Business Wire | Nov 2, 2020 04:00PM EST

Cirrus Logic Reports Q2 FY21 Revenue of $347.3 Million

Nov. 02, 2020

AUSTIN, Texas--(BUSINESS WIRE)--Nov. 02, 2020--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 second quarter fiscal year 2021, which ended Sept. 26, 2020, as well as the company's current business outlook.

"Cirrus Logic delivered revenue above the high end of guidance in the September quarter. We experienced solid sales across the breadth of our product portfolio, with particularly strong demand for components shipping in smartphones," said Jason Rhode, chief executive officer. "During the quarter, we were pleased to have expanded the number of smartphones, tablets and wearables that are utilizing our technology. The company also reached several meaningful development milestones that we believe will fuel product diversification and growth opportunities in the coming years."

The company also announced today that the Board of Directors has appointed current President John Forsyth, 47, as president and chief executive officer effective Jan. 1, 2021, at which time Jason Rhode will transition into his new role as executive fellow. "John's strong leadership and strategic vision make him the right choice to lead Cirrus Logic into what we believe is a very bright future," said Jason Rhode, chief executive officer. In addition, the company announced that David Tupman will become chair of the Board of Directors, effective the same date, succeeding Al Schuele ahead of his retirement prior to the next annual meeting of stockholders.

For more information on the CEO and Board leadership transition plans, please visit http://investor.cirrus.com/.

Reported Financial Results - Second Quarter FY21

* Revenue of $347.3 million; * GAAP and non-GAAP gross margin of 51.9 percent; * GAAP operating expenses of $116.1 million and non-GAAP operating expenses of $97.8 million; * GAAP earnings per share of $0.99 and non-GAAP earnings per share of $1.26.

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

Business Outlook - Third Quarter FY21

* Revenue is expected to range between $440 million and $480 million; * GAAP gross margin to be between 50 percent and 52 percent; and * Combined GAAP R&D and SG&A expenses to range between $121 million and $127 million, including approximately $15 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. 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 (416) 621-4642, or toll-free at (800) 585-8367 (Access Code: 9088457).

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 the company's product diversification and growth opportunities in the coming years and our ability to lead the company into what we believe is a very bright future, along with estimates for the third 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 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; 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 third 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 28, 2020 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 Six Months Ended Sep. 26, Jun. 27, Sep. 28, Sep. 26, Sep. 28, 2020 2020 2019 2020 2019

Q2'21 Q1'21 Q2'20 Q2'21 Q2'20Portable $ 312,911 $ 210,661 $ 349,379 $ 523,572 $ 552,317 productsNon-portable 34,414 31,912 39,533 66,326 74,848 and otherproductsNet sales 347,325 242,573 388,912 589,898 627,165

Cost of sales 167,115 115,101 180,979 282,216 296,738

Gross profit 180,210 127,472 207,933 307,682 330,427

Gross margin 51.9 % 52.6 % 53.5 % 52.2 % 52.7 %

Research and 84,810 78,741 88,239 163,551 177,069 developmentSelling, 31,247 29,704 33,018 60,951 62,538 general andadministrativeRestructuring - 352 - 352 - costsTotal 116,057 108,797 121,257 224,854 239,607 operatingexpenses Income from 64,153 18,675 86,676 82,828 90,820 operations Interest 1,378 1,576 2,250 2,954 4,535 incomeOther income 784 111 (568 ) 895 (946 )(expense)Income before 66,315 20,362 88,358 86,677 94,409 income taxesProvision for 6,829 2,153 12,148 8,982 13,581 income taxesNet income $ 59,486 $ 18,209 $ 76,210 $ 77,695 $ 80,828

Basic earnings $ 1.02 $ 0.31 $ 1.31 $ 1.33 $ 1.39 per share:Diluted $ 0.99 $ 0.30 $ 1.27 $ 1.29 $ 1.34 earnings pershare: Weightedaverage numberof shares:Basic 58,191 58,313 58,011 58,252 58,276

Diluted 60,127 60,280 60,213 60,203 60,260

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 ourinvestors for informational and comparative purposes. In addition, certainnon-GAAP financial information is used internally by management to evaluateand manage the company. As a note, the non-GAAP financial information used byCirrus Logic may differ from that used by other companies. These non-GAAPmeasures should be considered in addition to, and not as a substitute for, theresults prepared in accordance with GAAP.

Three Months EndedSix Months EndedSep. 26,

Jun. 27,

Sep. 28,

Sep. 26,

Sep. 28,

2020

2020

2019

2020

2019

Net Income ReconciliationQ2'21Q1'21Q2'20Q2'21Q2'20GAAP Net Income$

59,486

$

18,209

$

76,210

$

77,695

$

80,828

Amortization of acquisition intangibles2,998

2,998

6,722

5,996

13,950

Stock-based compensation expense15,476

13,306

13,759

28,782

25,545

Restructuring costs-

352

-

352

-

Adjustment to income taxes(2,293

)

(2,982

)

(3,417

)

(5,275

)

(6,220

)

Non-GAAP Net Income$

75,667

$

31,883

$

93,274

$

107,550

$

114,103

Earnings Per Share ReconciliationGAAP Diluted earnings per share$

0.99

$

0.30

$

1.27

$

1.29

$

1.34

Effect of Amortization of acquisition intangibles0.05

0.05

0.11

0.10

0.23

Effect of Stock-based compensation expense0.26

0.22

0.23

0.48

0.42

Effect of Restructuring costs-

0.01

-

0.01

-

Effect of Adjustment to income taxes(0.04

)

(0.05

)

(0.06

)

(0.09

)

(0.10

)

Non-GAAP Diluted earnings per share$

1.26

$

0.53

$

1.55

$

1.79

$

1.89

Operating Income ReconciliationGAAP Operating Income$

64,153

$

18,675

$

86,676

$

82,828

$

90,820

GAAP Operating Profit18.5

%

7.7

%

22.3

%

14.0

%

14.5

%

Amortization of acquisition intangibles2,998

2,998

6,722

5,996

13,950

Stock-based compensation expense - COGS197

207

254

404

495

Stock-based compensation expense - R&D9,235

8,653

7,830

17,888

15,070

Stock-based compensation expense - SG&A6,044

4,446

5,675

10,490

9,980

Restructuring costs-

352

-

352

-

Non-GAAP Operating Income$

82,627

$

35,331

$

107,157

$

117,958

$

130,315

Non-GAAP Operating Profit23.8

%

14.6

%

27.6

%

20.0

%

20.8

%

Operating Expense ReconciliationGAAP Operating Expenses$

116,057

$

108,797

$

121,257

$

224,854

$

239,607

Amortization of acquisition intangibles(2,998

)

(2,998

)

(6,722

)

(5,996

)

(13,950

)

Stock-based compensation expense - R&D(9,235

)

(8,653

)

(7,830

)

(17,888

)

(15,070

)

Stock-based compensation expense - SG&A(6,044

)

(4,446

)

(5,675

)

(10,490

)

(9,980

)

Restructuring costs-

(352

)

-

(352

)

-

Non-GAAP Operating Expenses$

97,780

$

92,348

$

101,030

$

190,128

$

200,607

Gross Margin/Profit ReconciliationGAAP Gross Profit$

180,210

$

127,472

$

207,933

$

307,682

$

330,427

GAAP Gross Margin51.9

%

52.6

%

53.5

%

52.2

%

52.7

%

Stock-based compensation expense - COGS197

207

254

404

495

Non-GAAP Gross Profit$

180,407

$

127,679

$

208,187

$

308,086

$

330,922

Non-GAAP Gross Margin51.9

%

52.6

%

53.5

%

52.2

%

52.8

%

Effective Tax Rate ReconciliationGAAP Tax Expense$

6,829

$

2,153

$

12,148

$

8,982

$

13,581

GAAP Effective Tax Rate10.3

%

10.6

%

13.7

%

10.4

%

14.4

%

Adjustments to income taxes2,293

2,982

3,417

5,275

6,220

Non-GAAP Tax Expense$

9,122

$

5,135

$

15,565

$

14,257

$

19,801

Non-GAAP Effective Tax Rate10.8

%

13.9

%

14.3

%

11.7

%

14.8

%

Tax Impact to EPS ReconciliationGAAP Tax Expense$

0.11

$

0.04

$

0.20

$

0.15

$

0.23

Adjustments to income taxes0.04

0.05

0.06

0.09

0.10

Non-GAAP Tax Expense$

0.15

$

0.09

$

0.26

$

0.24

$

0.33

Three Months Ended Six Months Ended Sep. 26, Jun. 27, Sep. 28, Sep. 26, Sep. 28,

2020 2020 2019 2020 2019

Net Income Q2'21 Q1'21 Q2'20 Q2'21 Q2'20ReconciliationGAAP Net Income $ 59,486 $ 18,209 $ 76,210 $ 77,695 $ 80,828

Amortization of 2,998 2,998 6,722 5,996 13,950 acquisitionintangiblesStock-based 15,476 13,306 13,759 28,782 25,545 compensationexpenseRestructuring - 352 - 352 - costsAdjustment to (2,293 ) (2,982 ) (3,417 ) (5,275 ) (6,220 )income taxesNon-GAAP Net $ 75,667 $ 31,883 $ 93,274 $ 107,550 $ 114,103 Income Earnings PerShareReconciliationGAAP Diluted $ 0.99 $ 0.30 $ 1.27 $ 1.29 $ 1.34 earnings pershareEffect ofAmortization of 0.05 0.05 0.11 0.10 0.23 acquisitionintangiblesEffect ofStock-based 0.26 0.22 0.23 0.48 0.42 compensationexpenseEffect of - 0.01 - 0.01 - RestructuringcostsEffect of (0.04 ) (0.05 ) (0.06 ) (0.09 ) (0.10 )Adjustment toincome taxesNon-GAAPDiluted $ 1.26 $ 0.53 $ 1.55 $ 1.79 $ 1.89 earnings pershare OperatingIncomeReconciliationGAAP Operating $ 64,153 $ 18,675 $ 86,676 $ 82,828 $ 90,820 IncomeGAAP Operating 18.5 % 7.7 % 22.3 % 14.0 % 14.5 %ProfitAmortization of 2,998 2,998 6,722 5,996 13,950 acquisitionintangiblesStock-based 197 207 254 404 495 compensationexpense - COGSStock-based 9,235 8,653 7,830 17,888 15,070 compensationexpense - R&DStock-based 6,044 4,446 5,675 10,490 9,980 compensationexpense - SG&ARestructuring - 352 - 352 - costsNon-GAAP $ 82,627 $ 35,331 $ 107,157 $ 117,958 $ 130,315 OperatingIncomeNon-GAAP 23.8 % 14.6 % 27.6 % 20.0 % 20.8 %OperatingProfit OperatingExpenseReconciliationGAAP Operating $ 116,057 $ 108,797 $ 121,257 $ 224,854 $ 239,607 ExpensesAmortization of (2,998 ) (2,998 ) (6,722 ) (5,996 ) (13,950 )acquisitionintangiblesStock-based (9,235 ) (8,653 ) (7,830 ) (17,888 ) (15,070 )compensationexpense - R&DStock-based (6,044 ) (4,446 ) (5,675 ) (10,490 ) (9,980 )compensationexpense - SG&ARestructuring - (352 ) - (352 ) - costsNon-GAAP $ 97,780 $ 92,348 $ 101,030 $ 190,128 $ 200,607 OperatingExpenses Gross Margin/ProfitReconciliationGAAP Gross $ 180,210 $ 127,472 $ 207,933 $ 307,682 $ 330,427 ProfitGAAP Gross 51.9 % 52.6 % 53.5 % 52.2 % 52.7 %MarginStock-based 197 207 254 404 495 compensationexpense - COGSNon-GAAP Gross $ 180,407 $ 127,679 $ 208,187 $ 308,086 $ 330,922 ProfitNon-GAAP Gross 51.9 % 52.6 % 53.5 % 52.2 % 52.8 %Margin Effective TaxRateReconciliationGAAP Tax $ 6,829 $ 2,153 $ 12,148 $ 8,982 $ 13,581 ExpenseGAAP Effective 10.3 % 10.6 % 13.7 % 10.4 % 14.4 %Tax RateAdjustments to 2,293 2,982 3,417 5,275 6,220 income taxesNon-GAAP Tax $ 9,122 $ 5,135 $ 15,565 $ 14,257 $ 19,801 ExpenseNon-GAAP 10.8 % 13.9 % 14.3 % 11.7 % 14.8 %Effective TaxRate Tax Impact toEPSReconciliationGAAP Tax $ 0.11 $ 0.04 $ 0.20 $ 0.15 $ 0.23 ExpenseAdjustments to 0.04 0.05 0.06 0.09 0.10 income taxesNon-GAAP Tax $ 0.15 $ 0.09 $ 0.26 $ 0.24 $ 0.33 ExpenseCONSOLIDATED CONDENSED BALANCE SHEETunaudited; in thousands Sep. 26, Mar. 28, Sep. 28, 2020 2020 2019

ASSETS Current assets Cash and cash equivalents $ 247,536 $ 292,119 $ 221,937

Marketable securities 36,641 22,008 22,563

Accounts receivable, net 181,496 153,998 217,962

Inventories 209,050 146,725 144,829

Other current assets 34,508 35,346 44,729

Total current Assets 709,231 650,196 652,020

Long-term marketable securities 328,255 283,573 238,741

Right-of-use lease assets 137,045 141,274 142,834

Property and equipment, net 153,640 158,244 178,420

Intangibles, net 27,898 34,430 54,780

Goodwill 287,673 287,088 285,321

Deferred tax asset 7,899 10,052 9,026

Other assets 48,223 27,820 22,489

Total assets $ 1,699,864 $ 1,592,677 $ 1,583,631

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 99,105 $ 78,412 $ 109,374

Accrued salaries and benefits 41,707 42,439 34,870

Lease liability 13,994 13,580 13,751

Other accrued liabilities 23,237 24,206 34,801

Total current liabilities 178,043 158,637 192,796

Non-current lease liability 128,570 129,312 133,105

Non-current income taxes 66,503 71,143 76,847

Other long-term liabilities 9,917 3,806 2,258

Stockholders' equity: Capital stock 1,466,978 1,434,929 1,392,650

Accumulated deficit (155,260 ) (201,681 ) (213,274 )

Accumulated other comprehensive 5,113 (3,469 ) (751 ) income (loss) Total stockholders' equity 1,316,831 1,229,779 1,178,625

Total liabilities and stockholders' $ 1,699,864 $ 1,592,677 $ 1,583,631 equity Prepared in accordance with Generally Accepted Accounting Principles View source version on businesswire.com: https://www.businesswire.com/news/home/20201102005671/en/

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