Cirrus Logic Reports Q1 FY22 Revenue of $277.3 Million

Rhea-AI Summary

Cirrus Logic (CRUS) reported a 14% year-on-year revenue increase for Q1 FY22, totaling $277.3 million. The company highlighted strong momentum in sales, particularly in the Android market, and announced shipments with a leading laptop OEM. Gross margins were reported at 50.5% (GAAP) and 50.6% (non-GAAP). Looking ahead, Q2 FY22 revenue is expected between $430 million and $470 million, with gross margins forecasted at 50%-52%. Significant investments in power-related products and a new partnership with GlobalFoundries are set to bolster growth.

Positive

• 14% year-on-year revenue growth, totaling $277.3 million.
• Increased market penetration in Android and shipments with a leading laptop OEM.
• Forecasted Q2 FY22 revenue between $430 million and $470 million.
• Strong gross margin of 50.5% (GAAP) and 50.6% (non-GAAP).
• Strategic partnerships with GlobalFoundries to secure supply capacity.

Negative

• None.

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 2022, which ended June 26, 2021, as well as the company’s current business outlook.

“In the past quarter, Cirrus Logic accelerated both sales momentum and execution of our growth strategy. We grew revenue by 14 percent year on year, increased penetration of the Android market, began shipments with a leading laptop OEM, ramped new content in anticipation of product launches in the latter half of the year and advanced the development of a number of new components that are expected to drive future revenue growth,” said John Forsyth, Cirrus Logic president and chief executive officer. “The company’s recent investments in power-related products, including the acquisition of Lion Semiconductor, are expected to meaningfully expand our addressable market and continue the exciting progress we have been making in building new and strategic areas of our business. With a strong pipeline of audio and high-performance mixed-signal products ramping in the coming months, we are upbeat about the next several quarters and continue to anticipate accelerated revenue growth in FY22.”

Reported Financial Results – First Quarter FY22

• Revenue of $277.3 million;
• GAAP gross margin of 50.5 percent and non-GAAP gross margin of 50.6 percent;
• GAAP operating expenses of $120.8 million and non-GAAP operating expenses of $103.1 million; and
• GAAP earnings per share of $0.29 and non-GAAP earnings per share of $0.54.

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

Business Outlook – Second Quarter FY22

• Revenue is expected to range between $430 million and $470 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 $135 million and $141 million, including approximately $17 million in stock-based compensation expense and $3 million in amortization of acquired intangibles.

The company has entered into a long-term Capacity Reservation and Wafer Supply Commitment Agreement with GlobalFoundries, a foundry partner for many of our strategic products. This will expand our ability to address unprecedented market demand and provide customers with much-needed supply assurance. Given our anticipated strong cash generation, we believe this agreement is a good use of our financial resources: it secures supplier commitments to capacity expansion in support of our sales growth, alleviates some of the supply uncertainty currently affecting the company and its customers, and ensures supplier investment in additional technologies for future products.

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: 9238026).

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 expectations for accelerated revenue growth in FY22; our ability to develop products that are expected to drive future revenue growth; our expectation that the company’s recent investments in power-related products, including the acquisition of Lion Semiconductor, will meaningfully expand our addressable market and continue our progress in building new and strategic areas of our business; our belief that the Capacity Reservation and Wafer Supply Commitment Agreement with GlobalFoundries will expand our ability to address unprecedented market demand and provide customers with much-needed supply assurance; our ability to secure supplier commitments to capacity expansion in support of our sales growth and alleviate some of the supply uncertainty currently affecting the company and its customers; and our estimates for the second 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 second 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
	Jun. 26,			Mar. 27,			Jun. 27,
	2021			2021			2020
	Q1'22			Q4'21			Q1'21
Audio	$	217,355		$	235,821		$	206,449
High-Performance Mixed-Signal		59,898			57,716			36,124
Net sales		277,253			293,537			242,573
Cost of sales		137,307			145,418			115,101
Gross profit		139,946			148,119			127,472
Gross margin		50.5%			50.5%			52.6%
Research and development		85,696			89,773			78,741
Selling, general and administrative		35,147			33,642			29,704
Restructuring costs		-			-			352
Total operating expenses		120,843			123,415			108,797
Income from operations		19,103			24,704			18,675
Interest income		761			1,064			1,576
Other income (expense)		(242)			2,152			111
Income before income taxes		19,622			27,920			20,362
Provision for income taxes		2,413			2,639			2,153
Net income	$	17,209		$	25,281		$	18,209
Basic earnings per share:	$	0.30		$	0.44		$	0.31
Diluted earnings per share:	$	0.29		$	0.42		$	0.30
Weighted average number of shares:
Basic		57,582			57,899			58,313
Diluted		59,513			59,922			60,280
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 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.
	Three Months Ended
	Jun. 26,			Mar. 27,			Jun. 27,
	2021			2021			2020
Net Income Reconciliation	Q1'22			Q4'21			Q1'21
GAAP Net Income	$	17,209		$	25,281		$	18,209
Amortization of acquisition intangibles		2,998			2,998			2,998
Stock-based compensation expense		14,984			14,693			13,306
Restructuring costs		-			-			352
Adjustment to income taxes		(2,949)			(3,251)			(2,982)
Non-GAAP Net Income	$	32,242		$	39,721		$	31,883
Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	0.29		$	0.42		$	0.30
Effect of Amortization of acquisition intangibles		0.05			0.05			0.05
Effect of Stock-based compensation expense		0.25			0.24			0.22
Effect of Restructuring costs		-			-			0.01
Effect of Adjustment to income taxes		(0.05)			(0.05)			(0.05)
Non-GAAP Diluted earnings per share	$	0.54		$	0.66		$	0.53
Operating Income Reconciliation
GAAP Operating Income	$	19,103		$	24,704		$	18,675
GAAP Operating Profit		6.9%			8.4%			7.7%
Amortization of acquisition intangibles		2,998			2,998			2,998
Stock-based compensation expense - COGS		246			260			207
Stock-based compensation expense - R&D		9,612			10,069			8,653
Stock-based compensation expense - SG&A		5,126			4,364			4,446
Restructuring costs		-			-			352
Non-GAAP Operating Income	$	37,085		$	42,395		$	35,331
Non-GAAP Operating Profit		13.4%			14.4%			14.6%
Operating Expense Reconciliation
GAAP Operating Expenses	$	120,843		$	123,415		$	108,797
Amortization of acquisition intangibles		(2,998)			(2,998)			(2,998)
Stock-based compensation expense - R&D		(9,612)			(10,069)			(8,653)
Stock-based compensation expense - SG&A		(5,126)			(4,364)			(4,446)
Restructuring costs		-			-			(352)
Non-GAAP Operating Expenses	$	103,107		$	105,984		$	92,348
Gross Margin/Profit Reconciliation
GAAP Gross Profit	$	139,946		$	148,119		$	127,472
GAAP Gross Margin		50.5%			50.5%			52.6%
Stock-based compensation expense - COGS		246			260			207
Non-GAAP Gross Profit	$	140,192		$	148,379		$	127,679
Non-GAAP Gross Margin		50.6%			50.5%			52.6%
Effective Tax Rate Reconciliation
GAAP Tax Expense	$	2,413		$	2,639		$	2,153
GAAP Effective Tax Rate		12.3%			9.5%			10.6%
Adjustments to income taxes		2,949			3,251			2,982
Non-GAAP Tax Expense	$	5,362		$	5,890		$	5,135
Non-GAAP Effective Tax Rate		14.3%			12.9%			13.9%
Tax Impact to EPS Reconciliation
GAAP Tax Expense	$	0.04		$	0.04		$	0.04
Adjustments to income taxes		0.05			0.05			0.05
Non-GAAP Tax Expense	$	0.09		$	0.09		$	0.09

CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands
					Jun. 26,			Mar. 27,			Jun. 27,
					2021			2021			2020
ASSETS
Current assets
	Cash and cash equivalents				$	385,127		$	442,164		$	285,922
	Marketable securities					60,503			55,697			29,943
	Accounts receivable, net					136,534			108,712			136,539
	Inventories					192,722			173,263			199,332
	Other current assets					64,458			62,683			38,231
	Total current Assets					839,344			842,519			689,967
Long-term marketable securities						311,643			312,759			290,186
Right-of-use lease assets						131,446			133,548			139,492
Property and equipment, net						158,451			154,942			154,286
Intangibles, net						18,429			22,031			31,185
Goodwill						287,518			287,518			287,399
Deferred tax asset						19,482			9,977			6,970
Other assets						47,693			67,320			44,554
	Total assets				$	1,814,006		$	1,830,614		$	1,644,039
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Accounts payable				$	95,232		$	102,744		$	95,523
	Accrued salaries and benefits					37,220			54,849			28,768
	Lease liability					14,662			14,573			13,887
	Other accrued liabilities					39,387			41,444			24,866
	Total current liabilities					186,501			213,610			163,044
Non-current lease liability						126,442			127,883			129,627
Non-current income taxes						64,245			64,020			69,130
Other long-term liabilities						30,087			36,096			9,949
Stockholders' equity:
	Capital stock					1,514,549			1,498,819			1,451,297
	Accumulated deficit					(109,754)			(112,689)			(184,049)
	Accumulated other comprehensive income					1,936			2,875			5,041
	Total stockholders' equity					1,406,731			1,389,005			1,272,289
	Total liabilities and stockholders' equity				$	1,814,006		$	1,830,614		$	1,644,039
Prepared in accordance with Generally Accepted Accounting Principles

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005904/en/

FAQ

What were Cirrus Logic's Q1 FY22 earnings results?

For Q1 FY22, Cirrus Logic reported revenue of $277.3 million, a GAAP gross margin of 50.5%, and non-GAAP earnings per share of $0.54.

What is Cirrus Logic's outlook for Q2 FY22?

Cirrus Logic expects Q2 FY22 revenue to be between $430 million and $470 million, with gross margins estimated between 50% and 52%.

What drove the revenue growth for Cirrus Logic in Q1 FY22?

The revenue growth was fueled by increased penetration of the Android market and new shipments with a leading laptop OEM.

What strategic investments has Cirrus Logic made recently?

Cirrus Logic made investments in power-related products and acquired Lion Semiconductor to expand its addressable market.

How does Cirrus Logic plan to address market demand?

The company has entered a long-term agreement with GlobalFoundries to secure capacity and alleviate supply uncertainty.