Company Expects Significant Year Over Year
Growth in Q3 and Announces Additional $200 Million Share Repurchase
Authorization
Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-precision
analog and digital signal processing products, 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 2016, which ended Sept.
26, 2015, as well as the company’s current business outlook.
“We are pleased with our results for the September quarter as
strong demand for our smart codecs and amplifiers fueled sequential
and year-over-year growth,” said Jason Rhode, president and chief
executive officer. “FY16 has been a great year for Cirrus Logic as
share gains and content increases have driven strong growth. We are
excited by the progress we made this past quarter toward the
strategic initiatives that are expected to drive continued growth
in FY17.”
Reported Financial Results – Second Quarter FY16
- Revenue of $306.8 million;
- GAAP gross margin of 46.4 percent and
non-GAAP gross margin of 46.5 percent;
- GAAP operating expenses of $98.1
million; non-GAAP operating expenses of $80.9 million; and
- GAAP diluted earnings per share of
$0.53 and non-GAAP diluted earnings per share of $0.65.
A reconciliation of the non-GAAP charges is included in the
tables accompanying this press release.
Business Outlook – Third Quarter FY16
- Revenue is expected to range between
$370 million and $400 million;
- GAAP gross margin is expected to be
between 46 percent and 48 percent; and
- Combined GAAP R&D and SG&A
expenses are expected to range between $100 million and $104
million, which includes approximately $8 million in share-based
compensation and $8 million in amortization of acquired
intangibles.
Share Repurchase Authorization
The company also announced that its Board of Directors has
authorized the repurchase of up to an additional $200 million of
the company's common stock, in addition to the $32.5 million
remaining from the Board’s previous share repurchase authorization
in November 2012. The repurchases will be funded from working
capital and anticipated cash from operations and may occur from
time to time depending on a variety of factors, including the
market price of the company's shares, general market and economic
conditions and other corporate considerations. 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 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: 75505782).
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, Australia, 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 income, tax expenses, effective tax rate 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 future growth opportunities and our estimates of third
quarter fiscal year 2016 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 third
quarter of fiscal year 2016, 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 28, 2015, 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 and Cirrus are registered trademarks of Cirrus
Logic, Inc. 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. 26, Jun. 27, Sep. 27, Sep.
26, Sep. 27, 2015 2015 2014
2015 2014 Q2'16 Q1'16 Q2'15
Q2'16 Q2'15 Portable audio products $ 257,152 $
235,866 $ 163,563 $ 493,018 $ 276,133 Non-portable audio and other
products 49,604 46,767 46,651
96,371 86,646
Net sales
306,756 282,633
210,214 589,389
362,779 Cost of sales 164,535
150,179 109,647 314,714
186,837
Gross profit 142,221 132,454
100,567 274,675 175,942 Gross margin
46.4 % 46.9 % 47.8 %
46.6 % 48.5 % Research and
development 67,258 65,835 44,557 133,093 84,334 Selling, general
and administrative 30,103 29,119 21,545 59,222 41,228 Acquisition
related costs - - 14,937 - 14,937 Restructuring and other - - 1,455
- 1,455 Patent agreement and other 752 (12,500
) - (11,748 ) - Total operating
expenses 98,113 82,454 82,494
180,567 141,954
Income
from operations 44,108 50,000 18,073
94,108 33,988 Interest expense, net (601 )
(638 ) (2,670 ) (1,239 ) (3,137 ) Other income (expense), net
(524 ) 136 (11,994 ) (388 )
(11,493 )
Income before income taxes 42,983
49,498 3,409 92,481 19,358 Provision
for income taxes 8,103 16,144
2,557 24,247 8,258
Net
income $ 34,880 $ 33,354
$ 852 $ 68,234
$ 11,100 Basic earnings per share: $
0.55 $ 0.53 $ 0.01 $ 1.08 $ 0.18 Diluted earnings per share: $ 0.53
$ 0.50 $ 0.01 $ 1.03 $ 0.17 Weighted average number of
shares: Basic 63,346 63,274 62,241 63,310 62,137 Diluted 66,329
66,410 65,085 66,378 64,892 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.
Certain modifications to prior year non-GAAP presentation has been
made and had no material effect on the results of operations.
Three Months Ended Six
Months Ended Sep. 26, Jun. 27, Sep.
27, Sep. 26, Sep. 27, 2015 2015
2014 2015 2014 Net Income Reconciliation
Q2'16 Q1'16 Q2'15 Q2'16 Q2'15
GAAP Net Income $ 34,880 $
33,354 $ 852 $ 68,234 $
11,100 Amortization of acquisition intangibles 8,133 7,141
2,524 15,274 2,770 Stock based compensation expense 8,688 8,271
6,496 16,959 12,118 Patent agreement and other 752 (12,500 ) -
(11,748 ) - Restructuring and other costs, net - - 1,455 - 1,455
Wolfson acquisition items - - 30,875 - 33,179 Adjustments to income
tax (9,492 ) (175 ) 1,764 (9,667
) 6,990
Non-GAAP Net Income $
42,961 $ 36,091 $
43,966 $ 79,052 $
67,612 Earnings Per Share Reconciliation
GAAP Diluted earnings per share $ 0.53
$ 0.50 $ 0.01 $ 1.03
$ 0.17 Effect of Amortization of acquisition
intangibles 0.12 0.11 0.04 0.23 0.04 Effect of Stock based
compensation expense 0.13 0.12 0.10 0.26 0.18 Effect of Patent
agreement and other 0.01 (0.19 ) - (0.18 ) - Effect of
Restructuring and other costs, net - - 0.03 - 0.02 Effect of
Wolfson acquisition items - - 0.47 - 0.50 Effect of Adjustments to
income tax (0.14 ) - 0.03
(0.15 ) 0.11
Non-GAAP Diluted earnings per
share $ 0.65 $ 0.54
$ 0.68 $ 1.19 $
1.02 Operating Income Reconciliation
GAAP
Operating Income $ 44,108 $ 50,000
$ 18,073 $ 94,108 $
33,988 GAAP Operating Profit 14 % 18 % 9 % 16 % 9 %
Amortization of acquisition intangibles 8,133 7,141 2,524 15,274
2,770 Stock compensation expense - COGS 380 325 253 705 484 Stock
compensation expense - R&D 4,126 3,868 2,781 7,994 5,324 Stock
compensation expense - SG&A 4,182 4,078 3,462 8,260 6,310
Patent agreement and other 752 (12,500 ) - (11,748 ) -
Restructuring and other costs, net - - 1,455 - 1,455 Wolfson
acquisition items - - 16,547
- 18,739
Non-GAAP Operating
Income $ 61,681 $ 52,912
$ 45,095 $ 114,593
$ 69,070 Non-GAAP Operating Profit 20 % 19 %
21 % 19 % 19 % Operating Expense Reconciliation
GAAP
Operating Expenses $ 98,113 $
82,454 $ 82,494 $ 180,567
$ 141,954 Amortization of acquisition intangibles
(8,133 ) (7,141 ) (2,524 ) (15,274 ) (2,770 ) Stock compensation
expense - R&D (4,126 ) (3,868 ) (2,781 ) (7,994 ) (5,324 )
Stock compensation expense - SG&A (4,182 ) (4,078 ) (3,462 )
(8,260 ) (6,310 ) Patent agreement and other (752 ) 12,500 - 11,748
- Restructuring and other costs, net - - (1,455 ) - (1,455 )
Wolfson acquisition items - -
(14,937 ) - (17,129 )
Non-GAAP Operating
Expenses $ 80,920 $ 79,867
$ 57,335 $ 160,787
$ 108,966 Gross Margin/Profit
Reconciliation
GAAP Gross Margin $ 142,221
$ 132,454 $ 100,567 $
274,675 $ 175,942 GAAP Gross Profit 46.4 %
46.9 % 47.8 % 46.6 % 48.5 % Wolfson acquisition items - - 1,610 -
1,610 Stock compensation expense - COGS 380
325 253 705 484
Non-GAAP Gross Margin $ 142,601
$ 132,779 $ 102,430
$ 275,380 $ 178,036
Non-GAAP Gross Profit 46.5 % 47.0 % 48.7 % 46.7 % 49.1 %
Effective Tax Rate Reconciliation
GAAP Tax Expense $
8,103 $ 16,144 $ 2,557 $
24,247 $ 8,258 GAAP Effective Tax Rate 18.9 %
32.6 % 75.0 % 26.2 % 42.7 % Adjustments to income tax 9,492
175 (1,764 ) 9,667
(6,990 )
Non-GAAP Tax Expense $ 17,595
$ 16,319 $ 793 $
33,914 $ 1,268 Non-GAAP
Effective Tax Rate 29.1 % 31.1 % 1.8 % 30.0 % 1.8 % Tax
Impact to EPS Reconciliation
GAAP Tax Expense $
0.12 $ 0.24 $ 0.04 $
0.37 $ 0.13 Adjustments to income tax
0.14 - (0.03 ) 0.15
(0.11 )
Non-GAAP Tax Expense $ 0.26
$ 0.24 $ 0.01
$ 0.52 $ 0.02
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET (in thousands)
Sep. 26, Mar. 28, Sep. 27, 2015
2015 2014 ASSETS (unaudited) (unaudited) Current
assets Cash and cash equivalents $ 56,333 $ 76,401 $ 48,214
Marketable securities 86,460 124,246 85,796 Accounts receivable,
net 169,423 112,608 126,161 Inventories 143,867 84,196 121,169
Deferred tax asset 8,502 18,559 16,435 Other current assets
51,329 35,903 29,089 Total
current Assets 515,914 451,913 426,864 Long-term marketable
securities 22,393 60,072 9,228 Property and equipment, net 158,529
144,346 133,458 Intangibles, net 179,816 175,743 187,030 Goodwill
289,565 263,115 265,410 Deferred tax asset 25,603 25,593 24,998
Other assets 20,474 27,996
17,658 Total assets $ 1,212,294 $ 1,148,778 $
1,064,646 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Accounts payable $ 111,023 $ 112,213 $ 81,549
Accrued salaries and benefits 29,156 24,132 17,706 Deferred income
5,582 6,105 5,218 Other accrued liabilities 42,181
34,128 34,946 Total current liabilities
187,942 176,578 139,419 Long-term debt 160,439 180,439
226,439 Other long-term liabilities 34,990 34,990 25,376
Stockholders' equity: Capital stock 1,183,262 1,159,494 1,104,379
Accumulated deficit (352,374 ) (400,613 ) (430,144 ) Accumulated
other comprehensive loss (1,965 ) (2,110 )
(823 ) Total stockholders' equity 828,923
756,771 673,412 Total liabilities and
stockholders' equity $ 1,212,294 $ 1,148,778 $
1,064,646 Prepared in accordance with Generally
Accepted Accounting Principles
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version on businesswire.com: http://www.businesswire.com/news/home/20151028006460/en/
Cirrus Logic, Inc.Thurman K. Case, 512-851-4125Chief Financial
OfficerInvestor.Relations@cirrus.com
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