Semtech Corporation (NASDAQ: SMTC) stock rose over 9.4% in the pre market session on August 30th, 2018 (as of 7:02 AM GMT-4 ; Source: Google finance) after the company topped estimates in its second-quarter results.
SMTC in the second quarter of FY 19 has reported the adjusted earnings per share of 55 cents, beating the analysts’ estimates for the adjusted earnings per share of 54 cents. The company had reported the adjusted revenue growth of 7 percent to $163.2 million in the second quarter of FY 19, beating the analysts’ estimates for revenue of $161.22 billion. In Q2, shipments into Asia represented 75% of net sales, North America represented 18%, and Europe represented 6%.Total direct net sales represented approximately 32%, and net sales to distribution represented approximately 68%. The company’s distributor business remains very balanced, with 57% of the total POS coming from the high-end consumer and enterprise computing end markets, and 43% of total POS coming from the industrial and communications end markets.
Moreover, the second quarter bookings remained strong, including Q1 fiscal 2019 record bookings and resulted in a book-to-bill solidly above one. The bookings accounted for approximately 39% of shipments during the quarter. Q2 fiscal 2019 GAAP gross margin increased 650 basis points sequentially to 61.3% due to the non-recurrence of the Comcast Warrant. Q2 FY19 GAAP operating expense decreased 10% sequentially due to the favorable impact from the $6.6 million initial payment we received from the HiLight settlement and lower supplemental compensation expenses partially offset by higher new product development expenses.
During the second quarter 2019, SMTC repurchased approximately 496,000 shares or $24.4 million of the outstanding stock during the quarter. The stock repurchase authorization now stands at approximately $247 million.
For the third quarter of 2019, SMTC expects earnings per share in the range of $0.58-$0.64, versus the consensus of $0.60. Semtech expects Q3 2019 revenue to be in the range of $168-178 million, versus the consensus of $171.42 million. Further, for the third quarter, SMTC expects Gross margin is expected to be in the range of 61.0% to 62.0%, SG&A expense is expected to be in the range of $38.2 million to $39.2 million, R&D expense is expected to be in the range of $28.0 million to $29.0 million and Intangible amortization expense is expected to be approximately $6.5 million. For Q3, 2019, Interest and other expense is expected to be approximately $2.0 million, Effective tax rate is expected to be in the range of 19% to 21%, Capital expenditures are expected to be approximately $9.0 million and Depreciation expense is expected to be approximately $5.9 million.