Cirrus Logic Reports Q2 FY20 Revenue of $388.9 Million

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

  • Revenue of $388.9 million;
  • GAAP and non-GAAP gross margin are 53.5 percent;
  • GAAP operating expenses of $121.2 million and non-GAAP operating expenses of $101 million; and
  • GAAP earnings per share of $1.27 and non-GAAP earnings per share of $1.55.

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

Business Outlook – Third Quarter FY20

  • Revenue is expected to range between $325 million and $365 million;
  • GAAP gross margin is expected to be between 51 percent and 53 percent; and
  • Combined GAAP R&D and SG&A expenses are expected to range between $118 million and $124 million, which includes approximately $13 million in stock-based compensation and $7 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: 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

Contacts:

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

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