Semtech Corp. Logo

Print Print page   Email Email page   PDF Download PDF    Add to Briefcase
« Previous Release | Next Release »



Semtech Announces Second Quarter of Fiscal Year 2018 Results


CAMARILLO, Calif., Aug. 30, 2017 (GLOBE NEWSWIRE) -- Semtech Corporation (Nasdaq:SMTC), a leading supplier of high performance analog, mixed-signal semiconductors and advanced algorithms, today reported unaudited financial results for its second quarter of fiscal year 2018, which ended July 30, 2017.  Net sales computed in accordance with U.S. generally accepted accounting principles ("GAAP"), were $153.1 million, after being reduced by $3.2 million of share-based compensation associated with the previously-announced issuance of a Warrant to Comcast.  Excluding the offset associated with the Warrant, net sales were $156.3 million ("non-GAAP net sales").

Highlights for the Second Fiscal Quarter 2018

Results on a GAAP basis for the Second Fiscal Quarter 2018

To facilitate a complete understanding of comparable financial performance between periods, the Company also presents performance results net of certain non-cash items and items that are not considered reflective of the Company's core results over time.  The Company's non-GAAP measures of net sales, gross margin, net income, earnings per diluted share, and free cash flow exclude certain items as described below under "Non-GAAP Financial Measures."

Results on a non-GAAP basis for the Second Fiscal Quarter 2018 (see the list of non-GAAP items and the reconciliation of these to the most relevant GAAP items set forth in the tables below): 

Mohan Maheswaran, Semtech's President and Chief Executive Officer stated, "We are delighted with the continued progress from our main growth engines driven by our exciting LoRa® initiatives in the IoT market, our ClearEdge™ 100Gbps platforms in the cloud and hyperscale data center market and our Z-platforms in the high performance Mobile market."  Maheswaran continued, "Record LoRa and record 100G CDR ClearEdge revenues in the first half of fiscal year 2018 combined with solid design wins and ongoing diversification in our Protection business increase our confidence and belief that the Company is well positioned to deliver a record annual financial performance this fiscal year." 

GAAP Third Quarter of Fiscal Year 2018 Outlook

Non-GAAP Third Quarter of Fiscal Year 2018 Outlook

Webcast and Conference Call

Semtech will be hosting a conference call today to discuss its second quarter of fiscal year 2018 results at 2:00 p.m. Pacific time.  An audio webcast will be available on Semtech's website at www.Semtech.com under the "Investor Relations" section.  A replay of the call will be available through September 30, 2017 at the same website or by calling (855) 859-2056 and entering conference ID 81685875.

Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements prepared in accordance with GAAP, this release includes a non-GAAP presentation of net sales, gross margin, net income, earnings per diluted share, and free cash flow.  The Company's measure of free cash flow is calculated as cash flow from operations less net capital expenditures.  The Company's non-GAAP measures of net sales, gross margin, net income and earnings per diluted share exclude the following items, if any:

To provide additional insight into the Company's third fiscal quarter outlook, this release also includes a presentation of forward-looking non-GAAP measures including net sales, gross margin, effective tax rate and earnings per diluted share. 

These non-GAAP financial measures are adjusted to exclude the items identified above because such items are either operating expenses which would not otherwise have been incurred by the Company in the normal course of the Company's business operations or are not reflective of the Company's core results over time.  These excluded items may include recurring as well as non-recurring items, and no inference should be made that all of these adjustments, charges, costs or expenses are unusual, infrequent or non-recurring.  For example: certain restructuring and integration-related expenses (which consist of employee termination costs, facility closure or lease termination costs, and contract termination costs) may be considered recurring given the Company's ongoing efforts to be more cost effective and efficient; certain acquisition and disposition-related adjustments or expenses may be deemed recurring given the Company's regular evaluation of potential transactions and investments; and certain litigation expenses or dispute settlement charges or gains (which may include estimated losses for which we may have established a reserve, as well as any actual settlements, judgments, or other resolutions against, or in favor of, the Company related to litigation, arbitration, disputes or similar matters, and insurance recoveries received by the Company related to such matters) may be viewed as recurring given that the Company may from time to time be involved in, and may resolve, litigation, arbitration, disputes, and similar matters.

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 measures to their most comparable GAAP results for the first and second quarters of fiscal year 2018 and the second quarter of fiscal year 2017 along with a reconciliation of forward-looking earnings per diluted share to its most comparable GAAP measure for the third quarter of fiscal year 2018.  The Company is unable to include a reconciliation of the forward-looking non-GAAP measures of the non-GAAP tax rate to the corresponding GAAP measure as these are not available without unreasonable efforts due to the high variability and low visibility with respect to the charges which are excluded from this non-GAAP measure.  We expect the variability of the above charges to have a potentially significant impact on our GAAP financial results. 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 third quarter of fiscal year 2018 outlook, 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 Company's ability to forecast its effective tax rates due to changing income in higher or lower tax jurisdictions and other factors that contribute to the volatility of the Company's effective tax rates and impact anticipated tax benefits; the Company's ability to manage expenses to achieve anticipated shifts in demand among target customers, and other comparable changes or protracted weakness in projected or anticipated markets; competitive changes in the marketplace including, but not limited to, the pace of growth or adoption rates of applicable products or technologies; shifts in focus among target customers, and other comparable changes in projected or anticipated end-user markets; the Company's ability to integrate its acquisitions and realize expected synergies and benefits from its acquisitions and dispositions; the Company's ability to accurately forecast the amount and timing of the share-based compensation associated with the vesting of the Warrant issued to Comcast; the continuation and/or pace of key trends considered to be main contributors to the Company's growth, such as demand for increased network bandwidth and connectivity, demand for increasing energy efficiency in the Company's products or end-use applications of the products, and demand for increasing miniaturization of electronic components; adequate supply of components and materials from the Company's suppliers, to include disruptions due to natural causes or disasters, weather, or other extraordinary events; the Company's ability to forecast and achieve anticipated net sales and earnings estimates in light of periodic economic uncertainty, to include impacts arising from European, Asian and global economic dynamics; and the amount and timing of expenditures for capital equipment.  Additionally, forward-looking statements should be considered in conjunction with the cautionary statements contained in the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2017, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission, and in material incorporated therein, including, without limitation, information under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors".  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 is a leading supplier of high performance analog, mixed-signal semiconductors and advanced algorithms for high-end consumer, enterprise computing, communications and industrial equipment.  Products are designed to benefit the engineering community as well as the global community.  The Company is dedicated to reducing the impact it, and its products, have on the environment.  Internal green programs seek to reduce waste through material and manufacturing control, use of green technology and designing for resource reduction.  Publicly traded since 1967, Semtech is listed on the NASDAQ Global Select Market under the symbol SMTC.  For more information, visit http://www.semtech.com.

Semtech, the Semtech logo and LoRa are registered trademarks or services marks, and ClearEdge is a trademark or service mark, of Semtech Corporation or its subsidiaries.

SMTC-F

 

SEMTECH CORPORATION 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(Table in thousands - except per share amount) 
           
 Three Months Ended Six Months Ended 
 July 30, April 30, July 31,   July 30, July 31, 
  2017   2017   2016   2017   2016  
 Q2 2018 Q1 2018 Q2 2017 Q2 2018 Q2 2017 
 (Unaudited) (Unaudited) (Unaudited)  (Unaudited) (Unaudited) 
            
Net sales$   153,127   $   143,802   $   135,911   $   296,929   $   267,056   
Cost of sales 60,891     58,887     54,136     119,778     106,757  
Gross profit 92,236    84,915    81,775      177,151      160,299   
Operating costs and expenses:           
Selling, general and administrative 39,237     33,586     32,824     72,823     66,538  
Product development and engineering 27,432     25,983     26,325     53,415     51,497  
Intangible amortization 6,675     6,286     6,328     12,961     12,731  
Changes in the fair value of contingent earn-out obligations   -      -      (129)    -      (162) 
Loss on disposition of business operations   -      375     -      375     -   
Restructuring charges   -      429     -      429     -   
Total operating costs and expenses 73,344   66,659   65,348     140,003     130,604  
Operating income   18,892      18,256      16,427      37,148      29,695   
Interest expense, net (2,029)    (2,046)    (2,037)    (4,075)    (3,967) 
Non-operating expense, net (204)    (632)     (136)    (836)    (181) 
Income before taxes    16,659      15,578      14,254      32,237      25,547   
Provision for taxes    4,095     3,757     5,276     7,852     9,681  
Net income $   12,564   $   11,821   $   8,978   $   24,385   $   15,866   
           
Earnings  per share:          
Basic$  0.19  $  0.18  $  0.14  $  0.37  $  0.24  
Diluted$  0.19  $  0.18  $  0.14  $  0.36  $  0.24  
           
Weighted average number of shares used in computing earnings per share:                          
Basic 65,763   65,839   65,299   65,801   65,222  
Diluted 67,470   67,376   65,905   67,421   65,723  
            
           
SEMTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(Table in thousands)
             
             
              
            
 July 30, January 29,       
  2017   2017        
 (Unaudited)         
ASSETS          
Current assets:          
Cash and cash equivalents$  277,854  $  297,134        
Accounts receivable, net   61,220     51,441        
Inventories   74,975     65,872        
Prepaid taxes   3,564     5,563        
Other current assets   21,217     18,418        
Total current assets   438,830     438,428        
           
Non-current assets:          
Property, plant and equipment, net   118,740      108,910        
Deferred tax assets   6,341     5,493        
Goodwill   346,575     329,703        
Other intangible assets, net   75,112     61,773        
Other assets   75,784     67,235        
Total assets$   1,061,382   $   1,011,542         
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Accounts payable$  34,868  $  41,960        
Accrued liabilities   65,843     54,524        
Deferred revenue   13,230     12,059        
Current portion - long term debt   14,452     14,432        
Total current liabilities   128,393     122,975        
           
Non-current liabilities:          
Deferred tax liabilities - non-current   8,879     6,881        
Long term debt - less current   219,293     226,524        
Other long-term liabilities   64,916     49,899        
Stockholders' equity   639,901     605,263        
Total liabilities & stockholders' equity$   1,061,382   $   1,011,542         
           
SEMTECH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Table in thousands)
             
             
             
           
 Six Months Ended       
 July 30, July 31,       
  2017   2016        
 (Unaudited) (Unaudited)       
           
Net income $   24,385   $   15,866         
           
Net cash provided by operating activities   45,996     45,467        
Net cash used in investing activities   (44,027)    (6,596)       
Net cash used in financing activities   (21,249)    (11,794)       
Net (decrease) increase in cash and cash equivalents   (19,280)    27,077        
Cash and cash equivalents at beginning of period   297,134     211,810        
Cash and cash equivalents at end of period$   277,854   $   238,887         
           
            
SEMTECH CORPORATION 
SUPPLEMENTAL INFORMATION - NOTES TO CONSOLIDATED GAAP STATEMENTS OF INCOME 
(Tables in thousands - except per share amounts) 
           
 Three Months Ended Six Months Ended 
 July 30, April 30, July 31, July 30, July 31, 
  2017   2017   2016   2017   2016  
Share-based PaymentsQ2 2018 Q1 2018 Q2 2017 Q2 2018 Q2 2017 
 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
Revenue offset$  3,197  $  5,280  $-  $  8,477   $-  
Cost of sales   281     564     372     845     749  
Selling, general and administrative   10,055     5,557     4,183     15,611     8,036  
Product development and engineering   1,992     1,885   1,542     3,877     3,019  
Total share-based compensation expense$  15,525  $  13,286  $  6,097  $  28,810  $  11,804  
           
           
 Three Months Ended Six Months Ended 
 July 30, April 30, July 31, July 30, July 31, 
  2017   2017   2016   2017   2016   
Gross Profit - Reconciliation GAAP to Non-GAAPQ2 2018 Q1 2018 Q2 2017 Q2 2018 Q2 2017 
 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
           
GAAP gross profit$   92,236   $   84,915   $   81,775   $   177,151    $   160,299   
Adjustments to GAAP gross profit:          
Revenue: share-based payment - Comcast Warrant 3,197     5,280     -      8,477     -   
Cost of sales: other share-based payments   281     564     372     845      749  
Non-GAAP gross profit$   95,714   $   90,759   $   82,147   $   186,473   $   161,048   
            
           
 Three Months Ended Six Months Ended 
 July 30, April 30, July 31, July 30, July 31, 
  2017   2017   2016   2017   2016  
Net Income - Reconciliation GAAP to Non-GAAPQ2 2018 Q1 2018 Q2 2017 Q2 2018 Q2 2017 
 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
           
GAAP net income$   12,564   $   11,821    $   8,978   $   24,385   $   15,866   
           
Adjustments to GAAP net income:          
Share-based compensation$  15,525  $  13,286  $  6,097  $  28,810  $  11,804  
Intangible amortization   6,675     6,286     6,328     12,961     12,731  
Loss on disposition of business operations   -      375     -      375     -   
Transaction and related expenses, including debt refinance costs   1,026     339     1,685     1,365     2,423  
Acquisition related earn-out   416     559     (75)    975     1,218  
Environmental and other reserves    -      -      -      -      1,000  
Litigation cost net of recoveries   (428)    67     119     (361)    (1,393) 
Restructuring charges   -      429     -      429     -   
Total Non-GAAP adjustments before taxes   23,214     21,341     14,154     44,554     27,783  
Associated tax effect   (3,532)    (3,820)    (385)    (7,352)    (1,384) 
Total of supplemental information net of taxes   19,682     17,521     13,769     37,202     26,399  
Non-GAAP net income$   32,246    $   29,342   $   22,747   $   61,587  $   42,265   
            
Diluted GAAP earnings per share$  0.19  $  0.18  $  0.14  $  0.36  $  0.24  
Adjustments per above   0.29     0.26     0.21     0.55     0.40  
Diluted non-GAAP earnings per share$  0.48  $  0.44  $  0.35  $  0.91  $  0.64  
           
            
 Three Months Ended Six Months Ended 
 July 30, April 30, July 31, July 30, July 31, 
  2017   2017   2016   2017   2016  
Tax Impact Associated With Supplemental InformationQ2 2018 Q1 2018 Q2 2017 Q2 2018 Q2 2017 
 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
Adjustments to GAAP net income:          
Share-based compensation$  3,937  $  4,153  $  1,496  $  8,090  $  2,925  
Valuation allowance against deferred tax assets   (2,225)    (2,356)    (3,455)    (4,581)    (5,687) 
Other   1,820     2,023     2,344     3,843     4,146  
Total of associated tax effect$  3,532  $  3,820  $  385  $  7,352  $  1,384  
            
           
 Three Months Ended      
 July 30, April 30, July 31,     
  2017   2017   2016      
 Q2 2018 Q1 2018 Q2 2017     
 (Unaudited) (Unaudited) (Unaudited)     
Free Cash Flow:          
Cash Flow from Operations$  35,637  $  10,359  $  31,666      
Net Capital Expenditure (13,777)  (5,175)  (2,635)     
Free Cash Flow:$   21,860   $   5,184   $   29,031       
           
            
Q3FY18 EPS Guidance Range Reconciliation          
GAAP to Non-GAAP Reconciliation (net of tax)          
 Low  High       
GAAP EPS   0.18     0.22        
           
Stock based compensation expense   0.19     0.19        
Transaction, restructuring, and acquisition related expenses   0.01     0.01        
Amortization of acquired intangibles   0.10     0.10        
Non-GAAP EPS$  0.48  $  0.52        
           
Contact:

Sandy Harrison

Semtech Corporation

(805) 480-2004

webir@semtech.com

Primary Logo

Source: Semtech Corporation

News Provided by Acquire Media

Close window | Back to top