Silicon Laboratories Inc. (NASDAQ:SLAB) Q4 2022 Earnings Call Transcript

Operator: Our next question is a follow-up from Gary Mobley from Wells Fargo Securities. Please go ahead with your follow-up.

Gary Mobley: Yes, thanks. I just had one follow-up question. I wanted to ask about the pace of the share buyback. If I’m not mistaken, in the past you mentioned that you would ideally like to maintain a billion-dollar cash position, gross cash position, and that would indicate that maybe there’s $200 million to $300 million of available buyback capacity. Am I summarizing that correctly?

John Hollister: Yes Gary, you have that exactly right. We’ve done a bit better than we contemplated at the onset, immediately following the divestiture. We have actually generated stronger cash flow in the intervening time period, and that is what has allowed us to both surpass the $2 billion goal and have another $200 million available for continued share repurchase. Looking further ahead as we continue to generate cash, we believe that will continue to be the case, and we’ll continue to work with the board of directors on capital allocation relative to this use versus strategic M&A, which we also continue to evaluate.

Gary Mobley: Got it, thank you.

Operator: Our next question comes from Tore Svanberg from Stifel. Please go ahead with your follow-up.

Tore Svanberg: Yes, thank you. Just a housekeeping one. John, tax rate 23%, still pretty high, right, and I know it’s got a lot of different elements to it, but anything happening this year that could potentially cause that tax rate to come down? I know you’re working on some capitalization on R&D and so on and so forth, but any view on the tax rate for the year would be great.

John Hollister: Yes, you bet, Tore. As we called this a couple years ago, the capitalized R&D aspect of the Tax Cuts and Jobs Act has an inflationary effect on the tax rate. That’s true for us, that’s true for other companies and entities with a relatively high R&D spend. That’s kind of the fundamental situation. All things considered, it is down a little bit from last year and we expect over the next couple of years, it will come in a bit further, come down a bit further as the amortization ladder builds, and you can essentially build up that stack of amortization periods into the future. But that’s the main thing that’s going on.

Tore Svanberg: Perfect, thank you John.

Operator: Ladies and gentlemen, with that, we will be concluding today’s question and answer session. I’d like to turn the floor back over to Giovanni Pacelli for any closing remarks.

Giovanni Pacelli: Yes, thank you Jamie, and thank you all for joining this morning. This concludes today’s call.

Operator: Ladies and gentlemen, with that we’ll conclude today’s conference call and presentation. We do thank you for joining. You may now disconnect your lines.