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Semtech Announces Second Quarter of Fiscal Year 2012 Results and Expansion of Stock Repurchase Plan


CAMARILLO, Calif.--(BUSINESS WIRE)-- Semtech Corp. (Nasdaq: SMTC), a leading supplier of analog and mixed-signal semiconductors, today reported unaudited financial results for its second quarter of fiscal year 2012, which ended July 31, 2011. The company also announced that its Board of Directors approved increasing the existing stock repurchase authorization by $36 million. Prior to the increase, the company had $14 million remaining in the authorization implemented in March 2008.

Net revenue for the second quarter of fiscal year 2012 was $130.3 million, up 15.0 percent from the second quarter of fiscal year 2011 and up 6.4 percent from the first quarter of fiscal year 2012.

Net income for the second quarter of fiscal year 2012, computed in accordance with U.S. generally accepted accounting principles (GAAP), was $27.1 million or 40 cents per diluted share. This compares to GAAP net income of $19.7 million or 31 cents per diluted share in the second quarter of fiscal year 2011 and GAAP net income of $22.6 million or 34 cents per diluted share in the first quarter of fiscal year 2012.

GAAP gross profit margin for the second quarter of fiscal year 2012 was 60.4 percent compared to 59.6 percent in the second quarter of fiscal year 2011 and 60.4 percent in the first quarter of fiscal year 2012.

To facilitate the complete understanding of comparable financial performance between periods, Semtech also presents performance results net of certain non-cash and one-time items. Semtech's non-GAAP results exclude the following items:

Excluding the items listed above, non-GAAP net income for the second quarter of fiscal year 2012 was $33.2 million or 49 cents per diluted share. Non-GAAP net income was $26.7 million or 42 cents per diluted share in the second quarter of fiscal year 2011 and was $30.0 million or 45 cents per diluted share in the first quarter of fiscal year 2012.

Non-GAAP gross profit margin for the second quarter of fiscal year 2012 was 60.6 percent. Non-GAAP gross profit margin for the second quarter of fiscal year 2011 was 60.1 percent and 60.6 percent in the first quarter of fiscal year 2012.

Semtech had $313.6 million of cash, cash equivalents and marketable securities as of July 31, 2011, up from $276.3 million at the end of the first quarter of fiscal year 2012.

Mohan Maheswaran, Semtech's President and Chief Executive Officer, stated, "The second quarter of fiscal year 2012 was another record quarter for Semtech. Our strong top-line growth enabled us to deliver record profits to our shareholders and grow our cash and investments balance by $37 million. We believe the ongoing global demand for increased bandwidth, smaller electronic devices and ‘greener' technology will drive growth in the high-performance analog sector for many years and that Semtech is well-positioned to capitalize on these long-term trends."

The results announced today are preliminary, as they are subject to customary quarterly review procedures by the Company's independent registered public accounting firm. As such, these results are subject to revision until the Company will have filed its quarterly report on Form 10-Q for the second quarter of fiscal year 2012.

Third Quarter of Fiscal Year 2012 Outlook

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 gross profit, net income and earnings per diluted share. To provide additional insight into the Company's third quarter outlook, this release includes a presentation of forward-looking non-GAAP earnings per diluted share. All of these non-GAAP measures exclude stock-based compensation, amortization of acquired intangible assets, restructuring charges and the other items detailed above. These non-GAAP 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 such items in managing and evaluating the performance of the business. A further discussion of these non-GAAP financial measures can be found above. Reconciliations of GAAP results for the second quarter of fiscal years 2012 and 2011 and the first quarter of fiscal year 2012, as well as a reconciliation of forward-looking earnings per diluted share for the third quarter of fiscal year 2012, appear with the financial statements included with this release. These additional 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 report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than historical information or statements of current condition and relate to matters such as future financial performance, future operational performance, the anticipated impact of specific items on future earnings, and our plans, objectives and expectations. These forward-looking statements are identified by the use of such terms and phrases as "intends," "goal," "estimate, "expect," "project," "plans," "anticipates," "should," "will," "designed to," "believe," and other similar expressions which generally identify 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. Important factors that could cause actual results to differ materially include, but are not limited to: 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, demand for increasing energy efficiency in the Company's products or end use applications of the products, demand for increasing miniaturization of electronic components; shifts in demand among target customers, and other comparable changes in projected or anticipated markets; adequate supply of components and materials from our suppliers, and of our products from our third-party manufacturers; the Company's ability to forecast and achieve anticipated revenues and earnings estimates in light of periodic economic uncertainty; the Company's ability to manage expenses to achieve anticipated amounts; and the amount and timing of expenditures for capital equipment deemed necessary or advisable by the Company. Additionally, forward-looking statements should be considered in conjunction with the cautionary statements contained in the "Risk Factors" section and elsewhere in the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2011, in the Company's other filings with the SEC, and in material incorporated therein by reference. In light of the significant uncertainties inherent in the forward-looking information included herein, any such forward-looking information should not be regarded as representations by the Company that its objectives or plans will be achieved or that any of its operating expectations or financial forecasts will be realized. Investors are cautioned not to place undue reliance on any forward-looking information contained herein. The Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Semtech

Semtech Corporation is a leading supplier of analog and mixed-signal semiconductors for high-end consumer, 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 and the Semtech logo are marks of Semtech Corporation.

 
SEMTECH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Table in thousands - except per share amount)
 
  Three Months Ended   Six Months Ended
July 31,   May 1,   Aug 1, July 31,   Aug 1,
2011 2011 2010 2011 2010
Q2 2012 Q1 2012 Q2 2011 FY 2012 FY 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
Net sales $ 130,254 $ 122,371 $ 113,227 $ 252,625 $ 215,107
Cost of sales   51,534     48,517     45,795   100,051     90,628
Gross profit 78,720 73,854 67,432 152,574 124,479
Operating costs and expenses:
Selling, general and administrative 22,481 26,705 24,915 49,186 51,266
Product development and engineering 22,228 18,525 17,404 40,753 32,707
Amortization of acquired intangible assets   2,103     2,102     2,405   4,205     4,810
Total operating costs and expenses   46,812     47,332     44,724   94,144     88,783
Operating income 31,908 26,522 22,708 58,430 35,696
Interest and other income, net   (117 )   (440 )   308   (557 )   505
Income before taxes 31,791 26,082 23,016 57,873 36,201
Provision for taxes   4,653     3,500     3,354   8,153     5,737
Net income $ 27,138   $ 22,582   $ 19,662 $ 49,720   $ 30,464
 
Earnings per share:
Basic $ 0.41 $ 0.35 $ 0.32 $ 0.76 $ 0.49
Diluted $ 0.40 $ 0.34 $ 0.31 $ 0.74 $ 0.48
 
Weighted average number of shares:
Basic 65,547 64,552 61,933 65,050 61,679
Diluted 68,186 67,123 63,552 67,638 63,264
 

 
SEMTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(Table in thousands)
 
  July 31,   Jan 30,
2011 2011
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 140,589 $ 119,019
Temporary investments 141,937 112,237
Receivables, less allowances 51,303 50,610
Inventories 49,203 47,719
Deferred income taxes 13,369 13,369
Other current assets   10,527   10,744
Total current assets 406,928 353,698
 
Property, plant and equipment, net 68,096 56,778
Long-term investments 31,082 27,086
Goodwill 129,651 129,651
Other intangible assets, net 70,618 74,823
Other assets   23,514   17,907
Total assets $ 729,889 $ 659,943
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,088 $ 29,629
Accrued liabilities 20,838 48,723
Income taxes payable 2,274 2,928
Deferred revenue 5,702 5,020
Accrued taxes 4,191 4,191
Deferred income taxes   3,334   3,334
Total current liabilities 70,427 93,825
 
Deferred income taxes - non-current 15,262 11,120
Accrued taxes 10,548 10,548
Other long-term liabilities 15,521 15,835
 
Shareholders' equity   618,131   528,615
Total liabilities & shareholders' equity $ 729,889 $ 659,943
 

 
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 31,   May 1,   Aug 1, July 31,   Aug 1,
2011 2011 2010 2011 2010
Stock-based Compensation Expense Q2 2012 Q1 2012 Q2 2011 FY 2012 FY 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
Cost of sales $ 195 $ 279 $ 646 $ 474 $ 1,172
Selling, general and administrative 2,666 5,618 4,702 8,284 10,306
Product development and engineering   1,760     1,590     1,858     3,350     4,028  
Total stock-based compensation expense $ 4,621   $ 7,487   $ 7,206   $ 12,108   $ 15,506  
 
 
Three Months Ended Six Months Ended
July 31, May 1, Aug 1, July 31, Aug 1,
2011 2011 2010 2011 2010
Gross Profit - Reconciliation GAAP to Non-GAAP Q2 2012 Q1 2012 Q2 2011 FY 2012 FY 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
GAAP gross profit $ 78,720 $ 73,854 $ 67,432 $ 152,574 $ 124,479
Adjustments to GAAP gross profit:
Stock-based compensation expense 195 279 646 474 1,172
Fair value adjustment related to acquired inventory   -     -     -     -     2,311  
Non-GAAP gross profit $ 78,915   $ 74,133   $ 68,078   $ 153,048   $ 127,962  
 
 
Three Months Ended Six Months Ended
July 31, May 1, Aug 1, July 31, Aug 1,
2011 2011 2010 2011 2010
Net Income - Reconciliation GAAP to Non-GAAP Q2 2012 Q1 2012 Q2 2011 FY 2012 FY 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
GAAP net income $ 27,138 $ 22,582 $ 19,662 $ 49,720 $ 30,464
 
Adjustments to GAAP net income:
Stock-based compensation expense 4,621 7,487 7,206 12,108 15,506
Legal expenses related to stock option matters 55 132 1,065 187 2,688
Fair value adjustment related to acquired inventory - - - - 2,311
Amortization of acquired intangible assets   2,103     2,102     2,405     4,205     4,810  
Total before taxes 6,779 9,721 10,676 16,500 25,315
Associated tax effect   (703 )   (2,339 )   (3,613 )   (3,042 )   (7,007 )
Total of supplemental information net of taxes   6,076     7,382     7,063     13,458     18,308  
Non-GAAP net income $ 33,214   $ 29,964   $ 26,725   $ 63,178   $ 48,772  
 
Diluted GAAP earnings per share $ 0.40 $ 0.34 $ 0.31 $ 0.74 $ 0.48
Adjustments per above   0.09     0.11     0.11     0.19     0.29  
Diluted non-GAAP earnings per share $ 0.49   $ 0.45   $ 0.42   $ 0.93   $ 0.77  
 
 
Three Months Ended Six Months Ended
July 31, May 1, Aug 1, July 31, Aug 1,
2011 2011 2010 2011 2010
Tax Impact Associated With Supplemental Information Q2 2012 Q1 2012 Q2 2011 FY 2012 FY 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Adjustments to GAAP net income:
Stock-based compensation expense $ 150 $ 1,808 $ 2,703 $ 1,958 $ 3,738
Legal expenses related to stock option matters 23 44 263 67 880
Fair value adjustment related to acquired inventory - - - - 878
Amortization of acquired intangible assets   530     487     647     1,017     1,511  
Total of associated tax effect $ 703   $ 2,339   $ 3,613   $ 3,042   $ 7,007  
 
Q3 FY12 Earnings Per Share Guidance
GAAP to Non-GAAP Reconciliation (net of tax)
Low High
GAAP EPS 0.34 0.38
 
Stock based compensation expense 0.07 0.07
Restructuring 0.01 0.01
Amortization of acquired intangibles   0.03     0.03  
Non-GAAP EPS $ 0.45   $ 0.49  
 

Semtech Corporation
Linda Brewton, 805-480-2004
webir@semtech.com

Source: Semtech Corp.

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