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Silicon Labs Announces Fourth Quarter 2019 Results

January 29, 2020
-- Continued Industry Leadership in a Challenging Macro Environment --

AUSTIN, Texas, Jan. 29, 2020 /PRNewswire/ -- Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its fourth quarter ended December 28, 2019. Revenue was within the guidance range at $219.4 million, down from $223.3 million in the third quarter. Fourth quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.22 and $0.84, respectively.

(PRNewsfoto/Silicon Labs)

"Despite a challenging macro environment, we are pleased to have outperformed the market with secular growth drivers in IoT and Infrastructure providing some offset to macro weakness," said Tyson Tuttle, CEO of Silicon Labs. "IoT and Infrastructure now represent 80 percent of our total revenue mix, with each offering a double-digit growth opportunity backed by our large pipeline and strong market traction."

Fourth Quarter Financial Highlights

  • IoT revenue declined to $128 million, down 1% sequentially and up 7% year-on-year.
  • Infrastructure revenue increased to $48 million, up 7% sequentially and 5% year-on-year.
  • Broadcast revenue declined to $28 million, down 17% sequentially and 20% year-on-year.
  • Access revenue increased to $15 million, up 4% sequentially and 1% year-on-year.

On a GAAP basis:                                                                                         

  • GAAP gross margin was 60.7%.
  • GAAP R&D expenses were $69 million.
  • GAAP SG&A expenses were $51 million.
  • GAAP operating income as a percentage of revenue was 6.0%.
  • GAAP diluted earnings per share were $0.22.

On a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, restructuring charges, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

  • Non-GAAP gross margin was 60.9%.
  • Non-GAAP R&D expenses were $52 million.
  • Non-GAAP SG&A expenses were $39 million.
  • Non-GAAP operating income as a percentage of revenue was 19.3%.
  • Non-GAAP diluted earnings per share were $0.84.

Product Results

  • Collaborated with the Z-Wave® Alliance to open the Z-Wave Specification as a ratified, multi-source wireless smart home standard available to all silicon and stack vendors for development.
  • Launched the Bluetooth® EFR32BG22 system-on-chip solution delivering a market-leading combination of security features, wireless performance, energy efficiency, and software tools and stacks to meet the demand for high-volume, battery-powered IoT products.
  • Partnered with Quuppa, a world leader in advanced location systems, to deliver a highly accurate indoor asset tracking solution combining Quuppa's Intelligent Location System with asset tags based on Silicon Labs' Bluetooth products.
  • Announced a collaboration with MicroEJ, a leader in trusted embedded environments, to provide an integrated Wi-Fi® solution to securely and cost effectively connect a wide range of IoT devices.
  • Collaborated with Keysight, a test and measurement solutions provider, to streamline the validation of timing solutions critical to system-level designs.

Business Highlights

  • Won the Global Semiconductor Alliance's (GSA) "Most Respected Public Semiconductor Company" award for the fifth year in a row.
  • Joined the Connected Home over IP project launched by Amazon, Apple, Google and the Zigbee® Alliance to develop and promote standardization of the smart home ecosystem to increase compatibility among smart home products, driving adoption and growth in the industry.
  • To further accelerate smart home market growth, unveiled plans to host Silicon Labs' "Works With" Smart Home Conference in Austin, a premier, one-of-a-kind event to be held in September 2020 exclusively for smart home designers and developers interested in creating products that work with the world's largest smart home ecosystems.

Business Outlook

The company expects first quarter revenue to be in the range of $209 to $219 million, with Infrastructure up, Broadcast flat, and declines in IoT and Access, and estimates the following:

On a GAAP basis:

  • GAAP gross margin at approximately 59.5%.
  • GAAP operating expenses at approximately $127 million.
  • GAAP effective tax rate of 0.0%.
  • GAAP diluted (loss)/earnings per share between $(0.03) and $0.07.

On a non-GAAP basis, and excluding the impact of stock compensation, amortization of acquired intangible assets, restructuring charges, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

  • Non-GAAP gross margin between 59.5% and 60.0%.
  • Non-GAAP operating expenses at approximately $97.5 million.
  • Non-GAAP effective tax rate at 11.5%.
  • Non-GAAP diluted earnings per share between $0.57 and $0.67.

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 (877) 344-7529 (US) or (412) 317-0088 (International) and entering access code 10137937. The replay will be available through February 29, 2020.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for a smarter, more connected world. Our award-winning technologies are shaping the future of the Internet of Things, Internet infrastructure, industrial automation, consumer and automotive markets. Our world-class engineering team creates products focused on performance, energy savings, connectivity and simplicity. 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; risks associated with international activities (including trade barriers); intellectual property litigation risks; risks associated with acquisitions and divestitures;  product liability risks; difficulties managing Silicon Labs' distributors, manufacturers and subcontractors; dependence on a limited number of products and customers; 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 its 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 Silicon Labs' products and its 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, and the Silicon Labs logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.

CONTACT: Jalene Hoover, +1 (512) 428-1610, Jalene.Hoover@silabs.com

Silicon Laboratories Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)



Three Months Ended


Year Ended


December 28,
2019


December 29,
2018


December 28,
2019


December 29,
2018

Revenues

$219,438


$215,534


$837,554


$868,267

Cost of revenues

86,167


85,291


327,270


346,868

Gross profit

133,271


130,243


510,284


521,399

Operating expenses:








   Research and development

69,176


62,933


257,150


238,347

   Selling, general and administrative

50,866


48,948


196,437


197,844

Operating expenses

120,042


111,881


453,587


436,191

Operating income

13,229


18,362


56,697


85,208

Other income (expense):








   Interest income and other, net

3,494


(273)


13,185


6,647

   Interest expense

(5,105)


(4,991)


(20,233)


(19,694)

Income before income taxes

11,618


13,098


49,649


72,161

Provision (benefit) for income taxes

1,903


(2,047)


30,384


(11,430)

 

Net income

$    9,715


$  15,145


$  19,265


$  83,591









Earnings per share:








   Basic

$      0.22


$      0.35


$      0.44


$      1.94

   Diluted

$      0.22


$      0.35


$      0.43


$      1.90









Weighted-average common shares outstanding:








   Basic

43,450


43,109


43,346


43,159

   Diluted

44,801


43,774


44,290


44,044

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures


(In thousands, except per share data)


Non-GAAP Income Statement Items


Three Months Ended

December 28, 2019



GAAP

Measure


GAAP

Percent of
Revenue


Stock

Compensation
Expense


Intangible
Asset
Amortization


Acquisition
Related
Items


Restructuring
Charges


Non-GAAP

Measure


Non-GAAP

Percent of
Revenue

Revenues


$219,438
































Gross margin


133,271


60.7%


$     328


$      --


$     55


$      --


$133,654


60.9%


















Research and
 
development


69,176


31.5%


7,157


7,145


 

--


 

2,847


52,027


23.7%


















Selling, general and
  
administrative


50,866


 

23.2%


7,273


2,494


950


791


39,358


 

17.9%


















Operating income


13,229


6.0%


14,758


9,639


1,005


3,638


42,269


19.3%


















Non-GAAP Earnings Per Share


Three Months Ended
December 28, 2019



GAAP

Measure


Stock

Compensation
Expense*


Intangible
Asset
Amortization*


Acquisition
Related
Items*


Restructuring
Charges*


Non-cash
Interest
Expense*


Income

Tax

Adjustments


Non-
GAAP
Measure

Net income


$  9,715


$14,758


$9,639


$1,005


$3,638


$3,001


$(3,918)


$37,838


















Diluted shares
  
outstanding


44,801














 

44,801


















Diluted earnings
  
per share


$    0.22














 

$    0.84



















* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)


Business Outlook


Three Months Ending

April 4, 2020



GAAP

Measure


Non-GAAP

Adjustments


Non-GAAP

Measure

Gross margin


59.50%


0.25%


59.75%








Operating expenses


$127.0


$29.5


$97.5








Effective tax rate


0%


11.5%


11.5%








Diluted earnings (loss) per share - low


$(0.03)


$0.60


$0.57








Diluted earnings per share - high


$0.07


$0.60


$0.67

 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)



December 28,
2019


December 29,
2018

Assets




Current assets:




   Cash and cash equivalents

$   227,146


$   197,043

   Short-term investments

498,825


416,779

   Accounts receivable, net

75,639


73,194

   Inventories

73,057


74,972

   Prepaid expenses and other current assets

69,192


64,650

Total current assets

943,859


826,638

Property and equipment, net

135,939


139,049

Goodwill

398,402


397,344

Other intangible assets, net

134,279


170,832

Other assets, net

62,374


90,491

Total assets

$1,674,853


$1,624,354





Liabilities and Stockholders' Equity




Current liabilities:




   Accounts payable

$     38,899


$     41,171

   Deferred revenue and returns liability

19,251


22,494

   Other current liabilities

79,551


81,180

Total current liabilities

137,701


144,845

Convertible debt

368,257


354,771

Other non-current liabilities

53,844


57,448

Total liabilities

559,802


557,064

Commitments and contingencies




Stockholders' equity:




   Preferred stock – $0.0001 par value; 10,000 shares authorized; no

      shares issued

--


--

   Common stock – $0.0001 par value; 250,000 shares authorized;  

      43,496 and 43,088 shares issued and outstanding at

      December 28, 2019 and December 29, 2018, respectively

4


4

   Additional paid-in capital

133,793


107,517

   Retained earnings

980,608


961,343

   Accumulated other comprehensive income (loss)

646


(1,574)

Total stockholders' equity

1,115,051


1,067,290

Total liabilities and stockholders' equity

$1,674,853


$1,624,354

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Year Ended


December 28,
2019


December 29,
2018

Operating Activities




Net income

$  19,265


$  83,591

Adjustments to reconcile net income to cash provided by operating activities:




   Depreciation of property and equipment

16,883


15,912

   Amortization of other intangible assets and other assets

39,584


44,102

   Amortization of debt discount and debt issuance costs

13,485


12,892

   Stock-based compensation expense

54,799


50,077

   Deferred income taxes

23,048


(8,210)

   Changes in operating assets and liabilities:




      Accounts receivable

(2,401)


3,931

      Inventories

2,171


7,660

      Prepaid expenses and other assets

8,965


(4,960)

      Accounts payable

7,830


5,952

      Other current liabilities and income taxes

(6,826)


(21,828)

      Deferred income, deferred revenue and returns liability

(3,243)


(6,202)

      Other non-current liabilities

(7,038)


(9,375)

Net cash provided by operating activities

166,522


173,542





Investing Activities




Purchases of available-for-sale investments

(424,524)


(395,904)

Sales and maturities of available-for-sale investments

344,937


474,129

Purchases of property and equipment

(16,279)


(24,462)

Purchases of other assets

(8,396)


(11,063)

Acquisitions of businesses, net of cash acquired

(2,510)


(239,729)

Net cash used in investing activities

(106,772)


(197,029)





Financing Activities




Payment of debt issuance costs

(1,132)


--

Repurchases of common stock

(26,716)


(39,276)

Payment of taxes withheld for vested stock awards

(16,295)


(19,483)

Proceeds from the issuance of common stock

14,496


13,303

Payment of acquisition-related contingent consideration

--


(3,380)

Net cash used in financing activities

(29,647)


(48,836)





Increase (decrease) in cash and cash equivalents

30,103


(72,323)

Cash and cash equivalents at beginning of period

197,043


269,366

Cash and cash equivalents at end of period

$227,146


$197,043

 

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SOURCE Silicon Labs

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