Lattice Semiconductor Corp - $LSCC - Earnings Analysis: Double-digit new product revenue growth indicates strong product portfolio.

Business Model

Lattice Semiconductor generates revenue from the sale of low power programmable solutions, including FPGAs, to customers across various end markets.

Revenue Sources

• Communications and Computing (45% of FY24 revenue)
• Industrial and Automotive (46% of FY24 revenue)
• Consumer (9% of FY24 revenue)

Revenue Distribution by Channel

• Distribution: 89% of FY24 revenue
• Direct: 11% of FY24 revenue

Income Statement Analysis

• Revenue decreased by 7.6% sequentially, reflecting continued inventory normalization and macroeconomic softness.
• Gross margin decreased to 61.1% in Q4 2024, compared to 69.0% in Q3 2024.
• Operating expenses increased by 4.7% sequentially, driven by realignment of resources.

Balance Sheet Analysis

• Cash and cash equivalents increased slightly to $136.3 million from $128.3 million.
• Total assets remained relatively stable at $843.9 million.
• Total liabilities decreased to $133.0 million from $148.9 million.

Cash Flow Analysis

• Net cash provided by operating activities decreased to $140.9 million, compared to $269.6 million in the previous year.
• Capital expenditures remained relatively consistent.
• Repurchase of common stock led to cash outflow from financing activities.

Capital Allocation

Lattice is prioritizing investing in the organic growth of its business, while also returning capital to shareholders through share repurchases. The Board recently approved a $100 million share buyback for 2025.

Management Commentary

We achieved record design wins, significantly reduced operating expenses, and delivered a strong 31.8% adjusted EBITDA margin in 2024.

We are starting to see signs of improvement in the broader market environment as evidenced by our stronger backlog and improved book to bill, which bode well for our business moving forward.

Overall Sentiment: Positive, with confidence in the strategy and product roadmap, expecting improvement in the market environment.

Recommendation

Rating: Hold

Reason for Rating: Hold rating due to mixed results. While the company is showing positive signs of recovery, the revenue decline and gross margin contraction raise concerns. Monitor the progress of new products and inventory normalization.

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 2/11/2025, 5:32:39 AM