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Silicon Labs Announces Record IoT Revenue for Fourth Quarter 2021

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IoT Leader Enters 2022 With Strong Momentum Across Wireless Portfolio

AUSTIN, Texas, Feb. 2, 2022 /PRNewswire/ -- Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported strong financial results for the fourth quarter, which ended January 1, 2022. Revenue exceeded the top of the guidance range at $209 million, up 13% sequentially and 43% year-on-year. Fourth quarter and annual results herein are from "continuing operations" unless explicitly stated.

(PRNewsfoto/Silicon Labs)
(PRNewsfoto/Silicon Labs)

"I'm proud of the team's disciplined execution as we transitioned to focus solely on the Internet of Things. We delivered record IoT revenue and gained momentum across our entire wireless portfolio," said Matt Johnson, President, and Chief Executive Officer. "We're well-positioned to take advantage of the accelerating IoT growth across smart home, medical, industrial, and commercial segments in 2022."

Fourth Quarter Financial Highlights

  • Revenue increased to $209 million, up 13% sequentially and 43% year-on-year

Results on a GAAP basis:

  • GAAP gross margin was 61.3%

  • GAAP R&D expenses were $72 million

  • GAAP SG&A expenses were $53 million

  • GAAP operating income as a percentage of revenue was 1.3%

  • GAAP diluted earnings per share were $0.13

Results 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 61.4%

  • Non-GAAP R&D expenses were $57 million

  • Non-GAAP SG&A expenses were $37 million

  • Non-GAAP operating income as a percentage of revenue was 16.3%

  • Non-GAAP diluted earnings per share were $0.77

Business Highlights

  • In January, Silicon Labs announced the BG24 and MG24 2.4 GHz wireless SoCs and a new software toolkit that bring AI/ML acceleration and wireless high performance to battery-powered edge devices. Matter-ready, the ultra-low-power BG24 and MG24 families support multiple wireless protocols and incorporate PSA Level 3 Secure Vault™ protection, important for diverse smart home, medical and industrial applications.

  • In Q4, Silicon Labs launched our new Z-Wave 800 SoCs and modules for the Z-Wave smart home and automation ecosystem. This expansion on the company's award-winning Series 2 platform provides developers with sub-GHz connectivity for Z-Wave Mesh and Z-Wave Long Range, which is ideal for the smart home as well as multi-dwelling units, hospitality, and lighting applications while supporting both devices and gateways.

  • Silicon Labs is proud to be named the Global Semiconductor Alliance's Most Respected Public Semiconductor Company among our peers, a testament to our strong performance and values. We were also ranked one of the best companies to work for in our industry based on the annual Great Place to Work survey of our employees.

  • On January 27, 2022, Silicon Labs' board of directors approved a new share repurchase program that authorizes the company to buy back up to $250 million of the company's common stock through the end of the fiscal year.

  • Silicon Labs announced that Sherri Luther, Chief Financial Officer of Lattice Semiconductor (NASDAQ: LSCC), joined Silicon Labs' board of directors effective January 2, 2022. Sherri is a well-respected industry leader, bringing 30 years of experience in mergers and acquisitions, global supply chain optimization, and deep financial expertise. Additionally, Sumit Sadana was appointed Lead Director for Silicon Labs. Sumit succeeds Bill Wood, who remains a member of the board. Sumit currently serves as Executive Vice President, Chief Business Officer, and interim Chief Financial Officer at Micron Technology (NASDAQ: MU).

Business Outlook

The company expects first quarter revenue to be in the range of $220 to $230 million. The company also estimates the following results:

On a GAAP basis:

  • GAAP gross margin of approximately 63%

  • GAAP operating expenses of approximately $128 million

  • GAAP effective tax rate of approximately 37%

  • GAAP diluted earnings per share to be between $0.15 to $0.25

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 of approximately 63%

  • Non-GAAP operating expenses of approximately $105 million

  • Non-GAAP effective tax rate of approximately 30%

  • Non-GAAP diluted earnings per share between $0.58 to $0.68

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 silabs.com/investors and make a replay available through March 2, 2022, online or by calling (877) 344-7529 (US) or (412) 317-0088 (international) and entering access code 4909009.

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 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 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; 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

Year Ended


January 1,
2022


January 2,
2021


January 1,
2022


January 2,
2021

Revenues

$ 208,680


$ 145,829


$ 720,860


$ 510,928

Cost of revenues

80,849


61,894


295,468


216,083

Gross profit

127,831


83,935


425,392


294,845

Operating expenses:








Research and development

71,705


60,554


273,208


235,185

Selling, general and administrative

53,487


41,792


185,022


166,748

Operating expenses

125,192


102,346


458,230


401,933

Other income (expense):








Interest income and other, net

2,595


1,206


5,696


9,027

Interest expense

(6,628)


(8,219)


(31,033)


(34,142)

Loss from continuing operations before income taxes

(1,394)


(25,424)


(58,175)


(132,203)

Provision (benefit) for income taxes

884


(2,702)


13,427


(14,602)

Equity-method earnings

7,791


1,375


13,728


2,116

Income (loss) from continuing operations

5,513


(21,347)


(57,874)


(115,485)

Income (loss) from discontinued operations, net of income taxes

(8,611)


30,295


2,175,273


128,016









Net income (loss)

$ (3,098)


$ 8,948


$ 2,117,399


$ 12,531









Basic earnings (loss) per share:








Continuing operations

$ 0.14


$ (0.49)


$ (1.35)


$ (2.64)

Net income

$ (0.08)


$ 0.20


$ 49.44


$ 0.29









Diluted earnings (loss) per share:








Continuing operations

$ 0.13


$ (0.49)


$ (1.35)


$ (2.64)

Net income

$ (0.08)


$ 0.20


$ 47.78


$ 0.28









Weighted-average common shares outstanding:








Basic

38,965


43,895


42,830


43,775

Diluted

41,031


44,729


44,315


44,372

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)






January 1,
2022


January 2,
2021

Assets




Current assets:




Cash and cash equivalents

$1,074,623


$ 202,720

Short-term investments

964,582


521,963

Accounts receivable, net

98,313


95,169

Inventories

49,307


47,861

Prepaid expenses and other current assets

51,748


87,103

Current assets of discontinued operations

--


21,005

Total current assets

2,238,573


975,821

Property and equipment, net

146,516


135,803

Goodwill

376,389


376,389

Other intangible assets, net

118,978


163,483

Other assets, net

77,839


76,675

Non-current assets of discontinued operations

--


265,316

Total assets

$2,958,295


$1,993,487





Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable

$ 47,327


$ 54,949

Current portion of convertible debt, net

450,599


134,480

Deferred revenue and returns liability

13,849


12,986

Other current liabilities

157,052


81,650

Current liabilities of discontinued operations

--


433

Total current liabilities

668,827


284,498

Convertible debt, net

--


428,945

Other non-current liabilities

77,044


79,752

Non-current liabilities of discontinued operations

--


451

Total liabilities

745,871


793,646

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;

38,481 and 43,925 shares issued and outstanding at

January 1, 2022 and January 2, 2021, respectively

4


4

Additional paid-in capital

--


204,359

Retained earnings

2,214,839


993,664

Accumulated other comprehensive income (loss)

(2,419)


1,814

Total stockholders' equity

2,212,424


1,199,841

Total liabilities and stockholders' equity

$2,958,295


$1,993,487

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)




Year Ended


January 1,
2022


January 2,
2021

Operating Activities




Net income

$2,117,399


$ 12,531

Adjustments to reconcile net income to cash provided by (used in)

operating activities of continuing operations:




Income from discontinued operations, net of income taxes

(2,175,273)


(128,016)

Depreciation of property and equipment

18,051


16,267

Amortization of other intangible assets

44,505


42,569

Amortization of debt discount and debt issuance costs

22,767


21,433

Loss on extinguishment of convertible debt

3,370


4,060

Stock-based compensation expense

56,842


49,454

Equity-method earnings

(13,728)


(2,116)

Deferred income taxes

(3,414)


(6,533)

Changes in operating assets and liabilities:




Accounts receivable

(3,144)


(17,612)

Inventories

(1,510)


9,148

Prepaid expenses and other assets

44,664


(50,664)

Accounts payable

(7,704)


15,263

Other current liabilities and income taxes

2,109


3,215

Deferred revenue and returns liability

863


(6,694)

Other non-current liabilities

(14,599)


28,856

Net cash provided by (used in) operating activities of continuing operations

91,198


(8,839)





Investing Activities




Purchases of marketable securities

(1,541,971)


(519,567)

Sales and maturities of marketable securities

1,095,041


497,357

Purchases of property and equipment

(28,577)


(18,088)

Purchases of other assets

(1,158)


(1,210)

Acquisitions of businesses, net of cash acquired

--


(316,809)

Net cash used in investing activities of continuing operations

(476,665)


(358,317)





Financing Activities




Proceeds from issuance of debt

--


845,000

Payments on debt

(140,572)


(624,737)

Repurchases of common stock

(1,150,044)


(16,287)

Payment of taxes withheld for vested stock awards

(22,239)


(18,124)

Proceeds from the issuance of common stock

14,183


15,015

Net cash provided by (used in) financing activities of continuing operations

(1,298,672)


200,867





Discontinued Operations




Operating activities

(191,642)


144,557

Investing activities

2,747,684


(2,694)

Net cash provided by discontinued operations

2,556,042


141,863





Increase (decrease) in cash and cash equivalents

871,903


(24,426)

Cash and cash equivalents at beginning of period

202,720


227,146

Cash and cash equivalents at end of period

$1,074,623


$202,720

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)


Non-GAAP Income Statement Items

Three Months Ended

January 1, 2022


GAAP

Measure

GAAP

Percent of
Revenue

Stock

Compensation
Expense

Intangible
Asset
Amortization

Termination
Costs

Non-
GAAP

Measure

Non-GAAP

Percent of Revenue

Revenues

$208,680















Gross profit

127,831

61.3%

$267

$ --

$ --

$128,098

61.4%









Research and development

71,705

34.4%

6,796

7,753

--

57,156

27.4%









Selling, general and administrative

53,487

25.6%

12,863

2,781

939

36,904

17.7%








Operating income

2,639

1.3%

19,926

10,534

939

34,038

16.3%

Non-GAAP Earnings Per Share
– Continuing Operations


Three Months Ended

January 1, 2022




GAAP

Measure



Stock

Compensation
Expense*


Intangible
Asset
Amortization*


Termination
Costs*


Investment
Fair Value
Adjustments*


Interest
Expense

Adjustments*


Income

Tax

Adjustments


Non-
GAAP
Measure


Income from continuing

operations


$5,513



$19,926


$10,534


$939


$(7,856)


$5,106


$(2,670)


$31,492





















Diluted shares outstanding


41,031















41,031





















Diluted earnings per share


$ 0.13















$ 0.77






















* Represents pre-tax amounts.

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)




Business Outlook


Three Months Ending

April 2, 2022



GAAP

Measure


Non-GAAP

Adjustments**


Non-GAAP

Measure

Gross margin


63%


0%


63%








Operating expenses


$128


$(23)


$105








Effective tax rate


37%


(7)%


30%








Diluted earnings per share - low


$ 0.15


$ 0.43


$ 0.58








Diluted earnings per share - high


$ 0.25


$ 0.43


$ 0.68

** Non-GAAP adjustments include the following estimates: stock compensation expense of $13 million, intangible asset amortization of $10 million, and the associated tax impact from the aforementioned items.

Cision
Cision

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SOURCE Silicon Labs