Lattice Semiconductor Reports Second Quarter 2024 Results

Non-GAAP Financial Measures:

Included within this press release and the accompanying tables and notes are certain non-GAAP financial measures that supplement the Company's consolidated financial information prepared in accordance with U.S. GAAP, including non-GAAP gross margin, gross margin percentage, R&D expense, SG&A expense, operating expenses, income from operations, other (expense) income, net, income tax expense, net income, net income per share – basic, and net income per share – diluted. The non-GAAP measures presented exclude charges and adjustments primarily related to stock-based compensation and related payroll tax effects, litigation expense outside the ordinary course of business, amortization of acquired intangible assets, restructuring plans, transformation activities, and other charges, and the estimated tax effect of these items, non-cash changes in net deferred income taxes, change in tax law and other tax adjustments. These charges and adjustments are a result of periodic or non-core operating activities of the Company. The Company describes these non-GAAP financial measures and reconciles them to the most directly comparable GAAP measures in the tables and notes attached to this press release.

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. The non-GAAP financial information used by the Company may differ from that used by other companies. 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, or Weibo.

Lattice Semiconductor Corporation

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

 

June 29,

 

March 30,

 

July 1,

 

June 29,

 

July 1,

 

 

2024

 

2024

 

2023

 

2024

 

2023

Revenue

 

$

124,076

 

$

140,815

 

 

$

190,079

 

 

$

264,891

 

$

374,389

 

Cost of sales

 

 

39,325

 

 

44,607

 

 

 

57,518

 

 

 

83,932

 

 

113,227

 

Gross margin

 

 

84,751

 

 

96,208

 

 

 

132,561

 

 

 

180,959

 

 

261,162

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

38,733

 

 

40,591

 

 

 

41,946

 

 

 

79,324

 

 

77,935

 

Selling, general, and administrative

 

 

20,005

 

 

36,469

 

 

 

36,788

 

 

 

56,474

 

 

69,366

 

Amortization of acquired intangible assets

 

 

869

 

 

870

 

 

 

869

 

 

 

1,739

 

 

1,739

 

Restructuring

 

 

2,579

 

 

1,704

 

 

 

(112

)

 

 

4,283

 

 

(82

)

Total operating expenses

 

 

62,186

 

 

79,634

 

 

 

79,491

 

 

 

141,820

 

 

148,958

 

Income from operations

 

 

22,565

 

 

16,574

 

 

 

53,070

 

 

 

39,139

 

 

112,204

 

Interest income (expense), net

 

 

933

 

 

1,307

 

 

 

189

 

 

 

2,240

 

 

(366

)

Other income (expense), net

 

 

254

 

 

(46

)

 

 

(176

)

 

 

208

 

 

(271

)

Income before income taxes

 

 

23,752

 

 

17,835

 

 

 

53,083

 

 

 

41,587

 

 

111,567

 

Income tax expense

 

 

1,121

 

 

3,039

 

 

 

2,439

 

 

 

4,160

 

 

5,000

 

Net income

 

$

22,631

 

$

14,796

 

 

$

50,644

 

 

$

37,427

 

$

106,567

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.16

 

$

0.11

 

 

$

0.37

 

 

$

0.27

 

$

0.77

 

Diluted

 

$

0.16

 

$

0.11

 

 

$

0.36

 

 

$

0.27

 

$

0.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

137,548

 

 

137,475

 

 

 

137,735

 

 

 

137,480

 

 

137,573

 

Diluted

 

 

138,243

 

 

138,774

 

 

 

139,768

 

 

 

138,485

 

 

139,966

 

Lattice Semiconductor Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

June 29,

 

December 30,

 

 

2024

 

2023

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

109,216

 

$

128,317

Accounts receivable, net

 

 

103,442

 

 

104,373

Inventories, net

 

 

101,556

 

 

98,826

Other current assets

 

 

38,990

 

 

36,430

Total current assets

 

 

353,204

 

 

367,946

 

 

 

 

 

 

 

Property and equipment, net

 

 

50,801

 

 

49,546

Operating lease right-of-use assets

 

 

17,326

 

 

14,487

Intangible assets, net

 

 

19,016

 

 

20,974

Goodwill

 

 

315,358

 

 

315,358

Deferred income taxes

 

 

57,329

 

 

57,762

Other long-term assets

 

 

14,486

 

 

14,821

 

 

$

827,520

 

$

840,894

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

34,957

 

$

34,487

Accrued liabilities

 

 

32,088

 

 

36,048

Accrued payroll obligations

 

 

13,239

 

 

26,865

Total current liabilities

 

 

80,284

 

 

97,400

 

 

 

 

 

 

 

Long-term operating lease liabilities, net of current portion

 

 

11,975

 

 

10,739

Other long-term liabilities

 

 

36,412

 

 

40,735

Total liabilities

 

 

128,671

 

 

148,874

 

 

 

 

 

 

 

Stockholders' equity

 

 

698,849

 

 

692,020

 

 

$

827,520

 

$

840,894

Lattice Semiconductor Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Six Months Ended

 

 

June 29,

 

July 1,

 

 

2024

 

2023

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

37,427

 

 

$

106,567

 

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

21,713

 

 

 

35,744

 

Depreciation and amortization

 

 

18,385

 

 

 

16,578

 

Change in deferred income tax provision

 

 

(969

)

 

 

(882

)

Other non-cash adjustments

 

 

4,329

 

 

 

3,427

 

Net changes in assets and liabilities

 

 

(29,443

)

 

 

(45,976

)

Net cash provided by (used in) operating activities

 

 

51,442

 

 

 

115,458

 

Cash flows from investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(10,581

)

 

 

(11,943

)

Other investing activities

 

 

(7,607

)

 

 

(5,799

)

Net cash provided by (used in) investing activities

 

 

(18,188

)

 

 

(17,742

)

Cash flows from financing activities:

 

 

 

 

 

 

Repayment of long-term debt

 

 

 

 

 

(85,000

)

Repurchase of common stock

 

 

(29,999

)

 

 

(20,006

)

Net cash flows related to stock compensation exercises

 

 

(21,734

)

 

 

(34,439

)

Net cash provided by (used in) financing activities

 

 

(51,733

)

 

 

(139,445

)

Effect of exchange rate change on cash

 

 

(622

)

 

 

(220

)

Net increase (decrease) in cash and cash equivalents

 

 

(19,101

)

 

 

(41,949

)

Beginning cash and cash equivalents

 

 

128,317

 

 

 

145,722

 

Ending cash and cash equivalents

 

$

109,216

 

 

$

103,773

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Interest paid

 

$

 

 

$

2,962

 

Income taxes paid, net of refunds

 

$

3,886

 

 

$

6,837

 

Operating lease payments

 

$

4,564

 

 

$

4,082

 

Lattice Semiconductor Corporation

Supplemental Historical Financial Information

(unaudited)

 

 

Three Months Ended

 

 

June 29,

 

March 30,

 

July 1,

 

 

2024

 

2024

 

2023

Balance Sheet Information

 

 

 

 

 

 

 

 

 

 

 

 

A/R Days Revenue Outstanding (DSO)

 

 

76

 

 

 

64

 

 

 

46

 

Inventory Days (DIO)

 

 

236

 

 

 

195

 

 

 

177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue % (by Geography)

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

 

67

%

 

 

66

%

 

 

63

%

Americas

 

 

19

%

 

 

22

%

 

 

17

%

Europe (incl. Africa)

 

 

14

%

 

 

12

%

 

 

20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue % (by End Market)

 

 

 

 

 

 

 

 

 

 

 

 

Communications and Computing

 

 

44

%

 

 

39

%

 

 

34

%

Industrial and Automotive

 

 

47

%

 

 

53

%

 

 

61

%

Consumer

 

 

9

%

 

 

8

%

 

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue $M (by End Market)

 

 

 

 

 

 

 

 

 

 

 

 

Communications and Computing

 

$

54.6

 

 

$

54.6

 

 

$

64.2

 

Industrial and Automotive

 

$

58.2

 

 

$

75.3

 

 

$

115.5

 

Consumer

 

$

11.3

 

 

$

10.9

 

 

$

10.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue % (by Channel)

 

 

 

 

 

 

 

 

 

 

 

 

Distribution

 

 

91

%

 

 

87

%

 

 

89

%

Direct

 

 

9

%

 

 

13

%

 

 

11

%

Lattice Semiconductor Corporation

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

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

 

June 29,

 

March 30,

 

July 1,

 

 

2024

 

2024

 

2023

Gross Margin Reconciliation

GAAP Gross margin

 

$

84,751

 

 

$

96,208

 

 

$

132,561

 

Stock-based compensation - gross margin (1)

 

 

805

 

 

 

888

 

 

 

1,425

 

Non-GAAP Gross margin

 

$

85,556

 

 

$

97,096

 

 

$

133,986

 

Gross Margin % Reconciliation

GAAP Gross margin %

 

 

68.3

%

 

 

68.3

%

 

 

69.7

%

Stock-based compensation - gross margin (1)

 

 

0.7

%

 

 

0.7

%

 

 

0.8

%

Non-GAAP Gross margin %

 

 

69.0

%

 

 

69.0

%

 

 

70.5

%

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

GAAP R&D Expense %

 

 

31.2

%

 

 

28.8

%

 

 

22.1

%

Stock-based compensation - R&D (1)

 

 

(4.5

)%

 

 

(5.7

)%

 

 

(4.1

)%

Non-GAAP R&D Expense %

 

 

26.7

%

 

 

23.1

%

 

 

18.0

%

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

 

 

 

 

 

GAAP SG&A Expense %

 

 

16.1

%

 

 

25.9

%

 

 

19.4

%

Stock-based compensation - SG&A (1)

 

 

2.7

%

 

 

(7.1

)%

 

 

(6.7

)%

Litigation expense (2)

 

 

(0.9

)%

 

 

(2.7

)%

 

 

(0.2

)%

Non-GAAP SG&A Expense %

 

 

17.9

%

 

 

16.1

%

 

 

12.5

%

Operating Expenses Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating expenses

 

$

62,186

 

 

$

79,634

 

 

$

79,491

 

Stock-based compensation - operations (1)

 

 

(2,343

)

 

 

(18,117

)

 

 

(20,277

)

Litigation expense (2)

 

 

(1,065

)

 

 

(3,832

)

 

 

(439

)

Amortization of acquired intangible assets

 

 

(869

)

 

 

(870

)

 

 

(869

)

Restructuring, transformation, and other (3)

 

 

(3,879

)

 

 

(1,957

)

 

 

112

 

Non-GAAP Operating expenses

 

$

54,030

 

 

$

54,858

 

 

$

58,018

 

Income from Operations Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Income from operations

 

$

22,565

 

 

$

16,574

 

 

$

53,070

 

Stock-based compensation - gross margin (1)

 

 

805

 

 

 

888

 

 

 

1,425

 

Stock-based compensation - operations (1)

 

 

2,343

 

 

 

18,117

 

 

 

20,277

 

Litigation expense (2)

 

 

1,065

 

 

 

3,832

 

 

 

439

 

Amortization of acquired intangible assets

 

 

869

 

 

 

870

 

 

 

869

 

Restructuring, transformation, and other (3)

 

 

3,879

 

 

 

1,957

 

 

 

(112

)

Non-GAAP Income from operations

 

$

31,526

 

 

$

42,238

 

 

$

75,968

 

Income from Operations % Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Income from operations %

 

 

18.2

%

 

 

11.8

%

 

 

27.9

%

Cumulative effect of non-GAAP Gross Margin and Operating adjustments

 

 

7.2

%

 

 

18.2

%

 

 

12.1

%

Non-GAAP Income from operations %

 

 

25.4

%

 

 

30.0

%

 

 

40.0

%

(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.

(3)

 

Restructuring, transformation, and other for Q2 and YTD 2024 includes business transformation charges of $0.8 million.

Lattice Semiconductor Corporation

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

(in thousands, except per share data)

(unaudited)  

 

 

Three Months Ended

 

 

June 29,

 

March 30,

 

July 1,

 

 

2024

 

2024

 

2023

Income Tax (Benefit) Expense Reconciliation

 

 

 

 

 

 

 

 

 

GAAP Income tax (benefit) expense

 

$

1,121

 

 

$

3,039

 

 

$

2,439

 

Estimated tax effect of non-GAAP adjustments

 

 

5,649

 

 

 

4,337

 

 

 

1,372

 

Non-cash changes in net deferred income taxes (4)

 

 

(1,090

)

 

 

(2,754

)

 

 

 

Change in tax law (5)

 

 

(4,399

)

 

 

(1,381

)

 

 

(339

)

Non-GAAP Income tax expense

 

$

1,281

 

 

$

3,241

 

 

$

3,472

 

Net Income Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income

 

$

22,631

 

 

$

14,796

 

 

$

50,644

 

Stock-based compensation - gross margin (1)

 

 

805

 

 

 

888

 

 

 

1,425

 

Stock-based compensation - operations (1)

 

 

2,343

 

 

 

18,117

 

 

 

20,277

 

Litigation expense (2)

 

 

1,065

 

 

 

3,832

 

 

 

439

 

Amortization of acquired intangible assets

 

 

869

 

 

 

870

 

 

 

869

 

Restructuring, transformation, and other (3)

 

 

3,879

 

 

 

1,957

 

 

 

(112

)

Estimated tax effect of non-GAAP adjustments

 

 

(5,649

)

 

 

(4,337

)

 

 

(1,372

)

Non-cash changes in net deferred income taxes (4)

 

 

1,090

 

 

 

2,754

 

 

 

 

Change in tax law (5)

 

 

4,399

 

 

 

1,381

 

 

 

339

 

Non-GAAP Net income

 

$

31,432

 

 

$

40,258

 

 

$

72,509

 

Net Income Per Share Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income per share - basic

 

$

0.16

 

 

$

0.11

 

 

$

0.37

 

Cumulative effect of Non-GAAP adjustments

 

 

0.07

 

 

 

0.18

 

 

 

0.16

 

Non-GAAP Net income per share - basic

 

$

0.23

 

 

$

0.29

 

 

$

0.53

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income per share - diluted

 

$

0.16

 

 

$

0.11

 

 

$

0.36

 

Cumulative effect of Non-GAAP adjustments

 

 

0.07

 

 

 

0.18

 

 

 

0.16

 

Non-GAAP Net income per share - diluted

 

$

0.23

 

 

$

0.29

 

 

$

0.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

137,548

 

 

 

137,475

 

 

 

137,735

 

Diluted

 

 

138,243

 

 

 

138,774

 

 

 

139,768

 

(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)

 

Restructuring, transformation, and other for Q2 and YTD 2024 includes business transformation charges of $0.8 million.

(4)

 

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.

(5)

 

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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