Broadcast Products to Drive Sequential Revenue Decline in Q3
AUSTIN, Texas — (BUSINESS WIRE) — July 29, 2015 — Silicon Labs (NASDAQ: SLAB), a leading provider of microcontroller, wireless connectivity, analog and sensor solutions for the Internet of Things (IoT), today reported financial results for its second quarter ended July 4, 2015. Revenue in the second quarter was within guidance and established a new record at $164.9 million, up from $163.7 million in the first quarter.
Second Quarter Financial Highlights
On a GAAP basis:
- Gross margin was 59.1 percent
- R&D expenses were $47.5 million
- SG&A expenses were $41.0 million
- Operating income as a percentage of revenue was 5.5 percent
- Diluted earnings per share were $0.17
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 60.3 percent
- R&D expenses were $37.4 million
- SG&A expenses were $32.7 million
- Operating income as a percentage of revenue was 17.8 percent
- Diluted earnings per share were $0.56
Business Highlights
- IoT products delivered an all-time high revenue quarter at $68.9 million
- Infrastructure products established record revenue at $30.3 million
- Broadcast revenue was down, at $39.4 million, with weakness in consumer partially offset by a record in automotive
- Access revenue was consistent with expectations at $26.3 million
Product Highlights
- Announced our highly anticipated Thread networking solution, delivering a wireless software stack built upon our many years of expertise and the industry’s most advanced mesh networking software development tools.
- Introduced the easy-to-use Bluetooth Smart Ready® BT121 module, offering a dual-mode solution for applications requiring Bluetooth Smart and Bluetooth Classic connectivity.
- Announced EFM32™ Happy Gecko microcontrollers, providing an energy-friendly, plug-and-play solution for adding USB connectivity to battery-powered IoT applications.
- Released the next generation of the Simplicity Studio™ development environment, enabling concurrent MCU and wireless design for IoT applications.
- Introduced the Si5380 clock IC, the industry’s most highly integrated timing solution for wireless infrastructure applications including small and macro cell base stations.
- Announced the Si88xx family of high-speed, multi-channel digital isolators designed to provide a highly integrated solution for signal and power isolation.
- Introduced the industry’s first complete Wireless M-Bus platform solution designed to simplify the development of wirelessly connected smart meters in the European market.
Business Outlook
The company expects revenue in the third quarter to be in the range of $151 million to $156 million. Third quarter diluted earnings per share are expected to be between $0.04 and $0.10 on a GAAP basis and between $0.39 and $0.45 on a non-GAAP basis.
“We delivered another record quarter, and are encouraged by the traction we are seeing in our strategic growth businesses including our Internet of Things, Infrastructure and Broadcast automotive products,” said Tyson Tuttle, CEO of Silicon Labs. “However, we believe macro trends continue to stifle the global demand for TVs, with the latest market estimates calling for a reduction in unit demand for 2015. Accordingly, we expect third quarter Broadcast revenue to decline again by approximately 15 percent, counter to typical seasonality.”
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 39717393. The replay will be available through August 28, 2015.
About Silicon Labs
Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and system 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; risks related to the successful completion of the development and implementation of Bluegiga’s technology; risks associated with the development of modules and the Company’s limited operating history with modules; risks that the acquisition may not yield the expected benefits due to the failure to properly integrate the acquired business and employees; risks that our competitors that supply products incorporated in Bluegiga’s modules may disrupt such supply; risks that the acquired business’ products and processes under development may fail to achieve market acceptance; risks of disputes regarding the acquired business and intellectual property; 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, the Silicon Labs logo, EFM32 and Simplicity Studio 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 | ||||||||||||||||||||
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July 4,
|
June 28,
|
July 4,
|
June 28,
|
||||||||||||||||||
| Revenues | $ | 164,856 | $ | 154,918 | $ | 328,561 | $ | 300,609 | |||||||||||||
| Cost of revenues | 67,428 | 56,255 | 134,764 | 114,841 | |||||||||||||||||
| Gross margin | 97,428 | 98,663 | 193,797 | 185,768 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Research and development | 47,465 | 41,844 | 94,322 | 84,329 | |||||||||||||||||
| Selling, general and administrative | 40,960 | 36,017 | 83,260 | 70,628 | |||||||||||||||||
| Operating expenses | 88,425 | 77,861 | 177,582 | 154,957 | |||||||||||||||||
| Operating income | 9,003 | 20,802 | 16,215 | 30,811 | |||||||||||||||||
| Other income (expense): | |||||||||||||||||||||
| Interest income | 166 | 200 | 358 | 502 | |||||||||||||||||
| Interest expense | (728 | ) | (780 | ) | (1,473 | ) | (1,578 | ) | |||||||||||||
| Other income (expense), net | 90 | (6 | ) | 498 | 61 | ||||||||||||||||
| Income before income taxes | 8,531 | 20,216 | 15,598 | 29,796 | |||||||||||||||||
| Provision for income taxes | 956 | 5,937 | 1,645 | 7,407 | |||||||||||||||||
|
Net income |
$ | 7,575 | $ | 14,279 | $ | 13,953 | $ | 22,389 | |||||||||||||
| Earnings per share: | |||||||||||||||||||||
| Basic | $ | 0.18 | $ | 0.33 | $ | 0.33 | $ | 0.52 | |||||||||||||
| Diluted | $ | 0.17 | $ | 0.32 | $ | 0.32 | $ | 0.51 | |||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||
| Basic | 42,823 | 43,462 | 42,617 | 43,271 | |||||||||||||||||
| Diluted | 43,461 | 44,218 | 43,305 | 44,137 | |||||||||||||||||
| Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures | ||||||||||||||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||||||||||||||
|
Non-GAAP Income
|
Three Months Ended
|
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|
GAAP
|
GAAP
|
Stock
|
Intangible
|
Acquisition
|
Termination
|
Non-
|
Non-GAAP
|
|||||||||||||||||||||||||||
| Revenues | $ | 164,856 | ||||||||||||||||||||||||||||||||
| Gross margin | 97,428 | 59.1 | % | $ | 229 | $ | 390 | $ | 1,324 | $ | -- | $ | 99,371 | 60.3 | % | |||||||||||||||||||
|
Research and development |
47,465 | 28.8 | % | 4,960 | 5,116 | -- | -- |
37,389 |
22.7 | % | ||||||||||||||||||||||||
|
Selling, general and administrative |
40,960 |
24.8 |
% |
5,868 | 1,219 | 767 |
392 |
32,714 |
19.8 | % | ||||||||||||||||||||||||
| Operating income | 9,003 | 5.5 | % | 11,057 | 6,725 | 2,091 | 392 | 29,268 | 17.8 | % | ||||||||||||||||||||||||
|
Non-GAAP
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Three Months Ended
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GAAP
|
Stock
|
Intangible
|
Acquisition
|
Termination
|
Tax
|
Non-
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||||||||||||||||||||||||||||
| Net income | $ | 7,575 | $ | 11,057 | $ | 6,725 | $ | 2,091 | $ | 392 | $ | (3,379 | ) | $ | 24,461 | |||||||||||||||||||
|
Diluted shares outstanding |
43,461 |
43,461 |
||||||||||||||||||||||||||||||||
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Diluted earnings per share |
$ | 0.17 | $ | 0.56 | ||||||||||||||||||||||||||||||
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* Represents pre-tax amounts |
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Unaudited Forward-Looking Statements Regarding Business Outlook |
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| Business Outlook |
Three Months Ending
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| High | Low | |||||||
| Estimated GAAP diluted earnings per share | $ | 0.10 | $ | 0.04 | ||||
| Estimated non-GAAP charges | 0.35 | 0.35 | ||||||
| Estimated non-GAAP diluted earnings per share | $ | 0.45 | $ | 0.39 | ||||
| Silicon Laboratories Inc. | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (In thousands, except per share data) | ||||||||||
| (Unaudited) | ||||||||||
|
July 4,
|
January 3,
|
|||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 125,051 | $ | 141,706 | ||||||
| Short-term investments | 147,556 | 193,489 | ||||||||
|
Accounts receivable, net of allowances for doubtful accounts of $624 at July 4, 2015 and $786 at January 3, 2015 |
71,403 | 70,367 | ||||||||
| Inventories | 60,746 | 52,631 | ||||||||
| Deferred income taxes | 17,815 | 21,173 | ||||||||
| Prepaid expenses and other current assets | 59,025 | 49,171 | ||||||||
| Total current assets | 481,596 | 528,537 | ||||||||
| Long-term investments | 7,179 | 7,419 | ||||||||
| Property and equipment, net | 130,994 | 132,820 | ||||||||
| Goodwill | 263,925 | 228,781 | ||||||||
| Other intangible assets, net | 128,196 | 115,021 | ||||||||
| Other assets, net | 24,041 | 29,983 | ||||||||
| Total assets | $ | 1,035,931 | $ | 1,042,561 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 34,553 | $ | 38,922 | ||||||
| Current portion of long-term debt | 10,000 | 10,000 | ||||||||
| Accrued expenses | 49,327 | 73,646 | ||||||||
| Deferred income on shipments to distributors | 38,573 | 38,662 | ||||||||
| Income taxes | 942 | 2,084 | ||||||||
| Total current liabilities | 133,395 | 163,314 | ||||||||
| Long-term debt | 74,562 | 77,500 | ||||||||
| Other non-current liabilities | 41,761 | 43,691 | ||||||||
| Total liabilities | 249,718 | 284,505 | ||||||||
| 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; 42,908 and 42,225 shares issued and outstanding at July 4, 2015 and January 3, 2015, respectively |
4 | 4 | ||||||||
| Additional paid-in capital | 44,152 | 29,501 | ||||||||
| Retained earnings | 742,586 | 728,633 | ||||||||
| Accumulated other comprehensive loss | (529 | ) | (82 | ) | ||||||
| Total stockholders' equity | 786,213 | 758,056 | ||||||||
| Total liabilities and stockholders' equity | $ | 1,035,931 | $ | 1,042,561 | ||||||
| Silicon Laboratories Inc. | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (In thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Six Months Ended | ||||||||||
|
July 4,
|
June 28,
|
|||||||||
| Operating Activities | ||||||||||
| Net income | $ | 13,953 | $ | 22,389 | ||||||
| Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||
| Depreciation of property and equipment | 6,029 | 6,427 | ||||||||
| Amortization of other intangible assets and other assets | 14,697 | 8,839 | ||||||||
| Stock-based compensation expense | 21,576 | 18,559 | ||||||||
| Income tax benefit from stock-based awards | 2,781 | 377 | ||||||||
| Excess income tax benefit from stock-based awards | (2,056 | ) | (589 | ) | ||||||
| Deferred income taxes | 3,892 | 4,665 | ||||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | 1,724 | 3,082 | ||||||||
| Inventories | (6,534 | ) | (123 | ) | ||||||
| Prepaid expenses and other assets | 452 | 3,394 | ||||||||
| Accounts payable | (3,359 | ) | 3,846 | |||||||
| Accrued expenses | (1,027 | ) | 19,697 | |||||||
| Deferred income on shipments to distributors | (2,132 | ) | 2,584 | |||||||
| Income taxes | (7,171 | ) | (5,130 | ) | ||||||
| Other non-current liabilities | (5,622 | ) | (24,599 | ) | ||||||
| Net cash provided by operating activities | 37,203 | 63,418 | ||||||||
| Investing Activities | ||||||||||
| Purchases of available-for-sale investments | (46,908 | ) | (117,744 | ) | ||||||
| Proceeds from sales and maturities of available-for-sale investments | 92,759 | 61,803 | ||||||||
| Purchases of property and equipment | (4,714 | ) | (3,339 | ) | ||||||
| Purchases of other assets | (1,871 | ) | (2,726 | ) | ||||||
| Acquisition of business, net of cash acquired | (76,899 | ) | -- | |||||||
| Net cash used in investing activities | (37,633 | ) | (62,006 | ) | ||||||
| Financing Activities | ||||||||||
| Proceeds from issuance of common stock, net of cash paid for withheld taxes | 1,684 | 8,943 | ||||||||
| Excess income tax benefit from stock-based awards | 2,056 | 589 | ||||||||
| Repurchases of common stock | (10,418 | ) | (10,954 | ) | ||||||
| Payment of acquisition-related contingent consideration | (4,464 | ) | -- | |||||||
| Payments on debt | (5,083 | ) | (2,500 | ) | ||||||
| Net cash used in financing activities | (16,225 | ) | (3,922 | ) | ||||||
| Decrease in cash and cash equivalents | (16,655 | ) | (2,510 | ) | ||||||
| Cash and cash equivalents at beginning of period | 141,706 | 95,800 | ||||||||
| Cash and cash equivalents at end of period | $ | 125,051 | $ | 93,290 | ||||||
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Contact:
Silicon Labs
Jalene Hoover, +1 512-428-1610
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