Silicon Labs Reports Record Revenue

Silicon Labs Reports Record Revenue

Company Delivers 15 Percent Revenue Growth in 2012

AUSTIN, Texas--(BUSINESS WIRE)-- Silicon Labs (NAS: SLAB) , a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported record revenue for the fourth quarter and the full year. Revenue of $563.3 million for 2012 was an impressive 15 percent increase compared to 2011.


Financial Highlights

Fourth quarter revenue of $152.5 million was up 20 percent compared to the same period last year. On a GAAP-basis, gross margin improved meaningfully to 61.4 percent. R&D investment increased to $36.0 million, and SG&A expense increased to $32.3 million. Resulting GAAP operating income decreased to 16.6 percent. Diluted GAAP earnings per share increased to $0.44. For all of 2012, GAAP gross margin was 60 percent and operating expenses increased only slightly by two percent to $252.3 million, resulting in a five hundred basis point improvement in operating margin to 15.2 percent. GAAP earnings increased therefore by 86 percent to $1.47.

The following non-GAAP results exclude the impact of stock compensation and other one-time items. Gross margin improved to 61.6 percent for the quarter. Operating expenses increased to 39.5 percent of revenue. R&D increased to $32.7 million, and SG&A increased to $27.5 million due to increasing product and sales activity as well as higher variable compensation driven by the outperformance for the quarter. Operating income for the quarter was a record for the year at 22.1 percent. Diluted earnings per share for the quarter were 61 cents, a 24 percent year-over-year increase.

For all of 2012, Silicon Labs reduced operating expenses to 40.3 percent of revenue and improved operating income to 20.7 percent of revenue. Diluted earnings per share increased by 20 percent to $2.16. Reconciling charges are set forth in the financial measures table included below.

The company repurchased 245 thousand shares of stock and ended the quarter with $293 million in cash, cash equivalents and investments due to continued healthy cash flow from operations.

Business Highlights

The company's strong performance in 2012 was driven by high growth in the Broadcast and Broad-based products. Broadcast growth was driven by the rapid adoption of the company's TV tuner products, which represented one third of the TV market in 2012. The Broad-based products, which grew more than 30 percent in 2012, significantly outgrew their end markets as the company added customers and expanded its sales channel.

In the fourth quarter, the Broad-based business was up as expected driven by a record quarter for the Timing products. Timing strength came from new business in consumer and embedded applications, a direct result of the company's investments to broaden the portfolio. The MCU products were up more than 45 percent year over year due to growth from strong organic execution and from a recent acquisition. The Broadcast business exceeded expectations due to record revenue for the company's video products. The Access business also grew sequentially in the fourth quarter.

"We had an excellent year in 2012, achieving record revenue levels and increasing our market share," said Tyson Tuttle, president and CEO of Silicon Laboratories. "We are addressing very large markets with a growing portfolio of differentiated products, we have a record backlog of design wins, and we believe that as we continue to execute, this will enable growth in 2013 and beyond."

The company expects revenue for the first quarter to be down sequentially four to eight percent.

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 simultaneously on Silicon Labs' website under Investor Relations (www.silabs.com). A replay will be available after the call at the same website listed above or by calling 1 (855) 859-2056 or +1 (404) 537-3406 (international) and by entering 39714732. The replay will be available through February 13.

About Silicon Labs

Silicon Labs is a leading designer of high-performance, analog-intensive, mixed-signal integrated circuits (ICs) for a broad range of applications. Silicon Labs' diverse portfolio of highly integrated, patented solutions is developed by a world-class engineering team with expertise in cutting-edge mixed-signal design. The company has design, engineering, marketing, sales and applications offices throughout North America, Europe and Asia. For more information about Silicon Labs, please visit 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 Laboratories 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; volatile stock price; average selling prices of products may decrease significantly and rapidly; difficulties developing new products that achieve market acceptance; dependence on a limited number of products and customers; intellectual property litigation risks; inventory-related risks; risks associated with acquisitions; difficulties managing international activities; difficulties managing our manufacturers and subcontractors; 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; risks associated with divestitures; 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; the competitive and cyclical nature of the semiconductor industry and other factors that are detailed in Silicon Labs' filings with the SEC. 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.

Note to editors: Silicon Laboratories, Silicon Labs 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 Income
(In thousands, except per share data)
(Unaudited)
 
      Three Months Ended       Year Ended
December 29,     December 31, December 29,     December 31,
  2012     2011     2012     2011  
Revenues $ 152,461 $ 126,692 $ 563,294 $ 491,625
Cost of revenues   58,835     49,513     225,277     193,179  
Gross margin 93,626 77,179 338,017 298,446
Operating expenses:
Research and development 36,009 34,705 137,952 135,953
Selling, general and administrative   32,315     27,251     114,390     112,419  
Operating expenses   68,324     61,956     252,342     248,372  
Operating income 25,302 15,223 85,675 50,074
Other income (expense):
Interest income 235 427 1,338 1,859
Interest expense (850 ) (23 ) (1,149 ) (37 )
Other income (expense), net   (323 )   152     484     444  
Income before income taxes 24,364 15,779 86,348 52,340
Provision for income taxes   5,669     2,974     22,800     16,868  

Net income

$ 18,695   $ 12,805   $ 63,548   $ 35,472  
 
Earnings per share:
Basic $ 0.45 $ 0.31 $ 1.51 $ 0.82
Diluted $ 0.44 $ 0.29 $ 1.47 $ 0.79
 
Weighted-average common shares outstanding:
Basic 41,705 41,979 42,136 43,421
Diluted 42,641 43,410 43,106 44,832
 
 
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
 
       
Non-GAAP Income Three Months Ended
Statement Items December 29, 2012
GAAP

Measure

    GAAP

Percent of Revenue

    Stock

Compensation Expense

    Termination Costs and Impairments     Acquisition Related Items     Non-GAAP

Measure

    Non-GAAP

Percent of Revenue

Revenues $ 152,461
 
Gross margin 93,626 61.4 % $ 268 $ -- $ -- $ 93,894 61.6 %
 
Research and

development

36,009 23.6 % 3,006 262 --

32,741

21.5 %
 

Selling, general and administrative

32,315

21.2

%

4,106 1,967

(1,253

)

27,495

18.0 %
 
Operating expenses 68,324 44.8 % 7,112 2,229 (1,253 ) 60,236 39.5 %
 
Operating income 25,302 16.6 % 7,380 2,229 (1,253 ) 33,658 22.1 %
 
         
Non-GAAP Diluted Three Months Ended
Earnings Per Share       December 29, 2012
GAAP

Measure

Stock

Compensation Expense

Termination Costs and Impairments Acquisition Related Items Non-GAAP

Measure

Net income $ 18,695 $ 6,667 $ 1,829 $ (1,253 ) $ 25,938
 
Diluted shares outstanding 42,641 -- -- -- 42,641
 
Diluted earnings per share $ 0.44 $ 0.61
 
 
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Continued)
 
       

Non-GAAP Income

Year Ended
Statement Items December 29, 2012
GAAP

Measure

    GAAP

Percent of Revenue

    Stock

Compensation Expense*

    Termination Costs and Impairments     Acquisition Related Items     Headquarters Purchase     Non-GAAP

Measure

    Non-GAAP

Percent of Revenue

Revenues $ 563,294
 
Operating expenses 252,342 44.8 % $ 28,038 $ 6,735 $ (1,361 ) $ (8,113 ) $ 227,043 40.3 %
 
Operating income 85,675 15.2 % 29,244 6,735 3,105 (8,113 ) 116,646 20.7 %
 
 
       
Non-GAAP Diluted Year Ended
Earnings Per Share December 29, 2012
GAAP

Measure

Stock

Compensation Expense*

Termination Costs and Impairments Acquisition Related Items Headquarters Purchase Release of Unrecognized Tax Benefits Non-GAAP

Measure

Net income $ 63,548 $

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