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Semtech Corporation’s (SMTC - Free Report) first-quarter fiscal 2024 non-GAAP earnings of 2 cents per share compares favorably with the Zacks Consensus Estimate of a loss of 7 cents per share. However, the reported earnings decreased by 97.5% year over year.
Net sales of $236.54 million outpaced the Zacks Consensus Estimate of $234 million. The same increased by 17% from the prior-year quarter’s level.
Top-line growth was driven by the strength of the company’s IoT System. Also, the growing momentum in the industrial market contributed well.
However, weakening momentum across infrastructure and consumer end markets and softness in Signal Integrity and Advanced Protection and Sensing product lines were concerns.
Semtech Corporation Price, Consensus and EPS Surprise
Sales from the infrastructure market were $39 million (16% of net sales), which exhibited a decline of 49% year over year.
Sales from the industrial market were $175.9 million (75% of net sales), up 125% from the prior-year period’s level.
Sales from the high-end consumer market were $21.6 million (9% of net sales), declining 55% year over year.
Revenues by Product Lines
Signal Integrity (18% of net sales) sales were $41.6 million in the reported quarter, down 47.5% year over year.
Advanced Sensing and Protection (15% of net sales) sales were $36.06 million, down 50.2% from the prior-year quarter.
IoT System (57% of net sales) sales were $134.6 million, increasing 166.9% on a year-over-year basis.
IoT Connected Services (10% of net sales) sales were $24.3 million in the reported quarter.
Operating Results
Non-GAAP gross margin of 48.5% contracted from 64.8% reported in the year-ago quarter.
Adjusted selling, general and administrative expenses for the fiscal first quarter increased 28.1% to $46.2 million from the last fiscal year’s quarterly number. Adjusted product development and engineering expenses increased 33.7% from the year-ago quarter to $46.5 million.
The non-GAAP operating margin of 9.3% contracted significantly from 29.8% reported in the last fiscal year quarter.
Balance Sheet and Cash Flow
As of Apr 30, 2023, cash and cash equivalents were $164.2 million, down from $235.5 million as of Jan 29, 2023.
Account receivables for the reported fiscal first-quarter 2024 were $145.4 million, down from $161.7 million in fourth-quarter fiscal 2023.
Long-term debt was $1.34 billion, significantly higher than $1.29 billion in the previous fiscal quarter.
In the reported fiscal quarter, the company used $89.9 million of cash in operations compared with $18.8 million in the previous quarter. Free cash flow in the fiscal first quarter was an outflow of $103.96 million.
Guidance
For second-quarter fiscal 2024, management expects net sales of $233-$243 million. The Zacks Consensus Estimate for the same is pegged at $234.59 million.
The non-GAAP gross margin is expected to be 47.5-49.5%. Also, management projects SG&A expenses of $45-$47 million and research and development costs of $44-$46 million.
The non-GAAP-based bottom-line is expected in the band of $(0.02)-$0.06 per share. The consensus mark for the same stands at 2 cents of earnings per share.
Zacks Rank & Stocks to Consider
Currently, Semtech carries a Zacks Rank #3 (Hold).
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Semtech (SMTC) Reports Q1 Earnings, Sales Surpass Estimates
Semtech Corporation’s (SMTC - Free Report) first-quarter fiscal 2024 non-GAAP earnings of 2 cents per share compares favorably with the Zacks Consensus Estimate of a loss of 7 cents per share. However, the reported earnings decreased by 97.5% year over year.
Net sales of $236.54 million outpaced the Zacks Consensus Estimate of $234 million. The same increased by 17% from the prior-year quarter’s level.
Top-line growth was driven by the strength of the company’s IoT System. Also, the growing momentum in the industrial market contributed well.
However, weakening momentum across infrastructure and consumer end markets and softness in Signal Integrity and Advanced Protection and Sensing product lines were concerns.
Semtech Corporation Price, Consensus and EPS Surprise
Semtech Corporation price-consensus-eps-surprise-chart | Semtech Corporation Quote
Revenues by End Market
Sales from the infrastructure market were $39 million (16% of net sales), which exhibited a decline of 49% year over year.
Sales from the industrial market were $175.9 million (75% of net sales), up 125% from the prior-year period’s level.
Sales from the high-end consumer market were $21.6 million (9% of net sales), declining 55% year over year.
Revenues by Product Lines
Signal Integrity (18% of net sales) sales were $41.6 million in the reported quarter, down 47.5% year over year.
Advanced Sensing and Protection (15% of net sales) sales were $36.06 million, down 50.2% from the prior-year quarter.
IoT System (57% of net sales) sales were $134.6 million, increasing 166.9% on a year-over-year basis.
IoT Connected Services (10% of net sales) sales were $24.3 million in the reported quarter.
Operating Results
Non-GAAP gross margin of 48.5% contracted from 64.8% reported in the year-ago quarter.
Adjusted selling, general and administrative expenses for the fiscal first quarter increased 28.1% to $46.2 million from the last fiscal year’s quarterly number. Adjusted product development and engineering expenses increased 33.7% from the year-ago quarter to $46.5 million.
The non-GAAP operating margin of 9.3% contracted significantly from 29.8% reported in the last fiscal year quarter.
Balance Sheet and Cash Flow
As of Apr 30, 2023, cash and cash equivalents were $164.2 million, down from $235.5 million as of Jan 29, 2023.
Account receivables for the reported fiscal first-quarter 2024 were $145.4 million, down from $161.7 million in fourth-quarter fiscal 2023.
Long-term debt was $1.34 billion, significantly higher than $1.29 billion in the previous fiscal quarter.
In the reported fiscal quarter, the company used $89.9 million of cash in operations compared with $18.8 million in the previous quarter. Free cash flow in the fiscal first quarter was an outflow of $103.96 million.
Guidance
For second-quarter fiscal 2024, management expects net sales of $233-$243 million. The Zacks Consensus Estimate for the same is pegged at $234.59 million.
The non-GAAP gross margin is expected to be 47.5-49.5%. Also, management projects SG&A expenses of $45-$47 million and research and development costs of $44-$46 million.
The non-GAAP-based bottom-line is expected in the band of $(0.02)-$0.06 per share. The consensus mark for the same stands at 2 cents of earnings per share.
Zacks Rank & Stocks to Consider
Currently, Semtech carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Palo Alto Networks (PANW - Free Report) , NVIDIA (NVDA - Free Report) and AMETEK (AME - Free Report) . While Palo Alto Networks and NVIDIA sport a Zacks Rank #1 (Strong Buy), AME carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Palo Alto Networks shares have gained 61.9% in the year-to-date period. The long-term earnings growth rate for PANW is currently projected at 31.5%.
NVIDIA shares have gained 166.1% in the year-to-date period. Its long-term earnings growth rate is presently projected at 23.02%.
AMTEK shares have gained 7% in the year-to-date period. The long-term earnings growth rate for AME is currently projected at 8.95%.