NASDAQ: CRUS

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Nov 27, 2020 01:00 PM Pricing delayed 20 minutes

Cirrus Logic Reports Q2 FY21 Revenue of $347.3 Million

Nov 02, 2020

Announces CEO and Board Leadership Transition Plans

AUSTIN, Texas--(BUSINESS WIRE)-- Cirrus Logic, Inc. (Nasdaq: CRUS)today posted on its website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the second quarter fiscal year 2021, which ended Sept. 26, 2020, as well as the company’s current business outlook.

“Cirrus Logic delivered revenue above the high end of guidance in the September quarter. We experienced solid sales across the breadth of our product portfolio, with particularly strong demand for components shipping in smartphones,” said Jason Rhode, chief executive officer. “During the quarter, we were pleased to have expanded the number of smartphones, tablets and wearables that are utilizing our technology. The company also reached several meaningful development milestones that we believe will fuel product diversification and growth opportunities in the coming years.”

The company also announced today that the Board of Directors has appointed current President John Forsyth, 47, as president and chief executive officer effective Jan. 1, 2021, at which time Jason Rhode will transition into his new role as executive fellow. “John’s strong leadership and strategic vision make him the right choice to lead Cirrus Logic into what we believe is a very bright future,” said Jason Rhode, chief executive officer. In addition, the company announced that David Tupman will become chair of the Board of Directors, effective the same date, succeeding Al Schuele ahead of his retirement prior to the next annual meeting of stockholders.

For more information on the CEO and Board leadership transition plans, please visit http://investor.cirrus.com/.

Reported Financial Results – Second Quarter FY21

  • Revenue of $347.3 million;
  • GAAP and non-GAAP gross margin of 51.9 percent;
  • GAAP operating expenses of $116.1 million and non-GAAP operating expenses of $97.8 million;
  • GAAP earnings per share of $0.99 and non-GAAP earnings per share of $1.26.

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

Business Outlook – Third Quarter FY21

  • Revenue is expected to range between $440 million and $480 million;
  • GAAP gross margin to be between 50 percent and 52 percent; and
  • Combined GAAP R&D and SG&A expenses to range between $121 million and $127 million, including approximately $15 million in stock-based compensation expense and $3 million in amortization of acquired intangibles.

Cirrus Logic will host a live Q&A session at 5 p.m. EST 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: 9088457).

Cirrus Logic, Inc.

Cirrus Logic is a leader in low-power, high-precision mixed-signal processing solutions that create innovative user experiences for the world’s top mobile and consumer 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, Cirrus and the Cirrus Logic logo 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, the company has provided non-GAAP financial information, including non-GAAP net income, diluted earnings per share, operating income and profit, operating expenses, gross margin and profit, tax expense, tax expense impact on earnings per share, and effective tax rate. 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 the company’s product diversification and growth opportunities in the coming years and our ability to lead the company into what we believe is a very bright future, along with estimates for the third quarter fiscal year 2021 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock 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 and readers should not place undue reliance on such statements. These risks and uncertainties include, but are not limited to, the following: the effects of the global COVID-19 outbreak and the measures taken to limit the spread of COVID-19, including any disruptions to our business that could result from measures to contain the outbreak that may be taken by governmental authorities in the jurisdictions in which we and our supply chain operate; the susceptibility of the markets we address to economic downturns, including as a result of the COVID-19 outbreak and the actions taken to mitigate the spread of COVID-19; the risks of doing business internationally, including increased import/export restrictions and controls (e.g., the effect of the U.S. Bureau of Industry and Security of the U.S. Department of Commerce placing Huawei Technologies Co., Ltd. and certain of its affiliates on the Bureau’s Entity List), imposition of trade protection measures (e.g., tariffs or taxes), security and health risks, possible disruptions in transportation networks, and other economic, social, military and geo-political conditions in the countries in which we, our customers or our suppliers operate; the level of orders and shipments during the third quarter of fiscal year 2021, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the risk factors listed in our Form 10-K for the year ended March 28, 2020 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 expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Summary financial data follows:

 
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
 
Three Months Ended Six Months Ended
 
Sep. 26, Jun. 27, Sep. 28, Sep. 26, Sep. 28,

2020

2020

2019

2020

2019

Q2'21 Q1'21 Q2'20 Q2'21 Q2'20
Portable products

$

312,911

 

$

210,661

 

$

349,379

 

$

523,572

 

$

552,317

 

Non-portable and other products

 

34,414

 

 

31,912

 

 

39,533

 

 

66,326

 

 

74,848

 

Net sales

 

347,325

 

 

242,573

 

 

388,912

 

 

589,898

 

 

627,165

 

Cost of sales

 

167,115

 

 

115,101

 

 

180,979

 

 

282,216

 

 

296,738

 

Gross profit

 

180,210

 

 

127,472

 

 

207,933

 

 

307,682

 

 

330,427

 

Gross margin

 

51.9

%

 

52.6

%

 

53.5

%

 

52.2

%

 

52.7

%

 
Research and development

 

84,810

 

 

78,741

 

 

88,239

 

 

163,551

 

 

177,069

 

Selling, general and administrative

 

31,247

 

 

29,704

 

 

33,018

 

 

60,951

 

 

62,538

 

Restructuring costs

 

-

 

 

352

 

 

-

 

 

352

 

 

-

 

Total operating expenses

 

116,057

 

 

108,797

 

 

121,257

 

 

224,854

 

 

239,607

 

 
Income from operations

 

64,153

 

 

18,675

 

 

86,676

 

 

82,828

 

 

90,820

 

 
Interest income

 

1,378

 

 

1,576

 

 

2,250

 

 

2,954

 

 

4,535

 

Other income (expense)

 

784

 

 

111

 

 

(568

)

 

895

 

 

(946

)

Income before income taxes

 

66,315

 

 

20,362

 

 

88,358

 

 

86,677

 

 

94,409

 

Provision for income taxes

 

6,829

 

 

2,153

 

 

12,148

 

 

8,982

 

 

13,581

 

Net income

$

59,486

 

$

18,209

 

$

76,210

 

$

77,695

 

$

80,828

 

 
Basic earnings per share:

$

1.02

 

$

0.31

 

$

1.31

 

$

1.33

 

$

1.39

 

Diluted earnings per share:

$

0.99

 

$

0.30

 

$

1.27

 

$

1.29

 

$

1.34

 

 
Weighted average number of shares:
Basic

 

58,191

 

 

58,313

 

 

58,011

 

 

58,252

 

 

58,276

 

Diluted

 

60,127

 

 

60,280

 

 

60,213

 

 

60,203

 

 

60,260

 

 
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 Six Months Ended
 

Sep. 26,

Jun. 27,

Sep. 28,

Sep. 26,

Sep. 28,

2020

2020

2019

2020

2019

Net Income Reconciliation Q2'21 Q1'21 Q2'20 Q2'21 Q2'20
GAAP Net Income

$

59,486

 

$

18,209

 

$

76,210

 

$

77,695

 

$

80,828

 

Amortization of acquisition intangibles

 

2,998

 

 

2,998

 

 

6,722

 

 

5,996

 

 

13,950

 

Stock-based compensation expense

 

15,476

 

 

13,306

 

 

13,759

 

 

28,782

 

 

25,545

 

Restructuring costs

 

-

 

 

352

 

 

-

 

 

352

 

 

-

 

Adjustment to income taxes

 

(2,293

)

 

(2,982

)

 

(3,417

)

 

(5,275

)

 

(6,220

)

Non-GAAP Net Income

$

75,667

 

$

31,883

 

$

93,274

 

$

107,550

 

$

114,103

 

 
Earnings Per Share Reconciliation
GAAP Diluted earnings per share

$

0.99

 

$

0.30

 

$

1.27

 

$

1.29

 

$

1.34

 

Effect of Amortization of acquisition intangibles

 

0.05

 

 

0.05

 

 

0.11

 

 

0.10

 

 

0.23

 

Effect of Stock-based compensation expense

 

0.26

 

 

0.22

 

 

0.23

 

 

0.48

 

 

0.42

 

Effect of Restructuring costs

 

-

 

 

0.01

 

 

-

 

 

0.01

 

 

-

 

Effect of Adjustment to income taxes

 

(0.04

)

 

(0.05

)

 

(0.06

)

 

(0.09

)

 

(0.10

)

Non-GAAP Diluted earnings per share

$

1.26

 

$

0.53

 

$

1.55

 

$

1.79

 

$

1.89

 

 
Operating Income Reconciliation
GAAP Operating Income

$

64,153

 

$

18,675

 

$

86,676

 

$

82,828

 

$

90,820

 

GAAP Operating Profit

 

18.5

%

 

7.7

%

 

22.3

%

 

14.0

%

 

14.5

%

Amortization of acquisition intangibles

 

2,998

 

 

2,998

 

 

6,722

 

 

5,996

 

 

13,950

 

Stock-based compensation expense - COGS

 

197

 

 

207

 

 

254

 

 

404

 

 

495

 

Stock-based compensation expense - R&D

 

9,235

 

 

8,653

 

 

7,830

 

 

17,888

 

 

15,070

 

Stock-based compensation expense - SG&A

 

6,044

 

 

4,446

 

 

5,675

 

 

10,490

 

 

9,980

 

Restructuring costs

 

-

 

 

352

 

 

-

 

 

352

 

 

-

 

Non-GAAP Operating Income

$

82,627

 

$

35,331

 

$

107,157

 

$

117,958

 

$

130,315

 

Non-GAAP Operating Profit

 

23.8

%

 

14.6

%

 

27.6

%

 

20.0

%

 

20.8

%

 
Operating Expense Reconciliation
GAAP Operating Expenses

$

116,057

 

$

108,797

 

$

121,257

 

$

224,854

 

$

239,607

 

Amortization of acquisition intangibles

 

(2,998

)

 

(2,998

)

 

(6,722

)

 

(5,996

)

 

(13,950

)

Stock-based compensation expense - R&D

 

(9,235

)

 

(8,653

)

 

(7,830

)

 

(17,888

)

 

(15,070

)

Stock-based compensation expense - SG&A

 

(6,044

)

 

(4,446

)

 

(5,675

)

 

(10,490

)

 

(9,980

)

Restructuring costs

 

-

 

 

(352

)

 

-

 

 

(352

)

 

-

 

Non-GAAP Operating Expenses

$

97,780

 

$

92,348

 

$

101,030

 

$

190,128

 

$

200,607

 

 
Gross Margin/Profit Reconciliation
GAAP Gross Profit

$

180,210

 

$

127,472

 

$

207,933

 

$

307,682

 

$

330,427

 

GAAP Gross Margin

 

51.9

%

 

52.6

%

 

53.5

%

 

52.2

%

 

52.7

%

Stock-based compensation expense - COGS

 

197

 

 

207

 

 

254

 

 

404

 

 

495

 

Non-GAAP Gross Profit

$

180,407

 

$

127,679

 

$

208,187

 

$

308,086

 

$

330,922

 

Non-GAAP Gross Margin

 

51.9

%

 

52.6

%

 

53.5

%

 

52.2

%

 

52.8

%

 
Effective Tax Rate Reconciliation
GAAP Tax Expense

$

6,829

 

$

2,153

 

$

12,148

 

$

8,982

 

$

13,581

 

GAAP Effective Tax Rate

 

10.3

%

 

10.6

%

 

13.7

%

 

10.4

%

 

14.4

%

Adjustments to income taxes

 

2,293

 

 

2,982

 

 

3,417

 

 

5,275

 

 

6,220

 

Non-GAAP Tax Expense

$

9,122

 

$

5,135

 

$

15,565

 

$

14,257

 

$

19,801

 

Non-GAAP Effective Tax Rate

 

10.8

%

 

13.9

%

 

14.3

%

 

11.7

%

 

14.8

%

 
Tax Impact to EPS Reconciliation
GAAP Tax Expense

$

0.11

 

$

0.04

 

$

0.20

 

$

0.15

 

$

0.23

 

Adjustments to income taxes

 

0.04

 

 

0.05

 

 

0.06

 

 

0.09

 

 

0.10

 

Non-GAAP Tax Expense

$

0.15

 

$

0.09

 

$

0.26

 

$

0.24

 

$

0.33

 

CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands
Sep. 26, Mar. 28, Sep. 28,

2020

2020

2019

ASSETS
Current assets
Cash and cash equivalents

$

247,536

 

$

292,119

 

$

221,937

 

Marketable securities

 

36,641

 

 

22,008

 

 

22,563

 

Accounts receivable, net

 

181,496

 

 

153,998

 

 

217,962

 

Inventories

 

209,050

 

 

146,725

 

 

144,829

 

Other current assets

 

34,508

 

 

35,346

 

 

44,729

 

Total current Assets

 

709,231

 

 

650,196

 

 

652,020

 

 
Long-term marketable securities

 

328,255

 

 

283,573

 

 

238,741

 

Right-of-use lease assets

 

137,045

 

 

141,274

 

 

142,834

 

Property and equipment, net

 

153,640

 

 

158,244

 

 

178,420

 

Intangibles, net

 

27,898

 

 

34,430

 

 

54,780

 

Goodwill

 

287,673

 

 

287,088

 

 

285,321

 

Deferred tax asset

 

7,899

 

 

10,052

 

 

9,026

 

Other assets

 

48,223

 

 

27,820

 

 

22,489

 

Total assets

$

1,699,864

 

$

1,592,677

 

$

1,583,631

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable

$

99,105

 

$

78,412

 

$

109,374

 

Accrued salaries and benefits

 

41,707

 

 

42,439

 

 

34,870

 

Lease liability

 

13,994

 

 

13,580

 

 

13,751

 

Other accrued liabilities

 

23,237

 

 

24,206

 

 

34,801

 

Total current liabilities

 

178,043

 

 

158,637

 

 

192,796

 

 
Non-current lease liability

 

128,570

 

 

129,312

 

 

133,105

 

Non-current income taxes

 

66,503

 

 

71,143

 

 

76,847

 

Other long-term liabilities

 

9,917

 

 

3,806

 

 

2,258

 

 
Stockholders' equity:
Capital stock

 

1,466,978

 

 

1,434,929

 

 

1,392,650

 

Accumulated deficit

 

(155,260

)

 

(201,681

)

 

(213,274

)

Accumulated other comprehensive income (loss)

 

5,113

 

 

(3,469

)

 

(751

)

Total stockholders' equity

 

1,316,831

 

 

1,229,779

 

 

1,178,625

 

Total liabilities and stockholders' equity

$

1,699,864

 

$

1,592,677

 

$

1,583,631

 

 
Prepared in accordance with Generally Accepted Accounting Principles

 

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

Source: Cirrus Logic, Inc.

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