Notwithstanding that certain adjustments, charges, costs or expenses may be considered recurring, in order to provide meaningful comparisons, the Company believes that it is appropriate to exclude such items because they are not reflective of the Company's core results and tend to vary based on timing, frequency and magnitude.
These non-GAAP financial measures are provided to enhance the user's overall understanding of the Company's comparable financial performance between periods. In addition, the Company’s management generally excludes the items noted above when managing and evaluating the performance of the business. The financial statements provided with this release include reconciliations of these non-GAAP financial measures to their most comparable GAAP measures for the first and fourth quarters of fiscal year 2023 and the first quarter of fiscal year 2024, along with a reconciliation of forward-looking non-GAAP measures (other than the non-GAAP normalized tax rate and non-GAAP Diluted (loss) earnings per share) to their most comparable GAAP measures for the second quarter of fiscal year 2024. The Company adopted a full-year, normalized tax rate for the computation of the non-GAAP income tax provision in order to provide better comparability across the interim reporting periods by reducing the quarterly variability in non-GAAP tax rates that can occur throughout the year. In estimating the full-year non-GAAP normalized tax rate, the Company utilized a full-year financial projection that considers multiple factors such as changes to the Company’s current operating structure, existing positions in various tax jurisdictions, the effect of key tax law changes, and other significant tax matters to the extent they are applicable to the full fiscal year financial projection. In addition to the adjustments described above, this normalized tax rate excludes the impact of share-based awards and the amortization of acquisition-related intangible assets. For fiscal year 2024, the Company’s projected non-GAAP normalized tax rate is 12% and will be applied to each quarter of fiscal year 2024. The Company’s non-GAAP normalized tax rate on non-GAAP net income may be adjusted during the year to account for events or trends that the Company believes materially impact the original annual non-GAAP normalized tax rate including, but not limited to, significant changes resulting from tax legislation, acquisitions, entity structures or operational changes and other significant events. These additional non-GAAP financial measures should not be considered substitutes for any measures derived in accordance with GAAP and may be inconsistent with similar measures presented by other companies.
Forward-Looking and Cautionary Statements
This press release contains "forward-looking statements" within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended, based on the Company’s current expectations, estimates and projections about its operations, industry, financial condition, performance, results of operations, and liquidity. Forward-looking statements are statements other than historical information or statements of current condition and relate to matters such as future financial performance including the second quarter of fiscal year 2024 outlook; the Company’s expectations concerning the negative impact on the Company’s results of operations from export restrictions, inflationary pressure and other macroeconomic conditions; future operational performance; the anticipated impact of specific items on future earnings; and the Company’s plans, objectives and expectations. Statements containing words such as “may,” “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “estimates,” “should,” “will,” “designed to,” “projections,” or “business outlook,” or other similar expressions constitute forward-looking statements.
Forward-looking statements involve known and unknown risks and uncertainties that could cause actual results and events to differ materially from those projected. Potential factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the inherent risks, costs and uncertainties associated with integrating Sierra Wireless successfully and risks of not achieving all or any of the anticipated benefits, or the risk that the anticipated benefits may not be fully realized or take longer to realize than expected; the uncertainty surrounding the impact and duration of supply chain constraints and any associated disruptions; future responses to and effects of public health crises; export restrictions and laws affecting the Company's trade and investments, and tariffs or the occurrence of trade wars; worldwide economic and political disruptions, including as a result of inflation and the current conflict between Russia and Ukraine; tightening credit conditions related to the United States banking system concerns; competitive changes in the marketplace including, but not limited to, the pace of growth or adoption rates of applicable products or technologies; downturns in the business cycle; decreased average selling prices of the Company’s products; the Company’s reliance on a limited number of suppliers and subcontractors for components and materials; changes in projected or anticipated end-user markets; the Company’s ability to forecast its annual non-GAAP normalized tax rate due to material changes that could occur during the fiscal year, which could include, but are not limited to, significant changes resulting from tax legislation, acquisitions, entity structures or operational changes and other significant events; and the Company's ability to forecast and achieve anticipated net sales and earnings estimates in light of periodic economic uncertainty. Additionally, forward-looking statements should be considered in conjunction with the cautionary statements contained in the risk factors disclosed in the Company's filings with the Securities and Exchange Commission (the "SEC"), including the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2023, filed with the SEC on March 30, 2023, as such risk factors may be updated, amended or superseded from time to time by subsequent reports the Company files with the SEC. In light of the significant risks and uncertainties inherent in the forward-looking information included herein that may cause actual performance and results to differ materially from those predicted, any such forward-looking information should not be regarded as representations or guarantees by the Company of future performance or results, or that its objectives or plans will be achieved or that any of its operating expectations or financial forecasts will be realized. Reported results should not be considered an indication of future performance. Investors are cautioned not to place undue reliance on any forward-looking information contained herein, which reflect management’s analysis only as of the date hereof. Except as required by law, the Company assumes no obligation to publicly release the results of any update or revision to any forward-looking statements that may be made to reflect new information, events or circumstances after the date hereof or to reflect the occurrence of unanticipated or future events, or otherwise.
About Semtech
Semtech Corporation (Nasdaq: SMTC) is a high-performance semiconductor, IoT systems and Cloud connectivity service provider dedicated to delivering high quality technology solutions that enable a smarter, more connected and sustainable planet. Our global teams are dedicated to empowering solution architects and application developers to develop breakthrough products for the infrastructure, industrial and consumer markets. To learn more about Semtech technology, visit us at Semtech.com or follow us on LinkedIn or Twitter.
Semtech and the Semtech logo are registered trademarks or service marks of Semtech Corporation or its subsidiaries.
SMTC-F
SEMTECH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited) |
|||||||||||
|
|
Three Months Ended |
||||||||||
|
|
April 30,
|
|
January 29,
|
|
May 1,
|
||||||
|
|
Q124 |
|
Q423 |
|
Q123 |
||||||
| Net sales |
$ |
236,539 |
|
|
$ |
167,512 |
|
|
$ |
202,149 |
|
| Cost of sales |
|
122,738 |
|
|
|
64,934 |
|
|
|
71,896 |
|
| Amortization of acquired technology |
|
10,855 |
|
|
|
2,565 |
|
|
|
1,048 |
|
| Total cost of sales |
|
133,593 |
|
|
|
67,499 |
|
|
|
72,944 |
|
| Gross profit |
|
102,946 |
|
|
|
100,013 |
|
|
|
129,205 |
|
| Operating costs and expenses, net: |
|
|
|
|
|
||||||
| Selling, general and administrative |
|
58,117 |
|
|
|
101,952 |
|
|
|
43,364 |
|
| Product development and engineering |
|
51,827 |
|
|
|
52,899 |
|
|
|
38,789 |
|
| Intangible amortization |
|
4,882 |
|
|
|
821 |
|
|
|
— |
|
| Total operating costs and expenses, net |
|
114,826 |
|
|
|
155,672 |
|
|
|
82,153 |
|
| Operating (loss) income |
|
(11,880 |
) |
|
|
(55,659 |
) |
|
|
47,052 |
|
| Interest expense |
|
(20,510 |
) |
|
|
(6,181 |
) |
|
|
(1,197 |
) |
| Interest income |
|
1,069 |
|
|
|
4,043 |
|
|
|
364 |
|
| Non-operating expense, net |
|
(473 |
) |
|
|
(735 |
) |
|
|
(102 |
) |
| Investment impairments and credit loss reserves, net |
|
(33 |
) |
|
|
(1,532 |
) |
|
|
(24 |
) |
| (Loss) income before taxes and equity method (loss) income |
|
(31,827 |
) |
|
|
(60,064 |
) |
|
|
46,093 |
|
| (Benefit) provision for taxes |
|
(2,417 |
) |
|
|
(9,071 |
) |
|
|
8,069 |
|
| Net (loss) income before equity method (loss) income |
|
(29,410 |
) |
|
|
(50,993 |
) |
|
|
38,024 |
|
| Equity method (loss) income |
|
(7 |
) |
|
|
(22 |
) |
|
|
24 |
|
| Net (loss) income |
|
(29,417 |
) |
|
|
(51,015 |
) |
|
|
38,048 |
|
| Net loss attributable to noncontrolling interest |
|
(2 |
) |
|
|
(2 |
) |
|
|
(1 |
) |
| Net (loss) income attributable to common stockholders |
$ |
(29,415 |
) |
|
$ |
(51,013 |
) |
|
$ |
38,049 |
|
|
|
|
|
|
|
|
||||||
| (Loss) earnings per share: |
|
|
|
|
|
||||||
| Basic |
$ |
(0.46 |
) |
|
$ |
(0.80 |
) |
|
$ |
0.59 |
|
| Diluted |
$ |
(0.46 |
) |
|
$ |
(0.80 |
) |
|
$ |
0.59 |
|
|
|
|
|
|
|
|
||||||
| Weighted average number of shares used in computing (loss) earnings per share: |
|
|
|
|
|
||||||
| Basic |
|
63,924 |
|
|
|
63,864 |
|
|
|
63,950 |
|
| Diluted |
|
63,924 |
|
|
|
63,924 |
|
|
|
64,553 |
|
| SEMTECH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) |
|||||
|
|
April 30, 2023 |
|
January 29, 2023 |
||
| ASSETS |
|
|
|
||
| Current assets: |
|
|
|
||
| Cash and cash equivalents |
$ |
164,198 |
|
$ |
235,510 |
| Accounts receivable, net |
|
145,383 |
|
|
161,695 |
| Inventories |
|
213,234 |
|
|
207,704 |
| Prepaid taxes |
|
11,554 |
|
|
6,243 |
| Other current assets |
|
130,030 |
|
|
111,634 |
| Total current assets |
|
664,399 |
|
|
722,786 |
| Non-current assets: |
|
|
|
||
| Property, plant and equipment, net |
|
165,341 |
|
|
169,293 |
| Deferred tax assets |
|
67,490 |
|
|
63,783 |
| Goodwill |
|
1,288,828 |
|
|
1,281,703 |
| Other intangible assets, net |
|
198,784 |
|
|
215,102 |
| Other assets |
|
115,182 |
|
|
116,961 |
| Total assets |
$ |
2,500,024 |
|
$ |
2,569,628 |
|
|
|
|
|
||
| LIABILITIES AND EQUITY |
|
|
|
||
| Current liabilities: |
|
|
|
||
| Accounts payable |
$ |
74,407 |
|
$ |
100,676 |
| Accrued liabilities |
|
192,654 |
|
|
253,075 |
| Current portion of long-term debt |
|
42,695 |
|
|
43,104 |
| Total current liabilities |
|
309,756 |
|
|
396,855 |
| Non-current liabilities: |
|
|
|
||
| Deferred tax liabilities |
|
4,708 |
|
|
5,065 |
| Long-term debt |
|
1,336,636 |
|
|
1,296,966 |
| Other long-term liabilities |
|
115,715 |
|
|
114,707 |
| Stockholders’ equity |
|
733,028 |
|
|
755,852 |
| Noncontrolling interest |
|
181 |
|
|
183 |
| Total liabilities & equity |
$ |
2,500,024 |
|
$ |
2,569,628 |
| SEMTECH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL INFORMATION (in thousands) (unaudited) |
|||||||||||
|
|
|
|
Three Months Ended |
||||||||
|
|
|
|
April 30,
|
|
May 1,
|
||||||
| Net (loss) income |
|
|
$ |
(29,417 |
) |
|
$ |
38,048 |
|
||
|
|
|
|
|
|
|
||||||
| Net cash (used in) provided by operations |
|
|
|
(89,987 |
) |
|
|
50,051 |
|
||
| Net cash used in investing activities |
|
|
|
(14,407 |
) |
|
|
(10,315 |
) |
||
| Net cash provided by (used in) financing activities |
|
|
|
33,728 |
|
|
|
(44,153 |
) |
||
| Effect of foreign exchange rate changes on cash and cash equivalents |
|
|
|
(646 |
) |
|
|
— |
|
||
| Net decrease in cash and cash equivalents |
|
|
|
(71,312 |
) |
|
|
(4,417 |
) |
||
| Cash and cash equivalents at beginning of period |
|
|
|
235,510 |
|
|
|
279,601 |
|
||
| Cash and cash equivalents at end of period |
|
|
$ |
164,198 |
|
|
$ |
275,184 |
|
||
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended |
||||||||||
|
|
April 30,
|
|
January 29,
|
|
May 1,
|
||||||
|
|
Q124 |
|
Q423 |
|
Q123 |
||||||
| Free Cash Flow: |
|
|
|
|
|
||||||
| Cash Flow from Operations |
$ |
(89,987 |
) |
|
$ |
(18,799 |
) |
|
$ |
50,051 |
|
| Net Capital Expenditures |
|
(13,977 |
) |
|
|
(5,680 |
) |
|
|
(8,315 |
) |
| Free Cash Flow |
$ |
(103,964 |
) |
|
$ |
(24,479 |
) |
|
$ |
41,736 |
|
|
|
Three Months Ended |
||||
| (in thousands) |
April 30, 2023 |
||||
| Net sales by reportable segment: |
|
|
|
||
| Signal Integrity Products Group |
$ |
41,646 |
|
18 |
% |
| Advanced Protection and Sensing Products Group |
|
36,057 |
|
15 |
% |
| IoT System Products Group |
|
134,576 |
|
57 |
% |
| IoT Connected Services Group |
|
24,260 |
|
10 |
% |
| Total net sales by reportable segment |
$ |
236,539 |
|
100 |
% |
|
|
Three Months Ended |
||||
| (in thousands) |
April 30, 2023 |
||||
| Net sales by end market: |
|
|
|
||
| Infrastructure |
$ |
39,000 |
|
16 |
% |
| High-End Consumer |
|
21,594 |
|
9 |
% |
| Industrial |
|
175,945 |
|
75 |
% |
| Total net sales by end market |
$ |
236,539 |
|
100 |
% |
| SEMTECH CORPORATION SUPPLEMENTAL INFORMATION: RECONCILIATION OF GAAP TO NON-GAAP RESULTS (in thousands, except per share data) (unaudited) |
|||||||||||
|
|
Three Months Ended |
||||||||||
|
|
April 30,
|
|
January 29,
|
|
May 1,
|
||||||
|
|
Q124 |
|
Q423 |
|
Q123 |
||||||
| Gross Margin–GAAP |
|
43.5 |
% |
|
|
59.7 |
% |
|
|
63.9 |
% |
| Share-based compensation |
|
0.2 |
% |
|
|
0.4 |
% |
|
|
0.4 |
% |
| Amortization of acquired technology |
|
4.6 |
% |
|
|
1.5 |
% |
|
|
0.5 |
% |
| Share-based compensation acceleration expense |
|
— |
% |
|
|
0.5 |
% |
|
|
— |
% |
| Restructuring and other reserves |
|
0.2 |
% |
|
|
0.2 |
% |
|
|
— |
% |
| Adjusted Gross Margin (Non-GAAP) |
|
48.5 |
% |
|
|
62.3 |
% |
|
|
64.8 |
% |
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended |
||||||||||
|
|
April 30,
|
|
January 29,
|
|
May 1,
|
||||||
|
|
Q124 |
|
Q423 |
|
Q123 |
||||||
| Selling, general and administrative–GAAP |
$ |
58,117 |
|
|
$ |
101,952 |
|
|
$ |
43,364 |
|
| Share-based compensation |
|
(4,502 |
) |
|
|
(7,801 |
) |
|
|
(6,132 |
) |
| Transaction and integration related costs, net |
|
(7,068 |
) |
|
|
(22,513 |
) |
|
|
(495 |
) |
| Share-based compensation acceleration expense |
|
— |
|
|
|
(33,937 |
) |
|
|
— |
|
| Restructuring and other reserves, net |
|
(337 |
) |
|
|
(8,850 |
) |
|
|
(500 |
) |
| Litigation costs, net |
|
(26 |
) |
|
|
(13 |
) |
|
|
(181 |
) |
| Adjusted selling, general and administrative (Non-GAAP) |
$ |
46,184 |
|
|
$ |
28,838 |
|
|
$ |
36,056 |
|
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended |
||||||||||
|
|
April 30,
|
|
January 29,
|
|
May 1,
|
||||||
|
|
Q124 |
|
Q423 |
|
Q123 |
||||||
| Product development and engineering–GAAP |
$ |
51,827 |
|
|
$ |
52,899 |
|
|
$ |
38,789 |
|
| Share-based compensation |
|
(3,539 |
) |
|
|
(3,592 |
) |
|
|
(3,986 |
) |
| Transaction and integration related costs, net |
|
(534 |
) |
|
|
(25 |
) |
|
|
— |
|
| Share-based compensation acceleration expense |
|
— |
|
|
|
(11,010 |
) |
|
|
— |
|
| Restructuring and other reserves, net |
|
(1,226 |
) |
|
|
(397 |
) |
|
|
— |
|
| Adjusted product development and engineering (Non-GAAP) |
$ |
46,528 |
|
|
$ |
37,875 |
|
|
$ |
34,803 |
|
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended |
||||||||||
|
|
April 30,
|
|
January 29,
|
|
May 1,
|
||||||
|
|
Q124 |
|
Q423 |
|
Q123 |
||||||
| Operating Margin–GAAP |
|
(5.0 |
)% |
|
|
(33.2 |
)% |
|
|
23.3 |
% |
| Share-based compensation |
|
3.6 |
% |
|
|
7.2 |
% |
|
|
5.5 |
% |
| Intangible amortization |
|
6.6 |
% |
|
|
2.0 |
% |
|
|
0.5 |
% |
| Transaction and integration related costs, net |
|
3.2 |
% |
|
|
13.5 |
% |
|
|
0.2 |
% |
| Share-based compensation acceleration expense |
|
— |
% |
|
|
27.3 |
% |
|
|
— |
% |
| Restructuring and other reserves, net |
|
0.9 |
% |
|
|
5.7 |
% |
|
|
0.2 |
% |
| Litigation costs, net |
|
— |
% |
|
|
— |
% |
|
|
0.1 |
% |
| Adjusted Operating Margin (Non-GAAP) |
|
9.3 |
% |
|
|
22.5 |
% |
|
|
29.8 |
% |
| SEMTECH CORPORATION SUPPLEMENTAL INFORMATION: RECONCILIATION OF GAAP TO NON-GAAP RESULTS (CONTINUED) (in thousands, except per share data) (unaudited) |
|||||||||||
|
|
Three Months Ended |
||||||||||
|
|
April 30,
|
|
January 29,
|
|
May 1,
|
||||||
|
|
Q124 |
|
Q423 |
|
Q123 |
||||||
| GAAP net (loss) income attributable to common stockholders |
$ |
(29,415 |
) |
|
$ |
(51,013 |
) |
|
$ |
38,049 |
|
| Adjustments to GAAP net (loss) income attributable to common stockholders: |
|
|
|
|
|
||||||
| Share-based compensation |
|
8,404 |
|
|
|
12,020 |
|
|
|
10,893 |
|
| Intangible amortization |
|
15,737 |
|
|
|
3,386 |
|
|
|
1,048 |
|
| Transaction and integration related costs, net |
|
7,651 |
|
|
|
22,642 |
|
|
|
495 |
|
| Share-based compensation acceleration expense |
|
— |
|
|
|
45,749 |
|
|
|
— |
|
| Restructuring and other reserves |
|
2,060 |
|
|
|
9,536 |
|
|
|
500 |
|
| Litigation costs, net |
|
26 |
|
|
|
13 |
|
|
|
181 |
|
| Investment (gains) losses, reserves and impairments, net |
|
(317 |
) |
|
|
1,190 |
|
|
|
(324 |
) |
| Total Non-GAAP adjustments before taxes |
|
33,561 |
|
|
|
94,536 |
|
|
|
12,793 |
|
| Associated tax effect |
|
(2,625 |
) |
|
|
(13,208 |
) |
|
|
1,003 |
|
| Equity method loss (income) |
|
7 |
|
|
|
22 |
|
|
|
(24 |
) |
| Total of supplemental information, net of taxes |
|
30,943 |
|
|
|
81,350 |
|
|
|
13,772 |
|
| Non-GAAP net income attributable to common stockholders |
$ |
1,528 |
|
|
$ |
30,337 |
|
|
$ |
51,821 |
|
|
|
|
|
|
|
|
||||||
| GAAP diluted (loss) earnings per share |
$ |
(0.46 |
) |
|
$ |
(0.80 |
) |
|
$ |
0.59 |
|
| Adjustments per above |
|
0.48 |
|
|
|
1.27 |
|
|
|
0.21 |
|
| Non-GAAP diluted earnings per share |
$ |
0.02 |
|
|
$ |
0.47 |
|
|
$ |
0.80 |
|
| SEMTECH CORPORATION RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK Second Quarter of Fiscal Year 2024 Outlook (in millions, except per share data) |
||||||||
|
|
|
Q2 FY24 Outlook |
||||||
|
|
|
July 30, 2023 |
||||||
|
|
|
Low |
|
High |
||||
| Gross Margin–GAAP |
|
|
42.6 |
% |
|
|
44.8 |
% |
| Share-based compensation |
|
|
0.2 |
% |
|
|
0.2 |
% |
| Amortization of acquired intangibles |
|
|
4.7 |
% |
|
|
4.5 |
% |
| Adjusted Gross Margin (Non-GAAP) |
|
|
47.5 |
% |
|
|
49.5 |
% |
|
|
|
|
|
|
||||
|
|
|
Low |
|
High |
||||
| Selling, general and administrative–GAAP |
|
$ |
63.2 |
|
|
$ |
65.2 |
|
| Share-based compensation |
|
|
(8.2 |
) |
|
|
(8.2 |
) |
| Transaction and integration related |
|
|
(10.0 |
) |
|
|
(10.0 |
) |
| Adjusted selling, general and administrative (Non-GAAP) |
|
$ |
45.0 |
|
|
$ |
47.0 |
|
|
|
|
|
|
|
||||
|
|
|
Low |
|
High |
||||
| Product development and engineering–GAAP |
|
$ |
48.0 |
|
|
$ |
50.0 |
|
| Share-based compensation |
|
|
(4.0 |
) |
|
|
(4.0 |
) |
| Adjusted product development and engineering (Non-GAAP) |
|
$ |
44.0 |
|
|
$ |
46.0 |
|
