Our second quarter cash flows were as follows:
| 3 months ended June 30, 2016
| |||
| (In $ millions)
| |||
| Net income | 29.0 | ||
| Depreciation & amortization | 2.7 | ||
| Changes in operating assets and liabilities | (4.7 | ) | |
| Others | 0.2 | ||
| Net cash provided by operating activities | 27.2 | ||
| Acquisition of property and equipment | (4.9 | ) | |
| Others | 0.2 | ||
| Net cash used in investing activities | (4.7 | ) | |
| Dividend | (5.3 | ) | |
| Others | - | ||
| Net cash used in financing activities | (5.3 | ) | |
| Effects of changes in foreign currency exchange rates on cash | - | ||
| Net increase in cash and cash equivalents | 17.2 | ||
Returning Value to Shareholders
On November 2, 2015, the Board of Directors of the Company declared a $0.60 per ADS annual dividend to be paid in quarterly installments of $0.15 per ADS. On May 9, 2016, the third installment was paid and we recorded $5.3 million as dividend payments to our shareholders.
Business Outlook
“We expect our strong sales momentum to continue into the third quarter,” said Wallace Kou, President and CEO of Silicon Motion. “This year, our client SSD controller sales are expected to increase by up to 150% and eMMC controller market share is expected to increase meaningfully. Our one-time SSD Solutions project in the second quarter was recently enlarged and we now expect it will expand further in the third quarter, which will temporarily decrease our overall gross margin for another quarter. This year, as a result of stronger sales, we anticipate better operating leverage and expect our operating margin to expand meaningfully.”
For the third quarter of 2016, management expects:
- Revenue to increase 0% to 5% sequentially
- Gross margin (non-GAAP) to be in the 46% to 48% range
- Operating margin (non-GAAP) to be in the 26% to 28% range
For the full-year 2016, management expects:
- Revenue to increase 44% to 46% as compared to full-year 2015
- Gross margin (non-GAAP) to be in the 47.5% to 49.5% range
- Operating margin (non-GAAP) to be in the 25.5% to 27.5% range
Conference Call & Webcast:
The Company’s management team will conduct a conference call at 8:00 am Eastern Time on July 22, 2016.
Speakers
Wallace Kou, President & CEO
Riyadh Lai, CFO
Jason Tsai, Senior Director of Investor Relations and Strategy
CONFERENCE CALL ACCESS NUMBERS:
USA (Toll Free): 1 866 519 4004
USA (Toll): 1 845 675 0437
Taiwan (Toll Free): 0080 112 6920
Participant Passcode: 4531 8340
REPLAY NUMBERS (for 7 days):
USA (Toll Free): 1 855 452 5696
USA (Toll): 1 646 254 3697
Participant Passcode: 4531 8340
A webcast of the call will be available on the Company's website at www.siliconmotion.com.
Discussion of Non-GAAP Financial Measures
To supplement the Company’s unaudited selected financial results calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company discloses certain non-GAAP financial measures that exclude stock-based compensation and other items, including non-GAAP cost of sales, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per diluted ADS. These non-GAAP measures are not in accordance with or an alternative to GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all the amounts associated with the Company’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measure. We compensate for the limitations of our non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.
Our non-GAAP financial measures are provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that we believe are not indicative of our core operating results and because it is consistent with the financial models and estimates published by many analysts who follow the Company. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with our forecasts, and for benchmarking our performance externally against our competitors. Also, when evaluating potential acquisitions, we exclude the items described below from our consideration of the target’s performance and valuation. Since we find these measures to be useful, we believe that our investors benefit from seeing the results from management’s perspective in addition to seeing our GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company’s GAAP financials, provide useful information to investors by offering:
- the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results;
- the ability to better identify trends in the Company’s underlying business and perform related trend analysis;
- a better understanding of how management plans and measures the Company’s underlying business; and
- an easier way to compare the Company’s operating results against analyst financial models and operating results of our competitors that supplement their GAAP results with non-GAAP financial measures.
The following are explanations of each of the adjustments that we incorporate into our non-GAAP measures, as well as the reasons for excluding each of these individual items in our reconciliation of these non-GAAP financial measures:
