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Silicon Motion Announces Results for the Period Ended September 30, 2024

Business Highlights

Financial Highlights

 3Q 2024 GAAP3Q 2024 Non-GAAP
• Net sales$212.4 million (+1% Q/Q, +23% Y/Y)$212.4 million (+1% Q/Q, +23% Y/Y)
• Gross margin46.7%46.8%
• Operating margin11.5%16.1%
• Earnings per diluted ADS$0.62$0.92


TAIPEI, Taiwan and MILPITAS, Calif., Oct. 31, 2024 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (NasdaqGS: SIMO) (“Silicon Motion,” the “Company” or “we”) today announced its financial results for the quarter ended September 30, 2024. For the third quarter of 2024, net sales (GAAP) increased sequentially to $212.4 million from $210.7 million in the second quarter of 2024. Net income (GAAP) decreased to $20.8 million, or $0.62 per diluted American Depositary Share of the Company (“ADS”) (GAAP), from net income (GAAP) of $30.8 million, or $0.91 per diluted ADS (GAAP), in the second quarter of 2024.

For the third quarter of 2024, net income (non-GAAP) decreased to $31.0 million, or $0.92 per diluted ADS (non-GAAP), from net income (non-GAAP) of $32.5 million, or $0.96 per diluted ADS (non-GAAP), in the second quarter of 2024.

All financial numbers are in U.S. dollars unless otherwise noted.

Third Quarter of 2024 Review
“We continued to execute well in the third quarter of 2024, delivering revenue above the mid-point of our guided range and further expanding our gross margins,” said Wallace Kou, President and CEO of Silicon Motion. “Our eMMC and UFS controller revenue grew modestly, and our SSD controller revenue remained strong given continued growth in the OEM channel. We continue to outperform the market through new wins we secured this quarter with both NAND makers and module makers that we expect will ramp-up in 2025. We expect this trend to continue as we expand our product portfolio and deliver world-class controllers to the market.”

Key Financial Results

(in millions, except percentages and per ADS amounts)
GAAPNon-GAAP
3Q 2024
 2Q 2024
 3Q 2023
 3Q 2024
 2Q 2024
 3Q 2023
 
Revenue$212.4 $210.7 $172.3 $212.4 $210.7 $172.3 
Gross profit $99.3  $96.8  $73.1  $99.3  $96.8  $73.3 
Percent of revenue 46.7%  45.9%  42.4%  46.8%  46.0%  42.5% 
Operating expenses$74.8 $66.0 $58.1 $65.1 $62.1 $49.5 
Operating income $24.5  $30.7  $15.0  $34.2  $34.7  $23.8 
Percent of revenue 11.5%  14.6%  8.7%  16.1%  16.5%  13.8% 
Earnings per diluted ADS$0.62 $0.91 $0.32 $0.92 $0.96 $0.63 


Other Financial Information

(in millions)3Q 2024
 2Q 2024
 3Q 2023
 
Cash, cash equivalents, restricted cash and short-term investments—end of period$368.6 $343.6 $350.3 
Routine capital expenditures$7.4 $6.3 $6.3 
Dividend payments$16.8 $16.8  -- 


During the third quarter of 2024, we had $12.4 million of capital expenditures, including $7.4 million for the routine purchase of testing equipment, software, design tools and other items, and $5.0 million for building construction in Hsinchu.

Business Outlook
“Looking ahead, we expect to experience gains from greater outsourcing by our NAND flash maker partners, which should continue to deliver revenue and profitability growth for the company,” said Wallace Kou, President and CEO of Silicon Motion. “In the current quarter, we are introducing two key new controllers, including our first AI/enterprise server MonTitan controller and our first PCIe Gen 5.0 client SSD controller, placing Silicon Motion in an exceptionally strong position entering calendar 2025. While the seasonal holiday demand is expected to be more muted than in past years, we are confident that our highly differentiated controller solutions for PCs, smartphones and now enterprise-class storage controllers will further strengthen our market leadership position and will build on our foundation for strong, sustainable long-term growth." 

For the fourth quarter of 2024, management expects:

($ in millions)GAAPNon-GAAP AdjustmentNon-GAAP
Revenue$191 to $202
-10% to -5% Q/Q
-6% to 0% Y/Y		--$191 to $202
-10% to -5% Q/Q
-6% to 0% Y/Y
Gross margin46.3% to 47.4%Approximately $0.3*46.5 % to 47.5%
Operating margin8.0% to 9.9%Approximately $13.4 to $14.4**15.6% to 16.6%

* Projected gross margin (non-GAAP) excludes $0.3 million of stock-based compensation.
** Projected operating margin (non-GAAP) excludes $13.4 million to $14.4 million of stock-based compensation and dispute related expenses.

Conference Call & Webcast:
The Company’s management team will conduct a conference call at 8:00 am Eastern Time on October 31, 2024.

Conference Call Details
Participants must register in advance to join the conference call using the link provided below. Conference access information (including dial-in information and a unique access PIN) will be provided in the email received upon registration.

Participant Online Registration:
https://register.vevent.com/register/BI3e5d77077ee94ca9b9fd61325f52a0e9

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), gross margin (non-GAAP), operating expenses (non-GAAP), operating profit (non-GAAP), operating margin (non-GAAP), non-operating income (expense) (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 similarly-titled 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 they are 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 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:

Stock-based compensation expense consists of non-cash charges related to the fair value of restricted stock units awarded to employees. The Company believes that the exclusion of these non-cash charges provides for more accurate comparisons of our operating results to our peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, the Company believes it is useful to investors to understand the specific impact of share-based compensation on its operating results.

Restructuring charges relate to the restructuring of our underperforming product lines, principally the write-down of NAND flash, embedded DRAM and SSD inventory valuation and severance payments. 

M&A transaction expenses consist of legal, financial advisory and other fees related to the transaction.

Dispute related expenses consist of legal, consultant, other fees and resolution related to the dispute.

Foreign exchange loss (gain) consists of translation gains and/or losses of non-US$ denominated current assets and current liabilities, as well as certain other balance sheet items which result from the appreciation or depreciation of non-US$ currencies against the US$. We do not use financial instruments to manage the impact on our operations from changes in foreign exchange rates, and because our operations are subject to fluctuations in foreign exchange rates, we therefore exclude foreign exchange gains and losses when presenting non-GAAP financial measures.

Unrealized holding loss (gain) on investments relates to the net change in fair value of long-term investments.

 
Silicon Motion Technology Corporation
Consolidated Statements of Income
(in thousands, except percentages and per ADS data, unaudited)
     
  For Three Months Ended For the Nine Months Ended
  Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30,
  2023 2024 2024 2023 2024
  ($) ($) ($) ($) ($)
Net Sales 172,333  210,670  212,412  436,763  612,392 
Cost of sales 99,193  113,893  113,142  254,897  331,227 
Gross profit 73,140  96,777  99,270  181,866  281,165 
Operating expenses          
Research & development 41,740  50,788  58,486  117,926  163,666 
Sales & marketing 6,862  6,777  7,009  20,715  20,090 
General & administrative 8,939  7,215  9,315  20,323  23,003 
Loss from settlement of litigation 591  1,250  -  591  1,250 
Operating income 15,008  30,747  24,460  22,311  73,156 
Non-operating income (expense)          
Interest income, net 3,480  4,175  3,518  8,026  10,760 
Foreign exchange gain (loss), net 569  245  (488) 2,030  345 
Unrealized holding gain(loss) on investments (2,828) 1,855  (602) 8,053  (355)
Subtotal 1,221  6,275  2,428  18,109  10,750 
Income before income tax 16,229  37,022  26,888  40,420  83,906 
Income tax expense 5,642  6,201  6,045  8,639  16,226 
Net income 10,587  30,821  20,843  31,781  67,680 
           
Earnings per basic ADS 0.32  0.92  0.62  0.95  2.01 
Earnings per diluted ADS 0.32  0.91  0.62  0.95  2.01 
           
Margin Analysis:          
Gross margin 42.4% 45.9% 46.7% 41.6% 45.9%
Operating margin 8.7% 14.6% 11.5% 5.1% 11.9%
Net margin 6.1% 14.6% 9.8% 7.3% 11.1%
           
Additional Data:          
Weighted avg. ADS equivalents 33,413  33,684  33,687  33,332  33,627 
Diluted ADS equivalents 33,471  33,697  33,700  33,431  33,691 
                


 
Silicon Motion Technology Corporation
Reconciliation of GAAP to Non-GAAP Operating Results
(in thousands, except percentages and per ADS data, unaudited)
     
  For Three Months Ended For the Nine Months Ended
  Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30,
  2023
 2024
 2024
 2023
 2024
  ($) ($) ($) ($) ($)
Gross profit (GAAP) 73,140  96,777  99,270  181,866  281,165 
Gross margin (GAAP) 42.4% 45.9% 46.7% 41.6% 45.9%
Stock-based compensation (A) 94  14  63  300  149 
Restructuring charges 88  46  -  3,347  46 
Gross profit (non-GAAP) 73,322  96,837  99,333  185,513  281,360 
Gross margin (non-GAAP) 42.5% 46.0% 46.8% 42.5% 45.9%
           
Operating expenses (GAAP) 58,132  66,030  74,810  159,555  208,009 
Stock-based compensation (A) (3,751) (371) (3,595) (11,460) (7,059)
M&A transaction expenses (708) -  -  (2,893) - 
Dispute related expenses (3,495) (3,527) (6,076) (3,495) (11,135)
Restructuring charges (661) -  -  (4,581) - 
Operating expenses (non-GAAP) 49,517  62,132  65,139  137,126  189,815 
           
Operating profit (GAAP) 15,008  30,747  24,460  22,311  73,156 
Operating margin (GAAP) 8.7% 14.6% 11.5% 5.1% 11.9%
Total adjustments to operating profit 8,797  3,958  9,734  26,076  18,389 
Operating profit (non-GAAP) 23,805  34,705  34,194  48,387  91,545 
Operating margin (non-GAAP) 13.8% 16.5% 16.1% 11.1% 14.9%
           
Non-operating income (expense) (GAAP) 1,221  6,275  2,428  18,109  10,750 
Foreign exchange loss (gain), net (569) (245) 488  (2,030) (345)
Unrealized holding loss (gain) on investments 2,828  (1,855) 602  (8,053) 355 
           
Non-operating income (expense) (non-GAAP) 3,480  4,175  3,518  8,026  10,760 
           
Net income (GAAP) 10,587  30,821  20,843  31,781  67,680 
Total pre-tax impact of non-GAAP adjustments 11,056  1,858  10,824  15,993  18,399 
Income tax impact of non-GAAP adjustments (584) (218) (649) (2,968) (1,014)
Net income (non-GAAP) 21,059  32,461  31,018  44,806  85,065 
           
Earnings per diluted ADS (GAAP) $0.32  $0.91  $0.62  $0.95  $2.01 
Earnings per diluted ADS (non-GAAP) $0.63  $0.96  $0.92  $1.33  $2.52 
           
Shares used in computing earnings per diluted ADS (GAAP) 33,471  33,697  33,700  33,431  33,691 
Non-GAAP adjustments 128  18  109  136  52 
Shares used in computing earnings per diluted ADS (non-GAAP) 33,599  33,715  33,809  33,567  33,743 
           
(A) Excludes stock-based compensation as follows:          
Cost of sales 94  14  63  300  149 
Research & development 2,422  94  2,377  7,605  4,614 
Sales & marketing 521  173  455  1,496  975 
General & administrative 808  104  763  2,359  1,470 
                


 
Silicon Motion Technology Corporation
Consolidated Balance Sheet
(In thousands, unaudited)
          
  Sep. 30,
 Jun. 30,
 Sep. 30,
  2023
 2024
 2024
  ($)
 ($)
 ($)
Cash and cash equivalents 295,385  289,175  313,924 
Accounts receivable (net) 193,389  191,692  202,726 
Inventories 199,003  240,811  214,574 
Refundable deposits – current 49,445  51,036  51,102 
Prepaid expenses and other current assets 16,896  31,460  38,246 
Total current assets 754,118  804,174  820,572 
Long-term investments 17,023  17,301  16,878 
Property and equipment (net) 162,107  179,550  181,983 
Other assets 33,672  29,121  29,304 
Total assets 966,920  1,030,146  1,048,737 
          
Accounts payable 26,975  36,411  30,888 
Income tax payable 26,279  14,103  14,444 
Accrued expenses and other current liabilities 77,502  134,947  131,143 
Total current liabilities 130,756  185,461  176,475 
Other liabilities 62,112  60,182  62,673 
Total liabilities 192,868  245,643  239,148 
Shareholders’ equity 774,052  784,503  809,589 
Total liabilities & shareholders’ equity 966,920  1,030,146  1,048,737 
          


 
Silicon Motion Technology Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
     
  For Three Months Ended For the Nine Months Ended
  Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30,
  2023 2024 2024 2023 2024
  ($) ($) ($) ($) ($)
Net income 10,587  30,821  20,843  31,781  67,680 
Depreciation & amortization 8,043  5,802  6,664  19,032  18,075 
Stock-based compensation 3,845  385  3,658  11,760  7,208 
Investment losses (gain) & disposals 3,135  (1,855) 602  (7,556) 355 
Changes in operating assets and liabilities 39,302  (13,660) 22,280  52,910  (9,967)
Net cash provided by (used in) operating activities 64,912  21,493  54,047  107,927  83,351 
           
Purchase of property & equipment (17,052) (10,427) (12,436) (40,687) (33,612)
Net cash provided by (used in) investing activities (17,052) (10,427) (12,436) (40,687) (33,612)
           
Dividend payments -  (16,820) (16,812) (15) (50,441)
Net cash used in financing activities -  (16,820) (16,812) (15) (50,441)
           
Net increase (decrease) in cash, cash equivalents & restricted cash 47,860  (5,754) 24,799  67,225  (702)
Effect of foreign exchange changes (2,528) 86  186  (3,977) 308 
Cash, cash equivalents & restricted cash—beginning of period 304,971  349,279  343,611  287,055  368,990 
Cash, cash equivalents & restricted cash—end of period 350,303  343,611  368,596  350,303  368,596 
                

Shareholder Litigation
On August 31, 2023, a Silicon Motion ADS holder (the “Plaintiff”) filed a putative class action complaint in the United States District Court for the Southern District of California, captioned Water Island Event-Driven Fund v. MaxLinear, Inc., No. 23-cv-01607 (S.D. Cal.), asserting claims against MaxLinear and two of its officers (the “MaxLinear Defendants”) for alleged violations of (i) Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder and (ii) Section 20(a) of the Exchange Act, in connection with alleged false and misleading statements made by the MaxLinear Defendants between June 6, 2023 and July 26, 2023 concerning MaxLinear’s intent to consummate the merger agreement it had entered into with Silicon Motion. On August 28, 2024, the Court dismissed the complaint against the MaxLinear Defendants without prejudice for lack of standing.  On September 18, 2024, the Plaintiff filed an amended complaint against the MaxLinear Defendants, and also added Silicon Motion and two of its officers (the “Silicon Motion Defendants”), asserting substantially similar claims under the Exchange Act. The complaint seeks compensatory damages, including interest, costs and expenses, and such other equitable or injunctive relief that the court deems appropriate. Motions to dismiss the amended complaint are expected to be fully briefed by February 2025.  The Silicon Motion Defendants believe that the claims asserted against them are without merit and intend to defend themselves vigorously.

About Silicon Motion:
We are the global leader in supplying NAND flash controllers for solid state storage devices.  We supply more SSD controllers than any other company in the world for servers, PCs and other client devices and are the leading merchant supplier of eMMC and UFS embedded storage controllers used in smartphones, IoT devices and other applications.  We also supply customized high-performance hyperscale data center and specialized industrial and automotive SSD solutions.  Our customers include most of the NAND flash vendors, storage device module makers and leading OEMs.  For further information on Silicon Motion, visit us at www.siliconmotion.com.

Forward-Looking Statements:
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other comparable terminology. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to the unpredictable volume and timing of customer orders, which are not fixed by contract but vary on a purchase order basis; the loss of one or more key customers or the significant reduction, postponement, rescheduling or cancellation of orders from one or more customers; general economic conditions or conditions in the semiconductor or consumer electronics markets; the impact of inflation on our business and customer’s businesses and any effect this has on economic activity in the markets in which we operate; the functionalities and performance of our information technology (“IT”) systems, which are subject to cybersecurity threats and which support our critical operational activities, and any breaches of our IT systems or those of our customers, suppliers, partners and providers of third-party licensed technology; the effects on our business and our customer’s business taking into account the ongoing U.S.-China tariffs and trade disputes; the uncertainties associated with any future global or regional pandemic; the continuing tensions between Taiwan and China including enhanced military activities; decreases in the overall average selling prices of our products; changes in the relative sales mix of our products; changes in our cost of finished goods; supply chain disruptions that have affected us and our industry as well as other industries on a global basis; the payment, or non-payment, of cash dividends in the future at the discretion of our board of directors and any announced planned increases in such dividends; changes in our cost of finished goods; the availability, pricing, and timeliness of delivery of other components and raw materials used in the products we sell given the current raw material supply shortages being experienced in our industry; our customers’ sales outlook, purchasing patterns, and inventory adjustments based on consumer demands and general economic conditions; any potential impairment charges that may be incurred related to businesses previously acquired or divested in the future; our ability to successfully develop, introduce, and sell new or enhanced products in a timely manner; and the timing of new product announcements or introductions by us or by our competitors. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the U.S. Securities and Exchange Commission, including our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on April 30, 2024. Other than as required under the securities laws, we do not intend, and do not undertake any obligation to, update or revise any forward-looking statements, which apply only as of the date of this press release.

Silicon Motion Investor Contacts: 
Tom SepenzisSelina Hsieh
Senior Director of IR & StrategyInvestor Relations
Email Contact  Email Contact 
  
Media Contact: 
Dan Scorpio, H/Advisors Abernathy 
Email Contact  

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