Strong Demand for Portable Audio Products
Expected to Fuel Continued Growth in Q3
Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-precision
analog and digital signal processing products, today posted on its
investor relations website at http://investor.cirrus.com the
quarterly Shareholder Letter that contains the complete financial
results for the second quarter of fiscal year 2017, which ended
Sept. 24, 2016, as well as the company’s current business
outlook.
“Robust demand for portable audio products drove Cirrus Logic’s
revenue above the high end of guidance,” said Jason Rhode,
president and chief executive officer. “We are extremely pleased
with our progress in the September quarter as we began volume
shipments of our new digital headset solution, expanded our share
with boosted amplifiers and ramped production in a mid-tier
smartphone at another leading customer. With a broad portfolio of
components that span the entire audio signal chain we believe we
are well positioned to capitalize on a variety of growth vectors in
the coming years.”
Reported Financial Results – Second Quarter FY17
- Revenue of $428.6 million;
- GAAP and non-GAAP gross margin of 49.4
percent;
- GAAP operating expenses of $107.8
million and non-GAAP operating expenses of $93.3 million; and
- GAAP diluted earnings per share of
$1.19 and non-GAAP diluted earnings per share of $1.35.
A reconciliation of the non-GAAP charges is included in the
tables accompanying this press release.
Business Outlook – Third Quarter FY17
- Revenue is expected to range between
$475 million and $515 million;
- GAAP gross margin is expected to be
between 47 percent and 49 percent; and
- Combined GAAP R&D and SG&A
expenses are expected to range between $107 million and $113
million, which includes approximately $11 million in share-based
compensation and $8 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 (404) 537-3406, or
toll-free at (855) 859-2056 (Access Code: 90417574).
Cirrus Logic, Inc.
Cirrus Logic is a leader in high performance,
low-power ICs for audio and voice 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.
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 gross margins, operating expenses, net income, operating
profit and income, tax expenses 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 future growth opportunities and our estimates of third
quarter fiscal year 2017 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 third
quarter of fiscal year 2017, customer cancellations of orders, or
the failure to place orders consistent with forecasts, along with
the timing and success of new product ramps; and the risk factors
listed in our Form 10-K for the year ended March 26, 2016, 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 registered trademarks of Cirrus
Logic, Inc. All other company or product names noted herein may be
trademarks of their respective holders.
Summary financial data follows:
CIRRUS LOGIC, INC. CONSOLIDATED CONDENSED
STATEMENT OF OPERATIONS (unaudited) (in thousands,
except per share data) Three Months
Ended Six Months Ended
Sep. 24, Jun. 25, Sep.
26, Sep. 24, Sep. 26, 2016
2016 2015
2016 2015 Q2'17
Q1'17 Q2'16 Q2'17 Q2'16 Portable audio
products $ 383,410 $ 216,068 $ 257,152 $ 599,478 $ 493,018
Non-portable audio and other products 45,209
43,360 49,604 88,569
96,371
Net sales 428,619
259,428 306,756
688,047 589,389 Cost of sales
216,920 132,743 164,535
349,663 314,714
Gross profit
211,699 126,685 142,221 338,384
274,675 Gross margin 49.4 % 48.8
% 46.4 % 49.2 % 46.6
% Research and development 75,673 73,934 67,258
149,607 133,093 Selling, general and administrative 32,089 30,540
30,103 62,629 59,222 Patent agreement and other -
- 752 - (11,748 )
Total operating expenses 107,762 104,474
98,113 212,236 180,567
Income from operations 103,937
22,211 44,108 126,148 94,108
Interest expense, net (1,003 ) (689 ) (709 ) (1,692 ) (1,454 )
Other income (expense), net (261 ) 147
(416 ) (114 ) (173 )
Income before income
taxes 102,673 21,669 42,983 124,342
92,481 Provision for income taxes 24,608
5,805 8,103 30,413
24,247
Net income $ 78,065
$ 15,864 $ 34,880
$ 93,929 $ 68,234
Basic earnings per share: $ 1.24 $ 0.25 $ 0.55 $ 1.50 $ 1.08
Diluted earnings per share: $ 1.19 $ 0.24 $ 0.53 $ 1.43 $ 1.03
Weighted average number of shares: Basic 62,787 62,450
63,346 62,618 63,310 Diluted 65,717 65,232 66,329 65,521 66,378
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.
Certain modifications to prior year non-GAAP presentation has been
made and had no material effect on the results of operations.
Three Months Ended Six Months
Ended Sep. 24,
Jun. 25, Sep. 26, Sep. 24, Sep. 26,
2016 2016
2015 2016 2015
Net Income Reconciliation
Q2'17 Q1'17
Q2'16 Q2'17 Q2'16 GAAP Net Income
$ 78,065 $ 15,864 $
34,880 $ 93,929 $ 68,234
Amortization of acquisition intangibles 8,326 8,363 8,133 16,689
15,274 Stock based compensation expense 9,925 9,310 8,688 19,235
16,959 Patent agreement and other - - 752 - (11,748 )
Acquisition-related items (3,566 ) - - (3,566 ) - Adjustment to
income taxes (4,277 ) (4,639 ) (9,492 )
(8,916 ) (9,667 )
Non-GAAP Net Income $
88,473 $ 28,898 $
42,961 $ 117,371 $
79,052 Earnings Per Share Reconciliation
GAAP Diluted earnings per share $ 1.19
$ 0.24 $ 0.53 $ 1.43
$ 1.03 Effect of Amortization of acquisition
intangibles 0.13 0.13 0.12 0.26 0.23 Effect of Stock based
compensation expense 0.15 0.14 0.13 0.29 0.26 Effect of Patent
agreement and other - - 0.01 - (0.18 ) Effect of
Acquisition-related items (0.05 ) - - (0.05 ) - Effect of
Adjustment to income taxes (0.07 ) (0.07 ) (0.14 ) (0.14 ) (0.15 )
Non-GAAP Diluted earnings per
share $ 1.35 $ 0.44
$ 0.65 $ 1.79 $
1.19 Operating Income Reconciliation
GAAP
Operating Income $ 103,937 $ 22,211
$ 44,108 $ 126,148 $
94,108 GAAP Operating Profit 24 % 9 % 14 % 18 % 16 %
Amortization of acquisition intangibles 8,326 8,363 8,133 16,689
15,274 Stock compensation expense - COGS 235 230 380 465 705 Stock
compensation expense - R&D 4,905 5,216 4,126 10,121 7,994 Stock
compensation expense - SG&A 4,785 3,864 4,182 8,649 8,260
Patent agreement and other - - 752 - (11,748 ) Acquisition-related
items (3,566 ) - - (3,566
) -
Non-GAAP Operating Income $
118,622 $ 39,884 $
61,681 $ 158,506 $
114,593 Non-GAAP Operating Profit 28 % 15 % 20 % 23 %
19 % Operating Expense Reconciliation
GAAP Operating
Expenses $ 107,762 $ 104,474
$ 98,113 $ 212,236 $
180,567 Amortization of acquisition intangibles (8,326 )
(8,363 ) (8,133 ) (16,689 ) (15,274 ) Stock compensation expense -
R&D (4,905 ) (5,216 ) (4,126 ) (10,121 ) (7,994 ) Stock
compensation expense - SG&A (4,785 ) (3,864 ) (4,182 ) (8,649 )
(8,260 ) Patent agreement and other - - (752 ) - 11,748
Acquisition-related items 3,566 -
- 3,566 -
Non-GAAP
Operating Expenses $ 93,312 $
87,031 $ 80,920 $
180,343 $ 160,787 Gross
Margin/Profit Reconciliation
GAAP Gross Margin $
211,699 $ 126,685 $ 142,221
$ 338,384 $ 274,675 GAAP Gross Profit
49.4 % 48.8 % 46.4 % 49.2 % 46.6 % Stock compensation expense -
COGS 235 230 380
465 705
Non-GAAP Gross Margin $
211,934 $ 126,915 $
142,601 $ 338,849 $
275,380 Non-GAAP Gross Profit 49.4 % 48.9 % 46.5 %
49.2 % 46.7 % Effective Tax Rate Reconciliation
GAAP Tax
Expense $ 24,608 $ 5,805 $
8,103 $ 30,413 $ 24,247 GAAP
Effective Tax Rate 24.0 % 26.8 % 18.9 % 24.5 % 26.2 % Adjustments
to income taxes 4,277 4,639
9,492 8,916 9,667
Non-GAAP
Tax Expense $ 28,885 $
10,444 $ 17,595 $
39,329 $ 33,914 Non-GAAP
Effective Tax Rate 24.6 % 26.5 % 29.1 % 25.1 % 30.0 % Tax
Impact to EPS Reconciliation
GAAP Tax Expense $
0.37 $ 0.09 $ 0.12 $
0.46 $ 0.37 Adjustments to income taxes
0.07 0.07 0.14 0.14
0.15
Non-GAAP Tax Expense $
0.44 $ 0.16 $ 0.26
$ 0.60 $ 0.52
CIRRUS LOGIC, INC. CONSOLIDATED CONDENSED
BALANCE SHEET
(in thousands)
Sep. 24, Mar.
26, Sep. 26, 2016
2016 2015 ASSETS (unaudited)
(unaudited) Current assets Cash and cash equivalents $ 113,264 $
168,793 $ 56,333 Marketable securities 116,087 60,582 86,460
Accounts receivable, net 269,559 88,532 169,423 Inventories 161,254
142,015 143,867 Deferred tax asset - - 8,502
Other current assets
35,788 46,207 51,329
Total current assets
695,952 506,129 515,914 Long-term marketable securities
2,004 20,631 22,393 Property and equipment, net 164,029 162,656
158,529 Intangibles, net 150,108 162,832 179,816 Goodwill 287,518
287,518 289,565 Deferred tax asset 28,009 25,772 25,603 Other
assets 17,914 16,345 20,474
Total assets $ 1,345,534 $ 1,181,883 $
1,212,294 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Accounts payable $ 130,458 $ 71,619 $ 111,023
Accrued salaries and benefits 30,257 21,239 29,156 Deferred income
- - 5,582 Other accrued liabilities 29,394
35,266 42,181 Total current liabilities
190,109 128,124 187,942 Long-term debt 140,000 160,439
160,439 Other long-term liabilities 46,277 33,837 34,990
Stockholders' equity: Capital stock 1,236,492 1,203,496 1,183,262
Accumulated deficit (267,887 ) (344,345 ) (352,374 ) Accumulated
other comprehensive income (loss) 543 332
(1,965 ) Total stockholders' equity 969,148
859,483 828,923 Total
liabilities and stockholders' equity $ 1,345,534 $ 1,181,883
$ 1,212,294 Prepared in accordance with
Generally Accepted Accounting Principles
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version on businesswire.com: http://www.businesswire.com/news/home/20161027006324/en/
Cirrus Logic, Inc.Thurman K. Case, 512-851-4125Chief Financial
OfficerInvestor.Relations@cirrus.com
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