Business Wire | Aug 3, 2020 04:00PM EDT

Cirrus Logic Reports Q1 FY21 Revenue of $242.6 Million

Aug. 03, 2020

AUSTIN, Texas--(BUSINESS WIRE)--Aug. 03, 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 first quarter fiscal year 2021, which ended June 27, 2020, as well as the company's current business outlook.

"We are pleased with our results in the June quarter as we experienced robust demand for certain products shipping in tablets and smartphones," said Jason Rhode, chief executive officer. "Despite the continuing challenges and adverse economic effects associated with COVID-19, design activity and new product development efforts were encouraging during the quarter. The company remains focused on leveraging our strong customer relationships and mixed-signal processing expertise to broaden our penetration in audio, voice and other mixed-signal domains and position the company for growth in the coming years."

Reported Financial Results - First Quarter FY21

* Revenue of $242.6 million; * GAAP and non-GAAP gross margin of 52.6 percent; * GAAP operating expenses of $108.8 million and non-GAAP operating expenses of $92.4 million; * GAAP earnings per share of $0.30 and non-GAAP earnings per share of $0.53.

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

Business Outlook - Second Quarter FY21

* Revenue is expected to range between $290 million and $330 million; * GAAP gross margin to be between 51 percent and 53 percent; and * Combined GAAP R&D and SG&A expenses to range between $114 million and $120 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. 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: 1899640).

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 broadening our penetration in audio, voice, and other domains, and positioning the company for growth in the coming years, along with estimates for the second 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 second 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 Jun. 27, Mar. 28, Jun. 29,

2020 2020 2019

Q1'21 Q4'20 Q1'20Portable products $ 210,661 $ 249,731 $ 202,938

Non-portable and other products 31,912 29,560 35,315

Net sales 242,573 279,291 238,253

Cost of sales 115,101 133,056 115,759

Gross profit 127,472 146,235 122,494

Gross margin 52.6 % 52.4 % 51.4 %

Research and development 78,741 81,865 88,830

Selling, general and administrative 29,704 32,464 29,520

Restructuring costs 352 21,925 -

Total operating expenses 108,797 136,254 118,350

Income from operations 18,675 9,981 4,144

Interest income 1,576 2,474 2,285

Other income (expense) 111 (106 ) (378 )

Income before income taxes 20,362 12,349 6,051

Provision for income taxes 2,153 2,191 1,433

Net income $ 18,209 $ 10,158 $ 4,618

Basic earnings per share: $ 0.31 $ 0.17 $ 0.08

Diluted earnings per share: $ 0.30 $ 0.17 $ 0.08

Weighted average number of shares: Basic 58,313 58,527 58,540

Diluted 60,280 60,683 60,258

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 evaluate andmanage 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 Ended

Jun. 27, Mar. 28, Jun. 29, 2020 2020 2019

Net Income Reconciliation Q1'21 Q4'20 Q1'20GAAP Net Income $ 18,209 $ 10,158 $ 4,618

Amortization of acquisition intangibles 2,998 3,000 7,228

Stock-based compensation expense 13,306 14,052 11,786

Restructuring costs 352 20,602 -

Adjustment to income taxes (2,982 ) (6,320 ) (2,803 )

Non-GAAP Net Income $ 31,883 $ 41,492 $ 20,829

Earnings Per Share Reconciliation GAAP Diluted earnings per share $ 0.30 $ 0.17 $ 0.08

Effect of Amortization of acquisition 0.05 0.05 0.12 intangiblesEffect of Stock-based compensation 0.22 0.23 0.20 expenseEffect of Restructuring costs 0.01 0.34 -

Effect of Adjustment to income taxes (0.05 ) (0.11 ) (0.05 )

Non-GAAP Diluted earnings per share $ 0.53 $ 0.68 $ 0.35

Operating Income Reconciliation GAAP Operating Income $ 18,675 $ 9,981 $ 4,144

GAAP Operating Profit 7.7 % 3.6 % 1.7 %

Amortization of acquisition intangibles 2,998 3,000 7,228

Stock-based compensation expense - COGS 207 213 241

Stock-based compensation expense - R&D 8,653 9,446 7,240

Stock-based compensation expense - SG&A 4,446 4,393 4,305

Restructuring costs 352 20,602 -

Non-GAAP Operating Income $ 35,331 $ 47,635 $ 23,158

Non-GAAP Operating Profit 14.6 % 17.1 % 9.7 %

Operating Expense Reconciliation GAAP Operating Expenses $ 108,797 $ 136,254 $ 118,350

Amortization of acquisition intangibles (2,998 ) (3,000 ) (7,228 )

Stock-based compensation expense - R&D (8,653 ) (9,446 ) (7,240 )

Stock-based compensation expense - SG&A (4,446 ) (4,393 ) (4,305 )

Restructuring costs (352 ) (20,724 ) -

Non-GAAP Operating Expenses $ 92,348 $ 98,691 $ 99,577

Gross Margin/Profit Reconciliation GAAP Gross Profit $ 127,472 $ 146,235 $ 122,494

GAAP Gross Margin 52.6 % 52.4 % 51.4 %

Stock-based compensation expense - COGS 207 213 241

Restructuring costs - COGS - (122 ) -

Non-GAAP Gross Profit $ 127,679 $ 146,326 $ 122,735

Non-GAAP Gross Margin 52.6 % 52.4 % 51.5 %

Effective Tax Rate Reconciliation GAAP Tax Expense $ 2,153 $ 2,191 $ 1,433

GAAP Effective Tax Rate 10.6 % 17.7 % 23.7 %

Adjustments to income taxes 2,982 6,320 2,803

Non-GAAP Tax Expense $ 5,135 $ 8,511 $ 4,236

Non-GAAP Effective Tax Rate 13.9 % 17.0 % 16.9 %

Tax Impact to EPS Reconciliation GAAP Tax Expense $ 0.04 $ 0.04 $ 0.02

Adjustments to income taxes 0.05 0.11 0.05

Non-GAAP Tax Expense $ 0.09 $ 0.15 $ 0.07



CONSOLIDATED CONDENSED BALANCE SHEETunaudited; in thousands Jun. 27, Mar. 28, Jun. 29, 2020 2020 2019

ASSETS Current assets Cash and cash equivalents $ 285,922 $ 292,119 $ 198,077

Marketable securities 29,943 22,008 52,350

Accounts receivable, net 136,539 153,998 111,497

Inventories 199,332 146,725 146,317

Other current assets 38,231 35,346 55,834

Total current Assets 689,967 650,196 564,075

Long-term marketable securities 290,186 283,573 205,079

Right-of-use lease assets 139,492 141,274 146,035

Property and equipment, net 154,286 158,244 182,042

Intangibles, net 31,185 34,430 62,496

Goodwill 287,399 287,088 286,370

Deferred tax asset 6,970 10,052 9,394

Other assets 44,554 27,820 14,625

Total assets $ 1,644,039 $ 1,592,677 $ 1,470,116

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 95,523 $ 78,412 $ 60,408

Accrued salaries and benefits 28,768 42,439 23,416

Current lease liability 13,887 13,580 14,517

Other accrued liabilities 24,866 24,206 32,865

Total current liabilities 163,044 158,637 131,206

Non-current lease liability 129,627 129,312 137,180

Non-current income taxes 69,130 71,143 79,484

Other long-term liabilities 9,949 3,806 4,996

Stockholders' equity: Capital stock 1,451,297 1,434,929 1,375,777

Accumulated deficit (184,049 ) (201,681 ) (258,899 )

Accumulated other comprehensive 5,041 (3,469 ) 372 income (loss)Total stockholders' equity 1,272,289 1,229,779 1,117,250

Total liabilities and stockholders' $ 1,644,039 $ 1,592,677 $ 1,470,116 equity Prepared in accordance with Generally Accepted Accounting Principles

View source version on businesswire.com: https://www.businesswire.com/news/home/20200803005446/en/

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