Glen Hawk, Interim Chief Executive Officer, said, "We exceeded our expectations for the second quarter of 2018. We are delivering revenue growth and higher profitability on a non-GAAP basis by focusing on our core business and further improving operational efficiencies. As an example, after pursuing strategic opportunities, we discontinued our non-core millimeter wave business, which was unable to achieve profitability levels necessary to warrant further investment. We remain committed to increasing shareholder value and are well-positioned for the future as our control, connect and compute solutions are ideally suited for the emerging IoT markets, particularly in the industrial segment."
Max Downing, Chief Financial Officer, added, "The discontinuation of our millimeter wave business resulted in $24 million of primarily non-cash restructuring and impairment charges which impacted GAAP operating expenses and gross margin. Non-GAAP operating expenses for the second quarter were 12% lower, as compared to the first quarter of 2018, at $39.9 million, as we continue to execute improvements to our cost structure. Importantly, this does not yet reflect the expected $13 million annual operating expense reduction from the discontinuation of our millimeter wave business, which will start to benefit us in the third quarter. Our non-GAAP gross margin came in at the high end of our expectations at 57.2% reflecting the acceleration of server related sales and automotive and industrial applications. Another key takeaway from the quarter is that we made a $10 million discretionary payment against our corporate debt and continue to maintain a healthy balance of $106 million in cash and short-term investments."
Business Outlook - Third Quarter of 2018:
- Revenue for the third quarter of 2018 is expected to be between approximately $100 million and $103 million.
- Gross margin percentage for the third quarter of 2018 is expected to be approximately 57% plus or minus 2% on both a GAAP and non-GAAP basis.
- Total operating expenses for the third quarter of 2018 are expected to be between approximately $44 million and $47 million on a GAAP basis and between approximately $39 million and $41 million on a non-GAAP basis. Both GAAP and non-GAAP operating expenses will reflect the initial benefits of the millimeter wave discontinuance. These savings are expected to be offset primarily by $1.5 million in mask and associated project costs related to new product advancements.
* For a reconciliation of GAAP to non-GAAP business outlook, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."
Investor Conference Call / Webcast Details:
Lattice Semiconductor will review the Company's financial results for the fiscal second quarter of 2018 and business outlook for the third quarter of 2018 on Thursday, July 26 at 5:00 p.m. Eastern Time. The conference call-in number is 1-888-684-5603 or 1-918-398-4852 with conference identification number 6199158. An accompanying presentation and live webcast of the conference call will also be available on Lattice's website at www.latticesemi.com. The Company's financial guidance will be limited to the comments on its public quarterly earnings call and the public business outlook statements contained in this press release.
A replay of the call will be available approximately two hours after the conclusion of the live call through 11:59 p.m. Eastern Time on August 2, 2018, by telephone at 1-404-537-3406. To access the replay, use conference identification number 6199158. A webcast replay will also be available on the investor relations section of www.latticesemi.com.
Forward-Looking Statements Notice:
The foregoing paragraphs contain forward-looking statements that involve estimates, assumptions, risks and uncertainties. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Such forward-looking statements include statements relating to: the expected $13 million annual operating expense reduction from the discontinuation of our millimeter wave business will start to benefit us in the third quarter; and the statements under the heading “Business Outlook - Third Quarter of 2018.” Other forward-looking statements may be indicated by words such as “will,” “could,” “should,” “would,” “may,” “expect,” “plan,” “project,” “anticipate,” “intend,” “forecast,” “future,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue” or the negative of these terms or other comparable terminology; and our expectation that we will remain focused on maximizing the leverage of our operating model and reduce our outstanding debt balance. Lattice believes the factors identified below could cause actual results to differ materially from the forward-looking statements.
Estimates of future revenue are inherently uncertain due to such factors
as global economic conditions, which may affect customer demand, pricing
pressures, competitive actions, the demand for our Mature, Mainstream
and New products, and in particular our iCE40™ and MachXO3L™ devices,
the ability to supply products to customers in a timely manner, changes
in our distribution relationships, or the volatility of our consumer
business. Actual gross margin percentage and operating expenses could
vary from the estimates on the basis of, among other things, changes in
revenue levels, changes in product pricing and mix, changes in wafer,
assembly, test and other costs, including commodity costs, variations in
manufacturing yields, the failure to sustain operational improvements,
the actual amount of compensation charges due to stock price changes.
Any unanticipated declines in revenue or gross margin, any unanticipated
increases in our operating expenses or unanticipated charges could
adversely affect our profitability.
