Business Wire | Nov 1, 2021 04:01PM EDT

Cirrus Logic Reports Q2 FY22 Revenue of $465.9 Million

Nov. 01, 2021

AUSTIN, Texas--(BUSINESS WIRE)--Nov. 01, 2021--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 2022, which ended Sept. 25, 2021, as well as the company's current business outlook.

"Cirrus Logic reported record revenue and EPS for the September quarter and delivered solid year-over-year operating profit growth," said John Forsyth, Cirrus Logic president and chief executive officer. "During the quarter we made great progress on the company's strategy to diversify beyond audio. In our high-performance mixed-signal product line, we brought our new power conversion and control IC to market, increased the attach rate of our camera controllers in smartphones and sampled new fast-charging products to our general market customers. This represents a significant expansion of Cirrus Logic's technology and product mix, with our high-performance mixed-signal business delivering 30 percent of total revenue in the first half fiscal year 2022, up 117 percent year over year. We continue to be excited about the opportunities these new technologies offer for further growth and diversification in the future."

Reported Financial Results - Second Quarter FY22

* Revenue of $465.9 million; * GAAP gross margin of 50.5 percent and non-GAAP gross margin of 51.3 percent; * GAAP operating expenses of $140.2 million and non-GAAP operating expenses of $114.5 million; and * GAAP earnings per share of $1.43 and non-GAAP earnings per share of $1.82.

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

Business Outlook - Third Quarter FY22

* Revenue is expected to range between $490 million and $530 million; * GAAP gross margin is forecasted to be between 50 percent and 52 percent; and * Combined GAAP R&D and SG&A expenses are anticipated to range between $141 million and $147 million, including approximately $19 million in stock-based compensation expense, $9 million in amortization of acquired intangibles and $3 million in acquisition-related costs.

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@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: 3476036).

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 opportunities for further growth and diversification in the future, and our estimates for the third quarter fiscal year 2022 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; recent 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; the level of orders and shipments during the third quarter of fiscal year 2022, 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, 2021 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. 25, Jun. 26, Sep. 26, Sep. 25, Sep. 26,

2021 2021 2020 2021 2020

Q2'22 Q1'22 Q2'21 Q2'22 Q2'21

Audio $ 300,775 $ 217,355 $ 279,905 $ 518,130 $ 486,354

High-Performance 165,111 59,898 67,420 225,009 103,544 Mixed-SignalNet sales 465,886 277,253 347,325 743,139 589,898

Cost of sales 230,442 137,307 167,115 367,749 282,216

Gross profit 235,444 139,946 180,210 375,390 307,682

Gross margin 50.5 % 50.5 % 51.9 % 50.5 % 52.2 %

Research and 102,116 85,696 84,810 187,812 163,551 developmentSelling, general 38,132 35,147 31,247 73,279 60,951 andadministrativeRestructuring - - - - 352 costsTotal operating 140,248 120,843 116,057 261,091 224,854 expenses Income from 95,196 19,103 64,153 114,299 82,828 operations Interest income 35 761 1,378 796 2,954

Other income 1,859 (242 ) 784 1,617 895 (expense)Income before 97,090 19,622 66,315 116,712 86,677 income taxesProvision for 11,994 2,413 6,829 14,407 8,982 income taxesNet income $ 85,096 $ 17,209 $ 59,486 $ 102,305 $ 77,695

Basic earnings $ 1.48 $ 0.30 $ 1.02 $ 1.78 $ 1.33 per share:Diluted earnings $ 1.43 $ 0.29 $ 0.99 $ 1.72 $ 1.29 per share: Weighted averagenumber ofshares:Basic 57,364 57,582 58,191 57,473 58,252

Diluted 59,451 59,513 60,127 59,485 60,203

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 and 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, the results prepared in accordance with GAAP. Three Months Ended Six Months Ended



Sep. 25, Jun. 26, Sep. 26, Sep. 25, Sep. 26,

2021 2021 2020 2021 2020

Net Income Q2'22 Q1'22 Q2'21 Q2'22 Q2'21ReconciliationGAAP Net Income $ 85,096 $ 17,209 $ 59,486 $ 102,305 $ 77,695

Amortization of 7,054 2,998 2,998 10,052 5,996 acquisitionintangiblesStock-based 16,551 14,984 15,476 31,535 28,782 compensation expenseRestructuring costs - - - - 352

Acquisition-related 5,834 - - 5,834 - costsAdjustment to income (6,045 ) (2,949 ) (2,293 ) (8,994 ) (5,275 )taxesNon-GAAP Net Income $ 108,490 $ 32,242 $ 75,667 $ 140,732 $ 107,550

Earnings Per ShareReconciliationGAAP Diluted earnings $ 1.43 $ 0.29 $ 0.99 $ 1.72 $ 1.29 per shareEffect of Amortization 0.12 0.05 0.05 0.17 0.10 of acquisitionintangiblesEffect of Stock-based 0.28 0.25 0.26 0.53 0.48 compensation expenseEffect of - - - - 0.01 Restructuring costsEffect of 0.09 - - 0.09 - Acquisition-relatedcostsEffect of Adjustment (0.10 ) (0.05 ) (0.04 ) (0.14 ) (0.09 )to income taxesNon-GAAP Diluted $ 1.82 $ 0.54 $ 1.26 $ 2.37 $ 1.79 earnings per share Operating IncomeReconciliationGAAP Operating Income $ 95,196 $ 19,103 $ 64,153 $ 114,299 $ 82,828

GAAP Operating Profit 20.4 % 6.9 % 18.5 % 15.4 % 14.0 %

Amortization of 7,054 2,998 2,998 10,052 5,996 acquisitionintangiblesStock-based 272 246 197 518 404 compensation expense -COGSStock-based 10,496 9,612 9,235 20,108 17,888 compensation expense -R&DStock-based 5,783 5,126 6,044 10,909 10,490 compensation expense -SG&ARestructuring costs - - - - 352

Acquisition-related 5,834 - - 5,834 - costsNon-GAAP Operating $ 124,635 $ 37,085 $ 82,627 $ 161,720 $ 117,958 IncomeNon-GAAP Operating 26.8 % 13.4 % 23.8 % 21.8 % 20.0 %Profit Operating ExpenseReconciliationGAAP Operating $ 140,248 $ 120,843 $ 116,057 $ 261,091 $ 224,854 ExpensesAmortization of (7,054 ) (2,998 ) (2,998 ) (10,052 ) (5,996 )acquisitionintangiblesStock-based (10,496 ) (9,612 ) (9,235 ) (20,108 ) (17,888 )compensation expense -R&DStock-based (5,783 ) (5,126 ) (6,044 ) (10,909 ) (10,490 )compensation expense -SG&ARestructuring costs - - - - (352 )

Acquisition-related (2,373 ) - - (2,373 ) - costsNon-GAAP Operating $ 114,542 $ 103,107 $ 97,780 $ 217,649 $ 190,128 Expenses Gross Margin/ProfitReconciliationGAAP Gross Profit $ 235,444 $ 139,946 $ 180,210 $ 375,390 $ 307,682

GAAP Gross Margin 50.5 % 50.5 % 51.9 % 50.5 % 52.2 %

Acquisition-related 3,461 - - 3,461 - costsStock-based 272 246 197 518 404 compensation expense -COGSNon-GAAP Gross Profit $ 239,177 $ 140,192 $ 180,407 $ 379,369 $ 308,086

Non-GAAP Gross Margin 51.3 % 50.6 % 51.9 % 51.0 % 52.2 %

Effective Tax RateReconciliationGAAP Tax Expense $ 11,994 $ 2,413 $ 6,829 $ 14,407 $ 8,982

GAAP Effective Tax 12.4 % 12.3 % 10.3 % 12.3 % 10.4 %RateAdjustments to income 6,045 2,949 2,293 8,994 5,275 taxesNon-GAAP Tax Expense $ 18,039 $ 5,362 $ 9,122 $ 23,401 $ 14,257

Non-GAAP Effective Tax 14.3 % 14.3 % 10.8 % 14.3 % 11.7 %Rate Tax Impact to EPSReconciliationGAAP Tax Expense $ 0.20 $ 0.04 $ 0.11 $ 0.24 $ 0.15

Adjustments to income 0.10 0.05 0.04 0.14 0.09 taxesNon-GAAP Tax Expense $ 0.30 $ 0.09 $ 0.15 $ 0.38 $ 0.24

CONSOLIDATED CONDENSED BALANCE SHEETunaudited; in thousands Sep. 25, Mar. 27, Sep. 26,

2021 2021 2020

ASSETSCurrent assetsCash and cash equivalents $ 386,741 $ 442,164 $ 247,536

Marketable securities 8,152 55,697 36,641

Accounts receivable, net 280,967 108,712 181,496

Inventories 188,360 173,263 209,050

Other current assets 84,836 62,683 34,508

Total current Assets 949,056 842,519 709,231

Long-term marketable securities 67,726 312,759 328,255

Right-of-use lease assets 129,298 133,548 137,045

Property and equipment, net 159,480 154,942 153,640

Intangibles, net 174,852 22,031 27,898

Goodwill 437,783 287,518 287,673

Deferred tax asset 10,073 9,977 7,899

Long-term prepaid wafers 195,000 - -

Other assets 102,892 67,320 48,223

Total assets $ 2,226,160 $ 1,830,614 $ 1,699,864

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesAccounts payable $ 386,699 $ 102,744 $ 99,105

Accrued salaries and benefits 54,919 54,849 41,707

Lease liability 14,359 14,573 13,994

Other accrued liabilities 44,404 41,444 23,237

Total current liabilities 500,381 213,610 178,043

Non-current lease liability 122,815 127,883 128,570

Non-current income taxes 79,727 64,020 66,503

Long-term acquisition-related liabilities 33,329 - -

Other long-term liabilities 21,818 36,096 9,917

Stockholders' equity:Capital stock 1,533,557 1,498,819 1,466,978

Accumulated deficit (65,672) (112,689) (155,260)

Accumulated other comprehensive income 205 2,875 5,113

Total stockholders' equity 1,468,090 1,389,005 1,316,831

Total liabilities and stockholders' $ 2,226,160 $ 1,830,614 $ 1,699,864equity Prepared in accordance with Generally Accepted Accounting Principles View source version on businesswire.com: https://www.businesswire.com/news/home/20211101005296/en/

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