Company Announces a $200 Million Share
Repurchase Program
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 third quarter fiscal year 2018, which ended Dec.
30, 2017, as well as the company’s current business outlook.
“Unanticipated weakness in smartphone demand that materialized
in late December drove our Q3 results below expectations and
further impacted our Q4 guidance,” said Jason Rhode, president and
chief executive officer. “Despite these near-term challenges, our
design position remains strong at our top customers and our wide
range of new and existing products are expected to drive exciting
opportunities in audio and voice applications across the
smartphone, digital headset and smart home markets over the next
several years.”
Reported Financial Results – Third Quarter FY18
- Revenue of $482.7 million;
- GAAP and non-GAAP gross margin of 48.7
percent and 48.8 percent, respectively;
- GAAP operating expenses of $131.6
million and non-GAAP operating expenses of $107.9 million; and
- GAAP diluted earnings per share of
$0.52 and non-GAAP diluted earnings per share of $1.59.
- Results include an additional week as
approximately every 6 years our financial results are comprised of
53 weeks versus the typical 52 weeks.
A reconciliation of the non-GAAP charges is included in the
tables accompanying this press release.
Business Outlook – Fourth Quarter FY18
- Revenue is expected to range between
$300 million and $340 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 $130 million and $136
million, which includes approximately $13 million in share-based
compensation and $13 million in amortization of acquired
intangibles.
Share Repurchase Authorization
The company also announced that its Board of Directors
authorized the repurchase of up to an additional $200 million of
the company's common stock, in addition to the $60.2 million
remaining from the Board’s previous share repurchase authorization
in October 2015. 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 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. 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: 3179607).
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.
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.
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 future opportunities and
estimates for the fourth 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 fourth 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.
Summary financial data follows:
CONSOLIDATED
CONDENSED STATEMENT OF OPERATIONS (unaudited) (in
thousands, except per share data) Three Months
Ended Nine Months Ended Dec. 30, Sep. 23,
Dec. 24, Dec. 30, Dec. 24, 2017
2017 2016 2017 2016 Q3'18
Q2'18 Q3'17 Q3'18 Q3'17 Portable audio
products $ 438,650 $ 381,761 $ 483,712 $ 1,101,099 $ 1,083,190
Non-portable audio and other products 44,091
43,776 39,317 127,914
127,886
Net sales 482,741
425,537 523,029
1,229,013 1,211,076 Cost of
sales 247,653 214,255 267,877
620,927 617,540
Gross
profit 235,088 211,282 255,152
608,086 593,536 Gross margin 48.7
% 49.7 % 48.8 % 49.5
% 49.0 % Research and development
96,978 90,353 76,079 270,888 225,686 Selling, general and
administrative 34,604 30,041
32,884 95,504 95,513 Total
operating expenses 131,582 120,394
108,963 366,392 321,199
Income from operations 103,506 90,888
146,189 241,694 272,337 Interest income
(expense), net 912 725 (350 ) 2,231 (2,042 ) Other income
(expense), net 322 (1,116 ) (47 )
(813 ) (161 )
Income before income taxes
104,740 90,497 145,792 243,112
270,134 Provision for income taxes 70,961
17,197 23,751 93,121
43,983
Net income $ 33,779
$ 73,300 $ 122,041
$ 149,991 $ 226,151
Basic earnings per share: $ 0.53 $ 1.16 $ 1.91 $ 2.36 $ 3.59
Diluted earnings per share: $ 0.52 $ 1.10 $ 1.83 $ 2.26 $ 3.41
Weighted average number of shares: Basic 63,453 63,431
63,837 63,655 63,025 Diluted 65,557 66,360 66,748 66,377 66,378
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. 30, Sep. 23, Dec.
24, Dec. 30, Dec. 24, 2017 2017
2016 2017 2016 Net Income Reconciliation
Q3'18 Q2'18 Q3'17 Q3'18 Q3'17
GAAP Net Income $ 33,779 $
73,300 $ 122,041 $ 149,991
$ 226,151 Amortization of acquisition intangibles
11,600 11,600 8,308 34,800 24,997 Stock based compensation expense
12,512 12,292 9,471 36,207 28,706 Acquisition-related items - - -
(4,048 ) (3,566 ) Adjustment to income taxes 46,273
(7,260 ) (15,094 ) 31,756
(34,191 )
Non-GAAP Net Income $ 104,164
$ 89,932 $ 124,726
$ 248,706 $ 242,097
Earnings Per Share Reconciliation
GAAP Diluted earnings
per share $ 0.52 $ 1.10 $
1.83 $ 2.26 $ 3.41 Effect of
Amortization of acquisition intangibles 0.18 0.18 0.13 0.52 0.38
Effect of Stock based compensation expense 0.19 0.19 0.14 0.55 0.43
Effect of Acquisition-related items - - - (0.06 ) (0.05 ) Effect of
Adjustment to income taxes 0.70 (0.11 )
(0.23 ) 0.48 (0.52 )
Non-GAAP Diluted
earnings per share $ 1.59 $
1.36 $ 1.87 $ 3.75
$ 3.65 Operating Income
Reconciliation
GAAP Operating Income $ 103,506
$ 90,888 $ 146,189 $
241,694 $ 272,337 GAAP Operating Profit 21 %
21 % 28 % 20 % 22 % Amortization of acquisition intangibles 11,600
11,600 8,308 34,800 24,997 Stock compensation expense - COGS 386
328 282 1,052 747 Stock compensation expense - R&D 6,995 6,034
5,078 19,289 15,199 Stock compensation expense - SG&A 5,131
5,930 4,111 15,866 12,760 Acquisition-related items -
- - (4,048 ) (3,566 )
Non-GAAP Operating Income $ 127,618
$ 114,780 $ 163,968
$ 308,653 $ 322,474
Non-GAAP Operating Profit 26 % 27 % 31 % 25 % 27 % Operating
Expense Reconciliation
GAAP Operating Expenses $
131,582 $ 120,394 $ 108,963
$ 366,392 $ 321,199 Amortization of
acquisition intangibles (11,600 ) (11,600 ) (8,308 ) (34,800 )
(24,997 ) Stock compensation expense - R&D (6,995 ) (6,034 )
(5,078 ) (19,289 ) (15,199 ) Stock compensation expense - SG&A
(5,131 ) (5,930 ) (4,111 ) (15,866 ) (12,760 ) Acquisition-related
items - - - 4,048
3,566
Non-GAAP Operating Expenses
$ 107,856 $ 96,830
$ 91,466 $ 300,485
$ 271,809 Gross Margin/Profit
Reconciliation
GAAP Gross Profit $ 235,088
$ 211,282 $ 255,152 $
608,086 $ 593,536 GAAP Gross Margin 48.7 %
49.7 % 48.8 % 49.5 % 49.0 % Stock compensation expense - COGS
386 328 282 1,052
747
Non-GAAP Gross Profit $
235,474 $ 211,610 $
255,434 $ 609,138 $
594,283 Non-GAAP Gross Margin 48.8 % 49.7 % 48.8 %
49.6 % 49.1 % Effective Tax Rate Reconciliation
GAAP Tax
Expense $ 70,961 $ 17,197 $
23,751 $ 93,121 $ 43,983 GAAP
Effective Tax Rate 67.7 % 19.0 % 16.3 % 38.3 % 16.3 % Adjustments
to income taxes (46,273 ) 7,260 15,094
(31,756 ) 34,191
Non-GAAP Tax
Expense $ 24,688 $ 24,457
$ 38,845 $ 61,365
$ 78,174 Non-GAAP Effective Tax Rate 19.2 %
21.4 % 23.7 % 19.8 % 24.4 % Tax Impact to EPS Reconciliation
GAAP Tax Expense $ 1.08 $ 0.26
$ 0.36 $ 1.40 $ 0.66
Adjustments to income taxes (0.71 ) 0.11
0.23 (0.48 ) 0.52
Non-GAAP
Tax Expense $ 0.37 $ 0.37
$ 0.59 $ 0.92
$ 1.18 Free Cash Flow Reconciliation
GAAP Cash Flow from Operations $ 132,314
$ 84,525 $ 208,046 $
213,023 $ 244,893 Capital Expenditures
(14,296 ) (16,079 ) (11,438 ) (41,663 )
(35,300 )
Non-GAAP Free Cash Flow $ 118,018
$ 68,446 $ 196,608
$ 171,360 $ 209,593
CONSOLIDATED CONDENSED BALANCE SHEET unaudited; in
thousands Dec. 30, Mar.
25, Dec. 24, 2017 2017 2016 ASSETS
Current assets Cash and cash equivalents $ 226,640 $ 351,166 $
310,375 Marketable securities 12,822 99,813 72,342 Accounts
receivable, net 217,619 119,974 246,630 Inventories 192,967 167,895
154,128 Other current assets 29,445 37,080
41,747 Total current Assets 679,493 775,928
825,222 Long-term marketable securities 173,717 - - Property
and equipment, net 187,143 168,139 167,933 Intangibles, net 126,183
135,188 144,005 Goodwill 288,481 286,767 287,518 Deferred tax asset
16,467 32,841 34,737 Other assets 21,841
14,607 13,990
Total assets
$ 1,493,325 $ 1,413,470 $ 1,473,405
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts
payable $ 116,274 $ 73,811 $ 154,930 Accrued salaries and benefits
29,543 40,190 33,122 Other accrued liabilities 29,903
30,074 24,687 Total current liabilities
175,720 144,075 212,739 Long-term debt - 60,000 100,000
Other long-term liabilities 106,239 57,703 56,631
Stockholders' equity: Capital stock 1,301,800 1,259,279 1,247,191
Accumulated deficit (92,402 ) (107,014 ) (141,027 ) Accumulated
other comprehensive income (loss) 1,968 (573 )
(2,129 ) Total stockholders' equity 1,211,366
1,151,692 1,104,035 Total liabilities
and stockholders' equity $ 1,493,325 $ 1,413,470 $
1,473,405 Prepared in accordance with Generally
Accepted Accounting Principles
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version on businesswire.com: http://www.businesswire.com/news/home/20180205005915/en/
Cirrus Logic, Inc.Thurman K. Case, 512-851-4125Chief Financial
OfficerInvestor.Relations@cirrus.com
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