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Semtech Announces Third Quarter of Fiscal Year 2024 Results

  • Net sales of $200.9 million, above the midpoint of guidance
  • GAAP gross margin of 46.3% and Non-GAAP gross margin, above the high-end of guidance, of 51.3%
  • GAAP diluted loss per share of $0.60 and Non-GAAP diluted earnings per share, above the high-end of guidance, of $0.02
  • Effective October 2, 2023, Mark Lin became Semtech's executive vice president and chief financial officer

Semtech Corporation (Nasdaq: SMTC), a high-performance semiconductor, IoT systems and cloud connectivity service provider, today reported unaudited financial results for its third quarter of fiscal year 2024, which ended October 29, 2023.

"While recognizing ongoing constraints in our hardware business and effects of elevated channel inventories, we noted stabilization of end market demand for our semiconductor business," said Paul H. Pickle, Semtech's president and chief executive officer. "Notably, end market demand in the third quarter for high-end consumer and data center applications has grown both sequentially and year-over-year."

"We continue to optimize our cost structure with non-GAAP operating expenses and non-GAAP interest expense each forecasted to sequentially improve in the fourth quarter," said Mark Lin, Semtech's executive vice president and chief financial officer. "Our recent change in capital structure further provides us with flexibility to address near-term challenges from the current economic environment."

Third Quarter of Fiscal Year 2024 Results

 

GAAP Financial Results

 

Non-GAAP Financial Results

(in millions, except per share data)

Q324

 

Q224

 

Q323

 

Q324

 

Q224

 

Q323

Net sales

$

200.9

 

 

$

238.4

 

 

$

177.6

 

 

$

200.9

 

 

$

238.4

 

 

$

177.6

 

Gross margin

 

46.3

%

 

 

42.3

%

 

 

64.5

%

 

 

51.3

%

 

 

49.6

%

 

 

65.5

%

Operating costs and expenses, net

$

105.3

 

 

$

400.8

 

 

$

77.2

 

 

$

82.5

 

 

$

85.7

 

 

$

68.0

 

Operating (loss) income

$

(12.4

)

 

$

(300.1

)

 

$

37.4

 

 

$

20.5

 

 

$

32.4

 

 

$

48.3

 

Operating margin

 

(6.2

)%

 

 

(125.9

)%

 

 

21.0

%

 

 

10.2

%

 

 

13.6

%

 

 

27.2

%

Interest expense, net

$

27.7

 

 

$

23.5

 

 

$

8.2

 

 

$

22.3

 

 

$

21.2

 

 

$

1.0

 

Diluted (loss) earnings per share

$

(0.60

)

 

$

(5.97

)

 

$

0.36

 

 

$

0.02

 

 

$

0.13

 

 

$

0.65

 

Adjusted EBITDA

 

 

 

 

 

 

$

28.1

 

 

$

39.0

 

 

$

54.6

 

To facilitate a more 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." See also our non-GAAP financial measures and reconciliations 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."

Fourth Quarter of Fiscal Year 2024 Outlook

(in millions, except per share data)

 

Net sales

$

190.0

 

+/-

 

$10.0

Non-GAAP Financial Measures

 

 

 

 

 

Gross margin

 

48.0%

 

+/-

 

100 bps

Operating costs and expenses, net

$

74.0

 

+/-

 

$2.0

Operating income

$

17.2

 

+/-

 

$4.7

Operating margin

 

9.1%

 

+/-

 

200 bps

Interest expense, net

$

21.0

 

 

 

 

Normalized income tax rate

 

12%

 

 

 

 

Diluted (loss) per share

$

(0.05)

 

+/-

 

$0.06

Adjusted EBITDA

$

24.7

 

+/-

 

$4.7

 

 

 

 

 

 

Diluted share count

 

64.4

 

 

 

 

The fourth quarter of fiscal year 2024 outlook incorporates the Company's current estimates, as well as its expectations regarding the impact of export restrictions, inflationary pressure and other macroeconomic conditions. The Company is unable to predict the full impact such challenges may have on its future results of operations.

The Company is unable to include a reconciliation of the forward-looking non-GAAP results to the corresponding GAAP measures as this is not available without unreasonable efforts due to the high variability and low visibility with respect to the impact of transaction, integration and restructuring expenses, share-based awards, amortization of acquisition-related intangible assets and other items that are excluded from these non-GAAP measures. The Company expects the variability of the above charges to have a potentially significant impact on its GAAP financial results.

Webcast and Conference Call

Semtech will be hosting a conference call today to discuss its third fiscal quarter 2024 results at 2:00 p.m. Pacific time. The dial-in number for the call is (877) 407-0312. Please use conference ID 13736083. An audio webcast and supplemental earnings materials for the quarter will be available on the Investor Relations section of Semtech's website at investors.semtech.com under "News & Events." A replay of the call will be available through January 3, 2024 at the same website or by calling (877) 660-6853 and entering conference ID 13736083.

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 costs and expenses, net, operating income or loss, operating margin, interest expense, net, diluted (loss) earnings per share, and normalized tax rate exclude the following items, if any, as set forth in the reconciliations in the tables below under "Supplemental Information: Reconciliation of GAAP to Non-GAAP Results:"

  • Share-based compensation
  • Intangible amortization
  • Transaction and integration related costs or recoveries (including costs associated with the acquisition of Sierra Wireless)
  • Restructuring and other reserves, including cumulative other reserves associated with historical activity including environmental and pension
  • Litigation costs or dispute settlement charges or recoveries
  • Gain on sale of business
  • Equity method income or loss
  • Investment gains, losses, reserves and impairments, including interest income from debt investments
  • Write-off and amortization of deferred financing costs
  • Debt commitment fee
  • Goodwill impairment
  • Amortization of inventory step-up

Effective as of the third quarter of fiscal year 2024, the Company's non-GAAP measures have been adjusted to exclude amortization of deferred financing costs, which had the impact of decreasing non-GAAP interest expense, net and increasing non-GAAP net income or loss attributable to common stockholders and non-GAAP earnings or loss per diluted share. This adjustment was applied retrospectively and all prior period amounts have been revised to conform to the current presentation.

To provide additional insight into the Company's fourth quarter outlook, this release also includes a presentation of forward-looking non-GAAP financial measures. In the financial statements provided with this release, the Company also presents Adjusted EBITDA and free cash flow. Adjusted EBITDA is defined as net (loss) income plus interest expense, interest income, income taxes, depreciation and amortization and share-based compensation, and adjusted to exclude certain expenses, gains and losses that the Company believes are not indicative of its core results over time. The Company considers free cash flow, which may be positive or negative, a non-GAAP financial measure defined as cash flows provided by (used in) operating activities less net capital expenditures. 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 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 second and third quarters of fiscal year 2024 and the third quarter of fiscal year 2023. 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 2024, the Company's projected non-GAAP normalized tax rate is 12% and will be applied to each quarter of fiscal year 2024. 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. 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 fourth quarter of fiscal year 2024 outlook; the Company's expectations concerning the negative impact on the Company's results of operations from export restrictions, inflationary pressure and other macroeconomic conditions; future operational performance; the anticipated impact of specific items on future earnings; the Company's expectations regarding its cost structure optimization; benefits from the Company's change in capital structure; 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 comply with, or pursue business strategies due to the covenants under the agreements governing its indebtedness; the Company's ability to forecast and achieve anticipated net sales and earnings estimates in light of periodic economic uncertainty; the inherent risks, costs and uncertainties associated with integrating Sierra Wireless successfully and risks of not achieving all or any of the anticipated benefits, or the risk that the anticipated benefits may not be fully realized or take longer to realize than expected; the uncertainty surrounding the impact and duration of supply chain constraints and any associated disruptions; export restrictions and laws affecting the Company's trade and investments, and tariffs or the occurrence of trade wars; worldwide economic and political disruptions, including as a result of inflation and current geopolitical conflicts; tightening credit conditions related to the United States banking system concerns; 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; future responses to and effects of public health crises; and 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. 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 29, 2023, filed with the SEC on March 30, 2023, and the Company's Quarterly Report on Form 10-Q for the quarter ended July 30, 2023, filed with the SEC on September 13, 2023, as such risk factors may be amended, supplemented 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 (Nasdaq: SMTC) is a high-performance semiconductor, IoT systems and cloud connectivity service provider dedicated to delivering high-quality technology solutions that enable a smarter, more connected and sustainable planet. Our global teams are committed to empowering solution architects and application developers to develop breakthrough products for the infrastructure, industrial and consumer markets. To learn more about Semtech technology, visit us at Semtech.com or follow us on LinkedIn or X.

Semtech and the Semtech logo are registered trademarks or service marks of Semtech Corporation or its subsidiaries.

SMTC-F

SEMTECH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

October 29,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

 

Q324

 

Q323

Net sales

$

200,899

 

 

$

238,372

 

 

$

177,618

 

 

$

675,810

 

 

$

589,021

 

Cost of sales

 

97,925

 

 

 

127,071

 

 

 

62,049

 

 

 

347,734

 

 

 

207,380

 

Amortization of acquired technology

 

10,008

 

 

 

10,573

 

 

 

1,000

 

 

 

31,436

 

 

 

3,096

 

Total cost of sales

 

107,933

 

 

 

137,644

 

 

 

63,049

 

 

 

379,170

 

 

 

210,476

 

Gross profit

 

92,966

 

 

 

100,728

 

 

 

114,569

 

 

 

296,640

 

 

 

378,545

 

Operating costs and expenses, net:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

47,663

 

 

 

59,579

 

 

 

40,227

 

 

 

165,022

 

 

 

131,710

 

Product development and engineering

 

46,911

 

 

 

47,433

 

 

 

35,056

 

 

 

144,945

 

 

 

114,446

 

Intangible amortization

 

4,853

 

 

 

4,871

 

 

 

 

 

 

14,606

 

 

 

 

Gain on sale of business

 

 

 

 

 

 

 

(327

)

 

 

 

 

 

(18,313

)

Restructuring

 

3,646

 

 

 

9,399

 

 

 

2,244

 

 

 

14,608

 

 

 

2,244

 

Goodwill impairment

 

2,266

 

 

 

279,555

 

 

 

 

 

 

281,821

 

 

 

 

Total operating costs and expenses, net

 

105,339

 

 

 

400,837

 

 

 

77,200

 

 

 

621,002

 

 

 

230,087

 

Operating (loss) income

 

(12,373

)

 

 

(300,109

)

 

 

37,369

 

 

 

(324,362

)

 

 

148,458

 

Interest expense

 

(28,305

)

 

 

(24,171

)

 

 

(9,009

)

 

 

(72,986

)

 

 

(11,465

)

Interest income

 

574

 

 

 

674

 

 

 

839

 

 

 

2,317

 

 

 

1,758

 

Non-operating income (expense), net

 

3,542

 

 

 

(1,566

)

 

 

(64

)

 

 

1,503

 

 

 

(596

)

Investment impairments and credit loss reserves, net

 

(1,990

)

 

 

(227

)

 

 

(29

)

 

 

(2,250

)

 

 

376

 

(Loss) income before taxes and equity method (loss) income

 

(38,552

)

 

 

(325,399

)

 

 

29,106

 

 

 

(395,778

)

 

 

138,531

 

(Benefit) provision for income taxes

 

(311

)

 

 

56,592

 

 

 

6,327

 

 

 

53,864

 

 

 

26,415

 

Net (loss) income before equity method (loss) income

 

(38,241

)

 

 

(381,991

)

 

 

22,779

 

 

 

(449,642

)

 

 

112,116

 

Equity method (loss) income

 

(11

)

 

 

(12

)

 

 

(36

)

 

 

(30

)

 

 

271

 

Net (loss) income

 

(38,252

)

 

 

(382,003

)

 

 

22,743

 

 

 

(449,672

)

 

 

112,387

 

Net loss attributable to noncontrolling interest

 

(2

)

 

 

(1

)

 

 

(3

)

 

 

(5

)

 

 

(6

)

Net (loss) income attributable to common stockholders

$

(38,250

)

 

$

(382,002

)

 

$

22,746

 

 

$

(449,667

)

 

$

112,393

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per share:

 

 

 

 

 

 

 

 

 

Basic

$

(0.60

)

 

$

(5.97

)

 

$

0.36

 

 

$

(7.02

)

 

$

1.76

 

Diluted

$

(0.60

)

 

$

(5.97

)

 

$

0.36

 

 

$

(7.02

)

 

$

1.76

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares used in computing (loss) earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

64,216

 

 

 

64,005

 

 

 

63,764

 

 

 

64,048

 

 

 

63,738

 

Diluted

 

64,216

 

 

 

64,005

 

 

 

63,855

 

 

 

64,048

 

 

 

64,040

 

SEMTECH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

 

October 29, 2023

 

January 29, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

123,820

 

$

235,510

Accounts receivable, net

 

156,613

 

 

161,695

Inventories

 

160,586

 

 

207,704

Prepaid taxes

 

10,193

 

 

6,243

Other current assets

 

121,192

 

 

111,634

Total current assets

 

572,404

 

 

722,786

Non-current assets:

 

 

 

Property, plant and equipment, net

 

158,834

 

 

169,293

Deferred tax assets

 

13,597

 

 

63,783

Goodwill

 

1,013,679

 

 

1,281,703

Other intangible assets, net

 

168,230

 

 

215,102

Other assets

 

111,385

 

 

116,961

Total assets

$

2,038,129

 

$

2,569,628

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

55,008

 

$

100,676

Accrued liabilities

 

183,989

 

 

253,075

Current portion of long-term debt

 

 

 

43,104

Total current liabilities

 

238,997

 

 

396,855

Non-current liabilities:

 

 

 

Deferred tax liabilities

 

4,526

 

 

5,065

Long-term debt

 

1,373,618

 

 

1,296,966

Other long-term liabilities

 

86,549

 

 

114,707

Stockholders’ equity

 

334,261

 

 

755,852

Noncontrolling interest

 

178

 

 

183

Total liabilities & equity

$

2,038,129

 

$

2,569,628

SEMTECH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL INFORMATION

(in thousands)

(unaudited)

 

 

 

 

Nine Months Ended

 

 

 

October 29,

2023

 

October 30,

2022

Net (loss) income

 

 

$

(449,672

)

 

$

112,387

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

 

 

 

(107,839

)

 

 

145,510

 

Net cash used in investing activities

 

 

 

(26,266

)

 

 

(761

)

Net cash provided by financing activities

 

 

 

24,337

 

 

 

193,451

 

Effect of foreign exchange rate changes on cash and cash equivalents

 

 

 

(1,922

)

 

 

 

Net (decrease) increase in cash and cash equivalents

 

 

 

(111,690

)

 

 

338,200

 

Cash and cash equivalents at beginning of period

 

 

 

235,510

 

 

 

279,601

 

Cash and cash equivalents at end of period

 

 

$

123,820

 

 

$

617,801

 

 

 

 

 

 

 

 

Three Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

Free cash flow:

 

 

 

 

 

Cash flow from operations

$

(5,847

)

 

$

(12,005

)

 

$

18,181

 

Net capital expenditures

 

(6,576

)

 

 

(6,920

)

 

 

(7,060

)

Free cash flow

$

(12,423

)

 

$

(18,925

)

 

$

11,121

 

 

 

 

Three Months Ended

 

 

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

Net sales by reportable segment:

 

 

 

 

 

 

 

 

 

 

 

Signal Integrity

$

48,737

 

24

%

 

$

46,507

 

20

%

 

$

76,705

 

43

%

Advanced Protection and Sensing

 

50,569

 

25

%

 

 

48,521

 

20

%

 

 

51,225

 

29

%

IoT Systems

 

77,373

 

39

%

 

 

119,455

 

50

%

 

 

49,688

 

28

%

IoT Connected Services

 

24,220

 

12

%

 

 

23,889

 

10

%

 

 

 

%

Total net sales by reportable segment

$

200,899

 

100

%

 

$

238,372

 

100

%

 

$

177,618

 

100

%

 

Three Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

Net sales by end market:

 

 

 

 

 

 

 

 

 

 

 

Infrastructure

$

43,191

 

21

%

 

$

42,369

 

18

%

 

$

70,475

 

39

%

High-End Consumer

 

37,553

 

19

%

 

 

34,016

 

14

%

 

 

34,662

 

20

%

Industrial

 

120,155

 

60

%

 

 

161,987

 

68

%

 

 

72,481

 

41

%

Total net sales by end market

$

200,899

 

100

%

 

$

238,372

 

100

%

 

$

177,618

 

100

%

SEMTECH CORPORATION

SUPPLEMENTAL INFORMATION: RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

October 29,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

 

Q324

 

Q323

Gross margin (GAAP)

 

46.3

%

 

 

42.3

%

 

 

64.5

%

 

 

43.9

%

 

 

64.3

%

Share-based compensation

 

0.3

%

 

 

0.2

%

 

 

0.4

%

 

 

0.2

%

 

 

0.4

%

Amortization of acquired technology

 

5.0

%

 

 

4.4

%

 

 

0.5

%

 

 

4.7

%

 

 

0.5

%

Transaction and integration related costs, net

 

(0.3

)%

 

 

1.1

%

 

 

%

 

 

0.3

%

 

 

%

Restructuring and other reserves, net

 

%

 

 

0.2

%

 

 

0.1

%

 

 

0.1

%

 

 

%

Amortization of inventory step-up

 

%

 

 

1.4

%

 

 

%

 

 

0.5

%

 

 

%

Adjusted gross margin (Non-GAAP)

 

51.3

%

 

 

49.6

%

 

 

65.5

%

 

 

49.7

%

 

 

65.2

%

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

October 29,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

 

Q324

 

Q323

Selling, general and administrative (GAAP)

$

47,663

 

 

$

59,579

 

 

$

40,227

 

 

$

165,022

 

 

$

131,710

 

Share-based compensation

 

(3,059

)

 

 

(9,409

)

 

 

1,028

 

 

 

(16,970

)

 

 

(13,692

)

Transaction and integration related costs, net

 

(5,936

)

 

 

(7,271

)

 

 

(4,902

)

 

 

(20,275

)

 

 

(9,528

)

Environmental reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

(500

)

Litigation costs, net

 

(25

)

 

 

(132

)

 

 

97

 

 

 

(183

)

 

 

(99

)

Adjusted selling, general and administrative (Non-GAAP)

$

38,643

 

 

$

42,767

 

 

$

36,450

 

 

$

127,594

 

 

$

107,891

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

October 29,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

 

Q324

 

Q323

Product development and engineering (GAAP)

$

46,911

 

 

$

47,433

 

 

$

35,056

 

 

$

144,945

 

 

$

114,446

 

Share-based compensation

 

(2,972

)

 

 

(3,465

)

 

 

(3,480

)

 

 

(9,976

)

 

 

(11,518

)

Transaction and integration related costs, net

 

(66

)

 

 

(1,016

)

 

 

 

 

 

(1,616

)

 

 

 

Adjusted product development and engineering (Non-GAAP)

$

43,873

 

 

$

42,952

 

 

$

31,576

 

 

$

133,353

 

 

$

102,928

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

October 29,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

 

Q324

 

Q323

Operating cost and expense (GAAP)

$

105,339

 

 

$

400,837

 

 

$

77,200

 

 

$

621,002

 

 

$

230,087

 

Share-based compensation

 

(6,031

)

 

 

(12,874

)

 

 

(2,452

)

 

 

(26,946

)

 

 

(25,210

)

Intangible amortization

 

(4,853

)

 

 

(4,871

)

 

 

 

 

 

(14,606

)

 

 

 

Transaction and integration related costs, net

 

(6,002

)

 

 

(8,287

)

 

 

(4,902

)

 

 

(21,891

)

 

 

(9,528

)

Restructuring and other reserves

 

(3,646

)

 

 

(9,399

)

 

 

(2,244

)

 

 

(14,608

)

 

 

(2,744

)

Litigation costs, net

 

(25

)

 

 

(132

)

 

 

97

 

 

 

(183

)

 

 

99

 

Gain on sale of business

 

 

 

 

 

 

 

327

 

 

 

 

 

 

18,313

 

Goodwill Impairment

 

(2,266

)

 

 

(279,555

)

 

 

 

 

 

(281,821

)

 

 

 

Adjusted operating cost and expense (Non-GAAP)

$

82,516

 

 

$

85,719

 

 

$

68,026

 

 

$

260,947

 

 

$

211,017

 

SEMTECH CORPORATION

SUPPLEMENTAL INFORMATION: RECONCILIATION OF GAAP TO NON-GAAP RESULTS (CONTINUED)

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

October 29,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

 

Q324

 

Q323

Operating (loss) income (GAAP)

$

(12,373

)

 

$

(300,109

)

 

$

37,369

 

 

$

(324,362

)

 

$

148,458

 

Share-based compensation

 

6,538

 

 

 

13,399

 

 

 

3,085

 

 

 

28,341

 

 

 

27,228

 

Intangible amortization

 

14,861

 

 

 

15,444

 

 

 

1,000

 

 

 

46,042

 

 

 

3,096

 

Transaction and integration related costs, net

 

5,507

 

 

 

10,952

 

 

 

4,902

 

 

 

24,110

 

 

 

9,528

 

Restructuring and other reserves, net

 

3,646

 

 

 

9,761

 

 

 

2,372

 

 

 

15,467

 

 

 

2,872

 

Litigation costs, net

 

25

 

 

 

132

 

 

 

(97

)

 

 

183

 

 

 

99

 

Gain on sale of business

 

 

 

 

 

 

 

(327

)

 

 

 

 

 

(18,313

)

Goodwill impairment

 

2,266

 

 

 

279,555

 

 

 

 

 

 

281,821

 

 

 

 

Amortization of inventory step-up

 

 

 

 

3,314

 

 

 

 

 

 

3,314

 

 

 

 

Adjusted operating income (Non-GAAP)

$

20,470

 

 

$

32,448

 

 

$

48,304

 

 

$

74,916

 

 

$

172,968

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

October 29,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

 

Q324

 

Q323

Operating margin (GAAP)

(6.2

)%

 

(125.9

)%

 

21.0

%

 

(48.0

)%

 

25.2

%

Share-based compensation

 

3.3

%

 

 

5.6

%

 

 

1.8

%

 

 

4.2

%

 

 

4.7

%

Intangible amortization

 

7.4

%

 

 

6.5

%

 

 

0.6

%

 

 

6.8

%

 

 

0.5

%

Transaction and integration related costs, net

 

2.8

%

 

 

4.6

%

 

 

2.8

%

 

 

3.6

%

 

 

1.6

%

Restructuring and other reserves, net

 

1.8

%

 

 

4.1

%

 

 

1.3

%

 

 

2.3

%

 

 

0.5

%

Litigation costs, net

 

%

 

 

0.1

%

 

 

(0.1

)%

 

 

%

 

 

%

Gain on sale of business

 

%

 

 

%

 

 

(0.2

)%

 

 

%

 

 

(3.1

)%

Goodwill impairment

 

1.1

%

 

 

117.2

%

 

 

%

 

 

41.7

%

 

 

%

Amortization of inventory step-up

 

%

 

 

1.4

%

 

 

%

 

 

0.5

%

 

 

%

Adjusted operating margin (Non-GAAP)

 

10.2

%

 

 

13.6

%

 

 

27.2

%

 

 

11.1

%

 

 

29.4

%

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

October 29,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

 

Q324

 

Q323

Interest expense, net (GAAP)

$

27,731

 

 

$

23,497

 

 

$

8,170

 

 

$

70,669

 

 

$

9,707

 

Amortization of deferred financing costs

 

(1,837

)

 

 

(1,689

)

 

 

(279

)

 

 

(4,940

)

 

 

(520

)

Write-off of deferred financing costs

 

(3,675

)

 

 

(771

)

 

 

 

 

 

(4,446

)

 

 

 

Debt commitment fee

 

 

 

 

 

 

 

(7,255

)

 

 

 

 

 

(7,255

)

Investment income

 

103

 

 

 

178

 

 

 

335

 

 

 

631

 

 

 

1,055

 

Adjusted interest expense, net (Non-GAAP)

$

22,322

 

 

$

21,215

 

 

$

971

 

 

$

61,914

 

 

$

2,987

 

 

 

 

 

 

 

 

 

 

 

SEMTECH CORPORATION

SUPPLEMENTAL INFORMATION: RECONCILIATION OF GAAP TO NON-GAAP RESULTS (CONTINUED)

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

October 29,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

 

Q324

 

Q323

GAAP net (loss) income attributable to common stockholders

$

(38,250

)

 

$

(382,002

)

 

$

22,746

 

 

$

(449,667

)

 

$

112,393

 

Adjustments to GAAP net (loss) income attributable to common stockholders:

 

 

 

 

 

 

 

 

 

Share-based compensation

 

6,538

 

 

 

13,399

 

 

 

3,085

 

 

 

28,341

 

 

 

27,228

 

Intangible amortization

 

14,861

 

 

 

15,444

 

 

 

1,000

 

 

 

46,042

 

 

 

3,096

 

Transaction and integration related costs, net

 

5,507

 

 

 

10,952

 

 

 

4,902

 

 

 

24,110

 

 

 

9,528

 

Restructuring and other reserves, net

 

3,646

 

 

 

9,761

 

 

 

2,372

 

 

 

15,467

 

 

 

2,872

 

Litigation costs, net

 

25

 

 

 

132

 

 

 

(97

)

 

 

183

 

 

 

99

 

Gain on sale of business

 

 

 

 

 

 

 

(327

)

 

 

 

 

 

(18,313

)

Investment losses (gains), reserves and impairments, net

 

1,887

 

 

 

49

 

 

 

(306

)

 

 

1,619

 

 

 

(1,431

)

Amortization of deferred financing costs

 

1,837

 

 

 

1,689

 

 

 

279

 

 

 

4,940

 

 

 

520

 

Write-off of deferred financing costs

 

3,675

 

 

 

771

 

 

 

 

 

 

4,446

 

 

 

 

Debt commitment fee

 

 

 

 

 

 

 

7,255

 

 

 

 

 

 

7,255

 

Goodwill impairment

 

2,266

 

 

 

279,555

 

 

 

 

 

 

281,821

 

 

 

 

Amortization of inventory step-up

 

 

 

 

3,314

 

 

 

 

 

 

3,314

 

 

 

 

Total Non-GAAP adjustments before taxes

 

40,242

 

 

 

335,066

 

 

 

18,163

 

 

 

410,283

 

 

 

30,854

 

Associated tax effect

 

(514

)

 

 

55,432

 

 

 

655

 

 

 

52,123

 

 

 

6,089

 

Equity method loss (income)

 

11

 

 

 

12

 

 

 

36

 

 

 

30

 

 

 

(271

)

Total of supplemental information, net of taxes

 

39,739

 

 

 

390,510

 

 

 

18,854

 

 

 

462,436

 

 

 

36,672

 

Non-GAAP net income attributable to common stockholders

$

1,489

 

 

$

8,508

 

 

$

41,600

 

 

$

12,769

 

 

$

149,065

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted (loss) earnings per share

$

(0.60

)

 

$

(5.97

)

 

$

0.36

 

 

$

(7.02

)

 

$

1.76

 

Adjustments per above

 

0.62

 

 

 

6.10

 

 

 

0.29

 

 

 

7.22

 

 

 

0.57

 

Non-GAAP diluted earnings per share

$

0.02

 

 

$

0.13

 

 

$

0.65

 

 

$

0.20

 

 

$

2.33

 

Weighted-average number of shares used in computing diluted (loss) earnings per share:

 

 

 

 

 

 

 

 

 

GAAP

 

64,216

 

 

 

64,005

 

 

 

63,855

 

 

 

64,048

 

 

 

64,040

 

Non-GAAP

 

64,304

 

 

 

64,104

 

 

 

63,855

 

 

 

64,135

 

 

 

64,040

 

SEMTECH CORPORATION

SUPPLEMENTAL INFORMATION: RECONCILIATION OF GAAP TO NON-GAAP RESULTS (CONTINUED)

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

October 29,

2023

 

July 30,

2023

 

October 30,

2022

 

October 29,

2023

 

October 30,

2022

 

Q324

 

Q224

 

Q323

 

Q324

 

Q323

GAAP net (loss) income attributable to common stockholders

$

(38,250

)

 

$

(382,002

)

 

$

22,746

 

 

$

(449,667

)

 

$

112,393

 

Interest expense

 

28,305

 

 

 

24,171

 

 

 

9,009

 

 

 

72,986

 

 

 

11,465

 

Interest income

 

(574

)

 

 

(674

)

 

 

(839

)

 

 

(2,317

)

 

 

(1,758

)

Non-operating (expense) income, net

 

(3,542

)

 

 

1,566

 

 

 

64

 

 

 

(1,503

)

 

 

596

 

Investment impairments and credit loss reserves, net

 

1,990

 

 

 

227

 

 

 

29

 

 

 

2,250

 

 

 

(376

)

Provision (benefit) for income taxes

 

(311

)

 

 

56,592

 

 

 

6,327

 

 

 

53,864

 

 

 

26,415

 

Equity in net gains (losses) of equity method investments

 

11

 

 

 

12

 

 

 

36

 

 

 

30

 

 

 

(271

)

Net loss attributable to noncontrolling interest

 

(2

)

 

 

(1

)

 

 

(3

)

 

 

(5

)

 

 

(6

)

Share-based compensation

 

6,538

 

 

 

13,399

 

 

 

3,085

 

 

 

28,341

 

 

 

27,228

 

Depreciation and amortization

 

22,539

 

 

 

22,042

 

 

 

7,323

 

 

 

69,104

 

 

 

22,321

 

Transaction and integration related costs, net

 

5,507

 

 

 

10,952

 

 

 

4,902

 

 

 

24,110

 

 

 

9,528

 

Restructuring and other reserves, net

 

3,646

 

 

 

9,761

 

 

 

2,372

 

 

 

15,467

 

 

 

2,872

 

Litigation costs, net

 

25

 

 

 

132

 

 

 

(97

)

 

 

183

 

 

 

99

 

Gain on sale of business

 

 

 

 

 

 

 

(327

)

 

 

 

 

 

(18,313

)

Goodwill impairment

 

2,266

 

 

 

279,555

 

 

 

 

 

 

281,821

 

 

 

 

Amortization of inventory step-up

 

 

 

 

3,314

 

 

 

 

 

 

3,314

 

 

 

 

Adjusted EBITDA

$

28,148

 

 

$

39,046

 

 

$

54,627

 

 

$

97,978

 

 

$

192,193

 

 

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