EX-99.1 2 d207482dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO   

Silicon Motion Announces Results for the Period

Ended September 30, 2021

NEWS RELEASE

Financial Highlights

 

    

3Q 2021 GAAP

  

3Q 2021  Non-GAAP

•   Net sales

   $254.2 million (+15% Q/Q, +102% Y/Y)    $254.2 million (+15% Q/Q, +102% Y/Y)

•   Gross margin

   50.0%    50.2%

•   Operating margin

   27.1%    29.4%

•   Earnings per diluted ADS

   $1.58    $1.70

Business Highlights

 

 

Achieved third consecutive record quarterly revenue and earnings per share

 

 

Reached $1 billion in Revenue Run-Rate, a quarter ahead of plan

 

 

Sales of eMMC+UFS controllers reached new record quarterly high

 

 

SSD controller sales approximately flat Q/Q and increased 70% to 75% Y/Y

 

 

eMMC+UFS controller sales increased 60% to 65% Q/Q and increased 305% to 310% Y/Y

 

 

SSD solutions sales increased 0% to 5% Q/Q and declined 0% to 5% Y/Y

 

 

Launched world’s fastest single chip controller for external portable SSDs

TAIPEI, Taiwan and MILPITAS, Calif., Oct 28, 2021 – Silicon Motion Technology Corporation (NasdaqGS: SIMO) (“Silicon Motion” or the “Company”) today announced its financial results for the quarter ended September 30, 2021. For the third quarter, net sales (GAAP) increased sequentially to $254.2 million from $221.1 million in second quarter 2021. Net income (GAAP) increased to $55.4 million or $1.58 per diluted ADS (GAAP) from net income (GAAP) of $49.5 million or $1.42 per diluted ADS (GAAP) in second quarter 2021.

For the third quarter, net income (non-GAAP) increased to $60.4 million or $1.70 per diluted ADS (non-GAAP) from a net income (non-GAAP) of $52.7 million or $1.50 per diluted ADS (non-GAAP) in second quarter 2021.

Third Quarter 2021 Review

“We continued to optimize our scarce foundry wafer capacity and product allocation to customers and delivered $1 billion in Revenue Run-Rate, a quarter ahead of plan,” said Wallace Kou, President and CEO of Silicon Motion. “Our third quarter results were driven by strong sales of eMMC+UFS controllers used primarily in smartphones and other smart devices.”

 

1


Key Financial Results

 

(in millions, except percentages and per ADS amounts)

   GAAP     Non-GAAP  
   3Q 2021     2Q 2021     3Q 2020     3Q 2021     2Q 2021     3Q 2020  

Revenue

   $ 254.2     $ 221.1     $ 126.0     $ 254.2     $ 221.1     $ 126.0  

Gross profit

Percent of revenue

   $

 

127.2

50.0

 

% 

  $

 

111.1

50.3

 

% 

  $

 

61.8

49.1

 

% 

  $

 

127.8

50.2

 

% 

  $

 

112.9

51.0

 

% 

  $

 

61.9

49.1

 

% 

Operating expenses

   $ 58.3     $ 50.7     $ 36.0     $ 53.0     $ 48.4     $ 32.9  

Operating income

Percent of revenue

   $

 

68.9

27.1

 

% 

  $

 

60.4

27.3

 

% 

  $

 

25.8

20.5

 

% 

  $

 

74.8

29.4

 

% 

  $

 

64.5

29.2

 

% 

  $

 

29.0

23.0

 

% 

Earnings per diluted ADS

   $ 1.58     $ 1.42     $ 0.70     $ 1.70     $ 1.50     $ 0.76  

Other Financial Information

 

(in millions)

   3Q 2021      2Q 2021      3Q 2020  

Cash, cash equivalents, restricted cash and short-term investments—end of period

   $ 419.5      $ 412.3      $ 368.4  

Routine capital expenditures

   $ 5.9      $ 4.9      $ 2.6  

Dividend payments

   $ 12.2      $ 12.2      $ 12.3  

During the third quarter, we had $5.9 million of capital expenditures for the routine purchase of software, design tools and other items and $1.4 million for building construction in Hsinchu, Taiwan.

Returning Value to Shareholders

On October 26, 2020, our Board of Directors declared a $1.40 per ADS annual dividend to be paid in quarterly installments of $0.35 per ADS. On August 19, 2021, we paid $12.2 million to shareholders as the fourth installment of our annual dividend. On October 25, 2021, our Board of Directors declared a $2.00 per ADS annual dividend, representing an annual increase of 43%, to be paid in quarterly installments of $0.50 per ADS. The first installment of our annual dividend will be paid on November 24, 2021.

Business Outlook

“In spite of capped foundry wafer supply this year, we’ve optimized with better product mix, customer allocation and pricing discipline to deliver strong growth,” said Wallace Kou, President and CEO of Silicon Motion. “We believe that our strong design win momentum with leading OEM customers positions us for continued market share gains and relative outperformance next year.”

 

2


For the fourth quarter of 2021, management expects:

 

     GAAP    Non-GAAP Adjustment    Non-GAAP

Revenue

   $254m to $267m

+0% to 5% Q/Q

   —      $254m to $267m

+0% to 5% Q/Q

Gross margin

   48.4% to 50.4%    Approximately $0.2m*    48.5% to 50.5%

Operating margin

   24.9% to 26.7%    Approximately $9.2m to $10.2m**    28.5% to 30.5%

 

*

Projected gross margin (non-GAAP) excludes $0.2 million of stock-based compensation.

**

Projected operating margin (non-GAAP) excludes $9.2 million to $10.2 million of stock-based compensation.

 

3


Conference Call & Webcast:

The Company’s management team will conduct a conference call at 8:00 am Eastern Time on October 28, 2021.

Speakers:

Wallace Kou, President & CEO

Riyadh Lai, CFO

Chris Chaney, Director of Investor Relations & Strategy

Conference Call Details

Participants must register in advance to join the conference using the link provided below and should dial in 10 minutes prior to the call start time. Conference access information (including dial-in numbers, the passcode, and a unique access pin) will be provided in the email received upon registration.

Participant Online Registration: http://apac.directeventreg.com/registration/event/7896715

Replay Numbers (for 7 days):

 

USA (Toll Free):    1 855 452 5696
USA (Toll):    1 646 254 3697
Participant Passcode:    7896715

A webcast of the call will be available on the Company’s website at www.siliconmotion.com.

 

4


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.

 

5


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.

SSD solutions restructuring are charges relate to the restructuring of our underperforming Shannon product lines and include goodwill impairment expenses, and the write-down of NAND flash and SSD inventory valuation.

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.

 

6


Silicon Motion Technology Corporation

Consolidated Statements of Income

(in thousands, except percentages and per ADS data, unaudited)

 

     For Three Months Ended     For the Nine Months Ended  
     Sep. 30,
2020
($)
    Jun. 30,
2021
($)
    Sep. 30,
2021
($)
    Sep. 30,
2020
($)
    Sep. 30,
2021
($)
 

Net sales

     126,043       221,103       254,241       395,624       657,743  

Cost of sales

     64,217       109,969       127,070       201,512       328,179  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     61,826       111,134       127,171       194,112       329,564  

Operating expenses

          

Research & development

     26,378       38,962       44,600       84,624       119,544  

Sales & marketing

     6,077       7,085       7,749       18,394       21,280  

General & administrative

     3,528       4,649       5,931       11,019       15,019  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     25,843       60,438       68,891       80,075       173,721  

Non-operating income (expense)

          

Interest income, net

     841       336       312       3,896       1,009  

Foreign exchange gain (loss), net

     551       519       (114     (72     (404

Others, net

     (6     —         —         15       3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

     1,386       855       198       3,839       608  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax

     27,229       61,293       69,089       83,914       174,329  

Income tax expense

     2,962       11,748       13,665       5,522       34,961  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     24,267       49,545       55,424       78,392       139,368  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per basic ADS

     0.70       1.42       1.59       2.24       4.00  

Earnings per diluted ADS

     0.70       1.42       1.58       2.24       3.99  

Margin Analysis:

          

Gross margin

     49.1     50.3     50.0     49.1     50.1

Operating margin

     20.5     27.3     27.1     20.2     26.4

Net margin

     19.3     22.4     21.8     19.8     21.2

Additional Data:

          

Basic ADS

     34,832       34,926       34,933       34,960       34,844  

Diluted ADS

     34,891       34,953       35,023       35,061       34,967  

 

7


Silicon Motion Technology Corporation

Reconciliation of GAAP to Non-GAAP Operating Results

(in thousands, except percentages and per ADS data, unaudited)

 

     For Three Months Ended     For the Nine Months Ended  
     Sep. 30,
2020
($)
    Jun. 30,
2021
($)
    Sep. 30,
2021
($)
    Sep. 30,
2020
($)
    Sep. 30,
2021
($)
 

Gross profit (GAAP)

     61,826       111,134       127,171       194,112       329,564  

Gross margin (GAAP)

     49.1     50.3     50.0     49.1     50.1

Stock-based compensation (A)

     55       52       111       96       217  

SSD solutions restructuring

     —         1,679       473       —         3,283  

Gross profit (non-GAAP)

     61,881       112,865       127,755       194,208       333,064  

Gross margin (non-GAAP)

     49.1     51.0     50.2     49.1     50.6

Operating expenses (GAAP)

     35,983       50,696       58,280       114,037       155,843  

Stock-based compensation (A)

     (3,076     (2,312     (5,059     (5,763     (10,332

SSD solutions restructuring

     —         —         (238     —         (238

Operating expenses (non-GAAP)

     32,907       48,384       52,983       108,274       145,273  

Operating profit (GAAP)

     25,843       60,438       68,891       80,075       173,721  

Operating margin (GAAP)

     20.5     27.3     27.1     20.2     26.4

Total adjustments to operating profit

     3,131       4,043       5,881       5,859       14,070  

Operating profit (non-GAAP)

     28,974       64,481       74,772       85,934       187,791  

Operating margin (non-GAAP)

     23.0     29.2     29.4     21.7     28.6

Non-operating income (expense) (GAAP)

     1,386       855       198       3,839       608  

Foreign exchange loss (gain), net

     (551     (519     114       72       404  

Non-operating income (expense) (non-GAAP)

     835       336       312       3,911       1,012  

Net income (GAAP)

     24,267       49,545       55,424       78,392       139,368  

Total pre-tax impact of non-GAAP adjustments

     2,580       3,524       5,995       5,931       14,474  

Income tax impact of non-GAAP adjustments

     (171     (339     (1,015     (693     (2,048

Net income (non-GAAP)

     26,676       52,730       60,404       83,630       151,794  

Earnings per diluted ADS (GAAP)

   $ 0.70     $ 1.42     $ 1.58     $ 2.24     $ 3.99  

Earnings per diluted ADS (non-GAAP)

   $ 0.76     $ 1.50     $ 1.70     $ 2.38     $ 4.31  

Shares used in computing earnings per diluted ADS (GAAP)

     34,891       34,953       35,023       35,061       34,967  

Non-GAAP Adjustments

     163       297       513       88       285  

Shares used in computing earnings per diluted ADS (non-GAAP)

     35,054       35,250       35,536       35,149       35,252  

(A) Excludes stock-based compensation as follows:

          

Cost of sales

     55       52       111       96       217  

Research & development

     2,163       1,203       3,251       3,937       6,508  

Sales & marketing

     405       480       616       825       1,502  

General & administrative

     508       629       1,192       1,001       2,322  

 

8


Silicon Motion Technology Corporation

Consolidated Balance Sheet

(In thousands, unaudited)

 

     Sep. 30,
2020
     Jun. 30,
2021
     Sep. 30,
2021
 
     ($)      ($)      ($)  

Cash and cash equivalents

     341,281        357,119        364,071  

Short-term investments

     1,951        —          —    

Accounts receivable (net)

     95,519        145,583        184,984  

Inventories

     107,426        150,617        161,010  

Refundable deposits – current

     24,094        48,760        48,507  

Prepaid expenses and other current assets

     24,643        26,742        26,398  
  

 

 

    

 

 

    

 

 

 

Total current assets

     594,914        728,821        784,970  

Long-term investments

     5,000        6,500        8,507  

Property and equipment (net)

     102,046        106,841        110,289  

Goodwill and intangible assets (net)

     17,489        —          —    

Other assets

     10,984        17,093        17,808  
  

 

 

    

 

 

    

 

 

 

Total assets

     730,433        859,255        921,574  
  

 

 

    

 

 

    

 

 

 

Accounts payable

     37,148        77,126        66,380  

Income tax payable

     5,870        19,071        31,190  

Accrued expenses and other current liabilities

     65,500        86,559        85,584  
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     108,518        182,756        183,154  

Other liabilities

     26,207        29,859        31,198  
  

 

 

    

 

 

    

 

 

 

Total liabilities

     134,725        212,615        214,352  

Shareholders’ equity

     595,708        646,640        707,222  
  

 

 

    

 

 

    

 

 

 

Total liabilities & shareholders’ equity

     730,433        859,255        921,574  
  

 

 

    

 

 

    

 

 

 

 

9


Silicon Motion Technology Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

 

     For Three Months Ended     For the Nine Months Ended  
     Sep. 30,
2020
    Jun. 30,
2021
    Sep. 30,
2021
    Sep. 30,
2020
    Sep. 30,
2021
 
     ($)     ($)     ($)     ($)     ($)  

Net income

     24,267       49,545       55,424       78,392       139,368  

Depreciation & amortization

     3,322       4,059       4,180       9,922       12,125  

Stock-based compensation

     3,131       2,364       5,170       5,859       10,549  

Investment impairment, losses & disposals

     1       —         2       7       204  

Changes in operating assets and liabilities

     (552     4,058       (36,117     1,287       (56,191

Others

     22       —         —         35       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     30,191       60,026       28,659       95,502       106,055  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Purchase of property & equipment

     (2,618     (4,926     (7,329     (13,148     (15,585

Purchase of long-term investments

     —         (1,500     (2,007     (2,000     (3,506
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (2,618     (6,426     (9,336     (15,148     (19,091
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dividend payments

     (12,280     (12,201     (12,204     (36,835     (36,604

Share repurchases

     (25,013     —         —         (25,013     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (37,293     (12,201     (12,204     (61,848     (36,604
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash, cash equivalents & restricted cash

     (9,720     41,399       7,119       18,506       50,360  

Effect of foreign exchange changes

     323       (57     23       (342     (119

Cash, cash equivalents & restricted cash—beginning of period

     375,814       370,968       412,310       348,253       369,211  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash, cash equivalents & restricted cash—end of period

     366,417       412,310       419,452       366,417       419,452  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

10


About Silicon Motion:

We are the global leader in supplying NAND flash controllers for solid state storage devices. We supply more SSD controllers than any other company in the world for servers, PCs and other client devices and are the leading merchant supplier of eMMC and UFS embedded storage controllers used in smartphones, IoT devices and other applications. We also supply customized high-performance hyperscale data center and specialized industrial and automotive 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 fourth quarter of 2021 and full year 2021 expectations of revenue, gross margin and operating expenses, all of which reflect management’s estimates based on information available at the 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 fourth quarter of 2021 and full year 2021. 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 one or more customers; general economic conditions or conditions in the semiconductor or consumer electronics markets; the effects on our business and our customer’s business taking into account the ongoing US-China tariffs and trade disputes together with the uncertainties associated with the ongoing global outbreak of COVID-19; the recent increases in tensions between Taiwan and China including enhanced military activities; 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; changes in our cost of finished goods; the availability,

 

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pricing, and timeliness of delivery of other components and raw materials used in the products we sell given the current raw material supply shortages being experienced in our industry; our customers’ sales outlook, purchasing patterns, and inventory adjustments based on consumer demands and general economic conditions; any potential impairment charges that may be incurred related to businesses previously acquired or divested in the future; 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 May 12, 2021. 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:
Christopher Chaney    Selina Hsieh
Director, Investor Relations & Strategy    Investor Relations
E-mail: CChaney@siliconmotion.com    E-mail: ir@siliconmotion.com
Media Contact:   
Sara Hsu   
Project Manager   
E-mail: sara.hsu@siliconmotion.com   

 

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