Lattice Semiconductor(LSCC) - 2024 Q2 - Quarterly Results

Financial Highlights Lattice Semiconductor reported Q2 2024 revenue of $124.1 million, a significant year-over-year decrease, reflecting cyclic industry headwinds GAAP Financial Results GAAP results for Q2 2024 show a significant year-over-year decline in revenue and net income, with diluted EPS at $0.16 Q2 2024 GAAP Financial Performance | Metric | Q2 2024 | Q1 2024 | Q2 2023 | Q/Q Change | Y/Y Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $124,076K | $140,815K | $190,079K | (11.9)% | (34.7)% | | Gross Margin % | 68.3% | 68.3% | 69.7% | — | (140) bps | | Income from Operations | $22,565K | $16,574K | $53,070K | 36.1% | (57.5)% | | Net Income | $22,631K | $14,796K | $50,644K | 53.0% | (55.3)% | | Net Income per Share - Diluted | $0.16 | $0.11 | $0.36 | $0.05 | $(0.20) | - The CEO attributed the results to the impact of cyclic industry headwinds, while noting early signs of improvement as the industry undergoes inventory normalization[23] Non-GAAP Financial Results Non-GAAP results for Q2 2024 show revenue of $124.1 million and a 56.7% year-over-year decline in net income Q2 2024 Non-GAAP Financial Performance | Metric | Q2 2024 | Q1 2024 | Q2 2023 | Q/Q Change | Y/Y Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $124,076K | $140,815K | $190,079K | (11.9)% | (34.7)% | | Gross Margin % | 69.0% | 69.0% | 70.5% | — | (150) bps | | Income from Operations | $31,526K | $42,238K | $75,968K | (25.4)% | (58.5)% | | Net Income | $31,432K | $40,258K | $72,509K | (21.9)% | (56.7)% | | Net Income per Share - Diluted | $0.23 | $0.29 | $0.52 | $(0.06) | $(0.29) | - The CFO highlighted the durability of the business model with stable gross margin, disciplined spending, and continued capital return to shareholders through share repurchases for the 15th consecutive quarter[40] Business Highlights and Outlook Lattice expanded its FPGA portfolio and security solutions while projecting Q3 2024 revenue between $117 million and $137 million Q2 2024 Business Highlights Lattice expanded its Certus-NX FPGA portfolio and MachXO5D-NX security solutions, earning industry recognition - Portfolio Expansion: Launched Certus™-NX-28 and Certus™-NX-09 devices, expanding leadership in small FPGAs[41] - New Security Solutions: Introduced the Lattice MachXO5D™-NX family of secure control FPGAs and an updated Lattice Sentry™ solution stack[41] - Industry Recognition: Received multiple awards for its hardware/software security portfolio and corporate sustainability[41] - Upcoming Event: Announced the second annual Developers Conference for December 10-11, 2024[41] Q3 2024 Business Outlook For Q3 2024, Lattice projects revenue between $117 million and $137 million, with a non-GAAP gross margin of approximately 69.0% Q3 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenue | $117 million to $137 million | | Gross Margin % (Non-GAAP) | 69.0% ± 1% | | Total Operating Expenses (Non-GAAP) | $53 million to $55 million | Consolidated Financial Statements (GAAP) GAAP financial statements reveal a year-over-year decline in revenue and net income, with stable total assets and reduced cash from operations Consolidated Statements of Operations For Q2 2024, revenue declined to $124.1 million year-over-year, with net income significantly decreasing to $22.6 million Statement of Operations Highlights (in thousands) | Line Item | Three Months Ended June 29, 2024 | Three Months Ended July 1, 2023 | | :--- | :--- | :--- | | Revenue | $124,076 | $190,079 | | Gross Margin | $84,751 | $132,561 | | Total Operating Expenses | $62,186 | $79,491 | | Income from Operations | $22,565 | $53,070 | | Net Income | $22,631 | $50,644 | Condensed Consolidated Balance Sheets As of June 29, 2024, total assets were $827.5 million, slightly down from year-end 2023, with cash at $109.2 million Balance Sheet Highlights (in thousands) | Line Item | June 29, 2024 | December 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $109,216 | $128,317 | | Inventories, net | $101,556 | $98,826 | | Total current assets | $353,204 | $367,946 | | Total assets | $827,520 | $840,894 | | Total current liabilities | $80,284 | $97,400 | | Total liabilities | $128,671 | $148,874 | | Stockholders' equity | $698,849 | $692,020 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities for the six months ended June 29, 2024, decreased to $51.4 million, with continued share repurchases Cash Flow Highlights - Six Months Ended (in thousands) | Line Item | June 29, 2024 | July 1, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $51,442 | $115,458 | | Net cash used in investing activities | $(18,188) | $(17,742) | | Net cash used in financing activities | $(51,733) | $(139,445) | | Net (decrease) in cash | $(19,101) | $(41,949) | | Repurchase of common stock | $(29,999) | $(20,006) | Supplemental Financial Information Supplemental data shows Asia as the largest market and Industrial & Automotive as the primary end market, with increased operational metrics Revenue Breakdown by Geography, End Market, and Channel (Q2 2024 vs. Q2 2023) | Category | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Geography | Asia | 67% | 63% | | | Americas | 19% | 17% | | | Europe | 14% | 20% | | End Market | Industrial & Automotive | 47% | 61% | | | Communications & Computing | 44% | 34% | | | Consumer | 9% | 5% | | Channel | Distribution | 91% | 89% | | | Direct | 9% | 11% | Key Operational Metrics (Days) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | A/R Days Outstanding (DSO) | 76 | 64 | 46 | | Inventory Days (DIO) | 236 | 195 | 177 | Reconciliation of GAAP to Non-GAAP Measures Detailed reconciliations from GAAP to non-GAAP results highlight adjustments for stock-based compensation and restructuring, leading to a higher non-GAAP net income Gross Margin and Operating Expense Reconciliation Adjustments for stock-based compensation and other items reconciled GAAP gross margin to 69.0% non-GAAP, and operating expenses to $54.0 million non-GAAP Q2 2024 Gross Margin Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | GAAP Gross margin | $84,751 | | Stock-based compensation | $805 | | Non-GAAP Gross margin | $85,556 | Q2 2024 Operating Expenses Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | GAAP Operating expenses | $62,186 | | Stock-based compensation - operations | $(2,343) | | Litigation expense | $(1,065) | | Amortization of acquired intangible assets | $(869) | | Restructuring, transformation, and other | $(3,879) | | Non-GAAP Operating expenses | $54,030 | Net Income and EPS Reconciliation GAAP net income of $22.6 million was reconciled to non-GAAP net income of $31.4 million, primarily due to stock-based compensation and restructuring Q2 2024 Net Income Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | GAAP Net income | $22,631 | | Stock-based compensation (total) | $3,148 | | Litigation expense | $1,065 | | Amortization of acquired intangible assets | $869 | | Restructuring, transformation, and other | $3,879 | | Tax effect and other tax adjustments | $(160) | | Non-GAAP Net income | $31,432 | Q2 2024 Diluted EPS Reconciliation | Description | Amount | | :--- | :--- | | GAAP Net income per share - diluted | $0.16 | | Cumulative effect of Non-GAAP adjustments | $0.07 | | Non-GAAP Net income per share - diluted | $0.23 |