Silicon Motion (SIMO) Q4 Earnings Beat, Revenues Up Y/Y

Silicon Motion Technology Corporation SIMO reported fourth-quarter 2019 non-GAAP earnings of 96 cents per American Depositary Share (ADS), which surpassed the Zacks Consensus Estimate by 12.9% and improved 39.1% sequentially. Moreover, the figure improved 17.1% from the year-ago quarter.

Net sales (non-GAAP) increased 32% from the year-ago quarter and improved 35% sequentially to $153 million.

On a GAAP basis, net sales increased 39% from the year-ago figure and improved 24% sequentially to $153.2 million.

The Zacks Consensus Estimate for revenues was pegged at $142 million.

Quarter in Detail

Sales of SSD controllers surged 25% sequentially.

Moreover, revenues from eMMC and UFS controllers improved 70% sequentially, on account of increasing adoption of mobile embedded memory controllers.

Silicon Motion Technology Corporation Price, Consensus and EPS Surprise

Silicon Motion Technology Corporation Price, Consensus and EPS Surprise

Silicon Motion Technology Corporation price-consensus-eps-surprise-chart | Silicon Motion Technology Corporation Quote

 

Notably, revenues from SSD solutions improved 60% sequentially on improving demand for Shannon and Ferri products.

Margins

Non-GAAP gross margin of 49.3% contracted 50 bps on a year-over-year basis and 90 bps sequentially.

Non-GAAP operating expenses as a percentage of revenues came in at 24.9% expanding 120 bps year over year. The figure contracted 280 bps sequentially.

Consequently, non-GAAP operating margin contracted 210 bps on year-over-year basis to 24.4%. Nonetheless, the figure expanded 230 bps sequentially.

Balance Sheet & Cash Flow

Silicon Motion ended the fourth quarter with cash, cash equivalents, restricted cash and short-term investments of $350.3 million, compared with $337.9 million reported in the prior quarter.

The company generated $29.4 million cash from operations during the reported quarter compared with $4.1 million in the previous quarter.

On Oct 25, 2019, the company’s board declared a new annual dividend of $1.40 per ADS, up from $1.20 in the past year. Quarterly installments to be paid by the company are 35 cents per ADS. Notably, on Nov 21, 2019, the company paid out $12.1 million as annual dividend to shareholders, which marked its first installment.

Further, on Nov 21, 2018, Silicon Motion announced a new buyback program spread over a two-year period. According to terms of the program, the company will repurchase approximately $200 million per ADS. In the reported quarter, the company did not make any repurchases. Under the buyback program, the company has repurchased shares worth $59.8 million.

Guidance

For first-quarter 2020, Silicon Motion expects non-GAAP revenues to be in the range of $130 million to $138 million (indicating sequential decline of 15-10%). The Zacks Consensus Estimate is currently pegged at $124.4 million.

Non-GAAP gross margin is anticipated within 44-46%. Non-GAAP operating margin is projected to lie in the range of 18% to 20%.

For 2020, Silicon Motion expects non-GAAP revenues to be in the range of $539 million to $584 million (indicating year-over-year growth of 20-30%). The Zacks Consensus Estimate is currently pegged at $541.64 million.

Non-GAAP gross margin is anticipated within 46-48%. Non-GAAP operating margin is anticipated to lie in the range of 21.5% to 23.5%.

Zacks Rank & Other Stocks to Consider

Currently, Silicon Motion sports a Zacks Rank #1 (Strong Buy).

Alteryx AYX, Cirrus Logic CRUS and Garmin GRMN are other top-ranked stocks in the broader computer and technology sector, each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Alteryx, Cirrus Logic and Garmin is pegged at 39.85%, 15.27% and 7.35%, respectively.

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