Cirrus Logic Reports Q4 FY20 Revenue of $279.3 Million
Cirrus Logic, Inc. (Nasdaq: CRUS) 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 2020, which ended March 28, 2020, as well as the company’s current business outlook.
“In FY20, we experienced strong demand for products shipping in smartphones and increased our penetration of tablets, truly wireless headsets and wearables,” said Jason Rhode, chief executive officer. “As the global community continues to confront the COVID-19 pandemic and the unknown economic consequences, Cirrus Logic’s priority is to ensure the safety and well-being of our employees, their families and our communities worldwide, while maintaining business continuity and continuing to provide outstanding support to our customers. With approximately $600 million in cash, no debt and outstanding relationships with the leaders in the markets we serve, Cirrus Logic is in a strong position to weather the storm and maximize our long-term growth opportunities.”
Reported Financial Results – Fourth Quarter FY20
Revenue of $279.3 million; GAAP and non-GAAP gross margin of 52.4 percent; GAAP operating expenses of $136.2 million and non-GAAP operating expenses of $98.7 million; GAAP operating expense included $20.7 million in restructuring costs associated with exiting the MEMS product line, $13.8 million in stock-based compensation and $3 million in amortization of acquired intangibles; GAAP earnings per share of $0.17 and non-GAAP earnings per share of $0.68.Reported Financial Results – Full Year FY20
Revenue of $1.28 billion; GAAP and non-GAAP gross margin are 52.6 percent and 52.7, respectively; GAAP operating expenses of $500.7 million and non-GAAP operating expenses of $402.5 million; GAAP operating expense included $52.8 million in stock-based compensation, $23.4 million in amortization of acquired intangibles and $21.9 million in restructuring costs associated with exiting the MEMS product line; GAAP earnings per share of $2.64 and non-GAAP earnings per share of $3.99.A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.
Business Outlook – First Quarter FY21
Revenue is expected to range between $200 million and $250 million; GAAP gross margin to be between 51 percent and 53 percent; and Combined GAAP R&D and SG&A expenses to range between $111 million and $117 million, including approximately $14 million in stock-based compensation expense and $3 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 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 (416) 621-4642, or toll-free at (800) 585-8367 (Access Code: 9199070).
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. Check us out at www.cirrus.com.
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, 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 ability to weather the storm during these challenging times and maximize our long-term growth opportunities, along with estimates for the first quarter fiscal year 2021 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 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; the risks of doing business internationally, including increased import/export restrictions and controls (e.g., the effect of the U.S. Bureau of Industry and Security of the U.S. Department of Commerce placing Huawei Technologies Co., Ltd. and certain of its affiliates on the Bureau’s Entity List), imposition of trade protection measures (e.g., tariffs or taxes), security and health risks, possible disruptions in transportation networks, and other economic, social, military and geo-political conditions in the countries in which we, our customers or our suppliers operate; the level of orders and shipments during the first quarter of fiscal year 2021, 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 30, 2019 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 (unaudited) (in thousands, except per share data) Three Months Ended Twelve Months Ended Mar. 28, Dec. 28, Mar. 30, Mar. 28, Mar. 30,2020
2019
2019
2020
2019
Q4'20 Q3'20 Q4'19 Q4'20 Q4'19 Portable products$
249,731
$
344,870
$
207,099
$
1,146,918
$
1,032,049
Non-portable and other products
29,560
29,798
33,342
134,206
153,475
Net sales
279,291
374,668
240,441
1,281,124
1,185,524
Cost of sales
133,056
177,163
115,802
606,957
588,027
Gross profit
146,235
197,505
124,639
674,167
597,497
Gross margin
52.4
%
52.7
%
51.8
%
52.6
%
50.4
%
Research and development
81,865
88,713
92,251
347,647
375,139
Selling, general and administrative
32,464
36,113
30,194
131,115
126,502
Restructuring costs
21,925
-
-
21,925
-
Gain on sale of assets
-
-
(4,913
)
-
(4,913
)
Total operating expenses
136,254
124,826
117,532
500,687
496,728
Income from operations
9,981
72,679
7,107
173,480
100,769
Interest income
2,474
2,392
2,248
9,401
6,960
U.K. pension settlement
-
-
-
-
(13,768
)
Other expense
(106
)
(563
)
(150
)
(1,615
)
(217
)
Income before income taxes
12,349
74,508
9,205
181,266
93,744
Provision for income taxes
2,191
5,996
3,048
21,768
3,753
Net income
$
10,158
$
68,512
$
6,157
$
159,498
$
89,991
Basic earnings per share:
$
0.17
$
1.18
$
0.10
$
2.74
$
1.50
Diluted earnings per share:
$
0.17
$
1.13
$
0.10
$
2.64
$
1.46
Weighted average number of shares: Basic
58,527
58,188
59,031
58,317
60,116
Diluted
60,683
60,492
60,199
60,462
61,583
Prepared in accordance with Generally Accepted Accounting Principles
2020
2019
2019
2020
2019
Net Income Reconciliation Q4'20 Q3'20 Q4'19 Q4'20 Q4'19 GAAP Net Income$
10,158
$
68,512
$
6,157
$
159,498
$
89,991
Amortization of acquisition intangibles
3,000
6,470
7,228
23,420
40,991
Stock-based compensation expense
14,052
14,160
12,583
53,757
49,689
Restructuring costs
20,602
1,323
-
21,925
-
U.K. pension settlement
-
-
-
-
13,768
Gain on sale of assets
-
-
(4,913
)
-
(4,913
)
Adjustment to income taxes
(6,320
)
(4,871
)
1,202
(17,411
)
(26,781
)
Non-GAAP Net Income$
41,492
$
85,594
$
22,257
$
241,189
$
162,745
Earnings Per Share Reconciliation GAAP Diluted earnings per share
$
0.17
$
1.13
$
0.10
$
2.64
$
1.46
Effect of Amortization of acquisition intangibles
0.05
0.11
0.12
0.39
0.67
Effect of Stock-based compensation expense
0.23
0.23
0.21
0.89
0.81
Effect of Restructuring costs
0.34
0.02
-
0.36
-
Effect of U.K. pension settlement
-
-
-
-
0.22
Effect of Gain on sale of assets
-
-
(0.08
)
-
(0.08
)
Effect of Adjustment to income taxes
(0.11
)
(0.08
)
0.02
(0.29
)
(0.44
)
Non-GAAP Diluted earnings per share$
0.68
$
1.41
$
0.37
$
3.99
$
2.64
Operating Income Reconciliation GAAP Operating Income
$
9,981
$
72,679
$
7,107
$
173,480
$
100,769
GAAP Operating Profit
3.6
%
19.4
%
3.0
%
13.5
%
8.5
%
Amortization of acquisition intangibles
3,000
6,470
7,228
23,420
40,991
Stock-based compensation expense - COGS
213
200
288
908
877
Stock-based compensation expense - R&D
9,446
9,343
8,270
33,859
29,115
Stock-based compensation expense - SG&A
4,393
4,617
4,025
18,990
19,697
Restructuring costs
20,602
1,323
-
21,925
-
Gain on sale of assets
-
-
(4,913
)
-
(4,913
)
Non-GAAP Operating Income$
47,635
$
94,632
$
22,005
$
272,582
$
186,536
Non-GAAP Operating Profit
17.1
%
25.3
%
9.2
%
21.3
%
15.7
%
Operating Expense Reconciliation GAAP Operating Expenses$
136,254
$
124,826
$
117,532
$
500,687
$
496,728
Amortization of acquisition intangibles
(3,000
)
(6,470
)
(7,228
)
(23,420
)
(40,991
)
Stock-based compensation expense - R&D
(9,446
)
(9,343
)
(8,270
)
(33,859
)
(29,115
)
Stock-based compensation expense - SG&A
(4,393
)
(4,617
)
(4,025
)
(18,990
)
(19,697
)
Restructuring costs
(20,724
)
(1,201
)
-
(21,925
)
-
Gain on sale of assets
-
-
4,913
-
4,913
Non-GAAP Operating Expenses
$
98,691
$
103,195
$
102,922
$
402,493
$
411,838
Gross Margin/Profit Reconciliation GAAP Gross Profit
$
146,235
$
197,505
$
124,639
$
674,167
$
597,497
GAAP Gross Margin
52.4
%
52.7
%
51.8
%
52.6
%
50.4
%
Stock-based compensation expense - COGS
213
200
288
908
877
Restructuring costs - COGS
(122
)
122
-
-
-
Non-GAAP Gross Profit
$
146,326
$
197,827
$
124,927
$
675,075
$
598,374
Non-GAAP Gross Margin
52.4
%
52.8
%
52.0
%
52.7
%
50.5
%
Effective Tax Rate Reconciliation GAAP Tax Expense$
2,191
$
5,996
$
3,048
$
21,768
$
3,753
GAAP Effective Tax Rate
17.7
%
8.0
%
33.1
%
12.0
%
4.0
%
Adjustments to income taxes
6,320
4,871
(1,202
)
17,411
26,781
Non-GAAP Tax Expense
$
8,511
$
10,867
$
1,846
$
39,179
$
30,534
Non-GAAP Effective Tax Rate
17.0
%
11.3
%
7.7
%
14.0
%
15.8
%
Tax Impact to EPS Reconciliation GAAP Tax Expense$
0.04
$
0.10
$
0.05
$
0.36
$
0.06
Adjustments to income taxes
0.11
0.08
(0.02
)
0.29
0.44
Non-GAAP Tax Expense
$
0.15
$
0.18
$
0.03
$
0.65
$
0.50
2020
2019
2019
ASSETS Current assets Cash and cash equivalents$
292,119
$
342,301
$
216,172
Marketable securities
22,008
13,098
70,183
Accounts receivable, net
153,998
175,937
120,656
Inventories
146,725
137,920
164,733
Other current assets
35,346
45,345
53,239
Total current Assets
650,196
714,601
624,983
Long-term marketable securities
283,573
250,162
158,968
Right-of-use lease assets
141,274
141,348
-
Property and equipment, net
158,244
174,390
186,185
Intangibles, net
34,430
47,133
67,847
Goodwill
287,088
285,904
286,241
Deferred tax asset
10,052
9,183
8,727
Other assets
27,820
24,819
19,689
Total assets
$
1,592,677
$
1,647,540
$
1,352,640
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable
$
78,412
$
98,835
$
48,398
Accrued salaries and benefits
42,439
34,228
29,289
Lease liability
13,580
13,863
-
Other accrued liabilities
24,206
31,385
37,853
Total current liabilities
158,637
178,311
115,540
Non-current lease liability
129,312
133,993
-
Non-current income taxes
71,143
72,422
78,309
Other long-term liabilities
3,806
2,934
18,551
Stockholders' equity: Capital stock
1,434,929
1,417,646
1,363,736
Accumulated deficit
(201,681
)
(157,869
)
(222,430
)
Accumulated other comprehensive income (loss)
(3,469
)
103
(1,066
)
Total stockholders' equity
1,229,779
1,259,880
1,140,240
Total liabilities and stockholders' equity
$
1,592,677
$
1,647,540
$
1,352,640
Prepared in accordance with Generally Accepted Accounting Principles
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