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Semtech Announces First Quarter of Fiscal Year 2017 Results


          
CAMARILLO, Calif., June 01, 2016 (GLOBE NEWSWIRE) -- Semtech Corporation (Nasdaq:SMTC), a leading supplier of analog and mixed-signal semiconductors, today reported unaudited financial results for its first quarter of fiscal year 2017, which ended May 1, 2016.  

Net sales for the first quarter of fiscal year 2017 were $131.1 million, up 11 percent from the fourth quarter of fiscal year 2016 and up 1 percent from the first quarter of fiscal year 2016.

Gross margin, computed in accordance with U.S. generally accepted accounting principles (GAAP), for the first quarter of fiscal year 2017 was 59.9 percent compared to 58.6 percent in the fourth quarter of fiscal year 2016 and 60.3 percent in the first quarter of fiscal year 2016. 

GAAP net income for the first quarter of fiscal year 2017 was $6.9 million, or $0.11 per diluted share.  This compares to GAAP net income of $1.2 million or $0.02 per diluted share in the fourth quarter of fiscal year 2016, and GAAP net loss of $0.01 million or $0.00 per diluted share in the first quarter of fiscal year 2016. 

GAAP operating results for the fourth quarter of fiscal 2016 reflected an after-tax benefit of $1.8 million as a result of the fair value re-measurement of the Triune Systems earn-out liability.   

To facilitate the 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 gross margin, net income and earnings per diluted share exclude certain items as described below under "Non-GAAP Financial Measures."

Excluding such items, non-GAAP net income for the first quarter of fiscal year 2017 was $19.5 million or $0.30 per diluted share.  Non-GAAP net income was $10.8 million or $0.17 per diluted share in the fourth quarter of fiscal year 2016, and was $17.9 million or $0.27 per diluted share in the first quarter of fiscal year 2016.

Non-GAAP gross margin for the first quarter of fiscal year 2017 was 60.2 percent.  Non-GAAP gross margin for the fourth quarter of fiscal year 2016 was 59.0 percent and 60.8 percent in the first quarter of fiscal year 2016.  

As of the end of the first quarter of fiscal year 2017, the Company had $216.0 million in cash, cash equivalents and marketable securities compared to $211.8 million in cash, cash equivalents and marketable securities at the end of fiscal year 2016.

Mohan Maheswaran, Semtech's President and Chief Executive Officer, stated, "We were pleased to deliver Q1 fiscal 2017 results that were at the upper-end of our guidance for the second consecutive quarter.  We believe strong broad-based bookings during the quarter and the higher backlog entering Q2 ensure a strong start to fiscal year 2017.  Our focus on high growth markets while striving to achieve end-market balance should help the Company to outperform the industry this year, as we continue toward our goal to achieve $1 billion in revenue."

Second Quarter of Fiscal Year 2017 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 margin, net income and earnings per diluted share and free cash flow.  The Company's measure of free cash flow excludes capital expenditures.  The Company's non-GAAP measures of gross margin, net income and earnings per diluted share may exclude the following items, if any:

To provide additional insight into the Company's second quarter outlook, this release also includes a presentation of forward-looking non-GAAP measures including 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 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 litigation expenses or dispute settlement charges or gains (which may include estimated losses for which we 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; and certain acquisition-related adjustments or expenses may be deemed recurring given the Company's regular evaluation of potential transactions and investments.

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 quarter of fiscal year 2017 and the fourth and first quarters of fiscal year 2016 along with a reconciliation of forward-looking earnings per diluted share to its most comparable GAAP measure for the second quarter of fiscal year 2017.  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, future operational performance, including the second quarter of fiscal year 2017 outlook and future goal of $1 billion in revenue, 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 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, 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 revenues 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 31, 2016, 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 analog and mixed-signal semiconductors 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, and the Semtech logo are registered marks of Semtech Corporation or its subsidiaries.


SEMTECH CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Table in thousands - except per share amount)
        
  Three Months Ended 
  May 1, January 31, April 26, 
   2016   2016   2015   
  Q1 2017 Q4 2016 Q1 2016 
  (Unaudited)   (Unaudited) 
        
Net sales $  131,145   $  118,609    $  130,088   
Cost of sales  52,621     49,059     51,688  
Gross profit  78,524      69,550      78,400   
Operating costs and expenses:       
Selling, general and administrative   33,715     33,769     37,513  
Product development and engineering  25,172     28,965     29,678  
Intangible amortization and impairments  6,403     6,411      6,163  
Changes in the fair value of contingent earn-out obligations    (33)    (2,744)    162  
Total operating costs and expenses  65,257     66,401     73,516  
Operating income (loss)    13,267      3,149      4,884   
Interest expense  (1,930)    (2,121)    (1,834) 
Interest income and other (expense), net  (45)    (648)    (493) 
Income before taxes     11,292      380      2,557   
Provision (benefit) for taxes    4,405     (868)    2,699  
Net (loss) income  $  6,887   $  1,248   $   (142) 
        
Earnings  per share:       
Basic $  0.11  $  0.02  $  (0.00)  
Diluted $  0.11  $  0.02  $  (0.00) 
        
Weighted average number of shares used in computing earnings per share:       
Basic  65,144   64,934   66,713  
Diluted  65,552   65,225   66,713  
        
        
        
        
SEMTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(Table in thousands)
        
  May 1, January 31,   
   2016   2016    
  (Unaudited)     
ASSETS       
Current assets:       
  Cash and cash equivalents $  216,029  $  211,810    
  Accounts receivable, net    49,178     44,132    
  Inventories    62,534      63,875    
  Prepaid taxes    5,487     5,236    
  Other current assets    16,739     16,168    
    Total current assets    349,967     341,221    
        
Property, plant and equipment, net    97,735      101,006    
Deferred income taxes    7,355     7,354    
Goodwill    329,703     329,703    
Other intangible assets, net    82,014      88,430    
Other assets    57,974     43,803    
    Total assets $  924,748   $  911,517     
        
LIABILITIES AND STOCKHOLDERS' EQUITY       
Current liabilities:       
  Accounts payable $  38,149  $  35,486    
  Accrued liabilities    36,613     41,204    
  Deferred revenue    8,761     8,628    
  Current portion - long term debt    18,120     18,569    
    Total current liabilities    101,643     103,887    
        
Deferred tax liabilities - non-current    11,064     6,802    
Long term debt - less current    234,132     239,177    
Other long-term liabilities    37,948     33,600    
Stockholders' equity    539,961     528,051    
    Total liabilities & stockholders' equity  $  924,748   $  911,517      
        
        
        
        
        
SEMTECH CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Table in thousands)
        
  Three Months Ended   
  May 1, April 26,   
   2016   2015    
  (Unaudited) (Unaudited)   
        
Net (loss) income $  6,887   $  (142)   
        
Net cash provided by operating activities    13,801     14,697    
Net cash used in investing activities    (2,713)    (42,003)   
Net cash used in financing activities    (6,869)    8,482    
Net increase (decrease) in cash and cash equivalents    4,219     (18,824)   
Cash and cash equivalents at beginning of period    211,810     230,328    
Cash and cash equivalents at end of period $   216,029   $  211,504     
        
        
        
        
        
SEMTECH CORPORATION
SUPPLEMENTAL INFORMATION - NOTES TO CONSOLIDATED GAAP STATEMENTS OF INCOME
(Tables in thousands - except per share amounts)
        
  Three Months Ended 
  May 1, January 31, April 26 , 
   2016   2016   2015  
Stock-based Compensation Expense Q1 2017 Q4 2016 Q1 2016 
  (Unaudited)   (Unaudited) 
Cost of sales $  377  $  484  $  475  
Selling, general and administrative     3,853     4,048   3,214  
Product development and engineering    1,477     2,538   2,257  
Total stock-based compensation expense $  5,707  $  7,070   $  5,946  
        
        
  Three Months Ended 
  May 1, January 31, April 26, 
   2016   2016   2015  
Gross Profit - Reconciliation GAAP to Non-GAAP Q1 2017 Q4 2016 Q1 2016 
  (Unaudited)    (Unaudited) 
        
GAAP gross profit $  78,524   $   69,550   $  78,400   
Adjustments to GAAP gross profit:       
  Stock-based compensation expense    377     484     475  
  Acquisition related fair value adjustments    -      -     265  
Non-GAAP gross profit $  78,901   $  70,034   $  79,140   
        
        
  Three Months Ended 
  May 1, January 31, April 26, 
   2016   2016   2015  
Net Income - Reconciliation GAAP to Non-GAAP Q1 2017 Q4 2016 Q1 2016 
  (Unaudited)   (Unaudited) 
        
GAAP net income $  6,887   $  1,248   $  (142) 
        
  Adjustments to GAAP net income:       
  Stock-based compensation expense $  5,707  $  7,070   $  5,946  
  Transaction and integration related expenses    949     1,212     3,588  
  Acquisition related earn-out - compensation    1,326      819     -  
  Acquisition related earn-out - non-compensation    (33)    (2,744)    162  
  Intangible amortization and impairments    6,403      6,567     6,163  
  Environmental and other reserves    1,000     -     2,335  
  Gain on litigation settlement    (1,725)    -     -   
        
  Total before tax adjustment    13,627     12,924     18,194  
  Associated tax effect    (999)    (3,372)    (124) 
  Total of supplemental information net of taxes     12,628     9,552   18,070  
Non-GAAP net (loss) income $  19,515   $  10,800   $  17,928   
        
Diluted GAAP earnings per share $  0.11  $  0.02  $  0.00  
  Adjustments per above    0.19     0.15     0.27  
Diluted non-GAAP earnings per share $  0.30  $  0.17  $  0.27  
        
        
  Three Months Ended 
  May 1, January 31, April 26, 
   2016   2016   2015  
Tax Impact Associated With Supplemental Information Q1 2017 Q4 2016 Q1 2016 
  (Unaudited)   (Unaudited) 
  Adjustments to GAAP net income:       
  Stock-based compensation expense $  1,429  $   1,607  $  1,760  
  Transaction and integration related expenses    247     352     853  
  Acquisition related earn-out - compensation    138     264      -  
  Acquisition related earn-out - non-compensation    (11)    (898)    54  
  Intangible amortization and impairments    1,710     1,751     1,589  
  Valuation allowance against deferred tax assets    (2,232)    296     (4,867) 
  Environmental and other reserves    328     -     735  
  Gain on litigation settlement    (610)    -     -  
  Total of associated tax effect  $  999  $  3,372  $  124  
        
        
  Three Months Ended 
   May 1, January 31, April 26, 
   2016   2016   2015  
  Q1 2017 Q4 2016 Q1 2016 
  (Unaudited)    (Unaudited) 
Free Cash Flow:       
Cash Flow from Operations $  13,801  $  34,460  $  14,697  
Net Capital Expenditure  (2,713)  (2,321)  (4,841) 
Free Cash Flow: $  11,088    $  32,139   $  9,856   
        
        
Q2FY17 EPS Guidance Range Reconciliation       
GAAP to Non-GAAP Reconciliation (net of tax)       
  Low  High   
GAAP EPS    0.12     0.17    
        
Stock based compensation expense    0.08     0.08    
Transaction, restructuring, and acquisition related expenses    0.01     0.01    
Amortization of acquired intangibles     0.09     0.10    
Non-GAAP EPS $  0.30  $  0.36     
        

 

 

Contact:

Sandy Harrison

Semtech Corporation

(805) 480-2004

webir@semtech.com

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Source: Semtech Corporation

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