Financial Highlights
Silicon Motion Technology Corporation (NasdaqGS: SIMO) (“Silicon
Motion” or the “Company”) today announced its financial results for
the quarter ended March 31, 2018. For the first quarter, net
sales decreased 4% sequentially to $130.3 million from $136.2
million in the fourth quarter 2017. Net income (GAAP) increased to
$23.1 million or $0.64 per diluted ADS (GAAP) from a net income
(GAAP) of $9.8 million or $0.27 per diluted ADS (GAAP) in the
fourth quarter 2017.
For the first quarter, net income (non-GAAP)
decreased to $25.6 million or $0.71 per diluted ADS (non-GAAP) from
a net income (non-GAAP) of $28.4 million or $0.79 per diluted ADS
(non-GAAP) in the fourth quarter 2017.
_____________________________1 Embedded Storage comprises
primarily eMMC and SSD controllers and data center and industrial
SSD solutions.
First Quarter 2018 Review “In
the first quarter, sales of our client SSD controllers continued to
grow sequentially, and importantly also grew year-over-year,” said
Wallace Kou, President and CEO of Silicon Motion. “In
addition, our eMMC controller sales grew as our NAND flash partner
rebuilt inventory while our Ferri and Shannon SSD solutions sales
declined seasonally.”
Sales
(in millions, except percentages) |
1Q 2018 |
4Q 2017 |
1Q 2017 |
|
Sales |
Mix |
Sales |
Mix |
Sales |
Mix |
Mobile Storage* |
$121.4 |
93% |
$125.3 |
92% |
$116.5 |
92% |
Q/Q |
-3% |
|
+7% |
|
-11% |
|
Y/Y |
+4% |
|
-4% |
|
+12% |
|
Mobile Communications** |
$7.9 |
6% |
$9.4 |
7% |
$9.3 |
7% |
Others |
$1.1 |
1% |
$1.5 |
1% |
$1.5 |
1% |
Total revenue |
$130.3 |
100% |
$136.2 |
100% |
$127.3 |
100% |
Q/Q |
-4% |
|
+7% |
|
-12% |
|
Y/Y |
+2% |
|
-6% |
|
+13% |
|
* Mobile Storage products include Embedded
Storage products (eMMC and SSD controllers and data center and
industrial SSD solutions) and Expandable Storage products (SD
memory cards and USB flash drive controllers) ** Mobile
Communications products include mobile TV SoCs
Key Financial Results
(in millions, except percentages and per ADS
amounts) |
GAAP |
Non-GAAP |
1Q 2018 |
4Q 2017 |
1Q 2017 |
1Q 2018 |
4Q 2017 |
1Q 2017 |
Revenue |
$130.3 |
$136.2 |
$127.3 |
$130.3 |
$136.2 |
$127.3 |
Gross profit |
$62.6 |
$63.3 |
$64.8 |
$62.6 |
$63.5 |
$64.9 |
Percent of revenue |
48.0% |
46.5% |
50.9% |
48.0% |
46.6% |
51.0% |
Operating expenses |
$37.7 |
$49.8 |
$34.8 |
$33.9 |
$30.6 |
$31.2 |
Operating income |
$24.9 |
$13.5 |
$30.0 |
$28.7 |
$32.9 |
$33.6 |
Percent of revenue |
19.1% |
9.9% |
23.6% |
22.1% |
24.1% |
26.4% |
Earnings per diluted ADS |
$0.64 |
$0.27 |
$0.65 |
$0.71 |
$0.79 |
$0.70 |
Other Financial Information
(in millions) |
1Q 2018 |
4Q 2017 |
1Q 2017 |
Cash and cash equivalents, and short-term investments |
$346.1 |
$366.4 |
$304.4 |
Bank loans |
$20.7 |
$25.0 |
$25.0 |
Capital expenditures |
$3.6 |
$3.5 |
$3.1 |
Dividend payments |
$10.8 |
$10.7 |
$7.1 |
Loan repayments |
$4.3 |
-- |
-- |
During the first quarter, we had $3.6 million of
capital expenditures for the routine purchase of software, design
tools and other items.
Our first quarter cash flows were as
follows:
3 months ended March 31, 2018 |
|
(In $
millions) |
Net
income (GAAP) |
23.1 |
Depreciation & amortization |
3.5 |
Changes in operating assets and liabilities |
(27.5) |
Others |
3.4 |
Net cash provided by operating activities |
2.5 |
Acquisition of property and equipment |
(3.6) |
Long-term investment |
(1.7) |
Net cash used in investing activities |
(5.3) |
Dividend |
(10.8) |
Loans |
(4.3) |
Net cash
used in financing activities |
(15.1) |
Effects of changes in foreign currency exchange rates on cash |
0.6 |
Net decrease in cash, cash equivalents and restricted cash |
(17.3) |
|
|
Returning Value to ShareholdersOn October 24,
2017, the Board of Directors of the Company declared a $1.20 per
ADS annual dividend to be paid in quarterly installments of $0.30
per ADS. On February 27, 2018, we paid $10.8 million to
shareholders as the second installment of our annual
dividend.
On August 1, 2017, the Company announced that
its Board of Directors had authorized a new program for the Company
to repurchase up to $200 million of its ADS over a 12 month
period. In the first quarter, the Company did not repurchase
any of its ADS.
Business Outlook"We believe our
business outlook is increasingly more favorable, especially for our
client SSD controller sales,” said Wallace Kou, President and CEO
of Silicon Motion. “We currently have over 80% more client SSD
controller projects with our NAND flash partners than at this time
a year ago and currently anticipate our SSD controller sales to
grow at least 20% for the full year.”
For the second quarter of 2018, management
expects:
|
GAAP |
Non-GAAP Adjustment |
Non-GAAP |
Revenue |
$134.3m to $140.8m |
-- |
$134.3m to $140.8m |
|
3% to 8% Q/Q |
|
3% to 8% Q/Q |
|
1% to 6% Y/Y |
|
1% to 6% Y/Y |
Gross margin |
46.5% to 48.5% |
-- |
46.5% to 48.5% |
Operating margin |
21.5% to 23.6% |
Approximately $1.3m to $1.4m* |
22.5% to 24.5% |
* Projected operating margin (non-GAAP) excludes $0.7 million of
amortization of intangible assets and $0.6 million to $0.7 million
of stock-based compensation.
For the full-year 2018, management
reiterates:
|
GAAP |
Non-GAAP Adjustment |
Non-GAAP |
Revenue |
$550m to $576m |
-- |
$550m to $576m |
|
+5% to +10% Y/Y |
|
+5% to +10% Y/Y |
Gross margin |
46.9% to 48.9% |
Approximately $0.5m* |
47.0% to 49.0% |
Operating margin |
19.4% to 21.9% |
Approximately $17.8m to $19.8m** |
23.0% to 25.0% |
* Projected gross margin (non-GAAP) excludes $0.5 million of
stock-based compensation.** Projected operating margin (non-GAAP)
excludes $3.0 million of amortization of intangible assets and
$14.8 million to $16.8 million of stock-based compensation.
Conference Call & Webcast:
The Company’s management team will conduct a
conference call at 8:00 am Eastern Time on April 27, 2018.
Speakers Wallace Kou,
President & CEO Riyadh Lai,
CFO Jason Tsai, Senior 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: 3095198
REPLAY NUMBERS (for 7
days): USA (Toll Free): 1 855 452
5696 USA (Toll): 1 646 254 3697
Participant Passcode: 3095198A 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 gross profit (non-GAAP),
operating expenses (non-GAAP), operating profit (non-GAAP), net
income (non-GAAP), and earnings per diluted ADS (non-GAAP). 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 they are 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 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.
Amortization of intangibles assets consists of
non-cash charges that can be impacted by the timing and magnitude
of our acquisitions. The Company considers its operating
results without these charges when evaluating its ongoing
performance and forecasting its earnings trends, and therefore
excludes such charges when presenting non-GAAP financial
measures. The Company believes that the assessment of its
operations excluding these costs is relevant to its assessment of
internal operations and comparisons to the performance of its
competitors.
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 and unplanned activity and therefore
exclude this charge when presenting non-GAAP financial
measures.
Impairment of goodwill relates to a non-cash write-down when
circumstances indicate the carrying value may not be recoverable
and because impairments are inconsistent in amount and frequency,
the Company excludes them for purposes of calculating non-GAAP
measures.
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$. We do not use financial
instruments to manage the impact on our operations from changes in
foreign exchange rates, and because our operations are subject to
fluctuations in foreign exchange rates, we therefore exclude
foreign exchange gains and losses when presenting non-GAAP
financial measures.
Impairment of long-term investments relates to the
other-than-temporary, non-operating write down of the Company's
minority stake investments. We do not consider these investments,
which were made before 2007, to be strategic and exclude the
performance of these investments when evaluating our ongoing
performance and forecasting our earnings trends, and therefore
excluding losses (and gains) from the investments when presenting
non-GAAP financial measures.
|
Silicon Motion Technology Corporation |
Consolidated Statements of Income |
(in thousands, except percentages and per ADS data,
unaudited) |
|
|
|
For the Three Months
Ended |
|
Mar. 31, 2017($) |
|
Dec. 31, 2017($) |
|
Mar. 31, 2018($) |
|
Net Sales |
127,292 |
|
136,165 |
|
130,344 |
|
Cost of sales |
62,466 |
|
72,878 |
|
67,790 |
|
Gross profit |
64,826 |
|
63,287 |
|
62,554 |
|
Operating expenses |
|
|
|
Research
& development |
24,338 |
|
27,946 |
|
25,832 |
|
Sales
& marketing |
5,758 |
|
7,364 |
|
6,965 |
|
General
& administrative |
4,220 |
|
5,046 |
|
4,163 |
|
Amortization of intangibles assets |
526 |
|
956 |
|
741 |
|
Impairment loss of goodwill |
- |
|
10,337 |
|
- |
|
Gain from
disposal of noncurrent assets held for sale |
- |
|
(1,880 |
) |
- |
|
Operating income |
29,984 |
|
13,518 |
|
24,853 |
|
Non-operating income
(expense) |
|
|
|
Interest
income, net |
759 |
|
1,135 |
|
1,213 |
|
Foreign
exchange gain (loss), net |
(347 |
) |
(447 |
) |
1,076 |
|
Impairment of long-term investments |
- |
|
(120 |
) |
- |
|
Others,
net |
(11 |
) |
70 |
|
58 |
|
Subtotal |
401 |
|
638 |
|
2,347 |
|
Income before income
tax |
30,385 |
|
14,156 |
|
27,200 |
|
Income tax expense |
6,874 |
|
4,338 |
|
4,139 |
|
Net income |
23,511 |
|
9,818 |
|
23,061 |
|
|
|
|
|
|
|
|
Earnings per basic
ADS |
$0.66 |
|
$0.27 |
|
$0.64 |
|
Earnings per diluted
ADS |
$0.65 |
|
$0.27 |
|
$0.64 |
|
|
|
|
|
Margin
Analysis: |
|
|
|
Gross margin |
50.9 |
% |
46.5 |
% |
48.0 |
% |
Operating margin |
23.6 |
% |
9.9 |
% |
19.1 |
% |
Net margin |
18.5 |
% |
7.2 |
% |
17.7 |
% |
|
|
|
|
Additional
Data: |
|
|
|
Weighted avg. ADS
equivalents2 |
35,446 |
|
35,785 |
|
35,900 |
|
Diluted ADS
equivalents |
35,972 |
|
36,005 |
|
36,119 |
|
|
|
|
|
|
|
|
2 Assumes all outstanding ordinary shares are represented by
ADSs. Each ADS represents four ordinary shares.
|
Silicon Motion Technology Corporation |
Reconciliation of GAAP to Non-GAAP Operating
Results |
(in thousands, except percentages and per ADS data,
unaudited) |
|
|
|
|
For the Three Months Ended |
|
|
|
Mar. 31,2017($) |
|
Dec. 31,2017($) |
|
Mar. 31,2018($) |
|
Gross profit (GAAP) |
|
64,826 |
|
63,287 |
|
62,554 |
|
Gross margin (GAAP) |
|
50.9 |
% |
46.5 |
% |
48.0 |
% |
Stock-based compensation expense (A) |
|
67 |
|
167 |
|
59 |
|
Gross profit (non-GAAP) |
|
64,893 |
|
63,454 |
|
62,613 |
|
Gross margin (non-GAAP) |
|
51.0 |
% |
46.6 |
% |
48.0 |
% |
|
|
|
|
|
Operating expenses (GAAP) |
|
34,842 |
|
49,769 |
|
37,701 |
|
Stock-based compensation expense (A) |
|
(3,068 |
) |
(7,887 |
) |
(3,078 |
) |
Amortization of intangible assets |
|
(526 |
) |
(956 |
) |
(741 |
) |
Impairment loss of goodwill |
|
- |
|
(10,337 |
) |
- |
|
Litigation expense |
|
- |
|
- |
|
(13 |
) |
Operating expenses (non-GAAP) |
|
31,248 |
|
30,589 |
|
33,869 |
|
|
|
|
|
|
Operating profit (GAAP) |
|
29,984 |
|
13,518 |
|
24,853 |
|
Operating margin (GAAP) |
|
23.6 |
% |
9.9 |
% |
19.1 |
% |
Total adjustments to operating profit |
|
3,661 |
|
19,347 |
|
3,891 |
|
Operating
profit (non-GAAP) |
|
33,645 |
|
32,865 |
|
28,744 |
|
Operating margin (non-GAAP) |
|
26.4 |
% |
24.1 |
% |
22.1 |
% |
|
|
|
|
|
Non-operating
income (expense) (GAAP) |
|
401 |
|
638 |
|
2,347 |
|
Foreign exchange loss (gain), net |
|
347 |
|
447 |
|
(1,076 |
) |
Impairment of long-term investments |
|
- |
|
120 |
|
- |
|
Non-operating
income (expense) (non-GAAP) |
|
748 |
|
1,205 |
|
1,271 |
|
|
|
|
|
|
Net income (GAAP) |
|
23,511 |
|
9,818 |
|
23,061 |
|
Total
pre-tax impact of non-GAAP adjustments |
|
4,008 |
|
19,914 |
|
2,815 |
|
Income
tax impact of non-GAAP adjustments |
|
(2,386 |
) |
(1,320 |
) |
(243 |
) |
Net income (non-GAAP) |
|
25,133 |
|
28,412 |
|
25,633 |
|
|
|
|
|
|
Earnings per diluted ADS (GAAP) |
|
$0.65 |
|
$0.27 |
|
$0.64 |
|
Earnings per diluted ADS (non-GAAP) |
|
$0.70 |
|
$0.79 |
|
$0.71 |
|
|
|
|
|
|
Shares used in
computing earnings per diluted ADS (GAAP) |
|
35,972 |
|
36,005 |
|
36,119 |
|
Non-GAAP Adjustments |
|
79 |
|
169 |
|
55 |
|
Shares used in computing earnings per diluted ADS
(non-GAAP) |
|
36,051 |
|
36,174 |
|
36,174 |
|
|
|
|
|
|
|
|
|
|
|
(A)
Excludes stock-based compensation as follows: |
|
|
|
|
Cost of Sales |
|
67 |
|
167 |
|
59 |
|
Research & development |
|
1,850 |
|
5,131 |
|
1,868 |
|
Sales & marketing |
|
609 |
|
1,194 |
|
659 |
|
General & administrative |
|
609 |
|
1,562 |
|
551 |
|
|
|
|
|
|
|
|
|
|
Silicon Motion Technology Corporation |
Consolidated Balance Sheet |
(In thousands, unaudited) |
|
|
|
|
|
|
|
Mar.
31,2017 ($) |
|
Dec.
31,2017 ($) |
|
Mar.
31,2018 ($) |
Cash and cash
equivalents |
302,462 |
|
359,453 |
|
341,695 |
Short-term
investments |
1,900 |
|
6,941 |
|
4,387 |
Accounts receivable (net) |
60,456 |
|
79,135 |
|
80,933 |
Inventories |
75,934 |
|
94,186 |
|
93,370 |
Refundable deposits –
current |
44,269 |
|
19,515 |
|
19,414 |
Prepaid expenses and other current assets |
10,279 |
|
9,567 |
|
8,999 |
Total
current assets |
495,300 |
|
568,797 |
|
548,798 |
Long-term investments |
120 |
|
- |
|
1,715 |
Property and equipment
(net) |
48,292 |
|
51,370 |
|
51,587 |
Goodwill and intangible
assets (net) |
73,369 |
|
66,393 |
|
65,653 |
Other
assets |
5,708 |
|
7,172 |
|
7,283 |
Total
assets |
622,789 |
|
693,732 |
|
675,036 |
|
|
|
|
|
|
Accounts payable |
30,860 |
|
56,423 |
|
31,077 |
Loans |
25,000 |
|
25,000 |
|
20,700 |
Income tax payable |
24,909 |
|
11,492 |
|
11,775 |
Accrued expenses and
other current liabilities |
52,937 |
|
84,329 |
|
66,371 |
Total
current liabilities |
133,706 |
|
177,244 |
|
129,923 |
Other
liabilities |
18,187 |
|
22,437 |
|
23,785 |
Total
liabilities |
151,893 |
|
199,681 |
|
153,708 |
Shareholders’ equity |
470,896 |
|
494,051 |
|
521,328 |
Total liabilities &
shareholders’ equity |
622,789 |
|
693,732 |
|
675,036 |
|
|
|
|
|
|
About Silicon Motion:We are the
global leader in supplying NAND flash controllers for solid state
storage devices and the merchant leader in supplying SSD
controllers. We have the broadest portfolio of controller
technologies and our controllers are widely used in embedded
storage products such as SSDs and eMMCs, which are found in
smartphones, PCs, commercial and industrial applications. We ship
over 750 million NAND controllers annually and have shipped over
five billion NAND controllers in the last ten years, more than any
other company in the world. We also supply specialized
high-performance hyperscale data center and industrial SSD
solutions. Our customers include most of the NAND flash
vendors, storage device module makers, and leading OEMs. For
further information on Silicon Motion, visit us at
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
currently expected second quarter of 2018 and full year 2018
expectations of 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 second
quarter of 2018 and full year 2018. Forward-looking statements also
include, without limitation, statements regarding trends in the
semiconductor or consumer electronics markets 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; changes in our
cost of finished goods; the payment, or non-payment, of cash
dividends in the future at the discretion of our board of directors
and any announced planned increases in such dividends; 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; any potential impairment of acquired
businesses; 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 28, 2017,
as amended on May 2, 2017. We assume no obligation to update
any forward-looking statements, which apply only as of the date of
this press release.
Investor Contact: |
Investor Contact: |
Jason Tsai |
Selina Hsieh |
Senior Director of IR
and Strategy |
Investor Relations |
E-mail:
jtsai@siliconmotion.com |
E-mail:
ir@siliconmotion.com |
|
|
Media Contact: |
|
Sara Hsu |
|
Project Manager |
|
E-mail:
sara.hsu@siliconmotion.com |
|
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