Cirrus Logic : Reports First Quarter Revenue of $393.6 Million - Form 8-K

Cirrus Logic Reports First Quarter Revenue of $393.6 Million

Company Announces $500 Million Share Repurchase Program

AUSTIN, Texas--(BUSINESS WIRE)--August 2, 2022--Cirrus Logic, Inc. (Nasdaq: CRUS)today posted on its website at investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the first quarter fiscal year 2023, which ended June 25, 2022, as well as the company's current business outlook.

"Cirrus Logic delivered record revenue for the June quarter, above the high end of guidance, as component shipments into smartphones exceeded expectations, and we continued to benefit from strong demand for flagship devices," said John Forsyth, Cirrus Logic president and chief executive officer. "We remain focused on delivering long-term growth through our investment in new technologies and high-performance mixed-signal products. With a compelling pipeline of low-power, low-latency signal processing components, we believe the company is well-positioned to drive content expansion opportunities in FY24 and beyond."

Reported Financial Results - First Quarter FY23

• Revenue of $393.6 million;
• GAAP and non-GAAP gross margin of 51.5 percent;
• GAAP operating expenses of $148.4 million and non-GAAP operating expenses of $119.5 million; and
• GAAP earnings per share of $0.69 and non-GAAP earnings per share of $1.12.

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

Business Outlook - Second Quarter FY23

• Revenue is expected to range between $450 million and $490 million;
• GAAP gross margin is forecasted to be between 49 percent and 51 percent; and
• Combined GAAP R&D and SG&A expenses are anticipated to range between $154 million and $160 million, including approximately $20 million in stock-based compensation expense, $8 million in amortization of acquired intangibles, and $3 million in acquisition-related costs.

Share Repurchase Authorization

The company also announced that its Board of Directors recently authorized the repurchase of up to an additional $500 million of the company's common stock, in addition to the $136.1 million remaining from the Board's previous share repurchase authorization in January 2021. The repurchases will be funded from working capital and anticipated cash flow from operations and may occur from time to time depending on a variety of factors, including general market and economic conditions and other corporate considerations. Repurchases may also be affected through open market purchases, 10b5-1 plans, or other means. The share repurchase program is designed to comply with all applicable securities laws and may be suspended or discontinued at any time without notice.

Cirrus Logic will host a live Q&A session at 5 p.m. EDT today to discuss its financial results and business outlook. Participants may listen to the conference call on the investor relations website at 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 [phone], or toll-free at [phone] (Access Code: 9542479).

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.

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, effective tax rate, free cash flow, and free cash flow margin. 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 ability to deliver long-term growth through investment in new technologies and high-performance mixed-signal products, drive content expansion opportunities in FY24 and beyond, and our estimates for the second quarter fiscal year 2023 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, amortization of acquired intangibles and acquisition-related costs. 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; 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;recent significant increases in inflation in the U.S. and overseas; the level and timing of orders and shipments during the second quarter of fiscal year 2023, 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 26, 2022 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
(in thousands, except per share data; unaudited)
	Three Months Ended
	Jun. 25,		Mar. 26,		Jun. 26,
	2022		2022		2021
	Q1'23		Q4'22		Q1'22
Audio	$	254,496			$	327,099			$	217,355
High-Performance Mixed-Signal		139,143				162,873				59,898
Net sales		393,639				489,972				277,253
Cost of sales		191,005				231,243				137,307
Gross profit		202,634				258,729				139,946
Gross margin		51.5	%			52.8	%			50.5	%
Research and development		109,716				111,394				85,696
Selling, general and administrative		38,642				39,470				35,147
Total operating expenses		148,358				150,864				120,843
Income from operations		54,276				107,865				19,103
Interest income (expense)		305				(103	)			761
Other income (expense)		506				180				(242	)
Income before income taxes		55,087				107,942				19,622
Provision for income taxes		15,380				11,528				2,413
Net income	$	39,707			$	96,414			$	17,209
Basic earnings per share:	$	0.71			$	1.69			$	0.30
Diluted earnings per share:	$	0.69			$	1.64			$	0.29
Weighted average number of shares:
Basic		56,277				56,993				57,582
Diluted		57,804				58,625				59,513
Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands, except per share data; unaudited)
(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. 25,		Mar. 26,		Jun. 26,
	2022		2022		2021
Net Income Reconciliation	Q1'23		Q4'22		Q1'22
GAAP Net Income	$	39,707			$	96,414			$	17,209
Amortization of acquisition intangibles		7,835				7,882				2,998
Stock-based compensation expense		18,138				17,024				14,984
Acquisition-related costs		3,164				3,164				-
Adjustment to income taxes		(4,300	)			(6,778	)			(2,949	)
Non-GAAP Net Income	$	64,544			$	117,706			$	32,242
Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	0.69			$	1.64			$	0.29
Effect of Amortization of acquisition intangibles		0.14				0.14				0.05
Effect of Stock-based compensation expense		0.31				0.29				0.25
Effect of Acquisition-related costs		0.05				0.05				-
Effect of Adjustment to income taxes		(0.07	)			(0.11	)			(0.05	)
Non-GAAP Diluted earnings per share	$	1.12			$	2.01			$	0.54
Operating Income Reconciliation
GAAP Operating Income	$	54,276			$	107,865			$	19,103
GAAP Operating Profit		13.8	%			22.0	%			6.9	%
Amortization of acquisition intangibles		7,835				7,882				2,998
Stock-based compensation expense - COGS		277				261				246
Stock-based compensation expense - R&D		12,592				11,786				9,612
Stock-based compensation expense - SG&A		5,269				4,977				5,126
Acquisition-related costs		3,164				3,164				-
Non-GAAP Operating Income	$	83,413			$	135,935			$	37,085
Non-GAAP Operating Profit		21.2	%			27.7	%			13.4	%
Operating Expense Reconciliation
GAAP Operating Expenses	$	148,358			$	150,864			$	120,843
Amortization of acquisition intangibles		(7,835	)			(7,882	)			(2,998	)
Stock-based compensation expense - R&D		(12,592	)			(11,786	)			(9,612	)
Stock-based compensation expense - SG&A		(5,269	)			(4,977	)			(5,126	)
Acquisition-related costs		(3,164	)			(3,164	)			-
Non-GAAP Operating Expenses	$	119,498			$	123,055			$	103,107
Gross Margin/Profit Reconciliation
GAAP Gross Profit	$	202,634			$	258,729			$	139,946
GAAP Gross Margin		51.5	%			52.8	%			50.5	%
Stock-based compensation expense - COGS		277				261				246
Non-GAAP Gross Profit	$	202,911			$	258,990			$	140,192
Non-GAAP Gross Margin		51.5	%			52.9	%			50.6	%
Effective Tax Rate Reconciliation
GAAP Tax Expense	$	15,380			$	11,528			$	2,413
GAAP Effective Tax Rate		27.9	%			10.7	%			12.3	%
Adjustments to income taxes		4,300				6,778				2,949
Non-GAAP Tax Expense	$	19,680			$	18,306			$	5,362
Non-GAAP Effective Tax Rate		23.4	%			13.5	%			14.3	%
Tax Impact to EPS Reconciliation
GAAP Tax Expense	$	0.27			$	0.20			$	0.04
Adjustments to income taxes		0.07				0.11				0.05
Non-GAAP Tax Expense	$	0.34			$	0.31			$	0.09

CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)
		Jun. 25,		Mar. 26,		Jun. 26,
		2022		2022		2021
ASSETS
Current assets
	Cash and cash equivalents	$	379,335			$	369,814			$	385,127
	Marketable securities		18,397				10,601				60,503
	Accounts receivable, net		206,272				240,264				136,534
	Inventories		174,370				138,436				192,722
	Other current assets		82,634				80,900				64,458
	Total current Assets		861,008				840,015				839,344
Long-term marketable securities		55,965				63,749				311,643
Right-of-use lease assets		168,680				171,003				131,446
Property and equipment, net		157,165				157,077				158,451
Intangibles, net		149,984				158,145				18,429
Goodwill		435,936				435,791				287,518
Deferred tax asset		16,928				11,068				19,482
Long-term prepaid wafers		195,000				195,000				-
Other assets		65,236				91,552				47,693
	Total assets	$	2,105,902			$	2,123,400			$	1,814,006
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Accounts payable	$	121,451			$	115,417			$	95,232
	Accrued salaries and benefits		41,026				65,261				37,220
	Lease liability		13,988				14,680				14,662
	Acquisition-related liabilities		30,964				30,964				-
	Other accrued liabilities		45,167				38,461				39,387
	Total current liabilities		252,596				264,783				186,501
Non-current lease liability		159,344				163,162				126,442
Non-current income taxes		73,735				73,383				64,245
Long-term acquisition-related liabilities		11,856				8,692				-
Other long-term liabilities		9,184				13,563				30,087
Stockholders' equity:
	Capital stock		1,596,684				1,578,427				1,514,549
	Accumulated earnings (deficit)		5,894				23,435				(109,754	)
	Accumulated other comprehensive income (loss)		(3,391	)			(2,045	)			1,936
	Total stockholders' equity		1,599,187				1,599,817				1,406,731
	Total liabilities and stockholders' equity	$	2,105,902			$	2,123,400			$	1,814,006
Prepared in accordance with Generally Accepted Accounting Principles

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands; unaudited)
	Three Months Ended
	Jun. 25,		Jun. 26,
	2022		2021
	Q1'23		Q1'22
Cash flows from operating activities:
Net income	$	39,707			$	17,209
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		16,515				11,898
Stock-based compensation expense		18,138				14,985
Deferred income taxes		(5,860	)			(9,270	)
Loss on retirement or write-off of long-lived assets		292				-
Other non-cash charges		99				108
Net change in operating assets and liabilities:
Accounts receivable, net		33,992				(27,822	)
Inventories		(35,934	)			(19,459	)
Other assets		549				(6,457	)
Accounts payable and other accrued liabilities		(20,327	)			(21,740	)
Income taxes payable		24,030				13,752
Acquisition-related liabilities		3,164				-
Net cash provided by (used in) operating activities		74,365				(26,796	)
Cash flows from investing activities:
Maturities and sales of available-for-sale marketable securities		4,694				49,158
Purchases of available-for-sale marketable securities		(5,186	)			(53,969	)
Purchases of property, equipment and software		(6,776	)			(10,835	)
Investments in technology		(448	)			(1,068	)
Net cash used in investing activities		(7,716	)			(16,714	)
Cash flows from financing activities:
Issuance of common stock, net of shares withheld for taxes		120				746
Repurchase of stock to satisfy employee tax withholding obligations		(866	)			(1,772	)
Repurchase and retirement of common stock		(56,382	)			(12,501	)
Net cash used in financing activities		(57,128	)			(13,527	)
Net increase (decrease) in cash and cash equivalents		9,521				(57,037	)
Cash and cash equivalents at beginning of period		369,814				442,164
Cash and cash equivalents at end of period	$	379,335			$	385,127
Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands; unaudited)
Free cash flow, a non-GAAP financial measure, is GAAP cash flow from operations (or cash provided by (used in) operating activities) less capital expenditures. Capital expenditures include purchases of property, equipment and software as well as investments in technology, as presented within our GAAP Consolidated Condensed Statement of Cash Flows. Free cash flow margin represents free cash flow divided by revenue.
		Twelve Months Ended		Three Months Ended
		Jun. 25,		Jun. 25,		Mar. 26,		Dec. 25,		Sep. 25,
		2022		2022		2022		2021		2021
		Q1'23		Q1'23		Q4'22		Q3'22		Q2'22
Net cash provided by (used in) operating activities (GAAP)		$	225,914			$	74,365			$	258,231			$	(135,855	)		$	29,173
Capital expenditures			(25,331	)			(7,224	)			(8,456	)			(3,724	)			(5,927	)
Free Cash Flow (Non-GAAP)		$	200,583			$	67,141			$	249,775			$	(139,579	)		$	23,246
Cash Flow from Operations as a Percentage of Revenue (GAAP)			12	%			19	%			53	%			-25	%			6	%
Free Cash Flow Margin (Non-GAAP)			11	%			17	%			51	%			-25	%			5	%

Contacts

Investor Contact:
Chelsea Heffernan
Vice President, Investor Relations
Cirrus Logic, Inc.
[phone]
[e-mail]