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--Closed Gennum Acquisition, Largest Acquisition in Company History
--Closed Cycleo Acquisition
--Record 1,170 Design Wins in the Quarter
--Book-To-Bill Greater Than 1:1
Semtech Corporation (SMTC), a leading supplier of analog and
mixed-signal semiconductors, today reported unaudited financial results
for its first quarter of fiscal year 2013, which ended April 29, 2012.
Net revenue for the first quarter of fiscal year 2013 was $116.6
million, down 4.7 percent from the first quarter of fiscal year 2012 and
up 12.1 percent from the fourth quarter of fiscal year 2012. Net revenue
for the first quarter included approximately $12.0 million of revenue
contribution from the Gennum acquisition, which closed on March 20, 2012.
Gross profit margin, computed in accordance with U.S. generally accepted
accounting principles (GAAP), for the first quarter of fiscal year 2013
was 47.4 percent compared to 60.4 percent in the first quarter of fiscal
year 2012 and 57.4 percent in the fourth quarter of fiscal year 2012.
GAAP gross profit margin for the quarter was negatively impacted by a
$12.9 million purchase accounting adjustment related to inventory
acquired from Gennum, which lowered GAAP gross margin by 11.1 percent.
GAAP net income for the first quarter of fiscal year 2013 was $2.2
million or 3 cents per diluted share. This compares to GAAP net income
of $22.6 million or 34 cents per diluted share in the first quarter of
fiscal year 2012 and GAAP net income of $12.4 million or 19 cents per
diluted share in the fourth quarter of fiscal year 2012. GAAP net income
for the first quarter of fiscal year 2013 was negatively impacted by
several significant transaction related items including the previously
mentioned purchase accounting adjustment of $12.9 million and
transaction and other expenses related to acquisition activity of $18.6
million.
To facilitate the complete understanding of comparable financial
performance between periods, Semtech also presents performance results
net of certain non-cash and one-time items. Semtech’s non-GAAP results
exclude the following items:
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Stock-based compensation expense
--
Transaction and other expenses related to acquisition activity
--
Incremental depreciation related to acquired property, plant and
equipment
--
Additional cost of sales related to acquired inventory
--
Amortization of acquired intangible assets
--
Expiration of acquired return rights
--
Release of prior accrued taxes on foreign earnings
--
Expenses related to historical class action litigation and stock
option related matters, net of insurance recoveries
Non-GAAP gross profit margin for the first quarter of fiscal year 2013
was 58.5 percent. Non-GAAP gross profit margin for the first quarter of
fiscal year 2012 was 60.6 percent and 57.6 percent in the fourth quarter
of fiscal year 2012.
Non-GAAP net income for the first quarter of fiscal year 2013 was $17.9
million or 27 cents per diluted share. Non-GAAP net income was $30.0
million or 45 cents per diluted share in the first quarter of fiscal
year 2012 and was $21.6 million or 32 cents per diluted share in the
fourth quarter of fiscal year 2012.
As of April 29, 2012 Semtech had $161.0 million in cash, cash
equivalents and marketable securities, compared to $327.7 million in
cash, cash equivalents and marketable securities at the end of the
fourth quarter of fiscal year 2012. The decline was attributable to
using approximately $213.0 million to partially fund the acquisition of
Gennum and Cycleo and to cover transaction and other related expenses.
In addition to using its cash, Semtech incurred debt of $350.0 million
in term loans during the quarter to complete the Gennum acquisition.
Mohan Maheswaran, Semtech’s President and Chief Executive Officer,
stated, "In the first quarter of fiscal year 2013, we not only closed
and financed the largest acquisition in company history, we also saw a
return to growth in bookings in all end markets and solid design win
activity. The ongoing strength in our organic business, combined with
the opportunity to expand into new markets with the addition of Gennum,
gives us confidence that fiscal year 2013 will be another exciting year
for Semtech."
The results announced today are preliminary, as they are subject to
customary quarterly review procedures by the Company’s independent
registered public accounting firm. As such, these results are subject to
revision until the Company will have filed its quarterly report on Form
10-Q for the first quarter of fiscal year 2013.
Second Quarter of Fiscal Year 2013 Outlook
--
Net sales are expected to be in the range of $146.0 million to $154.0
million
--
GAAP gross profit margin is expected to be up between 80 and 230 basis
points from Q1 2013, including the impact of a $17.7 million purchase
accounting adjustment related to acquired inventory
--
Non-GAAP gross profit margin is expected to be up between 210 and 290
basis points from Q1 2013
--
GAAP SG&A expense is expected to be in the range of $29.1 million to
$29.6 million
--
GAAP R&D expense is expected to be in the range of $31.6 million to
$32.1 million
--
Stock-based compensation expense, which is included in the preceding
GAAP estimates, is expected to be approximately $6.0 million,
categorized as follows: $0.3 million cost of sales, $2.1 million SG&A,
and $3.6 million R&D
--
Expenses related to integration activity are expected to be
approximately $0.5 million
--
Incremental depreciation related to acquired plant, property and
equipment is expected to be approximately $0.3 million
--
Amortization of acquired intangible assets is expected to be
approximately $7.8 million
--
GAAP tax rate is expected to be a benefit of approximately 3 percent
--
GAAP earnings are expected to be in the range of -4 cents to +4 cents
per diluted share
--
Non-GAAP earnings are expected to be in the range of 37 to 45 cents
per diluted share
--
Fully diluted share count is expected to be approximately 67.2 million
shares
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Capital expenditures are expected to be approximately $8.0 million
Non-GAAP Financial Measures
To supplement the Company’s consolidated financial statements prepared
in accordance with GAAP, this release includes a non-GAAP presentation
of gross profit, net income and earnings per diluted share. To provide
additional insight into the Company’s second quarter outlook, this
release includes a presentation of forward-looking non-GAAP gross profit
and earnings per diluted share. A further discussion of these non-GAAP
financial measures can be found above. The non-GAAP gross profit, net
income and earnings per diluted share measures exclude stock-based
compensation, amortization of acquired intangible assets, and the other
items detailed above. These non-GAAP measures are provided to enhance
the user’s overall understanding of the Company’s comparable financial
performance between periods. In addition, the Company’s management
generally excludes the items noted above when managing and evaluating
the performance of the business. The financial statements provided with
this release include reconciliations of GAAP results for the first
quarter of fiscal years 2013 and 2012 and the fourth quarter of fiscal
year 2012; and a reconciliation of forward-looking earnings per diluted
share for the second quarter of fiscal year 2013. These additional
financial measures should not be considered substitutes for any measures
derived in accordance with GAAP and may be inconsistent with similar
measures presented by other companies.
Forward-Looking and Cautionary Statements
This press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of
1934, as amended. Forward-looking statements are statements other than
historical information or statements of current condition and relate to
matters such as future financial performance, future operational
performance, the anticipated impact of specific items on future
earnings, and our plans, objectives and expectations. These
forward-looking statements are identified by the use of such terms and
phrases as "intends," "goal," "estimate, "expect," "project," "plans,"
"anticipates," "should," "will," "designed to," "believe," and other
similar expressions which generally identify forward-looking statements.
Forward-looking statements involve known and unknown risks and
uncertainties that could cause actual results and events to differ
materially from those projected. Important factors that could cause
actual results to differ materially include, but are not limited to: the
continuation and/or pace of key trends considered to be main
contributors to the Company’s growth, such as demand for increased
network bandwidth, demand for increasing energy efficiency in the
Company’s products or end use applications of the products, demand for
increasing miniaturization of electronic components; shifts in demand
among target customers, and other comparable changes in projected or
anticipated markets; the success of near and longer term efforts to
integrate Gennum into the Company; unexpected acquisition-related costs
and expenses; competitive changes in the market place applicable to the
products of Gennum, as well as the products of the Company in its
pre-Gennum "organic" product lines, including, but not limited to the
pace of growth or adoption rates of applicable products or technologies;
shifts in focus among target customers, and other comparable changes in
projected or anticipated markets; adequate supply of components and
materials from our suppliers, and of our products from our third-party
manufacturers, to include disruptions due to natural causes or
disasters, or related extraordinary weather events; the Company’s
ability to forecast and achieve anticipated revenues and earnings
estimates in light of periodic economic uncertainty, to include impacts
arising from European and global economic dynamics; the Company’s
ability to manage expenses to achieve anticipated amounts; and the
amount and timing of expenditures for capital equipment deemed necessary
or advisable by the Company. Additionally, forward-looking statements
should be considered in conjunction with the cautionary statements
contained in the "Risk Factors" section and elsewhere in the Company’s
Annual Report on Form 10-K for the fiscal year ended January 29, 2012,
in the Company’s other filings with the SEC, and in material
incorporated therein by reference. In light of the significant
uncertainties inherent in the forward-looking information included
herein, any such forward-looking information should not be regarded as
representations by the Company that its objectives or plans will be
achieved or that any of its operating expectations or financial
forecasts will be realized. Investors are cautioned not to place undue
reliance on any forward-looking information contained herein. The
Company assumes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
About Semtech
Semtech Corporation is a leading supplier of analog and mixed-signal
semiconductors for high-end consumer, computing, communications and
industrial equipment. Products are designed to benefit the engineering
community as well as the global community. The company is dedicated to
reducing the impact it, and its products, have on the environment.
Internal green programs seek to reduce waste through material and
manufacturing control, use of green technology and designing for
resource reduction. Publicly traded since 1967, Semtech is listed on the
NASDAQ Global Select Market under the symbol SMTC. For more information,
visit http://www.semtech.com.
Semtech and the Semtech logo are marks of Semtech Corporation.
SEMTECH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Table in thousands - except per share amount)
Three Months Ended
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April 29, January 29, May 1,
2012 2012 2011
---------------- ---------------- ----------------
Q1 2013 Q4 2012 Q1 2012
---------------- ---------------- ----------------
(Unaudited) (Unaudited) (Unaudited)
Net sales $ 116,642 $ 104,032 $ 122,371
Cost of sales 61,305 44,368 48,517
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Gross profit 55,337 59,664 73,854
Operating costs and expenses:
Selling, general and administrative 44,818 26,333 26,705
Product development and engineering 24,083 19,335 18,525
Intangible amortization 5,578 2,075 2,102
------- ------- -------
Total operating costs and expenses 74,479 47,743 47,332
Operating (loss) income (19,142 ) 11,921 26,522
Interest and other (expense) income, net (1,629 ) 421 (440 )
------- --- ------- ------- ---
(Loss) income before taxes (20,771 ) 12,342 26,082
(Benefit) provision for taxes (22,980 ) (46 ) 3,500
Net income $ 2,209 $ 12,388 $ 22,582
=== ======= === ======= === =======
Earnings per share:
Basic $ 0.03 $ 0.19 $ 0.35
Diluted $ 0.03 $ 0.19 $ 0.34
Weighted average number of shares:
Basic 65,282 64,856 64,552
Diluted 67,233 66,776 67,123
SEMTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(Table in thousands)
April 29, January 29,
2012 2012
---------------- --------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 138,901 $ 227,022
Temporary investments 8,611 83,121
Accounts receivable, net 64,423 49,644
Inventories 95,960 46,995
Deferred tax assets 13,826 5,339
Other current assets 31,438 15,191
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Total current assets 353,159 427,312
Property, plant and equipment, net 97,338 69,713
Long-term investments 13,522 17,522
Deferred income taxes 50,902 -
Goodwill 398,723 129,651
Other intangible assets, net 236,266 66,720
Other assets 22,831 15,403
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Total assets $ 1,172,741 $ 726,321
===== ========= ===== =======
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 42,654 $ 26,699
Accrued liabilities 38,173 32,389
Deferred revenue 5,368 3,853
Current portion - long term debt 21,825 -
Deferred tax liabilities 4,168 4,041
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Total current liabilities 112,188 66,982
Deferred income taxes - non-current 58,575 1,000
Long term debt - less current 325,251 -
Other long-term liabilities 35,783 28,151
Shareholders’ equity 640,944 630,188
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Total liabilities & shareholders’ equity $ 1,172,741 $ 726,321
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SEMTECH CORPORATION
SUPPLEMENTAL INFORMATION - NOTES TO CONSOLIDATED GAAP STATEMENTS
OF INCOME
(Tables in thousands - except per share amounts)
Three Months Ended
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April 29, Jan 29, May 1,
2012 2012 2011
------------------ ----------------- -----------------
Stock-based Compensation Expense Q1 2013 Q4 2012 Q1 2012
------------------ ----------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
Cost of sales $ 231 $ 272 $ 279
Selling, general and administrative 3,224 4,798 5,618
Product development and engineering 1,871 1,802 1,590
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Total stock-based compensation expense $ 5,326 $ 6,872 $ 7,487
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Three Months Ended
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April 29, Jan 29, May 1,
2012 2012 2011
------------------ ----------------- -----------------
Gross Profit - Reconciliation GAAP to Non-GAAP Q1 2013 Q4 2012 Q1 2012
------------------ ----------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
GAAP gross profit $ 55,337 $ 59,664 $ 73,854
Adjustments to GAAP gross profit:
Stock-based compensation expense 231 272 279
Expiration of acquired return rights (305 ) - -
Additional cost of sales related to acquired inventory 12,916 - -
------- ------ ------
Non-GAAP gross profit $ 68,179 $ 59,936 $ 74,133
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Three Months Ended
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April 29, Jan 29, May 1,
2012 2012 2011
------------------ ----------------- -----------------
Net Income - Reconciliation GAAP to Non-GAAP Q1 2013 Q4 2012 Q1 2012
------------------ ----------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
GAAP net income $ 2,209 $ 12,388 $ 22,582
Adjustments to GAAP net income:
Stock based compensation expense $ 5,326 $ 6,872 $ 7,487
Transaction and other expenses 18,625 1,963 -
Option and restatement related expenses - 5 131
Incremental depreciation related to acquired PP&E 217 - -
Additional cost of sales related to acquired inventory 12,916 - -
Expiration of acquired return rights (1,059 ) - -
Amortization of acquired intangibles 5,578 2,075 2,103
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Total before taxes 41,603 10,915 9,721
Associated tax effect (25,875 ) (1,687 ) (2,339 )
------- ---- ------ ---- ------ ----
Total of supplemental information net of taxes 15,728 9,228 7,382
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Non-GAAP net income $ 17,937 $ 21,616 $ 29,964
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Diluted GAAP earnings per share $ 0.03 $ 0.19 $ 0.34
Adjustments per above 0.24 0.13 0.11
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Diluted non-GAAP earnings per share $ 0.27 $ 0.32 $ 0.45
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Three Months Ended
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April 29, Jan 29, May 1,
2012 2012 2011
------------------ ----------------- -----------------
Tax Impact Associated With Supplemental Information Q1 2013 Q4 2012 Q1 2012
------------------ ----------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
Adjustments to GAAP net income:
Stock based compensation expense $ 737 $ 936 $ 1,808
Transaction and other expenses 369 398 -
Option and restatement related expenses - 2 44
Incremental depreciation related to acquired PP&E 11 - -
Additional cost of sales related to acquired inventory 664 - -
Expiration of acquired return rights (54 ) - -
Amortization of acquired intangibles 705 351 487
Release of prior accrued taxes on foreign earnings 23,443 - -
Total of associated tax effect $ 25,875 $ 1,687 $ 2,339
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Q2 FY13 Earnings Per Share Guidance
GAAP to Non-GAAP Reconciliation (net of tax)
Low High
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GAAP EPS (0.04 ) 0.04
Stock based compensation expense 0.08 0.08
Additional cost of sales related to acquired inventory 0.22 0.22
Amortization of acquired intangibles 0.11 0.11
Non-GAAP EPS 0.37 0.45
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SOURCE: Semtech Corporation
Semtech Corporation
Linda Brewton
(805) 480-2004
webir@semtech.com
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