Semtech(US:SMTC)2025-05-27 20:08Financial Performance - Net sales for Q1 2026 were $251.1 million, representing a 22% year-over-year growth[4] - GAAP gross margin increased to 52.3%, up from 48.3% a year ago, while Non-GAAP adjusted gross margin rose to 53.5% from 49.8%[4] - GAAP diluted earnings per share improved to $0.22 compared to a loss of $0.36 a year ago, and Non-GAAP adjusted diluted earnings per share increased to $0.38 from $0.06[4] - Adjusted EBITDA margin for Q1 2026 was 22.1%, up from 16.1% a year ago[4] - Operating income for Q1'26 was $36.0 million, up from $21.2 million in Q4'25 and $3.1 million in Q1'25, indicating a strong operational performance[25] - Net income for Q1'26 was $19.3 million, compared to $39.1 million in Q4'25 and a loss of $23.2 million in Q1'25, reflecting improved profitability[25] - Free cash flow for Q1'26 was $26.2 million, down from $30.9 million in Q4'25 but a significant improvement from a negative $1.4 million in Q1'25[29] - The adjusted net income (Non-GAAP) for Q1'26 was $33.9 million, slightly down from $34.5 million in Q4'25[37] Debt and Liquidity - The company made a $10 million term loan principal prepayment in Q1 and an additional $15 million in Q2 2026 to prioritize debt reduction[3] - Interest expense decreased to $6.2 million in Q1 2026 from $22.7 million a year ago[5] - Current liabilities decreased to $236.0 million from $283.0 million in the previous quarter, indicating improved liquidity[27] Outlook and Projections - The outlook for Q2 2026 includes projected net sales of $256.0 million, with an adjusted diluted earnings per share estimate of $0.40[6] - The company expects a normalized tax rate of 15% for fiscal year 2026, applied to each quarter[15] Operational Efficiency - Adjusted operating margin for Q1 2026 was 19.0%, compared to 12.2% a year ago[5] - The company reported a basic earnings per share of $0.22 for Q1'26, down from $0.48 in Q4'25 but an improvement from a loss of $0.36 in Q1'25[25] - The segment gross margin for Signal Integrity was 65.5% in Q1'26, while Analog Mixed Signal and Wireless had a gross margin of 62.3%[31] - The operating margin (GAAP) improved to 14.3% in Q1'26, up from 8.5% in Q4'25 and 1.5% in Q1'25[34] - Selling, general and administrative expenses (GAAP) decreased to $46.4 million in Q1'26 from $54.5 million in Q4'25[34] - The adjusted operating expenses (Non-GAAP) were $86.6 million in Q1'26, compared to $83.7 million in Q4'25[34] Strategic Focus - The company continues to invest strategically in innovation and operational scale to support long-term growth[3] - The company continues to focus on high-performance semiconductor and IoT systems, aiming to enhance its market position and expand its product offerings[22]