8-K
Semtech Corp (SMTC)
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): September 1, 2021
SEMTECH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation)
| 001-06395 | 95-2119684 |
|---|---|
| (Commission<br><br> <br>File Number) | (IRS Employer<br><br> <br>Identification No.) |
| 200 Flynn Road<br><br> <br>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:
| Title of each class | Trading Symbol(s) | Name of each exchange on which 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 September 1, 2021, the Registrant issued a press release announcing its financial results for the second quarter of fiscal year 2022, which ended August 1, 2021. A copy of the press release is attached<br> hereto as Exhibit 99.1. | ||
| Item 7.01 | Regulation FD Disclosure. | |
| --- | --- | |
| On September 1, 2021, 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<br> attached hereto as Exhibit 99.1. | ||
| Item 9.01 | Financial Statements and Exhibits. | |
| --- | --- | --- |
| (d) Exhibits | ||
| Exhibit 99.1 | Press Release of the Registrant dated September 1, 2021 (This Exhibit 99.1 is being furnished and<br> 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<br> 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<br> 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: September 1, 2021 | /s/ Emeka N. Chukwu |
| Name: Emeka N. Chukwu | |
| Title: Chief Financial Officer |
Exhibit 99.1
Semtech Announces Second Quarter of Fiscal Year 2022 Results
CAMARILLO, Calif.--(BUSINESS WIRE)--September 1, 2021--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 second quarter of fiscal year 2022, which ended August 1, 2021.
Highlights for the Second Fiscal Quarter 2022
- Record net sales of $185.0 million, an increase of 9% sequentially and 29% year-over-year
- GAAP and non-GAAP gross margin grew sequentially 90bps and 70bps to 62.4% and 62.7%, respectively
- Record GAAP diluted earnings per share of $0.50 and record non-GAAP diluted earnings per share of $0.65
- Record Wireless and Sensing products group net sales driven by record LoRa® and record proximity sensing net sales
- Record Signal Integrity products group net sales driven by record Tri-Edge™ and record 10G PON net sales
- Record operating cash flow of $53.0 million or 29% of Q2 FY2022 net sales
- Repurchased 639,519 shares for $42.0 million during Q2 FY2022
Results on a GAAP basis for the Second Fiscal Quarter 2022
- Net sales were $185.0 million
- GAAP Gross margin was 62.4%
- GAAP SG&A expense was $42.0 million
- GAAP R&D expense was $35.5 million
- GAAP Operating margin was 19.8%
- GAAP Net income attributable to common stockholders was $32.9 million or $0.50 diluted earnings per 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 Second Fiscal Quarter 2022 (see the list of non-GAAP financial 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 62.7%
- Non-GAAP SG&A expense was $34.2 million
- Non-GAAP R&D expense was $31.7 million
- Non-GAAP Operating margin was 27.1%
- Non-GAAP Net income attributable to common stockholders was $42.4 million or $0.65 diluted earnings per share
Mohan Maheswaran, Semtech’s President and Chief Executive Officer, stated, “Fiscal Q2 was a strong quarter with the Company achieving record net sales and record diluted earnings per share. The strong global demand for our core growth engines in the IoT and Infrastructure segments, led by our LoRa and Tri-Edge platforms is very exciting. In addition, the increase in gross margins driven by the ramp of our new products is evidence of the healthy innovation culture in the Company. We are confident that we should be able to continue to execute across all our product groups and deliver a record performance in FY2022.”
Third Fiscal Quarter 2022 Outlook
Both the GAAP and non-GAAP third 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 Third Fiscal Quarter 2022 Outlook
- Net sales are expected to be in the range of $188.0 million to $198.0 million
- GAAP Gross margin is expected to be in the range of 62.4% to 63.4%
- GAAP SG&A expense is expected to be in the range of $44.0 million to $45.0 million
- GAAP R&D expense is expected to be in the range of $36.7 million to $37.7 million
- GAAP Intangible amortization expense is expected to be approximately $1.3 million
- GAAP Interest and other expense, net is expected to be approximately $1.4 million
- GAAP Effective tax rate is expected to be in the range of 9% to 11%
- GAAP Diluted earnings per share are expected to be in the range of $0.47 to $0.55
- Fully-diluted share count is expected to be approximately 65.2 million shares
- Share-based compensation is expected to be approximately $15.0 million, categorized as follows: $0.8 million cost of sales, $10.0 million SG&A, and $4.2 million R&D
- Capital expenditures are expected to be approximately $8.9 million
- Depreciation expense is expected to be approximately $6.8 million
Non-GAAP Third Fiscal Quarter 2022 Outlook (see the list of non-GAAP financial 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 62.8% to 63.8%
- Non-GAAP SG&A expense is expected to be in the range of $33.5 million to $34.5 million
- Non-GAAP R&D expense is expected to be in the range of $32.5 million to $33.5 million
- Non-GAAP normalized tax rate for FY2022 is expected to be approximately 13%
- Non-GAAP Diluted earnings per share are expected to be in the range of $0.68 to $0.76
Webcast and Conference Call
Semtech will be hosting a conference call today to discuss its second 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 September 29, 2021 at the same website or by calling (877) 660-6853 and entering conference ID 13716892.
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 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 third 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 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 financial measures to their most comparable GAAP measures for the first and second quarters of fiscal year 2022 and the second quarter of fiscal year 2021, 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 third 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 third 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, and Tri-Edge is a trademark or service mark, of Semtech Corporation or its subsidiaries.
SMTC-F
| SEMTECH CORPORATION<br><br> <br>CONDENSED CONSOLIDATED STATEMENTS OF INCOME<br><br> <br>(in thousands, except per share data)<br><br> <br>(unaudited) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Six Months Ended | ||||||||||||||
| August 1, <br><br> 2021 | May 2, <br><br> 2021 | July 26, <br><br> 2020 | August 1, <br><br> 2021 | July 26, <br><br> 2020 | |||||||||||
| Q222 | Q122 | Q221 | Q222 | Q221 | |||||||||||
| Net sales | $ | 185,004 | $ | 170,372 | $ | 143,660 | $ | 355,376 | $ | 276,362 | |||||
| Cost of sales | 69,572 | 65,511 | 55,409 | 135,083 | 107,350 | ||||||||||
| Gross profit | 115,432 | 104,861 | 88,251 | 220,293 | 169,012 | ||||||||||
| Operating costs and expenses: | |||||||||||||||
| Selling, general and administrative | 41,977 | 38,804 | 38,255 | 80,781 | 72,855 | ||||||||||
| Product development and engineering | 35,497 | 36,790 | 29,220 | 72,287 | 56,806 | ||||||||||
| Intangible amortization | 1,298 | 1,298 | 2,020 | 2,596 | 4,860 | ||||||||||
| Changes in the fair value of contingent earn-out obligations | — | — | — | — | (33 | ) | |||||||||
| Total operating costs and expenses | 78,772 | 76,892 | 69,495 | 155,664 | 134,488 | ||||||||||
| Operating income | 36,660 | 27,969 | 18,756 | 64,629 | 34,524 | ||||||||||
| Interest expense | (1,185 | ) | (1,199 | ) | (1,252 | ) | (2,384 | ) | (2,811 | ) | |||||
| Non-operating income (expense), net | 213 | 94 | (176 | ) | 307 | 247 | |||||||||
| Investment impairments and credit loss reserves | (468 | ) | (246 | ) | (1,485 | ) | (714 | ) | (5,115 | ) | |||||
| Income before taxes and equity in net gains (losses) of equity method investments | 35,220 | 26,618 | 15,843 | 61,838 | 26,845 | ||||||||||
| Provision (benefit) for taxes | 2,963 | 3,198 | (416 | ) | 6,161 | 943 | |||||||||
| Net income before equity in net gains (losses) of equity method investments | 32,257 | 23,420 | 16,259 | 55,677 | 25,902 | ||||||||||
| Equity in net gains (losses) of equity method investments | 674 | 78 | (137 | ) | 752 | (148 | ) | ||||||||
| Net income | 32,931 | 23,498 | 16,122 | 56,429 | 25,754 | ||||||||||
| Net loss attributable to noncontrolling interest | (2 | ) | (2 | ) | (3 | ) | (4 | ) | (6 | ) | |||||
| Net income attributable to common stockholders | $ | 32,933 | $ | 23,500 | $ | 16,125 | $ | 56,433 | $ | 25,760 | |||||
| Earnings per share: | |||||||||||||||
| Basic | $ | 0.51 | $ | 0.36 | $ | 0.25 | $ | 0.87 | $ | 0.39 | |||||
| Diluted | $ | 0.50 | $ | 0.36 | $ | 0.24 | $ | 0.86 | $ | 0.39 | |||||
| Weighted average number of shares used in computing earnings per share: | |||||||||||||||
| Basic | 64,721 | 65,089 | 65,084 | 64,905 | 65,337 | ||||||||||
| Diluted | 65,584 | 66,110 | 66,004 | 65,849 | 66,099 |
| SEMTECH CORPORATION<br> <br>CONDENSED CONSOLIDATED BALANCE SHEETS<br><br> <br>(in thousands)<br><br> <br>(unaudited) | ||||
|---|---|---|---|---|
| August 1, 2021 | January 31, 2021 | |||
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 262,657 | $ | 268,891 |
| Accounts receivable, net | 73,062 | 70,433 | ||
| Inventories | 103,031 | 87,494 | ||
| Prepaid taxes | 14,179 | 22,083 | ||
| Other current assets | 31,920 | 25,827 | ||
| Total current assets | 484,849 | 474,728 | ||
| Non-current assets: | ||||
| Property, plant and equipment, net | 132,140 | 130,934 | ||
| Deferred tax assets | 24,816 | 25,483 | ||
| Goodwill | 351,141 | 351,141 | ||
| Other intangible assets, net | 9,150 | 11,746 | ||
| Other assets | 97,908 | 88,070 | ||
| Total assets | $ | 1,100,004 | $ | 1,082,102 |
| LIABILITIES AND EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 52,473 | $ | 50,189 |
| Accrued liabilities | 63,893 | 59,384 | ||
| Total current liabilities | 116,366 | 109,573 | ||
| Non-current liabilities: | ||||
| Deferred tax liabilities | 1,127 | 976 | ||
| Long term debt | 175,436 | 179,195 | ||
| Other long-term liabilities | 98,452 | 93,405 | ||
| Stockholders’ equity | 708,417 | 698,743 | ||
| Noncontrolling interest | 206 | 210 | ||
| Total liabilities & equity | $ | 1,100,004 | $ | 1,082,102 |
| SEMTECH CORPORATION<br> <br>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL INFORMATION<br><br> <br>(in thousands)<br><br> <br>(unaudited) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Six Months Ended | |||||||||
| August 1, <br><br> 2021 | July 26, <br><br> 2020 | ||||||||
| Net income | $ | 56,429 | $ | 25,754 | |||||
| Net cash provided by operations | 85,599 | 63,299 | |||||||
| Net cash used in investing activities | (15,867 | ) | (20,981 | ) | |||||
| Net cash used in financing activities | (75,966 | ) | (54,186 | ) | |||||
| Net decrease in cash and cash equivalents | (6,234 | ) | (11,868 | ) | |||||
| Cash and cash equivalents at beginning of period | 268,891 | 293,324 | |||||||
| Cash and cash equivalents at end of period | $ | 262,657 | $ | 281,456 | |||||
| Three Months Ended | |||||||||
| August 1, <br><br> 2021 | May 2, <br><br> 2021 | July 26, <br><br> 2020 | |||||||
| Q222 | Q122 | Q221 | |||||||
| Free Cash Flow: | |||||||||
| Cash Flow from Operations | $ | 53,014 | $ | 32,585 | $ | 37,216 | |||
| Net Capital Expenditures | (6,972 | ) | (5,760 | ) | (6,968 | ) | |||
| Free Cash Flow | $ | 46,042 | $ | 26,825 | $ | 30,248 |
| SEMTECH CORPORATION<br> <br>SUPPLEMENTAL INFORMATION: RECONCILIATION OF GAAP TO NON-GAAP RESULTS<br><br> <br>(in thousands, except per share data)<br><br> <br>(unaudited) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Six Months Ended | ||||||||||||||
| August 1, <br><br> 2021 | May 2, <br><br> 2021 | July 26, <br><br> 2020 | August 1, <br><br> 2021 | July 26, <br><br> 2020 | |||||||||||
| Q222 | Q122 | Q221 | Q222 | Q221 | |||||||||||
| Gross Margin–GAAP | 62.4 | % | 61.5 | % | 61.4 | % | 62.0 | % | 61.2 | % | |||||
| Share-based compensation | 0.3 | % | 0.5 | % | 0.4 | % | 0.4 | % | 0.3 | % | |||||
| Adjusted Gross Margin (Non-GAAP) | 62.7 | % | 62.0 | % | 61.8 | % | 62.4 | % | 61.5 | % | |||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| August 1, <br><br> 2021 | May 2, <br><br> 2021 | July 26, <br><br> 2020 | August 1, <br><br> 2021 | July 26, <br><br> 2020 | |||||||||||
| Q222 | Q122 | Q221 | Q222 | Q221 | |||||||||||
| Selling, general and administrative–GAAP | $ | 41,977 | $ | 38,804 | $ | 38,255 | $ | 80,781 | $ | 72,855 | |||||
| Share-based compensation | (7,098 | ) | (7,359 | ) | (9,501 | ) | (14,457 | ) | (15,460 | ) | |||||
| Transaction and integration related | (101 | ) | 177 | (249 | ) | 76 | (334 | ) | |||||||
| Restructuring and other reserves | (16 | ) | — | (502 | ) | (16 | ) | (502 | ) | ||||||
| Litigation cost, net of recoveries | (560 | ) | (540 | ) | (105 | ) | (1,100 | ) | (251 | ) | |||||
| Adjusted selling, general and administrative (Non-GAAP) | $ | 34,202 | $ | 31,082 | $ | 27,898 | $ | 65,284 | $ | 56,308 | |||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| August 1, <br><br> 2021 | May 2, <br><br> 2021 | July 26, <br><br> 2020 | August 1, <br><br> 2021 | July 26, <br><br> 2020 | |||||||||||
| Q222 | Q122 | Q221 | Q222 | Q221 | |||||||||||
| Product development and engineering–GAAP | $ | 35,497 | $ | 36,790 | $ | 29,220 | $ | 72,287 | $ | 56,806 | |||||
| Share-based compensation | (3,768 | ) | (3,762 | ) | (3,135 | ) | (7,530 | ) | (6,025 | ) | |||||
| Transaction and integration related | — | — | — | — | 87 | ||||||||||
| Adjusted product development and engineering (Non-GAAP) | $ | 31,729 | $ | 33,028 | $ | 26,085 | $ | 64,757 | $ | 50,868 | |||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| August 1, <br><br> 2021 | May 2, <br><br> 2021 | July 26, <br><br> 2020 | August 1, <br><br> 2021 | July 26, <br><br> 2020 | |||||||||||
| Q222 | Q122 | Q221 | Q222 | Q221 | |||||||||||
| Operating Margin–GAAP | 19.8 | % | 16.4 | % | 13.1 | % | 18.2 | % | 12.5 | % | |||||
| Share-based compensation | 6.2 | % | 6.9 | % | 9.2 | % | 6.6 | % | 8.2 | % | |||||
| Intangible amortization | 0.7 | % | 0.8 | % | 1.4 | % | 0.7 | % | 1.7 | % | |||||
| Transaction and integration related | 0.1 | % | (0.1 | )% | 0.1 | % | — | % | 0.1 | % | |||||
| Restructuring and other reserves | — | % | — | % | 0.3 | % | — | % | 0.2 | % | |||||
| Litigation cost, net of recoveries | 0.3 | % | 0.3 | % | 0.1 | % | 0.3 | % | 0.1 | % | |||||
| Adjusted Operating Margin (Non-GAAP) | 27.1 | % | 24.3 | % | 24.2 | % | 25.8 | % | 22.8 | % |
| SEMTECH CORPORATION<br> <br>SUPPLEMENTAL INFORMATION: RECONCILIATION OF GAAP TO NON-GAAP RESULTS (CONTINUED)<br><br> <br>(in thousands, except per share data)<br><br> <br>(unaudited) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Six Months Ended | ||||||||||||||
| August 1, <br><br> 2021 | May 2, <br><br> 2021 | July 26, <br><br> 2020 | August 1, <br><br> 2021 | July 26, <br><br> 2020 | |||||||||||
| Q222 | Q122 | Q221 | Q222 | Q221 | |||||||||||
| GAAP net income attributable to common stockholders | $ | 32,933 | $ | 23,500 | $ | 16,125 | $ | 56,433 | $ | 25,760 | |||||
| Adjustments to GAAP net income attributable to common stockholders: | |||||||||||||||
| Share-based compensation | 11,517 | 11,839 | 13,186 | 23,356 | 22,565 | ||||||||||
| Intangible amortization | 1,298 | 1,298 | 2,020 | 2,596 | 4,860 | ||||||||||
| Transaction and integration related | 101 | (177 | ) | 249 | (76 | ) | 247 | ||||||||
| Restructuring and other reserves | 16 | — | 502 | 16 | 502 | ||||||||||
| Litigation cost, net of recoveries | 560 | 540 | 105 | 1,100 | 251 | ||||||||||
| Changes in the fair value of contingent earn-out obligations | — | — | — | — | (33 | ) | |||||||||
| Investment losses (gains), reserves and impairments, net | 44 | (84 | ) | 729 | (40 | ) | 4,359 | ||||||||
| Total Non-GAAP adjustments before taxes | 13,536 | 13,416 | 16,791 | 26,952 | 32,751 | ||||||||||
| Associated tax effect | (3,375 | ) | (2,006 | ) | (4,848 | ) | (5,381 | ) | (7,420 | ) | |||||
| Equity in net (gains) losses of equity method investments | (674 | ) | (78 | ) | 137 | (752 | ) | 148 | |||||||
| Total of supplemental information, net of taxes | 9,487 | 11,332 | 12,080 | 20,819 | 25,479 | ||||||||||
| Non-GAAP net income attributable to common stockholders | $ | 42,420 | $ | 34,832 | $ | 28,205 | $ | 77,252 | $ | 51,239 | |||||
| GAAP diluted earnings per share | $ | 0.50 | $ | 0.36 | $ | 0.24 | $ | 0.86 | $ | 0.39 | |||||
| Adjustments per above | 0.15 | 0.17 | 0.19 | 0.31 | 0.39 | ||||||||||
| Non-GAAP diluted earnings per share | $ | 0.65 | $ | 0.53 | $ | 0.43 | $ | 1.17 | $ | 0.78 |
| SEMTECH CORPORATION<br> <br>RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK<br><br> <br>Third Quarter of Fiscal Year 2022 Outlook<br><br> <br>(in millions, except per share data) | ||||||
|---|---|---|---|---|---|---|
| Q3 FY22 Outlook | ||||||
| October 31, 2021 | ||||||
| Low | High | |||||
| Gross Margin–GAAP | 62.4 | % | 63.4 | % | ||
| Share-based compensation | 0.4 | % | 0.4 | % | ||
| Adjusted Gross Margin (Non-GAAP) | 62.8 | % | 63.8 | % | ||
| Low | High | |||||
| Selling, general and administrative–GAAP | $ | 44.0 | $ | 45.0 | ||
| Share-based compensation | (10.0 | ) | (10.0 | ) | ||
| Transaction and integration related | (0.5 | ) | (0.5 | ) | ||
| Adjusted selling, general and administrative (Non-GAAP) | $ | 33.5 | $ | 34.5 | ||
| Low | High | |||||
| Product development and engineering–GAAP | $ | 36.7 | $ | 37.7 | ||
| Share-based compensation | (4.2 | ) | (4.2 | ) | ||
| Adjusted product development and engineering (Non-GAAP) | $ | 32.5 | $ | 33.5 | ||
| Low | High | |||||
| Diluted earnings per share–GAAP | $ | 0.47 | $ | 0.55 | ||
| Share-based compensation | 0.23 | 0.23 | ||||
| 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 | ) | ||
| Adjusted diluted earnings per share (Non-GAAP) | $ | 0.68 | $ | 0.76 |
Contacts
Sandy Harrison
Semtech Corporation
\(805\) 480-2004
webir@semtech.com