Lattice Semiconductor Reports First Quarter 2024 Results


Lattice Semiconductor Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

	Three Months Ended
	March 30,			December 30,			April 1,
	2024			2023			2023
Revenue	$	140,815		$	170,596		$	184,310
Cost of sales		44,607			51,649			55,709
Gross margin		96,208			118,947			128,601
Operating expenses:
Research and development		40,591			39,787			35,989
Selling, general, and administrative		36,469			34,661			32,578
Amortization of acquired intangible assets		870			869			870
Restructuring		1,704			481			30
Total operating expenses		79,634			75,798			69,467
Income from operations		16,574			43,149			59,134
Interest income (expense), net		1,307			1,453			(555	)
Other income (expense), net		(46	)		802			(95	)
Income before income taxes		17,835			45,404			58,484
Income tax expense (benefit)		3,039			(53,302	)		2,561
Net income	$	14,796		$	98,706		$	55,923

Net income per share:
Basic	$	0.11		$	0.72		$	0.41
Diluted	$	0.11		$	0.71		$	0.40

Shares used in per share calculations:
Basic		137,475			137,686			137,418
Diluted		138,774			139,114			140,101

Lattice Semiconductor Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

	March 30,		December 30,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	107,466	$	128,317
Accounts receivable, net		98,940		104,373
Inventories, net		95,384		98,826
Other current assets		38,948		36,430
Total current assets		340,738		367,946

Property and equipment, net		51,390		49,546
Operating lease right-of-use assets		17,039		14,487
Intangible assets, net		19,888		20,974
Goodwill		315,358		315,358
Deferred income taxes		57,111		57,762
Other long-term assets		14,075		14,821
	$	815,599	$	840,894

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	33,069	$	34,487
Accrued liabilities		32,049		36,048
Accrued payroll obligations		16,443		26,865
Total current liabilities		81,561		97,400

Long-term operating lease liabilities, net of current portion		12,799		10,739
Other long-term liabilities		38,577		40,735
Total liabilities		132,937		148,874

Stockholders' equity		682,662		692,020
	$	815,599	$	840,894

Lattice Semiconductor Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

	Three Months Ended
	March 30,			April 1,
	2024			2023
Cash flows from operating activities:
Net income	$	14,796		$	55,923
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock-based compensation expense		18,494			14,255
Depreciation and amortization		9,129			8,090
Other non-cash adjustments		2,442			1,314
Net changes in assets and liabilities		(15,350	)		(34,718	)
Net cash provided by (used in) operating activities		29,511			44,864
Cash flows from investing activities:
Capital expenditures		(3,426	)		(8,414	)
Other investing activities		(4,321	)		(2,615	)
Net cash provided by (used in) investing activities		(7,747	)		(11,029	)
Cash flows from financing activities:
Repayment of long-term debt		—			(25,000	)
Repurchase of common stock		(20,000	)		(10,004	)
Net cash flows related to stock compensation exercises		(22,174	)		(32,552	)
Net cash provided by (used in) financing activities		(42,174	)		(67,556	)
Effect of exchange rate change on cash		(441	)		135
Net increase (decrease) in cash and cash equivalents		(20,851	)		(33,586	)
Beginning cash and cash equivalents		128,317			145,722
Ending cash and cash equivalents	$	107,466		$	112,136

Supplemental disclosure of cash flow information and non-cash investing and financing activities:
Interest paid	$	—		$	1,849
Income taxes paid, net of refunds	$	1,249		$	413
Operating lease payments	$	2,099		$	2,000

Lattice Semiconductor Corporation
Supplemental Historical Financial Information
(unaudited)

	Three Months Ended
	March 30,			December 30,			April 1,
	2024			2023			2023
Balance Sheet Information
A/R Days Revenue Outstanding (DSO)		64			56			45
Inventory Days (DIO)		195			175			192

Revenue % (by Geography)
Asia		66	%		60	%		57	%
Americas		22	%		22	%		23	%
Europe (incl. Africa)		12	%		18	%		20	%

Revenue % (by End Market)
Communications and Computing		39	%		34	%		36	%
Industrial and Automotive		53	%		59	%		59	%
Consumer		8	%		7	%		5	%

Revenue $M (by End Market)
Communications and Computing	$	54.6		$	58.7		$	66.3
Industrial and Automotive	$	75.3		$	99.8		$	108.3
Consumer	$	10.9		$	12.1		$	9.7

Revenue % (by Channel)
Distribution		87	%		82	%		88	%
Direct		13	%		18	%		12	%

Lattice Semiconductor Corporation
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)

	Three Months Ended
	March 30,			December 30,			April 1,
	2024			2023			2023
*Gross Margin Reconciliation*
GAAP Gross margin	$	96,208		$	118,947		$	128,601
Stock-based compensation - gross margin (1)		888			1,111			1,023
Non-GAAP Gross margin	$	97,096		$	120,058		$	129,624

*Gross Margin % Reconciliation*
GAAP Gross margin %		68.3	%		69.7	%		69.8	%
Stock-based compensation - gross margin (1)		0.7	%		0.7	%		0.5	%
Non-GAAP Gross margin %		69.0	%		70.4	%		70.3	%

*Research and Development Expense % (R&D Expense %) Reconciliation*
GAAP R&D Expense %		28.8	%		23.3	%		19.5	%
Stock-based compensation - R&D (1)		(5.7	)%		(4.6	)%		(3.0	)%
Non-GAAP R&D Expense %		23.1	%		18.7	%		16.5	%

*Selling, General, and Administrative Expense % (SG&A Expense %) Reconciliation*
GAAP SG&A Expense %		25.9	%		20.3	%		17.7	%
Stock-based compensation - SG&A (1)		(7.1	)%		(5.3	)%		(4.7	)%
Litigation expense (2)		(2.7	)%		(1.2	)%		(0.2	)%
Non-GAAP SG&A Expense %		16.1	%		13.8	%		12.8	%

*Operating Expenses Reconciliation*
GAAP Operating expenses	$	79,634		$	75,798		$	69,467
Stock-based compensation - operations (1)		(18,117	)		(16,811	)		(14,296	)
Litigation expense (2)		(3,832	)		(2,098	)		(288	)
Amortization of acquired intangible assets		(870	)		(869	)		(870	)
Restructuring and other		(1,957	)		(525	)		(30	)
Non-GAAP Operating expenses	$	54,858		$	55,495		$	53,983

*Income from Operations Reconciliation*
GAAP Income from operations	$	16,574		$	43,149		$	59,134
Stock-based compensation - gross margin (1)		888			1,111			1,023
Stock-based compensation - operations (1)		18,117			16,811			14,296
Litigation expense (2)		3,832			2,098			288
Amortization of acquired intangible assets		870			869			870
Restructuring and other		1,957			525			30
Non-GAAP Income from operations	$	42,238		$	64,563		$	75,641

*Income from Operations % Reconciliation*
GAAP Income from operations %		11.8	%		25.3	%		32.1	%
Cumulative effect of non-GAAP Gross Margin and Operating adjustments		18.2	%		12.5	%		8.9	%
Non-GAAP Income from operations %		30.0	%		37.8	%		41.0	%

(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
	March 30,			December 30,			April 1,
	2024			2023			2023
*Income Tax (Benefit) Expense Reconciliation*
GAAP Income tax (benefit) expense	$	3,039		$	(53,302	)	$	2,561
Estimated tax effect of non-GAAP adjustments		4,337			1,170			1,670
Non-cash changes in net deferred income taxes (3)		(2,754	)		56,913			—
Change in tax law (4)		(1,381	)		(764	)		(1,012	)
Non-GAAP Income tax expense	$	3,241		$	4,017		$	3,219

*Net Income Reconciliation*
GAAP Net income	$	14,796		$	98,706		$	55,923
Stock-based compensation - gross margin (1)		888			1,111			1,023
Stock-based compensation - operations (1)		18,117			16,811			14,296
Litigation expense (2)		3,832			2,098			288
Amortization of acquired intangible assets		870			869			870
Restructuring and other		1,957			525			30
Estimated tax effect of non-GAAP adjustments		(4,337	)		(1,170	)		(1,670	)
Non-cash changes in net deferred income taxes (3)		2,754			(56,913	)		—
Change in tax law (4)		1,381			764			1,012
Non-GAAP Net income	$	40,258		$	62,801		$	71,772

*Net Income Per Share Reconciliation*
GAAP Net income per share - basic	$	0.11	$	0.72		$	0.41
Cumulative effect of Non-GAAP adjustments		0.18		(0.26	)		0.11
Non-GAAP Net income per share - basic	$	0.29	$	0.46		$	0.52

GAAP Net income per share - diluted	$	0.11	$	0.71		$	0.40
Cumulative effect of Non-GAAP adjustments		0.18		(0.26	)		0.11
Non-GAAP Net income per share - diluted	$	0.29	$	0.45		$	0.51

Shares used in per share calculations:
Basic		137,475		137,686			137,418
Diluted		138,774		139,114			140,101

(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)		Non-cash changes in net deferred income taxes associated with the release of the valuation allowance against $56.9 million of our U.S. deferred tax assets in the fourth quarter of fiscal 2023.
(4)		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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