- Net Sales Increased 13% Sequentially to $75.1M
- Q3 GAAP Gross Margin Expanded 60 Basis Points Sequentially to 55.1%
- Q3 GAAP Operating Income Increased 42% Sequentially to $12.1M
- Cash and Investments Increased $25.3M Sequentially to $316.3M
- Semtech Announces Acquisition of Sierra Monolithics, Inc. in $180M Cash Transaction
Semtech Corporation (NASDAQ: SMTC), a leading producer of high performance analog and mixed-signal semiconductors, today reported un-audited financial results for its third quarter of fiscal year 2010 that ended October 25, 2009.
Net revenues for the third quarter of fiscal year 2010 were $75.1 million, down 6 percent from the third quarter of fiscal year 2009 and up 13 percent compared to the second quarter of fiscal year 2010.
For the third quarter of fiscal year 2010 the company reported a net loss of $20.9 million or 34 cents per share computed in accordance with U.S. generally accepted accounting principles (GAAP). Third quarter of fiscal year 2010 results reflect a one-time tax expense of $32.8 million related to the decision to repatriate foreign-domiciled cash for purposes of funding the Sierra Monolithics transaction as referenced in the press release and 8-K filed earlier this afternoon. Excluding this one-time tax expense, our GAAP net income would have been $11.9 million or 19 cents per share. GAAP net income was $11.5 million or 19 cents per diluted share in the third quarter of fiscal year 2009 and $7.4 million or 12 cents per diluted share in the second quarter of fiscal year 2010.
GAAP gross profit margin for the third quarter of fiscal year 2010 was 55.1 percent compared to 53.5 percent in the third quarter of fiscal year 2009 and 54.5 percent in the second quarter of fiscal year 2010.
Semtech had $316.3 million of cash, cash equivalents and investments as of October 25, 2009, which was up from $291.1 million at the end of the second quarter of fiscal year 2010.
Mohan Maheswaran, Semtech''s President and Chief Executive Officer, commented, "Semtech delivered strong sequential sales with our second consecutive quarter of double-digit revenue growth. We are also encouraged by the new platform products that are contributing to this growth. Semtech also demonstrated strong operating leverage with solid improvements in our gross and operating margins. These are clear examples of the focus on execution taking place within Semtech. We are also excited to announce the acquisition of Sierra Monolithics, Inc. as the combination will create a leading provider of ultra high performance wireless and communications platforms across multiple end markets and applications.”
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 files its Quarterly Report on Form 10-Q for the third quarter of fiscal year 2010.
Fourth Quarter Outlook
Semtech estimates net sales for the fourth quarter, which ends January 31, 2010, will be flat to up 4 percent on a sequential basis. GAAP earnings for the fourth quarter of fiscal year 2010 are expected to be 15 to 17 cents per diluted share. This outlook excludes any financial results associated with the pending Sierra Monolithics acquisition.
Forward-Looking and Cautionary Statements
This report 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, including but not limited to our plans, objectives and expectations with respect to Sierra Monolithics and its business. 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 actual closing of the proposed transaction; the satisfaction or non-satisfaction as applicable of one or more conditions to the closing of the proposed transaction; delay of, or inability to receive regulatory approval of the transaction, including delays in obtaining the expiration or termination of the waiting period under the HSR Act; the success of near and longer term integration efforts between the combined companies; competitive changes in the market place applicable to the products of Sierra Monolithics, 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; the depth, extent and duration of current and anticipated world wide economic uncertainty, at both a macro level, and as it impacts both the Company''s historical products, industry, and market sector, as well as those of Sierra Monolithics following closing of the transaction, and the Company''s ability to forecast and achieve anticipated revenues and earnings estimates in light of continuing economic uncertainty, including estimates applicable to Sierra Monolithics, as well as resulting from the integration of Sierra Monolithics'' financial performance and results into the Company''s full financial results. 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 25, 2009, 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.
About Sierra Monolithics
Sierra Monolithics, Inc. is a leading supplier of proven analog and mixed-signal IC solutions for optical communications, wireless and microwave/millimeter wave applications. Founded in 1986, Sierra Monolithics has leveraged its mixed-signal UC design and expertise in high-frequency aerospace and defense communications to develop a variety of high-performance optical ICs, RFICs, and MMICs. Currently, Sierra Monolithics designs and manufactures products for broadband wireless (WiMAX RFICs), optical communications (OC-768 SerDes) and microwave/millimeter markets. Sierra Monolithics is privately held with headquarters in Irvine, California. For more information, visit http://www.monolithics.com.
SEMTECH CORPORATION GAAP CONSOLIDATED STATEMENTS OF INCOME (Table in thousands - except per share amount) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| Oct 25, | Oct 26, | July 26 | Oct 25, | Oct 26, | |||||||||||||
| 2009 | 2008 | 2009 | 2009 | 2008 | |||||||||||||
| Q3 2010 | Q3 2009 | Q2 2010 | Q3 2010 | Q3 2009 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Net sales | $ | 75,147 | $ | 79,721 | $ | 66,317 | $ | 201,541 | $ | 232,125 | |||||||
| Cost of sales | 33,776 | 37,070 | 30,165 | 91,286 | 105,888 | ||||||||||||
| Gross profit | 41,371 | 42,651 | 36,152 | 110,255 | 126,237 | ||||||||||||
| Operating costs and expenses: | |||||||||||||||||
| Selling, general and administrative | 18,521 | 19,358 | 16,741 | 52,717 | 59,076 | ||||||||||||
| Product development and engineering | 10,467 | 10,127 | 10,591 | 31,142 | 31,634 | ||||||||||||
| Acquisition related items | 303 | 273 | 302 | 908 | 818 | ||||||||||||
| Total operating costs and expenses | 29,291 | 29,758 | 27,634 | 84,767 | 91,528 | ||||||||||||
| Operating income | 12,080 | 12,893 | 8,518 | 25,488 | 34,709 | ||||||||||||
| Interest and other income, net | 1,136 | 904 | 282 | 2,708 | 3,884 | ||||||||||||
| Income before taxes | 13,216 | 13,797 | 8,800 | 28,196 | 38,593 | ||||||||||||
| Provision for taxes | 34,103 | 2,287 | 1,380 | 36,719 | 7,343 | ||||||||||||
| Net (loss) income | $ | (20,887 | ) | $ | 11,510 | $ | 7,420 | $ | (8,523 | ) | $ | 31,250 | |||||
| Earnings (loss) per share: | |||||||||||||||||
| Basic | $ | (0.34 | ) | $ | 0.19 | $ | 0.12 | $ | (0.14 | ) | $ | 0.51 | |||||
| Diluted | $ | (0.34 | ) | $ | 0.19 | $ | 0.12 | $ | (0.14 | ) | $ | 0.50 | |||||
| Weighted average number of shares: | |||||||||||||||||
| Basic | 61,030 | 61,233 | 60,493 | 60,622 | 61,432 | ||||||||||||
| Diluted | 61,030 | 61,727 | 61,044 | 60,622 | 62,253 | ||||||||||||
SEMTECH CORPORATION GAAP CONSOLIDATED STATEMENTS OF INCOME (Table stated as a percentage of revenue) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| Oct 25, | Oct 26, | July 26 | Oct 25, | Oct 26, | |||||||||||
| 2009 | 2008 | 2009 | 2009 | 2008 | |||||||||||
| Q3 2010 | Q3 2009 | Q2 2010 | Q3 2010 | Q3 2009 | |||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
| Net sales | 100 | .0% | 100 | .0% | 100 | .0% | 100 | .0% | 100 | .0% | |||||
| Cost of sales | 44 | .9% | 46 | .5% | 45 | .5% | 45 | .3% | 45 | .6% | |||||
| Gross profit | 55 | .1% | 53 | .5% | 54 | .5% | 54 | .7% | 54 | .4% | |||||
| Operating costs and expenses: | |||||||||||||||
| Selling, general and administrative | 24 | .6% | 24 | .3% | 25 | .2% | 26 | .2% | 25 | .5% | |||||
| Product development and engineering | 13 | .9% | 12 | .7% | 16 | .0% | 15 | .5% | 13 | .6% | |||||
| Acquisition related items | 0 | .4% | 0 | .3% | 0 | .5% | 0 | .5% | 0 | .4% | |||||
| Total operating costs and expenses | 39 | .0% | 37 | .3% | 41 | .7% | 42 | .1% | 39 | .4% | |||||
| Operating income | 16 | .1% | 16 | .2% | 12 | .8% | 12 | .6% | 15 | .0% | |||||
| Interest and other income, net | 1 | .5% | 1 | .1% | 0 | .4% | 1 | .3% | 1 | .7% | |||||
| Income before taxes | 17 | .6% | 17 | .3% | 13 | .3% | 14 | .0% | 16 | .6% | |||||
| Provision for taxes | 45 | .4% | 2 | .9% | 2 | .1% | 18 | .2% | 3 | .2% | |||||
| Net (loss) income | (27 | .8%) | 14 | .4% | 11 | .2% | (4 | .2%) | 13 | .5% | |||||
Note: Percentages may not add or calculate precisely due to rounding | |||||||||||||||
SEMTECH CORPORATION CONSOLIDATED BALANCE SHEETS (Table in thousands) | ||||||
| Oct 25, | January 25, | |||||
| 2009 | 2009 | |||||
| (Unaudited) | ||||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 103,053 | $ | 147,666 | ||
| Temporary investments | 167,540 | 98,735 | ||||
| Receivables, less allowances | 25,501 | 27,467 | ||||
| Inventories | 25,428 | 27,986 | ||||
| Deferred income taxes | 4,900 | 4,287 | ||||
| Other current assets | 8,101 | 7,561 | ||||
| Total Current Assets | 334,523 | 313,702 | ||||
| Property, plant and equipment, net | 34,472 | 31,786 | ||||
| Long-term investments | 45,727 | 12,414 | ||||
| Deferred income taxes | 29,967 | 25,544 | ||||
| Goodwill | 25,540 | 25,540 | ||||
| Other Intangibles | 3,483 | 2,091 | ||||
| Other assets | 9,771 | 9,718 | ||||
| Total Assets | $ | 483,483 | $ | 420,795 | ||
| LIABILITIES AND SHAREHOLDERS'' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 19,390 | $ | 10,653 | ||
| Accrued liabilities | 16,971 | 15,915 | ||||
| Income taxes payable | 2,595 | 2,108 | ||||
| Deferred revenue | 2,368 | 2,808 | ||||
| Accrued taxes | 3,247 | 727 | ||||
| Deferred income taxes | 1,503 | 1,604 | ||||
| Total Current Liabilities | 46,074 | 33,815 | ||||
| Deferred income taxes - Non Current | 39,349 | 101 | ||||
| Accrued Taxes | 1,329 | 3,563 | ||||
| Other long-term liabilities | 7,428 | 5,296 | ||||
| Shareholders'' equity | 389,303 | 378,020 | ||||
| Total Liabilities & Equity | $ | 483,483 | $ | 420,795 | ||
The following information is provided to enhance the user''s overall understanding of the Company''s comparable financial performance between periods. Management generally considers these items in managing and evaluating the performance of the business.
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| Oct 25, | Oct 26, | July 26 | Oct 25, | Oct 26, | ||||||||||||||||
| 2009 | 2008 | 2009 | 2009 | 2008 | ||||||||||||||||
| Supplemental Information | Q3 2010 | Q3 2009 | Q2 2010 | Q3 2010 | Q3 2009 | |||||||||||||||
| (in thousands) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
| Acquisition related items | 303 | 273 | 302 | 908 | 818 | |||||||||||||||
| Option and restatement related expenses | 1,078 | 611 | (340 | ) | 1,147 | 1,101 | ||||||||||||||
| Stock based compensation expense | 4,102 | 3,836 | 4,952 | 13,820 | 13,089 | |||||||||||||||
| Restructuring cost | 50 | - | 160 | 398 | 2,310 | |||||||||||||||
| Total before taxes | 5,533 | 4,720 | 5,074 | 16,273 | 17,318 | |||||||||||||||
| Associated tax effect | (1,203 | ) | (1,372 | ) | (1,399 | ) | (4,044 | ) | (4,901 | ) | ||||||||||
| Total of supplemental information net of taxes | $ | 4,330 | $ | 3,348 | $ | 3,675 | $ | 12,229 | $ | 12,417 | ||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| Oct 25, | Oct 26, | July 26 | Oct 25, | Oct 26, | |||||||||||
| 2009 | 2008 | 2009 | 2009 | 2008 | |||||||||||
| Stock Based Compensation Expense | Q3 2010 | Q3 2009 | Q2 2010 | Q3 2010 | Q3 2009 | ||||||||||
| (in thousands) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Cost of sales | $ | 284 | $ | 382 | $ | 344 | $ | 942 | $ | 1,168 | |||||
| Selling, general and administrative | 2,658 | 2,475 | 3,354 | $ | 9,602 | 8,859 | |||||||||
| Product development and engineering | 1,160 | 979 | 1,254 | $ | 3,276 | 3,062 | |||||||||
| Total stock-based compensation | $ | 4,102 | $ | 3,836 | $ | 4,952 | $ | 13,820 | $ | 13,089 | |||||
Contacts:
Semtech Corporation
Chris Rogers, Investor Relations
805-480-2004