Semtech Corporation (Nasdaq: SMTC), a leading supplier of high
performance analog and mixed-signal semiconductors and advanced
algorithms, today reported unaudited financial results for its
first quarter of fiscal year 2022, which ended May 2, 2021.
Highlights for the First Fiscal Quarter 2022
- Q1 FY2022 net sales of $170.4 million increased 3% sequentially
and 28% year-over-year
- GAAP and non-GAAP gross margin grew sequentially 50bps
- GAAP Operating income increased 14x sequential net sales growth
and non-GAAP Operating income increased 2x sequential net sales
growth
- Wireless and Sensing products group net sales increased 7%
sequentially and 78% year-over-year for a new record that included
record net sales for our LoRa® platforms and proximity sensing
products
- Record quarterly bookings including records for our LoRa
platforms, Tri-Edge™ and broad-based Industrial Protection
devices
- Repurchased 360,942 shares for $25.0 million during Q1
FY2022
Results on a GAAP basis for the First Fiscal Quarter
2022
- Net sales were $170.4 million
- GAAP Gross margin was 61.5%
- GAAP SG&A expense was $38.8 million
- GAAP R&D expense was $36.8 million
- GAAP Operating margin was 16.4%
- GAAP Net income attributable to common stockholders was $23.5
million or $0.36 per diluted share
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 First Fiscal Quarter
2022 (see the list of non-GAAP measures and the reconciliation
of these to the most comparable GAAP measures set forth in the
tables below under "Supplemental Information: Reconciliation of
GAAP to Non-GAAP Results")
- Non-GAAP Gross margin was 62.0%
- Non-GAAP SG&A expense was $31.1 million
- Non-GAAP R&D expense was $33.0 million
- Non-GAAP Operating margin was 24.3%
- Non-GAAP Net income attributable to common stockholders was
$34.8 million or $0.53 per diluted share
Mohan Maheswaran, Semtech’s President and Chief Executive
Officer, stated, “We are pleased with the strong start to FY22 led
by the strength from the IoT, Optical Infrastructure and Mobile
segments. We believe we are very well positioned to continue the
recent momentum into our fiscal Q2 as record demand, record
bookings and record starting backlog highlight the underlying
strength of our core growth engines and should enable the Company
to deliver a record financial performance in FY22."
Second Fiscal Quarter 2022 Outlook
Both the GAAP and non-GAAP second fiscal quarter 2022 outlook
below take into account, based on the Company's current estimates,
the uncertain, but potential negative impact to the Company of 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 Second Fiscal Quarter 2022 Outlook
- Net sales are expected to be in the range of $177.0 million to
$187.0 million
- GAAP Gross margin is expected to be in the range of 61.3% to
62.3%
- GAAP SG&A expense is expected to be in the range of $41.6
million to $42.6 million
- GAAP R&D expense is expected to be in the range of $35.0
million to $36.0 million
- GAAP Intangible amortization expense is expected to be
approximately $1.3 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 9% to
11%
- GAAP Earnings per diluted share are expected to be in the range
of $0.40 to $0.48
- Fully-diluted share count is expected to be approximately 66.2
million shares
- Share-based compensation is expected to be approximately $12.8
million, categorized as follows: $0.7 million cost of sales, $8.1
million SG&A, and $4.0 million R&D
- Capital expenditures are expected to be approximately $10.0
million
- Depreciation expense is expected to be approximately $6.5
million
Non-GAAP Second Fiscal Quarter 2022 Outlook (see the list
of non-GAAP measures and the reconciliation of these 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 61.7%
to 62.7%
- Non-GAAP SG&A expense is expected to be in the range of
$33.0 million to $34.0 million
- Non-GAAP R&D expense is expected to be in the range of
$31.0 million to $32.0 million
- Non-GAAP normalized tax rate for FY2022 is expected to be
approximately 13%
- Non-GAAP Earnings per diluted share are expected to be in the
range of $0.57 to $0.65
Webcast and Conference Call
Semtech will be hosting a conference call today to discuss its
first fiscal quarter 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 June 30, 2021 at the same website or by
calling (877) 660-6853 and entering conference ID 13716891.
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 measures. The Company’s non-GAAP
measures of gross margin, SG&A expense, R&D expense,
operating margin, net income attributable to common stockholders,
earnings per diluted 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 second quarter
outlook, this release also includes a presentation of
forward-looking non-GAAP measures. Management believes that the
presentation of these non-GAAP financial measures provide useful
information to investors regarding the Company’s financial
condition and results of operations because 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 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 measures to their most comparable GAAP measures for
the first and fourth quarters of fiscal year 2021 and the first
quarter of fiscal year 2022, 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
second quarter of fiscal year 2022. 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 is 13% and will be
applied to each quarter of fiscal year 2022. 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 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 second quarter of fiscal year 2022
outlook and our expectations for growth momentum and record
financial results for our fiscal year 2022; the potential for a
negative impact associated with the current supply chain tightness
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 the COVID-19
pandemic on global economic conditions and on the Company's
business and results of operations; export restrictions and laws
affecting the Company's trade and investments including with
respect to Huawei and certain of its affiliates and other entities
identified by the U.S. government, and tariffs or the occurrence of
trade wars; 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 Annual Report on Form 10-K for the fiscal year
ended January 31, 2021, subsequent 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
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 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 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
May 2, 2021
January 31,
2021
April 26, 2020
Q122
Q421
Q121
Net sales
$
170,372
$
164,673
$
132,702
Cost of sales
65,511
64,197
51,941
Gross profit
104,861
100,476
80,761
Operating costs and expenses:
Selling, general and administrative
38,804
47,086
34,600
Product development and engineering
36,790
32,833
27,586
Intangible amortization
1,298
1,607
2,840
Changes in the fair value of contingent
earn-out obligations
—
—
(33
)
Total operating costs and expenses
76,892
81,526
64,993
Operating income
27,969
18,950
15,768
Interest expense
(1,199
)
(1,517
)
(1,559
)
Non-operating income, net
94
113
423
Investment impairments and credit loss
reserves
(246
)
(1,319
)
(3,630
)
Income before taxes and equity in net
gains (losses) of equity method investments
26,618
16,227
11,002
Provision for taxes
3,198
914
1,359
Net income before equity in net gains
(losses) of equity method investments
23,420
15,313
9,643
Equity in net gains (losses) of equity
method investments
78
318
(11
)
Net income
23,498
15,631
9,632
Net loss attributable to noncontrolling
interest
(2
)
(25
)
(3
)
Net income attributable to common
stockholders
$
23,500
$
15,656
$
9,635
Earnings per share:
Basic
$
0.36
$
0.24
$
0.15
Diluted
$
0.36
$
0.24
$
0.15
Weighted average number of shares used in
computing earnings per share:
Basic
65,089
65,035
65,589
Diluted
66,110
66,085
66,174
SEMTECH CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
(unaudited)
May 2, 2021
January 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
258,219
$
268,891
Accounts receivable, net
66,518
70,433
Inventories
93,919
87,494
Prepaid taxes
16,397
22,083
Other current assets
26,309
25,827
Total current assets
461,362
474,728
Non-current assets:
Property, plant and equipment, net
131,255
130,934
Deferred tax assets
25,413
25,483
Goodwill
351,141
351,141
Other intangible assets, net
10,448
11,746
Other assets
89,998
88,070
Total assets
$
1,069,617
$
1,082,102
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
51,195
$
50,189
Accrued liabilities
45,317
59,384
Total current liabilities
96,512
109,573
Non-current liabilities:
Deferred tax liabilities
955
976
Long term debt
175,316
179,195
Other long-term liabilities
92,349
93,405
Stockholders’ equity
704,277
698,743
Noncontrolling interest
208
210
Total liabilities & equity
$
1,069,617
$
1,082,102
SEMTECH CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL INFORMATION
(in thousands)
(unaudited)
Three Months Ended
May 2, 2021
April 26, 2020
Net income
$
23,498
$
9,632
Net cash provided by operations
32,585
26,083
Net cash used in investing activities
(8,655
)
(11,560
)
Net cash used in financing activities
(34,602
)
(38,900
)
Net decrease in cash and cash
equivalents
(10,672
)
(24,377
)
Cash and cash equivalents at beginning of
period
268,891
293,324
Cash and cash equivalents at end of
period
$
258,219
$
268,947
Three Months Ended
May 2, 2021
January 31,
2021
April 26, 2020
Q122
Q421
Q121
Free Cash Flow:
Cash Flow from Operations
$
32,585
$
27,254
$
26,083
Net Capital Expenditures
(5,760
)
(10,561
)
(7,672
)
Free Cash Flow
$
26,825
$
16,693
$
18,411
SEMTECH CORPORATION
SUPPLEMENTAL INFORMATION:
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(in thousands, except per share
data)
(unaudited)
Three Months Ended
May 2, 2021
January 31,
2021
April 26, 2020
Q122
Q421
Q121
Gross Margin–GAAP
61.5
%
61.0
%
60.9
%
Share-based compensation
0.5
%
0.5
%
0.4
%
Adjusted Gross Margin
(Non-GAAP)
62.0
%
61.5
%
61.3
%
Three Months Ended
May 2, 2021
January 31,
2021
April 26, 2020
Q122
Q421
Q121
Selling, general and
administrative–GAAP
$
38,804
$
47,086
$
34,600
Share-based compensation
(7,359
)
(12,136
)
(5,959
)
Transaction and integration related
177
(245
)
(85
)
Restructuring and other reserves
—
(926
)
—
Litigation cost, net of recoveries
(540
)
(454
)
(146
)
Adjusted selling, general and
administrative (Non-GAAP)
$
31,082
$
33,325
$
28,410
Three Months Ended
May 2, 2021
January 31,
2021
April 26, 2020
Q122
Q421
Q121
Product development and
engineering–GAAP
$
36,790
$
32,833
$
27,586
Share-based compensation
(3,762
)
(3,980
)
(2,890
)
Transaction and integration related
—
—
87
Restructuring and other reserves
—
114
—
Adjusted product development and
engineering (Non-GAAP)
$
33,028
$
28,967
$
24,783
Three Months Ended
May 2, 2021
January 31,
2021
April 26, 2020
Q122
Q421
Q121
Operating Margin–GAAP
16.4
%
11.5
%
11.9
%
Share-based compensation
6.9
%
10.3
%
7.1
%
Intangible amortization
0.8
%
1.0
%
2.1
%
Transaction and integration related
(0.1
)
%
0.1
%
—
%
Restructuring and other reserves
—
%
0.5
%
—
%
Litigation cost, net of recoveries
0.3
%
0.3
%
0.1
%
Adjusted Operating Margin
(Non-GAAP)
24.3
%
23.7
%
21.2
%
SEMTECH CORPORATION
SUPPLEMENTAL INFORMATION:
RECONCILIATION OF GAAP TO NON-GAAP RESULTS (CONTINUED)
(in thousands, except per share
data)
(unaudited)
Three Months Ended
May 2, 2021
January 31,
2021
April 26, 2020
Q122
Q421
Q121
GAAP net income attributable to common
stockholders
$
23,500
$
15,656
$
9,635
Adjustments to GAAP net income
attributable to common stockholders:
Share-based compensation
11,839
16,883
9,379
Intangible amortization
1,298
1,607
2,840
Transaction and integration related
(177
)
245
(2
)
Restructuring and other reserves
—
812
—
Litigation cost, net of recoveries
540
454
146
Changes in the fair value of contingent
earn-out obligations
—
—
(33
)
Investment (gains), losses, reserves and
impairments, net
(84
)
860
3,630
Total Non-GAAP adjustments before
taxes
13,416
20,861
15,960
Associated tax effect
(2,006
)
(2,609
)
(2,572
)
Equity in net (gains) losses of equity
method investments
(78
)
(318
)
11
Total of supplemental information, net of
taxes
11,332
17,934
13,399
Non-GAAP net income attributable to
common stockholders
$
34,832
$
33,590
$
23,034
Diluted GAAP earnings per share
$
0.36
$
0.24
$
0.15
Adjustments per above
0.17
0.27
0.20
Diluted non-GAAP earnings per
share
$
0.53
$
0.51
$
0.35
SEMTECH CORPORATION
RECONCILIATION OF GAAP TO
NON-GAAP OUTLOOK
Second Quarter of Fiscal Year
2022 Outlook
(in millions, except per share
data)
Q2 FY22 Outlook
August 1, 2021
Low
High
Gross Margin–GAAP
61.3
%
62.3
%
Share-based compensation
0.4
%
0.4
%
Adjusted Gross Margin
(Non-GAAP)
61.7
%
62.7
%
Low
High
Selling, general and
administrative–GAAP
$
41.6
$
42.6
Share-based compensation
(8.1
)
(8.1
)
Transaction and integration related
(0.5
)
(0.5
)
Adjusted selling, general and
administrative (Non-GAAP)
$
33.0
$
34.0
Low
High
Product development and
engineering–GAAP
$
35.0
$
36.0
Share-based compensation
(4.0
)
(4.0
)
Adjusted product development and
engineering (Non-GAAP)
$
31.0
$
32.0
Low
High
Diluted GAAP earnings per share
$
0.40
$
0.48
Share-based compensation
0.19
0.19
Transaction, restructuring, and
acquisition related expenses
0.01
0.01
Amortization of acquired intangibles
0.02
0.02
Associated tax effect
(0.05
)
(0.05
)
Diluted adjusted earnings per share
(Non-GAAP)
$
0.57
$
0.65
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210602005966/en/
Sandy Harrison Semtech Corporation (805) 480-2004
webir@semtech.com
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