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Cirrus Logic Reports Q3 FY20 Revenue of $374.7 Million

·11 mins read

Smartphone Volumes Drive Revenue Above Expectations

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 third quarter fiscal year 2020, which ended Dec. 28, 2019, as well as the company’s current business outlook.

"Cirrus Logic’s revenue for the December quarter exceeded guidance as we experienced higher-than-anticipated volumes for certain components shipping into smartphones," said Jason Rhode, chief executive officer. "During the quarter, development activities across existing and new product categories progressed, and the company continued to execute on key strategic initiatives. With a compelling pipeline of products addressing audio, voice and other signal-processing applications, we believe Cirrus Logic is well positioned for long-term success."

Reported Financial Results – Third Quarter FY20

  • Revenue of $374.7 million;

  • GAAP and non-GAAP gross margin are 52.7 percent and 52.8, respectively;

  • GAAP operating expenses of $124.8 million and non-GAAP operating expenses of $103.2 million; and

  • GAAP earnings per share of $1.13 and non-GAAP earnings per share of $1.41.

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

Business Outlook – Fourth Quarter FY20

  • Revenue is expected to range between $250 million and $290 million;

  • GAAP gross margin to be between 51 percent and 53 percent; and

  • Combined GAAP R&D and SG&A expenses to range between $115 million and $121 million, including approximately $14 million in stock-based compensation expense and $3 million in amortization of acquired intangibles;

  • GAAP operating expense is expected to include a restructuring charge of approximately $22 million.

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 (416) 621-4642, or toll-free at (800) 585-8367 (Access Code: 8287509).

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, 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 belief that Cirrus Logic is well positioned for long-term success, along with estimates for the fourth quarter fiscal year 2020 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, amortization of acquired intangibles and restructuring charges. 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 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

Nine Months Ended

Dec. 28,

Sep. 28,

Dec. 29,

Dec. 28,

Dec. 29,

2019

2019

2018

2019

2018

Q3'20

Q2'20

Q3'19

Q3'20

Q3'19

Portable products

$

344,870

$

349,379

$

288,640

$

897,187

$

824,950

Non-portable and other products

29,798

39,533

35,655

104,646

120,133

Net sales

374,668

388,912

324,295

1,001,833

945,083

Cost of sales

177,163

180,979

161,115

473,901

472,225

Gross profit

197,505

207,933

163,180

527,932

472,858

Gross margin

52.7

%

53.5

%

50.3

%

52.7

%

50.0

%

Research and development

88,713

88,239

88,575

265,782

282,888

Selling, general and administrative

36,113

33,018

30,364

98,651

96,308

Total operating expenses

124,826

121,257

118,939

364,433

379,196

Income from operations

72,679

86,676

44,241

163,499

93,662

Interest income

2,392

2,250

1,740

6,927

4,712

U.K. pension settlement

-

-

(13,768

)

-

(13,768

)

Other (expense) income

(563

)

(568

)

101

(1,509

)

(67

)

Income before income taxes

74,508

88,358

32,314

168,917

84,539

Provision for income taxes

5,996

12,148

2,381

19,577

705

Net income

$

68,512

$

76,210

$

29,933

$

149,340

$

83,834

Basic earnings per share:

$

1.18

$

1.31

$

0.50

$

2.56

$

1.39

Diluted earnings per share:

$

1.13

$

1.27

$

0.49

$

2.47

$

1.35

Weighted average number of shares:

Basic

58,188

58,011

59,511

58,247

60,482

Diluted

60,492

60,213

60,783

60,395

62,076

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

Nine Months Ended

Dec. 28,

Sep. 28,

Dec. 29,

Dec. 28,

Dec. 29,

2019

2019

2018

2019

2018

Net Income Reconciliation

Q3'20

Q2'20

Q3'19

Q3'20

Q3'19

GAAP Net Income

$

68,512

$

76,210

$

29,933

$

149,340

$

83,834

Amortization of acquisition intangibles

6,470

6,722

7,630

20,420

33,763

Stock-based compensation expense

14,160

13,759

11,181

39,705

37,106

Restructuring costs

1,323

-

-

1,323

-

U.K. pension settlement

-

-

13,768

-

13,768

Adjustment to income taxes

(4,871

)

(3,417

)

(7,003

)

(11,091

)

(27,983

)

Non-GAAP Net Income

$

85,594

$

93,274

$

55,509

$

199,697

$

140,488

Earnings Per Share Reconciliation

GAAP Diluted earnings per share

$

1.13

$

1.27

$

0.49

$

2.47

$

1.35

Effect of Amortization of acquisition intangibles

0.11

0.11

0.13

0.34

0.54

Effect of Stock-based compensation expense

0.23

0.23

0.18

0.66

0.60

Effect of Restructuring costs

0.02

-

-

0.02

-

Effect of U.K. pension settlement

-

-

0.23

-

0.22

Effect of Adjustment to income taxes

(0.08

)

(0.06

)

(0.12

)

(0.18

)

(0.45

)

Non-GAAP Diluted earnings per share

$

1.41

$

1.55

$

0.91

$

3.31

$

2.26

Operating Income Reconciliation

GAAP Operating Income

$

72,679

$

86,676

$

44,241

$

163,499

$

93,662

GAAP Operating Profit

19.4

%

22.3

%

13.6

%

16.3

%

9.9

%

Amortization of acquisition intangibles

6,470

6,722

7,630

20,420

33,763

Stock-based compensation expense - COGS

200

254

220

695

589

Stock-based compensation expense - R&D

9,343

7,830

6,761

24,413

20,845

Stock-based compensation expense - SG&A

4,617

5,675

4,200

14,597

15,672

Restructuring costs

1,323

-

-

1,323

-

Non-GAAP Operating Income

$

94,632

$

107,157

$

63,052

$

224,947

$

164,531

Non-GAAP Operating Profit

25.3

%

27.6

%

19.4

%

22.5

%

17.4

%

Operating Expense Reconciliation

GAAP Operating Expenses

$

124,826

$

121,257

$

118,939

$

364,433

$

379,196

Amortization of acquisition intangibles

(6,470

)

(6,722

)

(7,630

)

(20,420

)

(33,763

)

Stock-based compensation expense - R&D

(9,343

)

(7,830

)

(6,761

)

(24,413

)

(20,845

)

Stock-based compensation expense - SG&A

(4,617

)

(5,675

)

(4,200

)

(14,597

)

(15,672

)

Restructuring costs

(1,201

)

-

-

(1,201

)

-

Non-GAAP Operating Expenses

$

103,195

$

101,030

$

100,348

$

303,802

$

308,916

Gross Margin/Profit Reconciliation

GAAP Gross Profit

$

197,505

$

207,933

$

163,180

$

527,932

$

472,858

GAAP Gross Margin

52.7

%

53.5

%

50.3

%

52.7

%

50.0

%

Stock-based compensation expense - COGS

200

254

220

695

589

Restructuring costs - COGS

122

-

-

122

-

Non-GAAP Gross Profit

$

197,827

$

208,187

$

163,400

$

528,749

$

473,447

Non-GAAP Gross Margin

52.8

%

53.5

%

50.4

%

52.8

%

50.1

%

Effective Tax Rate Reconciliation

GAAP Tax Expense

$

5,996

$

12,148

$

2,381

$

19,577

$

705

GAAP Effective Tax Rate

8.0

%

13.7

%

7.4

%

11.6

%

0.8

%

Adjustments to income taxes

4,871

3,417

7,003

11,091

27,983

Non-GAAP Tax Expense

$

10,867

$

15,565

$

9,384

$

30,668

$

28,688

Non-GAAP Effective Tax Rate

11.3

%

14.3

%

14.5

%

13.3

%

17.0

%

Tax Impact to EPS Reconciliation

GAAP Tax Expense

$

0.10

$

0.20

$

0.04

$

0.32

$

0.01

Adjustments to income taxes

0.08

0.06

0.12

0.18

0.45

Non-GAAP Tax Expense

$

0.18

$

0.26

$

0.16

$

0.50

$

0.46

CONSOLIDATED CONDENSED BALANCE SHEET

unaudited; in thousands

Dec. 28,

Mar. 30,

Dec. 29,

2019

2019

2018

ASSETS

Current assets

Cash and cash equivalents

$

342,301

$

216,172

$

219,319

Marketable securities

13,098

70,183

59,793

Accounts receivable, net

175,937

120,656

142,135

Inventories

137,920

164,733

167,879

Other current assets

45,345

53,239

51,151

Total current Assets

714,601

624,983

640,277

Long-term marketable securities

250,162

158,968

165,063

Right-of-use lease assets

141,348

-

-

Property and equipment, net

174,390

186,185

191,324

Intangibles, net

47,133

67,847

76,389

Goodwill

285,904

286,241

286,678

Deferred tax asset

9,183

8,727

13,131

Other assets

24,819

19,689

24,003

Total assets

$

1,647,540

$

1,352,640

$

1,396,865

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

$

98,835

$

48,398

$

108,022

Accrued salaries and benefits

34,228

29,289

23,566

Other accrued liabilities

45,248

37,853

38,175

Total current liabilities

178,311

115,540

169,763

Non-current lease liability

133,993

-

-

Non-current income taxes

72,422

78,309

78,532

Other long-term liabilities

2,934

18,551

18,769

Stockholders' equity:

Capital stock

1,417,646

1,363,736

1,349,941

Accumulated deficit

(157,869

)

(222,430

)

(217,871

)

Accumulated other comprehensive income (loss)

103

(1,066

)

(2,269

)

Total stockholders' equity

1,259,880

1,140,240

1,129,801

Total liabilities and stockholders' equity

$

1,647,540

$

1,352,640

$

1,396,865

Prepared in accordance with Generally Accepted Accounting Principles

View source version on businesswire.com: https://www.businesswire.com/news/home/20200129005649/en/

Contacts

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