- Revenue Growth of 4.3% Sequentially from Q1 '19 to Q2 '19
- Gross Margin of 58.7% on a GAAP Basis and 59.0% on a Non-GAAP
Basis
- Net Income Improves to $0.06 / $0.15 Per Diluted Share on a
GAAP / Non-GAAP Basis
- $40 Million in Discretionary Debt Payments
* GAAP represents U.S. Generally Accepted Accounting Principles.
Non-GAAP represents GAAP excluding the impact of certain activities
which the Company's management excludes in analyzing the Company's
operating results and in understanding trends in the Company's
earnings. For a reconciliation of GAAP to non-GAAP results, see
accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP
Financial Measures."
Lattice Semiconductor Corporation (NASDAQ: LSCC), the low power
programmable leader, announced financial results today for the
fiscal second quarter ended June 29, 2019.
Jim Anderson, President and Chief Executive Officer, said, "We
achieved the highest profitability level in over a decade, with a
record high in operating income percentage and significant
improvements across key metrics, such as EPS. We continue to drive
operational improvements and we are also benefiting from strength
in our communications, computing, and industrial markets. We are
pleased with our progress and remain focused on execution and
driving further improvement, as we unlock additional value for the
company and its shareholders."
Sherri Luther, Chief Financial Officer, said, "In addition to
driving a 42.6% improvement in non-GAAP diluted EPS in Q2 2019
compared to Q1 2019, we achieved a major improvement in cash
generation, with $44.7 million in cash provided by operations in Q2
2019. We made $40 million in discretionary debt payments reducing
our non-GAAP debt leverage ratio below 2, as defined in the credit
agreement, and refinanced our corporate debt on more favorable
terms. We continue to focus on profitability and cash generation,
as we execute on our gross margin expansion strategy."
Selected Second Quarter 2019 Financial Results and
Comparisons (in thousands, except per share data)
GAAP Quarterly Financial
Results
Q2 2019
Q1 2019
Q2 2018
Q/Q
Y/Y
Revenue
$
102,296
$
98,091
$
102,715
+ 4.3
%
(0.4
%)
Gross Margin %
58.7
%
58.8
%
48.9
%
(10) bps
+ 980 bps
R&D Expense %
18.9
%
20.0
%
20.5
%
(110) bps
(160) bps
SG&A Expense %
19.3
%
21.2
%
20.5
%
(190) bps
(120) bps
Operating Expense
$
45,652
$
45,176
$
63,812
+ 1.1
%
(28.5
%)
Operating Income
$
14,386
$
12,476
$
(13,564
)
+ 15.3
%
+ 206.1
%
Net Income (Loss)
$
8,559
$
7,408
$
(20,223
)
+ 15.5
%
+ 142.3
%
Net Income (Loss) per share -
Basic
$
0.06
$
0.06
$
(0.16
)
—
+ $0.22
Net Income (Loss) per share -
Diluted
$
0.06
$
0.05
$
(0.16
)
+ $0.01
+ $0.22
Non-GAAP* Quarterly Financial
Results
Q2 2019
Q1 2019
Q2 2018
Q/Q
Y/Y
Revenue
$
102,296
$
98,091
$
102,715
+ 4.3
%
(0.4
%)
Gross Margin %
59.0
%
58.6
%
57.2
%
+ 40 bps
+ 180 bps
R&D Expense %
17.7
%
18.9
%
19.7
%
(120) bps
(200) bps
SG&A Expense %
17.0
%
18.8
%
19.2
%
(180) bps
(220) bps
Operating Expense
$
35,494
$
37,985
$
39,945
(6.6
%)
(11.1
%)
Operating Income
$
24,871
$
19,531
$
18,776
+ 27.3
%
+ 32.5
%
Net Income
$
21,087
$
14,561
$
12,375
+ 44.8
%
+ 70.4
%
Net Income per share - Basic
$
0.16
$
0.11
$
0.10
+ $0.05
+ $0.06
Net Income per share - Diluted
$
0.15
$
0.11
$
0.10
+ $0.04
+ $0.05
* GAAP represents U.S. Generally Accepted Accounting Principles.
Non-GAAP represents GAAP excluding the impact of certain activities
which the Company's management excludes in analyzing the Company's
operating results and in understanding trends in the Company's
earnings. For a reconciliation of GAAP to non-GAAP results, see
accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP
Financial Measures."
Second Quarter 2019 Highlights
- Improved Profitability: Achieved a 142% increase in net
income on a GAAP basis in Q2 2019 compared to Q2 2018, and a 70%
increase in net income on a non-GAAP basis in Q2 2019 compared to
Q2 2018.
- Debt Refinance and De-lever: Made $40 million in
discretionary debt payments, reduced leverage ratio below 2, and
successfully refinanced corporate debt, which lowered the interest
rate by 275 basis points, extended the maturity by 3 years to
2024.
- Launched New Platform Security Product: The MachXO3D™
FPGA simplifies the implementation of robust, comprehensive and
flexible hardware-based security. MachXO3D can protect, detect and
recover itself and other components from unauthorized firmware
access at every stage of a system’s lifecycle, from the point of
manufacturing all the way to the system’s end of life.
- Higher Performance AI: Announced major performance and
design flow enhancements for Lattice's award-winning sensAI™
solutions stack. The Lattice sensAI stack provides a comprehensive
hardware and software solution for implementing low power,
always-on artificial intelligence (AI) functionality in smart
devices operating at the Edge. sensAI was awarded the EDN Hot 100
Product Award, Tools & Development Category, the AI
Breakthrough Award, Best AI-Based Solution for Engineering, and the
Electronics Industry Award, Internet of Things Product of the Year,
among others.
- New Reference Design for Video Applications: Announced
availability of the latest in a series of new reference designs
featuring the popular Lattice CrossLink™ FPGA for video bridging
applications. The MIPI DSI/CSI-2 to OpenLDI LVDS Interface Bridge
reference design provides industrial device customers with a
flexible and easy to implement solution to connect today’s more
advanced application processors to the displays used in many of
today’s industrial environments.
Business Outlook - Third Quarter of 2019:
- Revenue for the third quarter of 2019 is expected to be between
$101 million and $105 million.
- Gross margin percentage for the third quarter of 2019 is
expected to be 59% plus or minus 1% on a non-GAAP basis.
- Total operating expenses for the third quarter of 2019 are
expected to be between $35.5 million and $36.5 million on a
non-GAAP basis.
Non-GAAP Financial Measures: In addition to financial measures
prepared in accordance with generally accepted accounting
principles (GAAP), this earnings release makes reference to
non-GAAP measures. With respect to the outlook for the third
quarter of 2019, certain items that affect GAAP measurement of
financial metrics are out of the Company’s control and/or cannot be
reasonably predicted. Consequently, the Company is unable to
provide a reasonable estimate of GAAP measurement for guidance or a
corresponding reconciliation to GAAP for the quarter. Additional
information regarding the reasons the Company uses non-GAAP
measures, a reconciliation of these measures to the most directly
comparable GAAP measures, and other information relating to these
measures are included below, following the GAAP financial
information.
Investor Conference Call / Webcast Details:
Lattice Semiconductor will review the Company's financial
results for the fiscal second quarter and business outlook on
Tuesday, July 30 at 5:00 p.m. Eastern Time. The dial-in number for
the live audio call is 1-888-684-5603 or 1-918-398-4852 with
conference identification number 8176926. A live webcast of the
conference call will also be available on the investor relations
section of www.latticesemi.com. The Company's financial guidance
will be limited to the comments on its public quarterly earnings
call and the public business outlook statements contained in this
press release.
Forward-Looking Statements Notice:
The foregoing paragraphs contain forward-looking statements that
involve estimates, assumptions, risks and uncertainties. Any
statements about our expectations, beliefs, plans, objectives,
assumptions or future events or performance are not historical
facts and may be forward-looking. Such forward-looking statements
include statements relating to: our belief that we will unlock
additional value for the Company and its shareholders; and the
statements under the heading “Business Outlook - Third Quarter of
2019.” Other forward-looking statements may be indicated by words
such as “will,” “could,” “should,” “would,” “may,” “expect,”
“plan,” “project,” “anticipate,” “intend,” “forecast,” “future,”
“believe,” “estimate,” “predict,” “propose,” “potential,”
“continue” or the negative of these terms or other comparable
terminology.
Estimates of future revenue are inherently uncertain due to such
factors such as global economic conditions which may affect
customer demand, pricing pressures, competitive actions, and
international trade disputes and sanctions. Actual gross margin
percentage and operating expenses could vary from the estimates on
the basis of, among other things, changes in revenue levels,
changes in product pricing and mix, changes in wafer, assembly,
test and other costs, variations in manufacturing yields, the
failure to sustain operational improvements, and the actual amount
of compensation charges due to stock price changes. Actual results
are subject to risks and uncertainties that relate more broadly to
our overall business, including those risks more fully described in
Lattice’s filings with the SEC including its Annual Report on Form
10-K for the fiscal year ended December 29, 2018, and Lattice’s
quarterly reports filed on Form 10-Q. Lattice believes these and
other risks and uncertainties could cause actual results to differ
materially from the forward-looking statements. You should not
unduly rely on forward-looking statements because actual results
could differ materially from those expressed in any forward-looking
statements. In addition, any forward-looking statement applies only
as of the date on which it is made. The Company does not intend to
update or revise any forward-looking statements, whether as a
result of events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
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. The non-GAAP measures presented exclude
charges and adjustments primarily related to stock-based
compensation, restructuring plans and related charges,
acquisition-related charges, amortization and impairment of
acquired intangible assets, inventory adjustments related to
restructured operations, and the estimated tax effect of these
items. 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.
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 a leader in low power,
small form factor programmable logic devices. Our FPGAs deliver
intelligence, connectivity, and control solutions to the
industrial, compute, communications, consumer, and automotive
markets. Our unwavering commitment to our global customers enables
them to accelerate their innovation, creating an even better and
more connected world.
For more information about Lattice, please visit www.latticesemi.com. You can also follow us via
LinkedIn, Twitter, Facebook, YouTube, WeChat, Weibo or Youku.
Lattice Semiconductor
Corporation
Consolidated Statements of
Operations
(in thousands, except per
share data)
(unaudited)
Three Months Ended
Six Months Ended
June 29, 2019
March 30, 2019
June 30, 2018
June 29, 2019
June 30, 2018
Revenue
$
102,296
$
98,091
$
102,715
$
200,387
$
201,338
Cost of sales
42,258
40,439
52,467
82,697
94,569
Gross margin
60,038
57,652
50,248
117,690
106,769
Operating expenses:
Research and development
19,377
19,665
21,081
39,042
44,022
Selling, general, and administrative
19,759
20,781
21,068
40,540
48,111
Amortization of acquired intangible
assets
3,390
3,389
4,523
6,779
10,159
Restructuring
3,126
1,341
4,376
4,467
5,405
Acquisition related charges
—
—
864
—
1,531
Impairment of acquired intangible
assets
—
—
11,900
—
11,900
Total operating expenses
45,652
45,176
63,812
90,828
121,128
Income (loss) from operations
14,386
12,476
(13,564
)
26,862
(14,359
)
Interest expense
(3,538
)
(4,987
)
(4,968
)
(8,525
)
(10,082
)
Other (expense) income, net
(2,109
)
153
(348
)
(1,956
)
206
Income (loss) before income taxes
8,739
7,642
(18,880
)
16,381
(24,235
)
Income tax expense
180
234
1,343
414
1,940
Net income (loss)
$
8,559
$
7,408
$
(20,223
)
$
15,967
$
(26,175
)
Net income (loss) per share:
Basic
$
0.06
$
0.06
$
(0.16
)
$
0.12
$
(0.21
)
Diluted
$
0.06
$
0.05
$
(0.16
)
$
0.12
$
(0.21
)
Shares used in per share calculations:
Basic
132,206
130,992
124,843
131,599
124,460
Diluted
137,221
134,810
124,843
136,133
124,460
Lattice Semiconductor
Corporation
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
June 29, 2019
December 29, 2018
Assets
Current assets:
Cash and cash equivalents
$
122,636
$
119,051
Short-term marketable securities
—
9,624
Accounts receivable, net
37,893
60,890
Inventories
64,964
67,096
Other current assets
30,752
27,762
Total current assets
256,245
284,423
Property and equipment, net
39,593
34,883
Operating lease right-of-use assets
26,092
—
Intangible assets, net
13,784
21,325
Goodwill
267,514
267,514
Deferred income taxes
227
215
Other long-term assets
13,204
15,327
$
616,659
$
623,687
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and other accrued
liabilities
$
61,123
$
61,128
Current portion of long-term debt
17,190
8,290
Current portion of operating lease
liabilities
4,804
—
Total current liabilities
83,117
69,418
Long-term debt, net of current portion
172,287
251,357
Long-term operating lease liabilities, net
of current portion
23,792
—
Other long-term liabilities
42,286
44,455
Total liabilities
321,482
365,230
Stockholders' equity
295,177
258,457
$
616,659
$
623,687
Lattice Semiconductor
Corporation
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 29, 2019
June 30, 2018
Cash flows from operating activities:
Net income (loss)
$
15,967
$
(26,175
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
16,450
22,425
Impairment of acquired intangible
assets
—
11,900
Stock-based compensation expense
7,655
7,200
Other non-cash adjustments
7,295
928
Net changes in assets and liabilities
19,129
(6,696
)
Net cash provided by operating
activities
66,496
9,582
Cash flows from investing activities:
Capital expenditures
(8,459
)
(4,105
)
Other investing activities
6,058
(11,084
)
Net cash used in investing activities
(2,401
)
(15,189
)
Cash flows from financing activities:
Proceeds from issuance of long-term
debt
206,500
—
Cash paid for debt issuance costs
(2,086
)
—
Repayment of long-term debt
(278,033
)
(12,009
)
Net cash flows related to stock
compensation exercises
13,023
5,040
Net cash used in financing activities
(60,596
)
(6,969
)
Effect of exchange rate change on cash
86
(540
)
Net increase (decrease) in cash and cash
equivalents
3,585
(13,116
)
Beginning cash and cash equivalents
119,051
106,815
Ending cash and cash equivalents
$
122,636
$
93,699
Supplemental disclosure of cash flow
information and non-cash
investing and financing
activities:
Interest paid
$
8,103
$
9,177
Income taxes paid, net of refunds
$
1,500
$
2,057
Lattice Semiconductor
Corporation
Supplemental Historical
Financial Information
(unaudited)
Three Months Ended
June 29, 2019
March 30, 2019
June 30, 2018
Balance Sheet Information
A/R Days Revenue Outstanding (DSO)
34
52
68
Inventory Days (DIO)
140
151
114
Revenue% (by Geography)
Asia
75%
70%
76%
Europe (incl. Africa)
12%
12%
12%
Americas
13%
18%
12%
Revenue% (by End Market)
Communications and Computing
39%
36%
29%
Industrial and Automotive
38%
37%
43%
Consumer
19%
20%
24%
Licensing and Services
4%
7%
4%
Revenue% (by Channel)
Distribution
85%
79%
86%
Direct
15%
21%
14%
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, 2019
March 30, 2019
June 30, 2018
Gross Margin Reconciliation
GAAP Gross margin
$
60,038
$
57,652
$
50,248
Inventory adjustment related to
restructured operations
—
(338
)
8,277
Stock-based compensation - gross
margin
327
202
196
Non-GAAP Gross margin
$
60,365
$
57,516
$
58,721
Gross Margin % Reconciliation
GAAP Gross margin %
58.7
%
58.8
%
48.9
%
Cumulative effect of non-GAAP Gross Margin
adjustments
0.3
%
(0.2
)%
8.3
%
Non-GAAP Gross margin %
59.0
%
58.6
%
57.2
%
Research and Development Expense %
(R&D Expense %)
Reconciliation
GAAP R&D Expense %
18.9
%
20.0
%
20.5
%
Stock-based compensation - R&D
(1.2
)%
(1.1
)%
(0.8
)%
Non-GAAP R&D Expense %
17.7
%
18.9
%
19.7
%
Selling, General, and Administrative
Expense % (SG&A
Expense %) Reconciliation
GAAP SG&A Expense %
19.3
%
21.2
%
20.5
%
Stock-based compensation - SG&A
(2.3
)%
(2.4
)%
(1.3
)%
Non-GAAP SG&A Expense %
17.0
%
18.8
%
19.2
%
Operating Expenses
Reconciliation
GAAP Operating expenses
$
45,652
$
45,176
$
63,812
Amortization of acquired intangible
assets
(3,390
)
(3,389
)
(4,523
)
Restructuring charges
(3,126
)
(1,341
)
(4,376
)
Acquisition related charges (1)
—
—
(864
)
Impairment of acquired intangible
assets
—
1,023
(11,900
)
Stock-based compensation - operations
(3,642
)
(3,484
)
(2,204
)
Non-GAAP Operating expenses
$
35,494
$
37,985
$
39,945
Income (Loss) from Operations
Reconciliation
GAAP Income (loss) from operations
$
14,386
$
12,476
$
(13,564
)
Inventory adjustment related to
restructured operations
—
(338
)
8,277
Stock-based compensation - gross
margin
327
202
196
Amortization of acquired intangible
assets
3,390
3,389
4,523
Restructuring charges
3,126
1,341
4,376
Acquisition related charges (1)
—
—
864
Impairment of acquired intangible
assets
—
(1,023
)
11,900
Stock-based compensation - operations
3,642
3,484
2,204
Non-GAAP Income from operations
$
24,871
$
19,531
$
18,776
Income (Loss) from Operations %
Reconciliation
GAAP Income (loss) from operations %
14.1
%
12.7
%
(13.2
)%
Cumulative effect of non-GAAP Gross Margin
and Operating
adjustments
10.2
%
7.2
%
31.5
%
Non-GAAP Income from operations %
24.3
%
19.9
%
18.3
%
(1) Legal fees and outside services that
were related to our proposed acquisition by Canyon Bridge
Acquisition Company, Inc.
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, 2019
March 30, 2019
June 30, 2018
Other (Expense) Income, Net
Reconciliation
GAAP Other (expense) income, net
$
(2,109
)
$
153
$
(348
)
Loss on re-financing of long-term debt
2,235
—
—
Non-GAAP Other income (expense), net
$
126
$
153
$
(348
)
Income Tax Expense
Reconciliation
GAAP Income tax expense
$
180
$
234
$
1,343
Estimated tax effect of non-GAAP
adjustments (2)
192
(98
)
(258
)
Non-GAAP Income tax expense
$
372
$
136
$
1,085
Net Income (Loss)
Reconciliation
GAAP Net income (loss)
$
8,559
$
7,408
$
(20,223
)
Inventory adjustment related to
restructured operations
—
(338
)
8,277
Stock-based compensation - gross
margin
327
202
196
Amortization of acquired intangible
assets
3,390
3,389
4,523
Restructuring charges
3,126
1,341
4,376
Acquisition related charges (1)
—
—
864
Impairment of acquired intangible
assets
—
(1,023
)
11,900
Stock-based compensation - operations
3,642
3,484
2,204
Loss on re-financing of long-term debt
2,235
—
—
Estimated tax effect of non-GAAP
adjustments (2)
(192
)
98
258
Non-GAAP Net income
$
21,087
$
14,561
$
12,375
Net Income (Loss) Per Share
Reconciliation
GAAP Net income (loss) per share -
basic
$
0.06
$
0.06
$
(0.16
)
Cumulative effect of Non-GAAP
adjustments
0.10
0.05
0.26
Non-GAAP Net income per share - basic
$
0.16
$
0.11
$
0.10
GAAP Net income (loss) per share -
diluted
$
0.06
$
0.05
$
(0.16
)
Cumulative effect of Non-GAAP
adjustments
0.09
0.06
0.26
Non-GAAP Net income per share -
diluted
$
0.15
$
0.11
$
0.10
Shares used in per share calculations:
Basic
132,206
130,992
124,843
Diluted - GAAP (3)
137,221
134,810
124,843
Diluted - Non-GAAP (3)
137,221
134,810
125,620
(1) Legal fees and outside services that
were related to our proposed acquisition by Canyon Bridge
Acquisition Company, Inc.
(2) We calculate non-GAAP tax expense by
applying our tax provision model to year-to-date and projected
income after adjusting for non-GAAP items. The difference between
calculated values for GAAP and non-GAAP tax expense has been
included as the “Estimated tax effect of non-GAAP adjustments.”
(3) Diluted shares are calculated using
the GAAP treasury stock method. In a loss position, diluted shares
equal basic shares.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190730005924/en/
MEDIA: Lattice Semiconductor Corporation Doug Hunter,
503.268.8512 doug.hunter@latticesemi.com
INVESTORS: Global IR Partners David Pasquale,
914.337.8801 lscc@globalirpartners.com
Lattice Semiconductor (NASDAQ:LSCC)
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From Mar 2024 to Apr 2024
Lattice Semiconductor (NASDAQ:LSCC)
Historical Stock Chart
From Apr 2023 to Apr 2024