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Silicon Motion Announces Results for the Period Ended June 30, 2021

Financial Highlights

  2Q 2021 GAAP 2Q 2021 Non-GAAP
  • Net sales
$221.1 million (+21% Q/Q, +62% Y/Y) $221.1 million (+21% Q/Q, +62% Y/Y)
  • Gross margin
50.3% 51.0%
  • Operating margin
27.3% 29.2%
  • Earnings per diluted ADS
$1.42   $1.50

Business Highlights

  • Achieved second consecutive all-time record quarterly revenue and earnings per share
  • Sales of SSD and eMMC+UFS controllers both reached new record quarterly highs
  • SSD controller sales increased 30% to 35% Q/Q and increased 105% to 110% Y/Y
  • eMMC+UFS controller sales increased 10% to 15% Q/Q and increased 25% to 30% Y/Y
  • SSD solutions sales increased 35% to 40% Q/Q and declined 15% to 20% Y/Y

TAIPEI, Taiwan and MILPITAS, Calif., July 30, 2021 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (NasdaqGS: SIMO) (“Silicon Motion” or the “Company”) today announced its financial results for the quarter ended June 30, 2021. For the second quarter, net sales (GAAP) increased sequentially to $221.1 million from $182.4 million in first quarter 2021. Net income (GAAP) increased to $49.5 million or $1.42 per diluted ADS (GAAP) from net income (GAAP) of $34.4 million or $0.98 per diluted ADS (GAAP) in first quarter 2021.

For the second quarter, net income (non-GAAP) increased to $52.7 million or $1.50 per diluted ADS (non-GAAP) from a net income (non-GAAP) of $38.7 million or $1.11 per diluted ADS (non-GAAP) in first quarter 2021.

Second Quarter 2021 Review
“We delivered better than expected revenue in the second quarter, primarily because of our focus on sales of higher-value products,” said Wallace Kou, President and CEO of Silicon Motion. “This focus also led to higher than expected gross profitability.”

Key Financial Results

(in millions, except percentages and per ADS amounts)
GAAP Non-GAAP
2Q 2021 1Q 2021 2Q 2020 2Q 2021 1Q 2021 2Q 2020
Revenue $ 221.1   $ 182.4   $ 136.8   $ 221.1   $ 182.4   $ 136.8  
Gross profit
  $111.1
    $91.3
    $68.4
    $112.9
    $92.4
    $68.4  
Percent of revenue   50.3 %   50.0 %   50.0 %   51.0 %   50.7 %   50.0 %
Operating expenses $ 50.7   $ 46.9   $ 38.3   $ 48.4   $ 43.9   $ 38.0  
Operating income
  $60.4
    $44.4     $30.1
    $64.5     $48.5
    $30.4
 
Percent of revenue   27.3 %   24.3 %   22.0 %   29.2 %   26.6 %   22.2 %
Earnings per diluted ADS $ 1.42   $ 0.98   $ 0.80   $ 1.50   $ 1.11   $ 0.81  

Other Financial Information

(in millions) 2Q 2021 1Q 2021 2Q 2020
Cash, cash equivalents, restricted cash and short-term investments—end of period $ 412.3 $ 371.0 $ 379.7
Routine capital expenditures $ 4.9 $ 3.3 $ 4.1
Dividend payments $ 12.2 $ 12.2 $ 12.3

During the second quarter, we had $4.9 million of capital expenditures for the routine purchase of software, design tools and other items.

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 May 20, 2021, we paid $12.2 million to shareholders as the third installment of our annual dividend.

On November 21, 2018, we announced that our Board of Directors had authorized a new program for the Company to repurchase up to $200 million of our ADS over a 24-month period. On October 26, 2020, the Board of Directors of the Company authorized the extension of the expiration of this program to November 21, 2021. Since the start of this program, we have repurchased $84.8 million of our ADSs and $115.2 million remains available for repurchase under the program. There were no share repurchases in the second quarter.

Business Outlook
“We are upsizing our previous full-year revenue guidance as we expect to continue our focus of selling higher-value products,” said Wallace Kou, President and CEO of Silicon Motion. “We believe that this focused approach will also lead to better gross profitability and deliver strong SSD controller market share gains.”

For the third quarter of 2021, management expects:

  GAAP Non-GAAP Adjustment Non-GAAP
Revenue $238m to $249m
+7.5% to 12.5% Q/Q
-- $238m to $249m
+7.5% to 12.5% Q/Q
Gross margin 48.5% to 50.5% Approximately $0.1m* 48.5% to 50.5%
Operating margin 25.2% to 27.7% Approximately $4.6m to $5.6m** 27.5% to 29.5%

* Projected gross margin (non-GAAP) excludes $0.1 million of stock-based compensation.
** Projected operating margin (non-GAAP) excludes $4.6 million to $5.6 million of stock-based compensation.

For full year 2021, management expects:

  GAAP Non-GAAP Adjustment Non-GAAP
Revenue $890m to $917m
+65% to 70% Y/Y
-- $890m to $917m
+65% to 70% Y/Y
Gross margin 49.1% to 50.2% Approximately $3.1m to $3.3m* 49.5% to 50.5%
Operating margin 24.9% to 27.2% Approximately $20.8m to $22.8m** 27.5% to 29.5%

* Projected gross margin (non-GAAP) excludes $0.3 million to $0.5 million of stock-based compensation and $2.8 million of SSD solutions restructuring.
** Projected operating margin (non-GAAP) excludes $18.0 million to $20.0 million of stock-based compensation and $2.8 million of SSD solutions restructuring.

Conference Call & Webcast:

The Company’s management team will conduct a conference call at 8:00 am Eastern Time on July 30, 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/9533307

Replay Numbers (for 7 days):    
USA (Toll Free):   1 855 452 5696 
USA (Toll):   1 646 254 3697
Participant Passcode:   9533307

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 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.


Silicon Motion Technology Corporation
Consolidated Statements of Income
(in thousands, except percentages and per ADS data, unaudited)

  For Three Months Ended   For the Six Months Ended
  Jun. 30,   Mar. 31,   Jun. 30,   Jun. 30,   Jun. 30,
  2020   2021   2021   2020   2021
  ($)   ($)   ($)   ($)   ($)
Net sales 136,811     182,399     221,103     269,580     403,502  
Cost of sales 68,417     91,140     109,969     137,294     201,109  
Gross profit 68,394     91,259     111,134     132,286     202,393  
Operating expenses                  
Research & development 28,901     35,982     38,962     58,247     74,944  
Sales & marketing 5,823     6,446     7,085     12,316     13,531  
General & administrative 3,531     4,439     4,649     7,490     9,088  
Operating income 30,139     44,392     60,438     54,233     104,830  
Non-operating income (expense)                  
Interest income, net 1,323     361     336     3,055     697  
Foreign exchange gain (loss), net (142 )   (808 )   519     (623 )   (289 )
Others, net 6     3     -     22     3  
Subtotal 1,187     (444 )   855     2,454     411  
Income before income tax 31,326     43,948     61,293     56,687     105,241  
Income tax expense 3,115     9,548     11,748     2,561     21,296  
Net income 28,211     34,400     49,545     54,126     83,945  
                   
Earnings per basic ADS 0.80     0.99     1.42     1.54     2.41  
Earnings per diluted ADS 0.80     0.98     1.42     1.54     2.40  
                   
Margin Analysis:                  
Gross margin 50.0 %   50.0 %   50.3 %   49.1 %   50.2 %
Operating margin 22.0 %   24.3 %   27.3 %   20.1 %   26.0 %
Net margin 20.6 %   18.9 %   22.4 %   20.1 %   20.8 %
                   
Additional Data:                  
Basic ADS 35,146     34,674     34,926     35,024     34,800  
Diluted ADS 35,164     34,924     34,953     35,147     34,939  


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 Six Months Ended
    Jun. 30,   Mar. 31,   Jun. 30,   Jun. 30,   Jun. 30,
  2020   2021   2021   2020   2021
  ($)   ($)   ($)   ($)   ($)
Gross profit (GAAP)     68,394       91,259       111,134       132,286       202,393  
Gross margin (GAAP)     50.0 %     50.0 %     50.3 %     49.1 %     50.2 %
Stock-based compensation (A)     3       54       52       41       106  
SSD solutions restructuring     -       1,131       1,679       -       2,810  
Gross profit (non-GAAP)     68,397       92,444       112,865       132,327       205,309  
Gross margin (non-GAAP)     50.0 %     50.7 %     51.0 %     49.1 %     50.9 %
                     
Operating expenses (GAAP)     38,255       46,867       50,696       78,053       97,563  
Stock-based compensation (A)     (243 )     (2,961 )     (2,312 )     (2,687 )     (5,273 )
Operating expenses (non-GAAP)     38,012       43,906       48,384       75,366       92,290  
                     
Operating profit (GAAP)     30,139       44,392       60,438       54,233       104,830  
Operating margin (GAAP)     22.0 %     24.3 %     27.3 %     20.1 %     26.0 %
Total adjustments to operating profit     246       4,146       4,043       2,728       8,189  
Operating profit (non-GAAP)     30,385       48,538       64,481       56,961       113,019  
Operating margin (non-GAAP)     22.2 %     26.6 %     29.2 %     21.1 %     28.0 %
                     
Non-operating income (expense) (GAAP)     1,187       (444 )     855       2,454       411  
Foreign exchange loss (gain), net     142       808       (519 )     623       289  
Non-operating income (expense) (non-GAAP)     1,329       364       336       3,077       700  
                     
Net income (GAAP)     28,211       34,400       49,545       54,126       83,945  
Total pre-tax impact of non-GAAP adjustments     388       4,954       3,524       3,351       8,478  
Income tax impact of non-GAAP adjustments     2       (695 )     (339 )     (522 )     (1,034 )
Net income (non-GAAP)     28,601       38,659       52,730       56,955       91,389  
                     
Earnings per diluted ADS (GAAP)   $ 0.80     $ 0.98     $ 1.42     $ 1.54     $ 2.40  
Earnings per diluted ADS (non-GAAP)   $ 0.81     $ 1.11     $ 1.50     $ 1.62     $ 2.60  
                     
Shares used in computing earnings per diluted ADS (GAAP)     35,164       34,924       34,953       35,147       34,939  
Non-GAAP adjustments     36       45       297       49       171  
Shares used in computing earnings per diluted ADS (non-GAAP)     35,200       34,969       35,250       35,196       35,110  
                     
(A) Excludes stock-based compensation as follows:                    
Cost of sales     3       54       52       41       106  
Research & development     118       2,056       1,203       1,773       3,259  
Sales & marketing     85       406       480       420       886  
General & administrative     40       499       629       494       1,128  


Silicon Motion Technology Corporation
Consolidated Balance Sheet
(In thousands, unaudited)

    Jun. 30,   Mar. 31,   Jun. 30,
    2020   2021   2021
    ($)   ($)   ($)
Cash and cash equivalents   350,790   350,125   357,119
Short-term investments   3,876   -   -
Accounts receivable (net)   93,825   136,244   145,583
Inventories   103,835   113,432   150,617
Refundable deposits – current   24,089   18,693   48,760
Prepaid expenses and other current assets   23,778   25,140   26,742
Total current assets   600,193   643,634   728,821
Long-term investments   5,000   5,000   6,500
Property and equipment (net)   102,156   103,948   106,841
Goodwill and intangible assets (net)   17,489   -   -
Other assets   11,556   10,832   17,093
Total assets   736,394   763,414   859,255
             
Accounts payable   34,209   44,112   77,126
Income tax payable   3,642   12,817   19,071
Accrued expenses and other current liabilities   78,244   85,533   86,559
Total current liabilities   116,095   142,462   182,756
Other liabilities   27,202   26,193   29,859
Total liabilities   143,297   168,655   212,615
Shareholders’ equity   593,097   594,759   646,640
Total liabilities & shareholders’ equity   736,394   763,414   859,255


Silicon Motion Technology Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)

    For Three Months Ended   For the Six Months Ended
    Jun. 30,   Mar. 31,   Jun. 30,   Jun. 30,   Jun. 30,
    2020   2021   2021   2020   2021
    ($)   ($)   ($)   ($)   ($)
Net income   28,211     34,400     49,545     54,126     83,945  
Depreciation & amortization   3,363     3,886     4,059     6,600     7,945  
Stock-based compensation   246     3,015     2,364     2,728     5,379  
Investment impairment, losses & disposals   33     203     -     19     203  
Changes in operating assets and liabilities   (6,151 )   (24,132 )   4,058     1,839     (20,074 )
Others   (1 )   -     -     (1 )   -  
Net cash provided by operating activities   25,701     17,372     60,026     65,311     77,398  
                     
Purchase of property & equipment   (4,134 )   (3,330 )   (4,926 )   (10,530 )   (8,256 )
Purchase of long-term investments   (2,000 )   -     (1,500 )   (2,000 )   (1,500 )
Net cash used in investing activities   (6,134 )   (3,330 )   (6,426 )   (12,530 )   (9,756 )
                     
Dividend payments   (12,278 )   (12,199 )   (12,201 )   (24,556 )   (24,400 )
Net cash used in financing activities   (12,278 )   (12,199 )   (12,201 )   (24,556 )   (24,400 )
                     
Net increase (decrease) in cash, cash equivalents & restricted cash   7,289     1,843     41,399     28,225     43,242  
Effect of foreign exchange changes   (550 )   (86 )   (57 )   (664 )   (143 )
Cash, cash equivalents & restricted cash—beginning of period   369,075     369,211     370,968     348,253     369,211  
Cash, cash equivalents & restricted cash—end of period   375,814     370,968     412,310     375,814     412,310  


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 third 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 third 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; 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, 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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Source: Silicon Motion Technology Corporation