NASDAQ: CRUS

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Mar 27, 2020 04:00 PM Pricing delayed 20 minutes

Cirrus Logic Reports Q3 FY20 Revenue of $374.7 Million

Jan 29, 2020

Smartphone Volumes Drive Revenue Above Expectations

AUSTIN, Texas--(BUSINESS WIRE)-- Cirrus Logic, Inc. (Nasdaq:CRUS)today posted on its website at http://investor.cirrus.comthe quarterly Shareholder Letter that contains the complete financial results for the third quarter fiscal year 2020, which ended Dec. 28, 2019, as well as the company’s current business outlook.

“Cirrus Logic’s revenue for the December quarter exceeded guidance as we experienced higher-than-anticipated volumes for certain components shipping into smartphones,” said Jason Rhode, chief executive officer. “During the quarter, development activities across existing and new product categories progressed, and the company continued to execute on key strategic initiatives. With a compelling pipeline of products addressing audio, voice and other signal-processing applications, we believe Cirrus Logic is well positioned for long-term success.”

Reported Financial Results – Third Quarter FY20

  • Revenue of $374.7 million;
  • GAAP and non-GAAP gross margin are 52.7 percent and 52.8, respectively;
  • GAAP operating expenses of $124.8 million and non-GAAP operating expenses of $103.2 million; and
  • GAAP earnings per share of $1.13 and non-GAAP earnings per share of $1.41.

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

Business Outlook – Fourth Quarter FY20

  • Revenue is expected to range between $250 million and $290 million;
  • GAAP gross margin to be between 51 percent and 53 percent; and
  • Combined GAAP R&D and SG&A expenses to range between $115 million and $121 million, including approximately $14 million in stock-based compensation expense and $3 million in amortization of acquired intangibles;
  • GAAP operating expense is expected to include a restructuring charge of approximately $22 million.

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: 8287509).

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, Cirrus 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 and effective tax rate 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 our belief that Cirrus Logic is well positioned for long-term success, along with estimates for the fourth quarter fiscal year 2020 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, amortization of acquired intangibles and restructuring charges. 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 fourth quarter of fiscal year 2020, 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 30, 2019 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.

Summary financial data follows:

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
 
Three Months Ended Nine Months Ended

Dec. 28,

 

Sep. 28,

 

Dec. 29,

 

Dec. 28,

 

Dec. 29,

2019

 

2019

 

2018

 

2019

 

2018

Q3'20

 

Q2'20

 

Q3'19

 

Q3'20

 

Q3'19

Portable products

$

344,870

 

$

349,379

 

$

288,640

 

$

897,187

 

$

824,950

 

Non-portable and other products

 

29,798

 

 

39,533

 

 

35,655

 

 

104,646

 

 

120,133

 

Net sales

 

374,668

 

 

388,912

 

 

324,295

 

 

1,001,833

 

 

945,083

 

Cost of sales

 

177,163

 

 

180,979

 

 

161,115

 

 

473,901

 

 

472,225

 

Gross profit

 

197,505

 

 

207,933

 

 

163,180

 

 

527,932

 

 

472,858

 

Gross margin

 

52.7

%

 

53.5

%

 

50.3

%

 

52.7

%

 

50.0

%

 
Research and development

 

88,713

 

 

88,239

 

 

88,575

 

 

265,782

 

 

282,888

 

Selling, general and administrative

 

36,113

 

 

33,018

 

 

30,364

 

 

98,651

 

 

96,308

 

Total operating expenses

 

124,826

 

 

121,257

 

 

118,939

 

 

364,433

 

 

379,196

 

 
Income from operations

 

72,679

 

 

86,676

 

 

44,241

 

 

163,499

 

 

93,662

 

 
Interest income

 

2,392

 

 

2,250

 

 

1,740

 

 

6,927

 

 

4,712

 

U.K. pension settlement

 

-

 

 

-

 

 

(13,768

)

 

-

 

 

(13,768

)

Other (expense) income

 

(563

)

 

(568

)

 

101

 

 

(1,509

)

 

(67

)

Income before income taxes

 

74,508

 

 

88,358

 

 

32,314

 

 

168,917

 

 

84,539

 

Provision for income taxes

 

5,996

 

 

12,148

 

 

2,381

 

 

19,577

 

 

705

 

Net income

$

68,512

 

$

76,210

 

$

29,933

 

$

149,340

 

$

83,834

 

 
Basic earnings per share:

$

1.18

 

$

1.31

 

$

0.50

 

$

2.56

 

$

1.39

 

Diluted earnings per share:

$

1.13

 

$

1.27

 

$

0.49

 

$

2.47

 

$

1.35

 

 
Weighted average number of shares:
Basic

 

58,188

 

 

58,011

 

 

59,511

 

 

58,247

 

 

60,482

 

Diluted

 

60,492

 

 

60,213

 

 

60,783

 

 

60,395

 

 

62,076

 

 
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 Nine Months Ended

Dec. 28,

 

Sep. 28,

 

Dec. 29,

 

Dec. 28,

 

Dec. 29,

2019

 

2019

 

2018

 

2019

 

2018

Net Income Reconciliation Q3'20 Q2'20 Q3'19 Q3'20 Q3'19
GAAP Net Income

$

68,512

 

$

76,210

 

$

29,933

 

$

149,340

 

$

83,834

 

Amortization of acquisition intangibles

 

6,470

 

 

6,722

 

 

7,630

 

 

20,420

 

 

33,763

 

Stock-based compensation expense

 

14,160

 

 

13,759

 

 

11,181

 

 

39,705

 

 

37,106

 

Restructuring costs

 

1,323

 

 

-

 

 

-

 

 

1,323

 

 

-

 

U.K. pension settlement

 

-

 

 

-

 

 

13,768

 

 

-

 

 

13,768

 

Adjustment to income taxes

 

(4,871

)

 

(3,417

)

 

(7,003

)

 

(11,091

)

 

(27,983

)

Non-GAAP Net Income

$

85,594

 

$

93,274

 

$

55,509

 

$

199,697

 

$

140,488

 

 
Earnings Per Share Reconciliation
GAAP Diluted earnings per share

$

1.13

 

$

1.27

 

$

0.49

 

$

2.47

 

$

1.35

 

Effect of Amortization of acquisition intangibles

 

0.11

 

 

0.11

 

 

0.13

 

 

0.34

 

 

0.54

 

Effect of Stock-based compensation expense

 

0.23

 

 

0.23

 

 

0.18

 

 

0.66

 

 

0.60

 

Effect of Restructuring costs

 

0.02

 

 

-

 

 

-

 

 

0.02

 

 

-

 

Effect of U.K. pension settlement

 

-

 

 

-

 

 

0.23

 

 

-

 

 

0.22

 

Effect of Adjustment to income taxes

 

(0.08

)

 

(0.06

)

 

(0.12

)

 

(0.18

)

 

(0.45

)

Non-GAAP Diluted earnings per share

$

1.41

 

$

1.55

 

$

0.91

 

$

3.31

 

$

2.26

 

 
Operating Income Reconciliation
GAAP Operating Income

$

72,679

 

$

86,676

 

$

44,241

 

$

163,499

 

$

93,662

 

GAAP Operating Profit

 

19.4

%

 

22.3

%

 

13.6

%

 

16.3

%

 

9.9

%

Amortization of acquisition intangibles

 

6,470

 

 

6,722

 

 

7,630

 

 

20,420

 

 

33,763

 

Stock-based compensation expense - COGS

 

200

 

 

254

 

 

220

 

 

695

 

 

589

 

Stock-based compensation expense - R&D

 

9,343

 

 

7,830

 

 

6,761

 

 

24,413

 

 

20,845

 

Stock-based compensation expense - SG&A

 

4,617

 

 

5,675

 

 

4,200

 

 

14,597

 

 

15,672

 

Restructuring costs

 

1,323

 

 

-

 

 

-

 

 

1,323

 

 

-

 

Non-GAAP Operating Income

$

94,632

 

$

107,157

 

$

63,052

 

$

224,947

 

$

164,531

 

Non-GAAP Operating Profit

 

25.3

%

 

27.6

%

 

19.4

%

 

22.5

%

 

17.4

%

 
Operating Expense Reconciliation
GAAP Operating Expenses

$

124,826

 

$

121,257

 

$

118,939

 

$

364,433

 

$

379,196

 

Amortization of acquisition intangibles

 

(6,470

)

 

(6,722

)

 

(7,630

)

 

(20,420

)

 

(33,763

)

Stock-based compensation expense - R&D

 

(9,343

)

 

(7,830

)

 

(6,761

)

 

(24,413

)

 

(20,845

)

Stock-based compensation expense - SG&A

 

(4,617

)

 

(5,675

)

 

(4,200

)

 

(14,597

)

 

(15,672

)

Restructuring costs

 

(1,201

)

 

-

 

 

-

 

 

(1,201

)

 

-

 

Non-GAAP Operating Expenses

$

103,195

 

$

101,030

 

$

100,348

 

$

303,802

 

$

308,916

 

 
Gross Margin/Profit Reconciliation
GAAP Gross Profit

$

197,505

 

$

207,933

 

$

163,180

 

$

527,932

 

$

472,858

 

GAAP Gross Margin

 

52.7

%

 

53.5

%

 

50.3

%

 

52.7

%

 

50.0

%

Stock-based compensation expense - COGS

 

200

 

 

254

 

 

220

 

 

695

 

 

589

 

Restructuring costs - COGS

 

122

 

 

-

 

 

-

 

 

122

 

 

-

 

Non-GAAP Gross Profit

$

197,827

 

$

208,187

 

$

163,400

 

$

528,749

 

$

473,447

 

Non-GAAP Gross Margin

 

52.8

%

 

53.5

%

 

50.4

%

 

52.8

%

 

50.1

%

 
Effective Tax Rate Reconciliation
GAAP Tax Expense

$

5,996

 

$

12,148

 

$

2,381

 

$

19,577

 

$

705

 

GAAP Effective Tax Rate

 

8.0

%

 

13.7

%

 

7.4

%

 

11.6

%

 

0.8

%

Adjustments to income taxes

 

4,871

 

 

3,417

 

 

7,003

 

 

11,091

 

 

27,983

 

Non-GAAP Tax Expense

$

10,867

 

$

15,565

 

$

9,384

 

$

30,668

 

$

28,688

 

Non-GAAP Effective Tax Rate

 

11.3

%

 

14.3

%

 

14.5

%

 

13.3

%

 

17.0

%

 
Tax Impact to EPS Reconciliation
GAAP Tax Expense

$

0.10

 

$

0.20

 

$

0.04

 

$

0.32

 

$

0.01

 

Adjustments to income taxes

 

0.08

 

 

0.06

 

 

0.12

 

 

0.18

 

 

0.45

 

Non-GAAP Tax Expense

$

0.18

 

$

0.26

 

$

0.16

 

$

0.50

 

$

0.46

 

CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands
 

Dec. 28,

 

Mar. 30,

 

Dec. 29,

2019

 

2019

 

2018

ASSETS    
Current assets    
Cash and cash equivalents

$

342,301

 

 

$

216,172

 

 

$

219,319

 

Marketable securities

 

13,098

 

 

 

70,183

 

 

 

59,793

 

Accounts receivable, net

 

175,937

 

 

 

120,656

 

 

 

142,135

 

Inventories

 

137,920

 

 

 

164,733

 

 

 

167,879

 

Other current assets

 

45,345

 

 

 

53,239

 

 

 

51,151

 

Total current Assets

 

714,601

 

 

 

624,983

 

 

 

640,277

 

   
Long-term marketable securities

 

250,162

 

 

 

158,968

 

 

 

165,063

 

Right-of-use lease assets

 

141,348

 

 

 

-

 

 

 

-

 

Property and equipment, net

 

174,390

 

 

 

186,185

 

 

 

191,324

 

Intangibles, net

 

47,133

 

 

 

67,847

 

 

 

76,389

 

Goodwill

 

285,904

 

 

 

286,241

 

 

 

286,678

 

Deferred tax asset

 

9,183

 

 

 

8,727

 

 

 

13,131

 

Other assets

 

24,819

 

 

 

19,689

 

 

 

24,003

 

Total assets

$

1,647,540

 

 

$

1,352,640

 

 

$

1,396,865

 

   
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities    
Accounts payable

$

98,835

 

 

$

48,398

 

 

$

108,022

 

Accrued salaries and benefits

 

34,228

 

 

 

29,289

 

 

 

23,566

 

Other accrued liabilities

 

45,248

 

 

 

37,853

 

 

 

38,175

 

Total current liabilities

 

178,311

 

 

 

115,540

 

 

 

169,763

 

   
Non-current lease liability

 

133,993

 

 

 

-

 

 

 

-

 

Non-current income taxes

 

72,422

 

 

 

78,309

 

 

 

78,532

 

Other long-term liabilities

 

2,934

 

 

 

18,551

 

 

 

18,769

 

   
Stockholders' equity:    
Capital stock

 

1,417,646

 

 

 

1,363,736

 

 

 

1,349,941

 

Accumulated deficit

 

(157,869

)

 

 

(222,430

)

 

 

(217,871

)

Accumulated other comprehensive income (loss)

 

103

 

 

 

(1,066

)

 

 

(2,269

)

Total stockholders' equity

 

1,259,880

 

 

 

1,140,240

 

 

 

1,129,801

 

Total liabilities and stockholders' equity

$

1,647,540

 

 

$

1,352,640

 

 

$

1,396,865

 

   
Prepared in accordance with Generally Accepted Accounting Principles

 

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

Source: Cirrus Logic, Inc.

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