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Silicon Labs Announces Record IoT Revenue for Third Quarter 2021

IoT Leader Reports Accelerating Adoption Across Entire Wireless Portfolio

AUSTIN, Texas, Oct. 27, 2021 — (PRNewswire) — Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported strong financial results for the third quarter, which ended October 2, 2021. Revenue from continuing operations exceeded the top of the guidance range at $185 million, up 9% sequentially and 39% year-on-year.

"I'm really proud of what our team has accomplished," said Silicon Labs President Matt Johnson. "We brought the industry together, delivered significant innovation and drove record revenue, all while navigating a uniquely challenging environment."

"IoT solutions are being adopted at a rapid pace in large, diverse, and fast-growing home and industrial end markets," said Silicon Labs CEO Tyson Tuttle. "Ten years ago, Silicon Labs set its sights on being a leader in IoT. I am confident in Matt's ability to carry that vision forward, building on a strong foundation."

During the third quarter, Silicon Labs completed the divestiture of its Infrastructure and Automotive (I&A) business to Skyworks Solutions, Inc. (NASDAQ: SWKS) for $2.75 billion in an all-cash transaction. Accordingly, all information included below is to be considered from continuing operations unless explicitly noted as "discontinued operations."

Third Quarter Financial Highlights

Results on a GAAP basis:                                                                             

Results 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 were as follows:

Business Highlights

Business Outlook

The company expects fourth quarter revenue to be in the range of $195 to $205 million. The company also estimates the following results:

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:

Share Repurchase Program

As of October 2, 2021, the company had repurchased $54 million under its $150 million repurchase program previously announced on May 19, 2021. In addition, on October 21, 2021, the Board of Directors authorized the repurchase of up to an incremental $400 million of the company's common stock. In connection with this authorization, the company intends to enter into an accelerated share repurchase (ASR) agreement with an investment bank under which it will repurchase $400 million of its common stock on terms to be negotiated, subject to customary adjustments. The final settlement of the ASR is expected to be completed in the first quarter of 2022.

With the anticipated completion of the ASR, the previously executed "modified Dutch auction" tender offer, and open market stock repurchases completed year-to-date, the company will have returned approximately $1.1 billion of the proceeds from the divestiture of the infrastructure and automotive business. John Hollister, senior vice president and chief financial officer, said, "This accelerated share repurchase is the next step in our capital deployment program and demonstrates our continued commitment to deliver value to our shareholders through a prudent capital allocation strategy."

Earnings Webcast and Conference Call    

Silicon Labs will host an earnings conference call to discuss the quarterly results and answer questions at 7:30 am CDT today. An audio webcast will be available on Silicon Labs' website ( www.silabs.com) under Investor Relations. The company will post an audio recording of the event at silabs.com/investors and make a replay available through November 24, 2021, online or by calling (877) 344-7529 (US) or (412) 317-0088 (international) and entering access code 10160443.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leader in secure, intelligent wireless technology for a more connected world. Our integrated hardware and software platform, intuitive development tools, thriving ecosystem and robust support make us an ideal long-term partner in building advanced industrial, commercial, home and life applications. We make it easy for developers to solve complex wireless challenges throughout the product lifecycle and get to market quickly with innovative solutions that transform industries, grow economies, and improve lives. 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 effect of the Skyworks transaction on the ability of Silicon Labs to retain and hire key personnel and maintain relationships with its customers, suppliers, advertisers, partners and others with whom it does business, or on its operating results and businesses generally; risks associated with the disruption of management's attention from ongoing business operations due to such transaction; the timing and scope of anticipated share repurchases, including the anticipated ASR transaction, and/or dividends; 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 and/or obtaining sufficient supply from 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 and other factors that are detailed in the SEC filings of Silicon Laboratories Inc. The level of share repurchases and/or dividends depends on market conditions and the level of other uses of cash.  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 2,
2021


October 3, 2
020


October 2,
2021


October 3,
2020

Revenues

$   184,831


$132,731


$   512,180


$365,099

Cost of revenues

75,322


57,247


214,619


154,189

Gross profit

109,509


75,484


297,561


210,910

Operating expenses:








   Research and development

72,656


58,929


201,503


174,631

   Selling, general and administrative

46,128


40,154


131,535


124,956

Operating expenses

118,784


99,083


333,038


299,587

Operating loss

(9,275)


(23,599)


(35,477)


(88,677)

Other income (expense):








   Interest income and other, net

5,516


2,044


9,038


8,562

   Interest expense

(6,595)


(8,604)


(24,405)


(25,923)

Loss from continuing operations before income taxes

(10,354)


(30,159)


(50,844)


(106,038)

Provision (benefit) for income taxes

9,386


(3,457)


12,543


(11,900)

Loss from continuing operations

(19,740)


(26,702)


(63,387)


(94,138)

Income from discontinued operations, net of income taxes

2,106,796


29,864


2,183,884


97,721









Net income

$2,087,056


$    3,162


$2,120,497


$    3,583









Basic earnings (loss) per share:








   Continuing operations

$        (0.45)


$      (0.61)


$        (1.44)


$     (2.15)

   Net income

$       48.11


$       0.07


$       48.08


$      0.08









Diluted earnings (loss) per share:








   Continuing operations

$         (0.45)


$      (0.61)


$        (1.44)


$     (2.15)

   Net income

$        46.76


$       0.07


$       46.71


$      0.08









Weighted-average common shares outstanding:








      Basic

43,385


43,815


44,103


43,737

      Diluted

44,634


44,328


45,394


44,254

 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)



October 2,
2021


January 2,
2021

Assets




Current assets:




   Cash and cash equivalents

$1,362,412


$   202,720

   Short-term investments

1,364,095


521,963

   Accounts receivable, net

72,596


95,169

   Inventories

59,114


47,861

   Prepaid expenses and other current assets

61,936


87,103

   Current assets of discontinued operations

--


21,005

Total current assets

2,920,153


975,821

Property and equipment, net

143,340


135,803

Goodwill

376,389


376,389

Other intangible assets, net

129,512


163,483

Other assets, net

70,108


76,675

Non-current assets of discontinued operations

--


265,316

Total assets

$3,639,502


$1,993,487





Liabilities and Stockholders' Equity




Current liabilities:




   Accounts payable

$     57,975


$     54,949

   Current portion of convertible debt, net

--


134,480

   Deferred revenue and returns liability

11,329


12,986

   Other current liabilities

389,071


81,650

   Current liabilities of discontinued operations

--


433

Total current liabilities

458,375


284,498

Convertible debt, net

445,110


428,945

Other non-current liabilities

88,434


79,752

Non-current liabilities of discontinued operations

--


451

Total liabilities

991,919


793,646

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;  

      40,547 and 43,925 shares issued and outstanding at

      October 2, 2021 and January 2, 2021, respectively

4


4

   Additional paid-in capital

--


204,359

   Retained earnings

2,648,190


993,664

   Accumulated other comprehensive income (loss)

(611)


1,814

Total stockholders' equity

2,647,583


1,199,841

Total liabilities and stockholders' equity

$3,639,502


$1,993,487

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Nine Months Ended


October 2,
2021


October 3,
2020


Operating Activities





Net income

$2,120,497


$    3,583


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

   continuing operations:





   Income from discontinued operations, net of income taxes

(2,183,884)


(97,721)


   Depreciation of property and equipment

12,925


11,789


   Amortization of intangible assets and other assets

33,971


31,118


   Amortization of debt discount and debt issuance costs 

17,278


14,946


   Loss on extinguishment of convertible debt

3,370


3,977


   Stock-based compensation expense

36,916


36,252


   Deferred income taxes

(3,132)


(7,382)


   Changes in operating assets and liabilities:





      Accounts receivable

22,573


(2,902)


      Inventories

(11,320)


12,499


      Prepaid expenses and other assets

27,598


(5,602)


      Accounts payable

(4,522)


6,103


      Other current liabilities and income taxes

(10,981)


3,608


      Deferred revenue and returns liability

(1,657)


2,643


      Other non-current liabilities

(11,388)


7,525


Net cash provided by operating activities of continuing operations

48,244


20,436







Investing Activities





Purchases of marketable securities

(1,212,572)


(418,227)


Sales and maturities of marketable securities

368,416


427,235


Purchases of property and equipment

(19,468)


(13,589)


Purchases of other assets

(578)


(920)


Acquisition of business, net of cash acquired

--


(316,809)


Net cash used in investing activities of continuing operations

(864,202)


(322,310)







Financing Activities





Proceeds from issuance of debt

--


845,000


Payments on debt

(140,572)


(618,729)


Repurchases of common stock

(688,373)


(16,287)


Payment of taxes withheld for vested stock awards

(21,393)


(17,562)


Proceeds from the issuance of common stock

8,619


8,155


Net cash provided by (used in) financing activities of continuing operations

(841,719)


200,577







Discontinued Operations





Operating activities

69,685


106,527


Investing activities

2,747,684


(2,018)


Net cash provided by discontinued operations

2,817,369


104,509







Increase in cash and cash equivalents

1,159,692


3,212


Cash and cash equivalents at beginning of period

202,720


227,146


Cash and cash equivalents at end of period

$1,362,412


$230,358



 

Non-GAAP Financial Measurements

In addition to the GAAP results provided throughout this document, Silicon Labs has provided non-GAAP financial measurements on a basis excluding non-cash and other charges and benefits.  Details of these excluded items are presented in the tables below, which reconcile the GAAP results to non-GAAP financial measurements.

The non-GAAP financial measurements do not replace the presentation of Silicon Labs' GAAP financial results.  These measurements provide supplemental information to assist management and investors in analyzing Silicon Labs' financial position and results of operations. Silicon Labs has chosen to provide this information to investors to enable them to perform meaningful comparisons of past, present, and future operating results and as a means to emphasize the results of core on-going operations.

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)


Non-GAAP Income Statement Items


Three Months Ended

October 2, 2021



GAAP

Measure


GAAP

Percent of
Revenue



Stock

Compensation
Expense


Intangible
Asset
Amortization


Termination
Costs


Non-GAAP

Measure


Non-GAAP

Percent of
Revenue

Revenues


$184,831






























Gross profit


109,509


59.2%



$260


$        --


$        --


$109,769


59.4%

















Research and development


72,656


39.3%



7,072


8,198


--


57,386


31.0%

















Selling, general and administrative


46,128


24.9%



6,963


2,871


626


35,668


19.3%

















Operating income (loss)


(9,275)


(5.0)%



14,295


11,069


626


16,715


9.0%

















Non-GAAP Earnings Per Share – Continuing Operations


Three Months Ended

October 2, 2021



GAAP

Measure


Stock
Compensation
Expense*


Intangible
Asset
Amortization*


 

Termination
Costs*


Investment
Fair Value
Adjustments*


Interest

Expense

Adjustments*


Income

Tax

Adjustments


Non-
GAAP
Measure

Income (loss) from continuing operations


$(19,740)


$14,295


$11,069


$626


$(4,100)


$5,076


$8,121


$15,347






















Dilutive Securities Excluded From GAAP Measure Due to Net Loss



Diluted shares outstanding


43,385


1,249


44,634


















Diluted earnings (loss) per share


$    (0.45)














$  0.34

 

Unaudited Forward-Looking Statements Regarding Business Outlook**

(In millions, except per share data)


Business Outlook


Three Months Ending

January 1, 2022



GAAP

Measure


Non-GAAP

Adjustments*


Non-GAAP

Measure

Gross margin


59%


0.5%


59.5%








Operating expenses


$126


$31


$95








Effective tax rate


(14)%


22%


8%








Diluted earnings (loss) per share - low


$ (0.41)


$ 0.91


$ 0.50








Diluted earnings (loss) per share - high


$ (0.31)


$ 0.91


$ 0.60









** Non-GAAP adjustments include the following estimates: stock compensation expense of $20 million, intangible asset amortization of $11 million, interest expense adjustments of $5 million, termination costs of $1 million and the associated tax impact from the aforementioned items.  

 

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SOURCE Silicon Labs

Contact:
Company Name: Silicon Labs
Austin Dean, Investor Relations Manager
Phone: +1 (512) 532-9432
Email Contact
Web: http://www.silabs.com
Financial data for Silicon Labs