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Published: 2023-11-01 07:17:45 ET
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EX-99 2 tm2329431d1_ex99.htm EXHIBIT 99

 

Exhibit 99

 

 

 

Silicon Labs Reports Third Quarter 2023 Results

 

IoT leader delivers solid results in a challenging market environment 

 

AUSTIN, Texas – November 1, 2023 – Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported financial results for the third quarter, which ended September 30, 2023.

 

“The Silicon Labs team executed well in the third quarter, driving revenue and EPS that exceeded the mid-point of our guidance,” said Matt Johnson, President and Chief Executive Officer at Silicon Labs. “The current demand environment remains quite weak as we navigate this cyclical inventory correction, and end market visibility continues to be challenging. That said, we are pleased with our record design win performance in the quarter and continued advancements in our industry-leading platform. We believe this positions us well for growth and higher earnings power when the market recovers.”

 

Third Quarter Financial Highlights

 

·Revenue was $204 million

·Industrial & Commercial revenue for the quarter was $121 million

·Home & Life revenue for the quarter was $83 million

 

Results on a GAAP basis:

 

·GAAP gross margin was 58.4%

·GAAP R&D expenses were $79 million

·GAAP SG&A expenses were $28 million

·GAAP operating income as a percentage of revenue was 6%

·GAAP diluted earnings per share were $0.32

 

Results on a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, and certain other items as set forth in the below GAAP to Non-GAAP reconciliation tables were as follows:

 

·Non-GAAP gross margin was 58.5%

·Non-GAAP R&D expenses were $64 million

·Non-GAAP SG&A expenses were $31 million

·Non-GAAP operating income as a percentage of revenue was 12%

·Non-GAAP diluted earnings per share were $0.62

 

 

 

Business Highlights

 

·Hosted its fourth annual Works With Conference in August, which attracted thousands of top IoT developers and included panels with partners from Amazon, Google, Samsung, and many more. The virtual event covered a broad range of IoT technologies and trends, including Bluetooth, Wi-Fi, Matter, Wi-Sun, and Amazon Sidewalk, as well as the latest developments in security and AI/ML.

·Announced its next-generation Series 3 platform, purpose-built for embedded IoT devices. Series 3 devices will be designed to offer industry-leading compute, wireless performance, scalability, and energy efficiency with the highest levels of IoT security. Notably, new levels of compute will bring more than 100x the processing capability of Series 2 and will include integrated AI/ ML accelerators for edge devices, enabling consolidation of system processing into wireless SoCs. Silicon Labs also announced the next version of their developer tool suite, Simplicity Studio, to help developers and device manufacturers streamline and accelerate product designs.

 

Business Outlook

 

The company expects fourth-quarter revenue to be between $70 to $100 million. The company also estimates the following results:

 

On a GAAP basis:

 

·GAAP gross margin to be 53%

·GAAP operating expenses of approximately $123 million

·GAAP diluted earnings (loss) per share between $(2.39) to $(1.95)

 

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

 

·Non-GAAP gross margin to be 53%

·Non-GAAP operating expenses of approximately $94 million

·Non-GAAP diluted earnings (loss) per share between $(1.66) to $(1.22)

 

Earnings Webcast and Conference Call

 

Silicon Labs will host an earnings conference call to discuss the quarterly results and answer questions at 7:30 am CDT today. An audio webcast will be available on Silicon Labs' website (www.silabs.com) under Investor Relations. In addition, the company will post an audio recording of the event at investor.silabs.com and make a replay available through December 1, 2023.

 

 

 

About Silicon Labs

 

Silicon Labs (NASDAQ: SLAB) is a leader in secure, intelligent wireless technology for a more connected world. Our integrated hardware and software platform, intuitive development tools, thriving ecosystem, and robust support make us an ideal long-term partner in building advanced industrial, commercial, home and life applications. We make it easy for developers to solve complex wireless challenges throughout the product lifecycle and get to market quickly with innovative solutions that transform industries, grow economies, and improve lives. 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: the competitive and cyclical nature of the semiconductor industry; the challenging macroeconomic environment, including disruptions in the financial services industry; 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 or pandemics, war and political unrest; risks that demand and the supply chain may be adversely affected by military conflict (including in the Middle East, and between Russia and Ukraine), terrorism, sanctions or other geopolitical events globally (including in the Middle East, and conflict between Taiwan and China); 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; risks associated with international activities (including trade barriers, particularly with respect to China); intellectual property litigation risks; risks associated with acquisitions and divestitures; product liability risks; difficulties managing and/or obtaining sufficient supply from Silicon Labs’ distributors, manufacturers and subcontractors; dependence on a limited number of products; absence of long-term commitments from customers; 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 its accounts receivable; dependence on key personnel; stock price volatility; the impact of COVID-19 on the U.S. and global economy; debt-related risks; capital-raising risks; the timing and scope of share repurchases and/or dividends; average selling prices of products may decrease significantly and rapidly; information technology risks; cyber-attacks against Silicon Labs’ products and its networks 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: Thomas Haws, Investor Relations Manager, (512) 416-8500, investor.relations@silabs.com

 

 

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Income 

(In thousands, except per share data) 

(Unaudited)

 

   Three Months Ended   Nine Months Ended 
   September 30,
2023
   October 1,
2022
   September 30,
2023
   October 1,
2022
 
Revenues  $203,760   $269,817   $695,413   $766,781 
Cost of revenues   84,735    104,232    278,753    281,521 
Gross profit   119,025    165,585    416,660    485,260 
Operating expenses:                    
   Research and development   79,042    84,624    254,340    245,677 
   Selling, general and administrative   27,766    50,738    113,363    144,398 
Operating expenses   106,808    135,362    367,703    390,075 
Operating income   12,217    30,223    48,957    95,185 
Other income (expense):                    
   Interest income and other, net   2,938    4,672    15,554    9,616 
   Interest expense   (1,359)   (1,527)   (4,611)   (4,874)
Income before income taxes   13,796    33,368    59,900    99,927 
Provision for income taxes   3,388    14,188    23,479    36,871 
Equity-method earnings (loss)   (60)   1,819    (1,150)   2,985 
Net income  $10,348   $20,999   $35,271   $66,041 
                     
Earnings per share:                    
   Basic  $0.33   $0.62   $1.11   $1.84 
   Diluted  $0.32   $0.60   $1.07   $1.79 
                     
Weighted-average common shares outstanding:                    
   Basic   31,796    34,079    31,789    35,935 
   Diluted   32,078    34,779    32,919    36,968 

 

 

 

Non-GAAP Financial Measurements

 

In addition to the GAAP results provided throughout this document, Silicon Labs has provided non-GAAP financial measurements on a basis excluding non-cash and other charges and benefits. Details of these excluded items are presented in the tables below, which reconcile the GAAP results to non-GAAP financial measurements.

 

The non-GAAP financial measurements do not replace the presentation of Silicon Labs’ GAAP financial results. These measurements provide supplemental information to assist management and investors in analyzing Silicon Labs’ financial position and results of operations. Silicon Labs has chosen to provide this information to investors to enable them to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of core on-going operations.

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

 

  

Three Months Ended

September 30, 2023

 
Non-GAAP Income Statement Items 

GAAP

Measure

  

GAAP

Percent of
Revenue

   Stock
Compensation
Expense
   Intangible Asset
Amortization
   Termination Costs  

Non-GAAP

Measure

  

Non-GAAP

Percent of
Revenue

 
Revenues  $203,760                               
                                    
Gross profit   119,025    58.4%  $192   $--   $18   $119,235    58.5%
                                    
Research and development   79,042    38.8%   8,598    6,239    269    63,936    31.4%
                                    
Selling, general and administrative   27,766    13.6%   (3,000)   19    8    30,739    15.1%
                                    
Operating income   12,217    6.0%   5,790    6,258    295    24,560    12.1%
                                    
  

Three Months Ended

September 30, 2023

 
Non-GAAP Earnings Per Share 

GAAP

Measure

  

Stock

Compensation
Expense*

   Intangible
Asset
Amortization*
   Termination
Costs*
  

Equity-Method

Investment
Adjustments*

  

Income

Tax

Adjustments

  

Non-

GAAP

Measure

 
Net income  $10,348   $5,790   $6,258   $295   $60   $(2,778)  $19,973 
                                    
Diluted shares outstanding   32,078                             32,078 
                                    
Diluted earnings per share  $0.32                            $0.62 

 

* Represents pre-tax amounts

 

 

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

 

 

Three Months Ending

December 30, 2023

 
Business Outlook   

GAAP

Measure

    

Non-GAAP

Adjustments**

    

Non-GAAP

Measure

 
Gross margin   53%   0%   53%
                
Operating expenses  $123   $(29)  $94 
                
Diluted earnings (loss) per share - low  $(2.39)  $0.73   $(1.66)
                
Diluted earnings (loss) per share - high  $(1.95)  $0.73   $(1.22)

 

** Non-GAAP adjustments include the following estimates: stock compensation expense of $16.5 million, intangible asset amortization of $6.2 million, termination costs of $6.5 million, and the associated tax impact from the aforementioned items.

 

 

 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets 

(In thousands, except per share data) 

(Unaudited)

 

  

September 30,

2023

  

December 31,

2022

 
Assets          
Current assets:          
   Cash and cash equivalents  $159,928   $499,915 
   Short-term investments   257,157    692,024 
   Accounts receivable, net   102,142    71,437 
   Inventories   167,581    100,417 
   Prepaid expenses and other current assets   86,727    97,570 
Total current assets   773,535    1,461,363 
Property and equipment, net   150,839    152,016 
Goodwill   376,389    376,389 
Other intangible assets, net   65,744    84,907 
Other assets, net   108,555    94,753 
Total assets  $1,475,062   $2,169,428 
           
Liabilities and Stockholders’ Equity          
Current liabilities:          
   Accounts payable  $48,086   $89,860 
   Revolving line of credit   45,000    -- 
   Deferred revenue and returns liability   10,066    6,780 
   Other current liabilities   61,991    89,136 
Total current liabilities   165,143    185,776 
Convertible debt, net   --    529,573 
Other non-current liabilities   49,997    49,071 
Total liabilities   215,140    764,420 
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; 31,779 and 31,994 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively   3    3 
   Retained earnings   1,262,518    1,415,693 
   Accumulated other comprehensive loss   (2,599)   (10,688)
Total stockholders’ equity   1,259,922    1,405,008 
Total liabilities and stockholders’ equity  $1,475,062   $2,169,428 

 

 

 

Silicon Laboratories Inc. 

Condensed Consolidated Statements of Cash Flows 

(In thousands) 

(Unaudited)

 

   Nine Months Ended 
  

September 30,

2023

  

October 1,

2022

 
Operating Activities          
Net income  $35,271   $66,041 
Adjustments to reconcile net income to net cash provided by (used in) operating activities of continuing operations:          
   Depreciation of property and equipment   18,992    16,514 
   Amortization of other intangible assets   19,162    27,328 
   Amortization of debt issuance costs   960    1,492 
   Loss on extinguishment of convertible debt   --    3 
   Stock-based compensation expense   37,167    43,213 
   Equity-method (earnings) loss   1,150    (2,985)
   Deferred income taxes   (5,881)   (13,126)
   Changes in operating assets and liabilities:          
      Accounts receivable   (30,706)   21,641 
      Inventories   (66,971)   (39,100)
      Prepaid expenses and other assets   8,085    (28,404)
      Accounts payable   (37,039)   26,694 
      Other current liabilities and income taxes   (39,155)   17,962 
      Deferred revenue and returns liability   3,286    (2,144)
      Other non-current liabilities   6,794    (7,713)
Net cash provided by (used in) operating activities of continuing operations   (48,885)   127,416 
           
Investing Activities          
Purchases of marketable securities   (91,493)   (579,507)
Sales of marketable securities   365,073    42,952 
Maturities of marketable securities   171,766    597,399 
Purchases of property and equipment   (18,533)   (20,057)
Purchases of other assets   (395)   -- 
Net cash provided by investing activities of continuing operations   426,418    40,787 
           
Financing Activities          
Proceeds from revolving line of credit   80,000    -- 
Payments on debt   (571,157)   (21)
Repurchases of common stock   (217,137)   (681,695)
Payment of taxes withheld for vested stock awards   (17,239)   (14,732)
Proceeds from the issuance of common stock   8,013    6,366 
Net cash used in financing activities of continuing operations   (717,520)   (690,082)
           
Discontinued Operations          
Operating activities   --    (69,467)
Net cash used in discontinued operations   --    (69,467)
           
Decrease in cash and cash equivalents   (339,987)   (591,346)
Cash and cash equivalents at beginning of period   499,915    1,074,623 
Cash and cash equivalents at end of period  $159,928   $483,277