Silicon Motion Technology Corporation ("Silicon Motion" or the "Company") today announced its financial results for the quarter ended March 31, 2015. For the first quarter, net sales increased slightly quarter-over-quarter to US$80.6 million from US$80.5 million in the fourth quarter. Net income (non-GAAP) decreased quarter-over-quarter to US$16.6 million or US$0.48 per diluted ADS from a net income (non-GAAP) of US$18.5 million or US$0.53 per diluted ADS in the fourth quarter.
GAAP net income for the first quarter increased to US$15.5 million or US$0.44 per diluted ADS from a GAAP net income of US$12.1 million or US$0.35 per diluted ADS in the fourth quarter.
First Quarter 2015 Review
Commenting on the results of the first quarter, Silicon Motion's President and CEO Wallace Kou said:
"We are off to a solid start in 2015. Our first quarter revenue benefited from strong client SATA 3 SSD controller sales momentum and stable eMMC controller sales. Client SSD controller sales doubled sequentially, now account for over 10% of our corporate revenue and shipments increased to over a million units a month in March. This quarter, our module maker customers aggressively built SSDs for channel markets. Micron and another NAND flash partner ramped sales of their SSDs with our controllers to both channel and OEM markets, and we expect a new major SSD program with our controllers, again for both channel and OEM markets, to begin shipping in the second quarter. Our storage OEM partner began shipping SSDs to three global tier-1 PC OEMs in the first quarter and recently started shipping to two additional OEMs. Our overall embedded products sales rebounded to well over half of total sales.
Separately, I am excited to announce that we have entered into an agreement to acquire Shannon Systems, a leading supplier of innovative enterprise-class PCIe SSD and storage array solutions to China's e-commerce, cloud computing and other industries. With this acquisition, which we anticipate closing in the next few months, we will supply enterprise-grade SSDs to the internet companies that operate in the world's largest internet market."
Sales
Net sales in the first quarter were US$80.6 million, a slight increase compared with the fourth quarter. For the quarter, mobile storage products accounted for 79% of net sales and mobile communications 19% of net sales.
Net sales of our mobile storage products, which primarily include eMMC, SSD, memory card and USB flash drive controllers, decreased 3% sequentially in the first quarter to US$63.6 million.
Net sales of mobile communications products, which primarily include LTE transceivers and mobile TV IC solutions, increased 14% sequentially to US$15.2 million in the first quarter.
Gross and Operating Margins
Gross margin (non-GAAP) decreased to 52.0% in the first quarter as compared to 52.5% in the fourth quarter. GAAP gross margin decreased in the first quarter to 52.0% as compared to 52.4% in the fourth quarter.
Operating expenses (non-GAAP) in the first quarter were US$22.5 million, an increase from US$21.4 million in the fourth quarter. Operating margin (non-GAAP) was 24.1%, a decrease from 26.0% in the previous quarter. GAAP operating margin was 22.1% for the first quarter, an increase from 20.9% in the fourth quarter.
Earnings
Net income (non-GAAP) was US$16.6 million for the first quarter, a decrease from US$18.5 million in the fourth quarter. Diluted earnings per ADS (non-GAAP) were US$0.48 per ADS in the first quarter, a decreased from US$0.53 per ADS in the fourth quarter of 2014.
GAAP net income was US$15.5 million for the first quarter, an increase from US$12.1 million in the fourth quarter. Diluted GAAP earnings per ADS in the first quarter were US$0.44, an increase from US$0.35 per ADS in the fourth quarter.
Balance Sheet
Cash and cash equivalents, and short-term investments increased at the end of the first quarter to US$200.5 million from US$194.9 million at the end of the fourth quarter.
Cash Flow
Our cash flows were as follows:
During the first quarter, we had US$1.8 million of capital expenditures primarily relating to the purchase of software and design tools.
Returning Value to Shareholders
On January 26, 2015 the Board of Directors of the Company declared a US$0.15 per ADS quarterly dividend. On February 20, we recorded $5.2 million as dividend payments to our shareholders.
Business Outlook:
Silicon Motion's President and CEO, Wallace Kou, added:
"The fundamentals of our business have never been stronger and we are excited about starting the next chapter of our growth. We believe that we are gaining share in the client SSD controller market and rapidly winning sockets and new designs with a broad range of OEMs. We remain on track to grow our market leading eMMC business as previously communicated. And with the proposed addition of Shannon Systems, we will be entering the world's largest internet market and will become one of the leading suppliers of enterprise SSDs to leading Chinese internet companies."
For the second quarter of 2015, management expects:
Revenue to increase 5% to 10% sequentially
Gross margin (non-GAAP) to be in the 50% to 52% range
Operating expenses (non-GAAP) of approximately US$23 to $24 million
For the full-year 2015, management expects:
Revenue to increase 17% to 25% as compared to full-year 2014
Gross margin (non-GAAP) to be in the 49.5% to 51.5% range
Operating expenses (non-GAAP) of approximately US$91 to $97 million | 