Cirrus Logic Reports December Quarter Revenue Up 15 Percent Sequentially to $218.9 Million

Completes Acquisition of Leading Voice-Based Technology Supplier Acoustic Technologies

Business Wire

AUSTIN, Texas--(BUSINESS WIRE)--

Cirrus Logic, Inc. (CRUS), a leader in high-precision analog and digital signal processing components, today posted on its investor relations website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the third quarter fiscal year 2014, which ended Dec. 28, as well as the company’s current business outlook.

“We delivered strong revenue, operating profit and EPS results for the third quarter,” said Jason Rhode, president and chief executive officer. “While our business is typically driven by product cycles that weight our revenue more heavily towards the September and December quarters, we expect to exceed our operating profit goal of 20 percent in FY14 and we remain committed to this long-term target. We are extremely excited to be taping out a wave of new products in advanced geometries this year as we look to capitalize on strategic opportunities in audio with new and existing customers, especially the growing trend of voice as a powerful interface to a wide variety of devices. We anticipate these products will contribute to future revenue growth as early as calendar year 2015.”

Reported Financial Results – Third Quarter FY14

  • Revenue of $218.9 million;
  • Gross margin of 47.4 percent;
  • GAAP operating expenses of $51 million and non-GAAP operating expenses of $45 million; and
  • GAAP diluted earnings per share of $0.63 and non-GAAP diluted earnings per share of $0.89.

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

Business Outlook – Fourth Quarter FY14

  • Revenue is expected to range between $130 million and $150 million;
  • Gross margin is expected to be between 47 percent and 49 percent; and
  • Combined R&D and SG&A expenses are expected to range between $51 million and $55 million, which includes approximately $6 million in share-based compensation and amortization of acquired intangibles.

Cirrus Logic will host a live Q&A session at 5 p.m. EST 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 (404) 537-3406, or toll-free at (855) 859-2056 (Access Code: 27210276).

Cirrus Logic, Inc.

Cirrus Logic develops high-precision, analog and mixed-signal integrated circuits for a broad range of innovative customers. Building on its diverse analog and signal-processing patent portfolio, Cirrus Logic delivers highly optimized products for a variety of audio and energy-related applications. The company operates from headquarters in Austin, Texas, with offices in Phoenix, Ariz., Europe, Japan and Asia. More information about Cirrus Logic is available at www.cirrus.com.

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 operating expenses, net income, operating profit and diluted 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 estimates of fourth quarter fiscal year 2014 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 fourth quarter of fiscal year 2014, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; and the risk factors listed in our Form 10-K for the year ended March 30, 2013, 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.

Cirrus Logic and Cirrus are trademarks of Cirrus Logic, Inc.

Summary financial data follows:

           
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
 
Three Months Ended

Nine Months Ended

 
Dec. 28, Sep. 28, Dec. 29, Dec. 28, Dec. 29,
2013 2013 2012 2013 2012
Q3'14 Q2'14 Q3'13 Q3'14 Q3'13
Audio products $ 206,388 $ 179,912 $ 300,010 $ 529,966 $ 558,671
Energy products   12,495     10,759     10,123     34,713     44,242  
Net revenue   218,883     190,671     310,133     564,679     602,913  
Cost of sales   115,034     91,223     152,083     281,884     291,336  
Gross Profit 103,849 99,448 158,050 282,795 311,577
Gross Margin 47.4 % 52.2 % 51.0 % 50.1 % 51.7 %
 
Research and development 32,426 29,722 29,608 90,678 83,986
Selling, general and administrative 18,625 19,215 19,021 57,038 57,274
Restructuring and other costs 12 (154 ) 3,539 (572 ) 3,539
Gain on sale of asset - - (247 ) - (247 )
Patent settlements, net   -     -     -     695     -  
Total operating expenses   51,063     48,783     51,921     147,839     144,552  
 
Operating income 52,786 50,665 106,129 134,956 167,025
 
Interest income, net 222 201 76 581 334
Other income (expense), net   (45 )   (38 )   (31 )   (100 )   (94 )
Income before income taxes 52,963 50,828 106,174 135,437 167,265
Provision (benefit) for income taxes   11,463     17,461     38,312     39,928     57,027  
Net income $ 41,500   $ 33,367   $ 67,862   $ 95,509   $ 110,238  
 
Basic earnings per share: $ 0.66 $ 0.53 $ 1.04 $ 1.51 $ 1.70
Diluted earnings per share: $ 0.63 $ 0.50 $ 0.99 $ 1.45 $ 1.60
 
Weighted average number of shares:
Basic 62,854 63,217 65,055 63,170 64,859
Diluted 65,368 66,125 68,866 65,894 68,946
 
Prepared in accordance with Generally Accepted Accounting Principles
         
CIRRUS LOGIC, INC.
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

Nine Months Ended

 
Dec. 28, Sep. 28, Dec. 29, Dec. 28, Dec. 29,
2013 2013 2012 2013 2012
Net Income Reconciliation Q3'14 Q2'14 Q3'13 Q3'14 Q3'13
GAAP Net Income $ 41,500 $ 33,367 $ 67,862 $ 95,509 $ 110,238
Amortization of acquisition intangibles 275 - - 275 604
Stock based compensation expense 6,016 5,739 6,026 17,529 15,762
International sales reorganization charges - - (47 ) - (47 )
Restructuring and other costs, net 12 (154 ) 3,539 (572 ) 3,539
Gain on asset sale - - (247 ) - (247 )
Patent settlements, net - - - 695 -
Provision (benefit) for income taxes   10,300     16,378     35,667     36,839     52,602  
Non-GAAP Net Income $ 58,103   $ 55,330   $ 112,800   $ 150,275   $ 182,451  
 
Earnings Per Share Reconciliation
GAAP Diluted earnings per share $ 0.63 $ 0.50 $ 0.99 $ 1.45 $ 1.60
Effect of Amortization of acquisition intangibles - - - - 0.01
Effect of Stock based compensation expense 0.10 0.09 0.09 0.27 0.23
Effect of Restructuring and other costs, net - - 0.05 (0.01 ) 0.05
Effect of Patent settlements, net - - - 0.01 -
Effect of Provision (benefit) for income taxes 0.16 0.25 0.51 0.56 0.76
         
Non-GAAP Diluted earnings per share $ 0.89   $ 0.84   $ 1.64   $ 2.28   $ 2.65  
 
Operating Income Reconciliation
GAAP Operating Income $ 52,786 $ 50,665 $ 106,129 $ 134,956 $ 167,025
GAAP Operating Profit 24 % 27 % 34 % 24 % 28 %
Amortization of acquisition intangibles 275 - - 275 604
Stock compensation expense - COGS 332 239 218 577 455
Stock compensation expense - R&D 2,834 2,158 3,234 7,846 7,574
Stock compensation expense - SG&A 2,850 3,342 2,574 9,106 7,733
International sales reorganization charges - - (47 ) - (47 )
Restructuring and other costs, net 12 (154 ) 3,539 (572 ) 3,539
Gain on asset sale - - (247 ) - (247 )
Patent settlements, net   -     -     -     695     -  
Non-GAAP Operating Income $ 59,089   $ 56,250   $ 115,400   $ 152,883   $ 186,636  
Non-GAAP Operating Profit 27 % 30 % 37 % 27 % 31 %
 
Operating Expense Reconciliation
GAAP Operating Expenses $ 51,063 $ 48,783 $ 51,921 $ 147,839 $ 144,552
Amortization of acquisition intangibles (275 ) - - (275 ) (604 )
Stock compensation expense - R&D (2,834 ) (2,158 ) (3,234 ) (7,846 ) (7,574 )
Stock compensation expense - SG&A (2,850 ) (3,342 ) (2,574 ) (9,106 ) (7,733 )
International sales reorganization charges - - 47 - 47
Restructuring and other costs, net (12 ) 154 (3,539 ) 572 (3,539 )
Gain on asset sale - - 247 - 247
Patent settlements, net   -     -     -     (695 )   -  
Non-GAAP Operating Expenses $ 45,092   $ 43,437   $ 42,868   $ 130,489   $ 125,396  
       
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands
 
Dec. 28, Sep. 28, Dec. 29,
2013 2013 2012
ASSETS
Current assets
Cash and cash equivalents $ 74,690 $ 68,886 $ 87,452
Restricted investments - - -
Marketable securities 215,792 199,423 60,717
Accounts receivable, net 109,535 97,640 170,683
Inventories 69,985 91,247 135,023
Deferred tax asset 33,155 38,398 53,140
Other current assets   25,662     23,978     21,775  
Total Current Assets 528,819 519,572 528,790
 
Long-term marketable securities 37,115 40,254 -
Property and equipment, net 102,542 101,885 100,534
Intangibles, net 13,427 4,734 4,920
Goodwill 16,335 6,027 6,027
Deferred tax asset 17,354 16,638 36,466
Other assets   6,848     10,051     15,761  
Total Assets $ 722,440   $ 699,161   $ 692,498  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 60,493 $ 56,868 $ 95,493
Accrued salaries and benefits 13,937 16,894 13,752
Other accrued liabilities 12,881 6,313 13,992
Deferred income on shipments to distributors   4,998     4,858     5,579  
Total Current Liabilities 92,309 84,933 128,816
 
Other long-term obligations 5,108 11,231 10,131
 
Stockholders' equity:
Capital stock 1,069,113 1,055,256 1,033,549
Accumulated deficit (443,322 ) (451,532 ) (479,225 )
Accumulated other comprehensive loss   (768 )   (727 )   (773 )
Total Stockholders' Equity   625,023     602,997     553,551  
Total Liabilities and Stockholders' Equity $ 722,440   $ 699,161   $ 692,498  
 
Prepared in accordance with Generally Accepted Accounting Principles

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

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