News Column

Silicon Labs Announces First Quarter 2014 Results

April 29, 2014

Company Sees Growing Momentum in the Internet of Things

AUSTIN, Texas--(BUSINESS WIRE)-- Silicon Labs (NASDAQ: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported financial results for its first quarter ended March 29, 2014. Revenue in the first quarter was at the top end of guidance at $145.7 million, compared with $146.2 million reported in the fourth quarter. Additionally, the company reported excellent performance on its balance sheet with strong cash flows and effective working capital management.

Q1 Financial Highlights

On a GAAP basis:

  • Gross margin was 59.8 percent
  • R&D expenses were $42.5 million
  • SG&A expenses were $34.6 million
  • Operating income as a percentage of revenue was 6.9 percent
  • Diluted earnings per share were $0.18

    On a non-GAAP basis (results exclude the impact of stock compensation, amortization from acquired intangible assets and certain other items as set forth in the reconciliation tables below):

  • Gross margin was 60.2 percent
  • R&D expenses were $35.0 million
  • SG&A expenses were $28.5 million
  • Operating income was 16.6 percent
  • Diluted earnings per share were $0.42

    Business Highlights

  • Broad-based revenue was $72.3 million, essentially flat sequentially, as expected.
  • Broadcast exceeded expectations with revenue of $50.7 million, including record revenue in video.
  • Access revenue decreased slightly, as expected, to $22.7 million.

    Product Highlights

  • Introduced a new version of the Simplicity Studio™ development ecosystem supporting Silicon Labs’ MCU products in a single, unified platform, making the embedded design process easier, faster and more efficient.
  • Announced the expansion of Silicon Labs’ Ember® ZigBee® portfolio with the introduction of a new ARM®-based system-on-a-chip family that reduces the cost and complexity of deploying ZigBee solutions in smart metering and home automation applications.
  • Launched the industry’s first single-chip digital ultraviolet (UV) index sensor ICs designed to track UV sun exposure, heart rate and blood oxygen levels for wearable products such as smart watches and health and fitness trackers.
  • Acquired the full product portfolio and intellectual property of Silicon Valley-based Touchstone Semiconductor, an early-stage technology company and provider of low-power analog IC products targeting Internet of Things applications.

    Business Outlook

    The company expects revenue in the second quarter to be in the range of $147 million to $151 million. Second quarter diluted earnings per share are expected to be between $0.15 and $0.19 on a GAAP basis and between $0.43 and $0.47 on a non-GAAP basis. Both GAAP and non-GAAP estimates include an estimated $0.03 per share effect from litigation costs.

    “We continue to strengthen our position as a leading supplier of silicon solutions for the Internet of Things,” said Tyson Tuttle, CEO of Silicon Labs. “We expect this momentum to drive record Broad-based revenue in the second quarter.”

    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 simultaneously 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 by entering 39717388. The replay will be available through May 29.

    About Silicon Labs

    Silicon Labs is an industry leader in the innovation of high-performance, analog-intensive, mixed-signal ICs. Developed by a world-class engineering team with unsurpassed expertise in mixed-signal design, Silicon Labs' diverse portfolio of patented semiconductor solutions offers customers significant advantages in performance, size and power consumption. For more information about Silicon Labs, please visit 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 Silicon Labs logo, Simplicity Studio and Ember 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

    March 29,

    2014

     

    March 30,

    2013

    Revenues $ 145,691 $ 145,375
    Cost of revenues   58,586     58,003  
    Gross margin 87,105 87,372
    Operating expenses:
    Research and development 42,485 37,582
    Selling, general and administrative   34,611     29,153  
    Operating expenses   77,096     66,735  
    Operating income 10,009 20,637
    Other income (expense):
    Interest income 302 335
    Interest expense (798 ) (842 )
    Other income (expense), net   67     (52 )
    Income before income taxes 9,580 20,078
    Provision for income taxes   1,470     44  
     

    Net income

    $ 8,110   $ 20,034  
     
    Earnings per share:
    Basic $ 0.19 $ 0.47
    Diluted $ 0.18 $ 0.46
     
    Weighted-average common shares outstanding:
    Basic 43,081 42,186
    Diluted 44,056 43,110
     
     
    Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
    (In thousands, except per share data)
       

    Non-GAAP Income

    Statement Items

    Three Months Ended

    March 29, 2014

    GAAP

    Measure

     

    GAAP

    Percent of

    Revenue

     

    Stock

    Compensation

    Expense

     

    Intangible

    Asset

    Amortization

     

    Termination

    Costs

     

    Acquisition

    Related

    Items

     

    Non-GAAP

    Measure

     

    Non-

    GAAP

    Percent of

    Revenue

    Revenues $ 145,691
     
    Gross margin 87,105 59.8 % $ 195 $ 390 $ -- $ -- $ 87,690 60.2 %
     
    Research and

    development

    42,485 29.2 % 4,241 3,247 -- --

    34,997

    24.0 %
     
    Selling, general and

    administrative

    34,611

    23.7

    %

    4,841 729 (267 )

    816

    28,492

    19.6 %
     
    Operating income 10,009 6.9 % 9,277 4,366 (267 ) 816 24,201 16.6 %
     
                                   
    Non-GAAP Diluted

    Earnings Per Share

    Three Months Ended

    March 29, 2014

    GAAP

    Measure

    Stock

    Compensation

    Expense

    Intangible

    Asset

    Amortization

    Termination

    Costs

    Acquisition

    Related

    Items

    Release of

    Unrecognized

    Tax Benefits

    Non-

    GAAP

    Measure

    Net income $ 8,110 $ 7,966 $ 3,019 $ (199 ) $ 816 $ (1,292 ) $ 18,420

     

     

     

    Diluted shares outstanding

     

    44,056 -- -- -- -- -- 44,056
     
    Diluted earnings per share $ 0.18 $ 0.42
     
     

    Unaudited Forward-Looking Statements Regarding Business Outlook

    (In thousands, except per share information)

         
    Business Outlook

    Three Months Ending

    June 28, 2014

    High   Low
    Estimated GAAP diluted earnings per share $ 0.19 $ 0.15
     
    Estimated non-GAAP charges   0.28   0.28
     
    Estimated non-GAAP diluted earnings per share $ 0.47 $ 0.43
         
     
    Silicon Laboratories Inc.
    Condensed Consolidated Balance Sheets
    (In thousands, except per share data)
    (Unaudited)
     

    March 29,

    2014

    December 28,

    2013

    Assets
    Current assets:
    Cash and cash equivalents $ 128,323 $ 95,800
    Short-term investments 194,765 179,593
    Accounts receivable, net of allowances for doubtful accounts of

    $767 at March 29, 2014 and $797 at December 28, 2013

    64,672 72,124
    Inventories 44,334 45,271
    Deferred income taxes 15,203 18,878
    Prepaid expenses and other current assets   40,214     47,651  
    Total current assets 487,511 459,317
    Long-term investments 10,997 10,632
    Property and equipment, net 130,829 132,445
    Goodwill 228,781 228,781
    Other intangible assets, net 128,453 131,593
    Other assets, net   23,482     28,382  
    Total assets $ 1,010,053   $ 991,150  
     
    Liabilities and Stockholders’ Equity
    Current liabilities:
    Accounts payable $ 22,707 $ 22,126
    Current portion of long-term debt 8,750 7,500
    Accrued expenses 67,745 45,975
    Deferred income on shipments to distributors 32,589 30,853
    Income taxes   1,330     2,693  
    Total current liabilities 133,121 109,147
    Long-term debt 85,000 87,500
    Other non-current liabilities   30,737     55,941  
    Total liabilities 248,858 252,588
    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;

    43,433 and 42,779 shares issued and outstanding at

    March 29, 2014 and December 28, 2013, respectively

    4 4
    Additional paid-in capital 62,883 48,630
    Retained earnings 698,722 690,612
    Accumulated other comprehensive loss   (414 )   (684 )
    Total stockholders' equity   761,195     738,562  
    Total liabilities and stockholders' equity $ 1,010,053   $ 991,150  
       
     
    Silicon Laboratories Inc.
    Condensed Consolidated Statements of Cash Flows
    (In thousands)
    (Unaudited)
     
    Three Months Ended

    March 29,

    2014

     

    March 30,

    2013

    Operating Activities
    Net income $ 8,110 $ 20,034
    Adjustments to reconcile net income to cash provided by operating activities:
    Depreciation of property and equipment 3,290 3,297
    Amortization of other intangible assets and other assets 4,491 2,840
    Stock-based compensation expense 9,277 6,260
    Income tax benefit (shortfall) from stock-based awards 45 (363 )
    Excess income tax benefit from stock-based awards (235 ) (217 )
    Deferred income taxes 6,784 7,521
    Changes in operating assets and liabilities:
    Accounts receivable 7,452 5,256
    Inventories 1,083 (7,350 )
    Prepaid expenses and other assets 14,266 4,620
    Accounts payable 1,195 2,356
    Accrued expenses (2,218 ) (4,330 )
    Deferred income on shipments to distributors 1,736 (598 )
    Income taxes   (8,324 )   (9,818 )
    Net cash provided by operating activities 46,952 29,508
     
    Investing Activities
    Purchases of available-for-sale investments (43,366 ) (78,851 )
    Proceeds from sales and maturities of available-for-sale investments 28,242 25,674
    Purchases of property and equipment (1,673 ) (3,898 )
    Purchases of other assets   (2,113 )   (1,228 )
    Net cash used in investing activities (18,910 ) (58,303 )
     
    Financing Activities
    Proceeds from issuance of common stock, net of shares withheld for taxes 5,496 4,915
    Excess income tax benefit from stock-based awards 235 217
    Payments on debt   (1,250 )   (2,500 )
    Net cash provided by financing activities   4,481     2,632  
     
    Increase (decrease) in cash and cash equivalents 32,523 (26,163 )
    Cash and cash equivalents at beginning of period   95,800     105,426  
    Cash and cash equivalents at end of period $ 128,323   $ 79,263  





    Silicon Labs

    Deborah Stapleton, +1-650-470-4200

    Deborah.Stapleton@silabs.com

    Source: Silicon Laboratories Inc.


  • For more stories on investments and markets, please see HispanicBusiness' Finance Channel



    Source: Business Wire