Semtech Announces Second Quarter of Fiscal Year 2016 Results

CAMARILLO, Calif.-- August 19, 2015 -- Semtech Corporation (Nasdaq: SMTC), a leading supplier of analog and mixed-signal semiconductors, today reported unaudited financial results for its second quarter of fiscal year 2016, which ended July 26, 2015.

Net sales for the second quarter of fiscal year 2016 were $125.7 million, down 3 percent from the first quarter of fiscal year 2016 and down 14 percent from the second quarter of fiscal year 2015.

Gross profit margin, computed in accordance with U.S. generally accepted accounting principles (GAAP), for the second quarter of fiscal year 2016 was 60.1 percent compared to 60.3 percent in the first quarter of fiscal year 2016 and 60.5 percent in the second quarter of fiscal year 2015.

GAAP net loss for the second quarter of fiscal year 2016 was $0.3 million or $0.00 per diluted share. This compares to a GAAP net loss of $0.1 million or $0.00 per diluted share in the first quarter of fiscal year 2016 and GAAP net income of $17.9 million or $0.26 per diluted share in the second quarter of fiscal year 2015.

Included in the GAAP operating results for the second quarter of fiscal year 2016 were charges that included $3.6 million associated with the Company's reduction in force of which the majority is expected to be cash settled.

To facilitate the complete understanding of comparable financial performance between periods, the Company also presents performance results net of certain non-cash items or items that are not considered reflective of the Company's core results over time. The Company's non-GAAP measures of gross profit margin, net income and earnings per diluted share exclude certain items as described below under "Non-GAAP Financial Measures."

Excluding such items, non-GAAP net income for the second quarter of fiscal year 2016 was $15.6 million or $0.24 per diluted share. Non-GAAP net income was $17.9 million or $0.27 per diluted share in the first quarter of fiscal year 2016 and was $28.3 million or $0.42 per diluted share in the second quarter of fiscal year 2015.

Non-GAAP gross profit margin for the second quarter of fiscal year 2016 was 60.4 percent. Non-GAAP gross profit margin for the first quarter of fiscal year 2016 was 60.8 percent and 60.8 percent in the second quarter of fiscal year 2015.

As of the end of the second quarter of fiscal year 2016, the Company had $212.6 million in cash, cash equivalents and marketable securities compared to $230.3 million in cash, cash equivalents and marketable securities at the end of fiscal year 2015.

Mohan Maheswaran, Semtech's President and Chief Executive Officer, stated, "Semtech delivered results consistent with our guidance as strength in the Enterprise Computing end-market was offset by the expected declines in the other three end-markets, particularly the High-End Consumer end-market, where we experienced continued weakness from our Korean smartphone customers." Maheswaran continued, "During the quarter we took actions that included reducing our global headcount to lower and better align our operating expenses with the current environment. These actions should enable the Company to leverage our new product momentum into increased earnings power once revenue growth resumes."

The results announced today are preliminary, as they are subject to the Company finalizing its closing procedures and customary quarterly review 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 second quarter of fiscal year 2016.

Third Quarter of Fiscal Year 2016 Outlook

• Net sales are expected to be in the range of $110 million to $120 million
• GAAP gross profit margin is expected to be in the range of 59.6% to 60.2%
• Non-GAAP gross profit margin is expected to be in the range of 60.0% to 60.5%
• GAAP SG&A expense is expected to be in the range of $30.7 million to $31.7 million
• GAAP R&D expense is expected to be in the range of $26.2 million to $27.2 million
• Transaction, integration and restructuring related expense is expected to be approximately $0.5 million
• Stock-based compensation expense, is expected to be approximately $7.4 million, categorized as follows: $0.4 million cost of sales, $4.5 million SG&A, and $2.5 million R&D
• Amortization of acquired intangible assets is expected to be approximately $6.2 million
• Interest and other expense is expected to be approximately $1.8 million
• GAAP tax rate is expected to be in the range of 54% to 56%
• Non-GAAP tax rate is expected to be in the range of 15% to 18%
• GAAP earnings per diluted share are expected to be in the range of $0.00 to $0.04
• Non-GAAP earnings per diluted share are expected to be in the range of $0.21 to $0.27
• Fully diluted share count is expected to be approximately 65.0 million shares
• Capital expenditures are expected to be approximately $3.0 million

Financial Tables

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About Semtech

Semtech Corporation is a leading supplier of analog and mixed-signal semiconductors for high-end consumer, enterprise 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.