PR Newswire | Jul 28, 2021 07:06AM EDT

07/28 06:05 CDT

Silicon Labs Announces Record Revenue for Second Quarter 2021Strong Execution in Supply-Constrained Market Delivers Record IoT Revenue AUSTIN, Texas, July 28, 2021

AUSTIN, Texas, July 28, 2021 /PRNewswire/ -- Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported strong financial results for the second quarter, which ended July 3, 2021. Revenue exceeded the top of the guidance range at $278 million, and revenue from the Internet of Things business (IoT) ended at a record high of $169 million, up seven percent sequentially and 48 percent year-on-year. Second quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.44 and $1.05, respectively.

"We continue to capitalize on the increased adoption, growth and diversity of the global IoT market," said Silicon Labs CEO Tyson Tuttle. "Achieving another quarter of record revenue, robust bookings, and strong design wins amid a tight supply chain environment is a testament to our powerful development platform, performance-driven team, and purpose-oriented culture."

Earlier in the week, Silicon Labs accomplished another major milestone, completing the divestiture of its Infrastructure and Automotive (I&A) businesses to Skyworks Solutions, Inc. (NASDAQ: SWKS) for $2.75 billion in an all-cash transaction, the proceeds of which have been fully funded. Silicon Labs is now reporting revenue from the divested products as "discontinued operations" and from IoT as "continuing operations."

Second Quarter Financial Highlights

* IoT revenue from continuing operations increased to $169 million, up seven percent sequentially and 48 percent year-on-year * I&A revenue from discontinued operations increased to $108 million, up 11 percent sequentially and 16 percent year-on-year

Results from continuing operations on a GAAP basis:

* GAAP gross margin was 56.8% * GAAP R&D expenses were $65 million * GAAP SG&A expenses were $43 million * GAAP operating loss as a percentage of revenue was (6.8)% * GAAP loss per share was $(0.41)

Results from continuing operations on a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, restructuring charges, non-cash interest expense and other costs associated with convertible notes, and certain other items as set forth in the reconciliation tables were as follows:

* Non-GAAP gross margin was 56.9% * Non-GAAP R&D expenses were $51 million * Non-GAAP SG&A expenses were $34 million * Non-GAAP operating income as a percentage of revenue was 6.6% * Non-GAAP diluted earnings per share were $0.16

Innovations and Achievements

* Completed smooth transition of the infrastructure and automotive business to Skyworks Solutions, positioning Silicon Labs as a pure-play leader in secure, intelligent wireless connectivity. * Continued to drive the IoT industry forward by contributing more than 20 percent of the source code and launching new products for Matter, which simplifies the complexities of secure, reliable wireless connectivity for both developers and consumers. * Collaborated with fellow IoT leader, Wirepas, to launch a connected solution for asset tracking and building automation. Wirepas chose Silicon Labs for its integrated hardware and software platform, ultra-low power chips and affordable solutions. * Remained steadfast in our dedication to environmental sustainability and passion for supporting local communities by becoming the first corporation to join the International Institute of Information Technology Hyderabad's new Smart City Living Lab, which focuses R&D on devices that improve life in densifying cities. * Demonstrated we are passionate about connecting more than "things" and announced the annual WorksWith conference, which connects developers and business leaders to the information, experts, and technology needed to go from IoT idea to award-winning innovation.

Business Outlook

The company expects third quarter revenue from continuing operations to be in the range of $170 to $180 million. The company also estimates the following results from continuing operations:

On a GAAP basis:

* GAAP gross margin between 57% and 57.5% * GAAP operating expenses at approximately $116 million * GAAP effective tax rate of approximately (11)% * GAAP diluted loss per share to be in the range of a $(0.56) to $(0.46)

On a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, restructuring charges, non-cash interest expense and other costs associated with convertible notes, and certain other items as set forth in the reconciliation tables:

* Non-GAAP gross margin between 57% and 58% * Non-GAAP operating expenses at approximately $93 million * Non-GAAP effective tax rate of approximately 14% * Non-GAAP diluted earnings per share between $0.10 and $0.20

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 CST today. An audio webcast will be available on Silicon Labs' website (www.silabs.com) under Investor Relations. The company will post an audio recording of the event at silabs.com/investors and make a replay available through August 4, 2021 online or by calling (877) 344-7529 (US) or (412) 317-0088 (international) and entering access code 10158301.

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, unmatched ecosystem and robust support make us the 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 effect of the Skyworks transaction on the ability of Silicon Labs to retain and hire key personnel and maintain relationships with its customers, suppliers, advertisers, partners and others with whom it does business, or on its operating results and businesses generally; risks associated with the disruption of management's attention from ongoing business operations due to such transaction; the timing and scope of anticipated share repurchases and/or dividends; the impact of COVID-19 on the U.S. and global economy, including the restrictions on travel and transportation and other actions taken by governmental authorities and disruptions to the business of our customers or our global supply chain that have occurred or may occur in the future, the ongoing impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs; 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 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; 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; 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 and other factors that are detailed in the SEC filings of Silicon Laboratories Inc. The level of share repurchases and/or dividends depends on market conditions and the level of other uses of cash. 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.

Silicon Laboratories Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

Three Months Ended Six Months Ended

July 3, July 4, July 3, July 4, 2021 2020 2021 2020

Revenues $169,492 $114,350 $327,349 $232,368

Cost of revenues 73,194 47,771 139,297 96,942

Gross profit 96,298 66,579 188,052 135,426

Operating expenses:

Research and development 64,832 57,992 128,847 115,702

Selling, general and administrative 42,953 40,350 85,407 84,802

Operating expenses 107,785 98,342 214,254 200,504

Operating loss (11,487) (31,763) (26,202) (65,078)

Other income (expense):

Interest income and other, net 647 3,267 3,522 6,518

Interest expense (6,486) (11,778) (17,810) (17,319)

Loss from continuing operations before income taxes (17,326) (40,274) (40,490) (75,879)

Provision (benefit) for income taxes 1,165 (4,229) 3,157 (8,443)

Loss from continuing operations (18,491) (36,045) (43,647) (67,436)

Income from discontinued operations, net of income taxes 38,423 34,222 77,088 67,857

Net income (loss) $ $ $ $ 19,932 (1,823) 33,441 421

Basic earnings (loss) per share:

Continuing operations $ $ $ $ (0.41) (0.82) (0.98) (1.54)

Net income $ $ $ $ 0.44 (0.04) 0.75 0.01

Diluted earnings (loss) per share:

Continuing operations $ $ $ $ (0.41) (0.82) (0.98) (1.54)

Net income $ $ $ $ 0.44 (0.04) 0.73 0.01

Weighted-average common shares outstanding:

Basic 44,803 43,761 44,481 43,699

Diluted 45,756 43,761 45,794 44,219

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

Non-GAAP Income Statement Three Months EndedItems - Continuing Operations July 3, 2021

GAAP GAAP Stock Non-GAAP Non-GAAP Intangible Asset Measure Percent of Compensation Amortization Measure Percent of Revenue Expense Revenue

Revenues $169,492

Gross profit 96,298 56.8% $199 $ -- $96,497 56.9%

Research and development 64,832 38.3% 5,488 8,184 51,160 30.2%

Selling, general and administrative 42,953 25.3% 5,565 3,267 34,121 20.1%

Operating income (loss) (11,487) (6.8)% 11,252 11,451 11,216 6.6%

Non-GAAP Earnings Per Share Three Months Ended- Continuing Operations July 3, 2021

Interest Income GAAP Stock Intangible Investment Non- Compensation Asset Fair Value Expense Tax GAAP Measure Expense* Amortization* Adjustments* Measure Adjustments* Adjustments

Loss from continuing $(18,491) $11,252 $11,451 $(236) $4,992 $(1,500) $7,468operations

Dilutive Securities Excluded From GAAP Measure Due to Net Loss

Diluted shares outstanding 44,803 953 45,756

Diluted earnings (loss) per $ $ 0.16share (0.41)

* Represents pre-tax amounts

Non-GAAP Earnings Per Share Three Months Ended- Net Income July 3, 2021

Stock Interest Income GAAP Intangible Disposition Investment Expense Non- Compensation Asset Related Fair Value Tax GAAP Measure Expense* Amortization* Items* Adjustments* Adjustments* Measure Adjustments

Net income $19,932 $13,644 $11,562 $3,195 $(236) $4,992 $(4,818) $48,271

Diluted shares outstanding 45,756 45,756

Diluted earnings per share $ 0.44 $ 1.05

* Represents pre-taxamounts

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

Three Months EndingBusiness Outlook October 2, 2021

GAAP Non-GAAP Non-GAAP

Measure Adjustments* Measure

Gross margin 57% - 57.5% 0% - 0.5% 57% - 58%

Operating expenses $116 $23 $93

Effective tax rate (11)% 25% 14%

Diluted earnings (loss) per share - low $(0.56) $0.66 $0.10

Diluted earnings (loss) per share - high $(0.46) $0.66 $0.20

* Non-GAAP adjustments include the following estimates: stock compensationexpense of $12.8 million, intangible asset amortization of $11.1 million,interest expense adjustments of $5.1 million and the associated tax impact fromthe aforementioned items.

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

July 3, January 2, 2021 2021

Assets

Current assets:

Cash and cash equivalents $ $ 303,084 202,720

Short-term investments 314,183 521,963

Accounts receivable, net 99,546 95,169

Inventories 52,269 47,861

Prepaid expenses and other current assets 94,378 87,103

Current assets held for sale 297,543 21,005

Total current assets 1,161,003 975,821

Property and equipment, net 139,362 135,803

Goodwill 376,389 376,389

Other intangible assets, net 140,581 163,483

Other assets, net 78,667 76,675

Non-current assets held for sale -- 265,316

Total assets $1,896,002 $1,993,487

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ $ 70,820 54,949

Current portion of convertible debt, net -- 134,480

Deferred revenue and returns liability 12,811 12,986

Other current liabilities 70,552 81,650

Current liabilities held for sale 699 433

Total current liabilities 154,882 284,498

Convertible debt, net 439,654 428,945

Other non-current liabilities 73,712 79,752

Non-current liabilities held for sale -- 451

Total liabilities 668,248 793,646

Commitments and contingencies

Stockholders' equity:

Preferred stock - $0.0001 par value; 10,000 sharesauthorized; no -- --

shares issued

Common stock - $0.0001 par value; 250,000 sharesauthorized; 4 4 44,764 and 43,925 shares issued and outstanding at

July 3, 2021 and January 2, 2021, respectively

Additional paid-in capital 200,716 204,359

Retained earnings 1,027,105 993,664

Accumulated other comprehensive income (loss) (71) 1,814

Total stockholders' equity 1,227,754 1,199,841

Total liabilities and stockholders' equity $1,896,002 $1,993,487

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Six Months Ended

July 3, July 4, 2021 2020

Operating Activities

Net income $ 33,441 $ 421

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

continuing operations:

Income from discontinued operations, net of income taxes (77,088) (67,857)

Depreciation of property and equipment 8,184 7,711

Amortization of intangible assets and other assets 22,902 20,486

Amortization of debt discount and debt issuance costs 11,822 8,359

Loss on extinguishment of convertible debt 3,370 3,685

Stock-based compensation expense 22,620 24,461

Deferred income taxes (5,644) 1,177

Changes in operating assets and liabilities:

Accounts receivable (4,377) 7,070

Inventories (4,447) 8,021

Prepaid expenses and other assets (5,489) 22,976

Accounts payable 14,711 (769)

Other current liabilities and income taxes (10,626) (15,480)

Deferred revenue and returns liability (175) 6,678

Other non-current liabilities (3,464) 1,146

Net cash provided by operating activities of continuing operations 5,740 28,085

Investing Activities

Purchases of marketable securities (80,426) (199,347)

Sales and maturities of marketable securities 286,649 255,112

Purchases of property and equipment (10,779) (9,051)

Purchases of other assets (578) (820)

Acquisition of business, net of cash acquired -- (316,809)

Net cash provided by (used in) investing activities of continuing operations 194,866 (270,915)

Financing Activities

Proceeds from issuance of debt -- 845,000

Payments on debt (140,572) (597,446)

Repurchases of common stock (18,982) (16,287)

Payment of taxes withheld for vested stock awards (19,732) (16,756)

Proceeds from the issuance of common stock 8,388 7,757

Net cash provided by (used in) financing activities of continuing operations (170,898) 222,268

Discontinued Operations

Operating activities 72,674 72,418

Investing activities (2,018) (1,343)

Net cash provided by (used in) discontinued operations 70,656 71,075

Increase in cash and cash equivalents 100,364 50,513

Cash and cash equivalents at beginning of period 202,720 227,146

Cash and cash equivalents at end of period $303,084 $277,659

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SOURCE Silicon Labs