Silicon Laboratories Inc.
Oct 26, 2016

Silicon Labs Announces Record Revenue for Third Quarter 2016

Exceeds Guidance on Revenue, Gross Margin and EPS

AUSTIN, Texas--(BUSINESS WIRE)-- 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 October 1, 2016. Revenue in the third quarter established a new record, exceeding the high end of guidance at $178.1 million, up from $174.9 million in the second quarter. Third quarter GAAP and non-GAAP earnings per share (EPS) exceeded the high end of guidance at $0.47 and $0.77, respectively.

Third Quarter Financial Highlights

On a GAAP basis:

On a non-GAAP basis (results exclude the impact of stock compensation, amortization of acquired intangible assets and certain other items as set forth in the reconciliation tables below):

Product Highlights

Business Outlook

The company expects revenue in the fourth quarter to be in the range of $176 million to $181 million. Fourth quarter diluted earnings per share are expected to be between $0.30 and $0.36 on a GAAP basis, and between $0.62 and $0.68 on a non-GAAP basis.

"We are delighted to report record revenue, including five percent sequential and 14 percent year-on-year growth in product revenue," said Tyson Tuttle, CEO of Silicon Labs. "We are executing on our growth strategy targeting the IoT and Infrastructure markets, and are seeing our efforts translate into strong financial results."

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 83473959. The replay will be available through November 26, 2016.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and 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; 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, Simplicity Studio, and USBXpress 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

October 1,
2016

   

October 3,
2015

October 1,
2016

   

October 3,
2015

Revenues $ 178,083 $ 156,194 $ 515,016 $ 484,755
Cost of revenues   69,880     62,759     202,988     197,523  
Gross margin 108,203 93,435 312,028 287,232
Operating expenses:
Research and development 48,437 46,483 149,118 140,805
Selling, general and administrative   38,034     35,729     116,716     118,989  
Operating expenses   86,471     82,212     265,834     259,794  
Operating income 21,732 11,223 46,194 27,438
Other income (expense):
Interest income 331 186 880 544
Interest expense (643 ) (687 ) (1,939 ) (2,160 )
Other, net   (58 )   (280 )   (431 )   218  
Income before income taxes 21,362 10,442 44,704 26,040
Provision for income taxes   1,344     467     3,319     2,112  
 

Net income

$ 20,018   $ 9,975   $ 41,385   $ 23,928  
 
Earnings per share:
Basic $ 0.48 $ 0.24 $ 0.99 $ 0.56
Diluted $ 0.47 $ 0.23 $ 0.98 $ 0.55
 
Weighted-average common shares outstanding:
Basic 41,614 42,331 41,673 42,522
Diluted 42,307 42,795 42,263 43,135
 
   
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
 
   

Non-GAAP Income
Statement Items

Three Months Ended

October 1, 2016

GAAP
Measure

 

GAAP
Percent of
Revenue

 

Stock
Compensation
Expense

 

Intangible
Asset
Amortization

 

Acquisition
Related
Items

 

Termination
Costs

 

Non-
GAAP
Measure

 

Non-GAAP
Percent of
Revenue

Revenues $ 178,083
 
Gross margin 108,203 60.8 % $ 272 $ 130 $ -- $ -- $ 108,605 61.0 %
 

Research and development

48,437 27.2 % 4,580 4,257

--

--

39,600

22.2 %
 

Selling, general and administrative

38,034

21.4

%

4,343 1,420 311 552

31,408

17.7

%

 
Operating income 21,732 12.2 % 9,195 5,807 311 552 37,597 21.1 %
 
   
Non-GAAP

Earnings Per Share

Three Months Ended

October 1, 2016

GAAP
Measure

Stock
Compensation
Expense*

Intangible
Asset
Amortization*

Acquisition
Related
Items*

Termination
Costs*

Income Tax
Adjustments

Non-
GAAP
Measure

Net income $ 20,018 $ 9,195 $ 5,807 $ 311 $ 552 $ (3,467 ) $ 32,416
 

Diluted shares outstanding

42,307

42,307

 

Diluted earnings per share

$ 0.47

$

0.77

 

* Represents pre-tax amounts

 
   

Unaudited Forward-Looking Statements Regarding Business Outlook

 
   
Business Outlook

Three Months Ending
December 31, 2016

High     Low
Estimated GAAP diluted earnings per share $ 0.36 $ 0.30
 
Estimated non-GAAP charges   0.32   0.32
 
Estimated non-GAAP diluted earnings per share $ 0.68 $ 0.62
 
       
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
 
October 1, January 2,
2016 2016
Assets
Current assets:
Cash and cash equivalents $ 148,195 $ 114,085
Short-term investments 131,139 128,901
Accounts receivable, net 84,923 73,601
Inventories 55,051 53,895
Prepaid expenses and other current assets   49,087     52,658  
Total current assets 468,395 423,140
Long-term investments 6,980 7,126
Property and equipment, net 130,318 131,132
Goodwill 272,722 272,722
Other intangible assets, net 100,320 121,354
Other assets, net   51,481     55,989  
Total assets $ 1,030,216   $ 1,011,463  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 39,591 $ 42,127
Current portion of long-term debt -- 10,000
Accrued expenses 51,561 52,131
Deferred income on shipments to distributors 47,057 35,448
Income taxes   5,638     2,615  
Total current liabilities 143,847 142,321
Long-term debt 72,500 67,500
Other non-current liabilities   26,240     40,528  
Total liabilities 242,587 250,349
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; 41,651 and 41,727 shares issued and outstanding at October 1, 2016 and January 2, 2016, respectively

4 4
Additional paid-in capital 6,344 13,868
Retained earnings 781,890 747,749
Accumulated other comprehensive loss   (609 )   (507 )
Total stockholders' equity   787,629     761,114  
Total liabilities and stockholders' equity $ 1,030,216   $ 1,011,463  
 
   
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Nine Months Ended

October 1,

   

October 3,

2016 2015
Operating Activities
Net income $ 41,385 $ 23,928
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment 9,912 9,293
Amortization of other intangible assets and other assets 21,461 21,686
Stock-based compensation expense 30,057 30,798
Income tax benefit (shortfall) from stock-based awards (1,238 ) 1,727
Excess income tax benefit from stock-based awards (373 ) (2,118 )
Deferred income taxes (1,460 ) 1,571
Changes in operating assets and liabilities:
Accounts receivable (11,322 ) 12,097
Inventories (1,558 ) 2,259
Prepaid expenses and other assets 7,404 8,409
Accounts payable 1,280 (5,686 )
Accrued expenses 8,930 (280 )
Deferred income on shipments to distributors 11,573 (2,825 )
Income taxes 1,459 (3,413 )
Other non-current liabilities   (10,891 )   (10,031 )
Net cash provided by operating activities 106,619 87,415
 
Investing Activities
Purchases of available-for-sale investments (131,741 ) (55,433 )
Sales and maturities of available-for-sale investments 129,511 136,262
Purchases of property and equipment (8,545 ) (7,281 )
Purchases of other assets (4,994 ) (5,291 )
Acquisition of business, net of cash acquired   --     (76,899 )
Net cash used in investing activities (15,769 ) (8,642 )
 
Financing Activities
Proceeds from issuance of long-term debt, net -- 81,238
Payments on debt (5,000 ) (92,206 )
Repurchases of common stock (40,543 ) (71,448 )
Payment of taxes withheld for vested stock awards (10,521 ) (12,652 )
Proceeds from the issuance of common stock 8,451 12,575
Excess income tax benefit from stock-based awards 373 2,118
Payment of acquisition-related contingent consideration   (9,500 )   (4,464 )
Net cash used in financing activities   (56,740 )   (84,839 )
 
Decrease in cash and cash equivalents 34,110 (6,066 )
Cash and cash equivalents at beginning of period   114,085     141,706  
Cash and cash equivalents at end of period $ 148,195   $ 135,640  

Silicon Labs
Jalene Hoover, +1 512-428-1610
Jalene.Hoover@silabs.com

Source: Silicon Labs

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