Cirrus Logic Reports Revenue of $298.6 Million

Growth in the December Quarter Driven by Strong Demand for Portable Audio Products

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 third quarter fiscal year 2015, which ended Dec. 27, 2014, as well as the company’s current business outlook.

“Q3 was an excellent quarter for Cirrus Logic, as strength in portable audio fueled revenue growth and operating profit expansion,” said Jason Rhode, president and chief executive officer. “We are very excited about the outlook for Cirrus Logic. We expect to deliver year-over-year revenue growth in Q4 and FY16 driven by a continued strong market for our innovative audio and voice products, a compelling lineup of new product introductions, and significantly improved contributions from the Wolfson acquisition.”

Reported Financial Results – Third Quarter FY15

  • Revenue of $298.6 million;
  • GAAP gross margin of 43.8 percent and non-GAAP gross margin of 46.2 percent;
  • GAAP operating expenses of $86.5 million and non-GAAP operating expenses of $70.6 million; and
  • GAAP diluted earnings per share of $0.35 and non-GAAP diluted earnings per share of $0.97.

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

Business Outlook – Fourth Quarter FY15

  • Revenue is expected to range between $220 million and $240 million;
  • GAAP gross margin is expected to be between 45 percent and 47 percent; and
  • Combined R&D and SG&A expenses are expected to range between $88 million and $92 million, which includes approximately $8 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: 61707935).

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, Europe, 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, 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 our estimates of fourth quarter fiscal year 2015 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 fourth quarter of fiscal year 2015, 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 29, 2014, 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, Cirrus and Wolfson are registered trademarks of Cirrus Logic, Inc. or its subsidiaries. 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 Nine Months Ended
Dec. 27, Sep. 27, Dec. 28, Dec. 27, Dec. 28,
2014 2014 2013 2014 2013
Q3'15 Q2'15 Q3'14 Q3'15 Q3'14
Portable products $ 253,355 $ 163,563 $ 181,749 $ 529,487 $ 449,305
Consumer, automotive and other products   45,251     46,651     37,134     131,898     115,374  
Net sales   298,606     210,214     218,883     661,385     564,679  
Cost of sales   167,775     109,647     115,034     354,612     281,884  
Gross profit 130,831 100,567 103,849 306,773 282,795
Gross margin 43.8 % 47.8 % 47.4 % 46.4 % 50.1 %
 
Research and development 55,474 44,557 32,426 139,808 90,678
Selling, general and administrative 27,783 21,545 18,625 69,011 57,038
Acquisition related costs 3,200 14,937 - 18,137 -
Restructuring and other - 1,455 12 1,455 (572 )
Patent infringement settlements, net   -     -     -     -     695  
Total operating expenses   86,457     82,494     51,063     228,411     147,839  
 
Income from operations 44,374 18,073 52,786 78,362 134,956
 
Interest income (expense), net (1,042 ) (2,670 ) 222 (4,179 ) 581
Other expense   (1,071 )   (11,994 )   (45 )   (12,564 )   (100 )
Income before income taxes 42,261 3,409 52,963 61,619 135,437
Provision for income taxes   19,532     2,557     11,463     27,790     39,928  
Net income $ 22,729  

 

$ 852   $ 41,500   $ 33,829  

 

$ 95,509  
 
Basic earnings per share: $ 0.36 $ 0.01 $ 0.66 $ 0.54 $ 1.51
Diluted earnings per share: $ 0.35 $ 0.01 $ 0.63 $ 0.52 $ 1.45
 
Weighted average number of shares:
Basic 62,885 62,241 62,854 62,386 63,170
Diluted 65,214 65,085 65,368 65,024 65,894
 
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 Nine Months Ended
Dec. 27,   Sep. 27,   Dec. 28, Dec. 27,   Dec. 28,
2014 2014 2013 2014 2013
Net Income Reconciliation Q3'15 Q2'15 Q3'14 Q3'15 Q3'14
GAAP Net Income $ 22,729 $ 852 $ 41,500 $ 33,829 $ 95,509
Amortization of acquisition intangibles 5,151 2,524 275 7,921 275
Stock based compensation expense 7,815 6,496 6,016 19,933 17,529
Provision for litigation expenses and settlements - - - - 695
Restructuring and other costs, net - 1,455 12 1,455 (572 )
Wolfson acquisition items 9,903 30,875 - 43,082 -
Provision (benefit) for income taxes   17,714     1,764     10,300     24,704     36,839  
Non-GAAP Net Income $ 63,312   $ 43,966   $ 58,103   $ 130,924   $ 150,275  
 
Earnings Per Share Reconciliation
GAAP Diluted earnings per share $ 0.35 $ 0.01 $ 0.63 $ 0.52 $ 1.45
Effect of Amortization of acquisition intangibles 0.08 0.04 - 0.12 -
Effect of Stock based compensation expense 0.12 0.10 0.10 0.31 0.27
Effect of Provision for litigation expenses and settlements - - - - 0.01
Effect of Restructuring and other costs, net - 0.03 - 0.02 (0.01 )
Effect of Wolfson acquisition items 0.15 0.47 - 0.66 -
Effect of Provision (benefit) for income taxes   0.27     0.03     0.16     0.38     0.56  
Non-GAAP Diluted earnings per share $ 0.97   $ 0.68   $ 0.89   $ 2.01   $ 2.28  
 
Operating Income Reconciliation
GAAP Operating Income $ 44,374 $ 18,073 $ 52,786 $ 78,362 $ 134,956
GAAP Operating Profit 15 % 9 % 24 % 12 % 24 %
Amortization of acquisition intangibles 5,151 2,524 275 7,921 275
Stock compensation expense - COGS 273 253 332 757 577
Stock compensation expense - R&D 2,904 2,781 2,834 8,228 7,846
Stock compensation expense - SG&A 4,638 3,462 2,850 10,948 9,106
Provision for litigation expenses and settlements - - - - 695
Restructuring and other costs, net - 1,455 12 1,455 (572 )
Wolfson acquisition items   9,903     16,547     -     28,642     -  
Non-GAAP Operating Income $ 67,243   $ 45,095   $ 59,089   $ 136,313   $ 152,883  
Non-GAAP Operating Profit 23 % 21 % 27 % 21 % 27 %
 
Operating Expense Reconciliation
GAAP Operating Expenses $ 86,457 $ 82,494 $ 51,063 $ 228,411 $ 147,839
Amortization of acquisition intangibles (5,151 ) (2,524 ) (275 ) (7,921 ) (275 )
Stock compensation expense - R&D (2,904 ) (2,781 ) (2,834 ) (8,228 ) (7,846 )
Stock compensation expense - SG&A (4,638 ) (3,462 ) (2,850 ) (10,948 ) (9,106 )
Provision for litigation expenses and settlements - - - - (695 )
Restructuring and other costs, net - (1,455 ) (12 ) (1,455 ) 572
Wolfson acquisition items   (3,200 )   (14,937 )   -     (20,329 )   -  
Non-GAAP Operating Expenses $ 70,564   $ 57,335   $ 45,092   $ 179,530   $ 130,489  
 
Gross Margin/Profit Reconciliation
GAAP Gross Margin $ 130,831 $ 100,567 $ 103,849 $ 306,773 $ 282,795
GAAP Gross Profit 43.8 % 47.8 % 47.4 % 46.4 % 50.1 %
Wolfson acquisition items 6,703 1,610 - 8,313 -
Stock compensation expense - COGS   273     253     332     757     577  
Non-GAAP Gross Margin $ 137,807   $ 102,430   $ 104,181   $ 315,843   $ 283,372  
Non-GAAP Gross Profit 46.2 % 48.7 % 47.6 % 47.8 % 50.2 %

 
 
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands)
     
Dec. 27, Mar. 29, Dec. 28,
2014 2014 2013
(unaudited) (unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 66,607 $ 31,850 $ 74,690
Marketable securities 106,061 263,417 215,792
Accounts receivable, net 148,386 63,220 109,535
Inventories 73,896 69,743 69,985
Deferred tax asset 14,143 22,024 33,155
Other current assets   27,081     25,079     25,662  
Total current Assets 436,174 475,333 528,819
 
Long-term marketable securities 3,404 89,243 37,115
Property and equipment, net 137,291 103,650 102,542
Intangibles, net 181,675 11,999 13,427
Goodwill 264,879 16,367 16,335
Deferred tax asset 24,991 25,065 17,354
Other assets   16,654     3,087     6,848  
Total assets $ 1,065,068   $ 724,744   $ 722,440  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 77,195 $ 51,932 $ 60,493
Accrued salaries and benefits 20,164 13,388 13,937
Deferred income 5,417 5,631 4,998
Other accrued liabilities   27,402     11,572     12,881  
Total current liabilities 130,178 82,523 92,309
 
Long-term debt 200,439 - -
Other long-term liabilities 21,073 4,863 5,108
 
Stockholders' equity:
Capital stock 1,135,719 1,078,878 1,069,113
Accumulated deficit (421,514 ) (440,634 ) (443,322 )
Accumulated other comprehensive loss   (827 )   (886 )   (768 )
Total stockholders' equity   713,378     637,358     625,023  
Total liabilities and stockholders' equity $ 1,065,068   $ 724,744   $ 722,440  
 
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

Contacts

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