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Silicon Labs Announces Third Quarter 2017 Results

-- Achieves All-Time Record Revenue --

AUSTIN, Texas, Oct. 25, 2017 — (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 September 30, 2017. Revenue in the third quarter ended at the high end of guidance at $199 million, up from $190 million in the second quarter, and establishing a new all-time record. Third quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.46 and $0.90, respectively.

"We are very pleased with our third quarter results, achieving record revenue in IoT and Infrastructure, and in total," said Tyson Tuttle, CEO of Silicon Labs. "Our portfolio is well positioned in high-quality growth markets, including IoT, infrastructure, green energy, and data communications, where we generate more than 70 percent of our total revenue, offering a long runway for growth and share gains."

Third Quarter Financial Highlights

On a GAAP basis:

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

Product Highlights

Business Outlook

The company expects revenue in the fourth quarter to be in the range of $195 million to $201 million, and also estimates the following:

On a GAAP basis:

On a non-GAAP basis, and excluding the impact of stock compensation, amortization of acquired intangible assets, non-cash interest expense on 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 (855) 859-2056 or (404) 537-3406 (international) and entering conference ID 8462249. The replay will be available through November 25, 2017.

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. 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.

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


Nine Months Ended


September 30,
2017


October 1,
2016


September 30,
2017


October 1,
2016

Revenues

$198,723


$178,083


$567,849


$515,016

Cost of revenues

82,149


69,880


232,922


202,988

Gross margin

116,574


108,203


334,927


312,028

Operating expenses:








   Research and development

52,000


48,437


156,756


149,118

   Selling, general and administrative

39,606


38,034


119,587


116,716

Operating expenses

91,606


86,471


276,343


265,834

Operating income

24,968


21,732


58,584


46,194

Other income (expense):








   Interest income and other, net

1,923


273


4,094


449

   Interest expense

(4,764)


(643)


(9,265)


(1,939)

Income before income taxes

22,127


21,362


53,413


44,704

Provision for income taxes

2,178


1,344


1,469


3,319

 

Net income

$  19,949


$  20,018


$  51,944


$  41,385









Earnings per share:








   Basic

$      0.47


$      0.48


$      1.23


$      0.99

   Diluted

$      0.46


$      0.47


$      1.20


$      0.98









Weighted-average common shares outstanding:








   Basic

42,553


41,614


42,376


41,673

   Diluted

43,374


42,307


43,194


42,263

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)


Non-GAAP Income
Statement Items


Three Months Ended

September 30, 2017



GAAP

Measure


GAAP

Percent of
Revenue


Stock

Compensation
Expense


Intangible
Asset
Amortization


Acquisition
Related
Items


Non-GAAP

Measure


Non-GAAP

Percent of
Revenue

Revenues


$198,723




























Gross margin


116,574


58.7%


$     281


$      --


$   --


$116,855


58.8%
















Research and

   development


52,000


26.2%


5,411


5,187


 

--


41,402


20.8%
















Selling, general and

   administrative


39,606


 

19.9%


5,663


1,647


161


32,135


 

16.2%
















Operating income


24,968


12.6%


11,355


6,834


161


43,318


21.8%





























Non-GAAP
Earnings Per Share


Three Months Ended

September 30, 2017



GAAP

Measure


Stock

Compensation
Expense*


Intangible
Asset
Amortization*


Acquisition
Related
Items*


Non-cash
Interest
Expense*


Income Tax
Adjustments


Non-GAAP

Measure

Net income


$19,949


$11,355


$6,834


$161


$2,674


$(1,796)


$39,177
















Diluted shares

   outstanding


43,374












 

43,374
















Diluted earnings

   per share


$    0.46












 

$    0.90




















* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)


Business Outlook


Three Months Ending

December 30, 2017



GAAP

Measure


Non-GAAP

Adjustments


Non-GAAP

Measure

Gross margin


58.5%


0.0%


58.5%








Operating expenses


$91.0


$17.5


$73.5








Effective tax rate


11.0%


0.0%


11.0%








Diluted earnings per share - low


$0.40


$0.43


$0.83








Diluted earnings per share - high


$0.46


$0.43


$0.89

 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)



September 30,

 2017


December 31,
2016

Assets




Current assets:




   Cash and cash equivalents

$   236,459


$   141,106

   Short-term investments

482,396


153,961

   Accounts receivable, net

76,188


74,401

   Inventories

72,895


59,578

   Prepaid expenses and other current assets

37,563


61,805

Total current assets

905,501


490,851

Long-term investments

5,471


5,196

Property and equipment, net

129,075


129,559

Goodwill

288,629


276,130

Other intangible assets, net

89,859


103,565

Other assets, net

59,251


76,543

Total assets

$1,477,786


$1,081,844





Liabilities and Stockholders' Equity




Current liabilities:




   Accounts payable

$     38,857


$     39,577

   Accrued expenses

60,376


50,100

   Deferred income on shipments to distributors

56,701


45,568

   Income taxes

4,057


4,450

Total current liabilities

159,991


139,695

Long-term debt

--


72,500

Convertible debt

338,717


--

Other non-current liabilities

36,246


42,691

Total liabilities

534,954


254,886

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;  

      42,562 and 41,889 shares issued and outstanding at

      September 30, 2017 and December 31, 2016, respectively

4


4

   Additional paid-in capital

87,004


24,463

   Retained earnings

856,159


801,999

   Accumulated other comprehensive income (loss)

(335)


492

Total stockholders' equity

942,832


826,958

Total liabilities and stockholders' equity

$1,477,786


$1,081,844

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Nine Months Ended


September 30,
2017


October 1,
2016


Operating Activities





Net income

$  51,944


$  41,385


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





   Depreciation of property and equipment

11,068


9,912


   Amortization of other intangible assets and other assets

20,531


21,461


   Amortization of debt discount and debt issuance costs 

6,984


--


   Stock-based compensation expense

33,007


30,057


   Income tax shortfall from stock-based awards

--


(1,611)


   Deferred income taxes

(5,703)


(1,460)


   Changes in operating assets and liabilities:





      Accounts receivable

(1,587)


(11,322)


      Inventories

(13,196)


(1,558)


      Prepaid expenses and other assets

23,506


7,404


      Accounts payable

1,746


1,280


      Accrued expenses

9,720


8,930


      Deferred income on shipments to distributors

11,039


11,573


      Income taxes

(424)


1,459


      Other non-current liabilities

(7,269)


(10,891)


Net cash provided by operating activities

141,366


106,619







Investing Activities





Purchases of available-for-sale investments

(471,938)


(131,741)


Sales and maturities of available-for-sale investments

143,765


129,511


Purchases of property and equipment

(10,494)


(8,545)


Purchases of other assets

(2,622)


(4,994)


Acquisition of business, net of cash acquired

(13,658)


--


Net cash used in investing activities

(354,947)


(15,769)







Financing Activities





Proceeds from issuance of long-term debt, net

389,468


--


Payments on debt

(72,500)


(5,000)


Repurchases of common stock

--


(40,543)


Payment of taxes withheld for vested stock awards

(14,870)


(10,148)


Proceeds from the issuance of common stock

6,836


8,451


Payment of acquisition-related contingent consideration

--


(9,500)


Net cash provided by (used in) financing activities

308,934


(56,740)







Increase in cash and cash equivalents

95,353


34,110


Cash and cash equivalents at beginning of period

141,106


114,085


Cash and cash equivalents at end of period

$236,459


$148,195


 

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SOURCE Silicon Labs

Contact:
Silicon Labs
Web: http://www.silabs.com