Silicon Motion: Fiscal 1Q21 Financial Results

(in $ million)	1Q20	1Q21	Growth
Revenue	132.8	182.4	*37%*
Net income	25.9	34.4

Silicon Motion Technology Corporation announced its financial results for the quarter ended March 31, 2021.

For 1FQ21, net sales (GAAP) increased sequentially to $182.4 million from $143.9 million, net income (GAAP) increased to $34.4 million or $0.98 per diluted ADS (GAAP) from net income (GAAP) of $1.4 million or $0.04 per diluted ADS (GAAP) in 4FQ20.

Net income (non-GAAP) increased to $38.7 million or $1.11 per diluted ADS (non- GAAP) from a net income (non-GAAP) of $29.9 million or $0.86 per diluted ADS (non-GAAP) in 4FQ20.

1FQ21 Review
“As we had previously communicated, we are seeing very strong demand for our SSD and eMMC+UFS controllers,” said Wallace Kou, president and CEO. “Customer demand was well in excess of our ability to supply as both our foundry supply and inventory on hand are limited.”

Returning value to shareholders
On October 26, 2020, the board of directors declared a $1.40 per ADS annual dividend to be paid in quarterly installments of $0.35 per ADS. On February 26, 2021, thd company paid $12.2 million to shareholders as the second installment of our annual dividend.

On November 21, 2018, the board of directors had authorized a new program to repurchase up to $200 million of our ADS over a 24-month period.

On October 26, 2020, the board authorized the extension of the expiration of this program to November 21, 2021.

Since the start of this program, Silicon Motion have repurchased $84.8 million of its ADSs and $115.2 million remains available for repurchase under the program. There were no share repurchases in 1FQ21.

Outlook
“With strong support from our business partners, we have secured more foundry supply and are now able to deliver a larger portion of the SSD and eMMC+UFS controllers previously ordered by our customers,” said Kou. “While we now expect to deliver much stronger full-year sales, our ability to fulfill customer demand remains capped by very tight foundry supply availability.”

For 2FQ21, management expects:

Projected gross margin (non-GAAP) excludes $0.1 million of stock-based compensation
Projected operating margin (non-GAAP) excludes $2.0 million to $3.0 million of stock-based compensation.

For FY21, management expects:

Projected gross margin (non-GAAP) excludes $0.4 million to $0.6 million of stock-based compensation and SSD solutions restructuring $1.1 million.
Projected operating margin (non-GAAP) excludes $16.0 million to $18.0 million of stock-based compensation and SSD solutions restructuring $1.1 million.

Comments

Excellent quarter for Taiwanese controller manufacturer Silicon Motion as revenue of $182.4 million was up 27% Q/Q and 37% Y/Y.

One month ago, it stated that, based on its preliminary 1FQ21 results, revenue was expected to grow approximately 25% sequentially, in excess of the original 7% to 12% guidance range issued on February 4, 2021. It's finally even better than that.

This growth was driven by strong sales of both SSD and eMMC+UFS controllers, both products achieving record quarterly highs:
• Sales of SSD and eMMC+UFS controllers both reached record quarterly highs
• SSD controller sales increased 25% to 30% Q/Q and increased 45% to 50% Y/Y
• eMMC+UFS controller sales increased 30% to 35% Q/Q and increased 50% to 55% Y/Y
• But SSD solutions sales increased only 0% to 5% Q/Q and declined 40% to 45% Y/Y

The company said that its market share of SD controller last year was in the 25% to 30% range. Based on strong sales growth this year, which will primarily be driven by PCIe Gen three SSD and OEM programs, it believes it should pick up 5 to 10 percentage points of market share.

It is shipping Gen three SD controller to 6 of 7 NAND flash makers.

Firm's momentum will pick up further when its PCIe Gen four SSD controller start ramping. It will start shipping in the middle of this year, initially with a few PC OEMs using Intel platform. The company expects its Gen four OEM program to scale quickly next year when Intel's elderly platform become widely available.

On February 24, Silicon Motion broke ground on the construction of its Hshinchu, Taiwan, office building. Construction is budgeted to cost $77 million, with $5 million spent this year and $33 million the next one. Complete construction is expected in 2024. Separately, on February 18, the company wanted to bid with a third-party to build an office building in Taipei, Taiwan. It paid $1 million bid bond and expect to execute a property development agreement in the next few weeks.

Outlook

Revenue of $192 million to $201 million or +5% to +10% Q/Q

$782 million to $836 million or +45% to 55% Y/Y for FY21 (last quarter, it was announced $1 billion sales target by 2023)