Upgrade to SI Premium - Free Trial

Cirrus Logic Reports Q2 FY19 Revenue of $366.3 Million

November 1, 2018 4:45 PM

Company Continues to Expect a Return to Growth in FY20

AUSTIN, Texas--(BUSINESS WIRE)-- 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 second quarter fiscal year 2019, which ended Sep. 29, 2018, as well as the company’s current business outlook.

“Cirrus Logic delivered Q2 revenue significantly above guidance as we experienced solid demand for our portable audio components ahead of customer product launches,” said Jason Rhode, president and chief executive officer. “While we are pleased with our results, we remain focused on executing on our product roadmap and expanding share with new and existing customers. As we move into FY20, we believe the company is well positioned to capitalize on the increasing demand for compelling audio, voice and haptic products which we expect to contribute to our return to year-over-year revenue growth.”

Reported Financial Results – Second Quarter FY19

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

Business Outlook – Third Quarter FY19

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 [email protected]. 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: 9875228).

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, diluted share count, 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, our ability to expand share with new and existing customers, our expectations with respect to our ability to capitalize on increasing demand for compelling audio, voice and haptic products, our ability to return to year-over-year revenue growth, along with estimates for the third 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 third quarter and remainder of fiscal year 2019, 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 extent to which customers adopt our new technologies and devices in new markets such as haptics; and 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

Six Months Ended

Sep. 29, Jun. 30, Sep. 23, Sep. 29, Sep. 23,
2018 2018 2017 2018 2017
Q2'19 Q1'19 Q2'18 Q2'19 Q2'18
Portable audio products $ 324,049 $ 212,260 $ 381,761 $ 536,309 $ 662,449
Non-portable audio and other products � 42,256 � � 42,223 � � 43,776 � � 84,479 � � 83,823 �
Net sales � 366,305 � � 254,483 � � 425,537 � � 620,788 � � 746,272 �
Cost of sales � 181,186 � � 129,924 � � 214,255 � � 311,110 � � 373,274 �
Gross profit 185,119 124,559 211,282 309,678 372,998
Gross margin 50.5 % 48.9 % 49.7 % 49.9 % 50.0 %
�
Research and development 96,381 97,932 90,353 194,313 173,910
Selling, general and administrative � 33,160 � � 32,784 � � 30,041 � � 65,944 � � 60,900 �
Total operating expenses � 129,541 � � 130,716 � � 120,394 � � 260,257 � � 234,810 �
�
Income (loss) from operations 55,578 (6,157 ) 90,888 49,421 138,188
�
Interest income (expense), net 1,525 1,447 725 2,972 1,319
Other income (expense), net � (378 ) � 210 � � (1,116 ) � (168 ) � (1,135 )
Income (loss) before income taxes 56,725 (4,500 ) 90,497 52,225 138,372
Provision (benefit) for income taxes � (1,448 ) � (228 ) � 17,197 � � (1,676 ) � 22,160 �
Net income (loss) $ 58,173 � $ (4,272 ) $ 73,300 � $ 53,901 � $ 116,212 �
�
Basic earnings (loss) per share: $ 0.96 $ (0.07 ) $ 1.16 $ 0.88 $ 1.82
Diluted earnings (loss) per share: $ 0.93 $ (0.07 ) $ 1.10 $ 0.86 $ 1.74
�
Weighted average number of shares:
Basic 60,472 61,462 63,431 60,967 63,764
Diluted 62,431 61,462 66,360 62,810 66,761
�

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. 29, � � Jun. 30, � � Sep. 23, Sep. 29, � � Sep. 23,
2018 2018 2017 2018 2017
Net Income Reconciliation Q2'19 Q1'19 Q2'18 Q2'19 Q2'18
GAAP Net Income (Loss) $ 58,173 $ (4,272 ) $ 73,300 $ 53,901 $ 116,212
Amortization of acquisition intangibles 12,867 13,266 11,600 26,133 23,200
Stock based compensation expense 13,131 12,794 12,292 25,925 23,695
Acquisition-related items - - - - (4,048 )
Adjustment to income taxes � (17,054 ) � (3,926 ) � (7,260 ) � (20,980 ) � (14,517 )
Non-GAAP Net Income $ 67,117 � $ 17,862 � $ 89,932 � $ 84,979 � $ 144,542 �
�
Earnings Per Share Reconciliation
GAAP Diluted earnings (loss) per share $ 0.93 $ (0.07 ) $ 1.10 $ 0.86 $ 1.74
Effect of Amortization of acquisition intangibles 0.21 0.21 0.18 0.42 0.35
Effect of Stock based compensation expense 0.21 0.20 0.19 0.41 0.36
Effect of Acquisition-related items - - - - (0.06 )
Effect of Adjustment to income taxes � (0.27 ) � (0.06 ) � (0.11 ) � (0.34 ) � (0.22 )
Non-GAAP Diluted earnings per share $ 1.08 � $ 0.28 � $ 1.36 � $ 1.35 � $ 2.17 �
�
Diluted Shares Reconciliation
GAAP Diluted shares 62,431 61,462 66,360 62,810 66,761
Effect of weighted dilutive shares � - � � 1,723 � � - � � - � � - �
Non-GAAP Diluted shares � 62,431 � � 63,185 � � 66,360 � � 62,810 � � 66,761 �
�
Operating Income Reconciliation
GAAP Operating Income (Loss) $ 55,578 $ (6,157 ) $ 90,888 $ 49,421 $ 138,188
GAAP Operating Profit (Loss) 15 % -2 % 21 % 8 % 19 %
Amortization of acquisition intangibles 12,867 13,266 11,600 26,133 23,200
Stock compensation expense - COGS 170 199 328 369 666
Stock compensation expense - R&D 6,834 7,250 6,034 14,084 12,294
Stock compensation expense - SG&A 6,127 5,345 5,930 11,472 10,735
Acquisition-related items � - � � - � � - � � - � � (4,048 )
Non-GAAP Operating Income $ 81,576 � $ 19,903 � $ 114,780 � $ 101,479 � $ 181,035 �
Non-GAAP Operating Profit 22 % 8 % 27 % 16 % 24 %
�
Operating Expense Reconciliation
GAAP Operating Expenses $ 129,541 $ 130,716 $ 120,394 $ 260,257 $ 234,810
Amortization of acquisition intangibles (12,867 ) (13,266 ) (11,600 ) (26,133 ) (23,200 )
Stock compensation expense - R&D (6,834 ) (7,250 ) (6,034 ) (14,084 ) (12,294 )
Stock compensation expense - SG&A (6,127 ) (5,345 ) (5,930 ) (11,472 ) (10,735 )
Acquisition-related items � - � � - � � - � � - � � 4,048 �
Non-GAAP Operating Expenses $ 103,713 � $ 104,855 � $ 96,830 � $ 208,568 � $ 192,629 �
�
Gross Margin/Profit Reconciliation
GAAP Gross Profit $ 185,119 $ 124,559 $ 211,282 $ 309,678 $ 372,998
GAAP Gross Margin 50.5 % 48.9 % 49.7 % 49.9 % 50.0 %
Stock compensation expense - COGS � 170 � � 199 � � 328 � � 369 � � 666 �
Non-GAAP Gross Profit $ 185,289 � $ 124,758 � $ 211,610 � $ 310,047 � $ 373,664 �
Non-GAAP Gross Margin 50.6 % 49.0 % 49.7 % 49.9 % 50.1 %
�
Effective Tax Rate Reconciliation
GAAP Tax Expense (Benefit) $ (1,448 ) $ (228 ) $ 17,197 $ (1,676 ) $ 22,160
GAAP Effective Tax Rate -2.6 % 5.1 % 19.0 % -3.2 % 16.0 %
Adjustments to income taxes � 17,054 � � 3,926 � � 7,260 � � 20,980 � � 14,517 �
Non-GAAP Tax Expense $ 15,606 � $ 3,698 � $ 24,457 � $ 19,304 � $ 36,677 �
Non-GAAP Effective Tax Rate 18.9 % 17.2 % 21.4 % 18.5 % 20.2 %
�
Tax Impact to EPS Reconciliation
GAAP Tax Expense (Benefit) $ (0.02 ) $ - $ 0.26 $ (0.03 ) $ 0.33
Adjustments to income taxes � 0.27 � � 0.06 � � 0.11 � � 0.34 � � 0.22 �
Non-GAAP Tax Expense $ 0.25 � $ 0.06 � $ 0.37 � $ 0.31 � $ 0.55 �
�

� � �
CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands
� � � �
Sep. 29, Mar. 31, Sep. 23,
2018 2018 2017
ASSETS
Current assets
Cash and cash equivalents $ 195,857 $ 235,604 $ 180,198
Marketable securities 48,701 26,397 15,446
Accounts receivable, net 206,789 100,801 232,380
Inventories 142,315 205,760 210,791
Other current assets � 48,910 � � 45,112 � � 31,185 �
Total current Assets 642,572 613,674 670,000
�
Long-term marketable securities 151,207 172,499 133,547
Property and equipment, net 193,218 191,154 177,523
Intangibles, net 86,769 111,547 131,235
Goodwill 287,368 288,718 289,248
Deferred tax asset 13,733 14,716 30,511
Other assets � 29,527 � � 37,809 � � 23,703 �
Total assets $ 1,404,394 � $ 1,430,117 � $ 1,455,767 �
�
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 88,473 $ 69,850 $ 131,125
Accrued salaries and benefits 30,154 35,721 35,651
Other accrued liabilities � 37,275 � � 34,638 � � 24,414 �

Total current liabilities

155,902 140,209 191,190
�
Non-current income taxes 79,127 92,753 51,830
Other long-term liabilities 26,390 35,427 12,831
�
Stockholders' equity:
Capital stock 1,338,586 1,312,434 1,288,669
Accumulated deficit (182,453 ) (139,345 ) (92,180 )
Accumulated other comprehensive income (loss) � (13,158 ) � (11,361 ) � 3,427 �
Total stockholders' equity � 1,142,975 � � 1,161,728 � � 1,199,916 �
Total liabilities and stockholders' equity $ 1,404,394 � $ 1,430,117 � $ 1,455,767 �
�

Prepared in accordance with Generally Accepted Accounting Principles

Cirrus Logic, Inc.

Thurman K. Case, 512-851-4125

Chief Financial Officer

[email protected]

Source: Cirrus Logic, Inc.

Categories

Press Releases

Next Articles