Semtech (SMTC) Tops Q4 EPS by 5c, Revenues Beat; Offers Q1 EPS/Revenue Outlook

Semtech (NASDAQ: SMTC) reported Q4 EPS of $0.40, $0.05 better than the analyst estimate of $0.35. Revenue for the quarter came in at $138 million versus the consensus estimate of $134.24 million.

Highlights for the Fourth Quarter and Fiscal Year 2020

• Q4 FY2020 net sales of $138.0 million, GAAP EPS of $0.04 and non-GAAP EPS of $0.40
• FY2020 net sales of $547.5 million, GAAP EPS of $0.47 and non-GAAP EPS of $1.52
• Cash flow from operations was $45.3 million, or 33% of net sales, in Q4 FY2020 and was $118.6 million, or 22% of net sales, in FY2020
• Refinanced the prior credit facility with a new $600.0 million revolving credit facility
• Repurchased 0.5 million shares for $27.6 million in Q4 FY2020 and 1.5 million shares for $70.2 million in FY2020

Mohan Maheswaran, Semtech’s President and Chief Executive Officer, stated, “We delivered fiscal Q4 results at the upper end of our guidance and ended with a solid finish to a challenging year. In fiscal year 2020, we continued to invest in our disruptive product platforms while delivering strong operating cash flow and are very well positioned in our target markets including hyper scale data centers and 5G infrastructure, Internet Of Things (IOT) and mobile systems." Maheswaran continued, "Despite the ongoing geopolitical challenges and the uncertainties associated with the coronavirus, we believe the long-term sustainability of our secular growth drivers, along with our balanced end-market approach and strong customer relationships, should enable the Company to deliver a strong financial performance in fiscal year 2021 and beyond.”

GUIDANCE:

Semtech sees Q1 2021 EPS of $0.30-$0.36, versus the consensus of $0.35. Semtech sees Q1 2021 revenue of $125-135 million, versus the consensus of $134.24 million.

Both the GAAP and non-GAAP first quarter of fiscal year 2021 outlook below take into account, based on the Company\'s current estimates, the anticipated, but uncertain, impact to the Company of the export restrictions pertaining to Huawei and certain of its affiliates imposed by the U.S. Department of Commerce, as well as of the coronavirus. The Company is unable to predict the full impact such challenges may have on its future results of operations.

GAAP First Quarter of Fiscal Year 2021 Outlook

• Net sales are expected to be in the range of $125.0 million to $135.0 million
• GAAP Gross margin is expected to be in the range of 60.6% to 61.6%
• GAAP SG&A expense is expected to be in the range of $35.5 million to $36.5 million
• GAAP R&D expense is expected to be in the range of $27.5 million to $28.5 million
• GAAP Intangible amortization expense is expected to be approximately $2.8 million
• GAAP Effective tax rate is expected to be in the range of 23% to 27%
• GAAP Earnings per diluted share are expected to be in the range of $0.10 to $0.15
• Fully-diluted share count is expected to be approximately 67.0 million shares
• Share-based compensation is expected to be approximately $10.5 million, categorized as follows: $0.5 million cost of sales, $7.0 million SG&A, and $3.0 million R&D
• Capital expenditures are expected to be approximately $6.0 million
• Depreciation expense is expected to be approximately $5.7 million

Non-GAAP First Quarter of Fiscal Year 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 $28.0 million to $29.0 million
• Non-GAAP R&D expense is expected to be in the range of $24.0 million to $25.0 million
• Non-GAAP Effective tax rate is expected to be in the range of 14% to 16%
• Non-GAAP Earnings per diluted share are expected to be in the range of $0.30 to $0.36

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

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