Lattice Semiconductor Reports Third Quarter 2022 Results

The Company's management believes that these non-GAAP financial measures provide an additional and useful way of viewing aspects of our performance that, when viewed in conjunction with our GAAP results, provide a more comprehensive understanding of the various factors and trends affecting our ongoing financial performance and operating results than GAAP measures alone. Management also uses these non-GAAP measures for strategic and business decision-making, internal budgeting, forecasting, and resource allocation processes and believes that investors should have access to similar data.

These non-GAAP measures are included solely for informational and comparative purposes and are not meant as a substitute for GAAP and should be considered together with the consolidated financial information located in the tables attached to this press release.

About Lattice Semiconductor Corporation:

Lattice Semiconductor (NASDAQ: LSCC) is the low power programmable leader. We solve customer problems across the network, from the Edge to the Cloud, in the growing communications, computing, industrial, automotive and consumer markets. Our technology, long-standing relationships, and commitment to world-class support let our customers quickly and easily unleash their innovation to create a smart, secure, and connected world.

For more information about Lattice, please visit www.latticesemi.com. You can also follow us via LinkedIn, Twitter, Facebook, YouTube, WeChat, Weibo or Youku.

Lattice Semiconductor Corporation

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 1,

 

 

July 2,

 

 

October 2,

 

 

October 1,

 

 

October 2,

 

 

 

2022

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

172,509

 

 

$

161,372

 

 

$

131,911

 

 

$

484,396

 

 

$

373,532

 

Cost of sales

 

 

53,777

 

 

 

50,887

 

 

 

49,086

 

 

 

154,412

 

 

 

142,937

 

Gross margin

 

 

118,732

 

 

 

110,485

 

 

 

82,825

 

 

 

329,984

 

 

 

230,595

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

34,820

 

 

 

33,613

 

 

 

28,769

 

 

 

100,988

 

 

 

80,289

 

Selling, general, and administrative

 

 

31,926

 

 

 

29,024

 

 

 

26,272

 

 

 

89,721

 

 

 

76,971

 

Amortization of acquired intangible assets

 

 

869

 

 

 

870

 

 

 

603

 

 

 

2,908

 

 

 

1,809

 

Restructuring

 

 

2,315

 

 

 

136

 

 

 

166

 

 

 

2,505

 

 

 

546

 

Acquisition related charges

 

 

 

 

 

56

 

 

 

 

 

 

511

 

 

 

 

Total operating expenses

 

 

69,930

 

 

 

63,699

 

 

 

55,810

 

 

 

196,633

 

 

 

159,615

 

Income from operations

 

 

48,802

 

 

 

46,786

 

 

 

27,015

 

 

 

133,351

 

 

 

70,980

 

Interest expense

 

 

(1,267

)

 

 

(891

)

 

 

(661

)

 

 

(2,866

)

 

 

(2,081

)

Other (expense) income, net

 

 

(820

)

 

 

(243

)

 

 

(87

)

 

 

(1,085

)

 

 

(384

)

Income before income taxes

 

 

46,715

 

 

 

45,652

 

 

 

26,267

 

 

 

129,400

 

 

 

68,515

 

Income tax expense (benefit)

 

 

356

 

 

 

1,120

 

 

 

(472

)

 

 

2,431

 

 

 

1,125

 

Net income

 

$

46,359

 

 

$

44,532

 

 

$

26,739

 

 

$

126,969

 

 

$

67,390

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.34

 

 

$

0.32

 

 

$

0.20

 

 

$

0.92

 

 

$

0.49

 

Diluted

 

$

0.33

 

 

$

0.32

 

 

$

0.19

 

 

$

0.90

 

 

$

0.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

137,267

 

 

 

137,424

 

 

 

136,638

 

 

 

137,397

 

 

 

136,476

 

Diluted

 

 

139,935

 

 

 

140,170

 

 

 

141,632

 

 

 

140,921

 

 

 

142,163

 

Lattice Semiconductor Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

 

October 1,

 

 

January 1,

 

 

 

2022

 

 

2022

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

118,766

 

 

$

131,570

 

Accounts receivable, net

 

 

100,446

 

 

 

79,859

 

Inventories, net

 

 

93,964

 

 

 

67,594

 

Other current assets

 

 

27,132

 

 

 

22,328

 

Total current assets

 

 

340,308

 

 

 

301,351

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

45,217

 

 

 

38,094

 

Operating lease right-of-use assets

 

 

17,372

 

 

 

23,818

 

Intangible assets, net

 

 

26,085

 

 

 

29,782

 

Goodwill

 

 

315,358

 

 

 

315,358

 

Other long-term assets

 

 

14,605

 

 

 

18,091

 

 

 

$

758,945

 

 

$

726,494

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

43,635

 

 

$

34,597

 

Accrued expenses

 

 

35,127

 

 

 

26,444

 

Accrued payroll obligations

 

 

31,516

 

 

 

27,967

 

Current portion of long-term debt

 

 

 

 

 

17,173

 

Total current liabilities

 

 

110,278

 

 

 

106,181

 

 

 

 

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

148,685

 

 

 

140,760

 

Long-term operating lease liabilities, net of current portion

 

 

14,169

 

 

 

19,248

 

Other long-term liabilities

 

 

44,082

 

 

 

48,672

 

Total liabilities

 

 

317,214

 

 

 

314,861

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

441,731

 

 

 

411,633

 

 

 

$

758,945

 

 

$

726,494

 

Lattice Semiconductor Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Nine Months Ended

 

 

 

October 1,

 

 

October 2,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

126,969

 

 

$

67,390

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

41,207

 

 

 

32,624

 

Depreciation and amortization

 

 

21,498

 

 

 

17,839

 

Other non-cash adjustments

 

 

6,935

 

 

 

5,083

 

Net changes in assets and liabilities

 

 

(39,784

)

 

 

(6,873

)

Net cash provided by (used in) operating activities

 

 

156,825

 

 

 

116,063

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(13,080

)

 

 

(7,118

)

Other investing activities

 

 

(8,322

)

 

 

(9,534

)

Net cash provided by (used in) investing activities

 

 

(21,402

)

 

 

(16,652

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from long-term debt, net of issuance costs

 

 

148,601

 

 

 

 

Repayment of long-term debt

 

 

(158,750

)

 

 

(8,750

)

Repurchase of common stock

 

 

(90,137

)

 

 

(55,126

)

Net cash flows related to stock compensation exercises

 

 

(45,726

)

 

 

(36,347

)

Net cash provided by (used in) financing activities

 

 

(146,012

)

 

 

(100,223

)

Effect of exchange rate change on cash

 

 

(2,215

)

 

 

(68

)

Net increase (decrease) in cash and cash equivalents

 

 

(12,804

)

 

 

(880

)

Beginning cash and cash equivalents

 

 

131,570

 

 

 

182,332

 

Ending cash and cash equivalents

 

$

118,766

 

 

$

181,452

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information and non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Interest paid

 

$

2,203

 

 

$

1,755

 

Income taxes paid, net of refunds

 

$

4,115

 

 

$

2,842

 

Lattice Semiconductor Corporation

Supplemental Historical Financial Information

(unaudited)

 

 

 

Three Months Ended

 

 

 

October 1,

 

 

July 2,

 

 

October 2,

 

 

 

2022

 

 

2022

 

 

2021

 

Balance Sheet Information

 

 

 

 

 

 

 

 

 

 

 

 

A/R Days Revenue Outstanding (DSO)

 

 

53

 

 

 

53

 

 

 

55

 

Inventory Days (DIO)

 

 

159

 

 

 

139

 

 

 

123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue% (by Geography)

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

 

72

%

 

 

73

%

 

 

75

%

Americas

 

 

13

%

 

 

14

%

 

 

15

%

Europe (incl. Africa)

 

 

15

%

 

 

13

%

 

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue% (by End Market)

 

 

 

 

 

 

 

 

 

 

 

 

Communications and Computing

 

 

41

%

 

 

44

%

 

 

42

%

Industrial and Automotive

 

 

50

%

 

 

46

%

 

 

45

%

Consumer

 

 

6

%

 

 

8

%

 

 

10

%

Licensing and Services

 

 

3

%

 

 

2

%

 

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue% (by Channel)

 

 

 

 

 

 

 

 

 

 

 

 

Distribution

 

 

90

%

 

 

89

%

 

 

90

%

Direct

 

 

10

%

 

 

11

%

 

 

10

%

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

 

October 1,

 

 

July 2,

 

 

October 2,

 

 

 

2022

 

 

2022

 

 

2021

 

Gross Margin Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Gross margin

 

$

118,732

 

 

$

110,485

 

 

$

82,825

 

Stock-based compensation - gross margin (1)

 

 

1,122

 

 

 

1,011

 

 

 

1,056

 

Non-GAAP Gross margin

 

$

119,854

 

 

$

111,496

 

 

$

83,881

 

Gross Margin % Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Gross margin %

 

 

68.8

%

 

 

68.5

%

 

 

62.8

%

Cumulative effect of non-GAAP Gross Margin adjustments

 

 

0.7

%

 

 

0.6

%

 

 

0.8

%

Non-GAAP Gross margin %

 

 

69.5

%

 

 

69.1

%

 

 

63.6

%

Research and Development Expense % (R&D Expense %) Reconciliation

GAAP R&D Expense %

 

 

20.2

%

 

 

20.8

%

 

 

21.8

%

Stock-based compensation - R&D (1)

 

 

(3.1

)%

 

 

(3.0

)%

 

 

(3.0

)%

Non-GAAP R&D Expense %

 

 

17.1

%

 

 

17.8

%

 

 

18.8

%

Selling, General, and Administrative Expense % (SG&A Expense %) Reconciliation

 

 

 

 

 

GAAP SG&A Expense %

 

 

18.5

%

 

 

18.0

%

 

 

19.9

%

Stock-based compensation - SG&A (1)

 

 

(4.9

)%

 

 

(4.9

)%

 

 

(5.1

)%

Litigation expense (2)

 

 

(1.0

)%

 

 

%

 

 

%

Non-GAAP SG&A Expense %

 

 

12.6

%

 

 

13.1

%

 

 

14.8

%

Operating Expenses Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating expenses

 

$

69,930

 

 

$

63,699

 

 

$

55,810

 

Stock-based compensation - operations (1)

 

 

(13,758

)

 

 

(12,694

)

 

 

(10,704

)

Litigation expense (2)

 

 

(1,646

)

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

(869

)

 

 

(870

)

 

 

(603

)

Restructuring and other charges

 

 

(2,315

)

 

 

(192

)

 

 

(701

)

Non-GAAP Operating expenses

 

$

51,342

 

 

$

49,943

 

 

$

43,802

 

Income from Operations Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Income from operations

 

$

48,802

 

 

$

46,786

 

 

$

27,015

 

Stock-based compensation - gross margin (1)

 

 

1,122

 

 

 

1,011

 

 

 

1,056

 

Stock-based compensation - operations (1)

 

 

13,758

 

 

 

12,694

 

 

 

10,704

 

Litigation expense (2)

 

 

1,646

 

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

869

 

 

 

870

 

 

 

603

 

Restructuring and other charges

 

 

2,315

 

 

 

192

 

 

 

701

 

Non-GAAP Income from operations

 

$

68,512

 

 

$

61,553

 

 

$

40,079

 

Income from Operations % Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Income from operations %

 

 

28.3

%

 

 

29.0

%

 

 

20.5

%

Cumulative effect of non-GAAP Gross Margin and Operating adjustments

 

 

11.4

%

 

 

9.1

%

 

 

9.9

%

Non-GAAP Income from operations %

 

 

39.7

%

 

 

38.1

%

 

 

30.4

%

(1)

 

The non-GAAP adjustments for Stock-based compensation include related tax expenses.

(2)

 

Legal expenses associated with the defense of claims that are outside the ordinary course of business that were brought against the Company by Steven A.W. De Jaray, Perienne De Jaray and Darrell R. Oswalde.

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

 

October 1,

 

 

July 2,

 

 

October 2,

 

 

 

2022

 

 

2022

 

 

2021

 

Other (Expense) Income Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Other (expense) income, net

 

$

(820

)

 

$

(243

)

 

$

(87

)

Loss on re-financing of long-term debt

 

 

735

 

 

 

 

 

 

 

Non-GAAP Other (expense) income, net

 

$

(85

)

 

$

(243

)

 

$

(87

)

Income Tax Expense (Benefit) Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Income tax expense (benefit)

 

$

356

 

 

$

1,120

 

 

$

(472

)

Estimated tax effect of non-GAAP adjustments (3)

 

 

312

 

 

 

175

 

 

 

183

 

Non-GAAP Income tax expense (benefit)

 

$

668

 

 

$

1,295

 

 

$

(289

)

Net Income Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income

 

$

46,359

 

 

$

44,532

 

 

$

26,739

 

Stock-based compensation - gross margin (1)

 

 

1,122

 

 

 

1,011

 

 

 

1,056

 

Stock-based compensation - operations (1)

 

 

13,758

 

 

 

12,694

 

 

 

10,704

 

Litigation expense (2)

 

 

1,646

 

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

869

 

 

 

870

 

 

 

603

 

Restructuring and other charges

 

 

2,315

 

 

 

192

 

 

 

701

 

Loss on re-financing of long-term debt

 

 

735

 

 

 

 

 

 

 

Estimated tax effect of non-GAAP adjustments (3)

 

 

(312

)

 

 

(175

)

 

 

(183

)

Non-GAAP Net income

 

$

66,492

 

 

$

59,124

 

 

$

39,620

 

Net Income Per Share Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income per share - basic

 

$

0.34

 

 

$

0.32

 

 

$

0.20

 

Cumulative effect of Non-GAAP adjustments

 

 

0.14

 

 

 

0.11

 

 

 

0.09

 

Non-GAAP Net income per share - basic

 

$

0.48

 

 

$

0.43

 

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income per share - diluted

 

$

0.33

 

 

$

0.32

 

 

$

0.19

 

Cumulative effect of Non-GAAP adjustments

 

 

0.15

 

 

 

0.10

 

 

 

0.09

 

Non-GAAP Net income per share - diluted

 

$

0.48

 

 

$

0.42

 

 

$

0.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

137,267

 

 

 

137,424

 

 

 

136,638

 

Diluted

 

 

139,935

 

 

 

140,170

 

 

 

141,632

 

(1)

 

The non-GAAP adjustments for Stock-based compensation include related tax expenses.

(2)

 

Legal expenses associated with the defense of claims that are outside the ordinary course of business that were brought against the Company by Steven A.W. De Jaray, Perienne De Jaray and Darrell R. Oswalde.

(3)

 

We calculate non-GAAP tax expense by applying our tax provision model to year-to-date and projected income after adjusting for non-GAAP items. The difference between calculated values for GAAP and non-GAAP tax expense has been included as the “Estimated tax effect of non-GAAP adjustments.”


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