Silicon Labs Announces Third Quarter Results

“Strong top line performance combined with favorable opex drove a solid beat in third quarter EPS,” said Tyson Tuttle, CEO of Silicon Labs. “We delivered another record revenue quarter in Infrastructure, with continued strength in IoT and Broadcast automotive, and a less than expected decline in Broadcast consumer.

“Despite the challenging macro environment, we are confident in our strategy and proud of our accomplishments. We have a rich product pipeline and see strong demand for our silicon and software. We are engaging with top industry leaders who are rapidly adopting our IoT solutions and propelling our design win activity to record levels. We are executing on our vision and strategy and excited about what lies ahead.”

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 under Investor Relations ( www.silabs.com). 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 39717394. The replay will be available through November 26, 2015.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and system 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; 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, the Silicon Laboratories logo, the Silicon Labs logo and Simplicity Studio 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 Nine Months Ended

October 3,
2015

 

September 27,
2014

October 3,
2015

 

September 27,
2014

Revenues $ 156,194 $ 158,144 $ 484,755 $ 458,753
Cost of revenues   62,759     62,033     197,523     176,874  
Gross margin 93,435 96,111 287,232 281,879
Operating expenses:
Research and development 46,483 42,517 140,805 126,846
Selling, general and administrative   35,729     43,990     118,989     114,618  
Operating expenses   82,212     86,507     259,794     241,464  
Operating income 11,223 9,604 27,438 40,415
Other income (expense):
Interest income 186 231 544 733
Interest expense (687 ) (768 ) (2,160 ) (2,346 )
Other income (expense), net   (280 )   42     218     103  
Income before income taxes 10,442 9,109 26,040 38,905
Provision for income taxes   467     3,501     2,112     10,908  
 

Net income

$ 9,975   $ 5,608   $ 23,928   $ 27,997  
 
Earnings per share:
Basic $ 0.24 $ 0.13 $ 0.56 $ 0.65
Diluted $ 0.23 $ 0.13 $ 0.55 $ 0.64
 
Weighted-average common shares outstanding:
Basic 42,331 43,112 42,522 43,218
Diluted 42,795 43,815 43,135 44,030
 
 
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
   
Non-GAAP Income Statement Items

Three Months Ended
October 3, 2015

GAAP
Measure

   

GAAP
Percent
of Revenue

   

Stock
Compensation
Expense

   

Intangible
Asset
Amortization

   

Acquisition
Related
Items

   

Termination
Costs

   

Non-GAAP
Measure

   

Non-GAAP
Percent of
Revenue

Revenues $ 156,194
 
Gross margin 93,435 59.8 % $ 249 $ 390 $ -- $ -- $ 94,074 60.2 %
 

Research and development

46,483 29.8 % 4,623 5,250 -- --

36,610

23.4 %
 

Selling, general and administrative

35,729

22.8

%

4,350 1,219 (1,351 )

118

31,393

20.1 %
 
Operating income 11,223 7.2 % 9,222 6,859 (1,351 ) 118 26,071 16.7 %
 
                                       
Non-GAAP

Earnings Per Share

Three Months Ended
October 3, 2015

GAAP
Measure

Stock
Compensation
Expense*

Intangible
Asset
Amortization*

Acquisition
Related
Items*

Termination
Costs*

Tax
Impact of
Adjustments

Non-GAAP
Measure

Net income $ 9,975 $ 9,222 $ 6,859 $ (1,351 ) $ 118 $ (2,996 ) $ 21,827
 

Diluted shares outstanding

42,795

42,795

 

Diluted earnings per share

$ 0.23 $ 0.51
 

* Represents pre-tax amounts

   

Unaudited Forward-Looking Statements Regarding Business Outlook

   
Business Outlook

Three Months Ending
January 2, 2016

High     Low
Estimated GAAP diluted earnings per share $ 0.11 $ 0.05
 
Estimated non-GAAP charges   0.40   0.40
 
Estimated non-GAAP diluted earnings per share $ 0.51 $ 0.45
       
 
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
 

October 3,
2015

January 3,
2015

Assets
Current assets:
Cash and cash equivalents $ 135,640 $ 141,706
Short-term investments 112,670 193,489

Accounts receivable, net of allowances for doubtful accounts of $695 at October 3, 2015 and $786 at January 3, 2015

61,030 70,367
Inventories 51,957 52,631
Deferred income taxes 19,155 21,173
Prepaid expenses and other current assets   48,903     49,171  
Total current assets 429,355 528,537
Long-term investments 7,240 7,419
Property and equipment, net 130,283 132,820
Goodwill 263,925 228,781
Other intangible assets, net 121,208 115,021
Other assets, net   26,040     29,983  
Total assets $ 978,051   $ 1,042,561  
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 30,306 $ 38,922
Current portion of long-term debt 10,000 10,000
Accrued expenses 50,080 73,646
Deferred income on shipments to distributors 37,881 38,662
Income taxes   1,074     2,084  
Total current liabilities 129,341 163,314
Long-term debt 70,000 77,500
Other non-current liabilities   37,234     43,691  
Total liabilities 236,575 284,505
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; 41,570 and 42,225 shares issued and outstanding at October 3, 2015 and January 3, 2015, respectively

4 4
Additional paid-in capital -- 29,501
Retained earnings 742,091 728,633
Accumulated other comprehensive loss   (619 )   (82 )
Total stockholders' equity   741,476     758,056  
Total liabilities and stockholders' equity $ 978,051   $ 1,042,561  
   
 
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Nine Months Ended

October 3,
2015

   

September 27,
2014

Operating Activities
Net income $ 23,928 $ 27,997
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment 9,293 9,512
Amortization of other intangible assets and other assets 21,686 13,090
Stock-based compensation expense 30,798 28,173
Income tax benefit from stock-based awards 1,727 413
Excess income tax benefit from stock-based awards (2,118 ) (654 )
Deferred income taxes 1,571 3,894
Changes in operating assets and liabilities:
Accounts receivable 12,097 769
Inventories 2,259 (1,591 )
Prepaid expenses and other assets 8,409 12,627
Accounts payable (5,686 ) 5,074
Accrued expenses (280 ) 28,756
Deferred income on shipments to distributors (2,825 ) 6,215
Income taxes (3,413 ) (4,898 )
Other non-current liabilities   (10,031 )   (21,790 )
Net cash provided by operating activities 87,415 107,587
 
Investing Activities
Purchases of available-for-sale investments (55,433 ) (137,373 )
Proceeds from sales and maturities of available-for-sale investments 136,262 100,009
Purchases of property and equipment (7,281 ) (5,500 )
Purchases of other assets (5,291 ) (3,339 )
Acquisition of business, net of cash acquired   (76,899 )   --  
Net cash used in investing activities (8,642 ) (46,203 )
 
Financing Activities
Proceeds from issuance of common stock, net of cash paid for withheld taxes (77 ) 8,559
Excess income tax benefit from stock-based awards 2,118 654
Repurchases of common stock (71,448 ) (50,942 )
Payment of acquisition-related contingent consideration (4,464 ) --
Proceeds from issuance of long-term debt, net 81,238 --
Payments on debt   (92,206 )   (3,750 )
Net cash used in financing activities   (84,839 )   (45,479 )
 
Increase (decrease) in cash and cash equivalents (6,066 ) 15,905
Cash and cash equivalents at beginning of period   141,706     95,800  
Cash and cash equivalents at end of period $ 135,640   $ 111,705  






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