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Cirrus Logic (CRUS) Q1 Earnings and Revenues Surpass Estimates

Zacks Equity Research

Cirrus Logic CRUS delivered first-quarter fiscal 2020 non-GAAP earnings per share of 37 cents, which topped the Zacks Consensus Estimate of 11 cents as well as the year-ago quarterly figure of 28 cents.

Total revenues of $238 million also surpassed the Zacks Consensus Estimate of $222 million. However, the top line was down 6.4% year over year and 1% sequentially due to reduction in sales of portable audio products shipping in smartphones, digital headsets and adapters.

Nonetheless, rise in amplifier sales among Android customers was a positive. Additionally, robust design momentum with new and existing customers across the company’s product portfolio is a tailwind.

Quarterly Details

Segment wise, portable audio product revenues (85% of total revenues) came in at $202.4 million, down 4.4% year over year. Non-portable audio and other products (15%) too decreased 16.4% to $33.3 million.

Cirrus Logic’s largest customer, apparently Apple, accounted for 72% of sales for the reported quarter. Another one delivered 10% of sales.

Non-GAAP gross profit was $122.7 million, which dipped 1.6% on a year-over-year basis. Gross margin, however, grew 250 basis points (bps) to 51.5%, driven by lower reserve expense and a favorable product mix.

Cirrus Logic’s non-GAAP operating expenses fell 5% to $99.6 million. However, non-GAAP operating income of $23.2 million increased 16.4%. Moreover, non-GAAP operating margin expanded 200 bps from the year-ago quarter to 10%.

Cirrus Logic, Inc. Price, Consensus and EPS Surprise

Cirrus Logic, Inc. Price, Consensus and EPS Surprise

Cirrus Logic, Inc. price-consensus-eps-surprise-chart | Cirrus Logic, Inc. Quote

Balance Sheet and Cash Flow

The company exited the fiscal first quarter with cash and cash equivalents of $198.1 million compared with $216.1 million at the end of the earlier reported quarter.

Accounts receivables were $111.5 million compared with $120.7 million in the last reported quarter. Notably, the company did not have any long-term debt during the quarter under review.

The company repurchased 885,085 shares worth $40 million during the quarter under discussion. As of Jun 29, 2019, it has $200 million remaining under share repurchase authorization.

Outlook

The company expects second-quarter fiscal 2020 revenues between $300 million and $340 million.

It envisions demand for certain portable components ahead of product launches in the second half of the year, to be a consistent tailwind.

Its growing share in the Android market and new product development activities are expected to be key catalysts in the long run. The company’s strong product portfolio comprising audio, voice and other adjacent market items, such as haptics, is a boon.

Zacks Rank and Stocks to Consider

Cirrus Logic currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Computer and Technology sector are LogMeIn LOGM, Alteryx AYX and Rosetta Stone RST, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for LogMeIn, Alteryx and Rosetta Stone is currently estimated at 5%, 13.7% and 12.5%, respectively.

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