Semtech Corp (SMTC) Reports Q3 Fiscal Year 2024 Earnings
Net sales reached $200.9 million, surpassing the midpoint of Semtech Corp (NASDAQ:SMTC)'s guidance.
GAAP gross margin stood at 46.3%, with Non-GAAP gross margin at a robust 51.3%.
Despite a GAAP diluted loss per share of $0.60, Non-GAAP diluted earnings per share were $0.02, exceeding the high-end of guidance.
Mark Lin appointed as executive vice president and chief financial officer effective October 2, 2023.
On December 6, 2023, Semtech Corp (NASDAQ:SMTC) released its 8-K filing, announcing financial results for the third quarter of fiscal year 2024, which concluded on October 29, 2023. The company, a leading provider of high-performance semiconductors and advanced IoT systems, reported net sales of $200.9 million, which was above the midpoint of its previously issued guidance. The GAAP gross margin was recorded at 46.3%, while the Non-GAAP gross margin exceeded the high-end of guidance at 51.3%.
Financial Performance Overview
Despite facing ongoing constraints in the hardware business and the effects of elevated channel inventories, Semtech Corp (NASDAQ:SMTC) observed a stabilization in end market demand for its semiconductor business. According to Paul H. Pickle, Semtech's president and CEO, there was notable growth in demand for high-end consumer and data center applications both sequentially and year-over-year.
Mark Lin, the newly appointed executive vice president and CFO, highlighted the company's efforts to optimize its cost structure, with both non-GAAP operating expenses and non-GAAP interest expense expected to improve sequentially in the fourth quarter. He also mentioned the recent changes in capital structure, which are anticipated to provide more flexibility in addressing near-term economic challenges.
Key Financial Highlights
Semtech Corp (NASDAQ:SMTC)'s operating costs and expenses were reported at $105.3 million on a GAAP basis, while Non-GAAP operating costs and expenses were significantly lower at $82.5 million. The company experienced a GAAP operating loss of $12.4 million, but on a Non-GAAP basis, operating income was positive at $20.5 million. The GAAP operating margin was negative at (6.2)%, whereas the Non-GAAP operating margin was a positive 10.2%.
Interest expense on a GAAP basis was $27.7 million, with Non-GAAP interest expense at $22.3 million. The GAAP diluted loss per share was $0.60, but the Non-GAAP diluted earnings per share reached $0.02, surpassing the high-end of the company's guidance. Adjusted EBITDA for the quarter was $28.1 million.
Looking Ahead: Q4 Fiscal Year 2024 Outlook
For the fourth quarter of fiscal year 2024, Semtech Corp (NASDAQ:SMTC) anticipates net sales to be around $190.0 million, plus or minus $10.0 million. The company expects a Non-GAAP gross margin of approximately 48.0%, plus or minus 100 basis points, and Non-GAAP operating income of $17.2 million, plus or minus $4.7 million. The projected Non-GAAP operating margin is 9.1%, plus or minus 200 basis points, with Non-GAAP interest expense estimated at $21.0 million. The company forecasts a Non-GAAP diluted loss per share of $0.05, plus or minus $0.06, and an adjusted EBITDA of $24.7 million, plus or minus $4.7 million.
The outlook for the fourth quarter takes into account the company's current estimates and expectations regarding the impact of export restrictions, inflationary pressures, and other macroeconomic conditions. However, Semtech Corp (NASDAQ:SMTC) notes that it is unable to predict the full impact of these challenges on its future results.
Investors and interested parties can access more detailed financial information and reconciliations of GAAP to Non-GAAP results in the supplemental materials provided with the earnings release. Additionally, a webcast and conference call discussing the third fiscal quarter 2024 results were held on the day of the announcement.
For a more comprehensive understanding of Semtech Corp (NASDAQ:SMTC)'s financial performance and future outlook, stakeholders are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Semtech Corp for further details.
This article first appeared on GuruFocus.
