Silicon Motion Announces Results for the Period Ended December 31, 2021

Thursday, 27. January 2022 00:00

Financial Highlights

 4Q 2021 GAAP4Q 2021 Non-GAAP
  • Net sales
$264.4 million (+4% Q/Q, +84% Y/Y)$264.4 million (+4% Q/Q, +84% Y/Y)
  • Gross margin
49.6%49.9%
  • Operating margin
27.3%30.9%
  • Earnings per diluted ADS
$1.73$1.90


 Full Year 2021 GAAPFull Year 2021 Non-GAAP
  • Net sales
$922.1 million (+71% Y/Y)$922.1 million (+71% Y/Y)
  • Gross margin
50.0%50.4%
  • Operating margin
26.7%29.2%
  • Earnings per diluted ADS
$5.71$6.21

Business Highlights

  • Achieved all-time records for full-year revenue and earnings per share
  • Sales of SSD controllers reached new record quarterly high
  • SSD controller sales: 4Q increased 15% to 20% Q/Q and FY2021 increased 75% to 80% Y/Y
  • eMMC+UFS controller sales: 4Q declined 5% to 10% Q/Q and FY2021 increased 105% to 110% Y/Y
  • SSD solutions sales: 4Q increased 5% to 10% Q/Q and FY2021 declined 5% to 10% Y/Y
  • Increased annual dividend by 43% to $2.00 per ADS
  • Announced new $200 million 6-month share repurchase program and repurchased $50 million

TAIPEI, Taiwan and MILPITAS, Calif., Jan. 27, 2022 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (NasdaqGS: SIMO) (“Silicon Motion” or the “Company”) today announced its financial results for the quarter ended December 31, 2021. For the fourth quarter, net sales (GAAP) increased sequentially to $264.4 million from $254.2 million in third quarter 2021. Net income (GAAP) increased to $60.6 million or $1.73 per diluted ADS (GAAP) from a net income (GAAP) of $55.4 million or $1.58 per diluted ADS (GAAP) in third quarter 2021.

For the fourth quarter, net income (non-GAAP) increased to $67.5 million or $1.90 per diluted ADS (non-GAAP) from a net income (non-GAAP) of $60.4 million or $1.70 per diluted ADS (non-GAAP) in third quarter 2021.

Fourth Quarter 2021 Review
“We were supply constrained for most of 2021, including the fourth quarter,” said Wallace Kou, President and CEO of Silicon Motion. “Nevertheless, we were able to create significant incremental value throughout the year by optimizing our limited foundry wafer supply, which led to solid consecutive sequential quarterly revenue and earnings growth and very strong full year operating results.”

Key Financial Results

(in millions, except percentages and per ADS amounts)
GAAPNon-GAAP
4Q 20213Q 20214Q 20204Q 20213Q 20214Q 2020
Revenue$264.4$254.2$143.9$264.4$254.2$143.9
Gross profit$131.2$127.2$66.0$131.9$127.8$71.0
Percent of revenue49.6%50.0%45.9%49.9%50.2%49.3%
Operating expenses$59.1$58.3$65.6$50.3$53.0$39.5
Operating income$72.1$68.9$0.4$81.6$74.8$31.5
Percent of revenue27.3%27.1%0.3%30.9%29.4%21.9%
Earnings per diluted ADS$1.73$1.58$0.04$1.90$1.70$0.86

Other Financial Information

(in millions)4Q 20213Q 20214Q 2020
Cash, cash equivalents, restricted cash and short-term investments—end of period$415.5$419.4$369.2
Routine capital expenditures$8.3$5.9$5.6
Dividend payments$17.4$12.2$12.1
Share repurchases$45.7----

During the fourth quarter, we had $11.2 million of capital expenditures, including $8.3 million for the routine purchase of testing equipment, software, design tools and other items and $2.9 million for building construction in Hsinchu and Taipei.

Returning Value to Shareholders
On October 25, 2021, our Board of Directors declared a $2.00 per ADS annual dividend, 43% higher than our previous dividend, to be paid in quarterly installments of $0.50 per ADS. On November 24, 2021, we paid $17.4 million to shareholders as the first installment of the new annual dividend.

On December 7, 2021, we announced that our Board of Directors had authorized a new program for the Company to repurchase up to $200 million of our ADSs over a 6-month period. In December 2021, we repurchased $50.0 million of our ADSs at an average price of $89.85.

Business Outlook
“After delivering record operating results in 2021, we are optimistic that 2022 could be another banner year,” said Wallace Kou, President and CEO of Silicon Motion. "This year, similar to last year, we further expanded and strengthened our SSD controller program engagements with PC OEMs and eMMC/UFS controllers for smartphones, automotive applications and IoT/smart devices. We are adding to this positive momentum the upcoming launch of our next-generation enterprise-class SSD controllers.”

For the first quarter of 2022, management expects:

 GAAPNon-GAAP AdjustmentNon-GAAP
Revenue$225m to $238m
-15% to -10% Q/Q
+23% to 30% Y/Y
--$225m to $238m
-15% to -10% Q/Q
+23% to 30% Y/Y
Gross margin49.4% to 51.4%Approximately $0.1m*49.5% to 51.5%
Operating margin24.8% to 27.4%Approximately $5.0m to $6.0m**27.5% to 29.5%

* Projected gross margin (non-GAAP) excludes $0.1 million of stock-based compensation.
** Projected operating margin (non-GAAP) excludes $5.0 million to $6.0 million of stock-based compensation.

For the full year 2022, management expects:

 GAAPNon-GAAP AdjustmentNon-GAAP
Revenue$1,110m to $1,200m
+20% to 30% Y/Y
--$1,110m to $1,200m
+20% to 30% Y/Y
Gross margin49.0% to 51.0%Approximately $0.5m*49.0% to 51.0%
Operating margin27.0% to 29.0%Approximately $22.0m to $24.0m**29.0% to 31.0%

* Projected gross margin (non-GAAP) excludes $0.5 million of stock-based compensation.
** Projected operating margin (non-GAAP) excludes $22.0 million to $24.0 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 January 27, 2022.

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/7728589

Replay Numbers (for 7 days):
USA (Toll Free): 1 855 452 5696
USA (Toll): 1 646 254 3697
Participant Passcode: 7728589

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 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.

SSD solutions restructuring are charges relate to the restructuring of our underperforming Shannon and Bigtera product lines and include goodwill and intangible assets impairment expenses, the write-down of NAND flash and SSD inventory valuation and customer sales returns and accounts receivable attributable to these product lines.

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.

Gain on disposal of long-term investments relate to gains from our sale of FCI, our specialty RF IC product line.

 
Silicon Motion Technology Corporation
Consolidated Statements of Income
(in thousands, except percentages and per ADS data, unaudited)
    
 For Three Months Ended For the Year Ended
 Dec. 31,  Sep. 30,  Dec. 31,  Dec. 31,  Dec. 31,
 2020 2021 2021 2020 2021
  ($)  ($)  ($)  ($)  ($)
Net sales143,897  254,241  264,357  539,521  922,100 
Cost of sales77,853  127,070  133,126  279,365  461,305 
Gross profit66,044  127,171  131,231  260,156  460,795 
Operating expenses         
Research & development37,160  44,600  44,747  121,784  164,291 
Sales & marketing6,411  7,749  7,534  24,805  28,813 
General & administrative4,585  5,931  6,802  15,604  21,822 
Impairment of goodwill and intangible assets17,489  -  -  17,489  - 
Operating income399  68,891  72,148  80,474  245,869 
Non-operating income (expense)         
Interest income, net729  312  270  4,625  1,279 
Gain on disposal of long-term investments(293) -  -  (293) - 
Foreign exchange gain (loss), net692  (114) 598  619  194 
Others, net117  -  (80) 133  (77)
Subtotal1,245  198  788  5,084  1,396 
Income before income tax1,644  69,089  72,936  85,558  247,265 
Income tax expense290  13,665  12,355  5,812  47,316 
Net income1,354  55,424  60,581  79,746  199,949 
          
Earnings per basic ADS0.04  1.59  1.74  2.29  5.74 
Earnings per diluted ADS0.04  1.58  1.73  2.28  5.71 
          
Margin Analysis:         
Gross margin45.9% 50.0% 49.6% 48.2% 50.0%
Operating margin0.3% 27.1% 27.3% 14.9% 26.7%
Net margin0.9% 21.8% 22.9% 14.8% 21.7%
               
Additional Data:              
Basic ADS34,540  34,933  34,872  34,855  34,851 
Diluted ADS34,761  35,023  35,068  34,978  34,992 
               


 
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 Year Ended
 Dec. 31,  Sep. 30,  Dec. 31,  Dec. 31,  Dec. 31,
 2020 2021 2021 2020 2021
  ($)  ($)  ($)  ($)  ($)
Gross profit (GAAP) 66,044   127,171   131,231   260,156   460,795 
Gross margin (GAAP) 45.9%  50.0%  49.6%  48.2%  50.0%
Stock-based compensation (A) 157   111   172   253   390 
SSD solutions restructuring 4,772   473   478   4,772   3,760 
Gross profit (non-GAAP)  70,973   127,755   131,881   265,181   464,945 
Gross margin (non-GAAP) 49.3%  50.2%  49.9%  49.2%  50.4%
          
Operating expenses (GAAP) 65,645   58,280   59,083   179,682   214,926 
Stock-based compensation (A) (8,572)  (5,059)  (8,822)  (14,335)  (19,156)
SSD solutions restructuring (17,613)  (238)  -   (17,613)  (238)
Operating expenses (non-GAAP)  39,460   52,983   50,261   147,734   195,532 
          
Operating profit (GAAP) 399   68,891   72,148   80,474   245,869 
Operating margin (GAAP) 0.3%  27.1%  27.3%  14.9%  26.7%
Total adjustments to operating profit 31,114   5,881   9,472   36,973   23,544 
Operating profit (non-GAAP)  31,513   74,772   81,620   117,447   269,413 
Operating margin (non-GAAP) 21.9%  29.4%  30.9%  21.8%  29.2%
          
Non-operating income (expense) (GAAP) 1,245   198   788   5,084   1,396 
Foreign exchange loss (gain), net (692)  114   (598)  (619)  (194)
Gain on disposal of long-term investments 293   -   -   293   - 
Non-operating income (expense) (non-GAAP)  846   312   190   4,758   1,202 
          
Net income (GAAP) 1,354   55,424   60,581   79,746   199,949 
Total pre-tax impact of non-GAAP adjustments 30,715   5,995   8,874   36,647   23,350 
Income tax impact of non-GAAP adjustments (2,152)  (1,015)  (1,917)  (2,845)  (3,966)
Net income (non-GAAP)  29,917   60,404   67,538   113,548   219,333 
          
Earnings per diluted ADS (GAAP)$0.04  $1.58  $1.73  $2.28  $5.71 
Earnings per diluted ADS (non-GAAP) $0.86  $1.70  $1.90  $3.24  $6.21 
          
Shares used in computing earnings per diluted ADS (GAAP) 34,761   35,023   35,068   34,978   34,992 
Non-GAAP adjustments 219   513   387   121   311 
Shares used in computing earnings per diluted ADS (non-GAAP) 34,980   35,536   35,455   35,099   35,303 
          
(A) Excludes stock-based compensation as follows:         
Cost of sales 157   111   172   253   390 
Research & development 6,196   3,251   6,355   10,132   12,864 
Sales & marketing 933   616   863   1,758   2,366 
General & administrative 1,443   1,192   1,604   2,445   3,926 
                    


 
Silicon Motion Technology Corporation
Consolidated Balance Sheet
(In thousands, unaudited)
         
 Dec. 31,
 Sep. 30,
 Dec. 31,
 2020
 2021
 2021
  ($)
  ($)
  ($)
Cash and cash equivalents342,961  364,071  360,082 
Accounts receivable (net)115,826  184,984  208,574 
Inventories110,162  161,010  163,104 
Refundable deposits – current24,098  48,500  48,500 
Prepaid expenses and other current assets25,046  26,405  37,852 
Total current assets618,093  784,970  818,112 
Long-term investments5,000  8,507  8,541 
Property and equipment (net)105,496  110,289  124,478 
Other assets13,471  17,808  20,197 
Total assets742,060  921,574  971,328 
         
Accounts payable44,535  66,380  80,768 
Income tax payable6,886  31,190  44,240 
Accrued expenses and other current liabilities107,323  85,584  156,550 
Total current liabilities158,744  183,154  281,558 
Other liabilities25,574  31,198  32,192 
Total liabilities184,318  214,352  313,750 
Shareholders’ equity557,742  707,222  657,578 
Total liabilities & shareholders’ equity742,060  921,574  971,328 
         


 
Silicon Motion Technology Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
     
  For Three Months Ended For the Year Ended
  Dec. 31,  Sep. 30,  Dec. 31,  Dec. 31,  Dec. 31,
  2020 2021 2021 2020 2021
   ($)  ($)  ($)  ($)  ($)
Net income 1,354  55,424  60,581  79,746  199,949 
Depreciation & amortization 3,640  4,180  5,036  13,562  17,160 
Stock-based compensation 8,729  5,170  8,994  14,589  19,546 
Goodwill & intangible assets impairment 17,489  -  -  17,489  - 
Investment impairment, losses & disposals 260  2  3  267  208 
Changes in operating assets and liabilities (9,823) (36,124) (3,789) (8,537) (59,990)
Others 79  -  -  113  - 
Net cash provided by operating activities 21,728  28,652  70,825  117,229  176,873 
           
Purchase of property & equipment (6,397) (7,329) (11,248) (19,545) (26,833)
Purchase of long-term investments -  (2,007) -  (2,000) (3,506)
Net cash provided by (used in) investing activities (6,397) (9,336) (11,248) (21,545) (30,339)
           
Dividend payments (12,065) (12,204) (17,436) (48,901) (54,039)
Share repurchases -  -  (45,696) (25,013) (45,696)
Net cash used in financing activities (12,065) (12,204) (63,132) (73,914) (99,735)
           
Net increase (decrease) in cash, cash equivalents & restricted cash 3,266  7,112  (3,555) 21,770  46,799 
Effect of foreign exchange changes (472) 23  (367) (812) (487)
Cash, cash equivalents & restricted cash—beginning of period 366,417  412,310  419,445  348,253  369,211 
Cash, cash equivalents & restricted cash—end of period 369,211  419,445  415,523  369,211  415,523 
                

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 storage products such as SSDs and eMMC+UFS devices, which are found in data centers, PCs, smartphones, and commercial and industrial applications. We have shipped over six billion NAND controllers in the last ten years, more than any other company in the world.  We also supply customized 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 first quarter of 2022 and full year 2022 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 first quarter of 2022 and full year 2022. 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, including, but not limited to, the emergence of variants to the original COVID-19 strain such as the Delta and Omicron variants; 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; supply chain disruptions that have affected us and our industry as well as other industries on a global basis; 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, 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 ChaneySelina Hsieh
Director, Investor Relations & StrategyInvestor Relations
E-mail: cchaney@siliconmotion.comE-mail: ir@siliconmotion.com
  
Media Contact: 
Sara Hsu 
Project Manager 
E-mail: sara.hsu@siliconmotion.com 


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