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Silicon Motion (SIMO) Q4 Earnings & Revenues Miss Estimates
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Silicon Motion Technology Corporation (SIMO - Free Report) reported soft fourth-quarter 2022 results, with the bottom and the top line missing the Zacks Consensus Estimate. The leading developer of microcontroller ICs for NAND flash storage devices reported lower revenues year over year as it continues to face supply chain headwinds, demand softness amid a challenging macroeconomic environment and a volatile geopolitical situation.
Net Income
On a GAAP basis, net income declined to $23.5 million or 71 cents per American depositary share (ADS) from $60.6 million or $1.73 per ADS in the prior-year quarter. Revenue contraction and higher research and development expenditures were the main causes of the year-over-year reduction in net income.
Non-GAAP net income was $41.1 million or $1.22 per ADS compared with $67.6 million or $1.91 ADS in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by 33 cents.
For 2022, net income was $172.6 million or $5.17 per ADS compared with $200 million or $5.72 per ADS in 2021. Net income declined by 2.5% on a non-GAAP basis from $219.4 million ($6.21 per ADS) in 2021 to $213.9 million ($6.36 per ADS) in 2022.
Silicon Motion Technology Corporation Price, Consensus and EPS Surprise
Quarterly revenues for Silicon Motion fell to $200.8 million from $264.4 million in the year-ago period. The top line missed the consensus estimate of $252 million. The declining smartphone market and waning demand in China induced by the COVID-related lockdown had affected the company’s sale of SSDs. Nevertheless, SSDs used in manufacturing PCs witnessed growth of 30% due to PCIe Gen 4 design wins and 20-25% sequential growth in SSD solutions sales in the fourth quarter partially offset the revenue loss. High inventory levels hurt sales of the company’s eMMC+UFS controllers in the December quarter, due to which sales declined 35-40% sequentially.
For 2022, the company experienced a 3% top-line expansion, with net sales increasing to $945.9 million from $922.1 million in 2021. In 2022, the company witnessed 15-20% growth in the sales of eMMC+UFS controllers despite unfavorable conditions in the smartphone market. Moreover, solid growth of 30-35% in SSD solution sales combined with 30% SSD controller sales growth in the PC OEM market cushioned the top-line performance.
Other Details
In the fourth quarter of 2022, non-GAAP gross profit was $95.1 million compared with $131.9 million in the year-ago quarter. This decline is due to significantly higher product-line restructuring and higher stock-based compensation compared with the year-ago quarter’s figure. Total operational expenses on a non-GAAP basis declined from $50.3 million in fourth-quarter 2021 to $48.5 million in 2022. Non-GAAP operating income fell from $81.6 million to $46.6 million, with margins of 30.9% and 23.2%, respectively.
Cash Flow & Liquidity
For the full year 2022, Silicon Motion generated $83.7 million of cash from operating activities compared with $174.7 million in the year-ago period. As of Dec 31, 2022, the company had $232.2 million in cash and cash equivalents with $44.8 million of other liabilities compared with $360.1 million in cash and cash equivalents with $32.2 million of other liabilities in 2021. In fourth-quarter 2022, the company’s capital expenditure totaled $7.6 million, including $3.5 million for the routine procurement of testing tools, software, design tools, and other goods and another $4.1 million for building construction in Hsinchu.
Outlook
Silicon Motion anticipates that recent developments aimed at improving SSD efficiency will lead to more design wins for PCIe Gen 4 SSD controllers. The NAND demand supply adjustment is expected to continue until the excess inventory is reduced in the upcoming quarters. The company is attempting to lower its operating cost structure to combat the softening in demand and maintain profitability. It is also optimistic about the recovery of sales following the relaxation of the lockdown in China. However, the geopolitical situation in Asia could adversely affect the company’s operations in the region.
Allegro MicroSystems Inc. (ALGM - Free Report) sporting a Zacks Rank #1(Strong Buy), delivered an earnings surprise of 9.43%, on average, in the trailing four quarters. Earnings estimates for ALGM for the current year stand at $1.27 per share.
Allegro MicroSystems Inc. is a designer, developer, fabless manufacturer and marketer of sensor integrated circuits and application-specific analog power ICs enabling emerging technologies in the automotive and industrial markets.
Infineon Technologies AG (IFNNY - Free Report) sporting a Zacks Rank #1(Strong Buy), delivered an earnings surprise of 6.32%, on average, in the trailing four quarters. Earnings estimates for IFNNY for the current year stands at $2.34 per share.
Infineon Technologies designs, produces and sells semiconductors, the microchips which have enabled the information age and have led to a vast increase in the speed, portability and capabilities of computers and myriad other electronic devices.
T-Mobile US, Inc. (TMUS - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 67.64%, on average, in the trailing four quarters. Earnings estimates for the current year stand at $6.66 per share.
T-Mobile US, Inc. is a national wireless service provider. The company offers its services under the T-Mobile, Metro by T-Mobile and Sprint brands. T-Mobile, through its subsidiaries, provides wireless services for branded postpaid and prepaid, and wholesale customers.
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Silicon Motion (SIMO) Q4 Earnings & Revenues Miss Estimates
Silicon Motion Technology Corporation (SIMO - Free Report) reported soft fourth-quarter 2022 results, with the bottom and the top line missing the Zacks Consensus Estimate. The leading developer of microcontroller ICs for NAND flash storage devices reported lower revenues year over year as it continues to face supply chain headwinds, demand softness amid a challenging macroeconomic environment and a volatile geopolitical situation.
Net Income
On a GAAP basis, net income declined to $23.5 million or 71 cents per American depositary share (ADS) from $60.6 million or $1.73 per ADS in the prior-year quarter. Revenue contraction and higher research and development expenditures were the main causes of the year-over-year reduction in net income.
Non-GAAP net income was $41.1 million or $1.22 per ADS compared with $67.6 million or $1.91 ADS in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by 33 cents.
For 2022, net income was $172.6 million or $5.17 per ADS compared with $200 million or $5.72 per ADS in 2021. Net income declined by 2.5% on a non-GAAP basis from $219.4 million ($6.21 per ADS) in 2021 to $213.9 million ($6.36 per ADS) in 2022.
Silicon Motion Technology Corporation Price, Consensus and EPS Surprise
Silicon Motion Technology Corporation price-consensus-eps-surprise-chart | Silicon Motion Technology Corporation Quote
Revenues
Quarterly revenues for Silicon Motion fell to $200.8 million from $264.4 million in the year-ago period. The top line missed the consensus estimate of $252 million. The declining smartphone market and waning demand in China induced by the COVID-related lockdown had affected the company’s sale of SSDs. Nevertheless, SSDs used in manufacturing PCs witnessed growth of 30% due to PCIe Gen 4 design wins and 20-25% sequential growth in SSD solutions sales in the fourth quarter partially offset the revenue loss. High inventory levels hurt sales of the company’s eMMC+UFS controllers in the December quarter, due to which sales declined 35-40% sequentially.
For 2022, the company experienced a 3% top-line expansion, with net sales increasing to $945.9 million from $922.1 million in 2021. In 2022, the company witnessed 15-20% growth in the sales of eMMC+UFS controllers despite unfavorable conditions in the smartphone market. Moreover, solid growth of 30-35% in SSD solution sales combined with 30% SSD controller sales growth in the PC OEM market cushioned the top-line performance.
Other Details
In the fourth quarter of 2022, non-GAAP gross profit was $95.1 million compared with $131.9 million in the year-ago quarter. This decline is due to significantly higher product-line restructuring and higher stock-based compensation compared with the year-ago quarter’s figure. Total operational expenses on a non-GAAP basis declined from $50.3 million in fourth-quarter 2021 to $48.5 million in 2022. Non-GAAP operating income fell from $81.6 million to $46.6 million, with margins of 30.9% and 23.2%, respectively.
Cash Flow & Liquidity
For the full year 2022, Silicon Motion generated $83.7 million of cash from operating activities compared with $174.7 million in the year-ago period. As of Dec 31, 2022, the company had $232.2 million in cash and cash equivalents with $44.8 million of other liabilities compared with $360.1 million in cash and cash equivalents with $32.2 million of other liabilities in 2021. In fourth-quarter 2022, the company’s capital expenditure totaled $7.6 million, including $3.5 million for the routine procurement of testing tools, software, design tools, and other goods and another $4.1 million for building construction in Hsinchu.
Outlook
Silicon Motion anticipates that recent developments aimed at improving SSD efficiency will lead to more design wins for PCIe Gen 4 SSD controllers. The NAND demand supply adjustment is expected to continue until the excess inventory is reduced in the upcoming quarters. The company is attempting to lower its operating cost structure to combat the softening in demand and maintain profitability. It is also optimistic about the recovery of sales following the relaxation of the lockdown in China. However, the geopolitical situation in Asia could adversely affect the company’s operations in the region.
Zacks Rank & Other Stocks to Consider
Silicon Motion currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Allegro MicroSystems Inc. (ALGM - Free Report) sporting a Zacks Rank #1(Strong Buy), delivered an earnings surprise of 9.43%, on average, in the trailing four quarters. Earnings estimates for ALGM for the current year stand at $1.27 per share.
Allegro MicroSystems Inc. is a designer, developer, fabless manufacturer and marketer of sensor integrated circuits and application-specific analog power ICs enabling emerging technologies in the automotive and industrial markets.
Infineon Technologies AG (IFNNY - Free Report) sporting a Zacks Rank #1(Strong Buy), delivered an earnings surprise of 6.32%, on average, in the trailing four quarters. Earnings estimates for IFNNY for the current year stands at $2.34 per share.
Infineon Technologies designs, produces and sells semiconductors, the microchips which have enabled the information age and have led to a vast increase in the speed, portability and capabilities of computers and myriad other electronic devices.
T-Mobile US, Inc. (TMUS - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 67.64%, on average, in the trailing four quarters. Earnings estimates for the current year stand at $6.66 per share.
T-Mobile US, Inc. is a national wireless service provider. The company offers its services under the T-Mobile, Metro by T-Mobile and Sprint brands. T-Mobile, through its subsidiaries, provides wireless services for branded postpaid and prepaid, and wholesale customers.