EX-99.1 2 a51892396_ex991.htm EXHIBIT 99.1

Exhibit 99.1

Cirrus Logic Reports Q2 FY19 Revenue of $366.3 Million

Company Continues to Expect a Return to Growth in FY20

AUSTIN, Texas--(BUSINESS WIRE)--November 1, 2018--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

- Revenue of $366.3 million;
- GAAP and non-GAAP gross margin of 50.5 percent and 50.6 percent, respectively;
- GAAP operating expenses of $129.5 million and non-GAAP operating expenses of $103.7 million; and
- GAAP earnings per share of $0.93 and non-GAAP earnings per share of $1.08.

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

Business Outlook – Third Quarter FY19

- Revenue is expected to range between $360 million and $400 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 $122 million and $128 million, which includes approximately $12 million in share-based compensation and $8 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: 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

CONTACT:
Cirrus Logic, Inc.
Thurman K. Case, 512-851-4125
Chief Financial Officer
Investor.Relations@cirrus.com