Semtech (SMTC) Tops Q2 EPS by 2c, Revenues Beat; Offers 3Q EPS/Revenue Guidance

Semtech (NASDAQ: SMTC) reported Q2 EPS of $0.43, $0.02 better than the analyst estimate of $0.41. Revenue for the quarter came in at $143.7 million versus the consensus estimate of $141.76 million.

Highlights for the Second Fiscal Quarter 2021

• Q2 FY2021 net sales of $143.7 million increased 8% sequentially and 5% year-over-year
• Q2 FY2021 GAAP EPS of $0.24 and non-GAAP EPS of $0.43
• Wireless and Sensing products group net sales increased 18% sequentially, led by record net sales of LoRa® platform products
• Signal Integrity products group net sales increased 20% sequentially and represented a new record
• Cash flow from operations was $37.2 million or 26% of net sales
• Repurchased approximately 233,000 shares for $12.4 million during Q2 FY2021

Mohan Maheswaran, Semtech’s President and Chief Executive Officer, stated, “Fiscal Q2 net sales increased 8% sequentially led by record quarterly results from our Signal Integrity products group driven by strong growth from the Hyperscale data center and 5G wireless base station markets. Net sales of our LoRa technology platform were also a record as LoRa continues to achieve significant milestones including reaching the 1 million gateways deployed milestone. Our recent announcement with Amazon Web Services (AWS) and TensorIoT to enable LoRaWAN to connect straight into the Amazon Cloud also represents another major milestone for LoRa.” Maheswaran continued, “Despite the ongoing uncertainty from COVID-19 and the ongoing geopolitical issues, the underlying fundamentals behind our core growth engines in the Infrastructure and IoT markets remain strong and we expect to continue to outperform.”

GUIDANCE:

Semtech sees Q3 2021 EPS of $0.43-$0.49, versus the consensus of $0.46. Semtech sees Q3 2021 revenue of $145-155 million, versus the consensus of $146.98 million.

Third Fiscal Quarter 2021 Outlook

Both the GAAP and non-GAAP third fiscal quarter 2021 outlook below take into account, based on the Company's current estimates, the anticipated, but uncertain, negative impact to the Company of the COVID-19 pandemic on global economic conditions and on the Company's business operations, sales and operating results, as well as export restrictions pertaining to Huawei and certain of its affiliates imposed by the U.S. government. The Company is unable to predict the full impact such challenges may have on its future results of operations.

GAAP Third Fiscal Quarter 2021 Outlook

• Net sales are expected to be in the range of $145.0 million to $155.0 million
• GAAP Gross margin is expected to be in the range of 60.5% to 61.5%
• GAAP SG&A expense is expected to be in the range of $40.1 million to $41.1 million
• GAAP R&D expense is expected to be in the range of $28.6 million to $29.6 million
• GAAP Intangible amortization expense is expected to be approximately $1.8 million
• GAAP Interest and other expense, net is expected to be approximately $1.5 million
• GAAP Effective tax rate is expected to be in the range of 12% to 14%
• GAAP Earnings per diluted share are expected to be in the range of $0.21 to $0.28
• Fully-diluted share count is expected to be approximately 65.8 million shares
• Share-based compensation is expected to be approximately $14.9 million, categorized as follows: $0.7 million cost of sales, $10.6 million SG&A, and $3.6 million R&D
• Capital expenditures are expected to be approximately $9.0 million
• Depreciation expense is expected to be approximately $5.9 million

Non-GAAP Third Fiscal Quarter 2021 Outlook (see the list of non-GAAP items and the reconciliation of these to the most comparable GAAP items set forth in the tables below)

• Non-GAAP Gross margin is expected to be in the range of 61.0% to 62.0%
• Non-GAAP SG&A expense is expected to be in the range of $29.0 million to $30.0 million
• Non-GAAP R&D expense is expected to be in the range of $25.0 million to $26.0 million
• Non-GAAP Interest and other expense, net is expected to be approximately $1.5 million
• Non-GAAP Effective tax rate is expected to be in the range of 15% to 17%
• Non-GAAP Earnings per diluted share are expected to be in the range of $0.43 to $0.49

For earnings history and earnings-related data on Semtech (SMTC) click here.

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