Demand for Smartphone Components Drives Revenue Above High End of Guidance
AUSTIN, Texas--(BUSINESS WIRE)--October 30, 2019--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
A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.
Business Outlook – Third Quarter FY20
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 |
|||||||||||||||
Thurman K. Case
Chief Financial Officer
Cirrus Logic, Inc.
(512) 851-4125
Investor.Relations@cirrus.com