Silicon Labs Announces Record Revenue
Broad-based Product Revenue Achieves All-Time High in Third Quarter
AUSTIN, Texas--(BUSINESS WIRE)-- Silicon Labs (NASDAQ: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported financial results for its third quarter ended September 27, 2014. Revenue in the third quarter exceeded the top end of guidance and established a new record at $158.1 million, up from $154.9 million in the second quarter.
Financial Highlights
On a GAAP basis:
- Gross margin was 60.8 percent
- R&D expenses were $42.5 million
- SG&A expenses were $44.0 million
- Operating income as a percentage of revenue was 6.1 percent
- Diluted earnings per share were $0.13
GAAP SG&A expenses include a $6.0 million charge due to improved expectations regarding the achievement of the Energy Micro earn-out, reflecting strong performance in acquired 32-bit MCU revenue. The charge has an approximate $0.14 per share impact.
On a non-GAAP basis (results exclude the impact of stock compensation, amortization from acquired intangible assets and certain other items as set forth in the reconciliation tables below):
- Gross margin was 61.1 percent
- R&D expenses were $34.8 million
- SG&A expenses were $32.1 million
- Operating income as a percentage of revenue was 18.9 percent
- Diluted earnings per share were $0.52
Business Highlights
- Broad-based revenue established a new record at $80.3 million, driven by record performance in Silicon Labs' microcontroller, wireless and sensor products.
- Broadcast revenue exceeded expectations at $53.1 million, which included $2.1 million from a patent sale.
- Access revenue also exceeded expectations at $24.8 million.
Product Highlights
- As a founding member of the Thread Group, announced the creation of a Thread software beta program for selected customers and ecosystem partners, helping them accelerate their product development plans for IP-based mesh networking.
- Introduced environmental and biometric sensing development kits that help developers simplify their designs in target applications including security systems, smart thermostats and wearables.
- Launched the industry's most advanced automotive tuner ICs, the Si4790x family, offering a global radio solution supporting all leading broadcast standards worldwide.
- Introduced the Si534x "clock-tree-on-a-chip" clock portfolio, providing the industry's lowest jitter and the greatest frequency flexibility, and supporting the use of a single clock to replace multiple timing components.
- Launched the ClockBuilder Pro software tool enabling designers to generate sophisticated clock configurations in less than five minutes, minimizing software development overhead and supporting the industry's shortest lead times.
Business Outlook
The company expects revenue in the fourth quarter to be in the range of $155 million to $161 million and anticipates another record in its Broad-based products. Fourth quarter diluted earnings per share are expected to be between $0.12 and $0.18 on a GAAP basis and between $0.43 and $0.49 on a non-GAAP basis.
"We are delighted to report record revenue in the third quarter and have set an all-time high in Broad-based product revenue," said Tyson Tuttle, CEO of Silicon Labs. "Our multi-year investment strategy in our MCU, wireless, sensor, power and timing products is driving strong results in our two largest markets, the Internet of Things and Internet Infrastructure, where we have continued to gain share and see exciting prospects for growth."
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 under Investor Relations (www.silabs.com). 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 39717390. The replay will be available through November 23, 2014.
About Silicon Labs
Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and system solutions for the Internet of Things, Internet Infrastructure, industrial control, 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 unsurpassed 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; 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 Laboratories logo 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 | Nine Months Ended | ||||||||||||||||||||
| September 27, | September 28, | September 27, | September 28, | ||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
| Revenues | $ | 158,144 | $ | 146,933 | $ | 458,753 | $ | 433,851 | |||||||||||||
| Cost of revenues | 62,033 | 58,772 | 176,874 | 169,545 | |||||||||||||||||
| Gross margin | 96,111 | 88,161 | 281,879 | 264,306 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Research and development | 42,517 | 40,662 | 126,846 | 115,631 | |||||||||||||||||
| Selling, general and administrative | 43,990 | 37,009 | 114,618 | 98,519 | |||||||||||||||||
| Operating expenses | 86,507 | 77,671 | 241,464 | 214,150 | |||||||||||||||||
| Operating income | 9,604 | 10,490 | 40,415 | 50,156 | |||||||||||||||||
| Other income (expense): | |||||||||||||||||||||
| Interest income | 231 | 129 | 733 | 616 | |||||||||||||||||
| Interest expense | (768 | ) | (813 | ) | (2,346 | ) | (2,486 | ) | |||||||||||||
| Other income (expense), net | 42 | (23 | ) | 103 | 39 | ||||||||||||||||
| Income before income taxes | 9,109 | 9,783 | 38,905 | 48,325 | |||||||||||||||||
| Provision for income taxes | 3,501 | 3,252 | 10,908 | 9,148 | |||||||||||||||||
| Net income | $ | 5,608 | $ | 6,531 | $ | 27,997 | $ | 39,177 | |||||||||||||
| Earnings per share: | |||||||||||||||||||||
| Basic | $ | 0.13 | $ | 0.15 | $ | 0.65 | $ | 0.92 | |||||||||||||
| Diluted | $ | 0.13 | $ | 0.15 | $ | 0.64 | $ | 0.90 | |||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||
| Basic | 43,112 | 42,684 | 43,218 | 42,477 | |||||||||||||||||
| Diluted | 43,815 | 43,922 | 44,030 | 43,437 | |||||||||||||||||
| Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures | |||||||||||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||||||||
| Non-GAAP Income Statement Items | Three Months Ended September 27, 2014 | ||||||||||||||||||||||||||||
| GAAP Measure | GAAP Percent of Revenue | Stock Compensation Expense | Intangible Asset Amortization | Acquisition Related Items | Non-GAAP Measure | Non-GAAP Percent of Revenue | |||||||||||||||||||||||
| Revenues | $ | 158,144 | |||||||||||||||||||||||||||
| Gross margin | 96,111 | 60.8 | % | $ | 201 | $ | 390 | $ | -- | $ | 96,702 | 61.1 | % | ||||||||||||||||
Research and development | 42,517 | 26.9 | % | 4,713 | 3,008 | -- | 34,796 | 22.0 | % | ||||||||||||||||||||
Selling, general and administrative | 43,990 | 27.8 | % | 4,700 | 729 | 6,483 | 32,078 | 20.2 | % | ||||||||||||||||||||
| Operating income | 9,604 | 6.1 | % | 9,614 | 4,127 | 6,483 | 29,828 | 18.9 | % | ||||||||||||||||||||
| Non-GAAP Diluted Earnings Per Share | Three Months Ended September 27, 2014 | ||||||||||||||||||||||||||||
| GAAP Measure | Stock Compensation Expense | Intangible Asset Amortization | Acquisition Related Items | Non-GAAP Measure | |||||||||||||||||||||||||
| Net income | $ | 5,608 | $ | 8,456 | $ | 2,407 | $ | 6,483 | $ | 22,954 | |||||||||||||||||||
| Diluted shares outstanding | 43,815 | -- | -- | -- | 43,815 | ||||||||||||||||||||||||
| Diluted earnings per share | $ | 0.13 | $ | 0.52 | |||||||||||||||||||||||||
| Unaudited Forward-Looking Statements Regarding Business Outlook | ||||||||
| Business Outlook | Three Months Ending January 3, 2015 | |||||||
| High | Low | |||||||
| Estimated GAAP diluted earnings per share | $ | 0.18 | $ | 0.12 | ||||
| Estimated non-GAAP charges | 0.31 | 0.31 | ||||||
| Estimated non-GAAP diluted earnings per share | $ | 0.49 | $ | 0.43 | ||||
| Silicon Laboratories Inc. | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (In thousands, except per share data) | ||||||||||
| (Unaudited) | ||||||||||
| September 27, | December 28, | |||||||||
| 2014 | 2013 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 111,705 | $ | 95,800 | ||||||
| Short-term investments | 216,973 | 179,593 | ||||||||
| Accounts receivable, net of allowances for doubtful accounts of $784 at September 27, 2014 and $797 at December 28, 2013 | 71,355 | 72,124 | ||||||||
| Inventories | 47,015 | 45,271 | ||||||||
| Deferred income taxes | 18,064 | 18,878 | ||||||||
| Prepaid expenses and other current assets | 39,756 | 47,651 | ||||||||
| Total current assets | 504,868 | 459,317 | ||||||||
| Long-term investments | 11,505 | 10,632 | ||||||||
| Property and equipment, net | 128,433 | 132,445 | ||||||||
| Goodwill | 228,781 | 228,781 | ||||||||
| Other intangible assets, net | 119,854 | 131,593 | ||||||||
| Other assets, net | 21,476 | 28,382 | ||||||||
| Total assets | $ | 1,014,917 | $ | 991,150 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 28,361 | $ | 22,126 | ||||||
| Current portion of long-term debt | 11,250 | 7,500 | ||||||||
| Accrued expenses | 74,732 | 45,975 | ||||||||
| Deferred income on shipments to distributors | 37,068 | 30,853 | ||||||||
| Income taxes | 1,319 | 2,693 | ||||||||
| Total current liabilities | 152,730 | 109,147 | ||||||||
| Long-term debt | 80,000 | 87,500 | ||||||||
| Other non-current liabilities | 32,217 | 55,941 | ||||||||
| Total liabilities | 264,947 | 252,588 | ||||||||
| 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; 42,490 and 42,779 shares issued and outstanding at September 27, 2014 and December 28, 2013, respectively | 4 | 4 | ||||||||
| Additional paid-in capital | 31,467 | 48,630 | ||||||||
| Retained earnings | 718,609 | 690,612 | ||||||||
| Accumulated other comprehensive loss | (110 | ) | (684 | ) | ||||||
| Total stockholders' equity | 749,970 | 738,562 | ||||||||
| Total liabilities and stockholders' equity | $ | 1,014,917 | $ | 991,150 | ||||||
| Silicon Laboratories Inc. | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (In thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Nine Months Ended | ||||||||||
| September 27, | September 28, | |||||||||
| 2014 | 2013 | |||||||||
| Operating Activities | ||||||||||
| Net income | $ | 27,997 | $ | 39,177 | ||||||
| Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||
| Depreciation of property and equipment | 9,512 | 10,050 | ||||||||
| Amortization of other intangible assets and other assets | 13,090 | 11,051 | ||||||||
| Stock-based compensation expense | 28,173 | 22,304 | ||||||||
| Income tax benefit (shortfall) from stock-based awards | 413 | (621 | ) | |||||||
| Excess income tax benefit from stock-based awards | (654 | ) | (284 | ) | ||||||
| Deferred income taxes | 3,894 | 6,790 | ||||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | 769 | 12,599 | ||||||||
| Inventories | (1,591 | ) | 6,213 | |||||||
| Prepaid expenses and other assets | 12,627 | (1,606 | ) | |||||||
| Accounts payable | 5,074 | (3,017 | ) | |||||||
| Accrued expenses | 6,966 | (2,864 | ) | |||||||
| Deferred income on shipments to distributors | 6,215 | (3,169 | ) | |||||||
| Income taxes | (4,898 | ) | (1,429 | ) | ||||||
| Net cash provided by operating activities | 107,587 | 95,194 | ||||||||
| Investing Activities | ||||||||||
| Purchases of available-for-sale investments | (137,373 | ) | (164,317 | ) | ||||||
| Proceeds from sales and maturities of available-for-sale investments | 100,009 | 186,936 | ||||||||
| Purchases of property and equipment | (5,500 | ) | (8,984 | ) | ||||||
| Purchases of other assets | (3,339 | ) | (3,499 | ) | ||||||
| Acquisition of businesses, net of cash acquired | -- | (86,441 | ) | |||||||
| Net cash used in investing activities | (46,203 | ) | (76,305 | ) | ||||||
| Financing Activities | ||||||||||
| Proceeds from issuance of common stock, net of shares withheld for taxes | 8,559 | 11,900 | ||||||||
| Excess income tax benefit from stock-based awards | 654 | 284 | ||||||||
| Repurchases of common stock | (50,942 | ) | (7,776 | ) | ||||||
| Payments on debt | (3,750 | ) | (12,184 | ) | ||||||
| Net cash used in financing activities | (45,479 | ) | (7,776 | ) | ||||||
| Increase in cash and cash equivalents | 15,905 | 11,113 | ||||||||
| Cash and cash equivalents at beginning of period | 95,800 | 105,426 | ||||||||
| Cash and cash equivalents at end of period | $ | 111,705 | $ | 116,539 | ||||||
Silicon Labs
Jalene Hoover, +1 512-428-1610
Jalene.Hoover@silabs.com
Source: Silicon Labs
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