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

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Financial Highlights

  3Q 2021 GAAP 3Q 2021 Non-GAAP
$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 (GLOBE NEWSWIRE) — 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.”

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   $127.2     $111.1     $61.8     $127.8     $112.9     $61.9  
Percent of revenue   50.0%     50.3%     49.1%     50.2%     51.0%     49.1%  
Operating expenses $58.3   $50.7   $36.0   $53.0   $48.4   $32.9  
Operating income   $68.9     $60.4     $25.8     $74.8     $64.5     $29.0  
Percent of revenue   27.1%     27.3%     20.5%     29.4%     29.2%     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.”

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.

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.

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 Nine Months Ended
  Sep. 30,   Jun. 30,   Sep. 30,   Sep. 30,   Sep. 30,
  2020   2021   2021   2020   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  
                             
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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,   Jun. 30,   Sep. 30,   Sep. 30,   Sep. 30,
  2020   2021   2021   2020   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  
                             
 
Silicon Motion Technology Corporation
Consolidated Balance Sheet
(In thousands, unaudited)
           
  Sep. 30,   Jun. 30,   Sep. 30,
  2020   2021   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
           
 
Silicon Motion Technology Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
         
    For Three Months Ended   For the Nine Months Ended
    Sep. 30,   Jun. 30,   Sep. 30,   Sep. 30,   Sep. 30,
    2020   2021   2021   2020   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  
                               

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, 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.

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

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