Cirrus Logic Reports Q1 FY21 Revenue of $242.6 Million
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 first quarter fiscal year 2021, which ended June 27, 2020, as well as the company’s current business outlook.
“We are pleased with our results in the June quarter as we experienced robust demand for certain products shipping in tablets and smartphones,” said Jason Rhode, chief executive officer. “Despite the continuing challenges and adverse economic effects associated with COVID-19, design activity and new product development efforts were encouraging during the quarter. The company remains focused on leveraging our strong customer relationships and mixed-signal processing expertise to broaden our penetration in audio, voice and other mixed-signal domains and position the company for growth in the coming years.”
Reported Financial Results – First Quarter FY21
Revenue of $242.6 million; GAAP and non-GAAP gross margin of 52.6 percent; GAAP operating expenses of $108.8 million and non-GAAP operating expenses of $92.4 million; GAAP earnings per share of $0.30 and non-GAAP earnings per share of $0.53.A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.
Business Outlook – Second Quarter FY21
Revenue is expected to range between $290 million and $330 million; GAAP gross margin to be between 51 percent and 53 percent; and Combined GAAP R&D and SG&A expenses to range between $114 million and $120 million, including approximately $15 million in stock-based compensation expense and $3 million in amortization of acquired intangibles.Cirrus Logic will host a live Q&A session at 5 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: 1899640).
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, 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, 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 broadening our penetration in audio, voice, and other domains, and positioning the company for growth in the coming years, along with estimates for the second quarter fiscal year 2021 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 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; the risks of doing business internationally, including increased import/export restrictions and controls (e.g., the effect of the U.S. Bureau of Industry and Security of the U.S. Department of Commerce placing Huawei Technologies Co., Ltd. and certain of its affiliates on the Bureau’s Entity List), imposition of trade protection measures (e.g., tariffs or taxes), security and health risks, possible disruptions in transportation networks, and other economic, social, military and geo-political conditions in the countries in which we, our customers or our suppliers operate; the level of orders and shipments during the second quarter of fiscal year 2021, 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 28, 2020 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:
Jun. 27,
Mar. 28,
Jun. 29,
2020
2020
2019
Q1'21 Q4'20 Q1'20 Portable products$
210,661
$
249,731
$
202,938
Non-portable and other products
31,912
29,560
35,315
Net sales
242,573
279,291
238,253
Cost of sales
115,101
133,056
115,759
Gross profit
127,472
146,235
122,494
Gross margin
52.6
%
52.4
%
51.4
%
Research and development
78,741
81,865
88,830
Selling, general and administrative
29,704
32,464
29,520
Restructuring costs
352
21,925
-
Total operating expenses
108,797
136,254
118,350
Income from operations
18,675
9,981
4,144
Interest income
1,576
2,474
2,285
Other income (expense)
111
(106
)
(378
)
Income before income taxes
20,362
12,349
6,051
Provision for income taxes
2,153
2,191
1,433
Net income
$
18,209
$
10,158
$
4,618
Basic earnings per share:
$
0.31
$
0.17
$
0.08
Diluted earnings per share:
$
0.30
$
0.17
$
0.08
Weighted average number of shares: Basic
58,313
58,527
58,540
Diluted
60,280
60,683
60,258
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
Jun. 27, Mar. 28, Jun. 29,2020
2020
2019
Net Income Reconciliation Q1'21 Q4'20 Q1'20 GAAP Net Income$
18,209
$
10,158
$
4,618
Amortization of acquisition intangibles
2,998
3,000
7,228
Stock-based compensation expense
13,306
14,052
11,786
Restructuring costs
352
20,602
-
Adjustment to income taxes
(2,982
)
(6,320
)
(2,803
)
Non-GAAP Net Income$
31,883
$
41,492
$
20,829
Earnings Per Share Reconciliation GAAP Diluted earnings per share
$
0.30
$
0.17
$
0.08
Effect of Amortization of acquisition intangibles
0.05
0.05
0.12
Effect of Stock-based compensation expense
0.22
0.23
0.20
Effect of Restructuring costs
0.01
0.34
-
Effect of Adjustment to income taxes
(0.05
)
(0.11
)
(0.05
)
Non-GAAP Diluted earnings per share$
0.53
$
0.68
$
0.35
Operating Income Reconciliation GAAP Operating Income
$
18,675
$
9,981
$
4,144
GAAP Operating Profit
7.7
%
3.6
%
1.7
%
Amortization of acquisition intangibles
2,998
3,000
7,228
Stock-based compensation expense - COGS
207
213
241
Stock-based compensation expense - R&D
8,653
9,446
7,240
Stock-based compensation expense - SG&A
4,446
4,393
4,305
Restructuring costs
352
20,602
-
Non-GAAP Operating Income
$
35,331
$
47,635
$
23,158
Non-GAAP Operating Profit
14.6
%
17.1
%
9.7
%
Operating Expense Reconciliation GAAP Operating Expenses$
108,797
$
136,254
$
118,350
Amortization of acquisition intangibles
(2,998
)
(3,000
)
(7,228
)
Stock-based compensation expense - R&D
(8,653
)
(9,446
)
(7,240
)
Stock-based compensation expense - SG&A
(4,446
)
(4,393
)
(4,305
)
Restructuring costs
(352
)
(20,724
)
-
Non-GAAP Operating Expenses
$
92,348
$
98,691
$
99,577
Gross Margin/Profit Reconciliation GAAP Gross Profit
$
127,472
$
146,235
$
122,494
GAAP Gross Margin
52.6
%
52.4
%
51.4
%
Stock-based compensation expense - COGS
207
213
241
Restructuring costs - COGS
-
(122
)
-
Non-GAAP Gross Profit
$
127,679
$
146,326
$
122,735
Non-GAAP Gross Margin
52.6
%
52.4
%
51.5
%
Effective Tax Rate Reconciliation GAAP Tax Expense$
2,153
$
2,191
$
1,433
GAAP Effective Tax Rate
10.6
%
17.7
%
23.7
%
Adjustments to income taxes
2,982
6,320
2,803
Non-GAAP Tax Expense
$
5,135
$
8,511
$
4,236
Non-GAAP Effective Tax Rate
13.9
%
17.0
%
16.9
%
Tax Impact to EPS Reconciliation GAAP Tax Expense$
0.04
$
0.04
$
0.02
Adjustments to income taxes
0.05
0.11
0.05
Non-GAAP Tax Expense
$
0.09
$
0.15
$
0.07
2020
2020
2019
ASSETS Current assets Cash and cash equivalents$
285,922
$
292,119
$
198,077
Marketable securities
29,943
22,008
52,350
Accounts receivable, net
136,539
153,998
111,497
Inventories
199,332
146,725
146,317
Other current assets
38,231
35,346
55,834
Total current Assets
689,967
650,196
564,075
Long-term marketable securities
290,186
283,573
205,079
Right-of-use lease assets
139,492
141,274
146,035
Property and equipment, net
154,286
158,244
182,042
Intangibles, net
31,185
34,430
62,496
Goodwill
287,399
287,088
286,370
Deferred tax asset
6,970
10,052
9,394
Other assets
44,554
27,820
14,625
Total assets
$
1,644,039
$
1,592,677
$
1,470,116
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable
$
95,523
$
78,412
$
60,408
Accrued salaries and benefits
28,768
42,439
23,416
Current lease liability
13,887
13,580
14,517
Other accrued liabilities
24,866
24,206
32,865
Total current liabilities
163,044
158,637
131,206
Non-current lease liability
129,627
129,312
137,180
Non-current income taxes
69,130
71,143
79,484
Other long-term liabilities
9,949
3,806
4,996
Stockholders' equity: Capital stock
1,451,297
1,434,929
1,375,777
Accumulated deficit
(184,049
)
(201,681
)
(258,899
)
Accumulated other comprehensive income (loss)
5,041
(3,469
)
372
Total stockholders' equity
1,272,289
1,229,779
1,117,250
Total liabilities and stockholders' equity
$
1,644,039
$
1,592,677
$
1,470,116
Prepared in accordance with Generally Accepted Accounting Principles
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