Silicon Labs Beats Expectations
Company Reports Solid Top Line Results and Strong Earnings
AUSTIN, Texas--(BUSINESS WIRE)-- Silicon Labs (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported first quarter revenue of $145.4 million, a sequential decline of five percent and an increase of 16 percent compared to the same period a year ago. GAAP diluted earnings per share were up five percent sequentially and an impressive 39 percent year over year. Non-GAAP diluted earnings per share also increased by 37 percent compared to the first quarter of 2012.
Financial Highlights
First quarter revenue declined seasonally, but market share gains enabled significant year over year growth in all major product lines. Gross margin declined sequentially due to product mix and on a GAAP-basis was 60.1 percent. GAAP R&D investment increased to $37.6 million while GAAP SG&A expense decreased to $29.2 million. Resulting GAAP operating income declined to 14.2 percent. GAAP diluted earnings per share increased again to $0.46.
The following non-GAAP results exclude the impact of stock compensation and certain other items as set forth in the reconciliation table below. Gross margin declined sequentially to 60.3 percent for the quarter. Operating expenses increased modestly to 41.7 percent of revenue. R&D and SG&A remained relatively flat at $32.5 million and $28.0 million, respectively, due to disciplined spending. Operating income for the quarter was 18.6 percent. Diluted earnings per share for the quarter were 59 cents.
Business Highlights
The company was able to grow all of its major product lines year over year through increased market share and expansion into new markets. The Broadcast products were up 7 percent sequentially, due to strong growth in both the video and audio products. The company secured record design wins with its market leading video products and grew sequentially as customers ramped up for the new model year.
In the first quarter, the broad-based products were up 15 percent year over year. A 10 percent sequential decline was due primarily to the decline of the touch controller business in handsets. Microcontrollers were down seasonally, and along with the timing and power products were impacted by softness in industrial markets. However, the company secured a record number of broad-based design wins driving confidence in the long-term prospects for continued market share gains.
"Our strategic products are all growing," said Tyson Tuttle, president and CEO of Silicon Labs. "We expect our historical headwinds will be a much smaller percent of our revenue as we exit the second quarter. We're also demonstrating good operating expense control and have a very active R&D pipeline — the right ingredients for another growth year."
Allowing for accelerated declines in legacy handset-related products, the company expects revenue for the second quarter to be $140 to $146 million.
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 simultaneously 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 +1 (404) 537-3406 (international) and by entering 39714733. The replay will be available through May 8.
About Silicon Labs
Silicon Labs is an industry leader in the innovation of high-performance, analog-intensive, mixed-signal ICs. Developed by a world-class engineering team with unsurpassed expertise in mixed-signal design, Silicon Labs' diverse portfolio of patented semiconductor solutions offers customers significant advantages in performance, size and power consumption. For more information about Silicon Labs, please visit 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; stock price volatility; average selling prices of products may decrease significantly and rapidly; difficulties developing new products that achieve market acceptance; dependence on a limited number of products and customers; intellectual property litigation risks; product liability risks; inventory-related risks; risks associated with acquisitions and divestitures; difficulties managing international activities; difficulties managing our distributors, manufacturers and subcontractors; 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; 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; information technology risks; conflict mineral risks; the competitive and cyclical nature of the semiconductor industry 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 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 | ||||||||||
| March 30, | March 31, | |||||||||
| 2013 | 2012 | |||||||||
| Revenues | $ | 145,375 | $ | 125,702 | ||||||
| Cost of revenues | 58,003 | 50,606 | ||||||||
| Gross margin | 87,372 | 75,096 | ||||||||
| Operating expenses: | ||||||||||
| Research and development | 37,582 | 32,930 | ||||||||
| Selling, general and administrative | 29,153 | 25,402 | ||||||||
| Operating expenses | 66,735 | 58,332 | ||||||||
| Operating income | 20,637 | 16,764 | ||||||||
| Other income (expense): | ||||||||||
| Interest income | 335 | 497 | ||||||||
| Interest expense | (842 | ) | (33 | ) | ||||||
| Other income (expense), net | (52 | ) | (111 | ) | ||||||
| Income before income taxes | 20,078 | 17,117 | ||||||||
| Provision for income taxes | 44 | 2,797 | ||||||||
| Net income | $ | 20,034 | $ | 14,320 | ||||||
| Earnings per share: | ||||||||||
| Basic | $ | 0.47 | $ | 0.34 | ||||||
| Diluted | $ | 0.46 | $ | 0.33 | ||||||
| Weighted-average common shares outstanding: | ||||||||||
| Basic | 42,186 | 42,458 | ||||||||
| Diluted | 43,110 | 43,850 | ||||||||
| Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures | ||||||||||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||||||||||
| Non-GAAP Income Statement Items | Three Months Ended March 30, 2013 | |||||||||||||||||||||||||||||
GAAP Measure | GAAP Percent of Revenue | Stock Compensation Expense | Termination Costs and Impairments | Acquisition Related Items | Non-GAAP Measure | Non-GAAP Percent of Revenue | ||||||||||||||||||||||||
| Revenues | $ | 145,375 | ||||||||||||||||||||||||||||
| Gross margin | 87,372 | 60.1 | % | $ | 253 | $ | -- | $ | -- | $ | 87,625 | 60.3 | % | |||||||||||||||||
Research and development | 37,582 | 25.9 | % | 3,339 | 1,700 | -- | 32,543 | 22.4 | % | |||||||||||||||||||||
Selling, general and administrative | 29,153 | 20.0 | % | 2,668 | 1,187 | (2,750 | ) | 28,048 | 19.3 | % | ||||||||||||||||||||
| Operating expenses | 66,735 | 45.9 | % | 6,007 | 2,887 | (2,750 | ) | 60,591 | 41.7 | % | ||||||||||||||||||||
| Operating income | 20,637 | 14.2 | % | 6,260 | 2,887 | (2,750 | ) | 27,034 | 18.6 | % | ||||||||||||||||||||
| Non-GAAP Diluted Earnings Per Share | Three Months Ended March 30, 2013 | |||||||||||||||||||||||||||||
GAAP Measure | Stock Compensation Expense | Termination Costs and Impairments | Acquisition Related Items | Non-GAAP Measure | ||||||||||||||||||||||||||
| Net income | $ | 20,034 | $ | 5,512 | $ | 2,598 | $ | (2,750 | ) | $ | 25,394 | |||||||||||||||||||
| Diluted shares outstanding | 43,110 | -- | -- | -- | 43,110 | |||||||||||||||||||||||||
| Diluted earnings per share | $ | 0.46 | $ | 0.59 | ||||||||||||||||||||||||||
| Silicon Laboratories Inc. | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (In thousands, except per share data) | ||||||||||
| (Unaudited) | ||||||||||
| March 30, | December 29, | |||||||||
| 2013 | 2012 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 79,263 | $ | 105,426 | ||||||
| Short-term investments | 229,808 | 176,565 | ||||||||
Accounts receivable, net of allowances for doubtful accounts of $673 at March 30, 2013 and $670 at December 29, 2012 | 72,766 | 78,023 | ||||||||
| Inventories | 56,949 | 49,579 | ||||||||
| Deferred income taxes | 15,411 | 16,652 | ||||||||
| Prepaid expenses and other current assets | 48,514 | 41,437 | ||||||||
| Total current assets | 502,711 | 467,682 | ||||||||
| Long-term investments | 11,189 | 11,369 | ||||||||
| Property and equipment, net | 135,761 | 135,271 | ||||||||
| Goodwill | 130,265 | 130,265 | ||||||||
| Other intangible assets, net | 87,910 | 90,750 | ||||||||
| Other assets, net | 28,797 | 36,629 | ||||||||
| Total assets | $ | 896,633 | $ | 871,966 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 31,279 | $ | 29,622 | ||||||
| Current portion of long-term debt | 5,000 | 5,000 | ||||||||
| Accrued expenses | 36,886 | 40,410 | ||||||||
| Deferred income on shipments to distributors | 29,661 | 30,259 | ||||||||
| Income taxes | 978 | 1,087 | ||||||||
| Total current liabilities | 103,804 | 106,378 | ||||||||
| Long-term debt | 92,500 | 95,000 | ||||||||
| Other non-current liabilities | 19,419 | 20,615 | ||||||||
| Total liabilities | 215,723 | 221,993 | ||||||||
| 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; 42,401 and 41,879 shares issued and outstanding at March 30, 2013 and December 29, 2012, respectively | 4 | 4 | ||||||||
| Additional paid-in capital | 20,954 | 10,122 | ||||||||
| Retained earnings | 660,827 | 640,793 | ||||||||
| Accumulated other comprehensive loss | (875 | ) | (946 | ) | ||||||
| Total stockholders' equity | 680,910 | 649,973 | ||||||||
| Total liabilities and stockholders' equity | $ | 896,633 | $ | 871,966 | ||||||
| Silicon Laboratories Inc. | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (In thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 30, | March 31, | |||||||||
| 2013 | 2012 | |||||||||
| Operating Activities | ||||||||||
| Net income | $ | 20,034 | $ | 14,320 | ||||||
| Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||
| Depreciation of property and equipment | 3,297 | 3,543 | ||||||||
| Amortization of other intangible assets and other assets | 2,840 | 2,280 | ||||||||
| Stock-based compensation expense | 6,260 | 6,693 | ||||||||
| Income tax benefit (detriment) from employee stock-based awards | (363 | ) | 2,656 | |||||||
| Excess income tax benefit from employee stock-based awards | (217 | ) | (2,426 | ) | ||||||
| Deferred income taxes | 7,521 | 3,101 | ||||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | 5,256 | (6,074 | ) | |||||||
| Inventories | (7,350 | ) | 447 | |||||||
| Prepaid expenses and other assets | 4,620 | 4,581 | ||||||||
| Accounts payable | 2,356 | 4,209 | ||||||||
| Accrued expenses | (4,330 | ) | (5,087 | ) | ||||||
| Deferred income on shipments to distributors | (598 | ) | 3,307 | |||||||
| Income taxes | (9,818 | ) | (5,403 | ) | ||||||
| Net cash provided by operating activities | 29,508 | 26,147 | ||||||||
| Investing Activities | ||||||||||
| Purchases of available-for-sale investments | (78,851 | ) | (82,845 | ) | ||||||
| Proceeds from sales and maturities of available-for-sale investments | 25,674 | 60,518 | ||||||||
| Purchases of property and equipment | (3,898 | ) | (2,428 | ) | ||||||
| Purchases of other assets | (1,228 | ) | (850 | ) | ||||||
| Net cash used in investing activities | (58,303 | ) | (25,605 | ) | ||||||
| Financing Activities | ||||||||||
| Proceeds from issuance of common stock, net of shares withheld for taxes | 4,915 | 106 | ||||||||
| Excess income tax benefit from employee stock-based awards | 217 | 2,426 | ||||||||
| Payments on debt | (2,500 | ) | -- | |||||||
| Net cash provided by financing activities | 2,632 | 2,532 | ||||||||
| Increase (decrease) in cash and cash equivalents | (26,163 | ) | 3,074 | |||||||
| Cash and cash equivalents at beginning of period | 105,426 | 94,964 | ||||||||
| Cash and cash equivalents at end of period | $ | 79,263 | $ | 98,038 | ||||||
Silicon Labs
Shannon Pleasant, 512-464-9254
shannon.pleasant@silabs.com
Source: Silicon Laboratories Inc.
News Provided by Acquire Media