Q3 FY18 Sales Expected to be Driven by Strong
Demand for Portable Audio Products
Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high performance,
low-power ICs for audio and voice signal processing applications,
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 2018, which ended Sep.
23, 2017, as well as the company’s current business outlook.
“Cirrus Logic delivered outstanding revenue, operating profit
and earnings per share in the September quarter,” said Jason Rhode,
president and chief executive officer. “Q2 was a great quarter; in
addition to shipping production volumes in a variety of recently
launched smartphones and digital headsets we also made progress on
longer term initiatives, including demonstrating and sampling many
of our new innovative products with target customers. With a robust
portfolio of products that enable a wide range of innovative audio
and voice features, we are excited about our opportunities to drive
growth in the coming years.”
Reported Financial Results – Second Quarter FY18
- Revenue of $425.5 million;
- GAAP and non-GAAP gross margin of 49.7
percent;
- GAAP operating expenses of $120.4
million and non-GAAP operating expenses of $96.8 million; and
- GAAP diluted earnings per share of
$1.10 and non-GAAP diluted earnings per share of $1.36.
A reconciliation of the non-GAAP charges is included in the
tables accompanying this press release.
Business Outlook – Third Quarter FY18
- Revenue is expected to range between
$510 million and $550 million;
- GAAP gross margin is expected to be
between 48 percent and 50 percent; and
- Combined GAAP R&D and SG&A
expenses are expected to range between $131 million and $137
million, which includes approximately $13 million in share-based
compensation and $12 million in amortization of acquired
intangibles.
- Guidance includes an additional week as
approximately every 6 years our financial results are comprised of
53 weeks versus the typical 52 weeks.
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 (416) 621-4642, or
toll-free at (800) 585-8367 (Access Code: 94754983).
Cirrus Logic, Inc.
Cirrus Logic is a leader in high performance,
low-power ICs for audio and voice signal processing applications.
Cirrus Logic’s products span the entire audio signal
chain, from capture to playback, providing
innovative products for the world’s top smartphones,
tablets, digital headsets, wearables and emerging smart home
applications. With headquarters in Austin, Texas, Cirrus Logic
is recognized globally for its award-winning corporate
culture. Check us out 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 non-GAAP net income, diluted earnings per share,
operating income, operating expenses, gross margin, tax expense and
tax expense impact on 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 statements about our opportunities to drive growth in
the coming years along with estimates of third quarter fiscal year
2018 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 2018,
customer cancellations of orders, or the failure to place orders
consistent with forecasts, along with the timing and success of new
product ramps; and the risk factors listed in our Form 10-K for the
year ended March 25, 2017 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:
CONSOLIDATED CONDENSED
STATEMENT OF OPERATIONS (unaudited) (in thousands,
except per share data)
Three Months Ended Six Months Ended
Sep. 23, Jun. 24, Sep. 24, Sep. 23,
Sep. 24, 2017 2017 2016 2017
2016 Q2'18 Q1'18 Q2'17 Q2'18
Q2'17 Portable audio products $ 381,761 $ 280,688 $ 383,410
$ 662,449 $ 599,478 Non-portable audio and other products
43,776 40,047 45,209
83,823 88,569
Net sales
425,537 320,735
428,619 746,272
688,047 Cost of sales 214,255
159,019 216,920 373,274
349,663
Gross margin 49.7 % 50.4
% 49.4 % 50.0 % 49.2
% Research and development 90,353 83,557 75,673
173,910 149,607 Selling, general and administrative 30,041
30,859 32,089 60,900
62,629 Total operating expenses 120,394
114,416 107,762 234,810
212,236
Income from operations
90,888 47,300 103,937 138,188
126,148 Interest income (expense), net 725 594 (1,003
) 1,319 (1,692 ) Other income (expense), net (1,116 )
(19 ) (261 ) (1,135 ) (114 )
Income before
income taxes 90,497 47,875 102,673
138,372 124,342 Provision for income taxes*
17,197 4,963 16,634
22,160 20,232
Net income* $
73,300 $ 42,912 $
86,039 $ 116,212 $
104,110 Basic earnings per share*: $ 1.16 $
0.67 $ 1.37 $ 1.82 $ 1.66 Diluted earnings per share*: $ 1.10 $
0.64 $ 1.30 $ 1.74 $ 1.58 Weighted average number of shares:
Basic 63,431 64,097 62,787 63,764 62,618 Diluted* 66,360 67,160
66,410 66,761 66,101 *Q2 FY17 results have been updated to reflect
Cirrus Logic’s adoption of the Accounting Standards Update (ASU)
2016-09, Compensation - Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting. The
adoption of this guidance impacted our previously reported
quarterly results. 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. 23, Jun. 24, Sep.
24, Sep. 23, Sep. 24, 2017 2017
2016 2017 2016 Net Income Reconciliation
Q2'18 Q1'18 Q2'17 Q2'18 Q2'17
GAAP Net Income* $ 73,300 $
42,912 $ 86,039 $ 116,212
$ 104,110 Amortization of acquisition intangibles
11,600 11,600 8,326 23,200 16,689 Stock based compensation expense
12,292 11,403 9,925 23,695 19,235 Acquisition-related items -
(4,048 ) (3,566 ) (4,048 ) (3,566 ) Adjustment to income taxes
(7,260 ) (7,257 ) (12,251 ) (14,517 )
(19,097 )
Non-GAAP Net Income* $ 89,932
$ 54,610 $ 88,473
$ 144,542 $ 117,371
Earnings Per Share Reconciliation
GAAP Diluted earnings
per share* $ 1.10 $ 0.64 $
1.30 $ 1.74 $ 1.58 Effect of
Amortization of acquisition intangibles 0.18 0.17 0.12 0.35 0.25
Effect of Stock based compensation expense 0.19 0.17 0.15 0.36 0.29
Effect of Acquisition-related items - (0.06 ) (0.05 ) (0.06 ) (0.05
) Effect of Adjustment to income taxes (0.11 ) (0.11
) (0.19 ) (0.22 ) (0.29 )
Non-GAAP Diluted
earnings per share* $ 1.36 $
0.81 $ 1.33 $ 2.17
$ 1.78 Operating Income
Reconciliation
GAAP Operating Income $ 90,888
$ 47,300 $ 103,937 $
138,188 $ 126,148 GAAP Operating Profit 21 %
15 % 24 % 19 % 18 % Amortization of acquisition intangibles 11,600
11,600 8,326 23,200 16,689 Stock compensation expense - COGS 328
338 235 666 465 Stock compensation expense - R&D 6,034 6,260
4,905 12,294 10,121 Stock compensation expense - SG&A 5,930
4,805 4,785 10,735 8,649 Acquisition-related items -
(4,048 ) (3,566 ) (4,048 ) (3,566 )
Non-GAAP Operating Income $ 114,780
$ 66,255 $ 118,622
$ 181,035 $ 158,506
Non-GAAP Operating Profit 27 % 21 % 28 % 24 % 23 % Operating
Expense Reconciliation
GAAP Operating Expenses $
120,394 $ 114,416 $ 107,762
$ 234,810 $ 212,236 Amortization of
acquisition intangibles (11,600 ) (11,600 ) (8,326 ) (23,200 )
(16,689 ) Stock compensation expense - R&D (6,034 ) (6,260 )
(4,905 ) (12,294 ) (10,121 ) Stock compensation expense - SG&A
(5,930 ) (4,805 ) (4,785 ) (10,735 ) (8,649 ) Acquisition-related
items - 4,048 3,566
4,048 3,566
Non-GAAP Operating
Expenses $ 96,830 $ 95,799
$ 93,312 $ 192,629
$ 180,343 Gross Margin/Profit
Reconciliation
GAAP Gross Profit $ 211,282
$ 161,716 $ 211,699 $
372,998 $ 338,384 GAAP Gross Margin 49.7 %
50.4 % 49.4 % 50.0 % 49.2 % Stock compensation expense - COGS
328 338 235 666
465
Non-GAAP Gross Profit $
211,610 $ 162,054 $
211,934 $ 373,664 $
338,849 Non-GAAP Gross Margin 49.7 % 50.5 % 49.4 %
50.1 % 49.2 % Effective Tax Rate Reconciliation
GAAP Tax
Expense* $ 17,197 $ 4,963 $
16,634 $ 22,160 $ 20,232 GAAP
Effective Tax Rate 19.0 % 10.4 % 16.2 % 16.0 % 16.3 % Adjustments
to income taxes 7,260 7,257
12,251 14,517 19,097
Non-GAAP
Tax Expense $ 24,457 $
12,220 $ 28,885 $
36,677 $ 39,329 Non-GAAP
Effective Tax Rate 21.4 % 18.3 % 24.6 % 20.2 % 25.1 % Tax
Impact to EPS Reconciliation
GAAP Tax Expense* $
0.26 $ 0.07 $ 0.25 $
0.33 $ 0.31 Adjustments to income taxes
0.11 0.11 0.19 0.22
0.29
Non-GAAP Tax Expense $
0.37 $ 0.18 $ 0.44
$ 0.55 $ 0.60 *Q2
FY17 results have been updated to reflect Cirrus Logic’s adoption
of the Accounting Standards Update (ASU) 2016-09, Compensation -
Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting. The adoption of this guidance
impacted our previously reported quarterly results.
CONSOLIDATED CONDENSED
BALANCE SHEET in thousands Sep. 23,
Mar. 25, Sep. 24, 2017 2017 2016
ASSETS (unaudited) (unaudited) Current assets Cash and cash
equivalents $ 180,198 $ 351,166 $ 113,264 Marketable securities
15,446 99,813 116,087 Accounts receivable, net 232,380 119,974
269,559 Inventories 210,791 167,895 161,254 Other current assets
31,185 37,080 35,788
Total current Assets 670,000 775,928 695,952 Long-term
marketable securities 133,547 - 2,004 Property and equipment, net
177,523 168,139 164,029 Intangibles, net 131,235 135,188 150,108
Goodwill 289,248 286,767 287,518 Deferred tax asset* 30,511 32,841
38,114 Other assets 23,703 14,607
17,914 Total assets $ 1,455,767 $ 1,413,470
$ 1,355,639 LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities Accounts payable $ 131,125 $ 73,811 $
130,458 Accrued salaries and benefits 35,651 40,190 30,257 Other
accrued liabilities 24,414 30,074
29,394 Total current liabilities 191,190 144,075
190,109 Long-term debt - 60,000 140,000 Other long-term
liabilities* 64,661 57,703 45,301 Stockholders' equity:
Capital stock* 1,288,669 1,259,279 1,231,743 Accumulated deficit*
(92,180 ) (107,014 ) (252,057 ) Accumulated other comprehensive
income (loss) 3,427 (573 ) 543
Total stockholders' equity 1,199,916 1,151,692
980,229 Total liabilities and stockholders'
equity $ 1,455,767 $ 1,413,470 $ 1,355,639 *Q2
FY17 results have been updated to reflect Cirrus Logic’s adoption
of the Accounting Standards Update (ASU) 2016-09, Compensation -
Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting. The adoption of this guidance
impacted our previously reported quarterly results. Prepared
in accordance with Generally Accepted Accounting Principles
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171102005121/en/
Cirrus Logic, Inc.Thurman K. Case, 512-851-4125Chief Financial
OfficerInvestor.Relations@cirrus.com
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