Smartphone Volumes Drive Revenue Above
Expectations
Cirrus Logic, Inc. (Nasdaq:CRUS) 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 2020, which ended Dec. 28, 2019, as well as the
company’s current business outlook.
“Cirrus Logic’s revenue for the December quarter exceeded
guidance as we experienced higher-than-anticipated volumes for
certain components shipping into smartphones,” said Jason Rhode,
chief executive officer. “During the quarter, development
activities across existing and new product categories progressed,
and the company continued to execute on key strategic initiatives.
With a compelling pipeline of products addressing audio, voice and
other signal-processing applications, we believe Cirrus Logic is
well positioned for long-term success.”
Reported Financial Results – Third Quarter FY20
- Revenue of $374.7 million;
- GAAP and non-GAAP gross margin are 52.7 percent and 52.8,
respectively;
- GAAP operating expenses of $124.8 million and non-GAAP
operating expenses of $103.2 million; and
- GAAP earnings per share of $1.13 and non-GAAP earnings per
share of $1.41.
A reconciliation of GAAP to non-GAAP financial information is
included in the tables accompanying this press release.
Business Outlook – Fourth Quarter FY20
- Revenue is expected to range between $250 million and $290
million;
- GAAP gross margin to be between 51 percent and 53 percent;
and
- Combined GAAP R&D and SG&A expenses to range between
$115 million and $121 million, including approximately $14 million
in stock-based compensation expense and $3 million in amortization
of acquired intangibles;
- GAAP operating expense is expected to include a restructuring
charge of approximately $22 million.
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: 8287509).
Cirrus Logic, Inc.
Cirrus Logic is a leader in low-power, high-precision
mixed-signal processing solutions that create innovative user
experiences for the world’s top mobile and consumer 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 belief that Cirrus Logic is well positioned for long-term
success, along with estimates for the fourth quarter fiscal year
2020 revenue, gross margin, combined research and development and
selling, general and administrative expense levels, stock
compensation expense, amortization of acquired intangibles and
restructuring charges. 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 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 Nine Months Ended
Dec. 28,
Sep. 28,
Dec. 29,
Dec. 28,
Dec. 29,
2019
2019
2018
2019
2018
Q3'20
Q2'20
Q3'19
Q3'20
Q3'19
Portable products
$
344,870
$
349,379
$
288,640
$
897,187
$
824,950
Non-portable and other products
29,798
39,533
35,655
104,646
120,133
Net sales
374,668
388,912
324,295
1,001,833
945,083
Cost of sales
177,163
180,979
161,115
473,901
472,225
Gross profit
197,505
207,933
163,180
527,932
472,858
Gross margin
52.7
%
53.5
%
50.3
%
52.7
%
50.0
%
Research and development
88,713
88,239
88,575
265,782
282,888
Selling, general and administrative
36,113
33,018
30,364
98,651
96,308
Total operating expenses
124,826
121,257
118,939
364,433
379,196
Income from operations
72,679
86,676
44,241
163,499
93,662
Interest income
2,392
2,250
1,740
6,927
4,712
U.K. pension settlement
-
-
(13,768
)
-
(13,768
)
Other (expense) income
(563
)
(568
)
101
(1,509
)
(67
)
Income before income taxes
74,508
88,358
32,314
168,917
84,539
Provision for income taxes
5,996
12,148
2,381
19,577
705
Net income
$
68,512
$
76,210
$
29,933
$
149,340
$
83,834
Basic earnings per share:
$
1.18
$
1.31
$
0.50
$
2.56
$
1.39
Diluted earnings per share:
$
1.13
$
1.27
$
0.49
$
2.47
$
1.35
Weighted average number of shares: Basic
58,188
58,011
59,511
58,247
60,482
Diluted
60,492
60,213
60,783
60,395
62,076
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. 28,
Sep. 28,
Dec. 29,
Dec. 28,
Dec. 29,
2019
2019
2018
2019
2018
Net Income Reconciliation
Q3'20 Q2'20 Q3'19
Q3'20 Q3'19 GAAP Net Income
$
68,512
$
76,210
$
29,933
$
149,340
$
83,834
Amortization of acquisition intangibles
6,470
6,722
7,630
20,420
33,763
Stock-based compensation expense
14,160
13,759
11,181
39,705
37,106
Restructuring costs
1,323
-
-
1,323
-
U.K. pension settlement
-
-
13,768
-
13,768
Adjustment to income taxes
(4,871
)
(3,417
)
(7,003
)
(11,091
)
(27,983
)
Non-GAAP Net Income
$
85,594
$
93,274
$
55,509
$
199,697
$
140,488
Earnings Per Share Reconciliation
GAAP Diluted earnings
per share
$
1.13
$
1.27
$
0.49
$
2.47
$
1.35
Effect of Amortization of acquisition intangibles
0.11
0.11
0.13
0.34
0.54
Effect of Stock-based compensation expense
0.23
0.23
0.18
0.66
0.60
Effect of Restructuring costs
0.02
-
-
0.02
-
Effect of U.K. pension settlement
-
-
0.23
-
0.22
Effect of Adjustment to income taxes
(0.08
)
(0.06
)
(0.12
)
(0.18
)
(0.45
)
Non-GAAP Diluted earnings per share
$
1.41
$
1.55
$
0.91
$
3.31
$
2.26
Operating Income Reconciliation
GAAP Operating Income
$
72,679
$
86,676
$
44,241
$
163,499
$
93,662
GAAP Operating Profit
19.4
%
22.3
%
13.6
%
16.3
%
9.9
%
Amortization of acquisition intangibles
6,470
6,722
7,630
20,420
33,763
Stock-based compensation expense - COGS
200
254
220
695
589
Stock-based compensation expense - R&D
9,343
7,830
6,761
24,413
20,845
Stock-based compensation expense - SG&A
4,617
5,675
4,200
14,597
15,672
Restructuring costs
1,323
-
-
1,323
-
Non-GAAP Operating Income
$
94,632
$
107,157
$
63,052
$
224,947
$
164,531
Non-GAAP Operating Profit
25.3
%
27.6
%
19.4
%
22.5
%
17.4
%
Operating Expense Reconciliation
GAAP Operating
Expenses
$
124,826
$
121,257
$
118,939
$
364,433
$
379,196
Amortization of acquisition intangibles
(6,470
)
(6,722
)
(7,630
)
(20,420
)
(33,763
)
Stock-based compensation expense - R&D
(9,343
)
(7,830
)
(6,761
)
(24,413
)
(20,845
)
Stock-based compensation expense - SG&A
(4,617
)
(5,675
)
(4,200
)
(14,597
)
(15,672
)
Restructuring costs
(1,201
)
-
-
(1,201
)
-
Non-GAAP Operating Expenses
$
103,195
$
101,030
$
100,348
$
303,802
$
308,916
Gross Margin/Profit Reconciliation
GAAP Gross Profit
$
197,505
$
207,933
$
163,180
$
527,932
$
472,858
GAAP Gross Margin
52.7
%
53.5
%
50.3
%
52.7
%
50.0
%
Stock-based compensation expense - COGS
200
254
220
695
589
Restructuring costs - COGS
122
-
-
122
-
Non-GAAP Gross Profit
$
197,827
$
208,187
$
163,400
$
528,749
$
473,447
Non-GAAP Gross Margin
52.8
%
53.5
%
50.4
%
52.8
%
50.1
%
Effective Tax Rate Reconciliation
GAAP Tax Expense
$
5,996
$
12,148
$
2,381
$
19,577
$
705
GAAP Effective Tax Rate
8.0
%
13.7
%
7.4
%
11.6
%
0.8
%
Adjustments to income taxes
4,871
3,417
7,003
11,091
27,983
Non-GAAP Tax Expense
$
10,867
$
15,565
$
9,384
$
30,668
$
28,688
Non-GAAP Effective Tax Rate
11.3
%
14.3
%
14.5
%
13.3
%
17.0
%
Tax Impact to EPS Reconciliation
GAAP Tax Expense
$
0.10
$
0.20
$
0.04
$
0.32
$
0.01
Adjustments to income taxes
0.08
0.06
0.12
0.18
0.45
Non-GAAP Tax Expense
$
0.18
$
0.26
$
0.16
$
0.50
$
0.46
CONSOLIDATED CONDENSED BALANCE SHEET unaudited; in
thousands
Dec. 28,
Mar. 30,
Dec. 29,
2019
2019
2018
ASSETS Current assets Cash and cash
equivalents
$
342,301
$
216,172
$
219,319
Marketable securities
13,098
70,183
59,793
Accounts receivable, net
175,937
120,656
142,135
Inventories
137,920
164,733
167,879
Other current assets
45,345
53,239
51,151
Total current Assets
714,601
624,983
640,277
Long-term marketable securities
250,162
158,968
165,063
Right-of-use lease assets
141,348
-
-
Property and equipment, net
174,390
186,185
191,324
Intangibles, net
47,133
67,847
76,389
Goodwill
285,904
286,241
286,678
Deferred tax asset
9,183
8,727
13,131
Other assets
24,819
19,689
24,003
Total assets
$
1,647,540
$
1,352,640
$
1,396,865
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Accounts payable
$
98,835
$
48,398
$
108,022
Accrued salaries and benefits
34,228
29,289
23,566
Other accrued liabilities
45,248
37,853
38,175
Total current liabilities
178,311
115,540
169,763
Non-current lease liability
133,993
-
-
Non-current income taxes
72,422
78,309
78,532
Other long-term liabilities
2,934
18,551
18,769
Stockholders' equity: Capital stock
1,417,646
1,363,736
1,349,941
Accumulated deficit
(157,869
)
(222,430
)
(217,871
)
Accumulated other comprehensive income (loss)
103
(1,066
)
(2,269
)
Total stockholders' equity
1,259,880
1,140,240
1,129,801
Total liabilities and stockholders' equity
$
1,647,540
$
1,352,640
$
1,396,865
Prepared in accordance with Generally Accepted
Accounting Principles
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200129005649/en/
Investors: Thurman K. Case Chief Financial Officer Cirrus
Logic, Inc. (512) 851-4125 Investor.Relations@cirrus.com
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