Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Lattice Semiconductor Reports Second Quarter 2024 Results By: Lattice Semiconductor Corporation via Business Wire July 29, 2024 at 16:00 PM EDT Lattice Semiconductor Corporation (Nasdaq: LSCC), the low power programmable leader, announced financial results today for the fiscal second quarter ended June 29, 2024. Revenue for the second quarter of 2024 was $124.1 million, with GAAP gross margin of 68.3% and GAAP net income of $0.16 per diluted share. On a non-GAAP basis, gross margin was 69.0% with net income per diluted share of $0.23. Esam Elashmawi, Interim Chief Executive Officer & Chief Strategy and Marketing Officer, said, "Second quarter 2024 results reflect the impact of cyclic industry headwinds. While the industry continues to go through a period of inventory normalization, we are starting to see signs of improvement. We continue to execute on our ongoing product portfolio expansion and remain well positioned for long-term growth." Sherri Luther, Chief Financial Officer, said, "Our gross margin remained stable, highlighting the durability of our business model. We maintained disciplined spending, prioritized cash flow, and continued to return capital to shareholders by executing share repurchases for the fifteenth consecutive quarter." Selected Second Quarter 2024 Financial Results and Comparisons (in thousands, except per share data) GAAP Financial Results (unaudited) Q2 2024 Q1 2024 Q2 2023 Q/Q Y/Y Revenue $ 124,076 $ 140,815 $ 190,079 (11.9 )% (34.7 )% Gross Margin % 68.3 % 68.3 % 69.7 % — (140) bps R&D Expense % 31.2 % 28.8 % 22.1 % 240 bps 910 bps SG&A Expense % 16.1 % 25.9 % 19.4 % (980) bps (330) bps Operating Expenses $ 62,186 $ 79,634 $ 79,491 (21.9 )% (21.8 )% Income from Operations $ 22,565 $ 16,574 $ 53,070 36.1 % (57.5 )% Net Income $ 22,631 $ 14,796 $ 50,644 53.0 % (55.3 )% Net Income per Share - Basic $ 0.16 $ 0.11 $ 0.37 $ 0.05 $ (0.21 ) Net Income per Share - Diluted $ 0.16 $ 0.11 $ 0.36 $ 0.05 $ (0.20 ) Non-GAAP* Financial Results (unaudited) Q2 2024 Q1 2024 Q2 2023 Q/Q Y/Y Revenue $ 124,076 $ 140,815 $ 190,079 (11.9 )% (34.7 )% Gross Margin % 69.0 % 69.0 % 70.5 % — (150) bps R&D Expense % 26.7 % 23.1 % 18.0 % 360 bps 870 bps SG&A Expense % 17.9 % 16.1 % 12.5 % 180 bps 540 bps Operating Expenses $ 54,030 $ 54,858 $ 58,018 (1.5 )% (6.9 )% Income from Operations $ 31,526 $ 42,238 $ 75,968 (25.4 )% (58.5 )% Net Income $ 31,432 $ 40,258 $ 72,509 (21.9 )% (56.7 )% Net Income per Share - Basic $ 0.23 $ 0.29 $ 0.53 $ (0.06 ) $ (0.30 ) Net Income per Share - Diluted $ 0.23 $ 0.29 $ 0.52 $ (0.06 ) $ (0.29 ) 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." Second Quarter 2024 Highlights: • Expanded Small FPGA Portfolio Leadership: Launched Certus™-NX-28 and Certus™-NX-09 devices, and multiple package options that offer class-leading power efficiency, small size, and reliability with flexible migration options. • New Nexus-based Security Solutions: Extended leadership in security-focused hardware and software with the launch of the Lattice MachXO5D™-NX family of advanced secure control FPGAs and the latest version of the Lattice Sentry™ solution stack. • Developers Conference: Lattice will hold its second annual Developers Conference on December 10-11, 2024, featuring a wide array of technical sessions, and keynote addresses from customers and ecosystem partners. Register here (advance registration required). • Received Multiple Industry Awards: Lattice won a variety of awards in recognition of its industry leading hardware and software security product portfolio, and corporate sustainability efforts. Business Outlook - Third Quarter of 2024: • Revenue for the third quarter of 2024 is expected to be between $117 million and $137 million. • Gross margin percentage for the third quarter of 2024 is expected to be 69.0% plus or minus 1% on a non-GAAP basis. • Total operating expenses for the third quarter of 2024 are expected to be between $53 million and $55 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 third quarter of 2024, 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 quarterly 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 in this press release. Investor Conference Call / Webcast Details: Lattice Semiconductor will review the Company's financial results for the fiscal second quarter 2024, and business outlook on Monday, July 29, 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 13747663. 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: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve estimates, assumptions, risks and uncertainties. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are neither historical facts nor assurances of future performance and may be forward-looking. Such forward-looking statements include, but are not limited to, statements relating to our rapid product portfolio expansion; long-term position; near-term cyclical industry headwinds; accelerating customer momentum; market improvement; durability of our business model; and the statements under the heading “Business Outlook - Third Quarter of 2024.” 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 and other financial and operational outcomes are inherently uncertain due to factors such as global economic conditions which may affect customer demand, the cyclical nature of the semiconductor industry, pricing and inflationary pressures, competitive actions, international trade disputes and sanctions, the potential impact of global pandemics, and other significant risks and uncertainties that are beyond our ability to predict or control. 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 our filings with the Securities and Exchange Commission, including Lattice’s most recent Annual Report on Form 10-K, especially those under the captions “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations”, all of which are expressly incorporated herein by reference. 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 the Company to predict all risk factors. You should not 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 and undertakes no obligation 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, transformation activities, and other charges, and the estimated tax effect of these items, non-cash changes in net deferred income taxes, 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. The non-GAAP financial information used by the Company may differ from that used by other companies. 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 LinkedIn, Twitter, Facebook, YouTube, WeChat, or Weibo. Lattice Semiconductor Corporation Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended June 29, March 30, July 1, June 29, July 1, 2024 2024 2023 2024 2023 Revenue $ 124,076 $ 140,815 $ 190,079 $ 264,891 $ 374,389 Cost of sales 39,325 44,607 57,518 83,932 113,227 Gross margin 84,751 96,208 132,561 180,959 261,162 Operating expenses: Research and development 38,733 40,591 41,946 79,324 77,935 Selling, general, and administrative 20,005 36,469 36,788 56,474 69,366 Amortization of acquired intangible assets 869 870 869 1,739 1,739 Restructuring 2,579 1,704 (112 ) 4,283 (82 ) Total operating expenses 62,186 79,634 79,491 141,820 148,958 Income from operations 22,565 16,574 53,070 39,139 112,204 Interest income (expense), net 933 1,307 189 2,240 (366 ) Other income (expense), net 254 (46 ) (176 ) 208 (271 ) Income before income taxes 23,752 17,835 53,083 41,587 111,567 Income tax expense 1,121 3,039 2,439 4,160 5,000 Net income $ 22,631 $ 14,796 $ 50,644 $ 37,427 $ 106,567 Net income per share: Basic $ 0.16 $ 0.11 $ 0.37 $ 0.27 $ 0.77 Diluted $ 0.16 $ 0.11 $ 0.36 $ 0.27 $ 0.76 Shares used in per share calculations: Basic 137,548 137,475 137,735 137,480 137,573 Diluted 138,243 138,774 139,768 138,485 139,966 Lattice Semiconductor Corporation Condensed Consolidated Balance Sheets (in thousands) (unaudited) June 29, December 30, 2024 2023 Assets Current assets: Cash and cash equivalents $ 109,216 $ 128,317 Accounts receivable, net 103,442 104,373 Inventories, net 101,556 98,826 Other current assets 38,990 36,430 Total current assets 353,204 367,946 Property and equipment, net 50,801 49,546 Operating lease right-of-use assets 17,326 14,487 Intangible assets, net 19,016 20,974 Goodwill 315,358 315,358 Deferred income taxes 57,329 57,762 Other long-term assets 14,486 14,821 $ 827,520 $ 840,894 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 34,957 $ 34,487 Accrued liabilities 32,088 36,048 Accrued payroll obligations 13,239 26,865 Total current liabilities 80,284 97,400 Long-term operating lease liabilities, net of current portion 11,975 10,739 Other long-term liabilities 36,412 40,735 Total liabilities 128,671 148,874 Stockholders' equity 698,849 692,020 $ 827,520 $ 840,894 Lattice Semiconductor Corporation Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Six Months Ended June 29, July 1, 2024 2023 Cash flows from operating activities: Net income $ 37,427 $ 106,567 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Stock-based compensation expense 21,713 35,744 Depreciation and amortization 18,385 16,578 Change in deferred income tax provision (969 ) (882 ) Other non-cash adjustments 4,329 3,427 Net changes in assets and liabilities (29,443 ) (45,976 ) Net cash provided by (used in) operating activities 51,442 115,458 Cash flows from investing activities: Capital expenditures (10,581 ) (11,943 ) Other investing activities (7,607 ) (5,799 ) Net cash provided by (used in) investing activities (18,188 ) (17,742 ) Cash flows from financing activities: Repayment of long-term debt — (85,000 ) Repurchase of common stock (29,999 ) (20,006 ) Net cash flows related to stock compensation exercises (21,734 ) (34,439 ) Net cash provided by (used in) financing activities (51,733 ) (139,445 ) Effect of exchange rate change on cash (622 ) (220 ) Net increase (decrease) in cash and cash equivalents (19,101 ) (41,949 ) Beginning cash and cash equivalents 128,317 145,722 Ending cash and cash equivalents $ 109,216 $ 103,773 Supplemental disclosure of cash flow information and non-cash investing and financing activities: Interest paid $ — $ 2,962 Income taxes paid, net of refunds $ 3,886 $ 6,837 Operating lease payments $ 4,564 $ 4,082 Lattice Semiconductor Corporation Supplemental Historical Financial Information (unaudited) Three Months Ended June 29, March 30, July 1, 2024 2024 2023 Balance Sheet Information A/R Days Revenue Outstanding (DSO) 76 64 46 Inventory Days (DIO) 236 195 177 Revenue % (by Geography) Asia 67 % 66 % 63 % Americas 19 % 22 % 17 % Europe (incl. Africa) 14 % 12 % 20 % Revenue % (by End Market) Communications and Computing 44 % 39 % 34 % Industrial and Automotive 47 % 53 % 61 % Consumer 9 % 8 % 5 % Revenue $M (by End Market) Communications and Computing $ 54.6 $ 54.6 $ 64.2 Industrial and Automotive $ 58.2 $ 75.3 $ 115.5 Consumer $ 11.3 $ 10.9 $ 10.4 Revenue % (by Channel) Distribution 91 % 87 % 89 % Direct 9 % 13 % 11 % Lattice Semiconductor Corporation Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (in thousands, except per share data) (unaudited) Three Months Ended June 29, March 30, July 1, 2024 2024 2023 Gross Margin Reconciliation GAAP Gross margin $ 84,751 $ 96,208 $ 132,561 Stock-based compensation - gross margin (1) 805 888 1,425 Non-GAAP Gross margin $ 85,556 $ 97,096 $ 133,986 Gross Margin % Reconciliation GAAP Gross margin % 68.3 % 68.3 % 69.7 % Stock-based compensation - gross margin (1) 0.7 % 0.7 % 0.8 % Non-GAAP Gross margin % 69.0 % 69.0 % 70.5 % Research and Development Expense % (R&D Expense %) Reconciliation GAAP R&D Expense % 31.2 % 28.8 % 22.1 % Stock-based compensation - R&D (1) (4.5 )% (5.7 )% (4.1 )% Non-GAAP R&D Expense % 26.7 % 23.1 % 18.0 % Selling, General, and Administrative Expense % (SG&A Expense %) Reconciliation GAAP SG&A Expense % 16.1 % 25.9 % 19.4 % Stock-based compensation - SG&A (1) 2.7 % (7.1 )% (6.7 )% Litigation expense (2) (0.9 )% (2.7 )% (0.2 )% Non-GAAP SG&A Expense % 17.9 % 16.1 % 12.5 % Operating Expenses Reconciliation GAAP Operating expenses $ 62,186 $ 79,634 $ 79,491 Stock-based compensation - operations (1) (2,343 ) (18,117 ) (20,277 ) Litigation expense (2) (1,065 ) (3,832 ) (439 ) Amortization of acquired intangible assets (869 ) (870 ) (869 ) Restructuring, transformation, and other (3) (3,879 ) (1,957 ) 112 Non-GAAP Operating expenses $ 54,030 $ 54,858 $ 58,018 Income from Operations Reconciliation GAAP Income from operations $ 22,565 $ 16,574 $ 53,070 Stock-based compensation - gross margin (1) 805 888 1,425 Stock-based compensation - operations (1) 2,343 18,117 20,277 Litigation expense (2) 1,065 3,832 439 Amortization of acquired intangible assets 869 870 869 Restructuring, transformation, and other (3) 3,879 1,957 (112 ) Non-GAAP Income from operations $ 31,526 $ 42,238 $ 75,968 Income from Operations % Reconciliation GAAP Income from operations % 18.2 % 11.8 % 27.9 % Cumulative effect of non-GAAP Gross Margin and Operating adjustments 7.2 % 18.2 % 12.1 % Non-GAAP Income from operations % 25.4 % 30.0 % 40.0 % (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) Restructuring, transformation, and other for Q2 and YTD 2024 includes business transformation charges of $0.8 million. Lattice Semiconductor Corporation Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (in thousands, except per share data) (unaudited) Three Months Ended June 29, March 30, July 1, 2024 2024 2023 Income Tax (Benefit) Expense Reconciliation GAAP Income tax (benefit) expense $ 1,121 $ 3,039 $ 2,439 Estimated tax effect of non-GAAP adjustments 5,649 4,337 1,372 Non-cash changes in net deferred income taxes (4) (1,090 ) (2,754 ) — Change in tax law (5) (4,399 ) (1,381 ) (339 ) Non-GAAP Income tax expense $ 1,281 $ 3,241 $ 3,472 Net Income Reconciliation GAAP Net income $ 22,631 $ 14,796 $ 50,644 Stock-based compensation - gross margin (1) 805 888 1,425 Stock-based compensation - operations (1) 2,343 18,117 20,277 Litigation expense (2) 1,065 3,832 439 Amortization of acquired intangible assets 869 870 869 Restructuring, transformation, and other (3) 3,879 1,957 (112 ) Estimated tax effect of non-GAAP adjustments (5,649 ) (4,337 ) (1,372 ) Non-cash changes in net deferred income taxes (4) 1,090 2,754 — Change in tax law (5) 4,399 1,381 339 Non-GAAP Net income $ 31,432 $ 40,258 $ 72,509 Net Income Per Share Reconciliation GAAP Net income per share - basic $ 0.16 $ 0.11 $ 0.37 Cumulative effect of Non-GAAP adjustments 0.07 0.18 0.16 Non-GAAP Net income per share - basic $ 0.23 $ 0.29 $ 0.53 GAAP Net income per share - diluted $ 0.16 $ 0.11 $ 0.36 Cumulative effect of Non-GAAP adjustments 0.07 0.18 0.16 Non-GAAP Net income per share - diluted $ 0.23 $ 0.29 $ 0.52 Shares used in per share calculations: Basic 137,548 137,475 137,735 Diluted 138,243 138,774 139,768 (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) Restructuring, transformation, and other for Q2 and YTD 2024 includes business transformation charges of $0.8 million. (4) Non-cash changes in net deferred income taxes associated with the release of the valuation allowance against $56.9 million of our U.S. deferred tax assets in the fourth quarter of fiscal 2023. (5) 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20240729491684/en/Contacts MEDIA: Sophia Hong Lattice Semiconductor Corporation 503-268-8786 Sophia.Hong@latticesemi.com INVESTORS: Rick Muscha Lattice Semiconductor Corporation 408-826-6000 Rick.Muscha@latticesemi.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Lattice Semiconductor Reports Second Quarter 2024 Results By: Lattice Semiconductor Corporation via Business Wire July 29, 2024 at 16:00 PM EDT Lattice Semiconductor Corporation (Nasdaq: LSCC), the low power programmable leader, announced financial results today for the fiscal second quarter ended June 29, 2024. Revenue for the second quarter of 2024 was $124.1 million, with GAAP gross margin of 68.3% and GAAP net income of $0.16 per diluted share. On a non-GAAP basis, gross margin was 69.0% with net income per diluted share of $0.23. Esam Elashmawi, Interim Chief Executive Officer & Chief Strategy and Marketing Officer, said, "Second quarter 2024 results reflect the impact of cyclic industry headwinds. While the industry continues to go through a period of inventory normalization, we are starting to see signs of improvement. We continue to execute on our ongoing product portfolio expansion and remain well positioned for long-term growth." Sherri Luther, Chief Financial Officer, said, "Our gross margin remained stable, highlighting the durability of our business model. We maintained disciplined spending, prioritized cash flow, and continued to return capital to shareholders by executing share repurchases for the fifteenth consecutive quarter." Selected Second Quarter 2024 Financial Results and Comparisons (in thousands, except per share data) GAAP Financial Results (unaudited) Q2 2024 Q1 2024 Q2 2023 Q/Q Y/Y Revenue $ 124,076 $ 140,815 $ 190,079 (11.9 )% (34.7 )% Gross Margin % 68.3 % 68.3 % 69.7 % — (140) bps R&D Expense % 31.2 % 28.8 % 22.1 % 240 bps 910 bps SG&A Expense % 16.1 % 25.9 % 19.4 % (980) bps (330) bps Operating Expenses $ 62,186 $ 79,634 $ 79,491 (21.9 )% (21.8 )% Income from Operations $ 22,565 $ 16,574 $ 53,070 36.1 % (57.5 )% Net Income $ 22,631 $ 14,796 $ 50,644 53.0 % (55.3 )% Net Income per Share - Basic $ 0.16 $ 0.11 $ 0.37 $ 0.05 $ (0.21 ) Net Income per Share - Diluted $ 0.16 $ 0.11 $ 0.36 $ 0.05 $ (0.20 ) Non-GAAP* Financial Results (unaudited) Q2 2024 Q1 2024 Q2 2023 Q/Q Y/Y Revenue $ 124,076 $ 140,815 $ 190,079 (11.9 )% (34.7 )% Gross Margin % 69.0 % 69.0 % 70.5 % — (150) bps R&D Expense % 26.7 % 23.1 % 18.0 % 360 bps 870 bps SG&A Expense % 17.9 % 16.1 % 12.5 % 180 bps 540 bps Operating Expenses $ 54,030 $ 54,858 $ 58,018 (1.5 )% (6.9 )% Income from Operations $ 31,526 $ 42,238 $ 75,968 (25.4 )% (58.5 )% Net Income $ 31,432 $ 40,258 $ 72,509 (21.9 )% (56.7 )% Net Income per Share - Basic $ 0.23 $ 0.29 $ 0.53 $ (0.06 ) $ (0.30 ) Net Income per Share - Diluted $ 0.23 $ 0.29 $ 0.52 $ (0.06 ) $ (0.29 ) 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." Second Quarter 2024 Highlights: • Expanded Small FPGA Portfolio Leadership: Launched Certus™-NX-28 and Certus™-NX-09 devices, and multiple package options that offer class-leading power efficiency, small size, and reliability with flexible migration options. • New Nexus-based Security Solutions: Extended leadership in security-focused hardware and software with the launch of the Lattice MachXO5D™-NX family of advanced secure control FPGAs and the latest version of the Lattice Sentry™ solution stack. • Developers Conference: Lattice will hold its second annual Developers Conference on December 10-11, 2024, featuring a wide array of technical sessions, and keynote addresses from customers and ecosystem partners. Register here (advance registration required). • Received Multiple Industry Awards: Lattice won a variety of awards in recognition of its industry leading hardware and software security product portfolio, and corporate sustainability efforts. Business Outlook - Third Quarter of 2024: • Revenue for the third quarter of 2024 is expected to be between $117 million and $137 million. • Gross margin percentage for the third quarter of 2024 is expected to be 69.0% plus or minus 1% on a non-GAAP basis. • Total operating expenses for the third quarter of 2024 are expected to be between $53 million and $55 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 third quarter of 2024, 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 quarterly 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 in this press release. Investor Conference Call / Webcast Details: Lattice Semiconductor will review the Company's financial results for the fiscal second quarter 2024, and business outlook on Monday, July 29, 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 13747663. 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: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve estimates, assumptions, risks and uncertainties. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are neither historical facts nor assurances of future performance and may be forward-looking. Such forward-looking statements include, but are not limited to, statements relating to our rapid product portfolio expansion; long-term position; near-term cyclical industry headwinds; accelerating customer momentum; market improvement; durability of our business model; and the statements under the heading “Business Outlook - Third Quarter of 2024.” 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 and other financial and operational outcomes are inherently uncertain due to factors such as global economic conditions which may affect customer demand, the cyclical nature of the semiconductor industry, pricing and inflationary pressures, competitive actions, international trade disputes and sanctions, the potential impact of global pandemics, and other significant risks and uncertainties that are beyond our ability to predict or control. 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 our filings with the Securities and Exchange Commission, including Lattice’s most recent Annual Report on Form 10-K, especially those under the captions “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations”, all of which are expressly incorporated herein by reference. 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 the Company to predict all risk factors. You should not 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 and undertakes no obligation 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, transformation activities, and other charges, and the estimated tax effect of these items, non-cash changes in net deferred income taxes, 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. The non-GAAP financial information used by the Company may differ from that used by other companies. 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 LinkedIn, Twitter, Facebook, YouTube, WeChat, or Weibo. Lattice Semiconductor Corporation Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended June 29, March 30, July 1, June 29, July 1, 2024 2024 2023 2024 2023 Revenue $ 124,076 $ 140,815 $ 190,079 $ 264,891 $ 374,389 Cost of sales 39,325 44,607 57,518 83,932 113,227 Gross margin 84,751 96,208 132,561 180,959 261,162 Operating expenses: Research and development 38,733 40,591 41,946 79,324 77,935 Selling, general, and administrative 20,005 36,469 36,788 56,474 69,366 Amortization of acquired intangible assets 869 870 869 1,739 1,739 Restructuring 2,579 1,704 (112 ) 4,283 (82 ) Total operating expenses 62,186 79,634 79,491 141,820 148,958 Income from operations 22,565 16,574 53,070 39,139 112,204 Interest income (expense), net 933 1,307 189 2,240 (366 ) Other income (expense), net 254 (46 ) (176 ) 208 (271 ) Income before income taxes 23,752 17,835 53,083 41,587 111,567 Income tax expense 1,121 3,039 2,439 4,160 5,000 Net income $ 22,631 $ 14,796 $ 50,644 $ 37,427 $ 106,567 Net income per share: Basic $ 0.16 $ 0.11 $ 0.37 $ 0.27 $ 0.77 Diluted $ 0.16 $ 0.11 $ 0.36 $ 0.27 $ 0.76 Shares used in per share calculations: Basic 137,548 137,475 137,735 137,480 137,573 Diluted 138,243 138,774 139,768 138,485 139,966 Lattice Semiconductor Corporation Condensed Consolidated Balance Sheets (in thousands) (unaudited) June 29, December 30, 2024 2023 Assets Current assets: Cash and cash equivalents $ 109,216 $ 128,317 Accounts receivable, net 103,442 104,373 Inventories, net 101,556 98,826 Other current assets 38,990 36,430 Total current assets 353,204 367,946 Property and equipment, net 50,801 49,546 Operating lease right-of-use assets 17,326 14,487 Intangible assets, net 19,016 20,974 Goodwill 315,358 315,358 Deferred income taxes 57,329 57,762 Other long-term assets 14,486 14,821 $ 827,520 $ 840,894 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 34,957 $ 34,487 Accrued liabilities 32,088 36,048 Accrued payroll obligations 13,239 26,865 Total current liabilities 80,284 97,400 Long-term operating lease liabilities, net of current portion 11,975 10,739 Other long-term liabilities 36,412 40,735 Total liabilities 128,671 148,874 Stockholders' equity 698,849 692,020 $ 827,520 $ 840,894 Lattice Semiconductor Corporation Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Six Months Ended June 29, July 1, 2024 2023 Cash flows from operating activities: Net income $ 37,427 $ 106,567 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Stock-based compensation expense 21,713 35,744 Depreciation and amortization 18,385 16,578 Change in deferred income tax provision (969 ) (882 ) Other non-cash adjustments 4,329 3,427 Net changes in assets and liabilities (29,443 ) (45,976 ) Net cash provided by (used in) operating activities 51,442 115,458 Cash flows from investing activities: Capital expenditures (10,581 ) (11,943 ) Other investing activities (7,607 ) (5,799 ) Net cash provided by (used in) investing activities (18,188 ) (17,742 ) Cash flows from financing activities: Repayment of long-term debt — (85,000 ) Repurchase of common stock (29,999 ) (20,006 ) Net cash flows related to stock compensation exercises (21,734 ) (34,439 ) Net cash provided by (used in) financing activities (51,733 ) (139,445 ) Effect of exchange rate change on cash (622 ) (220 ) Net increase (decrease) in cash and cash equivalents (19,101 ) (41,949 ) Beginning cash and cash equivalents 128,317 145,722 Ending cash and cash equivalents $ 109,216 $ 103,773 Supplemental disclosure of cash flow information and non-cash investing and financing activities: Interest paid $ — $ 2,962 Income taxes paid, net of refunds $ 3,886 $ 6,837 Operating lease payments $ 4,564 $ 4,082 Lattice Semiconductor Corporation Supplemental Historical Financial Information (unaudited) Three Months Ended June 29, March 30, July 1, 2024 2024 2023 Balance Sheet Information A/R Days Revenue Outstanding (DSO) 76 64 46 Inventory Days (DIO) 236 195 177 Revenue % (by Geography) Asia 67 % 66 % 63 % Americas 19 % 22 % 17 % Europe (incl. Africa) 14 % 12 % 20 % Revenue % (by End Market) Communications and Computing 44 % 39 % 34 % Industrial and Automotive 47 % 53 % 61 % Consumer 9 % 8 % 5 % Revenue $M (by End Market) Communications and Computing $ 54.6 $ 54.6 $ 64.2 Industrial and Automotive $ 58.2 $ 75.3 $ 115.5 Consumer $ 11.3 $ 10.9 $ 10.4 Revenue % (by Channel) Distribution 91 % 87 % 89 % Direct 9 % 13 % 11 % Lattice Semiconductor Corporation Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (in thousands, except per share data) (unaudited) Three Months Ended June 29, March 30, July 1, 2024 2024 2023 Gross Margin Reconciliation GAAP Gross margin $ 84,751 $ 96,208 $ 132,561 Stock-based compensation - gross margin (1) 805 888 1,425 Non-GAAP Gross margin $ 85,556 $ 97,096 $ 133,986 Gross Margin % Reconciliation GAAP Gross margin % 68.3 % 68.3 % 69.7 % Stock-based compensation - gross margin (1) 0.7 % 0.7 % 0.8 % Non-GAAP Gross margin % 69.0 % 69.0 % 70.5 % Research and Development Expense % (R&D Expense %) Reconciliation GAAP R&D Expense % 31.2 % 28.8 % 22.1 % Stock-based compensation - R&D (1) (4.5 )% (5.7 )% (4.1 )% Non-GAAP R&D Expense % 26.7 % 23.1 % 18.0 % Selling, General, and Administrative Expense % (SG&A Expense %) Reconciliation GAAP SG&A Expense % 16.1 % 25.9 % 19.4 % Stock-based compensation - SG&A (1) 2.7 % (7.1 )% (6.7 )% Litigation expense (2) (0.9 )% (2.7 )% (0.2 )% Non-GAAP SG&A Expense % 17.9 % 16.1 % 12.5 % Operating Expenses Reconciliation GAAP Operating expenses $ 62,186 $ 79,634 $ 79,491 Stock-based compensation - operations (1) (2,343 ) (18,117 ) (20,277 ) Litigation expense (2) (1,065 ) (3,832 ) (439 ) Amortization of acquired intangible assets (869 ) (870 ) (869 ) Restructuring, transformation, and other (3) (3,879 ) (1,957 ) 112 Non-GAAP Operating expenses $ 54,030 $ 54,858 $ 58,018 Income from Operations Reconciliation GAAP Income from operations $ 22,565 $ 16,574 $ 53,070 Stock-based compensation - gross margin (1) 805 888 1,425 Stock-based compensation - operations (1) 2,343 18,117 20,277 Litigation expense (2) 1,065 3,832 439 Amortization of acquired intangible assets 869 870 869 Restructuring, transformation, and other (3) 3,879 1,957 (112 ) Non-GAAP Income from operations $ 31,526 $ 42,238 $ 75,968 Income from Operations % Reconciliation GAAP Income from operations % 18.2 % 11.8 % 27.9 % Cumulative effect of non-GAAP Gross Margin and Operating adjustments 7.2 % 18.2 % 12.1 % Non-GAAP Income from operations % 25.4 % 30.0 % 40.0 % (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) Restructuring, transformation, and other for Q2 and YTD 2024 includes business transformation charges of $0.8 million. Lattice Semiconductor Corporation Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (in thousands, except per share data) (unaudited) Three Months Ended June 29, March 30, July 1, 2024 2024 2023 Income Tax (Benefit) Expense Reconciliation GAAP Income tax (benefit) expense $ 1,121 $ 3,039 $ 2,439 Estimated tax effect of non-GAAP adjustments 5,649 4,337 1,372 Non-cash changes in net deferred income taxes (4) (1,090 ) (2,754 ) — Change in tax law (5) (4,399 ) (1,381 ) (339 ) Non-GAAP Income tax expense $ 1,281 $ 3,241 $ 3,472 Net Income Reconciliation GAAP Net income $ 22,631 $ 14,796 $ 50,644 Stock-based compensation - gross margin (1) 805 888 1,425 Stock-based compensation - operations (1) 2,343 18,117 20,277 Litigation expense (2) 1,065 3,832 439 Amortization of acquired intangible assets 869 870 869 Restructuring, transformation, and other (3) 3,879 1,957 (112 ) Estimated tax effect of non-GAAP adjustments (5,649 ) (4,337 ) (1,372 ) Non-cash changes in net deferred income taxes (4) 1,090 2,754 — Change in tax law (5) 4,399 1,381 339 Non-GAAP Net income $ 31,432 $ 40,258 $ 72,509 Net Income Per Share Reconciliation GAAP Net income per share - basic $ 0.16 $ 0.11 $ 0.37 Cumulative effect of Non-GAAP adjustments 0.07 0.18 0.16 Non-GAAP Net income per share - basic $ 0.23 $ 0.29 $ 0.53 GAAP Net income per share - diluted $ 0.16 $ 0.11 $ 0.36 Cumulative effect of Non-GAAP adjustments 0.07 0.18 0.16 Non-GAAP Net income per share - diluted $ 0.23 $ 0.29 $ 0.52 Shares used in per share calculations: Basic 137,548 137,475 137,735 Diluted 138,243 138,774 139,768 (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) Restructuring, transformation, and other for Q2 and YTD 2024 includes business transformation charges of $0.8 million. (4) Non-cash changes in net deferred income taxes associated with the release of the valuation allowance against $56.9 million of our U.S. deferred tax assets in the fourth quarter of fiscal 2023. (5) 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20240729491684/en/Contacts MEDIA: Sophia Hong Lattice Semiconductor Corporation 503-268-8786 Sophia.Hong@latticesemi.com INVESTORS: Rick Muscha Lattice Semiconductor Corporation 408-826-6000 Rick.Muscha@latticesemi.com
Lattice Semiconductor Corporation (Nasdaq: LSCC), the low power programmable leader, announced financial results today for the fiscal second quarter ended June 29, 2024. Revenue for the second quarter of 2024 was $124.1 million, with GAAP gross margin of 68.3% and GAAP net income of $0.16 per diluted share. On a non-GAAP basis, gross margin was 69.0% with net income per diluted share of $0.23. Esam Elashmawi, Interim Chief Executive Officer & Chief Strategy and Marketing Officer, said, "Second quarter 2024 results reflect the impact of cyclic industry headwinds. While the industry continues to go through a period of inventory normalization, we are starting to see signs of improvement. We continue to execute on our ongoing product portfolio expansion and remain well positioned for long-term growth." Sherri Luther, Chief Financial Officer, said, "Our gross margin remained stable, highlighting the durability of our business model. We maintained disciplined spending, prioritized cash flow, and continued to return capital to shareholders by executing share repurchases for the fifteenth consecutive quarter." Selected Second Quarter 2024 Financial Results and Comparisons (in thousands, except per share data) GAAP Financial Results (unaudited) Q2 2024 Q1 2024 Q2 2023 Q/Q Y/Y Revenue $ 124,076 $ 140,815 $ 190,079 (11.9 )% (34.7 )% Gross Margin % 68.3 % 68.3 % 69.7 % — (140) bps R&D Expense % 31.2 % 28.8 % 22.1 % 240 bps 910 bps SG&A Expense % 16.1 % 25.9 % 19.4 % (980) bps (330) bps Operating Expenses $ 62,186 $ 79,634 $ 79,491 (21.9 )% (21.8 )% Income from Operations $ 22,565 $ 16,574 $ 53,070 36.1 % (57.5 )% Net Income $ 22,631 $ 14,796 $ 50,644 53.0 % (55.3 )% Net Income per Share - Basic $ 0.16 $ 0.11 $ 0.37 $ 0.05 $ (0.21 ) Net Income per Share - Diluted $ 0.16 $ 0.11 $ 0.36 $ 0.05 $ (0.20 ) Non-GAAP* Financial Results (unaudited) Q2 2024 Q1 2024 Q2 2023 Q/Q Y/Y Revenue $ 124,076 $ 140,815 $ 190,079 (11.9 )% (34.7 )% Gross Margin % 69.0 % 69.0 % 70.5 % — (150) bps R&D Expense % 26.7 % 23.1 % 18.0 % 360 bps 870 bps SG&A Expense % 17.9 % 16.1 % 12.5 % 180 bps 540 bps Operating Expenses $ 54,030 $ 54,858 $ 58,018 (1.5 )% (6.9 )% Income from Operations $ 31,526 $ 42,238 $ 75,968 (25.4 )% (58.5 )% Net Income $ 31,432 $ 40,258 $ 72,509 (21.9 )% (56.7 )% Net Income per Share - Basic $ 0.23 $ 0.29 $ 0.53 $ (0.06 ) $ (0.30 ) Net Income per Share - Diluted $ 0.23 $ 0.29 $ 0.52 $ (0.06 ) $ (0.29 ) 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." Second Quarter 2024 Highlights: • Expanded Small FPGA Portfolio Leadership: Launched Certus™-NX-28 and Certus™-NX-09 devices, and multiple package options that offer class-leading power efficiency, small size, and reliability with flexible migration options. • New Nexus-based Security Solutions: Extended leadership in security-focused hardware and software with the launch of the Lattice MachXO5D™-NX family of advanced secure control FPGAs and the latest version of the Lattice Sentry™ solution stack. • Developers Conference: Lattice will hold its second annual Developers Conference on December 10-11, 2024, featuring a wide array of technical sessions, and keynote addresses from customers and ecosystem partners. Register here (advance registration required). • Received Multiple Industry Awards: Lattice won a variety of awards in recognition of its industry leading hardware and software security product portfolio, and corporate sustainability efforts. Business Outlook - Third Quarter of 2024: • Revenue for the third quarter of 2024 is expected to be between $117 million and $137 million. • Gross margin percentage for the third quarter of 2024 is expected to be 69.0% plus or minus 1% on a non-GAAP basis. • Total operating expenses for the third quarter of 2024 are expected to be between $53 million and $55 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 third quarter of 2024, 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 quarterly 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 in this press release. Investor Conference Call / Webcast Details: Lattice Semiconductor will review the Company's financial results for the fiscal second quarter 2024, and business outlook on Monday, July 29, 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 13747663. 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: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve estimates, assumptions, risks and uncertainties. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are neither historical facts nor assurances of future performance and may be forward-looking. Such forward-looking statements include, but are not limited to, statements relating to our rapid product portfolio expansion; long-term position; near-term cyclical industry headwinds; accelerating customer momentum; market improvement; durability of our business model; and the statements under the heading “Business Outlook - Third Quarter of 2024.” 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 and other financial and operational outcomes are inherently uncertain due to factors such as global economic conditions which may affect customer demand, the cyclical nature of the semiconductor industry, pricing and inflationary pressures, competitive actions, international trade disputes and sanctions, the potential impact of global pandemics, and other significant risks and uncertainties that are beyond our ability to predict or control. 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 our filings with the Securities and Exchange Commission, including Lattice’s most recent Annual Report on Form 10-K, especially those under the captions “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations”, all of which are expressly incorporated herein by reference. 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 the Company to predict all risk factors. You should not 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 and undertakes no obligation 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, transformation activities, and other charges, and the estimated tax effect of these items, non-cash changes in net deferred income taxes, 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. The non-GAAP financial information used by the Company may differ from that used by other companies. 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 LinkedIn, Twitter, Facebook, YouTube, WeChat, or Weibo. Lattice Semiconductor Corporation Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended June 29, March 30, July 1, June 29, July 1, 2024 2024 2023 2024 2023 Revenue $ 124,076 $ 140,815 $ 190,079 $ 264,891 $ 374,389 Cost of sales 39,325 44,607 57,518 83,932 113,227 Gross margin 84,751 96,208 132,561 180,959 261,162 Operating expenses: Research and development 38,733 40,591 41,946 79,324 77,935 Selling, general, and administrative 20,005 36,469 36,788 56,474 69,366 Amortization of acquired intangible assets 869 870 869 1,739 1,739 Restructuring 2,579 1,704 (112 ) 4,283 (82 ) Total operating expenses 62,186 79,634 79,491 141,820 148,958 Income from operations 22,565 16,574 53,070 39,139 112,204 Interest income (expense), net 933 1,307 189 2,240 (366 ) Other income (expense), net 254 (46 ) (176 ) 208 (271 ) Income before income taxes 23,752 17,835 53,083 41,587 111,567 Income tax expense 1,121 3,039 2,439 4,160 5,000 Net income $ 22,631 $ 14,796 $ 50,644 $ 37,427 $ 106,567 Net income per share: Basic $ 0.16 $ 0.11 $ 0.37 $ 0.27 $ 0.77 Diluted $ 0.16 $ 0.11 $ 0.36 $ 0.27 $ 0.76 Shares used in per share calculations: Basic 137,548 137,475 137,735 137,480 137,573 Diluted 138,243 138,774 139,768 138,485 139,966 Lattice Semiconductor Corporation Condensed Consolidated Balance Sheets (in thousands) (unaudited) June 29, December 30, 2024 2023 Assets Current assets: Cash and cash equivalents $ 109,216 $ 128,317 Accounts receivable, net 103,442 104,373 Inventories, net 101,556 98,826 Other current assets 38,990 36,430 Total current assets 353,204 367,946 Property and equipment, net 50,801 49,546 Operating lease right-of-use assets 17,326 14,487 Intangible assets, net 19,016 20,974 Goodwill 315,358 315,358 Deferred income taxes 57,329 57,762 Other long-term assets 14,486 14,821 $ 827,520 $ 840,894 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 34,957 $ 34,487 Accrued liabilities 32,088 36,048 Accrued payroll obligations 13,239 26,865 Total current liabilities 80,284 97,400 Long-term operating lease liabilities, net of current portion 11,975 10,739 Other long-term liabilities 36,412 40,735 Total liabilities 128,671 148,874 Stockholders' equity 698,849 692,020 $ 827,520 $ 840,894 Lattice Semiconductor Corporation Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Six Months Ended June 29, July 1, 2024 2023 Cash flows from operating activities: Net income $ 37,427 $ 106,567 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Stock-based compensation expense 21,713 35,744 Depreciation and amortization 18,385 16,578 Change in deferred income tax provision (969 ) (882 ) Other non-cash adjustments 4,329 3,427 Net changes in assets and liabilities (29,443 ) (45,976 ) Net cash provided by (used in) operating activities 51,442 115,458 Cash flows from investing activities: Capital expenditures (10,581 ) (11,943 ) Other investing activities (7,607 ) (5,799 ) Net cash provided by (used in) investing activities (18,188 ) (17,742 ) Cash flows from financing activities: Repayment of long-term debt — (85,000 ) Repurchase of common stock (29,999 ) (20,006 ) Net cash flows related to stock compensation exercises (21,734 ) (34,439 ) Net cash provided by (used in) financing activities (51,733 ) (139,445 ) Effect of exchange rate change on cash (622 ) (220 ) Net increase (decrease) in cash and cash equivalents (19,101 ) (41,949 ) Beginning cash and cash equivalents 128,317 145,722 Ending cash and cash equivalents $ 109,216 $ 103,773 Supplemental disclosure of cash flow information and non-cash investing and financing activities: Interest paid $ — $ 2,962 Income taxes paid, net of refunds $ 3,886 $ 6,837 Operating lease payments $ 4,564 $ 4,082 Lattice Semiconductor Corporation Supplemental Historical Financial Information (unaudited) Three Months Ended June 29, March 30, July 1, 2024 2024 2023 Balance Sheet Information A/R Days Revenue Outstanding (DSO) 76 64 46 Inventory Days (DIO) 236 195 177 Revenue % (by Geography) Asia 67 % 66 % 63 % Americas 19 % 22 % 17 % Europe (incl. Africa) 14 % 12 % 20 % Revenue % (by End Market) Communications and Computing 44 % 39 % 34 % Industrial and Automotive 47 % 53 % 61 % Consumer 9 % 8 % 5 % Revenue $M (by End Market) Communications and Computing $ 54.6 $ 54.6 $ 64.2 Industrial and Automotive $ 58.2 $ 75.3 $ 115.5 Consumer $ 11.3 $ 10.9 $ 10.4 Revenue % (by Channel) Distribution 91 % 87 % 89 % Direct 9 % 13 % 11 % Lattice Semiconductor Corporation Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (in thousands, except per share data) (unaudited) Three Months Ended June 29, March 30, July 1, 2024 2024 2023 Gross Margin Reconciliation GAAP Gross margin $ 84,751 $ 96,208 $ 132,561 Stock-based compensation - gross margin (1) 805 888 1,425 Non-GAAP Gross margin $ 85,556 $ 97,096 $ 133,986 Gross Margin % Reconciliation GAAP Gross margin % 68.3 % 68.3 % 69.7 % Stock-based compensation - gross margin (1) 0.7 % 0.7 % 0.8 % Non-GAAP Gross margin % 69.0 % 69.0 % 70.5 % Research and Development Expense % (R&D Expense %) Reconciliation GAAP R&D Expense % 31.2 % 28.8 % 22.1 % Stock-based compensation - R&D (1) (4.5 )% (5.7 )% (4.1 )% Non-GAAP R&D Expense % 26.7 % 23.1 % 18.0 % Selling, General, and Administrative Expense % (SG&A Expense %) Reconciliation GAAP SG&A Expense % 16.1 % 25.9 % 19.4 % Stock-based compensation - SG&A (1) 2.7 % (7.1 )% (6.7 )% Litigation expense (2) (0.9 )% (2.7 )% (0.2 )% Non-GAAP SG&A Expense % 17.9 % 16.1 % 12.5 % Operating Expenses Reconciliation GAAP Operating expenses $ 62,186 $ 79,634 $ 79,491 Stock-based compensation - operations (1) (2,343 ) (18,117 ) (20,277 ) Litigation expense (2) (1,065 ) (3,832 ) (439 ) Amortization of acquired intangible assets (869 ) (870 ) (869 ) Restructuring, transformation, and other (3) (3,879 ) (1,957 ) 112 Non-GAAP Operating expenses $ 54,030 $ 54,858 $ 58,018 Income from Operations Reconciliation GAAP Income from operations $ 22,565 $ 16,574 $ 53,070 Stock-based compensation - gross margin (1) 805 888 1,425 Stock-based compensation - operations (1) 2,343 18,117 20,277 Litigation expense (2) 1,065 3,832 439 Amortization of acquired intangible assets 869 870 869 Restructuring, transformation, and other (3) 3,879 1,957 (112 ) Non-GAAP Income from operations $ 31,526 $ 42,238 $ 75,968 Income from Operations % Reconciliation GAAP Income from operations % 18.2 % 11.8 % 27.9 % Cumulative effect of non-GAAP Gross Margin and Operating adjustments 7.2 % 18.2 % 12.1 % Non-GAAP Income from operations % 25.4 % 30.0 % 40.0 % (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) Restructuring, transformation, and other for Q2 and YTD 2024 includes business transformation charges of $0.8 million. Lattice Semiconductor Corporation Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (in thousands, except per share data) (unaudited) Three Months Ended June 29, March 30, July 1, 2024 2024 2023 Income Tax (Benefit) Expense Reconciliation GAAP Income tax (benefit) expense $ 1,121 $ 3,039 $ 2,439 Estimated tax effect of non-GAAP adjustments 5,649 4,337 1,372 Non-cash changes in net deferred income taxes (4) (1,090 ) (2,754 ) — Change in tax law (5) (4,399 ) (1,381 ) (339 ) Non-GAAP Income tax expense $ 1,281 $ 3,241 $ 3,472 Net Income Reconciliation GAAP Net income $ 22,631 $ 14,796 $ 50,644 Stock-based compensation - gross margin (1) 805 888 1,425 Stock-based compensation - operations (1) 2,343 18,117 20,277 Litigation expense (2) 1,065 3,832 439 Amortization of acquired intangible assets 869 870 869 Restructuring, transformation, and other (3) 3,879 1,957 (112 ) Estimated tax effect of non-GAAP adjustments (5,649 ) (4,337 ) (1,372 ) Non-cash changes in net deferred income taxes (4) 1,090 2,754 — Change in tax law (5) 4,399 1,381 339 Non-GAAP Net income $ 31,432 $ 40,258 $ 72,509 Net Income Per Share Reconciliation GAAP Net income per share - basic $ 0.16 $ 0.11 $ 0.37 Cumulative effect of Non-GAAP adjustments 0.07 0.18 0.16 Non-GAAP Net income per share - basic $ 0.23 $ 0.29 $ 0.53 GAAP Net income per share - diluted $ 0.16 $ 0.11 $ 0.36 Cumulative effect of Non-GAAP adjustments 0.07 0.18 0.16 Non-GAAP Net income per share - diluted $ 0.23 $ 0.29 $ 0.52 Shares used in per share calculations: Basic 137,548 137,475 137,735 Diluted 138,243 138,774 139,768 (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) Restructuring, transformation, and other for Q2 and YTD 2024 includes business transformation charges of $0.8 million. (4) Non-cash changes in net deferred income taxes associated with the release of the valuation allowance against $56.9 million of our U.S. deferred tax assets in the fourth quarter of fiscal 2023. (5) 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20240729491684/en/
MEDIA: Sophia Hong Lattice Semiconductor Corporation 503-268-8786 Sophia.Hong@latticesemi.com INVESTORS: Rick Muscha Lattice Semiconductor Corporation 408-826-6000 Rick.Muscha@latticesemi.com