Demand for Smartphone Components Drives Revenue
Above High End of Guidance
Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-performance,
low-power ICs for audio, voice and other 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 2020, which ended Sept. 28, 2019, as well as the
company’s current business outlook.
“Cirrus Logic reported revenue for the September quarter
significantly above the high end of guidance as we experienced
stronger-than-anticipated demand for certain components,” said
Jason Rhode, president and chief executive officer. “The company
continues to experience increased demand for products that solve
complex analog and digital signal-processing challenges. Leveraging
solid relationships with many of the leaders in the markets we
target, a robust product portfolio and meaningful investments in
innovative technologies, we are excited about our opportunities for
growth in the coming years.”
Reported Financial Results – Second Quarter FY20
- Revenue of $388.9 million;
- GAAP and non-GAAP gross margin are 53.5 percent;
- GAAP operating expenses of $121.2 million and non-GAAP
operating expenses of $101 million; and
- GAAP earnings per share of $1.27 and non-GAAP earnings per
share of $1.55.
A reconciliation of GAAP to non-GAAP financial information is
included in the tables accompanying this press release.
Business Outlook – Third Quarter FY20
- Revenue is expected to range between $325 million and $365
million;
- GAAP gross margin is expected to be between 51 percent and 53
percent; and
- Combined GAAP R&D and SG&A expenses are expected to
range between $118 million and $124 million, which includes
approximately $13 million in stock-based compensation and $7
million in amortization of acquired intangibles.
Cirrus Logic will host a live Q&A session at 5:30 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: 6988221).
Cirrus Logic, Inc.
Cirrus Logic is a leader in high-performance, low-power ICs for
audio, voice and other 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, Cirrus and the Cirrus Logic logo 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 effective tax rate impact on earnings per
share, and effective tax rate. 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 third quarter fiscal year 2020
revenue, gross margin, combined research and development and
selling, general and administrative expense levels, stock
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 2020,
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 30, 2019 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
Six Months Ended
Sep. 28,
Jun. 29,
Sep. 29,
Sep. 28,
Sep. 29,
2019
2019
2018
2019
2018
Q2'20
Q1'20
Q2'19
Q2'20
Q2'19
Portable products
$
349,379
$
202,938
$
324,049
$
552,317
$
536,309
Non-portable and other products
39,533
35,315
42,256
74,848
84,479
Net sales
388,912
238,253
366,305
627,165
620,788
Cost of sales
180,979
115,759
181,186
296,738
311,110
Gross profit
207,933
122,494
185,119
330,427
309,678
Gross margin
53.5
%
51.4
%
50.5
%
52.7
%
49.9
%
Research and development
88,239
88,830
96,381
177,069
194,313
Selling, general and administrative
33,018
29,520
33,160
62,538
65,944
Total operating expenses
121,257
118,350
129,541
239,607
260,257
Income from operations
86,676
4,144
55,578
90,820
49,421
Interest income
2,250
2,285
1,525
4,535
2,972
Other (expense) income
(568
)
(378
)
(378
)
(946
)
(168
)
Income before income taxes
88,358
6,051
56,725
94,409
52,225
Provision (benefit) for income taxes
12,148
1,433
(1,448
)
13,581
(1,676
)
Net income
$
76,210
$
4,618
$
58,173
$
80,828
$
53,901
Basic earnings per share:
$
1.31
$
0.08
$
0.96
$
1.39
$
0.88
Diluted earnings per share:
$
1.27
$
0.08
$
0.93
$
1.34
$
0.86
Weighted average number of shares:
Basic
58,011
58,540
60,472
58,276
60,967
Diluted
60,213
60,258
62,431
60,260
62,810
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. 28,
Jun. 29,
Sep. 29,
Sep. 28,
Sep. 29,
2019
2019
2018
2019
2018
Net Income Reconciliation
Q2'20
Q1'20
Q2'19
Q2'20
Q2'19
GAAP Net Income
$
76,210
$
4,618
$
58,173
$
80,828
$
53,901
Amortization of acquisition
intangibles
6,722
7,228
12,867
13,950
26,133
Stock-based compensation expense
13,759
11,786
13,131
25,545
25,925
Adjustment to income taxes
(3,417
)
(2,803
)
(17,054
)
(6,220
)
(20,980
)
Non-GAAP Net Income
$
93,274
$
20,829
$
67,117
$
114,103
$
84,979
Earnings Per Share Reconciliation
GAAP Diluted earnings per share
$
1.27
$
0.08
$
0.93
$
1.34
$
0.86
Effect of Amortization of acquisition
intangibles
0.11
0.12
0.21
0.23
0.42
Effect of Stock-based compensation
expense
0.23
0.20
0.21
0.42
0.41
Effect of Adjustment to income taxes
(0.06
)
(0.05
)
(0.27
)
(0.10
)
(0.34
)
Non-GAAP Diluted earnings per
share
$
1.55
$
0.35
$
1.08
$
1.89
$
1.35
Operating Income Reconciliation
GAAP Operating Income
$
86,676
$
4,144
$
55,578
$
90,820
$
49,421
GAAP Operating Profit
22
%
2
%
15
%
14
%
8
%
Amortization of acquisition
intangibles
6,722
7,228
12,867
13,950
26,133
Stock-based compensation expense -
COGS
254
241
170
495
369
Stock-based compensation expense -
R&D
7,830
7,240
6,834
15,070
14,084
Stock-based compensation expense -
SG&A
5,675
4,305
6,127
9,980
11,472
Non-GAAP Operating Income
$
107,157
$
23,158
$
81,576
$
130,315
$
101,479
Non-GAAP Operating Profit
28
%
10
%
22
%
21
%
16
%
Operating Expense Reconciliation
GAAP Operating Expenses
$
121,257
$
118,350
$
129,541
$
239,607
$
260,257
Amortization of acquisition
intangibles
(6,722
)
(7,228
)
(12,867
)
(13,950
)
(26,133
)
Stock-based compensation expense -
R&D
(7,830
)
(7,240
)
(6,834
)
(15,070
)
(14,084
)
Stock-based compensation expense -
SG&A
(5,675
)
(4,305
)
(6,127
)
(9,980
)
(11,472
)
Non-GAAP Operating Expenses
$
101,030
$
99,577
$
103,713
$
200,607
$
208,568
Gross Margin/Profit Reconciliation
GAAP Gross Profit
$
207,933
$
122,494
$
185,119
$
330,427
$
309,678
GAAP Gross Margin
53.5
%
51.4
%
50.5
%
52.7
%
49.9
%
Stock-based compensation expense -
COGS
254
241
170
495
369
Non-GAAP Gross Profit
$
208,187
$
122,735
$
185,289
$
330,922
$
310,047
Non-GAAP Gross Margin
53.5
%
51.5
%
50.6
%
52.8
%
49.9
%
Effective Tax Rate Reconciliation
GAAP Tax Expense (Benefit)
$
12,148
$
1,433
$
(1,448
)
$
13,581
$
(1,676
)
GAAP Effective Tax Rate
13.7
%
23.7
%
-2.6
%
14.4
%
-3.2
%
Adjustments to income taxes
3,417
2,803
17,054
6,220
20,980
Non-GAAP Tax Expense
$
15,565
$
4,236
$
15,606
$
19,801
$
19,304
Non-GAAP Effective Tax Rate
14.3
%
16.9
%
18.9
%
14.8
%
18.5
%
Tax Impact to EPS Reconciliation
GAAP Tax Expense
$
0.20
$
0.02
$
(0.02
)
$
0.23
$
(0.03
)
Adjustments to income taxes
0.06
0.05
0.27
0.10
0.34
Non-GAAP Tax Expense
$
0.26
$
0.07
$
0.25
$
0.33
$
0.31
CONSOLIDATED CONDENSED BALANCE
SHEET
unaudited; in
thousands
Sep. 28,
Mar. 30,
Sep. 29,
2019
2019
2018
ASSETS Current assets Cash and cash equivalents
$
221,937
$
216,172
$
195,857
Marketable securities
22,563
70,183
48,701
Accounts receivable, net
217,962
120,656
206,789
Inventories
144,829
164,733
142,315
Other current assets
44,729
53,239
48,910
Total current Assets
652,020
624,983
642,572
Long-term marketable securities
238,741
158,968
151,207
Right-of-use lease assets
142,834
-
-
Property and equipment, net
178,420
186,185
193,218
Intangibles, net
54,780
67,847
86,769
Goodwill
285,321
286,241
287,368
Deferred tax asset
9,026
8,727
13,733
Other assets
22,489
19,689
29,527
Total assets
$
1,583,631
$
1,352,640
$
1,404,394
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Accounts payable
$
109,374
$
48,398
$
88,473
Accrued salaries and benefits
34,870
29,289
30,154
Other accrued liabilities
48,552
37,853
37,275
Total current liabilities
192,796
115,540
155,902
Non-current lease liability
133,105
-
-
Non-current income taxes
76,847
78,309
79,127
Other long-term liabilities
2,258
18,551
26,390
Stockholders' equity: Capital stock
1,392,650
1,363,736
1,338,586
Accumulated deficit
(213,274
)
(222,430
)
(182,453
)
Accumulated other comprehensive loss
(751
)
(1,066
)
(13,158
)
Total stockholders' equity
1,178,625
1,140,240
1,142,975
Total liabilities and stockholders' equity
$
1,583,631
$
1,352,640
$
1,404,394
Prepared in accordance with
Generally Accepted Accounting Principles
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191030005701/en/
Thurman K. Case Chief Financial Officer Cirrus Logic, Inc. (512)
851-4125 Investor.Relations@cirrus.com
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