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Silicon Labs Announces First Quarter 2016 Results

The following excerpt is from the company's SEC filing.

Record Revenue in IoT and Infrastructure Drives Solid Beat

AUSTIN, Texas Apr. 27, 2016

Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its first quarter ended April 2, 2016. Revenue in the first quarter slightly exceeded the high end of guidance at $162.0 million, up from $160.1 million in the fourth quarter. First quarter non-GAAP earnings per share (EPS) exceeded the high end of guidance at $0.51.

First Quarter Financial Highlights

IoT revenue exceeded expectations and est ablished a new record, increasing to $70.9 million, or 5.5% sequentially

Infrastructure revenue established a new record, increasing to $31.6 million, or 3.3% sequentially

Broadcast revenue declined to $38.4 million, or 3.1% sequentially

Access revenue declined to $21.1 million, or 6.7% sequentially

On a GAAP basis:

Gross margin was 59.0%

R&D expenses were $49.0 million

SG&A expenses were $39.6 million

Operating income as a percentage of revenue was 4.2%

Diluted earnings per share were $0.14

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

Gross margin was 59.6%

R&D expenses were $38.5 million

SG&A expenses were $33.0 million

Operating income as a percentage of revenue was 15.5%

Diluted earnings per share were $0.51

Product Highlights

Introduced the pre-certified BGM113 Blue Gecko Bluetooth® module offering an optimal combination of small footprint, ease of use and low-energy wireless technology.

Launched the Wizard Gecko WGM110 Wi-Fi® module for applications where strong RF performance, low power consumption and fast time to market are key requirements.

Introduced the multiprotocol Wireless Gecko SoC portfolio supporting ZigBee®, Thread, Bluetooth low energy and proprietary protocols for IoT applications.

Launched the Si827x isolated gate driver family providing the industrys highest noise immunity for power supplies, solar inverters, and electric and hybrid electric vehicles.

Announced the high-performance jitter-attenuating Si534xH clock family that reduces the cost and complexity of high-speed 100G/400G coherent optical networking applications.

Business Outlook

Including $5 million in patent sale revenue, the company expects revenue in the second quarter to be in the range of $168 million to $173 million. Second quarter diluted earnings per share are expected to be between $0.23 and $0.29 on a GAAP basis, and between $0.61 and $0.67 on a non-GAAP basis, which reflects an expected $0.09 after-tax benefit from the patent sale transaction.

Strong top line performance, fueled by record revenue in IoT and Infrastructure, combined with good gross margin results and favorable opex, drove a solid beat in first quarter non-GAAP EPS, said Tyson Tuttle, CEO of Silicon Labs. Over the past 20 years, weve established ourselves as a leading innovator of silicon, software and solutions for a more connected world. The launch of our multiprotocol Wireless Gecko portfolio enables game-changing functionality for our customers and will drive our growth and success in the broad IoT market.

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 ID 83470730. The replay will be available through May 27, 2016.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for the Internet of Things, Infrastructure, industrial automation, consumer and automotive markets. We solve the electronics industrys 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; cyber-attacks against our products and our 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

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

Three Months Ended

2016

April 4,

2015

Revenues

162,025

163,705

Cost of revenues

66,494

67,336

95,531

96,369

Operating expenses:

Research and development

49,046

46,857

Selling, general and administrative

39,637

42,300

88,683

89,157

Other income (expense):

Interest income

Interest expense

Other income (expense), net

Income before income taxes

Provision for income taxes

Net income

Earnings per share:

Weighted-average common shares outstanding:

41,629

42,412

42,199

43,149

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

April 2, 2016

Non-GAAP Income

Statement Items

Measure

Percent of

Revenue

Compensation

Expense

Intangible

Asset

Amortization

Acquisition

Related

Items

Termination

Costs

GAAP

96,613

Research and development

38,520

32,970

10,344

25,123

Earnings Per Share

Expense*

Amortization*

Items*

Costs*

Income Tax

Adjustments

(2,618

21,465

Diluted shares outstanding

Diluted earnings per share

* Represents pre-tax amounts

Unaudited Forward-Looking Statements Regarding Business Outlook

Three Months Ending

July 2, 2016

Business Outlook

Estimated GAAP diluted earnings per share

Estimated non-GAAP charges

Estimated non-GAAP diluted earnings per share

Condensed Consolidated Balance Sheets

January 2,

Assets

Current assets:

Cash and cash equivalents

126,690

114,085

Short-term investments

126,824

128,901

Accounts receivable, net of allowances for doubtful accounts of $657 at April 2, 2016 and $671 at January 2, 2016

74,591

73,601

Inventories

48,923

53,895

Prepaid expenses and other current assets

44,222

52,658

Total current assets

421,250

423,140

Long-term investments

Property and equipment, net

130,099

131,132

Goodwill

272,722

Other intangible assets, net

113,800

121,354

Other assets, net

53,566

55,989

Total assets

998,282

1,011,463

Liabilities and Stockholders Equity

Current liabilities:

Accounts payable

42,579

42,127

Current portion of long-term debt

10,000

Accrued expenses

58,391

52,131

Deferred income on shipments to distributors

41,042

35,448

Income taxes

Total current liabilities

155,096

142,321

Long-term debt

65,000

67,500

Other non-current liabilities

28,739

40,528

Total liabilities

248,835

250,349

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; 41,743 and 41,727 shares issued and outstanding at April 2, 2016 and January 2, 2016, respectively

Additional paid-in capital

13,868

Retained earnings

750,256

747,749

Accumulated other comprehensive loss

Total stockholders equity

749,447

761,114

Total liabilities and stockholders equity

Condensed Consolidated Statements of Cash Flows

(In thousands)

Operating Activities

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

Depreciation of property and equipment

Amortization of other intangible assets and other assets

Stock-based compensation expense

10,519

Income tax benefit (shortfall) from stock-based awards

(1,025

Excess income tax benefit from stock-based awards

(1,785

Deferred income taxes

Changes in operating assets and liabilities:

(6,424

Prepaid expenses and other assets

(5,046

(1,049

(8,409

(10,584

(3,816

Net cash provided by operating activities

42,409

24,088

Investing Activities

Purchases of available-for-sale investments

(44,547

(13,037

Proceeds from sales and maturities of available-for-sale investments

46,654

57,739

Purchases of property and equipment

(2,303

(1,991

Purchases of other assets

(1,107

Acquisition of business, net of cash acquired

(76,899

Net cash used in investing activities

(1,303

(35,123

Financing Activities

Payment of taxes withheld for vested stock awards, net of proceeds from the issuance of common stock

(7,523

(2,561

Repurchases of common stock

(18,484

(10,138

Payment of acquisition-related contingent consideration

(4,464

Payments on debt

(2,500

(2,583

Net cash used in financing activities

(28,501

(17,961

Increase (decrease) in cash and cash equivalents

12,605

(28,996

Cash and cash equivalents at beginning of period

141,706

Cash and cash equivalents at end of period

112,710

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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