Exhibit 99

 

 

Silicon Labs Announces Third Quarter 2018 Results

 

— Record Revenue in IoT and Infrastructure —

 

AUSTIN, Texas — Oct. 24, 2018 — Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its third quarter ended September 29, 2018. Revenue in the third quarter established a new, all-time record, exceeding the high end of guidance at $230.2 million, up from $217.1 million in the second quarter. Third quarter GAAP and non-GAAP diluted earnings per share (EPS) established eight-year record highs at $0.63 and $1.01, respectively.

 

“We are delighted to report outstanding third quarter 2018 financial performance, including 16 percent year-on-year revenue growth,” said Tyson Tuttle, CEO of Silicon Labs. “We saw sequential growth in all core business categories in Q3 and delivered record performance in IoT and Infrastructure. We have delivered target operating model performance in top line revenue growth, non-GAAP gross margin, non-GAAP opex and non-GAAP operating margin for the past five quarters.”

 

Third Quarter Financial Highlights

 

·                  IoT revenue increased to $125 million, up 8% sequentially and 25% year-on-year.

·                  Infrastructure revenue increased to $53 million, up 2% sequentially and 35% year-on-year.

·                  Broadcast revenue increased to $36 million, up 6% sequentially and down 16% year-on-year.

·                  Access revenue increased to $16 million, up 5% sequentially and down 4% year-on-year.

 

On a GAAP basis:

 

·                  GAAP gross margin was 58.9%

·                  GAAP R&D expenses were $61 million

·                  GAAP SG&A expenses were $49 million

·                  GAAP operating income as a percentage of revenue was 10.9%

·                  GAAP diluted earnings per share were $0.63

 

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:

 

·                  Non-GAAP gross margin was 60.8%

 


 

·                  Non-GAAP R&D expenses were $47 million

·                  Non-GAAP SG&A expenses were $40 million

·                  Non-GAAP operating income as a percentage of revenue was 23.0%

·                  Non-GAAP diluted earnings per share were $1.01

 

Product Highlights

 

·                  Released Wireless Xpress modules, enabling developers to move from product concept to prototyping in a matter of hours instead of weeks, and without firmware development.

·                  Collaborated with Q-Free to create the ParQSense outdoor parking sensor solution using Silicon Labs’ Wonder Gecko wireless MCU, making it faster and easier for drivers in urban areas to locate open parking spots.

·                  Introduced new any-frequency clocks with an integrated quartz crystal, simplifying board design and guaranteeing reliable start-up and operation over the lifetime of end products.

 

Business Highlights

 

·                  Reached a milestone with one billion cumulative units of TV tuners shipped.

 

Business Outlook

 

The company expects revenue in the fourth quarter to be in the range of $221 to $227 million, with IoT up and declines in Infrastructure, Broadcast and Access, and estimates the following:

 

On a GAAP basis:

 

·                  GAAP gross margin at approximately 60.0%

·                  GAAP operating expenses at approximately $111.0 million

·                  GAAP effective tax rate at approximately 10.0%

·                  GAAP diluted earnings per share between $0.39 and $0.45

 

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:

 

·                  Non-GAAP gross margin between 60.0% and 60.5%

·                  Non-GAAP operating expenses at approximately $88.0 million

·                  Non-GAAP effective tax rate at 13.0%

·                  Non-GAAP diluted earnings per share between $0.91 and $0.97

 

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 (855) 859-2056 or (404) 537-3406 (international) and entering conference 88340293. The replay will be available through November 20, 2018.

 


 

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

 

Nine Months Ended

 

 

 

September 29,
2018

 

September 30,
2017

 

September 29,
2018

 

September 30,
2017

 

Revenues

 

$

230,243

 

$

198,723

 

$

652,733

 

$

567,849

 

Cost of revenues

 

94,616

 

82,149

 

261,577

 

232,922

 

Gross margin

 

135,627

 

116,574

 

391,156

 

334,927

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

61,091

 

52,000

 

175,414

 

156,756

 

Selling, general and administrative

 

49,406

 

39,606

 

148,896

 

119,587

 

Operating expenses

 

110,497

 

91,606

 

324,310

 

276,343

 

Operating income

 

25,130

 

24,968

 

66,846

 

58,584

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income and other, net

 

2,109

 

1,923

 

6,920

 

4,094

 

Interest expense

 

(4,932

)

(4,764

)

(14,703

)

(9,265

)

Income before income taxes

 

22,307

 

22,127

 

59,063

 

53,413

 

Provision (benefit) for income taxes

 

(5,454

)

2,178

 

(9,383

)

1,469

 

Net income

 

$

27,761

 

$

19,949

 

$

68,446

 

$

51,944

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.64

 

$

0.47

 

$

1.59

 

$

1.23

 

Diluted

 

$

0.63

 

$

0.46

 

$

1.55

 

$

1.20

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

43,256

 

42,553

 

43,177

 

42,376

 

Diluted

 

44,194

 

43,374

 

44,135

 

43,194

 

 



 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

 

 

 

Three Months Ended
September 29, 2018

 

Non-GAAP Income
Statement Items

 

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

 

$

230,243

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

135,627

 

58.9

%

$

324

 

$

 

$

3,967

 

$

 

$

139,918

 

60.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

61,091

 

26.5

%

6,016

 

7,810

 

 

 

47,265

 

20.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

49,406

 

21.5

%

6,242

 

3,179

 

 

256

 

39,729

 

17.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

25,130

 

10.9

%

12,582

 

10,989

 

3,967

 

256

 

52,924

 

23.0

%

 

 

 

Three Months Ended
September 29, 2018

 

Non-GAAP
Earnings Per Share

 

GAAP
Measure

 

Stock
Compensation
Expense*

 

Intangible
Asset
Amortization*

 

Acquisition
Related
Items*

 

Termination
Costs *

 

Non-cash
Interest
Expense*

 

Income Tax
Adjustments

 

Non-GAAP
Measure

 

Net income

 

$

27,761

 

$

12,582

 

$

10,989

 

$

3,967

 

$

256

 

$

2,801

 

$

(13,700

)

$

44,656

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

44,194

 

 

 

 

 

 

 

 

 

 

 

 

 

44,194

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.63

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1.01

 

 


* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

 

 

 

Three Months Ending
December 29, 2018

 

Business Outlook

 

GAAP
Measure

 

Non-GAAP
Adjustments

 

Non-GAAP
Measure

 

Gross margin

 

60.0%

 

0.0% - 0.5%

 

60.0% - 60.5%

 

 

 

 

 

 

 

 

 

Operating expenses

 

$111

 

$23

 

$88

 

 

 

 

 

 

 

 

 

Effective tax rate

 

10.0%

 

3.0%

 

13.0%

 

 

 

 

 

 

 

 

 

Diluted earnings per share - low

 

$0.39

 

$0.52

 

$0.91

 

 

 

 

 

 

 

 

 

Diluted earnings per share - high

 

$0.45

 

$0.52

 

$0.97

 

 

 

 

 

 

 

 

 

 



 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 

 

 

September 29,
2018

 

December 30,
2017

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

225,326

 

$

269,366

 

Short-term investments

 

376,603

 

494,657

 

Accounts receivable, net

 

74,607

 

71,367

 

Inventories

 

77,563

 

73,132

 

Prepaid expenses and other current assets

 

46,952

 

39,120

 

Total current assets

 

801,051

 

947,642

 

Property and equipment, net

 

135,566

 

127,682

 

Goodwill

 

396,689

 

288,227

 

Other intangible assets, net

 

181,611

 

83,144

 

Other assets, net

 

89,372

 

88,387

 

Total assets

 

$

1,604,289

 

$

1,535,082

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

43,647

 

$

38,851

 

Deferred revenue and returns liability

 

25,880

 

 

Deferred income on shipments to distributors

 

 

50,115

 

Other current liabilities

 

77,821

 

73,359

 

Total current liabilities

 

147,348

 

162,325

 

Convertible debt

 

351,457

 

341,879

 

Other non-current liabilities

 

57,777

 

77,862

 

Total liabilities

 

556,582

 

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; 43,147 and 42,707 shares issued and outstanding at September 29, 2018 and December 30, 2017, respectively

 

4

 

4

 

Additional paid-in capital

 

103,169

 

102,862

 

Retained earnings

 

946,201

 

851,307

 

Accumulated other comprehensive loss

 

(1,667

)

(1,157

)

Total stockholders’ equity

 

1,047,707

 

953,016

 

Total liabilities and stockholders’ equity

 

$

1,604,289

 

$

1,535,082

 

 



 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 29,
2018

 

September 30,
2017

 

Operating Activities

 

 

 

 

 

Net income

 

$

68,446

 

$

51,944

 

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

 

 

 

 

 

Depreciation of property and equipment

 

11,781

 

11,068

 

Amortization of other intangible assets and other assets

 

33,322

 

20,531

 

Amortization of debt discount and debt issuance costs

 

9,578

 

6,984

 

Stock-based compensation expense

 

36,893

 

33,007

 

Deferred income taxes

 

(2,994

)

(5,703

)

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

2,518

 

(1,587

)

Inventories

 

5,066

 

(13,196

)

Prepaid expenses and other assets

 

6,349

 

23,506

 

Accounts payable

 

8,675

 

1,746

 

Other current liabilities and income taxes

 

(23,814

)

9,296

 

Deferred income, deferred revenue and returns liability

 

(2,816

)

11,039

 

Other non-current liabilities

 

(7,878

)

(7,269

)

Net cash provided by operating activities

 

145,126

 

141,366

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

Purchases of available-for-sale investments

 

(253,973

)

(471,938

)

Sales and maturities of available-for-sale investments

 

371,885

 

143,765

 

Purchases of property and equipment

 

(18,267

)

(10,494

)

Purchases of other assets

 

(9,088

)

(2,622

)

Acquisition of business, net of cash acquired

 

(239,729

)

(13,658

)

Net cash used in investing activities

 

(149,172

)

(354,947

)

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

Proceeds from issuance of long-term debt, net

 

 

389,468

 

Payments on debt

 

 

(72,500

)

Repurchases of common stock

 

(24,272

)

 

Payment of taxes withheld for vested stock awards

 

(18,927

)

(14,870

)

Proceeds from the issuance of common stock

 

6,585

 

6,836

 

Payment of acquisition-related contingent consideration

 

(3,380

)

 

Net cash provided by (used in) financing activities

 

(39,994

)

308,934

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(44,040

)

95,353

 

Cash and cash equivalents at beginning of period

 

269,366

 

141,106

 

Cash and cash equivalents at end of period

 

$

225,326

 

$

236,459

 

 


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