Silicon Motion Announces Results for the Period Ended September 30, 2024
Business Highlights
Third quarter of 2024 sales increased 1% Q/Q and increased 23% Y/Y
SSD controller sales: 3Q of 2024 were flat Q/Q and increased 20% to 25% Y/Y
eMMC+UFS controller sales: 3Q of 2024 increased 0% to 5% Q/Q and increased 40% to 45% Y/Y
SSD solutions sales: 3Q of 2024 increased 5% to 10% Q/Q and increased 5% to 10% Y/Y
Financial Highlights
3Q 2024 GAAP
3Q 2024 Non-GAAP
• Net sales
$212.4 million (+1% Q/Q, +23% Y/Y)
$212.4 million (+1% Q/Q, +23% Y/Y)
• Gross margin
46.7%
46.8%
• Operating margin
11.5%
16.1%
• Earnings per diluted ADS
$0.62
$0.92
TAIPEI, Taiwan and MILPITAS, Calif., Oct. 31, 2024 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (NASDAQ:SIMO) ("Silicon Motion," the "Company" or "we") today announced its financial results for the quarter ended September 30, 2024. For the third quarter of 2024, net sales (GAAP) increased sequentially to $212.4 million from $210.7 million in the second quarter of 2024. Net income (GAAP) decreased to $20.8 million, or $0.62 per diluted American Depositary Share of the Company ("ADS") (GAAP), from net income (GAAP) of $30.8 million, or $0.91 per diluted ADS (GAAP), in the second quarter of 2024.
For the third quarter of 2024, net income (non-GAAP) decreased to $31.0 million, or $0.92 per diluted ADS (non-GAAP), from net income (non-GAAP) of $32.5 million, or $0.96 per diluted ADS (non-GAAP), in the second quarter of 2024.
All financial numbers are in U.S. dollars unless otherwise noted.
Third Quarter of 2024 Review"We continued to execute well in the third quarter of 2024, delivering revenue above the mid-point of our guided range and further expanding our gross margins," said Wallace Kou, President and CEO of Silicon Motion. "Our eMMC and UFS controller revenue grew modestly, and our SSD controller revenue remained strong given continued growth in the OEM channel. We continue to outperform the market through new wins we secured this quarter with both NAND makers and module makers that we expect will ramp-up in 2025. We expect this trend to continue as we expand our product portfolio and deliver world-class controllers to the market."
Key Financial Results
(in millions, except percentages and per ADS amounts)
GAAP
Non-GAAP
3Q 2024
2Q 2024
3Q 2023
3Q 2024
2Q 2024
3Q 2023
Revenue
$212.4
$210.7
$172.3
$212.4
$210.7
$172.3
Gross profit
$99.3
$96.8
$73.1
$99.3
$96.8
$73.3
Percent of revenue
46.7%
45.9%
42.4%
46.8%
46.0%
42.5%
Operating expenses
$74.8
$66.0
$58.1
$65.1
$62.1
$49.5
Operating income
$24.5
$30.7
$15.0
$34.2
$34.7
$23.8
Percent of revenue
11.5%
14.6%
8.7%
16.1%
16.5%
13.8%
Earnings per diluted ADS
$0.62
$0.91
$0.32
$0.92
$0.96
$0.63
Other Financial Information
(in millions)
3Q 2024
2Q 2024
3Q 2023
Cash, cash equivalents, restricted cash and short-term investments—end of period
$368.6
$343.6
$350.3
Routine capital expenditures
$7.4
$6.3
$6.3
Dividend payments
$16.8
$16.8
--
During the third quarter of 2024, we had $12.4 million of capital expenditures, including $7.4 million for the routine purchase of testing equipment, software, design tools and other items, and $5.0 million for building construction in Hsinchu.
Business Outlook"Looking ahead, we expect to experience gains from greater outsourcing by our NAND flash maker partners, which should continue to deliver revenue and profitability growth for the company," said Wallace Kou, President and CEO of Silicon Motion. "In the current quarter, we are introducing two key new controllers, including our first AI/enterprise server MonTitan controller and our first PCIe Gen 5.0 client SSD controller, placing Silicon Motion in an exceptionally strong position entering calendar 2025. While the seasonal holiday demand is expected to be more muted than in past years, we are confident that our highly differentiated controller solutions for PCs, smartphones and now enterprise-class storage controllers will further strengthen our market leadership position and will build on our foundation for strong, sustainable long-term growth."
For the fourth quarter of 2024, management expects:
($ in millions)
GAAP
Non-GAAP Adjustment
Non-GAAP
Revenue
$191 to $202 -10% to -5% Q/Q-6% to 0% Y/Y
--
$191 to $202 -10% to -5% Q/Q-6% to 0% Y/Y
Gross margin
46.3% to 47.4%
Approximately $0.3*
46.5 % to 47.5%
Operating margin
8.0% to 9.9%
Approximately $13.4 to $14.4**
15.6% to 16.6%
* Projected gross margin (non-GAAP) excludes $0.3 million of stock-based compensation.** Projected operating margin (non-GAAP) excludes $13.4 million to $14.4 million of stock-based compensation and dispute related expenses.
Conference Call & Webcast:The Company's management team will conduct a conference call at 8:00 am Eastern Time on October 31, 2024.
Conference Call DetailsParticipants must register in advance to join the conference call using the link provided below. Conference access information (including dial-in information and a unique access PIN) will be provided in the email received upon registration.
Participant Online Registration:https://register.vevent.com/register/BI3e5d77077ee94ca9b9fd61325f52a0e9
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), gross margin (non-GAAP), operating expenses (non-GAAP), operating profit (non-GAAP), operating margin (non-GAAP), non-operating income (expense) (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 similarly-titled 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.
Restructuring charges relate to the restructuring of our underperforming product lines, principally the write-down of NAND flash, embedded DRAM and SSD inventory valuation and severance payments.
M&A transaction expenses consist of legal, financial advisory and other fees related to the transaction.
Dispute related expenses consist of legal, consultant, other fees and resolution related to the dispute.
Foreign exchange loss (gain) consists 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$. We do not use financial instruments to manage the impact on our operations from changes in foreign exchange rates, and because our operations are subject to fluctuations in foreign exchange rates, we therefore exclude foreign exchange gains and losses when presenting non-GAAP financial measures.
Unrealized holding loss (gain) on investments relates to the net change in fair value of long-term investments.
Silicon Motion Technology CorporationConsolidated Statements of Income(in thousands, except percentages and per ADS data, unaudited)
For Three Months Ended
For the Nine Months Ended
Sep. 30,
Jun. 30,
Sep. 30,
Sep. 30,
Sep. 30,
2023
2024
2024
2023
2024
($)
($)
($)
($)
($)
Net Sales
172,333
210,670
212,412
436,763
612,392
Cost of sales
99,193
113,893
113,142
254,897
331,227
Gross profit
73,140
96,777
99,270
181,866
281,165
Operating expenses
Research & development
41,740
50,788
58,486
117,926
163,666
Sales & marketing
6,862
6,777
7,009
20,715
20,090
General & administrative
8,939
7,215
9,315
20,323
23,003
Loss from settlement of litigation
591
