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Silicon Laboratories (SLAB)
Q4 2013 Earnings Call
January 29, 2014 8:30 AM ET
Deborah Stapleton - IR
Tyson Tuttle - CEO
John Hollister - CFO
Bill Bock - President
Cody Acree - Williams Financial Group
Tore Svanberg - Stifel Nicolaus
Craig Ellis - B. Riley
Blayne Curtis - Barclays
Srini Pajjuri - CLSA
Anil Doradla - William Blair
John Vihn - Pacific Crest
Suji De Silva - Topeka Capital
Harsh Kumar - Stephens Inc
Previous Statements by SLAB
» Q4 2013 Silicon Laboratories In Earnings Conference call (Webcast)
» Silicon Laboratories Management Discusses Q3 2013 Results - Earnings Call Transcript
» Silicon Laboratories (SLAB) Management Discusses Q2 2013 Results - Earnings Call Transcript
» Silicon Laboratories' CEO Hosts Definitive Agreement to Acquire Energy Micro Conference (Transcript)
As a reminder, this call is being webcast and will be archived for two weeks. The financial press release, reconciliation of GAAP to non-GAAP financial measures and other financial measurement tables are now available on the Investor page of our website, at www.silabs.com.
I'm joined today by Tyson Tuttle, Chief Executive Officer; Bill Bock, President; and John Hollister, Chief Financial Officer. We will discuss our financial results and review our business activities for the quarter and fiscal year 2013. Then we will have a question-and-answer session following our prepared remarks.
Our comments today will include forward-looking statements or projections that involve substantial risks and uncertainties. We base these forward-looking statements on information available to us as of the date of this conference call. This information will likely change over time.
By discussing our current perception of our markets, the future performance of Silicon Labs and our products with you today, we are not undertaking an obligation to provide updates in the future.
There are a variety of factors that we may not be able to accurately predict or control that could have a material adverse effect on our business, our operating results and financial condition. We encourage you to review our SEC filings, which identify important factors that could cause actual results to differ materially from those contained in any forward-looking statements.
Also the non-GAAP financial measurements that are discussed today are not intended to replace the presentation of Silicon Labs' GAAP financial results. We are providing this information because it may enable investors to perform meaningful comparisons of operating results and more clearly, highlight the results of core ongoing operations.
I'd like to now turn the call over to Silicon Labs' Chief Executive Officer, Tyson Tuttle.
Thanks Deb and good morning everyone. I am pleased to report a very strong finish to 2013, delivering fourth quarter revenue of $146.2 million and generating $580 million in record revenue for the year. We are kicking off 2014 with growing momentum. Fourth quarter results were better than anticipated, due to strength in our microcontroller and wireless, broadcast video and access products. I will talk more about business trends shortly.
For now, I'd like to turn the call over to John, who will review our financial results in detail. John?
Thank you, Tyson. Fourth quarter revenue of $146.2 million exceeded the high end of our guidance, and was essentially flat with Q3. For the full year, our revenue totaled $580 million, a record for Silicon Labs. Broad-based revenue, comprising our microcontroller and wireless, timing, power and sensor products ended at $72 million in Q4, or about 50% of total revenue. Microcontroller and wireless products reached a record 30% of total revenue in Q4, with 7% sequential and 17% year-over-year growth. This increase was driven primarily by continued expansion of the MCU and wireless portfolio into our target Internet of Things markets, including metering, home automation, security and health and fitness applications.
We are pleased to report that revenue contributions from the acquired Energy Micro products, met our expectations in the second half of 2013. Timing represents 13% of total revenue in Q4, and declined 12% sequentially. While we had expected to achieve record revenue in timing, we experienced a slowdown in order to midway through the quarter, across our tier-1 communications customer base. We believe this weakness in the telecom infrastructure market is temporary, and we expect growth to resume in Q1.
Broadcast outperformed expectations in Q4, with revenue of $50 million or approximately 34% of total Q4 revenue, down only slightly from Q3. Fourth quarter revenue reflected strong performance in video products and continued growth in automotive radio products.
Consumer shipments, most notably in video, accelerated as the quarter closed to gross revenue above the high end of guidance.
Access grew slightly in Q4, exceeding expectations, with revenue of $24 million or 16% of total Q4 revenue. We are pleased with the strength of our access business, declining only 8% from 2012. We again expect these products to decline less than 10% in 2014, and believe this business is a good example of the longevity of our mixed signal products.
On a GAAP basis, fourth quarter gross margins were 60.6%. R&D investments increased to $42.2 million and SG&A expense declined to $32.3 million, resulting in GAAP operating income of $14.2 million or 9.7%.
GAAP EPS was $0.24, which was significantly above our guidance range. Due to revenue upside, disciplined expense control, and the positive outcome of the MaxLinear legal settlement.
On a non-GAAP basis, fourth quarter gross margin was consistent with expectations at 61.2%, which is a favorable outcome in light of the product's mix shift. Non-GAAP operating expenses declined in the quarter to $62.2 million. Non-GAAP R&D investment increased to $34.5 million, due to a higher number of new product tape outs we executed in the quarter. Non-GAAP SG&A expenses declined to $27.7 million, reflecting legal spending. The combination of stable gross margin results and in line operating expenses, resulted in non-GAAP operating margin of 18.7%.