liabilities (7,878) (7,269)
Net cash provided by operating activities 145,126 141,366
Investing Activities
Purchases of available-for-sale investments (253,973) (471,938)
Sales and maturities of available-for-sale investments 371,885 143,765
Purchases of property and equipment (18,267) (10,494)
Purchases of other assets (9,088) (2,622)
Acquisition of business, net of cash acquired (239,729) (13,658)
Net cash used in investing activities (149,172) (354,947)
Financing Activities
Proceeds from issuance of long-term debt, net -- 389,468
Payments on debt -- (72,500)
Repurchases of common stock (24,272) --
Payment of taxes withheld for vested stock awards (18,927) (14,870)
Proceeds from the issuance of common stock 6,585 6,836
Payment of acquisition-related contingent consideration (3,380) --
Net cash provided by (used in) financing activities (39,994) 308,934
Increase (decrease) in cash and cash equivalents (44,040) 95,353
Cash and cash equivalents at beginning of period 269,366 141,106
Cash and cash equivalents at end of period $225,326 $236,459
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SOURCE Silicon Labs
