EX-99.1 2 ex_565340.htm EXHIBIT 99.1 ex_565340.htm
 

Exhibit 99.1

 

NEWS RELEASE

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CONTACTS

 

MEDIA:

INVESTORS:

Sophia Hong

Rick Muscha

Lattice Semiconductor Corporation Lattice Semiconductor Corporation

503-268-8786

408-826-6000

Sophia.Hong@latticesemi.com

Rick.Muscha@latticesemi.com

 

LATTICE SEMICONDUCTOR REPORTS Third QUARTER 2023 RESULTS

 

  Quarterly revenue growth of 11% compared to Q3 2022 and 1% compared to Q2 2023
 

Gross Margin expands to 70.0% / 70.6% for Q3 2023 on a GAAP / Non-GAAP basis, compared to 68.8% / 69.5%, respectively, for Q3 2022
  Net Income improves to $0.38 / $0.53 per diluted share for Q3 2023 on a GAAP / Non-GAAP basis, compared to $0.33 / $0.48, respectively, for Q3 2022

* 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. Additional information relating to these measures is included below in “Non-GAAP Financial Measures.” For a reconciliation of GAAP to non-GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."

 

HILLSBORO, OR - October 30, 2023 - Lattice Semiconductor Corporation (Nasdaq: LSCC), the low power programmable leader, announced financial results today for the fiscal third quarter ended September 30, 2023.

 

Jim Anderson, president and CEO, said, "We delivered another quarter of solid growth, with Q3 2023 revenue and net income increasing 11% on a year-over-year basis. Today Lattice has the strongest product portfolio in our 40-year history and we continue to rapidly expand our product lineup. We look forward to our Developers Conference in December, when we expect to launch two new members of the Lattice Avant™ mid-range FPGA product family."

 

Sherri Luther, CFO, said, "We achieved Q3 2023 operating profit of 29.6% on a GAAP basis and 40.3% on a non-GAAP basis, with gross margin expansion of 120 basis points on a GAAP basis and 110 basis points on a non-GAAP basis compared to Q3 2022. We drove record cash generation, increased our free cash flow to 40%, and continued our share repurchase program for the twelfth consecutive quarter."

 

1

 

Selected Third Quarter 2023 Financial Results and Comparisons (in thousands, except per share data)

 

   

GAAP Financial Results (unaudited)

   

Q3 2023

   

Q2 2023

   

Q3 2022

   

Q/Q

 

Y/Y

Revenue

  $ 192,169     $ 190,079     $ 172,509    

1.1%

 

11.4%

Gross Margin %

    70.0 %     69.7 %     68.8 %   30 bps  

120 bps

R&D Expense %

    21.9 %     22.1 %     20.2 %   (20) bps  

170 bps

SG&A Expense %

    17.3 %     19.4 %     18.5 %   (210) bps  

(120) bps

Operating Expenses

  $ 77,644     $ 79,491     $ 69,930    

(2.3)%

 

11.0%

Income from Operations

  $ 56,917     $ 53,070     $ 48,802     7.2%  

16.6%

Net Income

  $ 53,788     $ 50,644     $ 46,359     6.2%  

16.0%

Net Income per Share - Basic

  $ 0.39     $ 0.37     $ 0.34     $0.02  

$ 0.05

Net Income per Share - Diluted

  $ 0.38     $ 0.36     $ 0.33     $0.02  

$ 0.05

 

 

   

Non-GAAP* Financial Results (unaudited)

   

Q3 2023

   

Q2 2023

   

Q3 2022

   

Q/Q

 

Y/Y

Revenue

  $ 192,169     $ 190,079     $ 172,509    

1.1%

 

11.4%

Gross Margin %

    70.6 %     70.5 %     69.5 %  

10 bps

 

110 bps

R&D Expense %

    18.2 %     18.0 %     17.1 %  

20 bps

 

110 bps

SG&A Expense %

    12.1 %     12.5 %     12.6 %  

(40) bps

 

(50) bps

Operating Expenses

  $ 58,206     $ 58,018     $ 51,342    

0.3%

 

13.4%

Income from Operations

  $ 77,408     $ 75,968     $ 68,512    

1.9%

 

13.0%

Net Income

  $ 73,578     $ 72,509     $ 66,492    

1.5%

 

10.7%

Net Income per Share - Basic

  $ 0.53     $ 0.53     $ 0.48    

 

$ 0.05

Net Income per Share - Diluted

  $ 0.53     $ 0.52     $ 0.48    

$ 0.01

 

$ 0.05

 

 

Third Quarter 2023 Highlights

  Record Revenue: Revenue increased 11% in Q3 2023 compared to Q3 2022 and 1% compared to Q2 2023.
  Profit Growth: Gross margin expanded 120 basis points on a GAAP basis and 110 basis points on a non-GAAP basis compared to Q3 2022, with net income per diluted share increasing 15% on a GAAP basis and 10% on a non-GAAP basis compared to Q3 2022. 
  Continued Product Portfolio Expansion: Launched the Lattice CrossLinkU™-NX FPGA family, the industry’s first FPGA with integrated USB device functionality in its class to meet growing customer needs to simplify USB-based design for applications across multiple markets.
  Mazda Selects Lattice FPGAs: Mazda Motor Corporation's new crossover SUV models CX-60 and CX-90 leverage an interface bridging solution based on multiple power efficient Lattice FPGAs to enable safety-critical Advanced Driver Assistance System (ADAS) features.
 

Lattice Receives Multiple Industry Awards:

• Hewlett Packard Enterprise 2023 Cyber Security Supplier of the Year 
• 2023 AutoTech Breakthrough Award with New Lattice Drive Solution Stack

• 2023 CyberSecurity Breakthrough Award

 

2

 

Business Outlook - Fourth Quarter of 2023:

 

Revenue for the fourth quarter of 2023 is expected to be between $166 million and $186 million.

  Gross margin percentage for the fourth quarter of 2023 is expected to be 70.5% plus or minus 1% on a non-GAAP basis.
  Total operating expenses for the fourth quarter of 2023 are expected to be between $57 million and $59 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 financial measures. With respect to the outlook for the fourth quarter of 2023, certain items that affect GAAP measurement of financial measures for gross margin percentage and total operating expenses are not accessible on a forward-looking basis because such items cannot be reasonably predicted without unreasonable efforts due to the unpredictability of the amounts and timing of events affecting the items we exclude from non-GAAP measures, including certain large and/or unpredictable charges such as stock-based compensation expense; litigation expense outside the ordinary course of business; and restructuring. Consequently, the Company is unable to provide a reasonable estimate of GAAP measurement for non-GAAP gross margin percentage or non-GAAP total operating expenses for second quarter guidance or a corresponding reconciliation to GAAP for the quarter. From a qualitative perspective, the differences between our GAAP measurement of financial measures for gross margin percentage and total operating expenses and our non-GAAP measure of those items will consist of items similar to those described in the financial tables later in this release for such items historically, including, for example and without limitation, certain large and/or unpredictable charges such as stock-based compensation expense; litigation expense outside the ordinary course of business; and restructuring. 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 third quarter 2023, and business outlook on Monday, October 30 at 5:00 p.m. Eastern Time. The dial-in number for the live audio call is 1-877-407-3982 or 1-201-493-6780 with conference identification number 13741270. 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 within the meaning of the Private Securities Litigation Reform Act of 1995, 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, but are not limited to, statements relating to our rapid product portfolio expansion and strength; launch of new products; and the statements under the heading “Business Outlook - Fourth Quarter of 2023.” 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 and inflationary pressures, competitive actions, international trade disputes and sanctions, and potential impact of global pandemics.  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 may differ materially from our expectations and are subject to risks and uncertainties that relate more broadly to our overall business, including those described in Item 1A in Lattice’s most recent Annual Report on Form 10-K and as may be supplemented from time-to-time in Lattice’s other filings with the Securities and Exchange Commission, all of which are expressly incorporated herein by reference.

 

3

 

Lattice believes these and other risks and uncertainties could cause actual results to differ materially from the forward-looking statements. New risk factors emerge from time to time and it is not possible for Lattice’s management to predict all risk factors. 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, including non-GAAP gross margin, gross margin percentage, R&D expense, SG&A expense, operating expenses, income from operations, other (expense) income, net, income tax expense, net income, net income per share – basic, and net income per share – diluted. The non-GAAP measures presented exclude charges and adjustments primarily related to stock-based compensation and related payroll tax effects, litigation expense outside the ordinary course of business, amortization of acquired intangible assets, restructuring plans and other charges, and the estimated tax effect of these items, change in tax law and other tax adjustments. 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 the low power programmable leader. We solve customer problems across the network, from the Edge to the Cloud, in the growing communications, computing, industrial, automotive and consumer markets. Our technology, long-standing relationships, and commitment to world-class support let our customers quickly and easily unleash their innovation to create a smart, secure, and connected world.


For more information about Lattice, please visit www.latticesemi.com. You can also follow us via LinkedInTwitterFacebookYouTube, WeChat, Weibo or Youku.

 

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4

 

Lattice Semiconductor Corporation

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

July 1,

   

October 1,

   

September 30,

   

October 1,

 
   

2023

   

2023

   

2022

   

2023

   

2022

 

Revenue

  $ 192,169     $ 190,079     $ 172,509     $ 566,558     $ 484,396  

Cost of sales

    57,608       57,518       53,777       170,835       154,412  

Gross margin

    134,561       132,561       118,732       395,723       329,984  

Operating expenses:

                                       

Research and development

    42,048       41,946       34,820       119,983       100,988  

Selling, general, and administrative

    33,217       36,788       31,926       102,583       89,721  

Amortization of acquired intangible assets

    870       869       869       2,609       2,908  

Restructuring

    1,509       (112 )     2,315       1,427       2,505  

Acquisition related

                            511  

Total operating expenses

    77,644       79,491       69,930       226,602       196,633  

Income from operations

    56,917       53,070       48,802       169,121       133,351  

Interest income (expense), net

    954       189       (1,267 )     588       (2,866 )

Other income (expense), net

    14       (176 )     (820 )     (257 )     (1,085 )

Income before income taxes

    57,885       53,083       46,715       169,452       129,400  

Income tax expense

    4,097       2,439       356       9,097       2,431  

Net income

  $ 53,788     $ 50,644     $ 46,359     $ 160,355     $ 126,969  
                                         

Net income per share:

                                       

Basic

  $ 0.39     $ 0.37     $ 0.34     $ 1.16     $ 0.92  

Diluted

  $ 0.38     $ 0.36     $ 0.33     $ 1.15     $ 0.90  
                                         

Shares used in per share calculations:

                                       

Basic

    137,948       137,735       137,267       137,697       137,397  

Diluted

    139,828       139,768       139,935       139,927       140,921  

 

 

5

 

Lattice Semiconductor Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

   

September 30,

   

December 31,

 
   

2023

   

2022

 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 114,397     $ 145,722  

Accounts receivable, net

    105,913       94,018  

Inventories, net

    104,019       110,375  

Other current assets

    36,404       29,052  

Total current assets

    360,733       379,167  
                 

Property and equipment, net

    50,164       47,614  

Operating lease right-of-use assets

    16,088       17,590  

Intangible assets, net

    21,951       25,070  

Goodwill

    315,358       315,358  

Other long-term assets

    15,328       13,914  
    $ 779,622     $ 798,713  
                 

Liabilities and Stockholders' Equity

               

Current liabilities:

               

Accounts payable

  $ 36,887     $ 42,036  

Accrued liabilities

    36,305       48,467  

Accrued payroll obligations

    27,471       36,870  

Total current liabilities

    100,663       127,373  
                 

Long-term debt

          128,752  

Long-term operating lease liabilities, net of current portion

    12,122       13,618  

Other long-term liabilities

    40,667       41,807  

Total liabilities

    153,452       311,550  
                 

Stockholders' equity

    626,170       487,163  
    $ 779,622     $ 798,713  

 

 

6

 

Lattice Semiconductor Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

   

Nine Months Ended

 
   

September 30,

   

October 1,

 
   

2023

   

2022

 

Cash flows from operating activities:

               

Net income

  $ 160,355     $ 126,969  

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

               

Stock-based compensation expense

    52,408       41,207  

Depreciation and amortization

    25,279       21,498  

Other non-cash adjustments

    5,199       6,935  

Net changes in assets and liabilities

    (45,623 )     (39,784 )

Net cash provided by (used in) operating activities

    197,618       156,825  

Cash flows from investing activities:

               

Capital expenditures

    (16,370 )     (13,080 )

Other investing activities

    (8,917 )     (8,322 )

Net cash provided by (used in) investing activities

    (25,287 )     (21,402 )

Cash flows from financing activities:

               

Proceeds from long-term debt, net of issuance costs

          148,601  

Repayment of long-term debt

    (130,000 )     (158,750 )

Repurchase of common stock

    (30,005 )     (90,137 )

Net cash flows related to stock compensation exercises

    (43,114 )     (45,726 )

Net cash provided by (used in) financing activities

    (203,119 )     (146,012 )

Effect of exchange rate change on cash

    (537 )     (2,215 )

Net increase (decrease) in cash and cash equivalents

    (31,325 )     (12,804 )

Beginning cash and cash equivalents

    145,722       131,570  

Ending cash and cash equivalents

  $ 114,397     $ 118,766  
                 

Supplemental disclosure of cash flow information and non-cash investing and financing activities:

               

Interest paid

  $ 3,240     $ 2,203  

Income taxes paid, net of refunds

  $ 11,229     $ 4,115  

Operating lease payments

  $ 6,179     $ 5,500  

 

 

7

 

Lattice Semiconductor Corporation

Supplemental Historical Financial Information

(unaudited)

 

   

Three Months Ended

 
   

September 30,

 

July 1,

 

October 1,

   

2023

 

2023

 

2022

Balance Sheet Information

                       

A/R Days Revenue Outstanding (DSO)

    50       46       53  

Inventory Days (DIO)

    165       177       159  
                         

Revenue % (by Geography)

                       

Asia

    61 %     63 %     72 %

Americas

    17 %     17 %     13 %

Europe (incl. Africa)

    22 %     20 %     15 %
                         

Revenue % (by End Market) *

                       

Communications and Computing

    36 %     34 %     42 %

Industrial and Automotive

    57 %     61 %     50 %

Consumer

    7 %     5 %     8 %
                         

Revenue $M (by End Market) *

                       

Communications and Computing

  $ 68.4     $ 64.2     $ 73.0  

Industrial and Automotive

  $ 109.9     $ 115.5     $ 85.7  

Consumer

  $ 13.9     $ 10.4     $ 13.8  
                         

Revenue % (by Channel)

                       

Distribution

    90 %     89 %     90 %

Direct

    10 %     11 %     10 %

 

* During the first quarter of fiscal 2023, we realigned our end market categories. Prior periods have been reclassified to match current period presentation.

 

8

 

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

 

   

Three Months Ended

 
   

September 30,

   

July 1,

   

October 1,

 
   

2023

   

2023

   

2022

 

Gross Margin Reconciliation

                       

GAAP Gross margin

  $ 134,561     $ 132,561     $ 118,732  

Stock-based compensation - gross margin (1)

    1,053       1,425       1,122  

Non-GAAP Gross margin

  $ 135,614     $ 133,986     $ 119,854  

 

Gross Margin % Reconciliation

                       

GAAP Gross margin %

    70.0 %     69.7 %     68.8 %

Cumulative effect of non-GAAP Gross Margin adjustments

    0.6 %     0.8 %     0.7 %

Non-GAAP Gross margin %

    70.6 %     70.5 %     69.5 %

 

Research and Development Expense % (R&D Expense %) Reconciliation

GAAP R&D Expense %

    21.9 %     22.1 %     20.2 %

Stock-based compensation - R&D (1)

    (3.7 )%     (4.1 )%     (3.1 )%

Non-GAAP R&D Expense %

    18.2 %     18.0 %     17.1 %

 

Selling, General, and Administrative Expense % (SG&A Expense %) Reconciliation

         

GAAP SG&A Expense %

    17.3 %     19.4 %     18.5 %

Stock-based compensation - SG&A (1)

    (4.6 )%     (6.7 )%     (4.9 )%

Litigation expense (2)

    (0.6 )%     (0.2 )%     (1.0 )%

Non-GAAP SG&A Expense %

    12.1 %     12.5 %     12.6 %

 

Operating Expenses Reconciliation

                       

GAAP Operating expenses

  $ 77,644     $ 79,491     $ 69,930  

Stock-based compensation - operations (1)

    (15,956 )     (20,277 )     (13,758 )

Litigation expense (2)

    (1,103 )     (439 )     (1,646 )

Amortization of acquired intangible assets

    (870 )     (869 )     (869 )

Restructuring and other

    (1,509 )     112       (2,315 )

Non-GAAP Operating expenses

  $ 58,206     $ 58,018     $ 51,342  

 

Income from Operations Reconciliation

                       

GAAP Income from operations

  $ 56,917     $ 53,070     $ 48,802  

Stock-based compensation - gross margin (1)

    1,053       1,425       1,122  

Stock-based compensation - operations (1)

    15,956       20,277       13,758  

Litigation expense (2)

    1,103       439       1,646  

Amortization of acquired intangible assets

    870       869       869  

Restructuring and other

    1,509       (112 )     2,315  

Non-GAAP Income from operations

  $ 77,408     $ 75,968     $ 68,512  

 

Income from Operations % Reconciliation

                       

GAAP Income from operations %

    29.6 %     27.9 %     28.3 %

Cumulative effect of non-GAAP Gross Margin and Operating adjustments

    10.7 %     12.1 %     11.4 %

Non-GAAP Income from operations %

    40.3 %     40.0 %     39.7 %

 

(1)   The non-GAAP adjustments for Stock-based compensation include related payroll tax expenses.
(2)   Legal expenses associated with the defense of claims that are outside the ordinary course of business that were brought against the Company by Steven A.W. De Jaray, Perienne De Jaray and Darrell R. Oswalde.

 

 

9

 

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

 

   

Three Months Ended

 
   

September 30,

   

July 1,

   

October 1,

 
   

2023

   

2023

   

2022

 

Other Income (Expense) Reconciliation

                       

GAAP Other income (expense), net

  $ 14     $ (176 )   $ (820 )

Loss on re-financing of long-term debt

                735  

Non-GAAP Other income (expense), net

  $ 14     $ (176 )   $ (85 )

 

Income Tax Expense Reconciliation

                       

GAAP Income tax expense

  $ 4,097     $ 2,439     $ 356  

Estimated tax effect of non-GAAP adjustments

    1,467       1,372       312  

Change in tax law (3)

    (766 )     (339 )      

Non-GAAP Income tax expense

  $ 4,798     $ 3,472     $ 668  

 

Net Income Reconciliation

                       

GAAP Net income

  $ 53,788     $ 50,644     $ 46,359  

Stock-based compensation - gross margin (1)

    1,053       1,425       1,122  

Stock-based compensation - operations (1)

    15,956       20,277       13,758  

Litigation expense (2)

    1,103       439       1,646  

Amortization of acquired intangible assets

    870       869       869  

Restructuring and other

    1,509       (112 )     2,315  

Loss on re-financing of long-term debt

                735  

Estimated tax effect of non-GAAP adjustments

    (1,467 )     (1,372 )     (312 )

Change in tax law (3)

    766       339        

Non-GAAP Net income

  $ 73,578     $ 72,509     $ 66,492  

 

Net Income Per Share Reconciliation

                       

GAAP Net income per share - basic

  $ 0.39     $ 0.37     $ 0.34  

Cumulative effect of Non-GAAP adjustments

    0.14       0.16       0.14  

Non-GAAP Net income per share - basic

  $ 0.53     $ 0.53     $ 0.48  
                         

GAAP Net income per share - diluted

  $ 0.38     $ 0.36     $ 0.33  

Cumulative effect of Non-GAAP adjustments

    0.15       0.16       0.15  

Non-GAAP Net income per share - diluted

  $ 0.53     $ 0.52     $ 0.48  
                         

Shares used in per share calculations:

                       

Basic

    137,948       137,735       137,267  

Diluted

    139,828       139,768       139,935  

 

(1)  

The non-GAAP adjustments for Stock-based compensation include related payroll tax expenses.

(2)   Legal expenses associated with the defense of claims that are outside the ordinary course of business that were brought against the Company by Steven A.W. De Jaray, Perienne De Jaray and Darrell R. Oswalde.
(3)   Adjustments for Change in tax law reflect an increase in our provision for U.S. tax on foreign operations resulting from The 2017 Tax Cuts and Jobs Act and is related to the capitalization and subsequent amortization of R&D costs for tax purposes.

 

 

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