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Silicon Labs Announces Fourth Quarter 2018 Results

- Record 2018 Revenue -

AUSTIN, Texas, Jan. 30, 2019 — (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 fourth quarter ended December 29, 2018. Revenue in the fourth quarter fell short of the low end of guidance at $215.5 million, down from $230.2 million in the third quarter. Fourth quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.35 and $0.91, respectively.

(PRNewsfoto/Silicon Labs)

"We are proud of our performance in 2018, which was a strong year for Silicon Labs in many dimensions. We completed the successful acquisition of Z-Wave, strengthened our team, and grew our revenue and design wins to record levels," said Tyson Tuttle, CEO of Silicon Labs. "Despite current volatility, we remain confident about our longer-term ability to outperform the market. We are focused on executing on our product roadmaps and converting a large pipeline of opportunities into additional wins and share gains. The technologies we are developing are enabling our customers to transform industries and improve lives."

Fourth 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 Results

Business Highlights

Business Outlook

In light of macro uncertainty and volatility, the company expects first quarter revenue to be in the range of $183 to $193 million, with IoT, Infrastructure, Broadcast and Access down, and 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 (877) 344-7529 (US) or (412) 317-0088 (International) and entering access code 10127685. The replay will be available through March 2, 2019.

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. 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 Silicon Labs' distributors, manufacturers and subcontractors; inventory-related risks; difficulties managing international activities; risks associated with international activities (including trade barriers); 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, 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; 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


Year Ended


December 29,
2018


December 30,
2017


December 29,
2018


December 30,
2017

Revenues

$215,534


$201,018


$868,267


$768,867

Cost of revenues

85,291


81,754


346,868


314,676

Gross margin

130,243


119,264


521,399


454,191

Operating expenses:








   Research and development

62,933


52,735


238,347


209,491

   Selling, general and administrative

48,948


40,139


197,844


159,726

Operating expenses

111,881


92,874


436,191


369,217

Operating income

18,362


26,390


85,208


84,974

Other income (expense):








   Interest income and other, net

(273)


1,963


6,647


6,057

   Interest expense

(4,991)


(4,863)


(19,694)


(14,128)

Income before income taxes

13,098


23,490


72,161


76,903

Provision (benefit) for income taxes

(2,047)


28,342


(11,430)


29,811

Net income (loss)

$  15,145


$   (4,852)


$  83,591


$  47,092









Earnings (loss) per share:








   Basic

$      0.35


$     (0.11)


$      1.94


$      1.11

   Diluted

$      0.35


$     (0.11)


$      1.90


$      1.09









Weighted-average common shares outstanding:








   Basic

43,109


42,656


43,159


42,446

   Diluted

43,774


42,656


44,044


43,332

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)


Non-GAAP Income
Statement Items


Three Months Ended

December 29, 2018





GAAP

Measure


GAAP
Percent of
Revenue


Stock
Compensation
Expense


Intangible Asset
Amortization


Non-GAAP
Measure


Non-GAAP
Percent of
Revenue



Revenues


$215,534




























Gross margin


130,243


60.4%


$     323


$        --


$130,566


60.6%


















Research and

   development


62,933


29.2%


6,413


7,760


48,760


22.6%


















Selling, general and

   administrative


48,948


22.7%


6,447


3,020


39,481


18.4%


















Operating income


18,362


8.5%


13,183


10,780


42,325


19.6%

































Non-GAAP
Earnings Per Share


Three Months Ended

December 29, 2018



GAAP
Measure


Stock
Compensation
Expense*


Intangible
Asset
Amortization*


Termination Costs
and Fair Value
Adjustments *


Non-cash
Interest
Expense*


Income Tax
Adjustments


Non-GAAP
Measure

Net income


$15,145


$13,183


$10,780


$2,785


$2,880


$(4,777)


$39,996
















Diluted shares

   outstanding


43,774












43,774
















Diluted earnings

   per share


$    0.35












$    0.91


* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)


Business Outlook


Three Months Ending
March 30, 2019



GAAP
Measure


Non-GAAP
Adjustments


Non-GAAP
Measure

Gross margin


60.0%


0.0%


60.0%








Operating expenses


$114


$24


$90








Effective tax rate


10.0%


3.0%


13.0%








Diluted earnings (loss) per share - low


$(0.11)


$0.53


$0.42








Diluted earnings (loss) per share - high


$(0.01)


$0.53


$0.52


 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)



December 29,
2018


December 30,

 2017

Assets




Current assets:




   Cash and cash equivalents

$   197,043


$   269,366

   Short-term investments

416,779


494,657

   Accounts receivable, net

73,194


71,367

   Inventories

74,972


73,132

   Prepaid expenses and other current assets

64,650


39,120

Total current assets

826,638


947,642

Property and equipment, net

139,049


127,682

Goodwill

397,344


288,227

Other intangible assets, net

170,832


83,144

Other assets, net

90,491


88,387

Total assets

$1,624,354


$1,535,082





Liabilities and Stockholders' Equity




Current liabilities:




   Accounts payable

$     41,171


$     38,851

   Deferred revenue and returns liability

22,494


--

   Deferred income on shipments to distributors

--


50,115

   Other current liabilities

81,180


73,359

Total current liabilities

144,845


162,325

Convertible debt

354,771


341,879

Other non-current liabilities

57,448


77,862

Total liabilities

557,064


582,066

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;  

      43,088 and 42,707 shares issued and outstanding at

      December 29, 2018 and December 30, 2017, respectively

4


4

   Additional paid-in capital

107,517


102,862

   Retained earnings

961,343


851,307

   Accumulated other comprehensive loss

(1,574)


(1,157)

Total stockholders' equity

1,067,290


953,016

Total liabilities and stockholders' equity

$1,624,354


$1,535,082

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Year Ended


December 29,
2018


December 30,
2017

Operating Activities




Net income

$  83,591


$  47,092

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




   Depreciation of property and equipment

15,912


14,766

   Amortization of other intangible assets and other assets

44,102


27,246

   Amortization of debt discount and debt issuance costs 

12,892


10,146

   Stock-based compensation expense

50,077


44,752

   Deferred income taxes

(8,210)


(26,452)

   Changes in operating assets and liabilities:




      Accounts receivable

3,931


3,234

      Inventories

7,660


(13,416)

      Prepaid expenses and other assets

(4,960)


25,266

      Accounts payable

5,952


(468)

      Other current liabilities and income taxes

(21,828)


61,924

      Deferred income, deferred revenue and returns liability

(6,202)


4,453

      Other non-current liabilities

(9,375)


(9,022)

Net cash provided by operating activities

173,542


189,521





Investing Activities




Purchases of available-for-sale investments

(395,904)


(636,363)

Sales and maturities of available-for-sale investments

474,129


294,452

Purchases of property and equipment

(24,462)


(12,252)

Purchases of other assets

(11,063)


(4,960)

Acquisitions of businesses, net of cash acquired

(239,729)


(15,168)

Net cash used in investing activities

(197,029)


(374,291)





Financing Activities




Proceeds from issuance of long-term debt, net

--


389,468

Payments on debt

--


(72,500)

Repurchases of common stock

(39,276)


--

Payment of taxes withheld for vested stock awards

(19,483)


(15,753)

Proceeds from the issuance of common stock

13,303


11,815

Payment of acquisition-related contingent consideration

(3,380)


--

Net cash provided by (used in) financing activities

(48,836)


313,030





Increase (decrease) in cash and cash equivalents

(72,323)


128,260

Cash and cash equivalents at beginning of period

269,366


141,106

Cash and cash equivalents at end of period

$197,043


$269,366

 

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SOURCE Silicon Labs

Contact:
Company Name: Silicon Labs
Web: http://www.silabs.com
Financial data for Silicon Labs