NASDAQ: CRUS

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Aug 17, 2022 04:00 PM Pricing delayed 20 minutes

Cirrus Logic Reports First Quarter Revenue of $393.6 Million

Aug 02, 2022

Company Announces $500 Million Share Repurchase Program

Cirrus Logic, Inc. (Nasdaq: CRUS)today posted on its website at investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the first quarter fiscal year 2023, which ended June 25, 2022, as well as the company’s current business outlook.

“Cirrus Logic delivered record revenue for the June quarter, above the high end of guidance, as component shipments into smartphones exceeded expectations, and we continued to benefit from strong demand for flagship devices,” said John Forsyth, Cirrus Logic president and chief executive officer. “We remain focused on delivering long-term growth through our investment in new technologies and high-performance mixed-signal products. With a compelling pipeline of low-power, low-latency signal processing components, we believe the company is well-positioned to drive content expansion opportunities in FY24 and beyond.”

Reported Financial Results – First Quarter FY23

  • Revenue of $393.6 million;
  • GAAP and non-GAAP gross margin of 51.5 percent;
  • GAAP operating expenses of $148.4 million and non-GAAP operating expenses of $119.5 million; and
  • GAAP earnings per share of $0.69 and non-GAAP earnings per share of $1.12.

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

Business Outlook – Second Quarter FY23

  • Revenue is expected to range between $450 million and $490 million;
  • GAAP gross margin is forecasted to be between 49 percent and 51 percent; and
  • Combined GAAP R&D and SG&A expenses are anticipated to range between $154 million and $160 million, including approximately $20 million in stock-based compensation expense, $8 million in amortization of acquired intangibles, and $3 million in acquisition-related costs.

Share Repurchase Authorization

The company also announced that its Board of Directors recently authorized the repurchase of up to an additional $500 million of the company's common stock, in addition to the $136.1 million remaining from the Board’s previous share repurchase authorization in January 2021. The repurchases will be funded from working capital and anticipated cash flow from operations and may occur from time to time depending on a variety of factors, including general market and economic conditions and other corporate considerations. Repurchases may also be affected through open market purchases, 10b5-1 plans, or other means. The share repurchase program is designed to comply with all applicable securities laws and may be suspended or discontinued at any time without notice.

Cirrus Logic will host a live Q&A session at 5 p.m. EDT today to discuss its financial results and business outlook. Participants may listen to the conference call on the investor relations website at investor.cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (647) 362-9199, or toll-free at (800) 770-2030 (Access Code: 9542479).

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.

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, effective tax rate, free cash flow, and free cash flow margin. 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 ability to deliver long-term growth through investment in new technologies and high-performance mixed-signal products, drive content expansion opportunities in FY24 and beyond, and our estimates for the second quarter fiscal year 2023 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, amortization of acquired intangibles and acquisition-related costs. 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; increased industry-wide capacity constraints that may impact our ability to meet current customer demand, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships; the potential for increased prices due to capacity constraints in our supply chain, which, if we are unable to increase our selling price to our customers, could result in lower revenues and margins that could adversely affect our financial results; recent significant increases in inflation in the U.S. and overseas; the level and timing of orders and shipments during the second quarter of fiscal year 2023, 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 26, 2022 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
(in thousands, except per share data; unaudited)
Three Months Ended
Jun. 25, Mar. 26, Jun. 26,

2022

2022

2021

Q1'23 Q4'22 Q1'22
Audio

$

254,496

 

$

327,099

 

$

217,355

 

High-Performance Mixed-Signal

 

139,143

 

 

162,873

 

 

59,898

 

Net sales

 

393,639

 

 

489,972

 

 

277,253

 

Cost of sales

 

191,005

 

 

231,243

 

 

137,307

 

Gross profit

 

202,634

 

 

258,729

 

 

139,946

 

Gross margin

 

51.5

%

 

52.8

%

 

50.5

%

Research and development

 

109,716

 

 

111,394

 

 

85,696

 

Selling, general and administrative

 

38,642

 

 

39,470

 

 

35,147

 

Total operating expenses

 

148,358

 

 

150,864

 

 

120,843

 

Income from operations

 

54,276

 

 

107,865

 

 

19,103

 

Interest income (expense)

 

305

 

 

(103

)

 

761

 

Other income (expense)

 

506

 

 

180

 

 

(242

)

Income before income taxes

 

55,087

 

 

107,942

 

 

19,622

 

Provision for income taxes

 

15,380

 

 

11,528

 

 

2,413

 

Net income

$

39,707

 

$

96,414

 

$

17,209

 

Basic earnings per share:

$

0.71

 

$

1.69

 

$

0.30

 

Diluted earnings per share:

$

0.69

 

$

1.64

 

$

0.29

 

Weighted average number of shares:
Basic

 

56,277

 

 

56,993

 

 

57,582

 

Diluted

 

57,804

 

 

58,625

 

 

59,513

 

Prepared in accordance with Generally Accepted Accounting Principles
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands, except per share data; unaudited)
(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. 25, Mar. 26, Jun. 26,

2022

2022

2021

Net Income Reconciliation Q1'23 Q4'22 Q1'22
GAAP Net Income 

 $

      39,707

 

 $

      96,414

 

 $

      17,209

 

Amortization of acquisition intangibles

 

             7,835

 

 

             7,882

 

 

             2,998

 

Stock-based compensation expense

 

           18,138

 

 

           17,024

 

 

           14,984

 

Acquisition-related costs

 

             3,164

 

 

             3,164

 

 

                  -

 

Adjustment to income taxes

 

           (4,300

)

 

           (6,778

)

 

           (2,949

)

Non-GAAP Net Income

 $

      64,544

 

 $

   117,706

 

 $

      32,242

 

 
Earnings Per Share Reconciliation
GAAP Diluted earnings per share

 $

          0.69

 

 $

          1.64

 

 $

          0.29

 

Effect of Amortization of acquisition intangibles

 

               0.14

 

 

               0.14

 

 

               0.05

 

Effect of Stock-based compensation expense

 

               0.31

 

 

               0.29

 

 

               0.25

 

Effect of Acquisition-related costs

 

               0.05

 

 

               0.05

 

 

                  -

 

Effect of Adjustment to income taxes

 

             (0.07

)

 

             (0.11

)

 

             (0.05

)

Non-GAAP Diluted earnings per share

 $

          1.12

 

 $

          2.01

 

 $

          0.54

 

 
Operating Income Reconciliation
GAAP Operating Income

 $

      54,276

 

 $

   107,865

 

 $

      19,103

 

GAAP Operating Profit 

 

13.8

%

 

22.0

%

 

6.9

%

Amortization of acquisition intangibles

 

             7,835

 

 

             7,882

 

 

             2,998

 

Stock-based compensation expense - COGS

 

                277

 

 

                261

 

 

                246

 

Stock-based compensation expense - R&D

 

           12,592

 

 

           11,786

 

 

             9,612

 

Stock-based compensation expense - SG&A

 

             5,269

 

 

             4,977

 

 

             5,126

 

Acquisition-related costs

 

             3,164

 

 

             3,164

 

 

                  -

 

Non-GAAP Operating Income

 $

      83,413

 

 $

   135,935

 

 $

      37,085

 

Non-GAAP Operating Profit

 

21.2

%

 

27.7

%

 

13.4

%

 
Operating Expense Reconciliation
GAAP Operating Expenses

 $

   148,358

 

 $

   150,864

 

 $

   120,843

 

Amortization of acquisition intangibles

 

           (7,835

)

 

           (7,882

)

 

           (2,998

)

Stock-based compensation expense - R&D

 

         (12,592

)

 

         (11,786

)

 

           (9,612

)

Stock-based compensation expense - SG&A

 

           (5,269

)

 

           (4,977

)

 

           (5,126

)

Acquisition-related costs

 

           (3,164

)

 

           (3,164

)

 

                  -

 

Non-GAAP Operating Expenses

 $

   119,498

 

 $

   123,055

 

 $

   103,107

 

 
Gross Margin/Profit Reconciliation
GAAP Gross Profit

 $

   202,634

 

 $

   258,729

 

 $

   139,946

 

GAAP Gross Margin

 

51.5

%

 

52.8

%

 

50.5

%

Stock-based compensation expense - COGS

 

                277

 

 

                261

 

 

                246

 

Non-GAAP Gross Profit

 $

   202,911

 

 $

   258,990

 

 $

   140,192

 

Non-GAAP Gross Margin

 

51.5

%

 

52.9

%

 

50.6

%

 
Effective Tax Rate Reconciliation
GAAP Tax Expense 

 $

      15,380

 

 $

      11,528

 

 $

        2,413

 

GAAP Effective Tax Rate

 

27.9

%

 

10.7

%

 

12.3

%

Adjustments to income taxes

 

             4,300

 

 

             6,778

 

 

             2,949

 

Non-GAAP Tax Expense

 $

      19,680

 

 $

      18,306

 

 $

        5,362

 

Non-GAAP Effective Tax Rate

 

23.4

%

 

13.5

%

 

14.3

%

 
Tax Impact to EPS Reconciliation
GAAP Tax Expense

 $

          0.27

 

 $

          0.20

 

 $

          0.04

 

Adjustments to income taxes

 

               0.07

 

 

               0.11

 

 

               0.05

 

Non-GAAP Tax Expense

 $

          0.34

 

 $

          0.31

 

 $

          0.09

 

CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)
Jun. 25, Mar. 26, Jun. 26,

2022

2022

2021

ASSETS
Current assets
Cash and cash equivalents

$

379,335

 

$

369,814

 

$

385,127

 

Marketable securities

 

18,397

 

 

10,601

 

 

60,503

 

Accounts receivable, net

 

206,272

 

 

240,264

 

 

136,534

 

Inventories

 

174,370

 

 

138,436

 

 

192,722

 

Other current assets

 

82,634

 

 

80,900

 

 

64,458

 

Total current Assets

 

861,008

 

 

840,015

 

 

839,344

 

Long-term marketable securities

 

55,965

 

 

63,749

 

 

311,643

 

Right-of-use lease assets

 

168,680

 

 

171,003

 

 

131,446

 

Property and equipment, net

 

157,165

 

 

157,077

 

 

158,451

 

Intangibles, net

 

149,984

 

 

158,145

 

 

18,429

 

Goodwill

 

435,936

 

 

435,791

 

 

287,518

 

Deferred tax asset

 

16,928

 

 

11,068

 

 

19,482

 

Long-term prepaid wafers

 

195,000

 

 

195,000

 

 

-

 

Other assets

 

65,236

 

 

91,552

 

 

47,693

 

Total assets

$

2,105,902

 

$

2,123,400

 

$

1,814,006

 

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable

$

121,451

 

$

115,417

 

$

95,232

 

Accrued salaries and benefits

 

41,026

 

 

65,261

 

 

37,220

 

Lease liability

 

13,988

 

 

14,680

 

 

14,662

 

Acquisition-related liabilities

 

30,964

 

 

30,964

 

 

-

 

Other accrued liabilities

 

45,167

 

 

38,461

 

 

39,387

 

Total current liabilities

 

252,596

 

 

264,783

 

 

186,501

 

Non-current lease liability

 

159,344

 

 

163,162

 

 

126,442

 

Non-current income taxes

 

73,735

 

 

73,383

 

 

64,245

 

Long-term acquisition-related liabilities

 

11,856

 

 

8,692

 

 

-

 

Other long-term liabilities

 

9,184

 

 

13,563

 

 

30,087

 

Stockholders' equity:
Capital stock

 

1,596,684

 

 

1,578,427

 

 

1,514,549

 

Accumulated earnings (deficit)

 

5,894

 

 

23,435

 

 

(109,754

)

Accumulated other comprehensive income (loss)

 

(3,391

)

 

(2,045

)

 

1,936

 

Total stockholders' equity

 

1,599,187

 

 

1,599,817

 

 

1,406,731

 

Total liabilities and stockholders' equity

$

2,105,902

 

$

2,123,400

 

$

1,814,006

 

Prepared in accordance with Generally Accepted Accounting Principles
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands; unaudited)
 
Three Months Ended
 
Jun. 25, Jun. 26,

2022

2021

Q1'23 Q1'22
Cash flows from operating activities:
Net income

$

39,707

 

$

17,209

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization

 

16,515

 

 

11,898

 

Stock-based compensation expense

 

18,138

 

 

14,985

 

Deferred income taxes

 

(5,860

)

 

(9,270

)

Loss on retirement or write-off of long-lived assets

 

292

 

 

-

 

Other non-cash charges

 

99

 

 

108

 

Net change in operating assets and liabilities:
Accounts receivable, net

 

33,992

 

 

(27,822

)

Inventories

 

(35,934

)

 

(19,459

)

Other assets

 

549

 

 

(6,457

)

Accounts payable and other accrued liabilities

 

(20,327

)

 

(21,740

)

Income taxes payable

 

24,030

 

 

13,752

 

Acquisition-related liabilities

 

3,164

 

 

-

 

Net cash provided by (used in) operating activities

 

74,365

 

 

(26,796

)

Cash flows from investing activities:
Maturities and sales of available-for-sale marketable securities

 

4,694

 

 

49,158

 

Purchases of available-for-sale marketable securities

 

(5,186

)

 

(53,969

)

Purchases of property, equipment and software

 

(6,776

)

 

(10,835

)

Investments in technology

 

(448

)

 

(1,068

)

Net cash used in investing activities

 

(7,716

)

 

(16,714

)

Cash flows from financing activities:
Issuance of common stock, net of shares withheld for taxes

 

120

 

 

746

 

Repurchase of stock to satisfy employee tax withholding obligations

 

(866

)

 

(1,772

)

Repurchase and retirement of common stock

 

(56,382

)

 

(12,501

)

Net cash used in financing activities

 

(57,128

)

 

(13,527

)

Net increase (decrease) in cash and cash equivalents

 

9,521

 

 

(57,037

)

Cash and cash equivalents at beginning of period

 

369,814

 

 

442,164

 

Cash and cash equivalents at end of period

$

379,335

 

$

385,127

 

 
Prepared in accordance with Generally Accepted Accounting Principles
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands; unaudited)
 
Free cash flow, a non-GAAP financial measure, is GAAP cash flow from operations (or cash provided by (used in) operating activities) less capital expenditures. Capital expenditures include purchases of property, equipment and software as well as investments in technology, as presented within our GAAP Consolidated Condensed Statement of Cash Flows. Free cash flow margin represents free cash flow divided by revenue.
 

Twelve Months Ended

Three Months Ended
 
Jun. 25, Jun. 25, Mar. 26, Dec. 25, Sep. 25,

2022

2022

2022

2021

2021

Q1'23 Q1'23 Q4'22 Q3'22 Q2'22
 
Net cash provided by (used in) operating activities (GAAP)

$

225,914

 

$

74,365

 

$

258,231

 

$

(135,855

)

$

29,173

 

Capital expenditures

 

(25,331

)

 

(7,224

)

 

(8,456

)

 

(3,724

)

 

(5,927

)

Free Cash Flow (Non-GAAP)

$

200,583

 

$

67,141

 

$

249,775

 

$

(139,579

)

$

23,246

 

 
Cash Flow from Operations as a Percentage of Revenue (GAAP)

 

12

%

 

19

%

 

53

%

 

-25

%

 

6

%

Free Cash Flow Margin (Non-GAAP)

 

11

%

 

17

%

 

51

%

 

-25

%

 

5

%

 

Investor Contact:
Chelsea Heffernan
Vice President, Investor Relations
Cirrus Logic, Inc.
(512) 851-4125
Investor@cirrus.com

 

Source: Cirrus Logic, Inc.

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