Lattice Semiconductor Corporation (Nasdaq: LSCC), the low power
programmable leader, announced financial results today for the
fiscal second quarter ended June 29, 2024.
Revenue for the second quarter of 2024 was $124.1 million, with
GAAP gross margin of 68.3% and GAAP net income of $0.16 per diluted
share. On a non-GAAP basis, gross margin was 69.0% with net income
per diluted share of $0.23.
Esam Elashmawi, Interim Chief Executive Officer & Chief
Strategy and Marketing Officer, said, "Second quarter 2024 results
reflect the impact of cyclic industry headwinds. While the industry
continues to go through a period of inventory normalization, we are
starting to see signs of improvement. We continue to execute on our
ongoing product portfolio expansion and remain well positioned for
long-term growth."
Sherri Luther, Chief Financial Officer, said, "Our gross margin
remained stable, highlighting the durability of our business model.
We maintained disciplined spending, prioritized cash flow, and
continued to return capital to shareholders by executing share
repurchases for the fifteenth consecutive quarter."
Selected Second Quarter 2024 Financial
Results and Comparisons (in thousands, except per share
data)
GAAP Financial Results
(unaudited)
Q2 2024
Q1 2024
Q2 2023
Q/Q
Y/Y
Revenue
$
124,076
$
140,815
$
190,079
(11.9
)%
(34.7
)%
Gross Margin %
68.3
%
68.3
%
69.7
%
—
(140) bps
R&D Expense %
31.2
%
28.8
%
22.1
%
240 bps
910 bps
SG&A Expense %
16.1
%
25.9
%
19.4
%
(980) bps
(330) bps
Operating Expenses
$
62,186
$
79,634
$
79,491
(21.9
)%
(21.8
)%
Income from Operations
$
22,565
$
16,574
$
53,070
36.1
%
(57.5
)%
Net Income
$
22,631
$
14,796
$
50,644
53.0
%
(55.3
)%
Net Income per Share - Basic
$
0.16
$
0.11
$
0.37
$
0.05
$
(0.21
)
Net Income per Share - Diluted
$
0.16
$
0.11
$
0.36
$
0.05
$
(0.20
)
Non-GAAP* Financial Results
(unaudited)
Q2 2024
Q1 2024
Q2 2023
Q/Q
Y/Y
Revenue
$
124,076
$
140,815
$
190,079
(11.9
)%
(34.7
)%
Gross Margin %
69.0
%
69.0
%
70.5
%
—
(150) bps
R&D Expense %
26.7
%
23.1
%
18.0
%
360 bps
870 bps
SG&A Expense %
17.9
%
16.1
%
12.5
%
180 bps
540 bps
Operating Expenses
$
54,030
$
54,858
$
58,018
(1.5
)%
(6.9
)%
Income from Operations
$
31,526
$
42,238
$
75,968
(25.4
)%
(58.5
)%
Net Income
$
31,432
$
40,258
$
72,509
(21.9
)%
(56.7
)%
Net Income per Share - Basic
$
0.23
$
0.29
$
0.53
$
(0.06
)
$
(0.30
)
Net Income per Share - Diluted
$
0.23
$
0.29
$
0.52
$
(0.06
)
$
(0.29
)
GAAP represents U.S. Generally Accepted Accounting Principles.
Non-GAAP represents GAAP excluding the impact of certain activities
which the Company's management excludes in analyzing the Company's
operating results and in understanding trends in the Company's
earnings. Additional information relating to these measures is
included below in “Non-GAAP Financial Measures.” For a
reconciliation of GAAP to non-GAAP results, see accompanying tables
"Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."
Second Quarter 2024 Highlights:
•
Expanded Small FPGA Portfolio
Leadership: Launched Certus™-NX-28 and Certus™-NX-09 devices,
and multiple package options that offer class-leading power
efficiency, small size, and reliability with flexible migration
options.
•
New Nexus-based Security Solutions:
Extended leadership in security-focused hardware and software with
the launch of the Lattice MachXO5D™-NX family of advanced secure
control FPGAs and the latest version of the Lattice Sentry™
solution stack.
•
Developers Conference: Lattice will
hold its second annual Developers Conference on December 10-11,
2024, featuring a wide array of technical sessions, and keynote
addresses from customers and ecosystem partners. Register here
(advance registration required).
•
Received Multiple Industry Awards:
Lattice won a variety of awards in recognition of its industry
leading hardware and software security product portfolio, and
corporate sustainability efforts.
Business Outlook - Third Quarter of 2024:
•
Revenue for the third quarter of 2024 is
expected to be between $117 million and $137 million.
•
Gross margin percentage for the third
quarter of 2024 is expected to be 69.0% plus or minus 1% on a
non-GAAP basis.
•
Total operating expenses for the third
quarter of 2024 are expected to be between $53 million and $55
million on a non-GAAP basis.
Non-GAAP Financial Measures: In addition to financial measures
prepared in accordance with generally accepted accounting
principles (GAAP), this earnings release makes reference to
non-GAAP financial measures. With respect to the outlook for the
third quarter of 2024, certain items that affect GAAP measurement
of financial measures for gross margin percentage and total
operating expenses are not accessible on a forward-looking basis
because such items cannot be reasonably predicted without
unreasonable efforts due to the unpredictability of the amounts and
timing of events affecting the items we exclude from non-GAAP
measures, including certain large and/or unpredictable charges such
as stock-based compensation expense; litigation expense outside the
ordinary course of business; and restructuring. Consequently, the
Company is unable to provide a reasonable estimate of GAAP
measurement for non-GAAP gross margin percentage or non-GAAP total
operating expenses for quarterly guidance or a corresponding
reconciliation to GAAP for the quarter. From a qualitative
perspective, the differences between our GAAP measurement of
financial measures for gross margin percentage and total operating
expenses and our non-GAAP measure of those items will consist of
items similar to those described in the financial tables later in
this release for such items historically, including, for example
and without limitation, certain large and/or unpredictable charges
such as stock-based compensation expense; litigation expense
outside the ordinary course of business; and restructuring.
Additional information regarding the reasons the Company uses
non-GAAP measures, a reconciliation of these measures to the most
directly comparable GAAP measures, and other information relating
to these measures are included in this press release.
Investor Conference Call / Webcast Details:
Lattice Semiconductor will review the Company's financial
results for the fiscal second quarter 2024, and business outlook on
Monday, July 29, at 5:00 p.m. Eastern Time. The dial-in number for
the live audio call is 1-877-407-3982 or 1-201-493-6780 with
conference identification number 13747663. A live webcast of the
conference call will also be available on the investor relations
section of www.latticesemi.com. The Company's financial guidance
will be limited to the comments on its public quarterly earnings
call and the public business outlook statements contained in this
press release.
Forward-Looking Statements Notice:
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
and made pursuant to the safe harbor provisions of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements
involve estimates, assumptions, risks and uncertainties. Any
statements about our expectations, beliefs, plans, objectives,
assumptions or future events or performance are neither historical
facts nor assurances of future performance and may be
forward-looking. Such forward-looking statements include, but are
not limited to, statements relating to our rapid product portfolio
expansion; long-term position; near-term cyclical industry
headwinds; accelerating customer momentum; market improvement;
durability of our business model; and the statements under the
heading “Business Outlook - Third Quarter of 2024.” Other
forward-looking statements may be indicated by words such as
“will,” “could,” “should,” “would,” “may,” “expect,” “plan,”
“project,” “anticipate,” “intend,” “forecast,” “future,” “believe,”
“estimate,” “predict,” “propose,” “potential,” “continue” or the
negative of these terms or other comparable terminology.
Estimates of future revenue and other financial and operational
outcomes are inherently uncertain due to factors such as global
economic conditions which may affect customer demand, the cyclical
nature of the semiconductor industry, pricing and inflationary
pressures, competitive actions, international trade disputes and
sanctions, the potential impact of global pandemics, and other
significant risks and uncertainties that are beyond our ability to
predict or control. Actual gross margin percentage and operating
expenses could vary from the estimates on the basis of, among other
things, changes in revenue levels, changes in product pricing and
mix, changes in wafer, assembly, test and other costs, variations
in manufacturing yields, the failure to sustain operational
improvements, and the actual amount of compensation charges due to
stock price changes. Actual results may differ materially from our
expectations and are subject to risks and uncertainties that relate
more broadly to our overall business, including those described in
our filings with the Securities and Exchange Commission, including
Lattice’s most recent Annual Report on Form 10-K, especially those
under the captions “Risk Factors” and “Management's Discussion and
Analysis of Financial Condition and Results of Operations”, all of
which are expressly incorporated herein by reference.
Lattice believes these and other risks and uncertainties could
cause actual results to differ materially from the forward-looking
statements. New risk factors emerge from time to time and it is not
possible for the Company to predict all risk factors. You should
not rely on forward-looking statements because actual results could
differ materially from those expressed in any forward-looking
statements. In addition, any forward-looking statement applies only
as of the date on which it is made. The Company does not intend to
and undertakes no obligation to update or revise any
forward-looking statements, whether as a result of events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Non-GAAP Financial Measures:
Included within this press release and the accompanying tables
and notes are certain non-GAAP financial measures that supplement
the Company's consolidated financial information prepared in
accordance with U.S. GAAP, including non-GAAP gross margin, gross
margin percentage, R&D expense, SG&A expense, operating
expenses, income from operations, other (expense) income, net,
income tax expense, net income, net income per share – basic, and
net income per share – diluted. The non-GAAP measures presented
exclude charges and adjustments primarily related to stock-based
compensation and related payroll tax effects, litigation expense
outside the ordinary course of business, amortization of acquired
intangible assets, restructuring plans, transformation activities,
and other charges, and the estimated tax effect of these items,
non-cash changes in net deferred income taxes, change in tax law
and other tax adjustments. These charges and adjustments are a
result of periodic or non-core operating activities of the Company.
The Company describes these non-GAAP financial measures and
reconciles them to the most directly comparable GAAP measures in
the tables and notes attached to this press release.
The Company's management believes that these non-GAAP financial
measures provide an additional and useful way of viewing aspects of
our performance that, when viewed in conjunction with our GAAP
results, provide a more comprehensive understanding of the various
factors and trends affecting our ongoing financial performance and
operating results than GAAP measures alone. Management also uses
these non-GAAP measures for strategic and business decision-making,
internal budgeting, forecasting, and resource allocation processes
and believes that investors should have access to similar data. The
non-GAAP financial information used by the Company may differ from
that used by other companies. These non-GAAP measures are included
solely for informational and comparative purposes and are not meant
as a substitute for GAAP and should be considered together with the
consolidated financial information located in the tables attached
to this press release.
About Lattice Semiconductor Corporation:
Lattice Semiconductor (NASDAQ: LSCC) is the low power
programmable leader. We solve customer problems across the network,
from the Edge to the Cloud, in the growing communications,
computing, industrial, automotive and consumer markets. Our
technology, long-standing relationships, and commitment to
world-class support let our customers quickly and easily unleash
their innovation to create a smart, secure, and connected
world.
For more information about Lattice, please visit
www.latticesemi.com. You can also follow us via LinkedIn, Twitter,
Facebook, YouTube, WeChat, or Weibo.
Lattice Semiconductor
Corporation
Consolidated Statements of
Operations
(in thousands, except per
share data)
(unaudited)
Three Months Ended
Six Months Ended
June 29,
March 30,
July 1,
June 29,
July 1,
2024
2024
2023
2024
2023
Revenue
$
124,076
$
140,815
$
190,079
$
264,891
$
374,389
Cost of sales
39,325
44,607
57,518
83,932
113,227
Gross margin
84,751
96,208
132,561
180,959
261,162
Operating expenses:
Research and development
38,733
40,591
41,946
79,324
77,935
Selling, general, and administrative
20,005
36,469
36,788
56,474
69,366
Amortization of acquired intangible
assets
869
870
869
1,739
1,739
Restructuring
2,579
1,704
(112
)
4,283
(82
)
Total operating expenses
62,186
79,634
79,491
141,820
148,958
Income from operations
22,565
16,574
53,070
39,139
112,204
Interest income (expense), net
933
1,307
189
2,240
(366
)
Other income (expense), net
254
(46
)
(176
)
208
(271
)
Income before income taxes
23,752
17,835
53,083
41,587
111,567
Income tax expense
1,121
3,039
2,439
4,160
5,000
Net income
$
22,631
$
14,796
$
50,644
$
37,427
$
106,567
Net income per share:
Basic
$
0.16
$
0.11
$
0.37
$
0.27
$
0.77
Diluted
$
0.16
$
0.11
$
0.36
$
0.27
$
0.76
Shares used in per share calculations:
Basic
137,548
137,475
137,735
137,480
137,573
Diluted
138,243
138,774
139,768
138,485
139,966
Lattice Semiconductor
Corporation
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
June 29,
December 30,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
109,216
$
128,317
Accounts receivable, net
103,442
104,373
Inventories, net
101,556
98,826
Other current assets
38,990
36,430
Total current assets
353,204
367,946
Property and equipment, net
50,801
49,546
Operating lease right-of-use assets
17,326
14,487
Intangible assets, net
19,016
20,974
Goodwill
315,358
315,358
Deferred income taxes
57,329
57,762
Other long-term assets
14,486
14,821
$
827,520
$
840,894
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
34,957
$
34,487
Accrued liabilities
32,088
36,048
Accrued payroll obligations
13,239
26,865
Total current liabilities
80,284
97,400
Long-term operating lease liabilities, net
of current portion
11,975
10,739
Other long-term liabilities
36,412
40,735
Total liabilities
128,671
148,874
Stockholders' equity
698,849
692,020
$
827,520
$
840,894
Lattice Semiconductor
Corporation
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 29,
July 1,
2024
2023
Cash flows from operating activities:
Net income
$
37,427
$
106,567
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Stock-based compensation expense
21,713
35,744
Depreciation and amortization
18,385
16,578
Change in deferred income tax
provision
(969
)
(882
)
Other non-cash adjustments
4,329
3,427
Net changes in assets and liabilities
(29,443
)
(45,976
)
Net cash provided by (used in) operating
activities
51,442
115,458
Cash flows from investing activities:
Capital expenditures
(10,581
)
(11,943
)
Other investing activities
(7,607
)
(5,799
)
Net cash provided by (used in) investing
activities
(18,188
)
(17,742
)
Cash flows from financing activities:
Repayment of long-term debt
—
(85,000
)
Repurchase of common stock
(29,999
)
(20,006
)
Net cash flows related to stock
compensation exercises
(21,734
)
(34,439
)
Net cash provided by (used in) financing
activities
(51,733
)
(139,445
)
Effect of exchange rate change on cash
(622
)
(220
)
Net increase (decrease) in cash and cash
equivalents
(19,101
)
(41,949
)
Beginning cash and cash equivalents
128,317
145,722
Ending cash and cash equivalents
$
109,216
$
103,773
Supplemental disclosure of cash flow
information and non-cash investing and financing
activities:
Interest paid
$
—
$
2,962
Income taxes paid, net of refunds
$
3,886
$
6,837
Operating lease payments
$
4,564
$
4,082
Lattice Semiconductor
Corporation
Supplemental Historical
Financial Information
(unaudited)
Three Months Ended
June 29,
March 30,
July 1,
2024
2024
2023
Balance Sheet Information
A/R Days Revenue Outstanding (DSO)
76
64
46
Inventory Days (DIO)
236
195
177
Revenue % (by Geography)
Asia
67
%
66
%
63
%
Americas
19
%
22
%
17
%
Europe (incl. Africa)
14
%
12
%
20
%
Revenue % (by End Market)
Communications and Computing
44
%
39
%
34
%
Industrial and Automotive
47
%
53
%
61
%
Consumer
9
%
8
%
5
%
Revenue $M (by End Market)
Communications and Computing
$
54.6
$
54.6
$
64.2
Industrial and Automotive
$
58.2
$
75.3
$
115.5
Consumer
$
11.3
$
10.9
$
10.4
Revenue % (by Channel)
Distribution
91
%
87
%
89
%
Direct
9
%
13
%
11
%
Lattice Semiconductor
Corporation
Reconciliation of U.S. GAAP to
Non-GAAP Financial Measures
(in thousands, except per
share data)
(unaudited)
Three Months Ended
June 29,
March 30,
July 1,
2024
2024
2023
Gross Margin Reconciliation
GAAP Gross margin
$
84,751
$
96,208
$
132,561
Stock-based compensation - gross margin
(1)
805
888
1,425
Non-GAAP Gross margin
$
85,556
$
97,096
$
133,986
Gross Margin % Reconciliation
GAAP Gross margin %
68.3
%
68.3
%
69.7
%
Stock-based compensation - gross margin
(1)
0.7
%
0.7
%
0.8
%
Non-GAAP Gross margin %
69.0
%
69.0
%
70.5
%
Research and Development Expense %
(R&D Expense %) Reconciliation
GAAP R&D Expense %
31.2
%
28.8
%
22.1
%
Stock-based compensation - R&D (1)
(4.5
)%
(5.7
)%
(4.1
)%
Non-GAAP R&D Expense %
26.7
%
23.1
%
18.0
%
Selling, General, and Administrative
Expense % (SG&A Expense %) Reconciliation
GAAP SG&A Expense %
16.1
%
25.9
%
19.4
%
Stock-based compensation - SG&A
(1)
2.7
%
(7.1
)%
(6.7
)%
Litigation expense (2)
(0.9
)%
(2.7
)%
(0.2
)%
Non-GAAP SG&A Expense %
17.9
%
16.1
%
12.5
%
Operating Expenses
Reconciliation
GAAP Operating expenses
$
62,186
$
79,634
$
79,491
Stock-based compensation - operations
(1)
(2,343
)
(18,117
)
(20,277
)
Litigation expense (2)
(1,065
)
(3,832
)
(439
)
Amortization of acquired intangible
assets
(869
)
(870
)
(869
)
Restructuring, transformation, and other
(3)
(3,879
)
(1,957
)
112
Non-GAAP Operating expenses
$
54,030
$
54,858
$
58,018
Income from Operations
Reconciliation
GAAP Income from operations
$
22,565
$
16,574
$
53,070
Stock-based compensation - gross margin
(1)
805
888
1,425
Stock-based compensation - operations
(1)
2,343
18,117
20,277
Litigation expense (2)
1,065
3,832
439
Amortization of acquired intangible
assets
869
870
869
Restructuring, transformation, and other
(3)
3,879
1,957
(112
)
Non-GAAP Income from operations
$
31,526
$
42,238
$
75,968
Income from Operations %
Reconciliation
GAAP Income from operations %
18.2
%
11.8
%
27.9
%
Cumulative effect of non-GAAP Gross Margin
and Operating adjustments
7.2
%
18.2
%
12.1
%
Non-GAAP Income from operations %
25.4
%
30.0
%
40.0
%
(1)
The non-GAAP adjustments for Stock-based
compensation include related payroll tax expenses.
(2)
Legal expenses associated with the defense
of claims that are outside the ordinary course of business that
were brought against the Company by Steven A.W. De Jaray, Perienne
De Jaray and Darrell R. Oswalde.
(3)
Restructuring, transformation, and other
for Q2 and YTD 2024 includes business transformation charges of
$0.8 million.
Lattice Semiconductor
Corporation
Reconciliation of U.S. GAAP to
Non-GAAP Financial Measures
(in thousands, except per
share data)
(unaudited)
Three Months Ended
June 29,
March 30,
July 1,
2024
2024
2023
Income Tax (Benefit) Expense
Reconciliation
GAAP Income tax (benefit) expense
$
1,121
$
3,039
$
2,439
Estimated tax effect of non-GAAP
adjustments
5,649
4,337
1,372
Non-cash changes in net deferred income
taxes (4)
(1,090
)
(2,754
)
—
Change in tax law (5)
(4,399
)
(1,381
)
(339
)
Non-GAAP Income tax expense
$
1,281
$
3,241
$
3,472
Net Income Reconciliation
GAAP Net income
$
22,631
$
14,796
$
50,644
Stock-based compensation - gross margin
(1)
805
888
1,425
Stock-based compensation - operations
(1)
2,343
18,117
20,277
Litigation expense (2)
1,065
3,832
439
Amortization of acquired intangible
assets
869
870
869
Restructuring, transformation, and other
(3)
3,879
1,957
(112
)
Estimated tax effect of non-GAAP
adjustments
(5,649
)
(4,337
)
(1,372
)
Non-cash changes in net deferred income
taxes (4)
1,090
2,754
—
Change in tax law (5)
4,399
1,381
339
Non-GAAP Net income
$
31,432
$
40,258
$
72,509
Net Income Per Share
Reconciliation
GAAP Net income per share - basic
$
0.16
$
0.11
$
0.37
Cumulative effect of Non-GAAP
adjustments
0.07
0.18
0.16
Non-GAAP Net income per share - basic
$
0.23
$
0.29
$
0.53
GAAP Net income per share - diluted
$
0.16
$
0.11
$
0.36
Cumulative effect of Non-GAAP
adjustments
0.07
0.18
0.16
Non-GAAP Net income per share -
diluted
$
0.23
$
0.29
$
0.52
Shares used in per share calculations:
Basic
137,548
137,475
137,735
Diluted
138,243
138,774
139,768
(1)
The non-GAAP adjustments for Stock-based
compensation include related payroll tax expenses.
(2)
Legal expenses associated with the defense
of claims that are outside the ordinary course of business that
were brought against the Company by Steven A.W. De Jaray, Perienne
De Jaray and Darrell R. Oswalde.
(3)
Restructuring, transformation, and other
for Q2 and YTD 2024 includes business transformation charges of
$0.8 million.
(4)
Non-cash changes in net deferred income
taxes associated with the release of the valuation allowance
against $56.9 million of our U.S. deferred tax assets in the fourth
quarter of fiscal 2023.
(5)
Adjustments for Change in tax law reflect
an increase in our provision for U.S. tax on foreign operations
resulting from The 2017 Tax Cuts and Jobs Act and is related to the
capitalization and subsequent amortization of R&D costs for tax
purposes.
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version on businesswire.com: https://www.businesswire.com/news/home/20240729491684/en/
MEDIA: Sophia Hong Lattice Semiconductor Corporation
503-268-8786 Sophia.Hong@latticesemi.com
INVESTORS: Rick Muscha Lattice Semiconductor Corporation
408-826-6000 Rick.Muscha@latticesemi.com
Lattice Semiconductor (NASDAQ:LSCC)
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