Semtech Announces First Quarter of Fiscal Year 2024 Results

CAMARILLO, Calif. — (BUSINESS WIRE) — June 7, 2023 — Semtech Corporation (Nasdaq: SMTC), a high-performance semiconductor, IoT systems and cloud connectivity service provider, today reported unaudited financial results for its first quarter of fiscal year 2024, which ended April 30, 2023.

Highlights for the First Quarter of Fiscal Year 2024

Net sales of $236.5 million, an increase of 41.2% sequentially and 17.0% year-over-year

GAAP gross margin of 43.5% and Non-GAAP gross margin of 48.5%

GAAP diluted loss per share of $0.46 and Non-GAAP diluted earnings per share of $0.02

Published our first Corporate Sustainability Report showcasing our commitment to sustainability and products for environmental and social good

On May 30, 2023, the Company announced the appointment of Paul H. Pickle as the next Semtech president and chief executive officer

On June 6, 2023, the Company entered into a second amendment to its existing credit agreement that provides, among other things, additional cushion with respect to certain financial covenants

Results on a GAAP basis for the First Fiscal Quarter 2024

Net sales were $236.5 million

GAAP Gross margin was 43.5%

GAAP SG&A expense was $58.1 million

GAAP R&D expense was $51.8 million

GAAP Operating margin was (5.0)%

GAAP Interest expense was $20.5 million

GAAP Net loss attributable to common stockholders was $29.4 million or $0.46 diluted loss 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 First Fiscal Quarter 2024 (see the list of non-GAAP financial measures and the reconciliation 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")

Non-GAAP Gross margin was 48.5%

Non-GAAP SG&A expense was $46.2 million

Non-GAAP R&D expense was $46.5 million

Non-GAAP Operating margin was 9.3%

Non-GAAP Net income attributable to common stockholders was $1.5 million or $0.02 diluted earnings per share

“Semtech exceeded the midpoint of our revenue and earnings guidance as we see signs of business stabilization,” said Mohan Maheswaran, Semtech’s President and Chief Executive Officer. “As we continue to navigate this challenging macro-economic environment, we are taking steps to improve our operational efficiency and financial performance while focusing on executing our plans. With an expanded highly differentiated IoT portfolio, combined with our best-in-class High Performance Analog portfolio, we are well positioned to emerge stronger from this current cycle.”

Second Fiscal Quarter 2024 Outlook

Both the GAAP and non-GAAP second fiscal quarter 2024 outlook below take into account, based on the Company's current estimates, 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.

GAAP Second Fiscal Quarter 2024 Outlook

Net sales are expected to be in the range of $233.0 million to $243.0 million

GAAP Gross margin is expected to be in the range of 42.6% to 44.8%

GAAP SG&A expense is expected to be in the range of $63.2 million to $65.2 million

GAAP R&D expense is expected to be in the range of $48.0 million to $50.0 million

GAAP Intangible amortization expense is expected to be approximately $15.9 million

GAAP Interest and other expense, net is expected to be approximately $23.2 million

Fully-diluted share count is expected to be approximately 64.1 million shares

Share-based compensation is expected to be approximately $12.7 million, categorized as follows: $0.5 million cost of sales, $8.2 million SG&A, and $4.0 million R&D

Transaction and integration expenses are expected to be approximately $10.0 million

Capital expenditures are expected to be approximately $11.1 million

Depreciation expense is expected to be approximately $9.1 million

Non-GAAP Second Fiscal Quarter 2024 Outlook (see the list of non-GAAP financial measures and the reconciliation of Non-GAAP Gross margin, Non-GAAP SG&A expense, and Non-GAAP R&D expense 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 47.5% to 49.5%

Non-GAAP SG&A expense is expected to be in the range of $45.0 million to $47.0 million

Non-GAAP R&D expense is expected to be in the range of $44.0 million to $46.0 million

Non-GAAP normalized tax rate for fiscal year 2024 is expected to be approximately 12%

Non-GAAP Diluted (loss) earnings per share is expected to be in the range of $(0.02) to $0.06

The Company is unable to include a reconciliation of the forward-looking non-GAAP normalized tax rate and non-GAAP Diluted loss per share 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 share-based awards and the amortization of acquisition-related intangible assets 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 first 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 13736081. 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 July 5, 2023 at the same website or by calling (877) 660-6853 and entering conference ID 13736081.

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 (loss) income attributable to common stockholders, diluted (loss) 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 and transaction costs (including costs associated with the acquisition of Sierra Wireless), and other acquisition or disposition-related gains or losses

Share-based compensation acceleration expense related to the acquisition of Sierra Wireless

Litigation expenses or dispute settlement charges or gains

Cumulative other reserves associated with historical activity including environmental and pension

Equity method (loss) income

Interest income from debt investments

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