First Quarter 2015
Financial Highlights
- Net sales increased to US$80.6 million from US$80.5 million in
4Q14
- Gross margin (non-GAAP1) decreased to 52.0% from 52.5% in
4Q14
- Operating expenses (non-GAAP) increased to US$22.5 million from
US$21.4 million in 4Q14
- Operating margin (non-GAAP) decreased to 24.1% from 26.0% in
4Q14
- Diluted earnings per ADS (non-GAAP) decreased to US$0.48 from
US$0.53 in 4Q14
Business Highlights
- Announced the agreement to acquire Shannon Systems, China's
leading enterprise-class PCIe SSD and storage array solutions
provider
- SSD controller sales doubled sequentially and is now over 10%
of corporate revenue
- SSD controller shipments increased to over one million units a
month in March
- Two additional PC OEMs using SSDs with our controllers,
increasing the total to five PC OEMs
- Began shipping FerriSSD to a major German luxury automobile
maker's infotainment system
Silicon Motion Technology Corporation (NasdaqGS:SIMO) ("Silicon
Motion" or the "Company") today announced its financial results for
the quarter ended March 31, 2015. For the first quarter, net sales
increased slightly quarter-over-quarter to US$80.6 million from
US$80.5 million in the fourth quarter. Net income (non-GAAP)
decreased quarter-over-quarter to US$16.6 million or US$0.48 per
diluted ADS from a net income (non-GAAP) of US$18.5 million or
US$0.53 per diluted ADS in the fourth quarter.
GAAP net income for the first quarter increased to US$15.5
million or US$0.44 per diluted ADS from a GAAP net income of
US$12.1 million or US$0.35 per diluted ADS in the fourth
quarter.
1 Non-GAAP measures represent GAAP measures excluding the impact
of stock-based compensation, foreign exchange gain (loss), and
other non-recurring items. For reconciliation of non-GAAP to GAAP
results and further discussion, see accompanying financial tables
and the note "Discussion of Non-GAAP Financial Measures" at the end
of this press release.
First Quarter 2015 Review
Commenting on the results of the first quarter, Silicon Motion's
President and CEO Wallace Kou said:
"We are off to a solid start in 2015. Our first quarter revenue
benefited from strong client SATA 3 SSD controller sales momentum
and stable eMMC controller sales. Client SSD controller sales
doubled sequentially, now account for over 10% of our corporate
revenue and shipments increased to over a million units a month in
March. This quarter, our module maker customers aggressively built
SSDs for channel markets. Micron and another NAND flash partner
ramped sales of their SSDs with our controllers to both channel and
OEM markets, and we expect a new major SSD program with our
controllers, again for both channel and OEM markets, to begin
shipping in the second quarter. Our storage OEM partner began
shipping SSDs to three global tier-1 PC OEMs in the first quarter
and recently started shipping to two additional OEMs. Our overall
embedded products sales rebounded to well over half of total
sales.
Separately, I am excited to announce that we have entered into
an agreement to acquire Shannon Systems, a leading supplier of
innovative enterprise-class PCIe SSD and storage array solutions to
China's e-commerce, cloud computing and other industries. With this
acquisition, which we anticipate closing in the next few months, we
will supply enterprise-grade SSDs to the internet companies that
operate in the world's largest internet market."
Sales
Net sales in the first quarter were US$80.6 million, a slight
increase compared with the fourth quarter. For the quarter, mobile
storage products accounted for 79% of net sales and mobile
communications 19% of net sales.
Net sales of our mobile storage products, which primarily
include eMMC, SSD, memory card and USB flash drive controllers,
decreased 3% sequentially in the first quarter to US$63.6
million.
Net sales of mobile communications products, which primarily
include LTE transceivers and mobile TV IC solutions, increased 14%
sequentially to US$15.2 million in the first quarter.
Gross and Operating Margins
Gross margin (non-GAAP) decreased to 52.0% in the first quarter
as compared to 52.5% in the fourth quarter. GAAP gross margin
decreased in the first quarter to 52.0% as compared to 52.4% in the
fourth quarter.
Operating expenses (non-GAAP) in the first quarter were US$22.5
million, an increase from US$21.4 million in the fourth quarter.
Operating margin (non-GAAP) was 24.1%, a decrease from 26.0% in the
previous quarter. GAAP operating margin was 22.1% for the first
quarter, an increase from 20.9% in the fourth quarter.
Earnings
Net income (non-GAAP) was US$16.6 million for the first quarter,
a decrease from US$18.5 million in the fourth quarter. Diluted
earnings per ADS (non-GAAP) were US$0.48 per ADS in the first
quarter, a decreased from US$0.53 per ADS in the fourth quarter of
2014.
GAAP net income was US$15.5 million for the first quarter, an
increase from US$12.1 million in the fourth quarter. Diluted GAAP
earnings per ADS in the first quarter were US$0.44, an increase
from US$0.35 per ADS in the fourth quarter.
Balance Sheet
Cash and cash equivalents, and short-term investments increased
at the end of the first quarter to US$200.5 million from US$194.9
million at the end of the fourth quarter.
Cash Flow
Our cash flows were as follows:
|
|
3 months ended March 31,
2015 |
|
(In US$ millions) |
Net income |
15.5 |
Depreciation & amortization |
1.9 |
Changes in operating assets and
liabilities |
(5.4) |
Others |
0.6 |
Net cash provided by (used in)
operating activities |
12.6 |
Acquisition of property and equipment |
(1.8) |
Others |
(0.1) |
Net cash provided by (used in)
investing activities |
(1.9) |
Dividend |
(5.0) |
Others |
-- |
Net cash provided by (used in)
financing activities |
(5.0) |
Effects of changes in foreign currency
exchange rates on cash |
(0.1) |
Net increase (decrease) in cash
and cash equivalents |
5.6 |
|
|
During the first quarter, we had US$1.8 million of capital
expenditures primarily relating to the purchase of software and
design tools.
Returning Value to Shareholders
On January 26, 2015 the Board of Directors of the Company
declared a US$0.15 per ADS quarterly dividend. On February 20, we
recorded $5.2 million as dividend payments to our shareholders.
Business Outlook:
Silicon Motion's President and CEO, Wallace Kou, added:
"The fundamentals of our business have never been stronger and
we are excited about starting the next chapter of our growth. We
believe that we are gaining share in the client SSD controller
market and rapidly winning sockets and new designs with a broad
range of OEMs. We remain on track to grow our market leading eMMC
business as previously communicated. And with the proposed addition
of Shannon Systems, we will be entering the world's largest
internet market and will become one of the leading suppliers of
enterprise SSDs to leading Chinese internet companies."
For the second quarter of 2015, management expects:
- Revenue to increase 5% to 10% sequentially
- Gross margin (non-GAAP) to be in the 50% to 52% range
- Operating expenses (non-GAAP) of approximately US$23 to $24
million
For the full-year 2015, management expects:
- Revenue to increase 17% to 25% as compared to full-year
2014
- Gross margin (non-GAAP) to be in the 49.5% to 51.5% range
- Operating expenses (non-GAAP) of approximately US$91 to $97
million
Conference Call & Webcast:
The Company's management team will conduct a conference call at
8:00 am Eastern Time on April 28, 2015.
Speakers |
Wallace Kou, President & CEO |
Riyadh Lai, CFO |
Jason Tsai, Director of Investor Relations
and Strategy |
|
CONFERENCE CALL ACCESS NUMBERS: |
USA (Toll Free): 1 866 519 4004 |
USA (Toll): 1 845 675 0437 |
Taiwan (Toll Free): 0080 112 6920 |
Participant Passcode: 1518 8506 |
|
REPLAY NUMBERS (for 7 days): |
USA (Toll Free): 1 855 452 5696 |
USA (Toll): 1 646 254 3697 |
Participant Passcode: 1518 8506 |
A webcast of the call will be available on the Company's website
at www.siliconmotion.com.
Discussion of Non-GAAP Financial Measures
To supplement the Company's unaudited selected financial results
calculated in accordance with U.S. Generally Accepted Accounting
Principles ("GAAP"), the Company discloses certain non-GAAP
financial measures that exclude stock-based compensation and other
items, including non-GAAP cost of sales, non-GAAP gross profit,
non-GAAP selling, general, and administrative expenses, non-GAAP
operating income, non-GAAP net income, and non-GAAP earnings per
diluted ADS. These non-GAAP measures are not in accordance with or
an alternative to GAAP, and may be different from non-GAAP measures
used by other companies. We believe that these non-GAAP
measures have limitations in that they do not reflect all the
amounts associated with the Company's results of operations as
determined in accordance with GAAP and that these measures should
only be used to evaluate the Company's results of operations in
conjunction with the corresponding GAAP measures. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for the most directly
comparable GAAP measure. We compensate for the limitations of
our non-GAAP financial measures by relying upon GAAP results to
gain a complete picture of our performance.
Our non-GAAP financial measures are provided to enhance the
user's overall understanding of our current financial performance
and our prospects for the future. Specifically, we believe the
non-GAAP results provide useful information to both management and
investors as these non-GAAP results exclude certain expenses, gains
and losses that we believe are not indicative of our core operating
results and because it is consistent with the financial models and
estimates published by many analysts who follow the
Company. We use non-GAAP measures to evaluate the operating
performance of our business, for comparison with our forecasts, and
for benchmarking our performance externally against our
competitors. Also, when evaluating potential acquisitions, we
exclude the items described below from our consideration of the
target's performance and valuation. Since we find these
measures to be useful, we believe that our investors benefit from
seeing the results from management's perspective in addition to
seeing our GAAP results. We believe that these non-GAAP
measures, when read in conjunction with the Company's GAAP
financials, provide useful information to investors by
offering:
- the ability to make more meaningful period-to-period
comparisons of the Company's on-going operating results;
- the ability to better identify trends in the Company's
underlying business and perform related trend analysis;
- a better understanding of how management plans and measures the
Company's underlying business; and
- an easier way to compare the Company's operating results
against analyst financial models and operating results of our
competitors that supplement their GAAP results with non-GAAP
financial measures.
The following are explanations of each of the adjustments that
we incorporate into our non-GAAP measures, as well as the reasons
for excluding each of these individual items in our reconciliation
of these non-GAAP financial measures:
Stock-based compensation expense consists of non-cash charges
related to the fair value of stock options and restricted stock
units awarded to employees. The Company believes that the exclusion
of these non-cash charges provides for more accurate comparisons of
our operating results to our peer companies due to the varying
available valuation methodologies, subjective assumptions and the
variety of award types. In addition, the Company believes it is
useful to investors to understand the specific impact of
share-based compensation on its operating results.
Foreign exchange gains and losses consist of translation gains
and/or losses of non-US$ denominated current assets and current
liabilities, as well as certain other balance sheet items which
result from the appreciation or depreciation of non-US$ currencies
against the US$. We do not use financial instruments to manage
the impact on our operations from changes in foreign exchange
rates, and because our operations are subject to fluctuations in
foreign exchange rates, we therefore exclude foreign exchange gains
and losses when presenting non-GAAP financial measures.
Other non-recurring items:
- Litigation expenses consist of legal expenses relating to
intellectual property disputes, commercial claims and other types
of litigation. While litigation may arise in the ordinary course of
our business, we nevertheless consider litigation to be an unusual,
non-recurring and unplanned activity and therefore exclude this
charge when presenting non-GAAP financial measures.
- Acquisition costs consist of direct costs of acquisitions, such
as transaction fees, which vary significantly and are unique to
each acquisition. The Company does not acquire businesses on a
predictable cycle, so we have excluded the effect of these costs in
calculating our non-GAAP operating expenses and net income.
|
|
|
|
Silicon Motion Technology
Corporation |
Consolidated Statements of
Income |
(in thousands, except
percentages and per ADS data, unaudited) |
|
|
|
|
|
For the Three Months
Ended |
|
Mar. 31, 2014 |
Dec. 31, 2014 |
Mar. 31, 2015 |
|
(US$) |
(US$) |
(US$) |
Net Sales |
52,848 |
80,503 |
80,646 |
Cost of sales |
27,224 |
38,306 |
38,723 |
Gross profit |
25,624 |
42,197 |
41,923 |
Operating expenses |
|
|
|
Research & development |
11,907 |
17,528 |
16,355 |
Sales & marketing |
3,591 |
4,434 |
4,309 |
General &
administrative |
2,630 |
3,410 |
3,440 |
Operating income |
7,496 |
16,825 |
17,819 |
|
|
|
|
Non-operating income (expense) |
|
|
|
Gain on sale of
investments |
1 |
1 |
1 |
Interest income, net |
474 |
613 |
514 |
Foreign exchange gain (loss),
net |
(230) |
(451) |
150 |
Others, net |
2 |
(4) |
(4) |
Subtotal |
247 |
159 |
661 |
Income before income tax |
7,743 |
16,984 |
18,480 |
Income tax expense |
3,915 |
4,911 |
3,018 |
Net income |
3,828 |
12,073 |
15,462 |
|
|
|
|
Basic earnings per ADS |
$ 0.12 |
$ 0.36 |
$ 0.45 |
Diluted earnings per ADS |
$ 0.11 |
$ 0.35 |
$ 0.44 |
|
|
|
|
Margin Analysis: |
|
|
|
Gross margin |
48.5% |
52.4% |
52.0% |
Operating margin |
14.2% |
20.9% |
22.1% |
Net margin |
7.2% |
15.0% |
19.2% |
|
|
|
|
Additional Data: |
|
|
|
Weighted avg. ADS equivalents2 |
33,184 |
33,892 |
34,068 |
Diluted ADS equivalents |
33,963 |
34,471 |
34,751 |
|
|
|
|
|
|
|
|
2 Assumes all outstanding
ordinary shares are represented by ADSs. Each ADS represents
four ordinary shares. |
|
|
|
|
|
|
|
|
Silicon Motion Technology
Corporation |
Reconciliation of GAAP to
Non-GAAP Operating Results |
(in thousands, except
percentages and per ADS data, unaudited) |
|
|
|
|
|
For the Three
Months Ended |
|
Mar. 31, 2014 |
Dec. 31, 2014 |
Mar. 31, 2015 |
|
(US$) |
(US$) |
(US$) |
GAAP net income |
3,828 |
12,073 |
15,462 |
Stock-based
compensation: |
|
|
|
Cost of sales |
60 |
99 |
38 |
Research and development |
1,092 |
2,583 |
978 |
Sales and marketing |
219 |
701 |
263 |
General and administrative |
210 |
624 |
259 |
Total stock-based
compensation |
1,581 |
4,007 |
1,538 |
|
|
|
|
Non-recurring items: |
|
|
|
Litigation expenses |
(191) |
(6) |
8 |
Acquisition costs |
-- |
30 |
134 |
Foreign exchange loss (gain),
net |
1,285 |
2,422 |
(573) |
Non-GAAP net income |
6,503 |
18,526 |
16,569 |
|
|
|
|
Shares used in computing non-GAAP
diluted earnings per ADS |
34,104 |
34,650 |
34,818 |
|
|
|
|
Non-GAAP diluted earnings per
ADS |
$ 0.19 |
$ 0.53 |
$ 0.48 |
|
|
|
|
Non-GAAP gross margin |
48.6% |
52.5% |
52.0% |
Non-GAAP operating margin |
16.7% |
26.0% |
24.1% |
|
|
|
|
|
|
|
|
Silicon Motion Technology
Corporation |
Consolidated Balance Sheet |
(In thousands, unaudited) |
|
|
|
|
|
Mar. 31, 2014 |
Dec. 31, 2014 |
Mar. 31, 2015 |
|
(US$) |
(US$) |
(US$) |
Cash and cash equivalents |
157,841 |
194,211 |
199,836 |
Short-term investments |
727 |
703 |
712 |
Accounts receivable (net) |
37,441 |
28,742 |
41,114 |
Inventories |
30,982 |
44,076 |
46,158 |
Refundable deposits - current |
15,310 |
19,322 |
19,280 |
Prepaid expenses and other current
assets |
2,586 |
3,386 |
3,532 |
Total current assets |
244,887 |
290,440 |
310,632 |
|
|
|
|
Long-term investments |
133 |
133 |
133 |
Property and equipment (net) |
30,211 |
35,537 |
35,022 |
Goodwill and intangible assets (net) |
35,471 |
35,467 |
35,466 |
Other assets |
4,513 |
5,345 |
5,549 |
Total assets |
315,215 |
366,922 |
386,802 |
|
|
|
|
Accounts payable |
14,199 |
14,246 |
21,096 |
Income tax payable |
10,766 |
17,696 |
20,267 |
Accrued expenses and other current
liabilities |
13,651 |
24,513 |
22,822 |
Total current liabilities |
38,616 |
56,455 |
64,185 |
Other liabilities |
5,671 |
6,367 |
6,658 |
Total liabilities |
44,287 |
62,822 |
70,843 |
Shareholders' equity |
270,928 |
304,100 |
315,959 |
Total liabilities & shareholders'
equity |
315,215 |
366,922 |
386,802 |
|
|
|
|
About Silicon Motion:
We are a fabless semiconductor company that designs, develops
and markets high performance, low-power semiconductor solutions to
OEMs and other customers in the mobile storage and mobile
communications markets. For the mobile storage market, our key
products are microcontrollers used in solid state storage devices
such as SSDs, eMMCs and other embedded flash applications, as well
as removable storage products. For the mobile communications
market, our key products are LTE transceivers and mobile TV IC
solutions. Our products are widely used in smartphones,
tablets, and industrial and commercial applications. For
further information on Silicon Motion, visit
www.siliconmotion.com.
Forward-Looking Statements:
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including without limitation, statements about Silicon
Motion's expected second quarter of 2015 and full year 2015
revenue, gross margin and operating expenses, all of which reflect
management's estimates based on information available at this time
of this press release. While Silicon Motion believes these
estimates to be meaningful, these amounts could differ materially
from actual reported amounts for the first quarter of 2015.
Forward-looking statements also include, without limitation,
statements regarding trends in the multimedia consumer electronics
market and our future results of operations, financial condition
and business prospects. In some cases, you can identify
forward-looking statements by terminology such as "may," "will,"
"should," "expect," "intend," "plan," "anticipate," "believe,"
"estimate," "predict," "potential," "continue," or the negative of
these terms or other comparable terminology. Although such
statements are based on our own information and information from
other sources we believe to be reliable, you should not place undue
reliance on them. These statements involve risks and
uncertainties, and actual market trends or our actual results of
operations, financial condition or business prospects may differ
materially from those expressed or implied in these forward looking
statements for a variety of reasons. Potential risks and
uncertainties include, but are not limited to the unpredictable
volume and timing of customer orders, which are not fixed by
contract but vary on a purchase order basis; the loss of one or
more key customers or the significant reduction, postponement,
rescheduling or cancellation of orders from these customers;
general economic conditions or conditions in the semiconductor or
consumer electronics markets; decreases in the overall average
selling prices of our products; changes in the relative sales mix
of our products; our ability to successfully close the pending
acquisition of Shannon Systems and our integration of Shannon
Systems; the payment, or non-payment, of cash dividends in the
future at the discretion of our board of directors; the effect, if
any, on the price of our ADS as a result of the implementation of
the announced share repurchase program; changes in our cost of
finished goods; the availability, pricing, and timeliness of
delivery of other components and raw materials used in our
customers' products; our customers' sales outlook, purchasing
patterns, and inventory adjustments based on consumer demands and
general economic conditions, its customers and consumers; our
ability to successfully develop, introduce, and sell new or
enhanced products in a timely manner; and the timing of new product
announcements or introductions by us or by our competitors. For
additional discussion of these risks and uncertainties and other
factors, please see the documents we file from time to time with
the Securities and Exchange Commission, including our Annual Report
on Form 20-F filed on April 30, 2014. We assume no obligation
to update any forward-looking statements, which apply only as of
the date of this press release.
CONTACT: Investor Contact:
Jason Tsai
Director of IR and Strategy
Tel: +1 408 519 7259
Fax: +1 408 519 7101
E-mail: jtsai@siliconmotion.com
Investor Contact:
Selina Hsieh
Investor Relations
Tel: +886 3 552 6888 x2311
Fax: +886 3 560 0336
E-mail: ir@siliconmotion.com
Media Contact:
Sara Hsu
Project Manager
Tel: +886 2 2219 6688 x3509
Fax: +886 2 2219 6868
E-mail: sara.hsu@siliconmotion.com
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