Record Q2 Revenue and EPS Driven by Strong
Demand for Smartphones
Cirrus Logic, Inc. (Nasdaq: CRUS) today posted on its website at
investor.cirrus.com the quarterly Shareholder Letter that contains
the complete financial results for the second quarter fiscal year
2023, which ended September 24, 2022, as well as the company’s
current business outlook.
“Cirrus Logic reported Q2 revenue of $540.6 million, marking the
fifth consecutive quarter in which we have set a revenue record for
the corresponding fiscal period. Results were well above the top
end of our guidance, as we benefited from higher unit volumes and
high-performance mixed-signal content gains in smartphones,” said
John Forsyth, Cirrus Logic president and chief executive officer.
“In addition to these strong results, during the quarter we also
made excellent progress in our audio product lines and in our
strategy of expansion through adjacent high-performance
mixed-signal applications. We furthered the development of our
next-generation flagship smartphone audio components, continued to
build momentum with our audio products in additional markets, and
saw the continued growth in value of our camera controller
solutions. With an extensive product portfolio and an outstanding
roadmap, we believe we are positioned well to capitalize on
opportunities that we believe will drive growth in the years to
come.”
Reported Financial Results – Second Quarter FY23
- Revenue of $540.6 million;
- GAAP and non-GAAP gross margin of 50.2 percent;
- GAAP operating expenses of $155.1 million and non-GAAP
operating expenses of $123.9 million; and
- GAAP earnings per share of $1.52 and non-GAAP earnings per
share of $1.99.
A reconciliation of GAAP to non-GAAP financial information is
included in the tables accompanying this press release.
Business Outlook – Third Quarter FY23
- Revenue is expected to range between $520 million and $580
million;
- GAAP gross margin is forecasted to be between 49 percent and 51
percent; and
- Combined GAAP R&D and SG&A expenses are anticipated to
range between $153 million and $159 million, including
approximately $21 million in stock-based compensation expense, $9
million in amortization of acquired intangibles, and $3 million in
acquisition-related costs.
Cirrus Logic will host a live Q&A session at 5 p.m. EDT
today to discuss its financial results and business outlook.
Participants may listen to the conference call on the investor
relations website at investor.cirrus.com. A replay of the webcast
can be accessed on the Cirrus Logic website approximately two hours
following its completion, or by calling (647) 362-9199, or
toll-free at (800) 770-2030 (Access Code: 95424).
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.
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, the company 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, tax expense impact on earnings per
share, effective tax rate, free cash flow, and free cash flow
margin. 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 capitalizing on opportunities that
we believe will drive growth in the years to come, and our
estimates for the third quarter fiscal year 2023 revenue, gross
margin, combined research and development and selling, general and
administrative expense levels, stock compensation expense,
amortization of acquired intangibles and acquisition-related costs.
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, and readers should not place
undue reliance on such statements. These risks and uncertainties
include, but are not limited to, the following: the effects of the
global COVID-19 outbreak and the measures taken to limit the spread
of COVID-19, including any disruptions to our business that could
result from measures to contain the outbreak that may be taken by
governmental authorities in the jurisdictions in which we and our
supply chain operate; the susceptibility of the markets we address
to economic downturns, including as a result of the COVID-19
outbreak and the actions taken to mitigate the spread of COVID-19;
increased industry-wide capacity constraints that may impact our
ability to meet current customer demand, which could cause an
unanticipated decline in our sales and damage our existing customer
relationships and our ability to establish new customer
relationships; the potential for increased prices due to capacity
constraints in our supply chain, which, if we are unable to
increase our selling price to our customers, could result in lower
revenues and margins that could adversely affect our financial
results; recent significant increases in inflation in the U.S and
overseas; the level and timing of orders and shipments during the
third quarter of fiscal year 2023, 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 26, 2022 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 expressly
disclaim any 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
(in thousands, except per
share data; unaudited)
Three Months Ended
Six Months Ended
Sep. 24,
Jun. 25,
Sep. 25,
Sep. 24,
Sep. 25,
2022
2022
2021
2022
2021
Q2'23
Q1'23
Q2'22
Q2'23
Q2'22
Audio
$
337,811
$
254,496
$
300,775
$
592,307
$
518,130
High-Performance Mixed-Signal
202,763
139,143
165,111
341,906
225,009
Net sales
540,574
393,639
465,886
934,213
743,139
Cost of sales
269,288
191,005
230,442
460,293
367,749
Gross profit
271,286
202,634
235,444
473,920
375,390
Gross margin
50.2
%
51.5
%
50.5
%
50.7
%
50.5
%
Research and development
115,471
109,716
102,116
225,187
187,812
Selling, general and administrative
39,598
38,642
38,132
78,240
73,279
Total operating expenses
155,069
148,358
140,248
303,427
261,091
Income from operations
116,217
54,276
95,196
170,493
114,299
Interest income
1,285
305
35
1,590
796
Other income
295
506
1,859
801
1,617
Income before income taxes
117,797
55,087
97,090
172,884
116,712
Provision for income taxes
30,609
15,380
11,994
45,989
14,407
Net income
$
87,188
$
39,707
$
85,096
$
126,895
$
102,305
Basic earnings per share:
$
1.56
$
0.71
$
1.48
$
2.27
$
1.78
Diluted earnings per share:
$
1.52
$
0.69
$
1.43
$
2.20
$
1.72
Weighted average number of shares:
Basic
55,726
56,277
57,364
56,002
57,473
Diluted
57,418
57,804
59,451
57,620
59,485
Prepared in accordance with
Generally Accepted Accounting Principles
RECONCILIATION BETWEEN GAAP
AND NON-GAAP FINANCIAL INFORMATION
(in thousands, except per
share data; unaudited)
(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. 24,
Jun. 25,
Sep. 25,
Sep. 24,
Sep. 25,
2022
2022
2021
2022
2021
Net Income Reconciliation
Q2'23
Q1'23
Q2'22
Q2'23
Q2'22
GAAP Net Income
$
87,188
$
39,707
$
85,096
$
126,895
$
102,305
Amortization of acquisition
intangibles
7,787
7,835
7,054
15,622
10,052
Stock-based compensation expense
20,483
18,138
16,551
38,621
31,535
Acquisition-related costs
3,164
3,164
5,834
6,328
5,834
Adjustment to income taxes
(4,135
)
(4,300
)
(6,045
)
(8,435
)
(8,994
)
Non-GAAP Net Income
$
114,487
$
64,544
$
108,490
$
179,031
$
140,732
Earnings Per Share Reconciliation
GAAP Diluted earnings per share
$
1.52
$
0.69
$
1.43
$
2.20
$
1.72
Effect of Amortization of acquisition
intangibles
0.14
0.14
0.12
0.27
0.17
Effect of Stock-based compensation
expense
0.35
0.31
0.28
0.67
0.53
Effect of Acquisition-related costs
0.05
0.05
0.09
0.11
0.09
Effect of Adjustment to income taxes
(0.07
)
(0.07
)
(0.10
)
(0.14
)
(0.14
)
Non-GAAP Diluted earnings per
share
$
1.99
$
1.12
$
1.82
$
3.11
$
2.37
Operating Income Reconciliation
GAAP Operating Income
$
116,217
$
54,276
$
95,196
$
170,493
$
114,299
GAAP Operating Profit
21.5
%
13.8
%
20.4
%
18.2
%
15.4
%
Amortization of acquisition
intangibles
7,787
7,835
7,054
15,622
10,052
Stock-based compensation expense -
COGS
312
277
272
589
518
Stock-based compensation expense -
R&D
14,228
12,592
10,496
26,820
20,108
Stock-based compensation expense -
SG&A
5,943
5,269
5,783
11,212
10,909
Acquisition-related costs
3,164
3,164
5,834
6,328
5,834
Non-GAAP Operating Income
$
147,651
$
83,413
$
124,635
$
231,064
$
161,720
Non-GAAP Operating Profit
27.3
%
21.2
%
26.8
%
24.7
%
21.8
%
Operating Expense Reconciliation
GAAP Operating Expenses
$
155,069
$
148,358
$
140,248
$
303,427
$
261,091
Amortization of acquisition
intangibles
(7,787
)
(7,835
)
(7,054
)
(15,622
)
(10,052
)
Stock-based compensation expense -
R&D
(14,228
)
(12,592
)
(10,496
)
(26,820
)
(20,108
)
Stock-based compensation expense -
SG&A
(5,943
)
(5,269
)
(5,783
)
(11,212
)
(10,909
)
Acquisition-related costs
(3,164
)
(3,164
)
(2,373
)
(6,328
)
(2,373
)
Non-GAAP Operating Expenses
$
123,947
$
119,498
$
114,542
$
243,445
$
217,649
Gross Margin/Profit Reconciliation
GAAP Gross Profit
$
271,286
$
202,634
$
235,444
$
473,920
$
375,390
GAAP Gross Margin
50.2
%
51.5
%
50.5
%
50.7
%
50.5
%
Acquisition-related costs
—
—
3,461
—
3,461
Stock-based compensation expense -
COGS
312
277
272
589
518
Non-GAAP Gross Profit
$
271,598
$
202,911
$
239,177
$
474,509
$
379,369
Non-GAAP Gross Margin
50.2
%
51.5
%
51.3
%
50.8
%
51.0
%
Effective Tax Rate Reconciliation
GAAP Tax Expense
$
30,609
$
15,380
$
11,994
$
45,989
$
14,407
GAAP Effective Tax Rate
26.0
%
27.9
%
12.4
%
26.6
%
12.3
%
Adjustments to income taxes
4,135
4,300
6,045
8,435
8,994
Non-GAAP Tax Expense
$
34,744
$
19,680
$
18,039
$
54,424
$
23,401
Non-GAAP Effective Tax Rate
23.3
%
23.4
%
14.3
%
23.3
%
14.3
%
Tax Impact to EPS Reconciliation
GAAP Tax Expense
$
0.53
$
0.27
$
0.20
$
0.80
$
0.24
Adjustments to income taxes
0.07
0.07
0.10
0.14
0.14
Non-GAAP Tax Expense
$
0.60
$
0.34
$
0.30
$
0.94
$
0.38
CONSOLIDATED CONDENSED BALANCE
SHEET
(in thousands;
unaudited)
Sep. 24,
Mar. 26,
Sep. 25,
2022
2022
2021
ASSETS
Current assets
Cash and cash equivalents
$
355,043
$
369,814
$
386,741
Marketable securities
23,869
10,601
8,152
Accounts receivable, net
304,546
240,264
280,967
Inventories
164,571
138,436
188,360
Other current assets
108,538
80,900
84,836
Total current Assets
956,567
840,015
949,056
Long-term marketable securities
49,013
63,749
67,726
Right-of-use lease assets
162,859
171,003
129,298
Property and equipment, net
158,722
157,077
159,480
Intangibles, net
141,909
158,145
174,852
Goodwill
435,936
435,791
437,783
Deferred tax asset
13,094
11,068
10,073
Long-term prepaid wafers
174,787
195,000
195,000
Other assets
71,180
91,552
102,892
Total assets
$
2,164,067
$
2,123,400
$
2,226,160
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
$
118,000
$
115,417
$
386,699
Accrued salaries and benefits
59,140
65,261
54,919
Lease liability
13,583
14,680
14,359
Acquisition-related liabilities
45,984
30,964
—
Other accrued liabilities
45,658
38,461
44,404
Total current liabilities
282,365
264,783
500,381
Non-current lease liability
152,294
163,162
122,815
Non-current income taxes
65,255
73,383
79,727
Long-term acquisition-related
liabilities
—
8,692
33,329
Other long-term liabilities
9,539
13,563
21,818
Total long-term liabilities
227,088
258,800
257,689
Stockholders' equity:
Capital stock
1,618,177
1,578,427
1,533,557
Accumulated earnings (deficit)
40,927
23,435
(65,672
)
Accumulated other comprehensive income
(loss)
(4,490
)
(2,045
)
205
Total stockholders' equity
1,654,614
1,599,817
1,468,090
Total liabilities and stockholders'
equity
$
2,164,067
$
2,123,400
$
2,226,160
Prepared in accordance with
Generally Accepted Accounting Principles
CONSOLIDATED CONDENSED
STATEMENT OF CASH FLOWS
(in thousands;
unaudited)
Three Months Ended
Sep. 24,
Sep. 25,
2022
2021
Q2'23
Q2'22
Cash flows from operating activities:
Net income
$
87,188
$
85,096
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
17,219
15,812
Stock-based compensation expense
20,483
16,551
Deferred income taxes
1,404
294
Loss on retirement or write-off of
long-lived assets
11
331
Other non-cash charges
86
92
Net change in operating assets and
liabilities:
Accounts receivable, net
(98,274
)
(137,707
)
Inventories
9,799
12,037
Prepaid wafers
—
(195,000
)
Other assets
(2,491
)
(94,911
)
Accounts payable and other accrued
liabilities
14,229
302,681
Income taxes payable
(16,829
)
(9,432
)
Acquisition-related liabilities
3,164
33,329
Net cash provided by operating
activities
35,989
29,173
Cash flows from investing activities:
Maturities and sales of available-for-sale
marketable securities
1,961
308,478
Purchases of available-for-sale marketable
securities
(850
)
(14,194
)
Purchases of property, equipment and
software
(10,211
)
(3,893
)
Investments in technology
(36
)
(2,034
)
Acquisition of business, net of cash
obtained
—
(275,642
)
Net cash used in investing activities
(9,136
)
12,715
Cash flows from financing activities:
Debt issuance costs
—
(1,716
)
Issuance of common stock, net of shares
withheld for taxes
1,011
2,457
Repurchase of stock to satisfy employee
tax withholding obligations
(2,156
)
(1,013
)
Repurchase and retirement of common
stock
(50,000
)
(40,002
)
Net cash used in financing activities
(51,145
)
(40,274
)
Net increase in cash and cash
equivalents
(24,292
)
1,614
Cash and cash equivalents at beginning of
period
379,335
385,127
Cash and cash equivalents at end of
period
$
355,043
$
386,741
Prepared in accordance with
Generally Accepted Accounting Principles
RECONCILIATION BETWEEN GAAP
AND NON-GAAP FINANCIAL INFORMATION
(in thousands;
unaudited)
Free cash flow, a non-GAAP financial
measure, is GAAP cash flow from operations (or cash provided by
(used in) operating activities) less capital expenditures. Capital
expenditures include purchases of property, equipment and software
as well as investments in technology, as presented within our GAAP
Consolidated Condensed Statement of Cash Flows. Free cash flow
margin represents free cash flow divided by revenue.
Twelve Months
Ended
Three Months Ended
Sep. 24,
Sep. 24,
Jun. 25,
Mar. 26,
Dec. 25,
2022
2022
2022
2022
2021
Q2'23
Q2'23
Q1'23
Q4'22
Q3'22
Net cash provided by (used in) operating
activities (GAAP)
$
232,730
$
35,989
$
74,365
$
258,231
$
(135,855
)
Capital expenditures
(29,651
)
(10,247
)
(7,224
)
(8,456
)
(3,724
)
Free Cash Flow (Non-GAAP)
$
203,079
$
25,742
$
67,141
$
249,775
$
(139,579
)
Cash Flow from Operations as a
Percentage of Revenue (GAAP)
12
%
7
%
19
%
53
%
(25
) %
Free Cash Flow Margin
(Non-GAAP)
10
%
5
%
17
%
51
%
(25
) %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221101005518/en/
Investor Contact: Chelsea Heffernan Vice President,
Investor Relations Cirrus Logic, Inc. (512) 851-4125
Investor@cirrus.com
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