Cirrus Logic Reports Q1 Revenue of $282.6 Million

Demand for Portable Audio Products Drives Strong September Guidance

AUSTIN, Texas--()--Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-precision analog and digital signal processing components, today posted on its investor relations website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the first quarter fiscal year 2016, which ended June 27, 2015, as well as the company’s current business outlook.

“Q1 was a great quarter for Cirrus Logic. We delivered solid financial results as demand for our smart codecs and amplifiers pushed revenue above the high end of our guidance”

“Q1 was a great quarter for Cirrus Logic. We delivered solid financial results as demand for our smart codecs and amplifiers pushed revenue above the high end of our guidance,” said Jason Rhode, president and chief executive officer. “FY16 looks to be an outstanding year with a significant increase in revenue being driven by new products. We expect strong demand for our audio and voice solutions to fuel additional growth in FY17.”

Reported Financial Results – First Quarter FY16

  • Revenue of $282.6 million;
  • GAAP and non-GAAP gross margin of approximately 47 percent;
  • GAAP operating expenses of $82.5 million, which included a one-time $12.5 million benefit from the sale of certain LED patents; non-GAAP operating expenses of $79.9 million; and
  • GAAP diluted earnings per share of $0.50 and non-GAAP diluted earnings per share of $0.54.

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

Business Outlook – Second Quarter FY16

  • Revenue is expected to range between $290 million and $310 million;
  • GAAP gross margin is expected to be between 45 percent and 47 percent; and
  • Combined GAAP R&D and SG&A expenses are expected to range between $96 million and $100 million, which includes approximately $9 million in share-based compensation and $7 million in amortization of acquired intangibles.

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 (404) 537-3406, or toll-free at (855) 859-2056 (Access Code: 75505782).

Cirrus Logic, Inc.

Cirrus Logic develops high-precision, analog and mixed-signal integrated circuits for a broad range of innovative customers. Building on its diverse analog and signal-processing patent portfolio, Cirrus Logic delivers highly optimized products for a variety of audio, industrial and energy-related applications. The company operates from headquarters in Austin, Texas, with offices in the United States, United Kingdom, Australia, Japan and Asia. More information about Cirrus Logic is available 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, effective tax rate 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 second quarter fiscal year 2016 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 second quarter of fiscal year 2016, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; and the risk factors listed in our Form 10-K for the year ended March 28, 2015, 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
 
Jun. 27, Mar. 28, Jun. 28,
  2015     2015     2014  
Q1'16 Q4'15 Q1'15
Portable audio products $ 235,866 $ 210,814 $ 112,570
Non-portable audio and other products   46,767     44,369     39,995  
Net sales   282,633     255,183     152,565  
Cost of sales   150,179     136,208     77,190  
Gross profit 132,454 118,975 75,375
Gross margin 46.9 % 46.6 % 49.4 %
 
Research and development 65,835 58,070 39,777
Selling, general and administrative 29,119 30,498 19,683
Patent agreement, net   (12,500 )   -     -  
Total operating expenses   82,454     88,568     59,460  
 
Income from operations 50,000 30,407 15,915
 
Interest expense, net (638 ) (869 ) (467 )
Other expense   136     392     501  
Income before income taxes 49,498 29,930 15,949
Provision for income taxes  

16,144

    8,581     5,701  
Net income $

33,354

  $ 21,349   $ 10,248  
 
Basic earnings per share: $

0.53

$ 0.34 $ 0.17
Diluted earnings per share: $

0.50

$ 0.32 $ 0.16
 
Weighted average number of shares:
Basic 63,274 62,852 62,032
Diluted 66,410 65,815 64,688
 
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
Jun. 27, Mar. 28, Jun. 28,
  2015     2015     2014  
Net Income Reconciliation Q1'16 Q4'15 Q1'15
GAAP Net Income $

33,354

$ 21,349 $ 10,248
Amortization of acquisition intangibles 7,141 7,141 246
Stock based compensation expense 8,271 7,735 5,622
Patent agreement, net (12,500 ) - -
Wolfson acquisition items - - 2,304
Provision (benefit) for income taxes  

(175

)   7,230     5,226  
Non-GAAP Net Income $ 36,091   $ 43,455   $ 23,646  
 
Earnings Per Share Reconciliation
GAAP Diluted earnings per share $

0.50

$ 0.32 $ 0.16
Effect of Amortization of acquisition intangibles 0.11 0.11 -
Effect of Stock based compensation expense 0.12 0.12 0.09
Effect of Patent agreement, net (0.19 ) - -
Effect of Wolfson acquisition items

-

- 0.04
Effect of Provision (benefit) for income taxes  

-

 

  0.11     0.08  
Non-GAAP Diluted earnings per share $ 0.54   $ 0.66   $ 0.37  
 
Operating Income Reconciliation
GAAP Operating Income $ 50,000 $ 30,407 $ 15,915
GAAP Operating Profit 18 % 12 % 10 %
Amortization of acquisition intangibles 7,141 7,141 246
Stock compensation expense - COGS 325 (10 ) 231
Stock compensation expense - R&D 3,868 2,994 2,543
Stock compensation expense - SG&A 4,078 4,751 2,848
Patent agreement, net (12,500 ) - -
Wolfson acquisition items   -     -     2,192  
Non-GAAP Operating Income $ 52,912   $ 45,283   $ 23,975  
Non-GAAP Operating Profit 19 % 18 % 16 %
 
Operating Expense Reconciliation
GAAP Operating Expenses $ 82,454 $ 88,568 $ 59,460
Amortization of acquisition intangibles (7,141 ) (7,141 ) (246 )
Stock compensation expense - R&D (3,868 ) (2,994 ) (2,543 )
Stock compensation expense - SG&A (4,078 ) (4,751 ) (2,848 )
Patent agreement, net 12,500 - -
Wolfson acquisition items   -     -     (2,192 )
Non-GAAP Operating Expenses $ 79,867   $ 73,682   $ 51,631  
 
Gross Margin/Profit Reconciliation
GAAP Gross Margin $ 132,454 $ 118,975 $ 75,375
GAAP Gross Profit 46.9 % 46.6 % 49.4 %
Stock compensation expense - COGS   325     (10 )   231  
Non-GAAP Gross Margin $ 132,779   $ 118,965   $ 75,606  
Non-GAAP Gross Profit 47.0 % 46.6 % 49.6 %
 
Effective Tax Rate Reconciliation
GAAP Tax Expense $

16,144

$ 8,581 $ 5,701
GAAP Effective Tax Rate

32.6

% 28.7 % 35.7 %
Adjustments to income taxes  

175

    (7,230 )   (5,226 )
Non-GAAP Tax Expense $ 16,319   $ 1,351   $ 475  
Non-GAAP Effective Tax Rate 31.1 % 3.0 % 2.0 %
 

 
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands)
  Jun. 27,     Mar. 28,     Jun. 28,
  2015     2015     2014  
ASSETS (unaudited) (unaudited)
Current assets
Cash and cash equivalents $ 102,531 $ 76,401 $ 268,544
Marketable securities 120,226 124,246 75,198
Accounts receivable, net 120,838 112,608 77,219
Inventories 126,195 84,196 92,002
Deferred tax asset

5,276

18,559 19,921
Other current assets   32,982     35,903     40,469  
Total current Assets

508,048

451,913 573,353
 
Long-term marketable securities 50,629 60,072 39,952
Property and equipment, net 152,018 144,346 102,765
Intangibles, net 169,158 175,743 11,341
Goodwill 263,583 263,115 16,367
Deferred tax asset 25,639 25,593 25,034
Other assets   24,578     27,996     1,007  
Total assets $

1,193,653

  $ 1,148,778   $ 769,819  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 146,370 $ 112,213 $ 75,695
Accrued salaries and benefits 21,380 24,132 11,598
Deferred income 4,736 6,105 7,398
Other accrued liabilities   30,636     34,128     14,080  
Total current liabilities 203,122 176,578 108,771
 
Long-term debt 160,439 180,439 -
Other long-term liabilities

30,320

34,990 4,039
 
Stockholders' equity:
Capital stock 1,170,436 1,159,494 1,088,493
Accumulated deficit

(367,691

) (400,613 ) (430,663 )
Accumulated other comprehensive loss  

(2,973

)   (2,110 )   (821 )
Total stockholders' equity  

799,772

    756,771     657,009  
Total liabilities and stockholders' equity $

1,193,653

  $ 1,148,778   $ 769,819  
 
Prepared in accordance with Generally Accepted Accounting Principles

Contacts

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

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