Silicon Laboratories Reports Outstanding Quarterly Performance
Financial Results
The company delivered favorable results across the board during the second quarter. Revenue of $104.6 million exceeded the company's upward guidance revision and represented a seven percent sequential increase. GAAP gross margin was 63.1 percent, GAAP operating income increased by 64 percent sequentially to $18.2 million, and GAAP diluted earnings per share from continuing operations increased significantly to $0.29.
The following non-GAAP results exclude non-cash charges for stock compensation. Non-GAAP gross margin of 63.5 percent was considerably above the company's target range of 60 to 62 percent. Operating expenses were slightly lower than expected, resulting in non-GAAP operating income of $28.3 million or 27 percent of revenue, demonstrating very strong operating performance. It also marks a near tripling of non-GAAP operating income from the same period last year. Non-GAAP diluted earnings per share from continuing operations were $0.47, representing a greater than 20 percent sequential increase. The reconciling charges are set forth in the financial measures table included below.
During the second quarter, the company continued execution of its share repurchase program, completing repurchases totaling $33 million bringing the quarter ending cash, cash equivalents and investments balance to $450 million.
"Management is committed to building a business with the valuable combination of growth, profitability and a strong balance sheet," said Bill Bock, chief financial officer of Silicon Laboratories. "When we last delivered $104 million in quarterly revenue in late 2005 it included the cellular business that we divested last year. We have already achieved the same revenue scale, replacing the volume of the cellular business with other growth products. And, we are considerably more profitable, have more revenue per employee, fewer outstanding shares and an even better cash position."
Business Summary
Revenue growth in the second quarter was driven primarily by the company's voice and embedded modem products. Market share expansion and product refresh cycles supporting the transition to high definition set-top boxes were largely behind the sequential gains.
The company's MCU products had a record quarter, growing double-digits sequentially. The company shipped its one hundred millionth MCU and one hundred thousandth cumulative development kit during the quarter, significant milestones for this rapidly growing business.
Broadcast handset revenue increased, backed by solid design win additions among the top five handset makers. The competitiveness of the company's broadcast products, the adoption of value added products such as transmitters, AM/FM and embedded antenna tuners and the diversified customer base are all benefiting the business.
"Our ability to deliver top-line growth, well above the industry growth rate, while maintaining an attractive gross margin profile demonstrates the power of a diversified business model based on compelling, differentiated technology," said Necip Sayiner, president and chief executive officer of Silicon Laboratories. "We increased a number of our product line growth targets for 2008 and we are seeing new products ramp that we believe will drive growth in 2009."
The company also announced today the close of the acquisition of Integration Associates, which will add close to 100 engineers and a number of new products to the Silicon Labs portfolio. For the third quarter of 2008, the company is guiding revenue in the range of $111 to $115 million, which includes $5 to $6 million of Integration Associates revenue for the approximate two month stub period of consolidated operations.
Webcast and Conference Call
A conference call discussing the second quarter results will follow this press release today at 7:30 a.m. Central Time. An audio webcast will be available simultaneously on Silicon Laboratories' website under Investor Relations (www.silabs.com). A replay will be available after the call at the same website listed above or by calling 1-800-333-1872 or +1 203-369-3250 (international). Replays will be available through August 13, 2008.
About Silicon Laboratories Inc.
Silicon Laboratories Inc. is a leading designer of high-performance, analog-intensive, mixed-signal integrated circuits (ICs) for a broad range of applications. Silicon Laboratories' diverse portfolio of highly integrated, patented solutions is developed by a world-class engineering team with expertise in cutting-edge mixed-signal design. The company has design, engineering, marketing, sales and applications offices throughout North America, Europe and Asia. For more information about Silicon Laboratories, please visit www.silabs.com.
Forward Looking Statements
This press release contains forward-looking statements based on Silicon Laboratories' current expectations. The words "believe," "estimate," "expect," "intend," "anticipate," "plan," "project," "will" and similar phrases as they relate to Silicon Laboratories are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Silicon Laboratories 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 Laboratories may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; volatile stock price; average selling prices of products may decrease significantly and rapidly, dependence on a limited number of products and customers; difficulties developing new products that achieve market acceptance; risks that Silicon Laboratories may not be able to manage strains associated with its growth; dependence on key personnel; difficulties managing our manufacturers and subcontractors; difficulties managing international activities; credit risks associated with our accounts receivable; geographic concentration of manufacturers, assemblers, test service providers and customers in the Pacific Rim that subjects Silicon Laboratories' business and results of operations to risks of natural disasters, epidemics, war and political unrest; product development risks; inventory-related risks; intellectual property litigation risks; risks associated with acquisitions and divestitures; the competitive and cyclical nature of the semiconductor industry and other factors that are detailed in Silicon Laboratories' filings with the SEC. Silicon Laboratories disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Note to editors: Silicon Laboratories, Silicon Labs 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 Six Months Ended
------------------ -------------------
July 5, June 30, July 5, June 30,
2008 2007 2008 2007
--------- -------- -------- ----------
Revenues $104,620 $75,597 $202,799 $149,411
Cost of revenues 38,587 30,233 76,419 58,672
--------- -------- -------- ----------
Gross profit 66,033 45,364 126,380 90,739
Operating expenses:
Research and development 23,378 22,145 48,051 46,952
Selling, general and
administrative 24,486 21,282 49,095 45,574
--------- -------- -------- ----------
Operating expenses 47,864 43,427 97,146 92,526
--------- -------- -------- ----------
Operating income (loss) 18,169 1,937 29,234 (1,787)
Other income (expense):
Interest income 2,406 7,032 7,204 10,867
Interest expense (109) (167) (254) (398)
Other income (expense), net (355) (51) (497) (170)
--------- -------- -------- ----------
Income from continuing
operations before income taxes 20,111 8,751 35,687 8,512
Provision for income taxes 5,468 1,859 10,230 2,366
--------- -------- -------- ----------
Income from continuing
operations 14,643 6,892 25,457 6,146
Income from discontinued
operations, net of income
taxes -- 581 -- 156,940
--------- -------- -------- ----------
Net income $14,643 $7,473 $25,457 $163,086
========= ======== ======== ==========
Basic earnings per share:
Income from continuing
operations $0.30 $0.13 $0.51 $0.11
Net income $0.30 $0.14 $0.51 $2.97
Diluted earnings per share:
Income from continuing
operations $0.29 $0.12 $0.50 $0.11
Net income $0.29 $0.13 $0.50 $2.90
Weighted-average common shares
outstanding:
Basic 48,510 54,901 49,858 54,856
Diluted 49,705 56,312 50,901 56,308
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
----------------- ----------------------------------------------------
Non-GAAP Income Three Months Ended
Statement Items July 5, 2008
----------------- ----------------------------------------------------
Non-GAAP
GAAP Stock Non- Percent
GAAP Percent of Compensation GAAP of
Measure Revenue Expense Measure Revenue
-------- ------------ ------------ ------- --------
Revenues $104,620
Gross profit 66,033 63.1% $380 $66,413 63.5%
Operating income 18,169 17.4% 10,176 28,345 27.1%
----------------- ----------------------------------------------------
Non-GAAP Income Three Months Ended
Statement Items June 30, 2007
----------------- ----------------------------------------------------
Non-GAAP
GAAP Stock Non- Percent
GAAP Percent of Compensation GAAP of
Measure Revenue Expense Measure Revenue
-------- ------------ ------------ ------- --------
Revenues $75,597
Operating income 1,937 2.5% $8,621 $10,558 14.0%
----------------- ----------------------------------
Non-GAAP Diluted
Earnings Per Three Months Ended
Share July 5, 2008
----------------- ----------------------------------
Stock
GAAP Compensation Non-GAAP
Measure Expense Measure
-------- ------------ ------------
Income from
continuing
operations $14,643 $8,711 $23,354
Diluted shares
outstanding 49,705 -- 49,705
Diluted earnings
per share from
continuing
operations $0.29 $0.47
----------------- ----------------------------------
Non-GAAP Diluted
Earnings Per Three Months Ended
Share April 5, 2008
----------------- ----------------------------------
Stock
GAAP Compensation Non-GAAP
Measure Expense Measure
-------- ------------ ------------
Income from
continuing
operations $10,814 $8,974 $19,788
Diluted shares
outstanding 52,000 -- 52,000
Diluted earnings
per share from
continuing
operations $0.21 $0.38
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
July 5, December 29,
2008 2007
--------------- ------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $274,054 $264,408
Short-term investments 118,381 308,566
Accounts receivable, net of allowance
for doubtful accounts of $612 at July
5, 2008 and $517 at December 29, 2007 51,732 51,211
Inventories 29,608 28,587
Deferred income taxes 6,274 6,025
Prepaid expenses and other current
assets 16,906 33,895
--------------- ------------
Total current assets 496,955 692,692
Long-term investments 57,960 --
Property, equipment and software, net 27,984 28,157
Goodwill 73,096 73,199
Other intangible assets, net 16,004 18,077
Other assets, net 31,149 28,121
--------------- ------------
Total assets $703,148 $840,246
=============== ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $31,121 $33,321
Accrued expenses 19,136 26,397
Deferred income on shipments to
distributors 24,796 28,448
Income taxes 976 5,226
--------------- ------------
Total current liabilities 76,029 93,392
Long-term obligations and other
liabilities 47,801 43,309
--------------- ------------
Total liabilities 123,830 136,701
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; 47,917 and
52,810 shares issued and outstanding
at July 5, 2008 and December 29,
2007, respectively 5 5
Additional paid-in capital 156,494 303,682
Retained earnings 425,315 399,858
Accumulated other comprehensive loss (2,496) --
--------------- ------------
Total stockholders' equity 579,318 703,545
--------------- ------------
Total liabilities and stockholders'
equity $703,148 $840,246
=============== ============
SOURCE: Silicon Laboratories Inc.
Silicon Laboratories Inc., Austin
Shannon Pleasant, 512-464-9254
shannon.pleasant@silabs.com