Silicon Laboratories Reports Strong First Quarter Results
Financial Results
The company delivered favorable results across the board during the first quarter. Revenue of $98.2 million exceeded guidance. GAAP gross margin was 61.5 percent, GAAP operating income increased year-over-year to $11 million, and GAAP diluted earnings per share from continuing operations increased significantly compared to the same period last year to $0.21.
The following non-GAAP results exclude certain non-cash charges. Non-GAAP gross margin of 61.8 percent was at the high end of the corporate range of 60 to 62 percent. Operating expenses were slightly lower than expected, resulting in non-GAAP operating income of $21.3 million, or 21.7 percent of revenue, representing very strong operating performance relative to seasonal market trends. 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 was $0.38, representing a year-over-year increase of more than 100 percent. The reconciling charges are set forth in the financial measures table included below.
During the first quarter the company continued aggressive execution of its share repurchase program, completing repurchases totaling $137 million. The company ended the quarter with $467 million in cash, cash equivalents and investments.
Business Summary
Strong operating performance in the first quarter was coupled with a number of positive business drivers. A doubling of channel design wins for the broad-based products year-over-year, a strong quarter of new product announcements and the addition of new tier-one customers and design wins all offer strong indications of solid momentum in the business.
Broadcast revenue to handset customers increased sequentially in what is typically a seasonally weak quarter, demonstrating the strong competitive position of the company's broadcast audio solutions. The company announced new products in both audio and video broadcast that further differentiate Silicon Labs from the competition. The continued adoption of the current portfolio, increasing attach rates and a record number of design wins, clearly demonstrated the strength and long-term potential of the business.
The MCU business was up almost 40 percent over the same quarter last year and down sequentially due to seasonal weakness primarily in the portable navigation market. Record development kit shipments, a high rate of design win activity and new product introductions continued throughout the quarter, including the introduction of the industry's first 8-bit MCUs capable of operating with only a single cell battery. Healthy business trends are expected to drive the MCU product line to sequential revenue growth in the second quarter.
Demand for timing products and stable performance of the company's foundation businesses also supported the strong results.
"We have a global business, a number of new product cycles and new tier-one customers beginning to ramp. We're introducing products at an accelerated pace and continuing to fortify our leadership position in key markets," said Necip Sayiner, president and chief executive officer of Silicon Laboratories. "Together with strong operational performance and conservative financial management, we are delivering a combination of growth and profitability virtually unmatched in our sector."
For the second quarter of 2008, the company is guiding revenue in the range of $98 to $101 million.
Webcast and Conference Call
A conference call discussing the first 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 866-446-5477 or +1 203-369-1151 (international). Replays will be available through May, 14 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
--------------------
April 5, March 31,
2008 2007
--------- ----------
Revenues $98,179 $73,814
Cost of revenues 37,832 28,439
--------- ----------
Gross profit 60,347 45,375
Operating expenses:
Research and development 24,673 24,807
Selling, general and administrative 24,609 24,292
--------- ----------
Operating expenses 49,282 49,099
--------- ----------
Operating income (loss) 11,065 (3,724)
Other income (expense):
Interest income 4,798 3,835
Interest expense (145) (231)
Other income (expense), net (142) (119)
--------- ----------
Income (loss) from continuing operations before
income taxes 15,576 (239)
Provision for income taxes 4,762 507
--------- ----------
Income (loss) from continuing operations 10,814 (746)
Income from discontinued operations, net of
income taxes -- 156,359
--------- ----------
Net income $10,814 $155,613
========= ==========
Basic earnings per share:
Income (loss) from continuing operations $0.21 $(0.01)
Net income $0.21 $2.84
Diluted earnings per share:
Income (loss) from continuing operations $0.21 $(0.01)
Net income $0.21 $2.84
Weighted-average common shares outstanding:
Basic 51,109 54,806
Diluted 52,000 54,806
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
Non-GAAP Income Three Months Ended
Statement Items April 5, 2008
------------------ ---------------------------------------------------
Non-GAAP
GAAP Stock Non- Percent
GAAP Percent of Compensation GAAP of
Measure Revenue Expense Measure Revenue
------- ------------ ------------ ------- --------
Revenues $98,179
Gross profit 60,347 61.5% $370 $60,717 61.8%
Operating income 11,065 11.3% 10,221 21,286 21.7%
------------------ ---------------------------------------------------
Non-GAAP Income Three Months Ended
Statement Items March 31, 2007
------------------ ---------------------------------------------------
Non-GAAP
GAAP Stock Non- Percent
GAAP Percent of Compensation GAAP of
Measure Revenue Expense Measure Revenue
------- ------------ ------------ ------- --------
Revenues $73,814
Operating income
(loss) (3,724) (5.0)% 11,770 8,046 10.9%
------------------ ----------------------------------
Non-GAAP Diluted Three Months Ended
Earnings Per 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
------------------ ----------------------------------
Non-GAAP Diluted Three Months Ended
Earnings Per Share March 31, 2007
------------------ ----------------------------------
Stock
GAAP Compensation Non-GAAP
Measure Expense Measure
------- ------------ ------------
Income (loss) from
continuing
operations $(746) $9,702 $8,956
Diluted shares
outstanding 54,806 -- 54,806
Diluted earnings
(loss) per share
from continuing
operations $(0.01) $0.16
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
April 5, December 29,
2008 2007
----------- ------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $330,871 $264,408
Short-term investments 70,185 308,566
Accounts receivable, net of allowance for
doubtful accounts of $515 at April 5,
2008 and $517 at December 29, 2007 46,355 51,211
Inventories 26,918 28,587
Deferred income taxes 6,261 6,025
Prepaid expenses and other current assets 20,026 33,895
----------- ------------
Total current assets 500,616 692,692
Long-term investments 65,950 --
Property, equipment and software, net 26,814 28,157
Goodwill 73,096 73,199
Other intangible assets, net 17,045 18,077
Other assets, net 30,028 28,121
----------- ------------
Total assets $713,549 $840,246
=========== ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $23,583 $33,321
Accrued expenses 21,846 26,397
Deferred income on shipments to
distributors 27,606 28,448
Income taxes 5,302 5,226
----------- ------------
Total current liabilities 78,337 93,392
Long-term obligations and other liabilities 46,264 43,309
----------- ------------
Total liabilities 124,601 136,701
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; 48,700 and 52,810
shares issued and outstanding at April 5,
2008 and December 29, 2007, respectively 5 5
Additional paid-in capital 180,124 303,682
Retained earnings 410,672 399,858
Accumulated other comprehensive loss (1,853) --
----------- ------------
Total stockholders' equity 588,948 703,545
----------- ------------
Total liabilities and stockholders' equity $713,549 $840,246
=========== ============
SOURCE: Silicon Laboratories Inc.
Silicon Laboratories Inc., Austin
Shannon Pleasant, 512-464 9254
shannon.pleasant@silabs.com