Silicon Motion: Fiscal 1Q22 Financial Results

Business highlights
• Sales exceeded the high end of guidance
• SSD controller sales declined 15% to 20% Q/Q and increased 25% to 30% Y/Y
• eMMC+UFS controller sales declined 0% to 5% Q/Q and increased 60% to 65% Y/Y
• SSD solutions sales decreased 5% to 10% Q/Q and increased 40% to 45% Y/Y
• Gross margin exceeded the high end of guidance due to a stronger sales mix
• Repurchased $100 million of ADSs at an average price of $80.19, returning $150 million to shareholders since the program was announced last December

Silicon Motion Technology Corporation announced its financial results for the quarter ended March 31, 2022.

• For 1Q22, net sales declined sequentially to $242.0 million from $264.4 million in 4FQ21.
• Net income (GAAP) declined to $54.5 million or $1.60 per diluted ADS (GAAP) from net income (GAAP) of $60.6 million or $1.73 per diluted ADS (GAAP) in 4FQ21.
• For 1FQ22, net income (non-GAAP) declined to $58.9 million or $1.72 per diluted ADS (non-GAAP) from net income (non-GAAP) of $67.6 million or $1.91 per diluted ADS (non-GAAP) in 4FQ21.

1FQ22 review
“Due to strong shipments of SSD controllers for OEMs, we delivered results that were ahead of expectations,” said Wallace Kou, president and CEO. “Our overall PCIe SSD controller sales were up over 50% Y/Y, and our new OEM-focused PCIe Gen4 controller sales, which we started shipping in 3FQ21, scaled 4x sequentially.”

During 1FQ22, the company had $11.7 million of capital expenditures, including $5.7 million for the routine purchase of testing equipment, software, design tools and other items, and $6.0 million for building construction in Hsinchu, Taiwan.

Returning value to shareholders
On October 25, 2021, the board of directors declared a $2.00 per ADS annual dividend to be paid in quarterly installments of $0.50 per ADS. On February 25, 2022, the firm paid $17.0 million to shareholders as the second installment of the annual dividend. On December 7, 2021, it announced that the board had authorized a new program for the Company to repurchase up to $200 million of our ADSs over a 6-month period. During 1FQ22, through our Rule 10b5-1 repurchase plan, $100.0 million of ADSs were repurchased at an average price of $80.19. Since the program’s announcement, $150.0 million of ADSs were repurchased at an average price of $83.18.

Business outlook
“We are increasingly confident and optimistic about our growth prospects as our pipeline of OEM projects, customers, end-markets and sales commitments continued to expand,” said Kou. “We expect that our PCIe Gen4 SSD controller ramp this year will be very robust, in parallel with our rapid UFS+eMMC controller market share gains-as our share-of-wallet at customers increases and our customers broaden their market presence. Additionally, we believe that we are paving a solid foundation into the automotive market and are on-track to launch our PCIe Gen 5 enterprise-grade SSD controllers later this year.”