Silicon Laboratories Inc.
Oct 23, 2014

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:

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):

Business Highlights

Product Highlights

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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