Strong Demand for Portable Audio Drives
September Quarter Revenue Growth
Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-precision
analog and digital signal processing components, today posted on
its investor relations website at http://investor.cirrus.com the
quarterly Shareholder Letter that contains the complete financial
results for the second quarter fiscal year 2015, which ended Sept.
27, 2014, as well as the company’s current business outlook.
“Q2 was an outstanding quarter for Cirrus Logic, as strong
demand for portable audio products drove revenue above
expectations. In addition, we were pleased to have closed the
acquisition of Wolfson Microelectronics on Aug. 21,” said Jason
Rhode, president and chief executive officer. “The acquisition
further strengthens Cirrus Logic’s position as a market leader and
helps accelerate critical R&D programs we believe will fuel
revenue growth in the future.”
Reported Financial Results – Second Quarter FY15
- Revenue of $210.2 million, including
$197.2 million from Cirrus Logic and $13 million from five weeks of
Wolfson Microelectronics;
- GAAP gross margin of 47.8 percent and
non-GAAP gross margin of 48.7 percent;
- GAAP operating expenses of $82.5
million and non-GAAP operating expenses of $57.3 million. GAAP
operating expense includes $18.7 million in acquisition costs and
$6.5 million of share-based compensation and amortization of
acquired intangibles; and
- GAAP diluted earnings per share of
$0.01 and non-GAAP diluted earnings per share of $0.68.
A reconciliation of the non-GAAP charges is included in the
tables accompanying this press release.
Business Outlook – Third Quarter FY15
- Revenue is expected to range between
$265 million and $285 million;
- GAAP gross margin is expected to be
between 42 percent and 44 percent, which includes roughly 200 basis
points of costs associated with the fair value write up of acquired
inventory; and
- Combined R&D and SG&A expenses
are expected to range between $86 million and $90 million, which
includes approximately $9 million in share-based compensation and
$7 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 (404) 537-3406, or
toll-free at (855) 859-2056 (Access Code: 13896797).
Cirrus Logic, Inc.
Cirrus Logic develops high-precision, analog and mixed-signal
integrated circuits for a broad range of innovative customers.
Building on its diverse analog and signal-processing patent
portfolio, Cirrus Logic delivers highly optimized products for a
variety of audio, industrial and energy-related applications. The
company operates from headquarters in Austin, Texas, with offices
in the United States, United Kingdom, Europe, Japan and Asia. More
information about Cirrus Logic is available 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 gross margins, operating expenses, net income, operating
profit and diluted 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 estimates of third quarter fiscal year 2015 revenue,
gross margin, combined research and development and selling,
general and administrative expense levels, share-based compensation
expense, amortization of acquired intangibles and acquisition
related costs associated with the fair value write up of acquired
inventory. 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 third quarter of fiscal
year 2015, as well as customer cancellations of orders, or the
failure to place orders consistent with forecasts; and the risk
factors listed in our Form 10-K for the year ended March 29, 2014,
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, Cirrus and Wolfson are registered trademarks of
Cirrus Logic, Inc. or its subsidiaries. All other company or
product names noted herein may be trademarks of their respective
holders.
Summary financial data follows:
CIRRUS LOGIC, INC. CONSOLIDATED CONDENSED
STATEMENT OF OPERATIONS (unaudited) (in thousands,
except per share data) Three Months Ended Six
Months Ended Sep. 27, Jun. 28, Sep.
28, Sep. 27, Sep. 28, 2014 2014
2013 2014 2013 Q2'15 Q1'15
Q2'14 Q2'15 Q2'14 Portable audio products $
163,563 $ 112,570 $ 150,949 $ 276,132 $ 267,556 Non-portable audio
and other products 46,651 39,995
39,722 86,647 78,240
Net
sales 210,214 152,565
190,671 362,779
345,796 Cost of sales 109,647
77,190 91,223 186,837
166,850
Gross profit 100,567 75,375
99,448 175,942 178,946 Gross margin
47.8 % 49.4 % 52.2 %
48.5 % 51.7 % Research and
development 44,557 39,777 29,722 84,334 58,252 Selling, general and
administrative 21,545 19,683 19,215 41,228 38,413 Restructuring and
other 1,455 - (154 ) 1,455 (584 ) Acquisition related costs 14,937
- - 14,937 - Patent infringement settlements, net -
- - - 695
Total operating expenses 82,494 59,460
48,783 141,954 96,776
Operating income 18,073 15,915
50,665 33,988 82,170 Interest income
(expense), net (2,670 ) (467 ) 201 (3,137 ) 359 Other income
(expense), net (11,994 ) 501 (38 )
(11,493 ) (55 )
Income before income taxes
3,409 15,949 50,828 19,358
82,474 Provision for income taxes 2,557
5,701 17,461 8,258 28,465
Net income $ 852 $
10,248 $ 33,367 $
11,100 $ 54,009 Basic
earnings per share: $ 0.01 $ 0.17 $ 0.53 $ 0.18 $ 0.85 Diluted
earnings per share: $ 0.01 $ 0.16 $ 0.50 $ 0.17 $ 0.82
Weighted average common shares outstanding: Basic 62,241 62,032
63,217 62,137 63,329 Diluted 65,085 64,688 66,125 64,892 66,203
Prepared in accordance with Generally Accepted Accounting
Principles
CIRRUS LOGIC, INC. 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. 27, Jun. 28, Sep.
28, Sep. 27, Sep. 28, 2014 2014
2013 2014 2013 Net Income Reconciliation
Q2'15 Q1'15 Q2'14 Q2'15 Q2'14
GAAP Net Income $ 852 $ 10,248
$ 33,367 $ 11,100 $
54,009 Amortization of acquisition intangibles 2,524 246 -
2,770 - Stock based compensation expense 6,496 5,622 5,739 12,118
11,513 Provision for litigation expenses and settlements - - - -
695 Restructuring and other costs, net 1,455 - (154 ) 1,455 (584 )
Wolfson acquisition items 30,875 2,304 - 33,179 - Provision for
income taxes 1,764 5,226 16,378
6,990 26,539
Non-GAAP Net
Income $ 43,966 $ 23,646
$ 55,330 $ 67,612
$ 92,172 Earnings Per Share
Reconciliation
GAAP Diluted earnings per share $
0.01 $ 0.16 $ 0.50 $
0.17 $ 0.82 Effect of Amortization of
acquisition intangibles 0.04 - - 0.04 - Effect of Stock based
compensation expense 0.10 0.09 0.09 0.19 0.17 Effect of Provision
for litigation expenses and settlements - - - - 0.01 Effect of
Restructuring and other costs, net 0.03 - - 0.02 (0.01 ) Effect of
Wolfson acquisition items 0.47 0.04 - 0.51 - Effect of Provision
for income taxes 0.03 0.08 0.25 0.11 0.40
Non-GAAP Diluted earnings per share $
0.68 $ 0.37 $ 0.84
$ 1.04 $ 1.39
Operating Income Reconciliation
GAAP Operating Income
$ 18,073 $ 15,915 $
50,665 $ 33,988 $ 82,170 GAAP
Operating Profit 9 % 10 % 27 % 9 % 24 % Amortization of acquisition
intangibles 2,524 246 - 2,770 - Stock compensation expense - COGS
253 231 239 484 245 Stock compensation expense - R&D 2,781
2,543 2,158 5,324 5,012 Stock compensation expense - SG&A 3,462
2,848 3,342 6,310 6,256 Provision for litigation expenses and
settlements - - - - 695 Restructuring and other costs, net 1,455 -
(154 ) 1,455 (584 ) Wolfson acquisition items 16,547
2,192 - 18,739 -
Non-GAAP Operating Income $ 45,095
$ 23,975 $ 56,250
$ 69,070 $ 93,794
Non-GAAP Operating Profit 21 % 16 % 30 % 19 % 27 % Operating
Expense Reconciliation
GAAP Operating Expenses $
82,494 $ 59,460 $ 48,783
$ 141,954 $ 96,776 Amortization of
acquisition intangibles (2,524 ) (246 ) - (2,770 ) - Stock
compensation expense - R&D (2,781 ) (2,543 ) (2,158 ) (5,324 )
(5,012 ) Stock compensation expense - SG&A (3,462 ) (2,848 )
(3,342 ) (6,310 ) (6,256 ) Provision for litigation expenses and
settlements - - - - (695 ) Restructuring and other costs, net
(1,455 ) - 154 (1,455 ) 584 Wolfson acquisition items
(14,937 ) (2,192 ) - (17,129 ) -
Non-GAAP Operating Expenses $ 57,335
$ 51,631 $ 43,437
$ 108,966 $ 85,397
Gross Margin/Profit Reconciliation
GAAP Gross Margin
$ 100,567 $ 75,375 $
99,448 $ 175,942 $ 178,946 GAAP
Gross Profit 47.8 % 49.4 % 52.2 % 48.5 % 51.7 % Wolfson acquisition
items 1,610 - - 1,610 - Stock compensation expense - COGS
253 231 239 484
245
Non-GAAP Gross Margin $
102,430 $ 75,606 $
99,687 $ 178,036 $
179,191 Non-GAAP Gross Profit 48.7 % 49.6 % 52.3 %
49.1 % 51.8 %
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET (in thousands)
Sep. 27, Mar. 29, Sep. 28, 2014
2014 2013 (unaudited) (unaudited) ASSETS Current
assets Cash and cash equivalents $ 48,214 $ 31,850 $ 68,886
Marketable securities 85,796 263,417 199,423 Accounts receivable,
net 126,161 63,220 97,640 Inventories 121,169 69,743 91,247
Deferred tax assets 16,435 22,024 38,398 Other current assets
29,089 25,079 23,978
Total current assets 426,864 475,333 519,572 Long-term
marketable securities 9,228 89,243 40,254 Property and equipment,
net 133,458 103,650 101,885 Intangibles, net 187,030 11,999 4,734
Goodwill 265,410 16,367 6,027 Deferred tax assets 24,998 25,065
16,638 Other assets 17,658 3,087
10,051 Total assets $ 1,064,646 $ 724,744 $
699,161 LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Accounts payable $ 81,549 $ 51,932 $ 56,868 Accrued
salaries and benefits 17,706 13,388 16,894 Other accrued
liabilities 34,946 11,572 6,313 Deferred income 5,218
5,631 4,858 Total current liabilities
139,419 82,523 84,933 Other long-term liabilities 25,376
4,863 11,231 Long-term debt 226,439 - - Stockholders'
equity: Capital stock 1,104,379 1,078,878 1,055,256 Accumulated
deficit (430,144 ) (440,634 ) (451,532 ) Accumulated other
comprehensive loss (823 ) (886 ) (727 ) Total
stockholders' equity 673,412 637,358
602,997 Total liabilities and stockholders' equity $
1,064,646 $ 724,744 $ 699,161 Prepared
in accordance with Generally Accepted Accounting Principles
Cirrus Logic, Inc.Investor Contact:Thurman K. Case,
512-851-4125Chief Financial
OfficerInvestor.Relations@cirrus.com
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