) reported fourth-quarter 2013 earnings of 39 cents per share,
surpassing the Zacks Consensus Estimate of 34 cents. Adjusted
earnings per share exclude one-time items, but include
stock-based compensation expense.
Semtech's total revenue was $150.6 million, up 44.8% year over
year. Reported revenues were toward the higher end of the
management's expectation range of $146.0 million to $152.0
Direct sales represented approximately 60% of total
fourth-quarter revenues, while distribution brought in the
In the quarter, bookings grew across all end markets and the
book to bill ratio was above 1. Total bookings accounted for
approximately 41% of shipments during the quarter.
Revenue by Geography
In the fourth quarter, Asia remained the largest contributor
to Semtech's revenues, with a share of around 71%. North America
accounted for 17% of the revenues, with the remaining 12% coming
Reported gross margin for the quarter was 58.4%, up 100 basis
points (bps) from the year-ago quarter and down 180 bps
sequentially. The sequential decrease in gross margin was due to
lower IP licensing revenues compared with the prior quarter.
Semtech reported operating expenses of $67.3 million, which
were 47.3% higher than the year-ago quarter's $45.7 million.
Operating margin was 8.2%, down from 11.4% in the year-ago
quarter due to higher-than-expected operating expenses. As a
percentage of sales, product development and engineering expenses
increased from the year-ago quarter, while selling, general and
administrative (SG&A) expenses declined.
On a GAAP basis, Semtech recorded net income of $13.1 million
(19 cents per share) compared with $12.4 million (19 cents per
share) in the year-ago quarter and $16.6 million (25 cents per
share) in the previous quarter.
On a pro forma basis, Semtech generated net income of $26.7
million compared with $15.8 million in the year-ago comparable
quarter. Pro forma earnings per share came in at 39 cents
compared with 24 cents in the year-ago quarter.
Semtech ended the fourth quarter with cash and cash
equivalents (including temporary investments) balance of $228.2
million versus $210.0 million in the previous quarter. Accounts
receivables were $69.2 million, down from $72.8 million in the
prior quarter. Days sales outstanding were 43 days, up from 42
days in the last quarter.
During the quarter, cash flow from operations was $35.2
million, free cash flow was $30.0 million and capital expenditure
was $5.2 million. The company spent $7.5 million to repurchase
approximately 263,000 shares.
For the first quarter of 2014, management expects revenues in
the range of $154.0 million to $162.0 million. Gross profit
margin is expected in the range of 59.2%-59.8% on a GAAP basis
and 61.0%-61.5% on a non-GAAP basis, flat year over year.
Selling, general and administrative (SG&A) expense is
expected in the range of $35.4-$35.9 million and research and
development (R&D) expense is expected in the range of $32.3
million to $32.8 million on a GAAP basis. The company anticipates
stock-based compensation expense of $8.8 million, intangibles
amortization charges of $7.8 million, transaction and other
integration related expenses of approximately $1.7 million and
interest and other expense of $4.1 million.
Accordingly, based on a share count of 68.0 million, GAAP EPS
is expected in the range of 17 cents to 24 cents and non-GAAP EPS
is expected to be 43-49 cents.
Also, for the first quarter, the tax rate is expected to be
approximately nil to 2% on a GAAP basis. Capital expenditure is
expected to be approximately $10.0 million.
Semtech Corporation is a manufacturer of a wide range of
analog and mixed-signal semiconductors, including Standard
Semiconductor Products, Rectifier and Assembly Products and Other
Products. The company reported a robust quarter with earnings
beating our expectations.
In the quarter, the company performed strongly with bookings
increasing across all end markets and book-to-bill ratio of above
1 reflecting strong growth. Management's first-quarter guidance
was above the analysts' estimates, reflecting improvement in
We remain optimistic about the company's long-term prospects,
solid execution and its decision to reduce operating expenses
Currently, Semtech has a Zacks Rank #3 (Hold). Other stocks in
the sector that have been performing well and are worth a look
RDA Microelectronics, Inc
Microchip Technology Inc.
). While RDA Microelectronics and Supertex carry a Zacks Rank #1
(Strong Buy), Microchip Technology carries a Zacks Rank #2
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