0000088941-22-000005 8-K 14 20220316 2.02 7.01 9.01 20220316 20220316 SEMTECH CORP 0000088941 3674 952119684 DE 0130 8-K 34 001-06395 22745142 200 FLYNN ROAD CAMARILLO CA 93012-8790 8054982111 200 FLYNN ROAD CAMARILLO CA 93012-8790 8-K 1 smtc-20220316.htm 8-K false000008894100000889412022-03-162022-03-16 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 16, 2022 SEMTECH CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 001-06395 95-2119684 (Commission File Number) (IRS Employer Identification No.) 200 Flynn Road Camarillo, California 93012-8790 (Address of principal executive offices) (Zip Code) 805-498-2111 (Registrant’s telephone number, including area code) Not applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ? Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ? Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ? Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ? Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Exchange Act: Name of each exchange on which Title of each class Trading Symbol(s) registered Common Stock, par value $0.01 per share SMTC The Nasdaq Global Select Market Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ? If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ? -------------------------------------------------------------------------------- Item 2.02 Results of Operations and Financial Condition. On March 16, 2022, the Registrant issued a press release announcing its financial results for the fourth quarter and fiscal year 2022, which ended January 30, 2022. A copy of the press release is attached hereto as Exhibit 99.1. Item 7.01 Regulation FD Disclosure. On March 16, 2022, the Registrant issued a press release containing forward looking statements, including with respect to its future performance and financial results. A copy of the press release is attached hereto as Exhibit 99.1. Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit 99.1 Press Release of the Registrant dated March 16, 2022. (This Exhibit 99.1 is being furnished and shall not be deemed "filed.") Exhibit 104 The Cover Page from this Current Report on Form 8-K formatted in Inline XBRL (included as Exhibit 101) The information contained in Item 2.02, Item 7.01 and Exhibit 99.1 of this Current Report on Form 8-K hereto is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Item 2.02, Item 7.01 and Exhibit 99.1 hereto shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference to Item 2.02, Item 7.01 and Exhibit 99.1, as applicable in such filing. -------------------------------------------------------------------------------- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SEMTECH CORPORATION Date: March 16, 2022 /s/ Emeka N. Chukwu Name: Emeka N. Chukwu Title: Chief Financial Officer EX-99.1 2 smtc-01302022x8k991.htm EX-99.1 Exhibit 99.1 [[Image Removed: logoa03.gif]] FOR IMMEDIATE RELEASE Contact: Emeka Chukwu Semtech Corporation (805) 480-2004 webir@semtech.com Semtech Announces Fourth Quarter and Fiscal Year 2022 Results CAMARILLO, Calif., March 16, 2022—Semtech Corporation (Nasdaq: SMTC), a leading global supplier of high-performance analog and mixed-signal semiconductors and advanced algorithms, today reported unaudited financial results for its fourth quarter and fiscal year 2022, which ended January 30, 2022. Highlights for the Fourth Quarter of Fiscal Year 2022 •Net sales of $190.6 million, GAAP diluted EPS of $0.53 and non-GAAP diluted EPS of $0.70 •Record GAAP and non-GAAP gross margins grew 310bps and 300bps, respectively, year-over-year •Operating cash flow of $51.0 million or 26.8% of net sales •Record LoRa-enabled net sales of $41.7 million •Record distributor sell-through Highlights for Fiscal Year 2022 •Record net sales of $740.9 million, record GAAP diluted EPS of $1.92 and record non-GAAP diluted EPS of $2.61 •Record GAAP and non-GAAP gross margins each grew 180bps year-over-year •Record operating cash flow of $203.1 million or 27.4% of net sales •Record Wireless and Sensing products group net sales up 38.7% driven by $134.1 million of LoRa-enabled net sales, which grew 52.6% •Record Signal Integrity products group net sales up 13.9% driven by 10G PON •Protection products group net sales grew 25.7% driven by record Industrial and Automotive products •Repurchased 1.8 million shares for $129.7 million - more - -------------------------------------------------------------------------------- 2 Semtech Announces Fourth Quarter and Fiscal Year 2022 Results Results on a GAAP basis for the Fourth Quarter and Fiscal Year 2022 ($ in millions, except for diluted earnings per share data) Q4 FY2022 FY2022 Net Sales $ 190.6 $ 740.9 GAAP Gross Margin 64.1 % 62.9 % GAAP SG&A Expense $ 39.8 $ 168.2 GAAP R&D Expense $ 38.3 $ 147.9 GAAP Operating Expense $ 79.1 $ 321.1 GAAP Operating Margin 22.5 % 19.6 % GAAP Net Income Attributable To Common Stockholders $ 34.8 $ 125.7 GAAP Diluted Earnings Per Share $ 0.53 $ 1.92 To facilitate a complete understanding of comparable financial performance between periods, the Company also presents performance results that exclude certain non-cash items and items that are not considered reflective of the Company’s core results over time. These non-GAAP financial measures exclude certain items and are described below under “Non-GAAP Financial Measures.” Results on a Non-GAAP basis for the Fourth Quarter and Fiscal Year 2022 (see the list of non-GAAP financial measures and the reconciliation of these measures to the most comparable GAAP measures set forth in the tables below under "Supplemental Information: Reconciliation of GAAP to Non-GAAP Results") ($ in millions, except for diluted earnings per share data) Q4 FY2022 FY2022 Non-GAAP Gross Margin 64.5 % 63.3 % Non-GAAP SG&A Expense $ 34.2 $ 133.6 Non-GAAP R&D Expense $ 34.5 $ 132.5 Non-GAAP Operating Expense $ 68.7 $ 266.2 Non-GAAP Operating Margin 28.5 % 27.4 % Non-GAAP Net Income Attributable To Common Stockholders $ 45.7 $ 171.2 Non-GAAP Diluted Earnings Per Share $ 0.70 $ 2.61 Mohan Maheswaran, Semtech’s President and Chief Executive Officer, stated, “Our focus on enabling a smarter, more sustainable planet, with investments in disruptive technologies that allow our customers to deliver low-power solutions for remote sensing and analytics for the Internet of Things ("IoT"), bandwidth expansion and reduction of electronic waste, drove record financial performance in fiscal year 2022. We believe these secular growth drivers will be the foundation for multi-year revenue growth for the Company." -------------------------------------------------------------------------------- 3 Semtech Announces Fourth Quarter and Fiscal Year 2022 Results First Quarter of Fiscal Year 2023 Outlook Both the GAAP and non-GAAP first quarter of fiscal year 2023 outlook below take into account, based on the Company's current estimates, the uncertain, but potential negative impact to the Company of the current supply chain constraints and any associated disruptions and the ongoing COVID-19 pandemic on global economic conditions and on the Company's business operations, net sales and operating results, as well as export restrictions pertaining to Huawei and certain of its affiliates and other entities identified by the U.S. government. The Company is unable to predict the full impact such challenges may have on its future results of operations. GAAP First Quarter of Fiscal Year 2023 Outlook •Net sales are expected to be in the range of $195.0 million to $205.0 million •GAAP Gross margin is expected to be in the range of 63.8% to 64.8% •GAAP SG&A expense is expected to be in the range of $43.2 million to $44.2 million •GAAP R&D expense is expected to be in the range of $39.0 million to $40.0 million •GAAP Intangible amortization expense is expected to be approximately $1.0 million •GAAP Interest and other expense, net is expected to be approximately $1.5 million •GAAP Effective tax rate is expected to be in the range of 17% to 19% •GAAP Diluted earnings per share is expected to be in the range of $0.50 to $0.58 •Fully-diluted share count is expected to be approximately 65.3 million shares •Share-based compensation is expected to be approximately $12.0 million, categorized as follows: $0.8 million cost of sales, $6.7 million SG&A, and $4.5 million R&D •Capital expenditures are expected to be approximately $10.0 million •Depreciation expense is expected to be approximately $6.4 million Non-GAAP First Quarter of Fiscal Year 2023 Outlook (see the list of non-GAAP financial measures and the reconciliation of these measures to the most comparable GAAP measures set forth in the tables below under "Reconciliation of GAAP to Non-GAAP Outlook") •Non-GAAP Gross margin is expected to be in the range of 64.2% to 65.2% •Non-GAAP SG&A expense is expected to be in the range of $36.0 million to $37.0 million •Non-GAAP R&D expense is expected to be in the range of $34.5 million to $35.5 million •Non-GAAP normalized tax rate for FY2023 is expected to be approximately 12% •Non-GAAP Diluted earnings per share is expected to be in the range of $0.72 to $0.80 -------------------------------------------------------------------------------- 4 Semtech Announces Fourth Quarter and Fiscal Year 2022 Results Webcast and Conference Call Semtech will be hosting a conference call today to discuss its fourth quarter and fiscal year 2022 results at 2:00 p.m. Pacific time. An audio webcast will be available on Semtech’s website at www.semtech.com in the “Investor Relations” section under “Investor News.” A replay of the call will be available through April 13, 2022 at the same website or by calling (877) 660-6853 and entering conference ID 13716895. Non-GAAP Financial Measures To supplement the Company's consolidated financial statements prepared in accordance with GAAP, this release includes a presentation of select non-GAAP financial measures. The Company’s non-GAAP measures of gross margin, SG&A expense, R&D expense, operating expense, operating margin, net income attributable to common stockholders, diluted earnings per share and normalized tax rate exclude the following items, if any: •Share-based compensation •Amortization of purchased intangibles, impairments and credit loss reserves •Restructuring, transaction and other acquisition or disposition-related gains or losses •Litigation expenses or dispute settlement charges or gains •Cumulative other reserves associated with historical activity including environmental and pension •Equity in net gains or losses of equity method investments •Loss on early extinguishment of debt •Interest income from debt investments •Changes in the fair value of contingent earn-out obligations To provide additional insight into the Company's first quarter outlook, this release also includes a presentation of forward-looking non-GAAP financial measures. Management believes that the presentation of these non-GAAP measures provides useful information to investors regarding the Company’s financial condition and results of operations. These non-GAAP financial measures are adjusted to exclude the items identified above because such items are either operating expenses that 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 -------------------------------------------------------------------------------- 5 Semtech Announces Fourth Quarter and Fiscal Year 2022 Results 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 the Company 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 financial measures to their most comparable GAAP measures for the fourth quarter of fiscal year 2021, the third and fourth quarters of fiscal year 2022, and the full-year fiscal 2022 and fiscal 2021 periods, along with a reconciliation of forward-looking non-GAAP measures (other than the non-GAAP normalized tax rate) to their most comparable GAAP measures for the first quarter of fiscal year 2023. Beginning with fiscal year 2022, 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 2022, the Company’s projected non-GAAP normalized tax rate was 13% and was applied to each quarter of fiscal year 2022. For fiscal year 2023, the Company’s projected non-GAAP normalized tax rate is 12% and will be applied to each quarter of fiscal year 2023. 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 -------------------------------------------------------------------------------- 6 Semtech Announces Fourth Quarter and Fiscal Year 2022 Results legislation, acquisitions, entity structures or operational changes and other significant events. The Company is unable to include a reconciliation of the forward-looking measure of the non-GAAP normalized tax rate to the corresponding GAAP measure as this is not available without unreasonable efforts due to the high variability and low visibility with respect to the impact of share-based awards and the amortization of acquisition-related intangible assets that are excluded from this non-GAAP measure. The Company expects the variability of the above charges to have a potentially significant impact on its 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 first quarter of fiscal year 2023 outlook and our expectations for growth and strong financial results in fiscal year 2023; the potential for a negative impact associated with the current supply chain constraints and any associated disruptions; the potential for a negative impact of the COVID-19 pandemic on global economic conditions and on the Company's business operations, net sales and operating results; the Company’s expectations concerning the negative impact on the Company’s results of operations from its inability to ship certain products and provide certain support services due to the export restrictions including export restrictions with respect to Huawei and certain of its affiliates and other entities identified by the U.S. government; 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 uncertainty surrounding the impact and duration of supply chain constraints and any associated disruptions; the uncertainty surrounding the impact and duration of the COVID-19 pandemic; export restrictions and laws affecting the Company's trade and investments including with respect to Huawei and -------------------------------------------------------------------------------- 7 Semtech Announces Fourth Quarter and Fiscal Year 2022 Results certain of its affiliates and other entities identified by the U.S. government, and tariffs or the occurrence of trade wars; worldwide economic and political disruptions as a result of the current conflict between Russia and Ukraine; 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, including impacts arising from Asian, European and global economic dynamics. 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 30, 2022, which the Company expects to file with the SEC on March 16, 2022, 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 is a leading global supplier of high performance analog, mixed-signal semiconductors and advanced algorithms for infrastructure, high-end consumer, and industrial end markets. 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 -------------------------------------------------------------------------------- 8 Semtech Announces Fourth Quarter and Fiscal Year 2022 Results 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 service marks, and Tri-Edge is a trademark or service mark, 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 Twelve Months Ended January 30, October 31, January 31, January 30, January 31, 2022 2021 2021 2022 2021 Q422 Q322 Q421 Q422 Q421 Net sales $ 190,550 $ 194,932 $ 164,673 $ 740,858 $ 595,117 Cost of sales 68,451 71,243 64,197 274,777 231,568 Gross profit 122,099 123,689 100,476 466,081 363,549 Operating costs and expenses: Selling, general and administrative 39,808 47,621 47,086 168,210 162,832 Product development and engineering 38,292 37,346 32,833 147,925 117,529 Intangible amortization 1,048 1,298 1,607 4,942 8,265 Changes in the fair value of contingent earn-out obligations (13) — — (13) (33) Total operating costs and expenses 79,135 86,265 81,526 321,064 288,593 Operating income 42,964 37,424 18,950 145,017 74,956 Interest expense (1,474) (1,233) (1,517) (5,091) (5,336) Non-operating income, net 68 105 113 480 124 Investment impairments and credit loss reserves (407) (216) (1,319) (1,337) (6,769) Income before taxes and equity in net gains of equity method investments 41,151 36,080 16,227 139,069 62,975 Provision for taxes 6,360 3,018 914 15,539 3,437 Net income before equity in net gains of equity method investments 34,791 33,062 15,313 123,530 59,538 Equity in net gains of equity method investments — 1,363 318 2,115 329 Net income 34,791 34,425 15,631 125,645 59,867 Net loss attributable to noncontrolling interest (13) (2) (25) (19) (36) Net income attributable to common stockholders $ 34,804 $ 34,427 $ 15,656 $ 125,664 $ 59,903 Earnings per share: Basic $ 0.54 $ 0.53 $ 0.24 $ 1.94 $ 0.92 Diluted $ 0.53 $ 0.53 $ 0.24 $ 1.92 $ 0.91 Weighted average number of shares used in computing earnings per share: Basic 64,289 64,546 65,035 64,662 65,208 Diluted 65,235 65,299 66,085 65,565 66,059 -------------------------------------------------------------------------------- SEMTECH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) January 30, 2022 January 31, 2021 ASSETS Current assets: Cash and cash equivalents $ 279,601 $ 268,891 Accounts receivable, net 71,507 70,433 Inventories 114,003 87,494 Prepaid taxes 5,983 22,083 Other current assets 31,201 25,827 Total current assets 502,295 474,728 Non-current assets: Property, plant and equipment, net 134,940 130,934 Deferred tax assets 27,803 25,483 Goodwill 351,141 351,141 Other intangible assets, net 6,804 11,746 Other assets 107,928 88,070 Total assets $ 1,130,911 $ 1,082,102 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 50,695 $ 50,189 Accrued liabilities 77,704 59,384 Total current liabilities 128,399 109,573 Non-current liabilities: Deferred tax liabilities 1,132 976 Long term debt 171,676 179,195 Other long-term liabilities 91,929 93,405 Stockholders’ equity 737,584 698,743 Noncontrolling interest 191 210 Total liabilities & equity $ 1,130,911 $ 1,082,102 -------------------------------------------------------------------------------- SEMTECH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL INFORMATION (in thousands) (unaudited) Twelve Months Ended January 30, January 31, 2022 2021 Net income $ 125,645 $ 59,867 Net cash provided by operations 203,123 118,930 Net cash used in investing activities (40,316) (42,909) Net cash used in financing activities (152,097) (100,454) Net increase (decrease) in cash and cash equivalents 10,710 (24,433) Cash and cash equivalents at beginning of period 268,891 293,324 Cash and cash equivalents at end of period $ 279,601 $ 268,891 Three Months Ended January 30, October 31, January 31, 2022 2021 2021 Q422 Q322 Q421 Free Cash Flow: Cash Flow from Operations $ 50,986 $ 66,538 $ 27,254 Net Capital Expenditures (8,100) (5,349) (10,561) Free Cash Flow: $ 42,886 $ 61,189 $ 16,693 -------------------------------------------------------------------------------- SEMTECH CORPORATION SUPPLEMENTAL INFORMATION: RECONCILIATION OF GAAP TO NON-GAAP RESULTS (in thousands, except per share data) (unaudited) Three Months Ended Twelve Months Ended January 30, October 31, January 31, January 30, January 31, 2022 2021 2021 2022 2021 Q422 Q322 Q421 Q422 Q421 Gross Margin–GAAP 64.1 % 63.5 % 61.0 % 62.9 % 61.1 % Share-based compensation 0.4 % 0.3 % 0.5 % 0.4 % 0.4 % Adjusted Gross Margin (Non-GAAP) 64.5 % 63.8 % 61.5 % 63.3 % 61.5 % Three Months Ended Twelve Months Ended January 30, October 31, January 31, January 30, January 31, 2022 2021 2021 2022 2021 Q422 Q322 Q421 Q422 Q421 Selling, general and administrative–GAAP $ 39,808 $ 47,621 $ 47,086 $ 168,210 $ 162,832 Share-based compensation (5,593) (12,528) (12,136) (32,578) (37,000) Transaction and integration related costs, net (204) (460) (245) (588) (871) Restructuring and other reserves, net — — (926) (16) (1,428) Litigation recoveries (costs), net 152 (434) (454) (1,382) (1,263) Adjusted selling, general and administrative (Non-GAAP) $ 34,163 $ 34,199 $ 33,325 $ 133,646 $ 122,270 Three Months Ended Twelve Months Ended January 30, October 31, January 31, January 30, January 31, 2022 2021 2021 2022 2021 Q422 Q322 Q421 Q422 Q421 Product development and engineering–GAAP $ 38,292 $ 37,346 $ 32,833 $ 147,925 $ 117,529 Share-based compensation (4,110) (4,070) (3,980) (15,710) (13,485) Transaction and integration related recoveries, net 329 — — 329 87 Restructuring and other reserves, net — — 114 — 114 Adjusted product development and engineering (Non-GAAP) $ 34,511 $ 33,276 $ 28,967 $ 132,544 $ 104,245 Three Months Ended Twelve Months Ended January 30, October 31, January 31, January 30, January 31, 2022 2021 2021 2022 2021 Q422 Q322 Q421 Q422 Q421 Operating cost and expense–GAAP $ 79,135 $ 86,265 $ 81,526 $ 321,064 $ 288,593 Share-based compensation (9,703) (16,598) (16,116) (48,288) (50,485) Intangible amortization (1,048) (1,298) (1,607) (4,942) (8,265) Transaction and integration related recoveries (costs), net 125 (460) (245) (259) (784) Restructuring and other reserves, net — — (812) (16) (1,314) Litigation recoveries (costs), net 152 (434) (454) (1,382) (1,263) Changes in the fair value of contingent earn-out obligations 13 — — 13 33 Adjusted operating cost and expense (Non-GAAP) $ 68,674 $ 67,475 $ 62,292 $ 266,190 $ 226,515 -------------------------------------------------------------------------------- SEMTECH CORPORATION SUPPLEMENTAL INFORMATION: RECONCILIATION OF GAAP TO NON-GAAP RESULTS (CONTINUED) (in thousands, except per share data) (unaudited) Three Months Ended Twelve Months Ended January 30, October 31, January 31, January 30, January 31, 2022 2021 2021 2022 2021 Q422 Q322 Q421 Q422 Q421 Operating Margin–GAAP 22.5 % 19.2 % 11.5 % 19.6 % 12.6 % Share-based compensation 5.6 % 8.9 % 10.3 % 6.9 % 8.9 % Intangible amortization 0.6 % 0.7 % 1.0 % 0.7 % 1.4 % Transaction and integration related (recoveries) costs, net (0.1) % 0.2 % 0.1 % — % 0.1 % Restructuring and other reserves, net — % — % 0.5 % — % 0.2 % Litigation (recoveries) costs, net (0.1) % 0.2 % 0.3 % 0.2 % 0.2 % Adjusted Operating Margin (Non-GAAP) 28.5 % 29.2 % 23.7 % 27.4 % 23.4 % Three Months Ended Twelve Months Ended January 30, October 31, January 31, January 30, January 31, 2022 2021 2021 2022 2021 Q422 Q322 Q421 Q422 Q421 GAAP net income attributable to common stockholders $ 34,804 $ 34,427 $ 15,656 $ 125,664 $ 59,903 Adjustments to GAAP net income attributable to common stockholders: Share-based compensation 10,492 17,341 16,883 51,189 52,986 Intangible amortization 1,048 1,298 1,607 4,942 8,265 Transaction and integration related (recoveries) costs, net (125) 460 245 259 784 Restructuring and other reserves, net — — 812 16 1,314 Litigation (recoveries) costs, net (152) 434 454 1,382 1,263 Changes in the fair value of contingent earn-out obligations (13) — — (13) (33) Investment gains, losses, reserves and impairments 65 (96) 860 (71) 5,280 Total Non-GAAP adjustments before taxes 11,315 19,437 20,861 57,704 69,859 Associated tax effect (460) (4,199) (2,609) (10,040) (13,792) Equity in net gains of equity method investments — (1,363) (318) (2,115) (329) Total of supplemental information, net of taxes 10,855 13,875 17,934 45,549 55,738 Non-GAAP net income attributable to common stockholders $ 45,659 $ 48,302 $ 33,590 $ 171,213 $ 115,641 GAAP diluted earnings per share $ 0.53 $ 0.53 $ 0.24 $ 1.92 $ 0.91 Adjustments per above 0.17 0.21 0.27 0.69 0.84 Non-GAAP diluted earnings per share $ 0.70 $ 0.74 $ 0.51 $ 2.61 $ 1.75 -------------------------------------------------------------------------------- SEMTECH CORPORATION RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK First Quarter of Fiscal Year 2023 Outlook (in millions, except per share data) Q1 FY23 Outlook May 1, 2022 Low High Gross Margin–GAAP 63.8 % 64.8 % Share-based compensation 0.4 % 0.4 % Adjusted Gross Margin (Non-GAAP) 64.2 % 65.2 % Low High Selling, general and administrative–GAAP $ 43.2 $ 44.2 Share-based compensation (6.7) (6.7) Transaction and integration related (0.5) (0.5) Adjusted selling, general and administrative (Non-GAAP) $ 36.0 $ 37.0 Low High Product development and engineering–GAAP $ 39.0 $ 40.0 Share-based compensation (4.5) (4.5) Adjusted product development and engineering (Non-GAAP) $ 34.5 $ 35.5 Low High Diluted earnings per share–GAAP $ 0.50 $ 0.58 Share-based compensation 0.18 0.18 Transaction, restructuring, and acquisition related expenses 0.01 0.01 Amortization of acquired intangibles 0.02 0.02 Associated tax effect 0.01 0.01 Adjusted diluted earnings per share (Non-GAAP) $ 0.72 $ 0.80 CONTACT: Emeka Chukwu Semtech Corporation (805) 480-2004 webir@semtech.com