NASDAQ: CRUS

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Cirrus Logic Reports Q4 Revenue of $327.9 Million and $1.5 Billion for FY17

May 03, 2017

Significant Revenue Growth in FY17 Fueled by Demand for Portable Audio Products

AUSTIN, Texas--(BUSINESS WIRE)-- Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high performance, low-power ICs for audio and voice signal processing applications, today posted on its investor relations website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the fourth quarter and full fiscal year 2017, which ended Mar. 25, 2017, as well as the company’s current business outlook.

“We are extremely pleased with Cirrus Logic’s FY17 financial performance as we delivered outstanding revenue, operating profit and earnings per share growth,” said Jason Rhode, president and chief executive officer. “With a growing product line spanning the complete audio signal chain, Cirrus Logic expects to leverage our solid customer relationships and engineering execution to capitalize on our rapidly expanding growth opportunities.”

Reported Financial Results – Fourth Quarter FY17

  • Revenue of $327.9 million;
  • GAAP gross margin of 50.1 percent and non-GAAP gross margin of 50.2 percent;
  • GAAP operating expenses of $119.6 million and non-GAAP operating expenses of $90.9 million; and
  • GAAP diluted earnings per share of $0.52 and non-GAAP diluted earnings per share of $0.85.

Reported Financial Results – Full Year FY17

  • Revenue of $1.5 billion;
  • GAAP gross margin of 49.2 percent and non-GAAP gross margin of 49.3 percent;
  • GAAP operating expenses of $440.8 million and non-GAAP operating expenses of $362.7 million; and
  • GAAP diluted earnings per share of $3.92 and non-GAAP diluted earnings per share of $4.49.

A reconciliation of the non-GAAP charges is included in the tables accompanying this press release.

Business Outlook – First Quarter FY18

  • Revenue is expected to range between $300 million and $340 million;
  • GAAP gross margin is expected to be between 48 percent and 50 percent; and
  • Combined GAAP R&D and SG&A expenses are expected to range between $118 million and $124 million, which includes approximately $11 million in share-based compensation and $10 million in amortization of acquired intangibles.

Cirrus Logic will host a live Q&A session at 5 p.m. EDT today to answer questions related to its financial results and business outlook. Participants may listen to the conference call on the Cirrus Logic website. Participants who would like to submit a question to be addressed during the call are requested to email investor.relations@cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (416) 621-4642, or toll-free at (800) 585-8367 (Access Code: 2452447).

Cirrus Logic, Inc.

Cirrus Logic is a leader in high performance, low-power ICs for audio and voice signal processing applications. Cirrus Logic’s products span the entire audio signal chain, from capture to playback, providing innovative products for the world’s top smartphones, tablets, digital headsets, wearables and emerging smart home applications. With headquarters in Austin, Texas, Cirrus Logic is recognized globally for its award-winning corporate culture. Check us out at www.cirrus.com.

Use of non-GAAP Financial Information

To supplement Cirrus Logic's financial statements presented on a GAAP basis, Cirrus has provided non-GAAP financial information, including non-GAAP net income, diluted earnings per share, operating income, operating expenses, gross margins, tax expenses and tax expense impact on earnings per share. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this news release contain forward-looking statements including statements about our future ability to leverage our solid customer relationships and engineering execution to capitalize on our rapidly expanding growth opportunities, and our estimates of first quarter fiscal year 2018 revenue, gross margin, combined research and development and selling, general and administrative expense levels, share-based compensation expense and amortization of acquired intangibles. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” “intend,” and variations of these types of words and similar expressions. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, the following: the level of orders and shipments during the first quarter of fiscal year 2018, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the timing and success of new product ramps; and the risk factors listed in our Form 10-K for the year ended March 26, 2016, as amended, and in our other filings with the Securities and Exchange Commission, which are available at www.sec.gov. The foregoing information concerning our business outlook represents our outlook as of the date of this news release, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Cirrus Logic and Cirrus are registered trademarks of Cirrus Logic, Inc. All other company or product names noted herein may be trademarks of their respective holders.

Summary financial data follows:

 
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
                     

Three Months Ended

Twelve Months Ended

 
Mar. 25, Dec. 24, Mar. 26, Mar. 25, Mar. 26,
2017 2016 2016 2017 2016
Q4'17 Q3'17 Q4'16 Q4'17 Q4'16
Portable audio products $ 290,658 $ 483,712 $ 187,280 $ 1,373,848 $ 989,101
Non-portable audio and other products   37,206     39,317     44,719     165,092     180,150  
Net sales   327,864     523,029     231,999     1,538,940     1,169,251  
Cost of sales   163,585     267,877     116,745     781,125     614,411  
Gross profit 164,279 255,152 115,254 757,815 554,840
Gross margin 50.1 % 48.8 % 49.7 % 49.2 % 47.5 %
 
Research and development 77,972 76,079 65,834 303,658 269,217
Selling, general and administrative 31,752 32,884 27,228 127,265 117,082
Asset impairment 9,842 - - 9,842 -
Patent agreement and other   -     -     -     -     (11,670 )
Total operating expenses   119,566     108,963     93,062     440,765     374,629  
 
Income from operations 44,713 146,189 22,192 317,050 180,211
 
Interest income (expense), net 118 (350 ) (709 ) (1,924 ) (2,861 )
Other income (expense), net   82     (47 )   (370 )   (79 )   (1,361 )
Income before income taxes 44,913 145,792 21,113 315,047 175,989
Provision for income taxes   9,855     23,751     7,101     53,838     52,359  
Net income $ 35,058   $ 122,041   $ 14,012   $ 261,209   $ 123,630  
 
Basic earnings per share: $ 0.55 $ 1.91 $ 0.22 $ 4.12 $ 1.96
Diluted earnings per share: $ 0.52 $ 1.83 $ 0.21 $ 3.92 $ 1.87
 
Weighted average number of shares:
Basic 64,232 63,837 62,843 63,329 63,197
Diluted 67,062 66,748 65,398 66,561 65,993
 
Prepared in accordance with Generally Accepted Accounting Principles
 

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share data)
(not prepared in accordance with GAAP)

Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

      Three Months Ended     Twelve Months Ended
           
Mar. 25, Dec. 24, Mar. 26, Mar. 25, Mar. 26,
  2017     2016     2016     2017     2016  
Net Income Reconciliation Q4'17 Q3'17 Q4'16 Q4'17 Q4'16
GAAP Net Income $ 35,058 $ 122,041 $ 14,012 $ 261,209 $ 123,630
Amortization of acquisition intangibles 8,255 8,308 8,363 33,252 32,271
Stock based compensation expense 10,888 9,471 8,858 39,594 33,578
Patent agreement and other - - - - (11,670 )
Restructuring and other costs, net - - (3,667 ) - (3,667 )
Acquisition-related items - - - (3,566 ) -
Asset impairment 9,842 - - 9,842 -
Adjustment to income taxes   (7,289 )   (15,094 )   (2,658 )   (41,480 )   (16,062 )
Non-GAAP Net Income $ 56,754   $ 124,726   $ 24,908   $ 298,851   $ 158,080  
 
Earnings Per Share Reconciliation
GAAP Diluted earnings per share $ 0.52 $ 1.83 $ 0.21 $ 3.92 $ 1.87
Effect of Amortization of acquisition intangibles 0.13 0.13 0.13 0.50 0.49
Effect of Stock based compensation expense 0.16 0.14 0.14 0.59 0.51
Effect of Patent agreement and other - - - - (0.18 )
Effect of Restructuring and other costs, net - - (0.06 ) - (0.05 )
Effect of Acquisition-related items - - - (0.05 ) -
Effect of Asset impairment 0.15 - - 0.15 -
Effect of Adjustment to income taxes   (0.11 )   (0.23 )   (0.04 )   (0.62 )   (0.24 )
Non-GAAP Diluted earnings per share $ 0.85   $ 1.87   $ 0.38   $ 4.49   $ 2.40  
 
Operating Income Reconciliation
GAAP Operating Income $ 44,713 $ 146,189 $ 22,192 $ 317,050 $ 180,211
GAAP Operating Profit 14 % 28 % 10 % 21 % 15 %
Amortization of acquisition intangibles 8,255 8,308 8,363 33,252 32,271
Stock compensation expense - COGS 324 282 233 1,071 1,151
Stock compensation expense - R&D 5,987 5,078 4,996 21,186 17,173
Stock compensation expense - SG&A 4,577 4,111 3,629 17,337 15,254
Patent agreement and other - - - - (11,670 )
Restructuring and other costs, net - - (3,667 ) - (3,667 )
Acquisition-related items - - - (3,566 ) -
Asset impairment   9,842     -     -     9,842     -  
Non-GAAP Operating Income $ 73,698   $ 163,968   $ 35,746   $ 396,172   $ 230,723  
Non-GAAP Operating Profit 22 % 31 % 15 % 26 % 20 %
 
Operating Expense Reconciliation
GAAP Operating Expenses $ 119,566 $ 108,963 $ 93,062 $ 440,765 $ 374,629
Amortization of acquisition intangibles (8,255 ) (8,308 ) (8,363 ) (33,252 ) (32,271 )
Stock compensation expense - R&D (5,987 ) (5,078 ) (4,996 )

(21,186

) (17,173 )
Stock compensation expense - SG&A (4,577 ) (4,111 ) (3,629 ) (17,337 ) (15,254 )
Patent agreement and other - - - - 11,670
Restructuring and other costs, net - - 3,667 - 3,667
Acquisition-related items - - - 3,566 -
Asset impairment   (9,842 )   -     -     (9,842 )   -  
Non-GAAP Operating Expenses $ 90,905   $ 91,466   $ 79,741   $ 362,714   $ 325,268  
 
Gross Margin/Profit Reconciliation
GAAP Gross Profit $ 164,279 $ 255,152 $ 115,254 $ 757,815 $ 554,840
GAAP Gross Margin 50.1 % 48.8 % 49.7 % 49.2 % 47.5 %
Acquisition-related items - - - - -
Stock compensation expense - COGS   324     282     233     1,071     1,151  
Non-GAAP Gross Profit $ 164,603   $ 255,434   $ 115,487   $ 758,886   $ 555,991  
Non-GAAP Gross Margin 50.2 % 48.8 % 49.8 % 49.3 % 47.6 %
 
Effective Tax Rate Reconciliation
GAAP Tax Expense $ 9,855 $ 23,751 $ 7,101 $ 53,838 $ 52,359
GAAP Effective Tax Rate 21.9 % 16.3 % 33.6 % 17.1 % 29.8 %
Adjustments to income taxes   7,289     15,094     2,658     41,480     16,062  
Non-GAAP Tax Expense $ 17,144   $ 38,845   $ 9,759   $ 95,318   $ 68,421  
Non-GAAP Effective Tax Rate 23.2 % 23.7 % 28.2 % 24.2 % 30.2 %
 
Tax Impact to EPS Reconciliation
GAAP Tax Expense $ 0.15 $ 0.36 $ 0.11 $ 0.81 $ 0.79
Adjustments to income taxes   0.11     0.23     0.04     0.62     0.24  
Non-GAAP Tax Expense $ 0.26   $ 0.59   $ 0.15   $ 1.43   $ 1.03  
 

             
CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands
 
Mar. 25, Dec. 24, Mar. 26,
  2017     2016     2016  
ASSETS
Current assets
Cash and cash equivalents $ 351,166 $ 310,375 $ 168,793
Marketable securities 99,813 72,342 60,582
Accounts receivable, net 119,974 246,630 88,532
Inventories 167,895 154,128 142,015
Other current assets   37,080     41,747     46,207  
Total current Assets 775,928 825,222 506,129
 
Property and equipment, net 168,139 167,933 162,656
Intangibles, net 135,188 144,005 162,832
Goodwill 286,767 287,518 287,518
Deferred tax asset 32,841 34,737 25,772
Other assets   14,607     13,990     16,345  
Total assets $ 1,413,470   $ 1,473,405   $ 1,181,883  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 73,811 $ 154,930 $ 71,619
Accrued salaries and benefits 40,190 33,122 21,239
Other accrued liabilities   30,074     24,687     35,266  
Total current liabilities 144,075 212,739 128,124
 
Long-term debt 60,000 100,000 160,439
Other long-term liabilities 57,703 56,631 33,837
 
Stockholders' equity:
Capital stock 1,259,279 1,247,191 1,203,496
Accumulated deficit (107,014 ) (141,027 ) (344,345 )
Accumulated other comprehensive income (loss)   (573 )   (2,129 )   332  
Total stockholders' equity   1,151,692     1,104,035     859,483  
Total liabilities and stockholders' equity $ 1,413,470   $ 1,473,405   $ 1,181,883  
 
Prepared in accordance with Generally Accepted Accounting Principles

Source: Cirrus Logic, Inc.

Investor Contact:

Cirrus Logic, Inc.

Thurman K. Case, 512-851-4125

Chief Financial Officer

Investor.Relations@cirrus.com

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