Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 1, 2023

SILICON LABORATORIES INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	000-29823	74-2793174
(State or Other Jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification No.)

400 West Cesar Chavez, Austin, TX		78701
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (512) 416-8500

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value		SLAB		The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act of 1934. ¨

Item 2.02. Results of Operations and Financial Condition

On November 1, 2023, Silicon Laboratories Inc. (“Silicon Laboratories”) issued a press release announcing its results of operations for its fiscal quarter ended September 30, 2023. A copy of the press release is attached as Exhibit 99 to this report.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

99	Press Release of Silicon Laboratories Inc. dated November 1, 2023

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Use of Non-GAAP Financial Information

From time to time, Silicon Laboratories provides certain non-GAAP financial measures as additional information relating to its operating results. The non-GAAP financial measurements provided in the press release furnished herewith do not replace the presentation of Silicon Laboratories’ GAAP financial results. These additional measurements merely provide supplemental information to assist investors in analyzing Silicon Laboratories’ financial position and results of operations; however, these measures are not in accordance with, or an alternative to, GAAP and may be different from non-GAAP measures used by other companies.

Non-GAAP financial measures used by Silicon Laboratories include non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expense and non-GAAP research and development expense as a percentage of revenue, non-GAAP selling, general and administrative expense and non-GAAP selling, general and administrative as a percentage of revenue, non-GAAP operating expenses and non-GAAP operating expenses as a percentage of revenue, non-GAAP operating income and non-GAAP operating income as a percentage of revenue, non-GAAP income before income taxes and equity-method earnings (loss), non-GAAP tax expense, non-GAAP tax rate, non-GAAP net income, and non-GAAP diluted earnings per share. Silicon Laboratories has chosen to provide this information to investors because it believes that such supplemental information enables them to perform meaningful comparisons of past, present and future operating results, and as a means to highlight the results of core ongoing operations.

Non-GAAP financial measures are adjusted by the following items:

Stock compensation expense – represents charges for employee stock awards issued under Silicon Laboratories’ stock-based compensation plans. Stock compensation expense is excluded from non-GAAP financial measures because it is a non-cash expense, and excluding such expense provides meaningful supplemental information regarding core ongoing operations.

Intangible asset amortization – primarily represents charges for the amortization of intangibles assets, such as core and developed technology, customer relationships and trademarks acquired in connection with business combinations. Intangible asset amortization is excluded from non-GAAP financial measures because it is a non-cash expense, and excluding such expense provides meaningful supplemental information regarding core ongoing operations.

Acquisition and disposition related items – primarily including the following: charges for the fair value write-up associated with inventory acquired; adjustments to the fair value of acquisition-related contingent consideration; and acquisition-related costs of a business combination or disposition-related costs of a business divestiture, such as costs for attorneys, investment bankers, accountants and other third party service providers. Acquisition and disposition related items are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

Termination costs, impairments, and fair value and other adjustments – primarily include costs associated with certain employee terminations, asset impairments, fair value adjustments resulting from observable price changes and other non-cash adjustments. Termination costs, impairments, and fair value and other adjustments are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

Equity-method investment adjustments – primarily include the proportionate share of gains and/or losses from investments accounted for by the equity method of accounting. Equity-method investment adjustments are excluded from non-GAAP financial measures because these generally are non-cash, represent non-operating activity during the period of adjustment, relate to activity in entities outside of the operational control of Silicon Laboratories, and excluding such expense/gain provides meaningful supplemental information regarding core operations.

Interest expense adjustments – represents losses or gains on the extinguishment of convertible debt and losses or gains on the termination of interest rate swap agreements. Such amounts are excluded from non-GAAP financial measures because they are non-cash expenses and/or excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

Income tax adjustments – primarily include the following: the current and deferred income tax effects of the above non-GAAP adjustments; other indirect impacts of excluding stock-based compensation; and the income tax impact of certain intercompany license arrangements for technology acquired in business combinations. Income tax adjustments are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

Pursuant to the requirements of Regulation G, we have provided in the press release furnished with this report a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. The information contained therein and in the accompanying exhibit shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by Silicon Laboratories, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		SILICON LABORATORIES INC.

November 1, 2023		/s/ John C. Hollister
Date		John C. Hollister
		Senior Vice President and
		Chief Financial Officer
		(Principal Financial Officer)

Exhibit 99

Silicon Labs Reports Third Quarter 2023 Results

IoT leader delivers solid results in a challenging market environment

AUSTIN, Texas – November 1, 2023 – Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported financial results for the third quarter, which ended September 30, 2023.

“The Silicon Labs team executed well in the third quarter, driving revenue and EPS that exceeded the mid-point of our guidance,” said Matt Johnson, President and Chief Executive Officer at Silicon Labs. “The current demand environment remains quite weak as we navigate this cyclical inventory correction, and end market visibility continues to be challenging. That said, we are pleased with our record design win performance in the quarter and continued advancements in our industry-leading platform. We believe this positions us well for growth and higher earnings power when the market recovers.”

Third Quarter Financial Highlights

Revenue was $204 million

Industrial & Commercial revenue for the quarter was $121 million

Home & Life revenue for the quarter was $83 million

Results on a GAAP basis:

GAAP gross margin was 58.4%

GAAP R&D expenses were $79 million

GAAP SG&A expenses were $28 million

GAAP operating income as a percentage of revenue was 6%

GAAP diluted earnings per share were $0.32

Results 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 below GAAP to Non-GAAP reconciliation tables were as follows:

Non-GAAP gross margin was 58.5%

Non-GAAP R&D expenses were $64 million

Non-GAAP SG&A expenses were $31 million

Non-GAAP operating income as a percentage of revenue was 12%

Non-GAAP diluted earnings per share were $0.62

Business Highlights

Hosted its fourth annual Works With Conference in August, which attracted thousands of top IoT developers and included panels with partners from Amazon, Google, Samsung, and many more. The virtual event covered a broad range of IoT technologies and trends, including Bluetooth, Wi-Fi, Matter, Wi-Sun, and Amazon Sidewalk, as well as the latest developments in security and AI/ML.

Announced its next-generation Series 3 platform, purpose-built for embedded IoT devices. Series 3 devices will be designed to offer industry-leading compute, wireless performance, scalability, and energy efficiency with the highest levels of IoT security. Notably, new levels of compute will bring more than 100x the processing capability of Series 2 and will include integrated AI/ ML accelerators for edge devices, enabling consolidation of system processing into wireless SoCs. Silicon Labs also announced the next version of their developer tool suite, Simplicity Studio, to help developers and device manufacturers streamline and accelerate product designs.

Business Outlook

The company expects fourth-quarter revenue to be between $70 to $100 million. The company also estimates the following results:

On a GAAP basis:

GAAP gross margin to be 53%

GAAP operating expenses of approximately $123 million

GAAP diluted earnings (loss) per share between $(2.39) to $(1.95)

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 to be 53%

Non-GAAP operating expenses of approximately $94 million

Non-GAAP diluted earnings (loss) per share between $(1.66) to $(1.22)

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 investor.silabs.com and make a replay available through December 1, 2023.

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 competitive and cyclical nature of the semiconductor industry; the challenging macroeconomic environment, including disruptions in the financial services industry; 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; risks that demand and the supply chain may be adversely affected by military conflict (including in the Middle East, and between Russia and Ukraine), terrorism, sanctions or other geopolitical events globally (including in the Middle East, and conflict between Taiwan and China); 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; the impact of COVID-19 on the U.S. and global economy; debt-related risks; capital-raising risks; the timing and scope of share repurchases and/or dividends; 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. 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.

CONTACT: Thomas Haws, Investor Relations Manager, (512) 416-8500, investor.relations@silabs.com

Silicon Laboratories Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
Revenues	$	203,760		$	269,817		$	695,413		$	766,781
Cost of revenues		84,735			104,232			278,753			281,521
Gross profit		119,025			165,585			416,660			485,260
Operating expenses:
Research and development		79,042			84,624			254,340			245,677
Selling, general and administrative		27,766			50,738			113,363			144,398
Operating expenses		106,808			135,362			367,703			390,075
Operating income		12,217			30,223			48,957			95,185
Other income (expense):
Interest income and other, net		2,938			4,672			15,554			9,616
Interest expense		(1,359	)		(1,527	)		(4,611	)		(4,874	)
Income before income taxes		13,796			33,368			59,900			99,927
Provision for income taxes		3,388			14,188			23,479			36,871
Equity-method earnings (loss)		(60	)		1,819			(1,150	)		2,985
Net income	$	10,348		$	20,999		$	35,271		$	66,041

Earnings per share:
Basic	$	0.33		$	0.62		$	1.11		$	1.84
Diluted	$	0.32		$	0.60		$	1.07		$	1.79

Weighted-average common shares outstanding:
Basic		31,796			34,079			31,789			35,935
Diluted		32,078			34,779			32,919			36,968

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)

	Three Months Ended September 30, 2023
Non-GAAP Income Statement Items	GAAP Measure		GAAP Percent of Revenue			Stock Compensation Expense			Intangible Asset Amortization		Termination Costs		Non-GAAP Measure			Non-GAAP Percent of Revenue
Revenues	$	203,760

Gross profit		119,025		58.4	%	$	192		$	--	$	18	$	119,235			58.5	%

Research and development		79,042		38.8	%		8,598			6,239		269		63,936			31.4	%

Selling, general and administrative		27,766		13.6	%		(3,000	)		19		8		30,739			15.1	%

Operating income		12,217		6.0	%		5,790			6,258		295		24,560			12.1	%

	Three Months Ended September 30, 2023
Non-GAAP Earnings Per Share	GAAP Measure		Stock Compensation Expense*			Intangible Asset Amortization*			Termination Costs*		Equity-Method Investment Adjustments*		Income Tax Adjustments			Non- GAAP Measure
Net income	$	10,348	$	5,790		$	6,258		$	295	$	60	$	(2,778	)	$	19,973

Diluted shares outstanding		32,078															32,078

Diluted earnings per share	$	0.32														$	0.62

* Represents pre-tax amounts

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

	Three Months Ending December 30, 2023
Business Outlook		GAAP Measure			Non-GAAP Adjustments**			Non-GAAP Measure
Gross margin		53	%		0	%		53	%

Operating expenses	$	123		$	(29	)	$	94

Diluted earnings (loss) per share - low	$	(2.39	)	$	0.73		$	(1.66	)

Diluted earnings (loss) per share - high	$	(1.95	)	$	0.73		$	(1.22	)

** Non-GAAP adjustments include the following estimates: stock compensation expense of $16.5 million, intangible asset amortization of $6.2 million, termination costs of $6.5 million, and the associated tax impact from the aforementioned items.

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

	September 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	159,928		$	499,915
Short-term investments		257,157			692,024
Accounts receivable, net		102,142			71,437
Inventories		167,581			100,417
Prepaid expenses and other current assets		86,727			97,570
Total current assets		773,535			1,461,363
Property and equipment, net		150,839			152,016
Goodwill		376,389			376,389
Other intangible assets, net		65,744			84,907
Other assets, net		108,555			94,753
Total assets	$	1,475,062		$	2,169,428

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	48,086		$	89,860
Revolving line of credit		45,000			--
Deferred revenue and returns liability		10,066			6,780
Other current liabilities		61,991			89,136
Total current liabilities		165,143			185,776
Convertible debt, net		--			529,573
Other non-current liabilities		49,997			49,071
Total liabilities		215,140			764,420
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; 31,779 and 31,994 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		3			3
Retained earnings		1,262,518			1,415,693
Accumulated other comprehensive loss		(2,599	)		(10,688	)
Total stockholders’ equity		1,259,922			1,405,008
Total liabilities and stockholders’ equity	$	1,475,062		$	2,169,428

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended
	September 30, 2023			October 1, 2022
Operating Activities
Net income	$	35,271		$	66,041
Adjustments to reconcile net income to net cash provided by (used in) operating activities of continuing operations:
Depreciation of property and equipment		18,992			16,514
Amortization of other intangible assets		19,162			27,328
Amortization of debt issuance costs		960			1,492
Loss on extinguishment of convertible debt		--			3
Stock-based compensation expense		37,167			43,213
Equity-method (earnings) loss		1,150			(2,985	)
Deferred income taxes		(5,881	)		(13,126	)
Changes in operating assets and liabilities:
Accounts receivable		(30,706	)		21,641
Inventories		(66,971	)		(39,100	)
Prepaid expenses and other assets		8,085			(28,404	)
Accounts payable		(37,039	)		26,694
Other current liabilities and income taxes		(39,155	)		17,962
Deferred revenue and returns liability		3,286			(2,144	)
Other non-current liabilities		6,794			(7,713	)
Net cash provided by (used in) operating activities of continuing operations		(48,885	)		127,416

Investing Activities
Purchases of marketable securities		(91,493	)		(579,507	)
Sales of marketable securities		365,073			42,952
Maturities of marketable securities		171,766			597,399
Purchases of property and equipment		(18,533	)		(20,057	)
Purchases of other assets		(395	)		--
Net cash provided by investing activities of continuing operations		426,418			40,787

Financing Activities
Proceeds from revolving line of credit		80,000			--
Payments on debt		(571,157	)		(21	)
Repurchases of common stock		(217,137	)		(681,695	)
Payment of taxes withheld for vested stock awards		(17,239	)		(14,732	)
Proceeds from the issuance of common stock		8,013			6,366
Net cash used in financing activities of continuing operations		(717,520	)		(690,082	)

Discontinued Operations
Operating activities		--			(69,467	)
Net cash used in discontinued operations		--			(69,467	)

Decrease in cash and cash equivalents		(339,987	)		(591,346	)
Cash and cash equivalents at beginning of period		499,915			1,074,623
Cash and cash equivalents at end of period	$	159,928		$	483,277

Cover	Nov. 01, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 01, 2023
Entity File Number	000-29823
Entity Registrant Name	SILICON LABORATORIES INC.
Entity Central Index Key	0001038074
Entity Tax Identification Number	74-2793174
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	400 West Cesar Chavez
Entity Address, City or Town	Austin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78701
City Area Code	512
Local Phone Number	416-8500
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	SLAB
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false