| (in millions) | 3Q 2018 | 2Q 2018 | 3Q 2017 | ||
| Cash and cash equivalents, and short-term investments | $308.2 | $364.2 | $332.8 | ||
| Bank loans | $3.9 | $12.0 | -- | ||
| Capital expenditures | $62.9 | $3.2 | $3.0 | ||
| Dividend payments | $10.8 | $10.8 | $7.1 | ||
| Loan repayments | $8.1 | $8.7 | $25.0 | ||
During the third quarter, we had $62.9 million of capital expenditures, with $58.9 million spent on the purchase of land for our office building in Hsinchu, Taiwan and $4.0 million for the routine purchase of software, design tools and other items.
Our third quarter cash flows were as follows:
| 3 months ended September 30, 2018 | ||
| (In $ millions) | ||
| Net income (GAAP) | 29.2 | |
| Depreciation & amortization | 3.8 | |
| Changes in operating assets and liabilities | (7.9 | ) |
| Others | 4.4 | |
| Net cash provided by operating activities | 29.5 | |
| Acquisition of property and equipment | (62.9 | ) |
| Net cash used in investing activities | (62.9 | ) |
| Dividend |
(10.8 |
) |
| Loans | (8.1 | ) |
| Net cash used in financing activities | (18.9 | ) |
| Effects of changes in foreign currency exchange rates on cash | (0.5 | ) |
| Net decrease in cash, cash equivalents and restricted cash | (52.8 | ) |
Returning Value to Shareholders
On October 24, 2017, the Board of Directors of the Company declared a $1.20 per ADS annual dividend to be paid in quarterly installments of $0.30 per ADS. On August 22, 2018, we paid $10.8 million to shareholders as the fourth installment of our annual dividend. On October 26, 2018, the Board of Directors of the Company declared a $1.20 per ADS annual dividend to be paid in quarterly installments of $0.30 per ADS. The first installment of our new annual dividend will be paid on November 23, 2018.
Business Outlook
“Our client SSD controller sales momentum continues to improve as the cost of NAND has been falling and SSDs are becoming increasingly affordable,” said Wallace Kou, President and CEO of Silicon Motion. “Full-year sales of our client SSD controllers are now tracking towards a 35% growth rate. We believe this positive trend will extend further next year. However, both our SSD solutions and eMMC+UFS controller sales are tracking below prior expectation due to product transition timing and weaker end-market demand. Nevertheless, in spite of weaker than expected sales for the full year, we anticipate that our full-year margins will be better than expected because of stronger SSD controller sales and believe our earnings growth remains strong.”
For the fourth quarter of 2018, management expects:
| GAAP | Non-GAAP Adjustment | Non-GAAP | |
| Revenue | $120.5m to $127.5m
-13% to -8% Q/Q | -- | $120.5m to $127.5m
-13% to -8% Q/Q |
| Gross margin | 49.8% to 51.8% | Approximately $0.2m* | 50.0% to 52.0% |
| Operating margin | 13.6% to 17.0% | Approximately $12.7m to $13.7m** | 25.0% to 27.0% |
* Projected gross margin (non-GAAP) excludes $0.2 million of stock-based compensation.
* *Projected operating margin (non-GAAP) excludes $0.7 million of amortization of intangible assets and $12 million to $13 million of stock-based compensation.
Conference Call & Webcast:
The Company’s management team will conduct a conference call at 8:00 am Eastern Time on October 31, 2018.
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): 080 909 1568
Participant Passcode: 2481599
REPLAY NUMBERS (for 7 days):
USA (Toll Free): 1 855 452 5696
USA (Toll): 1 646 254 3697
Participant Passcode: 2481599
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 gross profit (non-GAAP), operating expenses (non-GAAP), operating profit (non-GAAP), net income (non-GAAP), and earnings per diluted ADS (non-GAAP). 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.
