Cirrus Logic Reports Q1 Revenue of $259.4 Million

Demand for New Products Expected to Fuel Significant Revenue Growth in September Quarter

AUSTIN, Texas - July 27, 2016 - Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-precision analog and digital signal processing products, today posted on its investor relations website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the first quarter of fiscal 2017, which ended June 25, 2016, as well as the company’s current business outlook.

“We are pleased to have delivered results above the high end of our guidance for the June quarter, and we continue to expect strong growth in FY17 driven by new product introductions,” said Jason Rhode, president and chief executive officer. “Our team has done a great job of developing a compelling portfolio of high performance audio and voice solutions, and we believe the company is well positioned to capitalize on these exciting markets into the future.”

Reported Financial Results – First Quarter FY17

  • Revenue of $259.4 million;
  • GAAP gross margin of 48.8 percent and non-GAAP gross margin of 48.9 percent;
  • GAAP operating expenses of $104.5 million; non-GAAP operating expenses of $87 million; and
  • GAAP diluted earnings per share of $0.24 and non-GAAP diluted earnings per share of $0.44.

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

Business Outlook – Second Quarter FY17

  • Revenue is expected to range between $380 million and $410 million;
  • GAAP gross margin is expected to be between 47 percent and 49 percent; and
  • Combined GAAP R&D and SG&A expenses are expected to range between $110 million and $114 million, which includes approximately $10 million in share-based compensation and $8 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 (404) 537-3406, or toll-free at (855) 859-2056 (Access Code: 40728133).

Cirrus Logic, Inc.

Cirrus Logic is a leader in high performance, low-power ICs for audio and voice signal processing applications. Cirrus Logic’s products span the entire audio signal chain, from capture to playback, providing innovative products for the world’s top smartphones, tablets, digital headsets, wearables and emerging smart home applications. With headquarters in Austin, Texas, Cirrus Logic is recognized globally for its award-winning corporate culture. Check us out at www.cirrus.com.

Use of non-GAAP Financial Information

To supplement Cirrus Logic’s financial statements presented on a GAAP basis, Cirrus has provided non-GAAP financial information, including gross margins, operating expenses, net income, operating profit and income, tax expenses and diluted earnings per share. 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 future growth opportunities and our estimates of second quarter fiscal year 2017 revenue, gross margin, combined research and development and selling, general and administrative expense levels, share-based 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 level of orders and shipments during the second quarter of fiscal year 2017, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the timing and success of new product ramps; and the risk factors listed in our Form 10-K for the year ended March 26, 2016, 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 undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

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Cirrus Logic and Cirrus are registered trademarks of Cirrus Logic, Inc. All other company or product names noted herein may be trademarks of their respective holders.

Summary financial data follows:

CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Three Months Ended
Jun. 25, Mar. 26, Jun. 27,
2016 2016 2015
Q1'17 Q4'16 Q1'16
Portable audio products $ 216,068 $ 187,280 $ 235,866
Non-portable audio and other products 43,360 44,719 46,767
Net sales 259,428 231,999 282,633
Cost of sales 132,743 116,745 150,179
Gross profit 126,685 115,254 132,454
Gross margin 48.8 % 49.7 % 46.9 %
Research and development 73,934 65,834 65,835
Selling, general and administrative 30,540 27,228 29,119
Patent agreement and other - - (12,500 )
Total operating expenses 104,474 93,062 82,454
Income from operations 22,211 22,192 50,000
Interest expense, net (689 ) (709 ) (745 )
Other income (expense), net 147 (370 ) 243
Income before income taxes 21,669 21,113 49,498
Provision for income taxes 5,805 7,101 16,144
Net income $ 15,864 $ 14,012 $ 33,354
Basic earnings per share: $ 0.25 $ 0.22 $ 0.53
Diluted earnings per share: $ 0.24 $ 0.21 $ 0.50
Weighted average number of shares:
Basic 62,450 62,843 63,274
Diluted 65,232 65,398 66,410
Prepared in accordance with Generally Accepted Accounting Principles
CIRRUS LOGIC, INC.
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 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. Certain modifications to prior year non-GAAP presentation has been made and had no material effect on the results of operations.
Three Months Ended
Jun. 25, Mar. 26, Jun. 27,
2016 2016 2015
Net Income Reconciliation Q1'17 Q4'16 Q1'16
GAAP Net Income $ 15,864 $ 14,012 $ 33,354
Amortization of acquisition intangibles 8,363 8,363 7,141
Stock based compensation expense 9,310 8,858 8,271
Patent agreement and other - - (12,500 )
Restructuring and other costs, net - (3,667 ) -
Adjustment to income taxes (4,639 ) (2,658 ) (175 )
Non-GAAP Net Income $ 28,898 $ 24,908 $ 36,091
Earnings Per Share Reconciliation
GAAP Diluted earnings per share $ 0.24 $ 0.21 $ 0.50
Effect of Amortization of acquisition intangibles 0.13 0.13 0.11
Effect of Stock based compensation expense 0.14 0.14 0.12
Effect of Patent agreement and other - - (0.19 )
Effect of Restructuring and other costs, net - (0.06 ) -
Effect of Adjustment to income taxes (0.07 ) (0.04 ) -
Non-GAAP Diluted earnings per share $ 0.44 $ 0.38 $ 0.54
Operating Income Reconciliation
GAAP Operating Income $ 22,211 $ 22,192 $ 50,000
GAAP Operating Profit 9 % 10 % 18 %
Amortization of acquisition intangibles 8,363 8,363 7,141
Stock compensation expense - COGS 230 233 325
Stock compensation expense - R&D 5,216 4,996 3,868
Stock compensation expense - SG&A 3,864 3,629 4,078
Patent agreement and other - - (12,500 )
Restructuring and other costs, net - (3,667 ) -
Non-GAAP Operating Income $ 39,884 $ 35,746 $ 52,912
Non-GAAP Operating Profit 15 % 15 % 19 %
Operating Expense Reconciliation
GAAP Operating Expenses $ 104,474 $ 93,062 $ 82,454
Amortization of acquisition intangibles (8,363 ) (8,363 ) (7,141 )
Stock compensation expense - R&D (5,216 ) (4,996 ) (3,868 )
Stock compensation expense - SG&A (3,864 ) (3,629 ) (4,078 )
Patent agreement and other - - 12,500
Restructuring and other costs, net - 3,667 -
Non-GAAP Operating Expenses $ 87,031 $ 79,741 $ 79,867
Gross Margin/Profit Reconciliation
GAAP Gross Margin $ 126,685 $ 115,254 $ 132,454
GAAP Gross Profit 48.8 % 49.7 % 46.9 %
Stock compensation expense - COGS 230 233 325
Non-GAAP Gross Margin $ 126,915 $ 115,487 $ 132,779
Non-GAAP Gross Profit 48.9 % 49.8 % 47.0 %
Effective Tax Rate Reconciliation
GAAP Tax Expense $ 5,805 $ 7,101 $ 16,144
GAAP Effective Tax Rate 26.8 % 33.6 % 32.6 %
Adjustments to income taxes 4,639 2,658 175
Non-GAAP Tax Expense $ 10,444 $ 9,759 $ 16,319
Non-GAAP Effective Tax Rate 26.5 % 28.2 % 31.1 %
Tax Impact to EPS Reconciliation
GAAP Tax Expense $ 0.09 $ 0.11 $ 0.24
Adjustments to income taxes 0.07 0.04 -
Non-GAAP Tax Expense $ 0.16 $ 0.15 $ 0.24
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands)
Jun. 25, Mar. 26, Jun. 27,
2016 2016 2015
ASSETS (unaudited) (unaudited)
Current assets
Cash and cash equivalents $ 143,591 $ 168,793 $ 102,531
Marketable securities 91,090 60,582 120,226
Accounts receivable, net 140,893 88,532 120,838
Inventories 154,043 142,015 126,195
Deferred tax asset - - 5,276
Other current assets 44,106 46,207 32,982
Total current Assets 573,723 506,129 508,048
Long-term marketable securities 3,923 20,631 50,629
Property and equipment, net 160,875 162,656 152,018
Intangibles, net 156,949 162,832 169,158
Goodwill 287,518 287,518 263,583
Deferred tax asset 27,334 25,772 25,639
Other assets 14,776 16,345 24,578
Total assets $ 1,225,098 $ 1,181,883 $ 1,193,653
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 105,138 $ 71,619 $ 146,370
Accrued salaries and benefits 21,854 21,239 21,380
Deferred income - - 4,736
Other accrued liabilities 31,068 35,266 30,636
Total current liabilities 158,060 128,124 203,122
Long-term debt 160,439 160,439 160,439
Other long-term liabilities 34,855 33,837 30,320
Stockholders' equity:
Capital stock 1,215,749 1,203,496 1,170,436
Accumulated deficit (344,564 ) (344,345 ) (367,691 )
Accumulated other comprehensive income (loss) 559 332 (2,973 )
Total stockholders' equity 871,744 859,483 799,772
Total liabilities and stockholders' equity $ 1,225,098 $ 1,181,883 $ 1,193,653
Prepared in accordance with Generally Accepted Accounting Principles

Media Contacts

Thurman Case
Chief Financial Officer
(512) 841-4125
investor.relations@cirrus.com