Cirrus Logic Reports Fiscal Third Quarter Revenue of $590.6 Million
Cirrus Logic, Inc. (NASDAQ: CRUS) today posted on its website at investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the third quarter fiscal year 2023, which ended December 24, 2022, as well as the company’s current business outlook.
“Cirrus Logic delivered record revenue in the December quarter, with sales driven above the high end of guidance by demand for smartphones,” said John Forsyth, Cirrus Logic president and chief executive officer. “During the quarter, customer engagement across our product portfolio remained strong. We taped out our next-generation 22-nanometer smart codec and we made excellent progress on numerous other audio and high-performance mixed-signal products. Going forward, we will continue to leverage our intellectual property into other applications and markets as we target opportunities for incremental content, including in the areas of sensing, charging, and power. With a solid product roadmap and a deep commitment to innovation, we believe Cirrus Logic is well-positioned to drive further growth and product diversification in the future.”
Reported Financial Results – Third Quarter FY23
Revenue of $590.6 million; GAAP and non-GAAP gross margin of 50.2 percent and 50.3 percent; GAAP operating expenses of $155.3 million and non-GAAP operating expenses of $123.2 million; and GAAP earnings per share of $1.83 and non-GAAP earnings per share of $2.40.A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.
Business Outlook – Fourth Quarter FY23
Revenue is expected to range between $340 million and $400 million; GAAP gross margin is forecasted to be between 49 percent and 51 percent; and Combined GAAP R&D and SG&A expenses are anticipated to range between $153 million and $159 million, including approximately $22 million in stock-based compensation expense, $8 million in amortization of acquired intangibles, and $3 million in acquisition-related costs.Cirrus Logic will host a live Q&A session at 6 p.m. EST today to discuss its financial results and business outlook. Participants may listen to the conference call on the investor relations website at investor.cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (647) 362-9199, or toll-free at (800) 770-2030 (Access Code: 95424).
About 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.
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, the company 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, tax expense impact on earnings per share, effective tax rate, free cash flow, and free cash flow margin. 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 ability to leverage our intellectual property into other applications and markets including in the areas of sensing, charging, and power; our ability to drive incremental content, growth, and product diversification in the future; and our estimates for the fourth quarter fiscal year 2023 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, amortization of acquired intangibles and acquisition-related costs. 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, and readers should not place undue reliance on such statements. These risks and uncertainties include, but are not limited to, the following: the effects of the global COVID-19 outbreak and the measures taken to limit the spread of COVID-19, including any disruptions to our business that could result from measures to contain the outbreak that may be taken by governmental authorities in the jurisdictions in which we and our supply chain operate; the susceptibility of the markets we address to economic downturns, including as a result of the COVID-19 outbreak and the actions taken to mitigate the spread of COVID-19; increased industry-wide capacity constraints that may impact our ability to meet current customer demand, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships; the potential for increased prices due to capacity constraints in our supply chain, which, if we are unable to increase our selling price to our customers, could result in lower revenues and margins that could adversely affect our financial results; recent significant increases in inflation in the U.S and overseas; the level and timing of orders and shipments during the fourth quarter of fiscal year 2023, 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 26, 2022 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 expressly disclaim any 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
(in thousands, except per share data; unaudited)
Three Months Ended
Nine Months Ended
Dec. 24,
Sep. 24,
Dec. 25,
Dec. 24,
Dec. 25,
2022
2022
2021
2022
2021
Q3'23
Q2'23
Q3'22
Q3'23
Q3'22
Audio
$
347,297
$
337,811
$
341,897
$
939,604
$
860,027
High-Performance Mixed-Signal
243,285
202,763
206,452
585,191
431,461
Net sales
590,582
540,574
548,349
1,524,795
1,291,488
Cost of sales
293,877
269,288
258,827
754,170
626,576
Gross profit
296,705
271,286
289,522
770,625
664,912
Gross margin
50.2
%
50.2
%
52.8
%
50.5
%
51.5
%
Research and development
118,063
115,471
107,101
343,250
294,913
Selling, general and administrative
37,262
39,598
38,247
115,502
111,526
Total operating expenses
155,325
155,069
145,348
458,752
406,439
Income from operations
141,380
116,217
144,174
311,873
258,473
Interest income
2,777
1,285
(78
)
4,367
718
Other income (expense)
(3,716
)
295
(87
)
(2,915
)
1,530
Income before income taxes
140,441
117,797
144,009
313,325
260,721
Provision for income taxes
36,964
30,609
16,373
82,953
30,780
Net income
$
103,477
$
87,188
$
127,636
$
230,372
$
229,941
Basic earnings per share:
$
1.87
$
1.56
$
2.23
$
4.13
$
4.01
Diluted earnings per share:
$
1.83
$
1.52
$
2.16
$
4.02
$
3.88
Weighted average number of shares:
Basic
55,239
55,726
57,178
55,748
57,374
Diluted
56,583
57,418
59,031
57,280
59,317
Prepared in accordance with Generally Accepted Accounting Principles
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands, except per share data; unaudited)
(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. 24,
Sep. 24,
Dec. 25,
Dec. 24,
Dec. 25,
2022
2022
2021
2022
2021
Net Income Reconciliation
Q3'23
Q2'23
Q3'22
Q3'23
Q3'22
GAAP Net Income
$
103,477
$
87,188
$
127,636
$
230,372
$
229,941
Amortization of acquisition intangibles
8,807
7,787
9,083
24,429
19,135
Stock-based compensation expense
20,487
20,483
17,833
59,108
49,368
Acquisition-related costs
3,176
3,164
3,155
9,504
8,989
Investment write off
2,746
—
—
2,746
—
Adjustment to income taxes
(2,936
)
(4,135
)
(7,903
)
(11,371
)
(16,897
)
Non-GAAP Net Income
$
135,757
$
114,487
$
149,804
$
314,788
$
290,536
Earnings Per Share Reconciliation
GAAP Diluted earnings per share
$
1.83
$
1.52
$
2.16
$
4.02
$
3.88
Effect of Amortization of acquisition intangibles
0.15
0.14
0.16
0.43
0.32
Effect of Stock-based compensation expense
0.36
0.35
0.30
1.03
0.83
Effect of Acquisition-related costs
0.06
0.05
0.05
0.17
0.15
Effect of Investment write off
0.05
—
—
0.05
—
Effect of Adjustment to income taxes
(0.05
)
(0.07
)
(0.13
)
(0.20
)
(0.28
)
Non-GAAP Diluted earnings per share
$
2.40
$
1.99
$
2.54
$
5.50
$
4.90
Operating Income Reconciliation
GAAP Operating Income
$
141,380
$
116,217
$
144,174
$
311,873
$
258,473
GAAP Operating Profit
23.9
%
21.5
%
26.3
%
20.5
%
20.0
%
Amortization of acquisition intangibles
8,807
7,787
9,083
24,429
19,135
Stock-based compensation expense - COGS
309
312
245
898
763
Stock-based compensation expense - R&D
14,710
14,228
12,260
41,530
32,368
Stock-based compensation expense - SG&A
5,468
5,943
5,328
16,680
16,237
Acquisition-related costs
3,176
3,164
3,155
9,504
8,989
Non-GAAP Operating Income
$
173,850
$
147,651
$
174,245
$
404,914
$
335,965
Non-GAAP Operating Profit
29.4
%
27.3
%
31.8
%
26.6
%
26.0
%
Operating Expense Reconciliation
GAAP Operating Expenses
$
155,325
$
155,069
$
145,348
$
458,752
$
406,439
Amortization of acquisition intangibles
(8,807
)
(7,787
)
(9,083
)
(24,429
)
(19,135
)
Stock-based compensation expense - R&D
(14,710
)
(14,228
)
(12,260
)
(41,530
)
(32,368
)
Stock-based compensation expense - SG&A
(5,468
)
(5,943
)
(5,328
)
(16,680
)
(16,237
)
Acquisition-related costs
(3,176
)
(3,164
)
(3,155
)
(9,504
)
(5,528
)
Non-GAAP Operating Expenses
$
123,164
$
123,947
$
115,522
$
366,609
$
333,171
Gross Margin/Profit Reconciliation
GAAP Gross Profit
$
296,705
$
271,286
$
289,522
$
770,625
$
664,912
GAAP Gross Margin
50.2
%
50.2
%
52.8
%
50.5
%
51.5
%
Acquisition-related costs
—
—
—
—
3,461
Stock-based compensation expense - COGS
309
312
245
898
763
Non-GAAP Gross Profit
$
297,014
$
271,598
$
289,767
$
771,523
$
669,136
Non-GAAP Gross Margin
50.3
%
50.2
%
52.8
%
50.6
%
51.8
%
Effective Tax Rate Reconciliation
GAAP Tax Expense
$
36,964
$
30,609
$
16,373
$
82,953
$
30,780
GAAP Effective Tax Rate
26.3
%
26.0
%
11.4
%
26.5
%
11.8
%
Adjustments to income taxes
2,936
4,135
7,903
11,371
16,897
Non-GAAP Tax Expense
$
39,900
$
34,744
$
24,276
$
94,324
$
47,677
Non-GAAP Effective Tax Rate
22.7
%
23.3
%
13.9
%
23.1
%
14.1
%
Tax Impact to EPS Reconciliation
GAAP Tax Expense
$
0.65
$
0.53
$
0.28
$
1.45
$
0.52
Adjustments to income taxes
0.05
0.07
0.13
0.20
0.28
Non-GAAP Tax Expense
$
0.70
$
0.60
$
0.41
$
1.65
$
0.80
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)
Dec. 24,
Mar. 26,
Dec. 25,
2022
2022
2021
ASSETS
Current assets
Cash and cash equivalents
$
434,544
$
369,814
$
195,121
Marketable securities
28,373
10,601
3,719
Accounts receivable, net
270,493
240,264
326,131
Inventories
152,426
138,436
148,525
Other current assets
127,649
80,900
90,025
Total current Assets
1,013,485
840,015
763,521
Long-term marketable securities
44,784
63,749
72,118
Right-of-use lease assets
150,938
171,003
173,054
Property and equipment, net
156,602
157,077
157,186
Intangibles, net
133,032
158,145
165,581
Goodwill
435,936
435,791
437,783
Deferred tax asset
8,630
11,068
7,203
Long-term prepaid wafers
154,575
195,000
195,000
Other assets
67,907
91,552
96,671
Total assets
$
2,165,889
$
2,123,400
$
2,068,117
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
$
117,406
$
115,417
$
110,250
Accrued salaries and benefits
42,187
65,261
43,044
Lease liability
14,024
14,680
14,653
Acquisition-related liabilities
18,195
30,964
30,964
Other accrued liabilities
36,737
38,461
40,603
Total current liabilities
228,549
264,783
239,514
Non-current lease liability
143,252
163,162
164,896
Non-current income taxes
72,267
73,383
77,683
Long-term acquisition-related liabilities
—
8,692
5,528
Other long-term liabilities
5,501
13,563
17,749
Total long-term liabilities
221,020
258,800
265,856
Stockholders' equity:
Capital stock
1,639,056
1,578,427
1,556,746
Accumulated earnings
80,865
23,435
6,416
Accumulated other comprehensive loss
(3,601
)
(2,045
)
(415
)
Total stockholders' equity
1,716,320
1,599,817
1,562,747
Total liabilities and stockholders' equity
$
2,165,889
$
2,123,400
$
2,068,117
Prepared in accordance with Generally Accepted Accounting Principles
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands; unaudited)
Three Months Ended
Dec. 24,
Dec. 25,
2022
2021
Q3'23
Q3'22
Cash flows from operating activities:
Net income
$
103,477
$
127,636
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
18,624
17,446
Stock-based compensation expense
20,487
17,832
Deferred income taxes
10,886
733
Loss on retirement or write-off of long-lived assets
3
196
Other non-cash charges
2,832
82
Net change in operating assets and liabilities:
Accounts receivable, net
34,053
(45,165
)
Inventories
12,145
39,835
Other assets
6,458
208
Accounts payable and other accrued liabilities
(20,521
)
(293,661
)
Income taxes payable
(10,656
)
(4,161
)
Acquisition-related liabilities
3,160
3,164
Net cash provided by (used in) operating activities
180,948
(135,855
)
Cash flows from investing activities:
Maturities and sales of available-for-sale marketable securities
3,691
8,946
Purchases of available-for-sale marketable securities
(3,433
)
(9,553
)
Purchases of property, equipment and software
(6,777
)
(3,363
)
Investments in technology
(831
)
(361
)
Acquisition-related payments
—
(1,242
)
Net cash used in investing activities
(7,350
)
(5,573
)
Cash flows from financing activities:
Debt issuance costs
—
(2
)
Payment of acquisition-related holdback
(30,949
)
—
Issuance of common stock, net of shares withheld for taxes
393
5,359
Repurchase of stock to satisfy employee tax withholding obligations
(13,541
)
(15,550
)
Repurchase and retirement of common stock
(50,000
)
(39,999
)
Net cash used in financing activities
(94,097
)
(50,192
)
Net increase (decrease) in cash and cash equivalents
79,501
(191,620
)
Cash and cash equivalents at beginning of period
355,043
386,741
Cash and cash equivalents at end of period
$
434,544
$
195,121
Prepared in accordance with Generally Accepted Accounting Principles
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands; unaudited)
Free cash flow, a non-GAAP financial measure, is GAAP cash flow from operations (or cash provided by (used in) operating activities) less capital expenditures. Capital expenditures include purchases of property, equipment and software as well as investments in technology, as presented within our GAAP Consolidated Condensed Statement of Cash Flows. Free cash flow margin represents free cash flow divided by revenue.
Twelve Months Ended
Three Months Ended
Dec. 24,
Dec. 24,
Sep. 24,
Jun. 25,
Mar. 26,
2022
2022
2022
2022
2022
Q3'23
Q3'23
Q2'23
Q1'23
Q4'22
Net cash provided by operating activities (GAAP)
$
549,533
$
180,948
$
35,989
$
74,365
$
258,231
Capital expenditures
(33,535
)
(7,608
)
(10,247
)
(7,224
)
(8,456
)
Free Cash Flow (Non-GAAP)
$
515,998
$
173,340
$
25,742
$
67,141
$
249,775
Cash Flow from Operations as a Percentage of Revenue (GAAP)
27
%
31
%
7
%
19
%
53
%
Capital Expenditures as a Percentage of Revenue (GAAP)
2
%
1
%
2
%
2
%
2
%
Free Cash Flow Margin (Non-GAAP)
26
%
29
%
5
%
17
%
51
%
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