CRUS Cirrus Logic Inc

Company Announces $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 2019, which ended Dec. 29, 2018, as well as the company’s current business outlook.

“Cirrus Logic reported revenue for the third quarter in line with our revised expectations as we experienced the effects of the turbulent macroeconomic environment and reduced demand for smartphones,” said Jason Rhode, president and chief executive officer. “Despite these challenges, we are encouraged to see continued broad-based interest for low-latency, low-power signal processing across a wide range of product categories. We are making considerable investments in technologies addressing audio, voice and other adjacent applications that we believe will fuel growth opportunities in the coming years.”

Reported Financial Results – Third Quarter FY19

• Revenue of $324.3 million;
• GAAP and non-GAAP gross margin of 50.3 percent and 50.4 percent, respectively;
• GAAP operating expenses of $118.9 million and non-GAAP operating expenses of $100.3 million; and
• GAAP earnings per share of $0.49 and non-GAAP earnings per share of $0.91.

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

Business Outlook – Fourth Quarter FY19

• Revenue is expected to range between $200 million and $240 million;
• GAAP gross margin is expected to be between 49 percent and 51 percent; and
• Combined GAAP R&D and SG&A expenses are expected to range between $119 million and $125 million, which includes approximately $12 million in share-based compensation and $7 million in amortization of acquired intangibles.

Share Repurchase Authorization

The company also announced that its Board of Directors recently authorized the repurchase of up to an additional $200 million of the company's common stock, in addition to the $50 million remaining from the Board’s previous share repurchase authorization in January 2018. 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: 9569708).

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 and profit, operating expenses, gross margin and profit, 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 growth opportunities, along with estimates for the fourth quarter fiscal year 2019 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 2019, 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 31, 2018 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.

    CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (unaudited) (in thousands, except per share data)                       Three Months Ended Nine Months Ended   Dec. 29, Sep. 29, Dec. 30, Dec. 29, Dec. 30, 2018 2018 2017 2018 2017 Q3'19 Q2'19 Q3'18 Q3'19 Q3'18 Portable audio products $ 288,640 $ 324,049 $ 438,650 $ 824,950 $ 1,101,099 Non-portable audio and other products   35,655     42,256     44,091     120,133     127,914   Net sales   324,295     366,305     482,741     945,083     1,229,013   Cost of sales   161,115     181,186     247,653     472,225     620,927   Gross profit 163,180 185,119 235,088 472,858 608,086 Gross margin 50.3 % 50.5 % 48.7 % 50.0 % 49.5 %   Research and development 88,575 96,381 96,978 282,888 270,888 Selling, general and administrative   30,364     33,160     34,604     96,308     95,504   Total operating expenses   118,939     129,541     131,582     379,196     366,392     Income from operations 44,241 55,578 103,506 93,662 241,694   Interest income (expense), net 1,740 1,525 912 4,712 2,231 U.K. pension settlement (13,768 ) - - (13,768 ) - Other income (expense), net   101     (378 )   322     (67 )   (813 ) Income before income taxes 32,314 56,725 104,740 84,539 243,112 Provision (benefit) for income taxes   2,381     (1,448 )   70,961     705     93,121   Net income $ 29,933   $ 58,173   $ 33,779   $ 83,834   $ 149,991     Basic earnings per share: $ 0.50 $ 0.96 $ 0.53 $ 1.39 $ 2.36 Diluted earnings per share: $ 0.49 $ 0.93 $ 0.52 $ 1.35 $ 2.26   Weighted average number of shares: Basic 59,511 60,472 63,453 60,482 63,655 Diluted 60,783 62,431 65,557 62,076 66,377   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. 29, Sep. 29, Dec. 30, Dec. 29, Dec. 30, 2018 2018 2017 2018 2017 Net Income Reconciliation Q3'19 Q2'19 Q3'18 Q3'19 Q3'18 GAAP Net Income $ 29,933 $ 58,173 $ 33,779 $ 83,834 $ 149,991 Amortization of acquisition intangibles 7,630 12,867 11,600 33,763 34,800 Stock based compensation expense 11,181 13,131 12,512 37,106 36,207 U.K. pension settlement 13,768 - - 13,768 - Acquisition-related items - - - - (4,048 ) Adjustment to income taxes   (7,003 )   (17,054 )   46,273     (27,983 )   31,756   Non-GAAP Net Income $ 55,509   $ 67,117   $ 104,164   $ 140,488   $ 248,706     Earnings Per Share Reconciliation GAAP Diluted earnings per share $ 0.49 $ 0.93 $ 0.52 $ 1.35 $ 2.26 Effect of Amortization of acquisition intangibles 0.13 0.21 0.18 0.54 0.52 Effect of Stock based compensation expense 0.18 0.21 0.19 0.60 0.55 Effect of U.K. pension settlement 0.23 - - 0.22 - Effect of Acquisition-related items - - - - (0.06 ) Effect of Adjustment to income taxes   (0.12 )   (0.27 )   0.70     (0.45 )   0.48   Non-GAAP Diluted earnings per share $ 0.91   $ 1.08   $ 1.59   $ 2.26   $ 3.75     Operating Income Reconciliation GAAP Operating Income $ 44,241 $ 55,578 $ 103,506 $ 93,662 $ 241,694 GAAP Operating Profit 14 % 15 % 21 % 10 % 20 % Amortization of acquisition intangibles 7,630 12,867 11,600 33,763 34,800 Stock compensation expense - COGS 220 170 386 589 1,052 Stock compensation expense - R&D 6,761 6,834 6,995 20,845 19,289 Stock compensation expense - SG&A 4,200 6,127 5,131 15,672 15,866 Acquisition-related items   -     -     -     -     (4,048 ) Non-GAAP Operating Income $ 63,052   $ 81,576   $ 127,618   $ 164,531   $ 308,653   Non-GAAP Operating Profit 19 % 22 % 26 % 17 % 25 %   Operating Expense Reconciliation GAAP Operating Expenses $ 118,939 $ 129,541 $ 131,582 $ 379,196 $ 366,392 Amortization of acquisition intangibles (7,630 ) (12,867 ) (11,600 ) (33,763 ) (34,800 ) Stock compensation expense - R&D (6,761 ) (6,834 ) (6,995 ) (20,845 ) (19,289 ) Stock compensation expense - SG&A (4,200 ) (6,127 ) (5,131 ) (15,672 ) (15,866 ) Acquisition-related items   -     -     -     -     4,048   Non-GAAP Operating Expenses $ 100,348   $ 103,713   $ 107,856   $ 308,916   $ 300,485     Gross Margin/Profit Reconciliation GAAP Gross Profit $ 163,180 $ 185,119 $ 235,088 $ 472,858 $ 608,086 GAAP Gross Margin 50.3 % 50.5 % 48.7 % 50.0 % 49.5 % Stock compensation expense - COGS   220     170     386     589     1,052   Non-GAAP Gross Profit $ 163,400   $ 185,289   $ 235,474   $ 473,447   $ 609,138   Non-GAAP Gross Margin 50.4 % 50.6 % 48.8 % 50.1 % 49.6 %   Effective Tax Rate Reconciliation GAAP Tax Expense (Benefit) $ 2,381 $ (1,448 ) $ 70,961 $ 705 $ 93,121 GAAP Effective Tax Rate 7.4 % -2.6 % 67.7 % 0.8 % 38.3 % Adjustments to income taxes   7,003     17,054     (46,273 )   27,983     (31,756 ) Non-GAAP Tax Expense $ 9,384   $ 15,606   $ 24,688   $ 28,688   $ 61,365   Non-GAAP Effective Tax Rate 14.5 % 18.9 % 19.2 % 17.0 % 19.8 %   Tax Impact to EPS Reconciliation GAAP Tax Expense (Benefit) $ 0.04 $ (0.02 ) $ 1.08 $ 0.01 $ 1.40 Adjustments to income taxes   0.12     0.27     (0.70 )   0.45     (0.48 ) Non-GAAP Tax Expense $ 0.16   $ 0.25   $ 0.38   $ 0.46   $ 0.92       CIRRUS LOGIC, INC. CONSOLIDATED CONDENSED BALANCE SHEET unaudited; in thousands             Dec. 29, Mar. 31, Dec. 30, 2018 2018 2017 ASSETS Current assets Cash and cash equivalents $ 219,319 $ 235,604 $ 226,640 Marketable securities 59,793 26,397 12,822 Accounts receivable, net 142,135 100,801 217,619 Inventories 167,879 205,760 192,967 Other current assets   51,151     45,112     29,445   Total current Assets 640,277 613,674 679,493   Long-term marketable securities 165,063 172,499 173,717 Property and equipment, net 191,324 191,154 187,143 Intangibles, net 76,389 111,547 126,183 Goodwill 286,678 288,718 288,481 Deferred tax asset 13,131 14,716 16,467 Other assets   24,003     37,809     21,841   Total assets $ 1,396,865   $ 1,430,117   $ 1,493,325     LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 108,022 $ 69,850 $ 116,274 Accrued salaries and benefits 23,566 35,721 29,543 Other accrued liabilities   38,175     34,638     29,903   Total current liabilities 169,763 140,209 175,720   Non-current income taxes 78,532 92,753 54,652 Other long-term liabilities 18,769 35,427 51,587   Stockholders' equity: Capital stock 1,349,941 1,312,434 1,301,800 Accumulated deficit (217,871 ) (139,345 ) (92,402 ) Accumulated other comprehensive income (loss)   (2,269 )   (11,361 )   1,968   Total stockholders' equity   1,129,801     1,161,728     1,211,366   Total liabilities and stockholders' equity $ 1,396,865   $ 1,430,117   $ 1,493,325     Prepared in accordance with Generally Accepted Accounting Principles

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Thurman K. CaseChief Financial OfficerCirrus Logic, Inc.(512) 851-4125Investor.Relations@cirrus.com