Lattice Semiconductor Reports First Quarter 2023 Results

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

 

 

April 1,

 

December 31,

 

April 2,

 

 

2023

 

2022

 

2022

Revenue

 

$

184,310

 

 

$

175,960

 

 

$

150,515

 

Cost of sales

 

 

55,709

 

 

 

53,894

 

 

 

49,748

 

Gross margin

 

 

128,601

 

 

 

122,066

 

 

 

100,767

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

35,989

 

 

 

34,779

 

 

 

32,555

 

Selling, general, and administrative

 

 

32,578

 

 

 

32,355

 

 

 

28,771

 

Amortization of acquired intangible assets

 

 

870

 

 

 

870

 

 

 

1,169

 

Restructuring

 

 

30

 

 

 

46

 

 

 

54

 

Acquisition related charges

 

 

 

 

 

 

 

 

455

 

Total operating expenses

 

 

69,467

 

 

 

68,050

 

 

 

63,004

 

Income from operations

 

 

59,134

 

 

 

54,016

 

 

 

37,763

 

Interest expense, net

 

 

(555

)

 

 

(1,280

)

 

 

(708

)

Other (expense) income, net

 

 

(95

)

 

 

(24

)

 

 

(22

)

Income before income taxes

 

 

58,484

 

 

 

52,712

 

 

 

37,033

 

Income tax expense

 

 

2,561

 

 

 

799

 

 

 

955

 

Net income

 

$

55,923

 

 

$

51,913

 

 

$

36,078

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.41

 

 

$

0.38

 

 

$

0.26

 

Diluted

 

$

0.40

 

 

$

0.37

 

 

$

0.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

137,418

 

 

 

137,095

 

 

 

137,500

 

Diluted

 

 

140,101

 

 

 

139,631

 

 

 

141,281

 

Lattice Semiconductor Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

 

April 1,

 

December 31,

 

 

2023

 

2022

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

112,136

 

 

$

145,722

 

Accounts receivable, net

 

 

90,822

 

 

 

94,018

 

Inventories, net

 

 

117,079

 

 

 

110,375

 

Other current assets

 

 

28,843

 

 

 

29,052

 

Total current assets

 

 

348,880

 

 

 

379,167

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

51,086

 

 

 

47,614

 

Operating lease right-of-use assets

 

 

16,054

 

 

 

17,590

 

Intangible assets, net

 

 

23,930

 

 

 

25,070

 

Goodwill

 

 

315,358

 

 

 

315,358

 

Other long-term assets

 

 

12,321

 

 

 

13,914

 

 

 

$

767,629

 

 

$

798,713

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

40,843

 

 

$

42,036

 

Accrued liabilities

 

 

40,661

 

 

 

48,467

 

Accrued payroll obligations

 

 

15,654

 

 

 

36,870

 

Total current liabilities

 

 

97,158

 

 

 

127,373

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

103,819

 

 

 

128,752

 

Long-term operating lease liabilities, net of current portion

 

 

12,012

 

 

 

13,618

 

Other long-term liabilities

 

 

39,666

 

 

 

41,807

 

Total liabilities

 

 

252,655

 

 

 

311,550

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

514,974

 

 

 

487,163

 

 

 

$

767,629

 

 

$

798,713

 

Lattice Semiconductor Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

April 1,

 

April 2,

 

 

2023

 

2022

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

55,923

 

 

$

36,078

 

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

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

14,255

 

 

 

14,125

 

Depreciation and amortization

 

 

8,090

 

 

 

7,179

 

Other non-cash adjustments

 

 

1,702

 

 

 

1,740

 

Net changes in assets and liabilities

 

 

(35,106

)

 

 

(15,917

)

Net cash provided by (used in) operating activities

 

 

44,864

 

 

 

43,205

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(8,414

)

 

 

(4,426

)

Other investing activities

 

 

(2,615

)

 

 

(2,704

)

Net cash provided by (used in) investing activities

 

 

(11,029

)

 

 

(7,130

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Repayment of long-term debt

 

 

(25,000

)

 

 

(4,375

)

Repurchase of common stock

 

 

(10,004

)

 

 

(15,000

)

Net cash flows related to stock compensation exercises

 

 

(32,552

)

 

 

(25,028

)

Net cash provided by (used in) financing activities

 

 

(67,556

)

 

 

(44,403

)

Effect of exchange rate change on cash

 

 

135

 

 

 

(253

)

Net increase (decrease) in cash and cash equivalents

 

 

(33,586

)

 

 

(8,581

)

Beginning cash and cash equivalents

 

 

145,722

 

 

 

131,570

 

Ending cash and cash equivalents

 

$

112,136

 

 

$

122,989

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Interest paid

 

$

1,849

 

 

$

552

 

Income taxes paid, net of refunds

 

$

413

 

 

$

761

 

Operating lease payments

 

$

2,000

 

 

$

1,884

 

Lattice Semiconductor Corporation

Supplemental Historical Financial Information

(unaudited)

 

 

 

Three Months Ended

 

 

April 1,

 

December 31,

 

April 2,

 

 

2023

 

2022

 

2022

Balance Sheet Information

 

 

 

 

 

 

 

 

 

 

 

 

A/R Days Revenue Outstanding (DSO)

 

 

45

 

 

 

49

 

 

 

50

 

Inventory Days (DIO)

 

 

192

 

 

 

187

 

 

 

132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue % (by Geography)

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

 

57

%

 

 

65

%

 

 

72

%

Americas

 

 

23

%

 

 

19

%

 

 

15

%

Europe (incl. Africa)

 

 

20

%

 

 

16

%

 

 

13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue % (by End Market) *

 

 

 

 

 

 

 

 

 

 

 

 

Communications and Computing

 

 

36

%

 

 

42

%

 

 

43

%

Industrial and Automotive

 

 

59

%

 

 

51

%

 

 

46

%

Consumer

 

 

5

%

 

 

7

%

 

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue $M (by End Market) *

 

 

 

 

 

 

 

 

 

 

 

 

Communications and Computing

 

$

66.3

 

 

$

73.2

 

 

$

64.1

 

Industrial and Automotive

 

$

108.3

 

 

$

89.6

 

 

$

69.6

 

Consumer

 

$

9.7

 

 

$

13.2

 

 

$

16.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue % (by Channel)

 

 

 

 

 

 

 

 

 

 

 

 

Distribution

 

 

88

%

 

 

89

%

 

 

90

%

Direct

 

 

12

%

 

 

11

%

 

 

10

%

 

* During the first quarter of fiscal 2023, we realigned our end market categories. Prior periods have been reclassified to match current period presentation.

Lattice Semiconductor Corporation

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

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

April 1,

 

December 31,

 

April 2,

 

 

2023

 

2022

 

2022

Gross Margin Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Gross margin

 

$

128,601

 

 

$

122,066

 

 

$

100,767

 

Stock-based compensation - gross margin (1)

 

 

1,023

 

 

 

1,056

 

 

 

1,121

 

Non-GAAP Gross margin

 

$

129,624

 

 

$

123,122

 

 

$

101,888

 

Gross Margin % Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Gross margin %

 

 

69.8

%

 

 

69.4

%

 

 

66.9

%

Cumulative effect of non-GAAP Gross Margin adjustments

 

 

0.5

%

 

 

0.6

%

 

 

0.8

%

Non-GAAP Gross margin %

 

 

70.3

%

 

 

70.0

%

 

 

67.7

%

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

GAAP R&D Expense %

 

 

19.5

%

 

 

19.8

%

 

 

21.6

%

Stock-based compensation - R&D (1)

 

 

(3.0

)%

 

 

(3.0

)%

 

 

(3.4

)%

Non-GAAP R&D Expense %

 

 

16.5

%

 

 

16.8

%

 

 

18.2

%

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

 

 

 

 

 

GAAP SG&A Expense %

 

 

17.7

%

 

 

18.4

%

 

 

19.1

%

Stock-based compensation - SG&A (1)

 

 

(4.7

)%

 

 

(4.7

)%

 

 

(5.9

)%

Litigation expense (2)

 

 

(0.2

)%

 

 

(0.6

)%

 

 

%

Non-GAAP SG&A Expense %

 

 

12.8

%

 

 

13.1

%

 

 

13.2

%

Operating Expenses Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating expenses

 

$

69,467

 

 

$

68,050

 

 

$

63,004

 

Stock-based compensation - operations (1)

 

 

(14,296

)

 

 

(13,584

)

 

 

(14,083

)

Litigation expense (2)

 

 

(288

)

 

 

(1,081

)

 

 

 

Amortization of acquired intangible assets

 

 

(870

)

 

 

(870

)

 

 

(1,169

)

Restructuring and other charges

 

 

(30

)

 

 

(46

)

 

 

(509

)

Non-GAAP Operating expenses

 

$

53,983

 

 

$

52,469

 

 

$

47,243

 

Income from Operations Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Income from operations

 

$

59,134

 

 

$

54,016

 

 

$

37,763

 

Stock-based compensation - gross margin (1)

 

 

1,023

 

 

 

1,056

 

 

 

1,121

 

Stock-based compensation - operations (1)

 

 

14,296

 

 

 

13,584

 

 

 

14,083

 

Litigation expense (2)

 

 

288

 

 

 

1,081

 

 

 

 

Amortization of acquired intangible assets

 

 

870

 

 

 

870

 

 

 

1,169

 

Restructuring and other charges

 

 

30

 

 

 

46

 

 

 

509

 

Non-GAAP Income from operations

 

$

75,641

 

 

$

70,653

 

 

$

54,645

 

Income from Operations % Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Income from operations %

 

 

32.1

%

 

 

30.7

%

 

 

25.1

%

Cumulative effect of non-GAAP Gross Margin and Operating adjustments

 

 

8.9

%

 

 

9.5

%

 

 

11.2

%

Non-GAAP Income from operations %

 

 

41.0

%

 

 

40.2

%

 

 

36.3

%

(1)

 

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

(2)

 

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

Lattice Semiconductor Corporation

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

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

April 1,

 

December 31,

 

April 2,

 

 

2023

 

2022

 

2022

Other (Expense) Income Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Other (expense) income, net

 

$

(95

)

 

$

(24

)

 

$

(22

)

Loss on re-financing of long-term debt

 

 

 

 

 

4

 

 

 

 

Non-GAAP Other (expense) income, net

 

$

(95

)

 

$

(20

)

 

$

(22

)

Income Tax Expense Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Income tax expense

 

$

2,561

 

 

$

799

 

 

$

955

 

Estimated tax effect of non-GAAP adjustments

 

 

1,670

 

 

 

187

 

 

 

264

 

Change in tax law (3)

 

 

(1,012

)

 

 

 

 

 

 

Non-GAAP Income tax expense

 

$

3,219

 

 

$

986

 

 

$

1,219

 

Net Income Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income

 

$

55,923

 

 

$

51,913

 

 

$

36,078

 

Stock-based compensation - gross margin (1)

 

 

1,023

 

 

 

1,056

 

 

 

1,121

 

Stock-based compensation - operations (1)

 

 

14,296

 

 

 

13,584

 

 

 

14,083

 

Litigation expense (2)

 

 

288

 

 

 

1,081

 

 

 

 

Amortization of acquired intangible assets

 

 

870

 

 

 

870

 

 

 

1,169

 

Restructuring and other charges

 

 

30

 

 

 

46

 

 

 

509

 

Loss on re-financing of long-term debt

 

 

 

 

 

4

 

 

 

 

Estimated tax effect of non-GAAP adjustments

 

 

(1,670

)

 

 

(187

)

 

 

(264

)

Change in tax law (3)

 

 

1,012

 

 

 

 

 

 

 

Non-GAAP Net income

 

$

71,772

 

 

$

68,367

 

 

$

52,696

 

Net Income Per Share Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income per share - basic

 

$

0.41

 

 

$

0.38

 

 

$

0.26

 

Cumulative effect of Non-GAAP adjustments

 

 

0.11

 

 

 

0.12

 

 

 

0.12

 

Non-GAAP Net income per share - basic

 

$

0.52

 

 

$

0.50

 

 

$

0.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income per share - diluted

 

$

0.40

 

 

$

0.37

 

 

$

0.26

 

Cumulative effect of Non-GAAP adjustments

 

 

0.11

 

 

 

0.12

 

 

 

0.11

 

Non-GAAP Net income per share - diluted

 

$

0.51

 

 

$

0.49

 

 

$

0.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

137,418

 

 

 

137,095

 

 

 

137,500

 

Diluted

 

 

140,101

 

 

 

139,631

 

 

 

141,281

 

(1)

 

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

(2)

 

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

(3)

 

Adjustments for Change in tax law reflect an increase in our provision for U.S. tax on foreign operations resulting from The 2017 Tax Cuts and Jobs Act and is related to the capitalization and subsequent amortization of R&D costs for tax purposes.


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