Cirrus Logic : Reports Q3 FY22 Revenue of $548.3 Million - Form 8-K

Cirrus Logic Reports Q3 FY22 Revenue of $548.3 Million

Record Revenue Driven by High-Performance Mixed-Signal Content Gains in Smartphones

AUSTIN, Texas--(BUSINESS WIRE)--January 31, 2022--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 third quarter fiscal year 2022, which ended Dec. 25, 2021, as well as the company's current business outlook.

"Cirrus Logic reported record revenue in the December quarter, above the top end of our guidance, driven by significant contributions from the expanded high-performance mixed-signal content shipping into smartphones and strong overall demand for our products," said John Forsyth, Cirrus Logic president and chief executive officer. "These results reflect our continued momentum in FY22 and mark another milestone in the execution of our strategy to diversify our product and technology portfolio. Building on our success over the past few years, we are investing in additional technologies targeting new opportunities for incremental content, including the areas of sensing, power, and battery systems. Moving forward, we believe we are well-positioned to increase the diversity of our business and drive long-term revenue growth."

Reported Financial Results - Third Quarter FY22

• Revenue of $548.3 million;
• GAAP gross margin of 52.8 percent and non-GAAP gross margin of 52.8 percent;
• GAAP operating expenses of $145.3 million and non-GAAP operating expenses of $115.5 million; and
• GAAP earnings per share of $2.16 and non-GAAP earnings per share of $2.54.

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

Business Outlook - Fourth Quarter FY22

• Revenue is expected to range between $400 million and $440 million;
• GAAP gross margin is forecasted to be between 51 percent and 53 percent; and
• Combined GAAP R&D and SG&A expenses are anticipated to range between $150 million and $156 million, including approximately $19 million in stock-based compensation expense, $8 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. EST 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 [e-mail]. 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: 3871289).

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 ability to diversify our product and technology portfolios and drive long-term revenue growth, , and our estimates for the fourth quarter fiscal year 2022 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; 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; our ability to attract, hire, and retain qualified personnel to support the development, marketing, and sales of our products; the level of orders and shipments during the fourth 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		Nine Months Ended
		Dec. 25,		Sep. 25,		Dec. 26,		Dec. 25,		Dec. 26,
		2021		2021		2020		2021		2020
		Q3'22		Q2'22		Q3'21		Q3'22		Q3'21
Audio		$	341,897			$	300,775			$	381,885			$	860,027			$	868,239
High-Performance Mixed-Signal			206,452				165,111				103,910				431,461				207,454
Net sales			548,349				465,886				485,795				1,291,488				1,075,693
Cost of sales			258,827				230,442				234,295				626,576				516,511
Gross profit			289,522				235,444				251,500				664,912				559,182
Gross margin			52.8	%			50.5	%			51.8	%			51.5	%			52.0	%
Research and development			107,101				102,116				89,435				294,913				252,986
Selling, general and administrative			38,247				38,132				32,415				111,526				93,366
Restructuring costs			-				-				-				-				352
Total operating expenses			145,348				140,248				121,850				406,439				346,704
Income from operations			144,174				95,196				129,650				258,473				212,478
Interest income (expense)			(78	)			35				1,206				718				4,160
Other income (expense)			(87	)			1,859				(207	)			1,530				688
Income before income taxes			144,009				97,090				130,649				260,721				217,326
Provision for income taxes			16,373				11,994				16,281				30,780				25,263
Net income		$	127,636			$	85,096			$	114,368			$	229,941			$	192,063
Basic earnings per share:		$	2.23			$	1.48			$	1.97			$	4.01			$	3.30
Diluted earnings per share:		$	2.16			$	1.43			$	1.91			$	3.88			$	3.20
Weighted average number of shares:
Basic			57,178				57,364				58,024				57,374				58,176
Diluted			59,031				59,451				59,963				59,317				60,101
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		Nine Months Ended
		Dec. 25,		Sep. 25,		Dec. 26,		Dec. 25,		Dec. 26,
		2021		2021		2020		2021		2020
Net Income Reconciliation		Q3'22		Q2'22		Q3'21		Q3'22		Q3'21
GAAP Net Income		$	127,636			$	85,096			$	114,368			$	229,941			$	192,063
Amortization of acquisition intangibles			9,083				7,054				2,998				19,135				8,994
Stock-based compensation expense			17,833				16,551				13,287				49,368				42,069
Restructuring costs			-				-				-				-				352
Acquisition-related costs			3,155				5,834				-				8,989				-
Adjustment to income taxes			(7,903	)			(6,045	)			(2,897	)			(16,897	)			(8,172	)
Non-GAAP Net Income		$	149,804			$	108,490			$	127,756			$	290,536			$	235,306
Earnings Per Share Reconciliation
GAAP Diluted earnings per share		$	2.16			$	1.43			$	1.91			$	3.88			$	3.20
Effect of Amortization of acquisition intangibles			0.16				0.12				0.05				0.32				0.15
Effect of Stock-based compensation expense			0.30				0.28				0.22				0.83				0.70
Effect of Restructuring costs			-				-				-				-				0.01
Effect of Acquisition-related costs			0.05				0.09				-				0.15				-
Effect of Adjustment to income taxes			(0.13	)			(0.10	)			(0.05	)			(0.28	)			(0.14	)
Non-GAAP Diluted earnings per share		$	2.54			$	1.82			$	2.13			$	4.90			$	3.92
Operating Income Reconciliation
GAAP Operating Income		$	144,174			$	95,196			$	129,650			$	258,473			$	212,478
GAAP Operating Profit			26.3	%			20.4	%			26.7	%			20.0	%			19.8	%
Amortization of acquisition intangibles			9,083				7,054				2,998				19,135				8,994
Stock-based compensation expense - COGS			245				272				236				763				640
Stock-based compensation expense - R&D			12,260				10,496				9,526				32,368				27,414
Stock-based compensation expense - SG&A			5,328				5,783				3,525				16,237				14,015
Restructuring costs			-				-				-				-				352
Acquisition-related costs			3,155				5,834				-				8,989				-
Non-GAAP Operating Income		$	174,245			$	124,635			$	145,935			$	335,965			$	263,893
Non-GAAP Operating Profit			31.8	%			26.8	%			30.0	%			26.0	%			24.5	%
Operating Expense Reconciliation
GAAP Operating Expenses		$	145,348			$	140,248			$	121,850			$	406,439			$	346,704
Amortization of acquisition intangibles			(9,083	)			(7,054	)			(2,998	)			(19,135	)			(8,994	)
Stock-based compensation expense - R&D			(12,260	)			(10,496	)			(9,526	)			(32,368	)			(27,414	)
Stock-based compensation expense - SG&A			(5,328	)			(5,783	)			(3,525	)			(16,237	)			(14,015	)
Restructuring costs			-				-				-				-				(352	)
Acquisition-related costs			(3,155	)			(2,373	)			-				(5,528	)			-
Non-GAAP Operating Expenses		$	115,522			$	114,542			$	105,801			$	333,171			$	295,929
Gross Margin/Profit Reconciliation
GAAP Gross Profit		$	289,522			$	235,444			$	251,500			$	664,912			$	559,182
GAAP Gross Margin			52.8	%			50.5	%			51.8	%			51.5	%			52.0	%
Acquisition-related costs			-				3,461				-				3,461				-
Stock-based compensation expense - COGS			245				272				236				763				640
Non-GAAP Gross Profit		$	289,767			$	239,177			$	251,736			$	669,136			$	559,822
Non-GAAP Gross Margin			52.8	%			51.3	%			51.8	%			51.8	%			52.0	%
Effective Tax Rate Reconciliation
GAAP Tax Expense		$	16,373			$	11,994			$	16,281			$	30,780			$	25,263
GAAP Effective Tax Rate			11.4	%			12.4	%			12.5	%			11.8	%			11.6	%
Adjustments to income taxes			7,903				6,045				2,897				16,897				8,172
Non-GAAP Tax Expense		$	24,276			$	18,039			$	19,178			$	47,677			$	33,435
Non-GAAP Effective Tax Rate			13.9	%			14.3	%			13.1	%			14.1	%			12.4	%
Tax Impact to EPS Reconciliation
GAAP Tax Expense		$	0.28			$	0.20			$	0.27			$	0.52			$	0.42
Adjustments to income taxes			0.13				0.10				0.05				0.28				0.14
Non-GAAP Tax Expense		$	0.41			$	0.30			$	0.32			$	0.80			$	0.56

CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands
		Dec. 25,		Mar. 27,		Dec. 26,
		2021		2021		2020
ASSETS
Current assets
Cash and cash equivalents		$	195,121			$	442,164			$	327,294
Marketable securities			3,719				55,697				43,289
Accounts receivable, net			326,131				108,712				244,803
Inventories			148,525				173,263				142,689
Other current assets			90,025				62,683				45,469
Total current Assets			763,521				842,519				803,544
Long-term marketable securities			72,118				312,759				326,491
Right-of-use lease assets			173,054				133,548				135,719
Property and equipment, net			157,186				154,942				154,312
Intangibles, net			165,581				22,031				24,322
Goodwill			437,783				287,518				287,518
Deferred tax asset			7,203				9,977				7,277
Long-term prepaid wafers			195,000				-				-
Other assets			96,671				67,320				86,446
Total assets		$	2,068,117			$	1,830,614			$	1,825,629
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	110,250			$	102,744			$	90,814
Accrued salaries and benefits			43,044				54,849				39,367
Lease liability			14,653				14,573				14,539
Acquisition-related liabilities			30,964				-				-
Other accrued liabilities			40,603				41,444				40,135
Total current liabilities			239,514				213,610				184,855
Non-current lease liability			164,896				127,883				129,583
Non-current income taxes			77,683				64,020				70,866
Long-term acquisition-related liabilities			5,528				-				-
Other long-term liabilities			17,749				36,096				39,968
Stockholders' equity:
Capital stock			1,556,746				1,498,819				1,483,567
Accumulated earnings (deficit)			6,416				(112,689	)			(88,238	)
Accumulated other comprehensive income (loss)			(415	)			2,875				5,028
Total stockholders' equity			1,562,747				1,389,005				1,400,357
Total liabilities and stockholders' equity		$	2,068,117			$	1,830,614			$	1,825,629
Prepared in accordance with Generally Accepted Accounting Principles

Contacts

Investor Contact:
Thurman K. Case
Chief Financial Officer
Cirrus Logic, Inc.
[phone]
[e-mail]