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Silicon Labs Announces Third Quarter 2020 Results

-- Strong Results Driven by Record IoT Revenue --

AUSTIN, Texas, Oct. 28, 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 third quarter ended October 3, 2020. Revenue exceeded the top end of the guidance range at $221.3 million, up from $207.5 million in the second quarter. Third quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.07 and $0.73, respectively.

"Third quarter revenue exceeded the high end of our guidance range at $221.3 million," said Tyson Tuttle, CEO of Silicon Labs. "Revenue was considerably stronger than expected, with our IoT products leading the way with a record quarter. We see sustained acceleration towards a more connected world, which our products are well-suited to address."

Third Quarter Financial Highlights

On a GAAP basis:

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

Product Results

Business Highlights

Business Outlook

The company expects fourth quarter revenue to be in the range of $221 to $231 million, with IoT and Infrastructure & Automotive up, and estimates the following:

On a GAAP basis:

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

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 10145993. The replay will be available through November 28, 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: the impact of COVID-19 on the U.S. and global economy, including the restrictions on travel and transportation and other actions taken by governmental authorities and disruptions to the business of our customers or our global supply chain that have occurred or may occur in the future, the ongoing impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs; 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, particularly with respect to China); 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; absence of long-term commitments from 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 or pandemics, 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.

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)



Three Months Ended


Nine Months Ended


October 3,
2020


September 28,
2019


October 3,
2020


September 28,
2019

Revenues

$221,350


$223,294


$643,760


$618,116

Cost of revenues

91,276


89,204


258,209


241,103

Gross profit

130,074


134,090


385,551


377,013

Operating expenses:








   Research and development

71,969


62,552


214,030


187,974

   Selling, general and administrative

48,483


47,718


150,883


145,571

Operating expenses

120,452


110,270


364,913


333,545

Operating income

9,622


23,820


20,638


43,468

Other income (expense):








   Interest income and other, net

2,044


3,172


8,562


9,691

   Interest expense

(8,604)


(5,126)


(25,923)


(15,128)

Income before income taxes

3,062


21,866


3,277


38,031

Provision (benefit) for income taxes

(100)


1,685


(306)


28,481

 

Net income

$    3,162


$  20,181


$    3,583


$    9,550









Earnings per share:








   Basic

$      0.07


$      0.47


$      0.08


$      0.22

   Diluted

$      0.07


$      0.45


$      0.08


$      0.22









Weighted-average common shares outstanding:








   Basic

43,815


43,358


43,737


43,311

   Diluted

44,328


44,634


44,254


44,120

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)


Non-GAAP Income
Statement Items


Three Months Ended

October 3, 2020



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


$221,350
































Gross profit


130,074


58.8%


$     390


$        --


$1,233


$   --


$131,697


59.5%


















Research and

   development


71,969


32.5%


7,384


8,954


--


37


55,594


25.1%


















Selling, general and

   administrative


48,483


 

22.0%


6,785


2,894


--


153


38,651


 

17.5%


















Operating income


9,622


4.3%


14,559


11,848


1,233


190


37,452


16.9%



Non-GAAP
Earnings Per Share


Three Months Ended
October 3, 2020



GAAP

Measure


Stock

Compensation
Expense*


Intangible
Asset
Amortization*


Acquisition
Related
Items*


Restructuring
Charges*


Interest
Expense

Adjustments*


Income

Tax

Adjustments


Non-
GAAP
Measure

Net income


$  3,162


$14,559


$11,848


$1,233


$190


$6,373


$(4,853)


$32,512


















Diluted shares

   outstanding


 

44,328














44,328


















Diluted earnings

   per share


$    0.07














 

$    0.73


* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)


Business Outlook


Three Months Ending

January 2, 2021



GAAP

Measure


Non-GAAP

Adjustments*


Non-GAAP

Measure

Gross margin


59%


0%


59%








Operating expenses


$123


$28


$95








Effective tax rate


0.0%


13.0%


13.0%








Diluted earnings per share - low


$0.02


$0.66


$0.68








Diluted earnings per share - high


$0.12


$0.66


$0.78


* Non-GAAP adjustments include the following estimates: stock compensation expense of $16.0 million, intangible asset amortization of $12.0 million, and interest expense adjustments of $6.0 million, and associated tax impact from the aforementioned items.

 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)



October 3,
2020


December 28,
2019

Assets




Current assets:




   Cash and cash equivalents

$   230,358


$   227,146

   Short-term investments

491,428


498,825

   Accounts receivable, net

80,460


75,639

   Inventories

66,159


73,057

   Prepaid expenses and other current assets

69,244


69,192

Total current assets

937,649


943,859

Property and equipment, net

139,673


135,939

Goodwill

631,932


398,402

Other intangible assets, net

178,076


134,279

Other assets, net

55,745


62,374

Total assets

$1,943,075


$1,674,853





Liabilities and Stockholders' Equity




Current liabilities:




   Accounts payable

$     46,228


$     38,899

   Deferred revenue and returns liability

22,323


19,251

   Other current liabilities

82,595


79,551

Total current liabilities

151,146


137,701

Convertible debt

561,678


368,257

Other non-current liabilities

60,200


53,844

Total liabilities

773,024


559,802

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;  

      43,827 and 43,496 shares issued and outstanding at

      October 3, 2020 and December 28, 2019, respectively

4


4

   Additional paid-in capital

183,471


133,793

   Retained earnings

984,716


980,608

   Accumulated other comprehensive income

1,860


646

Total stockholders' equity

1,170,051


1,115,051

Total liabilities and stockholders' equity

$1,943,075


$1,674,853

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Nine Months Ended


October 3,
2020


September 28,
2019

Operating Activities




Net income

$    3,583


$    9,550

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




   Depreciation of property and equipment

12,896


12,675

   Amortization of other intangible assets and other assets

32,741


29,891

   Amortization of debt discount and debt issuance costs 

14,946


10,031

   Loss on extinguishment of convertible debt

3,977


--

   Stock-based compensation expense

44,329


40,042

   Deferred income taxes

(7,382)


24,531

   Changes in operating assets and liabilities:




      Accounts receivable

(2,902)


(2,975)

      Inventories

11,283


3,512

      Prepaid expenses and other assets

(6,162)


23,401

      Accounts payable

6,103


6,419

      Other current liabilities and income taxes

3,648


(15,602)

      Deferred revenue and returns liability

2,643


(667)

      Other non-current liabilities

7,260


(5,957)

Net cash provided by operating activities

126,963


134,851





Investing Activities




Purchases of available-for-sale investments

(418,227)


(306,645)

Sales and maturities of available-for-sale investments

427,235


268,140

Purchases of property and equipment

(15,247)


(12,773)

Purchases of other assets

(1,280)


(7,132)

Acquisition of business, net of cash acquired

(316,809)


--

Net cash used in investing activities

(324,328)


(58,410)





Financing Activities




Proceeds from issuance of debt

845,000


--

Payments on debt

(618,729)


(1,127)

Repurchases of common stock

(16,287)


(26,716)

Payment of taxes withheld for vested stock awards

(17,562)


(15,693)

Proceeds from the issuance of common stock

8,155


7,108

Net cash provided by (used in) financing activities

200,577


(36,428)





Increase in cash and cash equivalents

3,212


40,013

Cash and cash equivalents at beginning of period

227,146


197,043

Cash and cash equivalents at end of period

$230,358


$237,056

 

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SOURCE Silicon Labs

Contact:
Company Name: Silicon Labs
George Lane
Phone: +1 (512) 712-0019
Email Contact
Web: http://www.silabs.com
Financial data for Silicon Labs