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Cirrus Logic Reports First Quarter Revenue of $393.6 Million

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Company Announces $500 Million Share Repurchase Program

AUSTIN, Texas, August 02, 2022--(BUSINESS WIRE)--Cirrus Logic, Inc. (Nasdaq: CRUS) today posted on its website at investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the first quarter fiscal year 2023, which ended June 25, 2022, as well as the company’s current business outlook.

"Cirrus Logic delivered record revenue for the June quarter, above the high end of guidance, as component shipments into smartphones exceeded expectations, and we continued to benefit from strong demand for flagship devices," said John Forsyth, Cirrus Logic president and chief executive officer. "We remain focused on delivering long-term growth through our investment in new technologies and high-performance mixed-signal products. With a compelling pipeline of low-power, low-latency signal processing components, we believe the company is well-positioned to drive content expansion opportunities in FY24 and beyond."

Reported Financial Results – First Quarter FY23

  • Revenue of $393.6 million;

  • GAAP and non-GAAP gross margin of 51.5 percent;

  • GAAP operating expenses of $148.4 million and non-GAAP operating expenses of $119.5 million; and

  • GAAP earnings per share of $0.69 and non-GAAP earnings per share of $1.12.

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

Business Outlook – Second Quarter FY23

  • Revenue is expected to range between $450 million and $490 million;

  • GAAP gross margin is forecasted to be between 49 percent and 51 percent; and

  • Combined GAAP R&D and SG&A expenses are anticipated to range between $154 million and $160 million, including approximately $20 million in stock-based compensation expense, $8 million in amortization of acquired intangibles, and $3 million in acquisition-related costs.

Share Repurchase Authorization

The company also announced that its Board of Directors recently authorized the repurchase of up to an additional $500 million of the company's common stock, in addition to the $136.1 million remaining from the Board’s previous share repurchase authorization in January 2021. The repurchases will be funded from working capital and anticipated cash flow from operations and may occur from time to time depending on a variety of factors, including general market and economic conditions and other corporate considerations. Repurchases may also be affected through open market purchases, 10b5-1 plans, or other means. The share repurchase program is designed to comply with all applicable securities laws and may be suspended or discontinued at any time without notice.

Cirrus Logic will host a live Q&A session at 5 p.m. EDT today to discuss its financial results and business outlook. Participants may listen to the conference call on the investor relations website at investor.cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (647) 362-9199, or toll-free at (800) 770-2030 (Access Code: 9542479).

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.

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, effective tax rate, free cash flow, and free cash flow margin. 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 ability to deliver long-term growth through investment in new technologies and high-performance mixed-signal products, drive content expansion opportunities in FY24 and beyond, and our estimates for the second quarter fiscal year 2023 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, amortization of acquired intangibles and acquisition-related costs. 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; increased industry-wide capacity constraints that may impact our ability to meet current customer demand, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships; the potential for increased prices due to capacity constraints in our supply chain, which, if we are unable to increase our selling price to our customers, could result in lower revenues and margins that could adversely affect our financial results; recent significant increases in inflation in the U.S. and overseas; the level and timing of orders and shipments during the second quarter of fiscal year 2023, 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 26, 2022 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:

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

(in thousands, except per share data; unaudited)

Three Months Ended

Jun. 25,

Mar. 26,

Jun. 26,

2022

2022

2021

Q1'23

Q4'22

Q1'22

Audio

$

254,496

$

327,099

$

217,355

High-Performance Mixed-Signal

139,143

162,873

59,898

Net sales

393,639

489,972

277,253

Cost of sales

191,005

231,243

137,307

Gross profit

202,634

258,729

139,946

Gross margin

51.5

%

52.8

%

50.5

%

Research and development

109,716

111,394

85,696

Selling, general and administrative

38,642

39,470

35,147

Total operating expenses

148,358

150,864

120,843

Income from operations

54,276

107,865

19,103

Interest income (expense)

305

(103

)

761

Other income (expense)

506

180

(242

)

Income before income taxes

55,087

107,942

19,622

Provision for income taxes

15,380

11,528

2,413

Net income

$

39,707

$

96,414

$

17,209

Basic earnings per share:

$

0.71

$

1.69

$

0.30

Diluted earnings per share:

$

0.69

$

1.64

$

0.29

Weighted average number of shares:

Basic

56,277

56,993

57,582

Diluted

57,804

58,625

59,513

Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION

(in thousands, except per share data; unaudited)

(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. 25,

Mar. 26,

Jun. 26,

2022

2022

2021

Net Income Reconciliation

Q1'23

Q4'22

Q1'22

GAAP Net Income

$

39,707

$

96,414

$

17,209

Amortization of acquisition intangibles

7,835

7,882

2,998

Stock-based compensation expense

18,138

17,024

14,984

Acquisition-related costs

3,164

3,164

-

Adjustment to income taxes

(4,300

)

(6,778

)

(2,949

)

Non-GAAP Net Income

$

64,544

$

117,706

$

32,242

Earnings Per Share Reconciliation

GAAP Diluted earnings per share

$

0.69

$

1.64

$

0.29

Effect of Amortization of acquisition intangibles

0.14

0.14

0.05

Effect of Stock-based compensation expense

0.31

0.29

0.25

Effect of Acquisition-related costs

0.05

0.05

-

Effect of Adjustment to income taxes

(0.07

)

(0.11

)

(0.05

)

Non-GAAP Diluted earnings per share

$

1.12

$

2.01

$

0.54

Operating Income Reconciliation

GAAP Operating Income

$

54,276

$

107,865

$

19,103

GAAP Operating Profit

13.8

%

22.0

%

6.9

%

Amortization of acquisition intangibles

7,835

7,882

2,998

Stock-based compensation expense - COGS

277

261

246

Stock-based compensation expense - R&D

12,592

11,786

9,612

Stock-based compensation expense - SG&A

5,269

4,977

5,126

Acquisition-related costs

3,164

3,164

-

Non-GAAP Operating Income

$

83,413

$

135,935

$

37,085

Non-GAAP Operating Profit

21.2

%

27.7

%

13.4

%

Operating Expense Reconciliation

GAAP Operating Expenses

$

148,358

$

150,864

$

120,843

Amortization of acquisition intangibles

(7,835

)

(7,882

)

(2,998

)

Stock-based compensation expense - R&D

(12,592

)

(11,786

)

(9,612

)

Stock-based compensation expense - SG&A

(5,269

)

(4,977

)

(5,126

)

Acquisition-related costs

(3,164

)

(3,164

)

-

Non-GAAP Operating Expenses

$

119,498

$

123,055

$

103,107

Gross Margin/Profit Reconciliation

GAAP Gross Profit

$

202,634

$

258,729

$

139,946

GAAP Gross Margin

51.5

%

52.8

%

50.5

%

Stock-based compensation expense - COGS

277

261

246

Non-GAAP Gross Profit

$

202,911

$

258,990

$

140,192

Non-GAAP Gross Margin

51.5

%

52.9

%

50.6

%

Effective Tax Rate Reconciliation

GAAP Tax Expense

$

15,380

$

11,528

$

2,413

GAAP Effective Tax Rate

27.9

%

10.7

%

12.3

%

Adjustments to income taxes

4,300

6,778

2,949

Non-GAAP Tax Expense

$

19,680

$

18,306

$

5,362

Non-GAAP Effective Tax Rate

23.4

%

13.5

%

14.3

%

Tax Impact to EPS Reconciliation

GAAP Tax Expense

$

0.27

$

0.20

$

0.04

Adjustments to income taxes

0.07

0.11

0.05

Non-GAAP Tax Expense

$

0.34

$

0.31

$

0.09

CONSOLIDATED CONDENSED BALANCE SHEET

(in thousands; unaudited)

Jun. 25,

Mar. 26,

Jun. 26,

2022

2022

2021

ASSETS

Current assets

Cash and cash equivalents

$

379,335

$

369,814

$

385,127

Marketable securities

18,397

10,601

60,503

Accounts receivable, net

206,272

240,264

136,534

Inventories

174,370

138,436

192,722

Other current assets

82,634

80,900

64,458

Total current Assets

861,008

840,015

839,344

Long-term marketable securities

55,965

63,749

311,643

Right-of-use lease assets

168,680

171,003

131,446

Property and equipment, net

157,165

157,077

158,451

Intangibles, net

149,984

158,145

18,429

Goodwill

435,936

435,791

287,518

Deferred tax asset

16,928

11,068

19,482

Long-term prepaid wafers

195,000

195,000

-

Other assets

65,236

91,552

47,693

Total assets

$

2,105,902

$

2,123,400

$

1,814,006

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

$

121,451

$

115,417

$

95,232

Accrued salaries and benefits

41,026

65,261

37,220

Lease liability

13,988

14,680

14,662

Acquisition-related liabilities

30,964

30,964

-

Other accrued liabilities

45,167

38,461

39,387

Total current liabilities

252,596

264,783

186,501

Non-current lease liability

159,344

163,162

126,442

Non-current income taxes

73,735

73,383

64,245

Long-term acquisition-related liabilities

11,856

8,692

-

Other long-term liabilities

9,184

13,563

30,087

Stockholders' equity:

Capital stock

1,596,684

1,578,427

1,514,549

Accumulated earnings (deficit)

5,894

23,435

(109,754

)

Accumulated other comprehensive income (loss)

(3,391

)

(2,045

)

1,936

Total stockholders' equity

1,599,187

1,599,817

1,406,731

Total liabilities and stockholders' equity

$

2,105,902

$

2,123,400

$

1,814,006

Prepared in accordance with Generally Accepted Accounting Principles

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

(in thousands; unaudited)

Three Months Ended

Jun. 25,

Jun. 26,

2022

2021

Q1'23

Q1'22

Cash flows from operating activities:

Net income

$

39,707

$

17,209

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization

16,515

11,898

Stock-based compensation expense

18,138

14,985

Deferred income taxes

(5,860

)

(9,270

)

Loss on retirement or write-off of long-lived assets

292

-

Other non-cash charges

99

108

Net change in operating assets and liabilities:

Accounts receivable, net

33,992

(27,822

)

Inventories

(35,934

)

(19,459

)

Other assets

549

(6,457

)

Accounts payable and other accrued liabilities

(20,327

)

(21,740

)

Income taxes payable

24,030

13,752

Acquisition-related liabilities

3,164

-

Net cash provided by (used in) operating activities

74,365

(26,796

)

Cash flows from investing activities:

Maturities and sales of available-for-sale marketable securities

4,694

49,158

Purchases of available-for-sale marketable securities

(5,186

)

(53,969

)

Purchases of property, equipment and software

(6,776

)

(10,835

)

Investments in technology

(448

)

(1,068

)

Net cash used in investing activities

(7,716

)

(16,714

)

Cash flows from financing activities:

Issuance of common stock, net of shares withheld for taxes

120

746

Repurchase of stock to satisfy employee tax withholding obligations

(866

)

(1,772

)

Repurchase and retirement of common stock

(56,382

)

(12,501

)

Net cash used in financing activities

(57,128

)

(13,527

)

Net increase (decrease) in cash and cash equivalents

9,521

(57,037

)

Cash and cash equivalents at beginning of period

369,814

442,164

Cash and cash equivalents at end of period

$

379,335

$

385,127

Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION

(in thousands; unaudited)

Free cash flow, a non-GAAP financial measure, is GAAP cash flow from operations (or cash provided by (used in) operating activities) less capital expenditures. Capital expenditures include purchases of property, equipment and software as well as investments in technology, as presented within our GAAP Consolidated Condensed Statement of Cash Flows. Free cash flow margin represents free cash flow divided by revenue.

Twelve Months Ended

Three Months Ended

Jun. 25,

Jun. 25,

Mar. 26,

Dec. 25,

Sep. 25,

2022

2022

2022

2021

2021

Q1'23

Q1'23

Q4'22

Q3'22

Q2'22

Net cash provided by (used in) operating activities (GAAP)

$

225,914

$

74,365

$

258,231

$

(135,855

)

$

29,173

Capital expenditures

(25,331

)

(7,224

)

(8,456

)

(3,724

)

(5,927

)

Free Cash Flow (Non-GAAP)

$

200,583

$

67,141

$

249,775

$

(139,579

)

$

23,246

Cash Flow from Operations as a Percentage of Revenue (GAAP)

12

%

19

%

53

%

-25

%

6

%

Free Cash Flow Margin (Non-GAAP)

11

%

17

%

51

%

-25

%

5

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20220802005447/en/

Contacts

Investor Contact:
Chelsea Heffernan
Vice President, Investor Relations
Cirrus Logic, Inc.
(512) 851-4125
Investor@cirrus.com