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Silicon Labs Announces Second Quarter 2016 Results

Exceeds Guidance on Revenue, Gross Margin and EPS

AUSTIN, Texas — (BUSINESS WIRE) — July 27, 2016 — Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its second quarter ended July 2, 2016. Revenue in the second quarter exceeded the high end of guidance at $174.9 million, up from $162.0 million in the first quarter. Second quarter GAAP and non-GAAP earnings per share (EPS) exceeded the high end of guidance at $0.37 and $0.75, respectively.

Second Quarter Financial Highlights

On a GAAP basis:

On a non-GAAP basis (results exclude the impact of stock compensation, amortization of acquired intangible assets and certain other items as set forth in the reconciliation tables below):

Product Highlights

Business Outlook

The company expects revenue in the third quarter to be in the range of $171 million to $176 million. Third quarter diluted earnings per share are expected to be between $0.27 and $0.33 on a GAAP basis, and between $0.61 and $0.67 on a non-GAAP basis.

“We are pleased to report exceptional second quarter financial performance, including record revenue in all of our strategic growth products,” said Tyson Tuttle, CEO of Silicon Labs. “We have a 20-year history of leveraging our mixed-signal and RF design expertise to deliver highly integrated solutions, and we have consistently demonstrated our ability to pioneer innovation and achieve market leadership. Our vision is to connect people, devices and data across multiple markets and applications. We are beginning a new chapter in the creation of a more connected world, where the intersection of cloud computing and the proliferation of connected devices will transform our lives and economy in dramatic ways, and Silicon Labs is at the heart of it.”

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 (855) 859-2056 or (404) 537-3406 (international) and entering conference ID 83472104. The replay will be available through August 27, 2016.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for the Internet of Things, Infrastructure, industrial automation, consumer and automotive markets. We solve the electronics industry’s toughest problems, providing customers with significant advantages in performance, energy savings, connectivity and design simplicity. Backed by our world-class engineering teams with strong software and mixed-signal design expertise, Silicon Labs empowers developers with the tools and technologies they need to advance quickly and easily from initial idea to final product. 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; difficulties developing new products that achieve market acceptance; dependence on a limited number of products and customers; intellectual property litigation risks; risks associated with acquisitions and divestitures; product liability risks; difficulties managing our distributors, manufacturers and subcontractors; 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 our 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 our products and our 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 Six Months Ended

July 2,
2016

   

July 4,
2015

July 2,
2016

   

July 4,
2015

Revenues $ 174,908 $ 164,856 $ 336,933 $ 328,561
Cost of revenues   66,614     67,428     133,108     134,764  
Gross margin 108,294 97,428 203,825 193,797
Operating expenses:
Research and development 51,635 47,465 100,681 94,322
Selling, general and administrative   39,045     40,960     78,682     83,260  
Operating expenses   90,680     88,425     179,363     177,582  
Operating income 17,614 9,003 24,462 16,215
Other income (expense):
Interest income 278 166 549 358
Interest expense (641 ) (728 ) (1,296 ) (1,473 )
Other, net   18     90     (373 )   498  
Income before income taxes 17,269 8,531 23,342 15,598
Provision for income taxes   1,710     956     1,975     1,645  
 

Net income

$ 15,559   $ 7,575   $ 21,367   $ 13,953  
 
Earnings per share:
Basic $ 0.37 $ 0.18 $ 0.51 $ 0.33
Diluted $ 0.37 $ 0.17 $ 0.51 $ 0.32
 
Weighted-average common shares outstanding:
Basic 41,775 42,823 41,702 42,617
Diluted 42,284 43,461 42,242 43,305
 
     

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

   

Non-GAAP Income
Statement Items

Three Months Ended

July 2, 2016

GAAP
Measure

   

GAAP
Percent
of Revenue

   

Stock
Compensation
Expense

   

Intangible
Asset
Amortization

   

Termination
Costs

   

Non-
GAAP
Measure

   

Non-GAAP
Percent of
Revenue

Revenues $ 174,908
 
Gross margin 108,294 61.9 % $ 269 $ 389 $ -- $ 108,952 62.3 %
 
Research and

development

51,635 29.5 % 5,205 5,616 236

40,578

23.2 %
 
Selling, general and

administrative

39,045

22.3

%

5,044 1,419 63

32,519

18.6 %
 
Operating income 17,614 10.1 % 10,518 7,424 299 35,855 20.5 %
 
                                 

Non-GAAP
Earnings Per Share

Three Months Ended

July 2, 2016

GAAP
Measure

Stock
Compensation
Expense*

Intangible
Asset
Amortization*

Termination
Costs*

Income Tax
Adjustments

Non-
GAAP
Measure

Net income $ 15,559 $ 10,518 $ 7,424 $ 299 $ (2,046 ) $ 31,754
 
Diluted shares

outstanding

42,284

42,284

 
Diluted earnings

per share

$ 0.37

$

0.75

 

* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

         
Business Outlook

Three Months Ending
October 1, 2016

High     Low
Estimated GAAP diluted earnings per share $ 0.33 $ 0.27
 
Estimated non-GAAP charges   0.34   0.34
 
Estimated non-GAAP diluted earnings per share $ 0.67 $ 0.61
 
         
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
 

July 2,
2016

January 2,
2016

Assets
Current assets:
Cash and cash equivalents $ 101,334 $ 114,085
Short-term investments 142,326 128,901
Accounts receivable, net 71,990 73,601
Inventories 56,388 53,895
Prepaid expenses and other current assets   53,326     52,658  
Total current assets 425,364 423,140
Long-term investments 6,921 7,126
Property and equipment, net 130,498 131,132
Goodwill 272,722 272,722
Other intangible assets, net 106,246 121,354
Other assets, net   50,837     55,989  
Total assets $ 992,588   $ 1,011,463  
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 41,152 $ 42,127
Current portion of long-term debt 10,000 10,000
Accrued expenses 47,004 52,131
Deferred income on shipments to distributors 39,257 35,448
Income taxes   3,567     2,615  
Total current liabilities 140,980 142,321
Long-term debt 62,500 67,500
Other non-current liabilities   27,959     40,528  
Total liabilities 231,439 250,349
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;

41,637 and 41,727 shares issued and outstanding at

July 2, 2016 and January 2, 2016, respectively

4 4
Additional paid-in capital -- 13,868
Retained earnings 761,872 747,749
Accumulated other comprehensive loss   (727 )   (507 )
Total stockholders' equity   761,149     761,114  
Total liabilities and stockholders' equity $ 992,588   $ 1,011,463  
 
     
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Six Months Ended

July 2,
2016

   

July 4,
2015

Operating Activities
Net income $ 21,367 $ 13,953
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment 6,675 6,029
Amortization of other intangible assets and other assets 15,534 14,697
Stock-based compensation expense 20,861 21,576
Income tax benefit (shortfall) from stock-based awards (1,127 ) 2,781
Excess income tax benefit from stock-based awards (91 ) (2,056 )
Deferred income taxes 817 3,892
Changes in operating assets and liabilities:
Accounts receivable 1,611 1,724
Inventories (2,888 ) (6,534 )
Prepaid expenses and other assets 3,282 452
Accounts payable (1,680 ) (3,359 )
Accrued expenses 4,372 (1,027 )
Deferred income on shipments to distributors 3,773 (2,132 )
Income taxes (1,338 ) (7,171 )
Other non-current liabilities   (10,737 )   (5,622 )
Net cash provided by operating activities 60,431 37,203
 
Investing Activities
Purchases of available-for-sale investments (92,222 ) (46,908 )
Sales and maturities of available-for-sale investments 78,950 92,759
Purchases of property and equipment (5,146 ) (4,714 )
Purchases of other assets (2,215 ) (1,871 )
Acquisition of business, net of cash acquired   --     (76,899 )
Net cash used in investing activities (20,633 ) (37,633 )
 
Financing Activities
Payments on debt (5,000 ) (5,083 )
Repurchases of common stock (36,103 ) (10,418 )
Payment of taxes withheld for vested stock awards (9,399 ) (10,783 )
Proceeds from the issuance of common stock 7,362 12,467
Excess income tax benefit from stock-based awards 91 2,056
Payment of acquisition-related contingent consideration   (9,500 )   (4,464 )
Net cash used in financing activities   (52,549 )   (16,225 )
 
Decrease in cash and cash equivalents (12,751 ) (16,655 )
Cash and cash equivalents at beginning of period   114,085     141,706  
Cash and cash equivalents at end of period $ 101,334   $ 125,051  
 


Contact:

Silicon Labs
Jalene Hoover, +1-512-428-1610
Email Contact