Cirrus Logic Inc.

05/01/2019 | Press release | Distributed by Public on 05/01/2019 14:06

Cirrus Logic Reports Q4 FY19 Revenue of $240.4 Million

Progress on Strategic Initiatives in FY19 Positions Company for Future Growth

AUSTIN, Texas--(BUSINESS WIRE)-- Cirrus Logic, Inc. (Nasdaq: CRUS),a leader in high-performance, low-power ICs for audio and voice signal processing applications, today posted on its website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the fourth quarter and full fiscal year 2019, which ended March 30, 2019, as well as the company's current business outlook.

'In FY19 we significantly expanded our penetration of the handset market, driven by strong demand for our boosted amplifiers,' said Jason Rhode, president and chief executive officer. 'Although smartphone market headwinds brought challenges this past year, revenue for the quarter was at the high end of guidance. We are pleased with our progress in FY19 as we executed on key strategic initiatives and gained momentum with new product lines, while expanding our customer base.'

Reported Financial Results - Fourth Quarter FY19

  • Revenue of $240.4 million;
  • GAAP and non-GAAP gross margin of 51.8 percent and 52 percent, respectively;
  • GAAP operating expenses of $117.5 million and non-GAAP operating expenses of $102.9 million; and
  • GAAP earnings per share of $0.10 and non-GAAP earnings per share of $0.37.

Reported Financial Results - Full Year FY19

  • Revenue of $1.19 billion;
  • GAAP and non-GAAP gross margin of 50.4 percent and 50.5 percent, respectively;
  • GAAP operating expenses of $496.7 million and non-GAAP operating expenses of $411.9 million; and
  • GAAP earnings per share of $1.46 and non-GAAP earnings per share of $2.64.

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

Business Outlook - First Quarter FY20

  • Revenue is expected to range between $200 million and $240 million;
  • GAAP gross margin is expected to be between 49 percent and 51 percent; and
  • Combined GAAP R&D and SG&A expenses are expected to range between $120 million and $126 million, which includes approximately $14 million in stock-based compensation and $7 million in amortization of acquired intangibles.

Cirrus Logic will host a live Q&A session at 5 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 [email protected]. 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: 6169247).

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.

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.

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 future growth opportunities, along with estimates for the first quarter fiscal year 2020 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock 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 first 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 31, 2018 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 Twelve Months Ended
Mar. 30, Dec. 29, Mar. 31, Mar. 30, Mar. 31,
2019 2018 2018 2019 2018
Q4'19 Q3'19 Q4'18 Q4'19 Q4'18
Portable products $ 207,099 $ 288,640 $ 262,777 $ 1,032,049 $ 1,363,876
Non-portable and other products 33,342 35,655 40,396 153,475 168,310
Net sales 240,441 324,295 303,173 1,185,524 1,532,186
Cost of sales 115,802 161,115 150,543 588,027 771,470
Gross profit 124,639 163,180 152,630 597,497 760,716
Gross margin 51.8 % 50.3 % 50.3 % 50.4 % 49.6 %
Research and development 92,251 88,575 95,556 375,139 366,444
Selling, general and administrative 30,194 30,364 36,307 126,502 131,811
Gain on sale of assets (4,913 ) - - (4,913 ) -
Total operating expenses 117,532 118,939 131,863 496,728 498,255
Income from operations 7,107 44,241 20,767 100,769 262,461
Interest income 2,248 1,740 1,378 6,960 3,609
U.K. pension settlement - (13,768 ) - (13,768 ) -
Other expense (150 ) 101 (158 ) (217 ) (971 )
Income before income taxes 9,205 32,314 21,987 93,744 265,099
Provision for income taxes 3,048 2,381 9,983 3,753 103,104
Net income $ 6,157 $ 29,933 $ 12,004 $ 89,991 $ 161,995
Basic earnings per share: $ 0.10 $ 0.50 $ 0.19 $ 1.50 $ 2.55
Diluted earnings per share: $ 0.10 $ 0.49 $ 0.19 $ 1.46 $ 2.46
Weighted average number of shares:
Basic 59,031 59,511 62,654 60,116 63,407
Diluted 60,199 60,783 64,572 61,583 65,951

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 Twelve Months Ended
Mar. 30, Dec. 29, Mar. 31, Mar. 30, Mar. 31,
2019 2018 2018 2019 2018
Net Income Reconciliation Q4'19 Q3'19 Q4'18 Q4'19 Q4'18
GAAP Net Income $ 6,157 $ 29,933 $ 12,004 $ 89,991 $ 161,995
Amortization of acquisition intangibles 7,228 7,630 13,266 40,991 48,066
Stock-based compensation expense 12,583 11,181 12,533 49,689 48,740
U.K. pension settlement - 13,768 - 13,768 -
Gain on asset sale (4,913 ) - - (4,913 ) -
Acquisition-related items - - (279 ) - (4,327 )
Adjustment to income taxes 1,202 (7,003 ) (4,502 ) (26,781 ) 27,254
Non-GAAP Net Income $ 22,257 $ 55,509 $ 33,022 $ 162,745 $ 281,728
Earnings Per Share Reconciliation
GAAP Diluted earnings per share $ 0.10 $ 0.49 $ 0.19 $ 1.46 $ 2.46
Effect of Amortization of acquisition intangibles 0.12 0.13 0.21 0.67 0.73
Effect of Stock-based compensation expense 0.21 0.18 0.19 0.81 0.74
Effect of U.K. pension settlement - 0.23 - 0.22 -
Effect of Gain on asset sale (0.08 ) - - (0.08 ) -
Effect of Acquisition-related items - - - - (0.07 )
Effect of Adjustment to income taxes 0.02 (0.12 ) (0.08 ) (0.44 ) 0.41
Non-GAAP Diluted earnings per share $ 0.37 $ 0.91 $ 0.51 $ 2.64 $ 4.27
Operating Income Reconciliation
GAAP Operating Income $ 7,107 $ 44,241 $ 20,767 $ 100,769 $ 262,461
GAAP Operating Profit 3 % 14 % 7 % 8 % 17 %
Amortization of acquisition intangibles 7,228 7,630 13,266 40,991 48,066
Stock-based compensation expense - COGS 288 220 422 877 1,474
Stock-based compensation expense - R&D 8,270 6,761 6,847 29,115 26,136
Stock-based compensation expense - SG&A 4,025 4,200 5,264 19,697 21,130
Gain on asset sale (4,913 ) - - (4,913 ) -
Acquisition-related items - - (279 ) - (4,327 )
Non-GAAP Operating Income $ 22,005 $ 63,052 $ 46,287 $ 186,536 $ 354,940
Non-GAAP Operating Profit 9 % 19 % 15 % 16 % 23 %
Operating Expense Reconciliation
GAAP Operating Expenses $ 117,532 $ 118,939 $ 131,863 $ 496,728 $ 498,255
Amortization of acquisition intangibles (7,228 ) (7,630 ) (13,266 ) (40,991 ) (48,066 )
Stock-based compensation expense - R&D (8,270 ) (6,761 ) (6,847 ) (29,115 ) (26,136 )
Stock-based compensation expense - SG&A (4,025 ) (4,200 ) (5,264 ) (19,697 ) (21,130 )
Gain on asset sale 4,913 - - 4,913 -
Acquisition-related items - - 279 - 4,327
Non-GAAP Operating Expenses $ 102,922 $ 100,348 $ 106,765 $ 411,838 $ 407,250
Gross Margin/Profit Reconciliation
GAAP Gross Profit $ 124,639 $ 163,180 $ 152,630 $ 597,497 $ 760,716
GAAP Gross Margin 51.8 % 50.3 % 50.3 % 50.4 % 49.6 %
Stock-based compensation expense - COGS 288 220 422 877 1,474
Non-GAAP Gross Profit $ 124,927 $ 163,400 $ 153,052 $ 598,374 $ 762,190
Non-GAAP Gross Margin 52.0 % 50.4 % 50.5 % 50.5 % 49.7 %
Effective Tax Rate Reconciliation
GAAP Tax Expense $ 3,048 $ 2,381 $ 9,983 $ 3,753 $ 103,104
GAAP Effective Tax Rate 33.1 % 7.4 % 45.4 % 4.0 % 38.9 %
Adjustments to income taxes (1,202 ) 7,003 4,502 26,781 (27,254 )
Non-GAAP Tax Expense $ 1,846 $ 9,384 $ 14,485 $ 30,534 $ 75,850
Non-GAAP Effective Tax Rate 7.7 % 14.5 % 30.5 % 15.8 % 21.2 %
Tax Impact to EPS Reconciliation
GAAP Tax Expense $ 0.05 $ 0.04 $ 0.15 $ 0.06 $ 1.56
Adjustments to income taxes (0.02 ) 0.12 0.08 0.44 (0.41 )
Non-GAAP Tax Expense $ 0.03 $ 0.16 $ 0.23 $ 0.50 $ 1.15
CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands
Mar. 30, Dec. 29, Mar. 31,
2019 2018 2018
ASSETS
Current assets
Cash and cash equivalents $ 216,172 $ 219,319 $ 235,604
Marketable securities 70,183 59,793 26,397
Accounts receivable, net 120,656 142,135 100,801
Inventories 164,733 167,879 205,760
Other current assets 53,239 51,151 45,112
Total current Assets 624,983 640,277 613,674
Long-term marketable securities 158,968 165,063 172,499
Property and equipment, net 186,185 191,324 191,154
Intangibles, net 67,847 76,389 111,547
Goodwill 286,241 286,678 288,718
Deferred tax asset 8,727 13,131 14,716
Other assets 19,689 24,003 37,809
Total assets $ 1,352,640 $ 1,396,865 $ 1,430,117
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 48,398 $ 108,022 $ 69,850
Accrued salaries and benefits 29,289 23,566 35,721
Other accrued liabilities 37,853 38,175 34,638
Total current liabilities 115,540 169,763 140,209
Non-current income taxes 78,309 78,532 92,753
Other long-term liabilities 18,551 18,769 35,427
Stockholders' equity:
Capital stock 1,363,736 1,349,941 1,312,434
Accumulated deficit (222,430 ) (217,871 ) (139,345 )
Accumulated other comprehensive income (loss) (1,066 ) (2,269 ) (11,361 )
Total stockholders' equity 1,140,240 1,129,801 1,161,728
Total liabilities and stockholders' equity $ 1,352,640 $ 1,396,865 $ 1,430,117
Prepared in accordance with Generally Accepted Accounting Principles

View source version on businesswire.com : https://www.businesswire.com/news/home/20190501005718/en/

Investor Contact:
Thurman K. Case
Chief Financial Officer
Cirrus Logic, Inc.
(512) 851-4125
[email protected]

Source: Cirrus Logic, Inc.