Company Increases Revenue 11% Year over Year and Achieves Record Profitability
AUSTIN, Texas — (BUSINESS WIRE) — October 28, 2009 — Silicon Laboratories Inc. (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported third quarter revenue of $125.9 million, a more than 20 percent sequential increase, and an 11 percent increase over peak revenue levels during the same period in 2008. GAAP diluted earnings per share of $0.47 more than doubled sequentially, and non-GAAP diluted earnings per share increased to $0.67. Strong operating performance resulted in record operating income of 21 percent on a GAAP basis and 30 percent on a non-GAAP basis, and more than $50 million in cash flow from operations.
Third Quarter Financial Results
Third quarter revenue of $125.9 million represents a record revenue level for the company. Third quarter GAAP gross margin increased by more than 200 basis points sequentially to 64.4 percent. R&D investment for the period was $25.9 million, and SG&A was $28.6 million. GAAP diluted earnings per share was $0.47, significantly better than forecasted.
The following non-GAAP results exclude the impact of stock compensation expense. Non-GAAP gross margin increased sequentially by 220 basis points to 64.7 percent. Non-GAAP operating expenses declined sequentially to 35 percent of revenue. On an absolute dollar basis, non-GAAP R&D investment increased to $23.1 million and non-GAAP SG&A expense increased to $20.6 million. Non-GAAP operating income was a record 30 percent. Non-GAAP diluted earnings per share were $0.67, higher than anticipated. The reconciling charges are set forth in the financial tables below.
The quarter ending cash, cash equivalents and investments balance increased sequentially by $67 million, resulting in a total of $403 million. Given the company’s very strong cash position, the Board of Directors approved a share repurchase program to acquire up to $150 million of the company’s outstanding shares through the end of 2010. The program may be executed on the open market or in private transactions, including structured or accelerated transactions, depending on market conditions.
Business Summary
Five of the company’s eight product lines achieved record revenue in the third quarter due to new product cycles and strength at large customers. Notably, the RF business grew in aggregate about 40 percent compared to the same quarter a year ago. An aggressive ramp at the company’s largest customer, the addition of new tier one customers and demand in consumer devices for the AM/FM tuners were largely behind the growth.
The broad-based business was up 15 percent compared to the same period last year, led by a strong rebound in the MCU business. Customer demand improved across the board, with a significant part of the recovery coming from customers shipping into consumer applications. The timing and power product lines also grew sequentially, adding a significant number of new design wins and expanding the customer base.
“While we are pleased with the success of the business, I strongly believe that there is far more potential for growth,” said Necip Sayiner, president and CEO of Silicon Laboratories. “2009 will be another record year for new product launches, we have an increasing number of developments in the pipeline and we have many more ideas in the funnel. We believe that all of this combined will create new opportunities for us to continue our growth story into 2010 and beyond.”
The company guided fourth quarter revenue to be in the range of $124 million to $129 million, a 25 to 30 percent increase year over year.
Webcast and Conference Call
A conference call discussing the results will follow this press release today at 7:30 a.m. Central Time. An audio webcast will be available simultaneously on Silicon Laboratories’ website under Investor Relations ( www.silabs.com). A replay will be available after the call at the same website listed above or by calling 1-866-513-1237 or +1-203-369-1979 (international). Replays will be available through November 11, 2009.
About Silicon Laboratories Inc.
Silicon Laboratories Inc. is a leading designer of high-performance, analog-intensive, mixed-signal integrated circuits (ICs) for a broad range of applications. Silicon Laboratories’ diverse portfolio of highly integrated, patented solutions is developed by a world-class engineering team with expertise in cutting-edge mixed-signal design. The company has design, engineering, marketing, sales and applications offices throughout North America, Europe and Asia. For more information about Silicon Laboratories, please visit www.silabs.com.
Forward-Looking Statements
This press release contains forward-looking statements based on Silicon Laboratories’ current expectations. The words “guide,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “anticipate,” “plan,” “project,” “will” and similar phrases as they relate to Silicon Laboratories are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Silicon Laboratories 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 Laboratories may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; volatile stock price; average selling prices of products may decrease significantly and rapidly, dependence on a limited number of products and customers; difficulties developing new products that achieve market acceptance; risks that Silicon Laboratories may not be able to manage strains associated with its growth; dependence on key personnel; difficulties managing our manufacturers and subcontractors; difficulties managing international activities; credit risks associated with our accounts receivable; geographic concentration of manufacturers, assemblers, test service providers and customers in Asia that subjects Silicon Laboratories’ business and results of operations to risks of natural disasters, epidemics, war and political unrest; product development risks; inventory-related risks; intellectual property litigation risks; risks associated with acquisitions (including risks that acquisitions may not yield the expected benefits due to the failure to properly integrate the acquired businesses and employees; risks that the customer base and revenue of the acquired businesses may cease to expand or may decline; risks that the acquired business’ products under development may fail to achieve market acceptance; risks of disputes regarding the acquired business; risks that the performance of Silicon Laboratories’ existing business may not offset the dilutive effect of an acquisition); risks associated with divestitures; the competitive and cyclical nature of the semiconductor industry and other factors that are detailed in Silicon Laboratories’ filings with the SEC. Silicon Laboratories disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Note to editors: Silicon Laboratories, Silicon Labs and the Silicon Labs logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.
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Silicon Laboratories Inc. |
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Condensed Consolidated Statements of Income |
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(In thousands, except per share data) |
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(Unaudited) |
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| Three Months Ended | Nine Months Ended | ||||||||||||||
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October 3,
2009 |
October 4,
2008 |
October 3,
2009 |
October 4,
2008 |
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| Revenues | $ | 125,913 | $ | 113,483 | $ | 313,830 | $ | 316,282 | |||||||
| Cost of revenues | 44,878 | 44,174 | 117,336 | 120,593 | |||||||||||
| Gross margin | 81,035 | 69,309 | 196,494 | 195,689 | |||||||||||
| Operating expenses: | |||||||||||||||
| Research and development | 25,904 | 25,785 | 77,841 | 73,836 | |||||||||||
| Selling, general and administrative | 28,592 | 25,940 | 78,221 | 75,035 | |||||||||||
| In-process research and development | -- | 10,250 | -- | 10,250 | |||||||||||
| Operating expenses | 54,496 | 61,975 | 156,062 | 159,121 | |||||||||||
| Operating income | 26,539 | 7,334 | 40,432 | 36,568 | |||||||||||
| Other income (expense): | |||||||||||||||
| Interest income | 546 | 2,073 | 2,083 | 9,277 | |||||||||||
| Interest expense | (51 | ) | (71 | ) | (154 | ) | (325 | ) | |||||||
| Other income (expense), net | 8 | (43 | ) | 298 | (540 | ) | |||||||||
| Income before income taxes | 27,042 | 9,293 | 42,659 | 44,980 | |||||||||||
| Provision for income taxes | 4,603 | 8,139 | 9,819 | 18,369 | |||||||||||
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Net income |
$ | 22,439 | $ | 1,154 | $ | 32,840 | $ | 26,611 | |||||||
| Earnings per share: | |||||||||||||||
| Basic | $ | 0.50 | $ | 0.02 | $ | 0.73 | $ | 0.54 | |||||||
| Diluted | $ | 0.47 | $ | 0.02 | $ | 0.71 | $ | 0.53 | |||||||
| Weighted-average common shares outstanding: | |||||||||||||||
| Basic | 45,170 | 47,331 | 44,814 | 49,036 | |||||||||||
| Diluted | 47,322 | 48,385 | 46,127 | 50,083 | |||||||||||
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Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures |
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(In thousands, except per share data) |
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Non-GAAP Income
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Three Months Ended
October 3, 2009 |
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GAAP
Measure |
GAAP
Percent of
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Stock
Compensation
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Non-GAAP
Measure |
Non-GAAP
Percent of
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| Revenues | $125,913 | |||||||||
| Gross margin | 81,035 | 64.4% | $ 375 | $81,410 | 64.7% | |||||
| Research and development | 25,904 | 20.6% | 2,829 | 23,075 | 18.3% | |||||
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Selling, general and
administrative |
28,592 |
22.7% |
7,973 |
20,619 |
16.4% | |||||
| Operating expenses | 54,496 | 43.3% | 10,802 | 43,694 | 34.7% | |||||
| Operating income | 26,539 | 21.1% | 11,177 | 37,716 | 30.0% | |||||
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Non-GAAP Diluted
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Three Months Ended
October 3, 2009 |
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GAAP
Measure |
Stock
Compensation
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Non-GAAP
Measure |
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| Net Income | $22,439 | $9,484 |
$31,923 |
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| Diluted shares outstanding | 47,322 | -- | 47,322 | |||||||
| Diluted earnings per share | $ 0.47 | $ 0.67 | ||||||||
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Non-GAAP Income
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Three Months Ended
July 4, 2009 |
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GAAP
Measure |
GAAP
Percent of
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Stock
Compensation
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Non-GAAP
Measure |
Non-GAAP
Percent of
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| Revenues | $104,216 | |||||||||
| Gross margin | 64,781 | 62.2% | $ 372 | $65,153 | 62.5% | |||||
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Silicon Laboratories Inc. |
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Condensed Consolidated Balance Sheets |
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(In thousands, except per share data) |
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(Unaudited) |
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October 3,
2009 |
January 3,
2009 |
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| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 149,072 | $ | 172,272 | |||
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Short-term investments |
228,935 | 101,267 | |||||
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Accounts receivable, net of allowance for doubtful accounts of $645 at October 3, 2009 and $1,011 at January 3, 2009 |
61,487 | 36,144 | |||||
| Inventories | 33,510 | 28,293 | |||||
| Deferred income taxes | 7,437 | 6,439 | |||||
| Prepaid expenses and other current assets | 17,869 | 18,297 | |||||
| Total current assets | 498,310 | 362,712 | |||||
| Long-term investments | 25,344 | 51,821 | |||||
| Property, equipment and software, net | 28,698 | 30,496 | |||||
| Goodwill | 105,109 | 105,515 | |||||
| Other intangible assets, net | 43,804 | 49,728 | |||||
| Other assets, net | 16,894 | 23,973 | |||||
| Total assets | $ | 718,159 | $ | 624,245 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 26,840 | $ | 22,274 | |||
| Accrued expenses | 30,176 | 29,119 | |||||
| Deferred income on shipments to distributors | 31,966 | 21,599 | |||||
| Income taxes | -- | 4 | |||||
| Total current liabilities | 88,982 | 72,996 | |||||
| Long-term obligations and other liabilities | 50,513 | 48,789 | |||||
| Total liabilities | 139,495 | 121,785 | |||||
| Commitments and contingencies | |||||||
| Stockholders' equity: | |||||||
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Preferred stock--$0.0001 par value; 10,000 shares authorized; no shares issued and outstanding |
-- | -- | |||||
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Common stock--$0.0001 par value; 250,000 shares authorized; 45,577 and 44,613 shares issued and outstanding at October 3, 2009 and January 3, 2009, respectively |
5 | 4 | |||||
| Additional paid-in capital | 117,555 | 75,711 | |||||
| Retained earnings | 465,633 | 432,793 | |||||
| Accumulated other comprehensive loss | (4,529 | ) | (6,048 | ) | |||
| Total stockholders' equity | 578,664 | 502,460 | |||||
| Total liabilities and stockholders' equity | $ | 718,159 | $ | 624,245 | |||
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Silicon Laboratories Inc. |
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Condensed Consolidated Statements of Cash Flows |
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(In thousands) |
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(Unaudited) |
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| Nine Months Ended | ||||||||
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October 3,
2009 |
October 4,
2008 |
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| Operating Activities | ||||||||
| Net income | $ | 32,840 | $ | 26,611 | ||||
| Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
| Depreciation and amortization of property, equipment and software | 9,021 | 7,927 | ||||||
| Loss (gain) on disposal of property, equipment and software | 32 | (15 | ) | |||||
| Amortization of other intangible assets and other assets | 5,924 | 5,118 | ||||||
| Stock compensation expense | 32,176 | 30,393 | ||||||
| In-process research and development | -- | 10,250 | ||||||
| Income tax benefit from employee stock-based awards | 1,672 | 1,108 | ||||||
| Excess income tax benefit from employee stock-based awards | (1,378 | ) | (810 | ) | ||||
| Deferred income taxes | 626 | 339 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (25,016 | ) | (5,838 | ) | ||||
| Inventories | (5,256 | ) | (1,367 | ) | ||||
| Prepaid expenses and other assets | 3,444 | 8,930 | ||||||
| Accounts payable | 5,656 | (1,258 | ) | |||||
| Accrued expenses | 3,801 | (6,922 | ) | |||||
| Deferred income on shipments to distributors | 10,367 | 965 | ||||||
| Income taxes | 4,246 | 5,654 | ||||||
| Net cash provided by operating activities | 78,155 | 81,085 | ||||||
| Investing Activities | ||||||||
| Purchases of available-for-sale investments | (182,039 | ) | (151,470 | ) | ||||
| Proceeds from sales and maturities of available-for-sale investments | 80,312 | 271,824 | ||||||
| Proceeds from sales of trading securities | 2,600 | -- | ||||||
| Purchases of property, equipment and software | (6,991 | ) | (7,861 | ) | ||||
| Proceeds from the sale of assets | -- | 14,265 | ||||||
| Purchases of other assets | (2,763 | ) | (4,828 | ) | ||||
| Acquisitions of businesses, net of cash acquired | (2,800 | ) | (74,560 | ) | ||||
| Net cash provided by (used in) investing activities | (111,681 | ) | 47,370 | |||||
| Financing Activities | ||||||||
| Proceeds from issuance of common stock | 26,322 | 7,649 | ||||||
| Excess income tax benefit from employee stock-based awards | 1,378 | 810 | ||||||
| Repurchases of common stock | (12,325 | ) | (246,031 | ) | ||||
| Repurchases of stock to satisfy employee tax withholding | (5,049 | ) | (3,980 | ) | ||||
| Net cash provided by (used in) financing activities | 10,326 | (241,552 | ) | |||||
| Decrease in cash and cash equivalents | (23,200 | ) | (113,097 | ) | ||||
| Cash and cash equivalents at beginning of period | 172,272 | 264,408 | ||||||
| Cash and cash equivalents at end of period | $ | 149,072 | $ | 151,311 | ||||
Contact:
Silicon Laboratories Inc.
Shannon Pleasant, 512-464-9254
Email Contact