NASDAQ: CRUS

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Aug 17, 2018 04:00 PM Pricing delayed 20 minutes

Cirrus Logic Reports Q1 FY19 Revenue of $254.5 Million

Aug 01, 2018

Revenue Exceeded Guidance Due to Stronger than Anticipated Demand for Portable Audio

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 website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the first quarter fiscal year 2019, which ended June 30, 2018, as well as the company’s current business outlook.

“We are pleased with our results in the June quarter as several customers launched new smartphones and wireless headsets utilizing our technology and customer engagements continued to be strong,” said Jason Rhode, president and chief executive officer. “With a diversified product portfolio that addresses a wide range of performance and cost requirements, the company expects to capitalize on increasing demand for innovative audio and voice solutions, as well as adjacent opportunities including haptics, all of which we believe will contribute to the company’s continued success.”

Reported Financial Results – First Quarter FY19

  • Revenue of $254.5 million;
  • GAAP and non-GAAP gross margin of 48.9 percent and 49 percent, respectively;
  • GAAP operating expenses of $130.7 million and non-GAAP operating expenses of $104.8 million; and
  • GAAP loss per share of $0.07 and non-GAAP earnings per share of $0.28.

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

Business Outlook – Second Quarter FY19

  • Revenue is expected to range between $310 million and $350 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 $132 million and $138 million, which includes approximately $15 million in share-based compensation and $13 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: 9589402).

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.

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.

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, diluted share count, operating income, operating expenses, gross margin, tax expense 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 our statements about our future growth opportunities and expectations with respect to our ability to capitalize on increasing demand for innovative audio and voice solutions, as well as adjacent opportunities including haptics, along with estimates for the second quarter fiscal year 2019 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 second quarter of fiscal year 2019, 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 extent to which customers adopt our new technologies and devices in new markets such as haptics; and the risk factors listed in our Form 10-K for the year ended March 31, 2018 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.

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

   
   
   



Three Months Ended









 



Jun. 30,

Mar. 31,

Jun. 24,



2018

2018

2017



Q1'19

Q4'18

Q1'18
Portable audio products

$ 212,260


$ 262,777


$ 280,688
Non-portable audio and other products

  42,223  

  40,396  

  40,047  
Net sales

  254,483  

  303,173  

  320,735  
Cost of sales

  129,924  

  150,543  

  159,019  
Gross profit


124,559



152,630



161,716
Gross margin


48.9 %


50.3 %


50.4 %









 
Research and development


97,932



95,556



83,557
Selling, general and administrative

  32,784  

  36,307  

  30,859  
Total operating expenses

  130,716  

  131,863  

  114,416  









 
Income (loss) from operations


(6,157 )


20,767



47,300









 
Interest income (expense), net


1,447



1,378



594
Other income (expense), net

  210  

  (158 )

  (19 )
Income (loss) before income taxes


(4,500 )


21,987



47,875
Provision (benefit) for income taxes

  (228 )

  9,983  

  4,963  
Net income (loss)

$ (4,272 )

$ 12,004  

$ 42,912  









 
Basic earnings (loss) per share:

$ (0.07 )

$ 0.19


$ 0.67
Diluted earnings (loss) per share:

$ (0.07 )

$ 0.19


$ 0.64









 
Weighted average number of shares:








Basic


61,462



62,654



64,097
Diluted


61,462



64,572



67,160









 
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




   
   



Jun. 30,

Mar. 31,

Jun. 24,



2018

2018

2017
Net Income Reconciliation

Q1'19

Q4'18

Q1'18
GAAP Net Income (Loss)

$ (4,272 )

$ 12,004


$ 42,912
Amortization of acquisition intangibles


13,266



13,266



11,600
Stock based compensation expense


12,794



12,533



11,403
Acquisition-related items


-



(279 )


(4,048 )
Adjustment to income taxes

  (3,926 )

  (4,502 )

  (7,257 )
Non-GAAP Net Income

$ 17,862  

$ 33,022  

$ 54,610  









 
Earnings Per Share Reconciliation








GAAP Diluted earnings (loss) per share

$ (0.07 )

$ 0.19


$ 0.64
Effect of Amortization of acquisition intangibles


0.21



0.21



0.17
Effect of Stock based compensation expense


0.20



0.19



0.17
Effect of Acquisition-related items


-



-



(0.06 )
Effect of Adjustment to income taxes

  (0.06 )

  (0.08 )

  (0.11 )
Non-GAAP Diluted earnings per share

$ 0.28  

$ 0.51  

$ 0.81  









 
Diluted Shares Reconciliation








GAAP Diluted shares


61,462



64,572



67,160
Effect of weighted dilutive shares

  1,723  

  -  

  -  
Non-GAAP Diluted shares

  63,185  

  64,572  

  67,160  









 
Operating Income Reconciliation








GAAP Operating Income (Loss)

$ (6,157 )

$ 20,767


$ 47,300
GAAP Operating Profit (Loss)


-2 %


7 %


15 %
Amortization of acquisition intangibles


13,266



13,266



11,600
Stock compensation expense - COGS


199



422



338
Stock compensation expense - R&D


7,250



6,847



6,260
Stock compensation expense - SG&A


5,345



5,264



4,805
Acquisition-related items

  -  

  (279 )

  (4,048 )
Non-GAAP Operating Income

$ 19,903  

$ 46,287  

$ 66,255  
Non-GAAP Operating Profit


8 %


15 %


21 %









 
Operating Expense Reconciliation








GAAP Operating Expenses

$ 130,716


$ 131,863


$ 114,416
Amortization of acquisition intangibles


(13,266 )


(13,266 )


(11,600 )
Stock compensation expense - R&D


(7,250 )


(6,847 )


(6,260 )
Stock compensation expense - SG&A


(5,345 )


(5,264 )


(4,805 )
Acquisition-related items

  -  

  279  

  4,048  
Non-GAAP Operating Expenses

$ 104,855  

$ 106,765  

$ 95,799  









 
Gross Margin/Profit Reconciliation








GAAP Gross Profit

$ 124,559


$ 152,630


$ 161,716
GAAP Gross Margin


48.9 %


50.3 %


50.4 %
Stock compensation expense - COGS

  199  

  422  

  338  
Non-GAAP Gross Profit

$ 124,758  

$ 153,052  

$ 162,054  
Non-GAAP Gross Margin


49.0 %


50.5 %


50.5 %









 
Effective Tax Rate Reconciliation








GAAP Tax Expense (Benefit)

$ (228 )

$ 9,983


$ 4,963
GAAP Effective Tax Rate


5.1 %


45.4 %


10.4 %
Adjustments to income taxes

  3,926  

  4,502  

  7,257  
Non-GAAP Tax Expense

$ 3,698  

$ 14,485  

$ 12,220  
Non-GAAP Effective Tax Rate


17.2 %


30.5 %


18.3 %









 
Tax Impact to EPS Reconciliation








GAAP Tax Expense

$ -


$ 0.15


$ 0.07
Adjustments to income taxes

  0.06  

  0.08  

  0.11  
Non-GAAP Tax Expense

$ 0.06  

$ 0.23  

$ 0.18  















 

 
CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands

   
   
   



Jun. 30,

Mar. 31,

Jun. 24,



2018

2018

2017
ASSETS








Current assets








Cash and cash equivalents

$ 186,459


$ 235,604


$ 163,918
Marketable securities


39,877



26,397



11,380
Accounts receivable, net


126,604



100,801



162,437
Inventories


173,063



205,760



202,429
Other current assets

  49,118  

  45,112  

  38,342  
Total current Assets


575,121



613,674



578,506









 
Long-term marketable securities


159,334



172,499



134,851
Property and equipment, net


195,804



191,154



170,829
Intangibles, net


99,366



111,547



143,107
Goodwill


287,042



288,718



287,049
Deferred tax asset


15,985



14,716



31,971
Other assets

  34,151  

  37,809  

  20,337  
Total assets

$ 1,366,803  

$ 1,430,117  

$ 1,366,650  









 
LIABILITIES AND STOCKHOLDERS' EQUITY








Current liabilities








Accounts payable

$ 53,655


$ 69,850


$ 85,995
Accrued salaries and benefits


22,924



35,721



31,113
Other accrued liabilities

  42,065  

  34,638  

  28,767  
Total current liabilities


118,644



140,209



145,875









 
Non-current income taxes


94,612



92,753



50,415
Other long-term liabilities


26,451



35,427



9,655









 
Stockholders' equity:








Capital stock


1,325,287



1,312,434



1,272,570
Accumulated deficit


(184,673 )


(139,345 )


(112,258 )
Accumulated other comprehensive income (loss)

  (13,518 )

  (11,361 )

  393  
Total stockholders' equity

  1,127,096  

  1,161,728  

  1,160,705  
Total liabilities and stockholders' equity

$ 1,366,803  

$ 1,430,117  

$ 1,366,650  









 
Prepared in accordance with Generally Accepted Accounting Principles
 

Cirrus Logic, Inc.
Thurman K. Case, 512-851-4125
Chief Financial Officer
Investor.Relations@cirrus.com

Source: Cirrus Logic, Inc.

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