Cirrus Logic Reports Fiscal First Quarter Revenue of $317.0 Million

About this update from Cirrus Logic, Inc.

AUSTIN, Texas --(BUSINESS WIRE)-- 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 2024, which ended June 24, 2023 , as well as the company’s current business outlook. “Cirrus Logic reported revenue for the June quarter towards the top end of guidance as we benefited from higher-than-expected unit volumes,” said John Forsyth , Cirrus Logic president and chief executive officer. “During the quarter, we taped out our next-generation boosted amplifier, completed product validation on our first 22-nanometer smart codec, and began ramping production of our latest camera controller. We also made progress on product and end-market diversification as we gained momentum in laptops and began selectively refreshing certain core product lines that are expected to drive expansion outside of smartphones.” Reported Financial Results – First Quarter FY24 Revenue of $317.0 million ; GAAP and non-GAAP gross margin of 50.3 percent and 50.4 percent; GAAP operating expenses of $141.6 million and non-GAAP operating expenses of $113.8 million ; and GAAP earnings per share of $0.28 and non-GAAP earnings per share of $0.67 . A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release. Business Outlook – Second Quarter FY24 Revenue is expected to range between $430 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 $141 million and $147 million , including approximately $22 million in stock-based compensation expense, $2 million in amortization of acquired intangibles, and $3 million in acquisition-related costs and restructuring charges associated with our recently announced workforce reduction. Cirrus Logic will host a live Q&A session at 6 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 (647) 362-9199, or toll-free at (800) 770-2030 (Access Code: 95424). Cirrus Logic to Present at Upcoming Conference Cirrus Logic Chief Financial Officer Venk Nathamuni and Vice President of Mixed-Signal Products Carl Alberty will present at the KeyBanc Technology Leadership Forum in Vail, Colorado on August 7, 2023 at 2:30 p.m. MDT . A live webcast and replay of the presentation will be available on the company's investor relations website . About 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, diluted share count, 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 make progress with product and end-market diversification and refresh certain core product lines that are expected to drive expansion outside of smartphones; and our estimates for the second quarter fiscal year 2024 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 and restructuring charges associated with our recently announced workforce reduction. 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: our ability to develop and ramp new products in a timely manner, including our next-generation boosted amplifier, our first 22-nm smart codec, and latest camera controller; our ability to commercialize new research and development efforts into new markets outside of smartphones; and the level and timing of orders and shipments during the second quarter of fiscal year 2024, 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 25, 2023 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. 24 , Mar. 25 , Jun. 25 , 2023 2023 2022 Q1'24 Q4'23 Q1'23 Audio $ 195,806 $ 232,402 $ 254,496 High-Performance Mixed-Signal 121,210 140,420 139,143 Net sales 317,016 372,822 393,639 Cost of sales 157,629 186,468 191,005 Gross profit 159,387 186,354 202,634 Gross margin 50.3 % 50.0 % 51.5 % Research and development 106,215 115,162 109,716 Selling, general and administrative 35,379 37,642 38,642 Lease impairments and restructuring — 10,632 — Intangibles impairment — 85,760 — Total operating expenses 141,594 249,196 148,358 Income (loss) from operations 17,793 (62,842 ) 54,276 Interest income (expense) 4,600 4,720 305 Other income (expense) 377 (464 ) 506 Income (loss) before income taxes 22,770 (58,586 ) 55,087 Provision for income taxes 7,170 (4,917 ) 15,380 Net income (loss) $ 15,600 $ (53,669 ) $ 39,707 Basic earnings (loss) per share $ 0.28 $ (0.97 ) $ 0.71 Diluted earnings (loss) per share: $ 0.28 $ (0.97 ) $ 0.69 Weighted average number of shares: Basic 54,862 55,219 56,277 Diluted 56,631 55,219 57,804 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. 24 , Mar. 25 , Jun. 25 , 2023 2023 2022 Net Income (Loss) Reconciliation Q1'24 Q4'23 Q1'23 GAAP Net Income (Loss) $ 15,600 $ (53,669 ) $ 39,707 Amortization of acquisition intangibles 2,170 7,657 7,835 Stock-based compensation expense 22,715 22,533 18,138 Lease impairments and restructuring — 10,632 — Intangibles impairment — 85,760 — Acquisition-related costs 3,166 3,166 3,164 Adjustment to income taxes (5,628 ) (23,461 ) (4,300 ) Non-GAAP Net Income $ 38,023 $ 52,618 $ 64,544 Earnings (Loss) Per Share Reconciliation GAAP Diluted earnings (loss) per share $ 0.28 $ (0.97 ) $ 0.69 Effect of Amortization of acquisition intangibles 0.04 0.14 0.14 Effect of Stock-based compensation expense 0.40 0.40 0.31 Effect of Lease impairments and restructuring — 0.19 — Effect of Intangibles impairment — 1.51 — Effect of Acquisition-related costs 0.05 0.06 0.05 Effect of Adjustment to income taxes (0.10 ) (0.41 ) (0.07 ) Non-GAAP Diluted earnings per share $ 0.67 $ 0.92 $ 1.12 Diluted Shares Reconciliation GAAP Diluted shares 56,631 55,219 57,804 Effect of weighted dilutive shares — 1,821 — Non-GAAP Diluted shares 56,631 57,040 57,804 Operating Income (Loss) Reconciliation GAAP Operating Income (Loss) $ 17,793 $ (62,842 ) $ 54,276 GAAP Operating Profit (Loss) 5.6 % (16.9 )% 13.8 % Amortization of acquisition intangibles 2,170 7,657 7,835 Stock-based compensation expense - COGS 285 372 277 Stock-based compensation expense - R&D 15,952 15,782 12,592 Stock-based compensation expense - SG&A 6,478 6,379 5,269 Lease impairments and restructuring — 10,632 — Intangibles impairment — 85,760 — Acquisition-related costs 3,166 3,166 3,164 Non-GAAP Operating Income $ 45,844 $ 66,906 $ 83,413 Non-GAAP Operating Profit 14.5 % 17.9 % 21.2 % Operating Expense Reconciliation GAAP Operating Expenses $ 141,594 $ 249,196 $ 148,358 Amortization of acquisition intangibles (2,170 ) (7,657 ) (7,835 ) Stock-based compensation expense - R&D (15,952 ) (15,782 ) (12,592 ) Stock-based compensation expense - SG&A (6,478 ) (6,379 ) (5,269 ) Lease impairments and restructuring — (10,632 ) — Intangibles impairment — (85,760 ) — Acquisition-related costs (3,166 ) (3,166 ) (3,164 ) Non-GAAP Operating Expenses $ 113,828 $ 119,820 $ 119,498 Gross Margin/Profit Reconciliation GAAP Gross Profit $ 159,387 $ 186,354 $ 202,634 GAAP Gross Margin 50.3 % 50.0 % 51.5 % Stock-based compensation expense - COGS 285 372 277 Non-GAAP Gross Profit $ 159,672 $ 186,726 $ 202,911 Non-GAAP Gross Margin 50.4 % 50.1 % 51.5 % Three Months Ended Jun. 24 , Mar. 25 , Jun. 25 , 2023 2023 2022 Effective Tax Rate Reconciliation Q1'24 Q4'23 Q1'23 GAAP Tax Expense (Benefit) $ 7,170 $ (4,917 ) $ 15,380 GAAP Effective Tax Rate 31.5 % 8.4 % 27.9 % Adjustments to income taxes 5,628 23,461 4,300 Non-GAAP Tax Expense $ 12,798 $ 18,544 $ 19,680 Non-GAAP Effective Tax Rate 25.2 % 26.1 % 23.4 % Tax Impact to EPS Reconciliation GAAP Tax Expense (Benefit) $ 0.13 $ (0.09 ) $ 0.27 Adjustments to income taxes 0.10 0.41 0.07 Non-GAAP Tax Expense $ 0.23 $ 0.32 $ 0.34 CONSOLIDATED CONDENSED BALANCE SHEET (in thousands; unaudited) Jun. 24 , Mar. 25 , Jun. 25 , 2023 2023 2022 ASSETS Current assets Cash and cash equivalents $ 352,346 $ 445,784 $ 379,335 Marketable securities 35,765 34,978 18,397 Accounts receivable, net 186,033 150,473 206,272 Inventories 300,956 233,450 174,370 Prepaid wafers 84,739 60,638 — Other current assets 88,829 92,533 82,634 Total current Assets 1,048,668 1,017,856 861,008 Long-term marketable securities 38,029 36,509 55,965 Right-of-use lease assets 125,538 128,145 168,680 Property and equipment, net 167,238 162,972 157,165 Intangibles, net 36,447 38,876 149,984 Goodwill 435,936 435,936 435,936 Deferred tax asset 44,991 35,580 16,928 Long-term prepaid wafers 110,262 134,363 195,000 Other assets 49,483 73,729 65,236 Total assets $ 2,056,592 $ 2,063,966 $ 2,105,902 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 75,941 $ 81,462 $ 121,451 Accrued salaries and benefits 36,465 50,606 41,026 Lease liability 19,903 18,442 13,988 Acquisition-related liabilities 24,527 21,361 30,964 Other accrued liabilities 46,018 44,469 45,167 Total current liabilities 202,854 216,340 252,596 Non-current lease liability 125,071 122,631 159,344 Non-current income taxes 59,587 59,013 73,735 Long-term acquisition-related liabilities — — 11,856 Other long-term liabilities 12,286 7,700 9,184 Total long-term liabilities 196,944 189,344 254,119 Stockholders' equity: Capital stock 1,693,420 1,670,141 1,596,684 Accumulated earnings (deficit) (33,621 ) (9,320 ) 5,894 Accumulated other comprehensive loss (3,005 ) (2,539 ) (3,391 ) Total stockholders' equity 1,656,794 1,658,282 1,599,187 Total liabilities and stockholders' equity $ 2,056,592 $ 2,063,966 $ 2,105,902 Prepared in accordance with Generally Accepted Accounting Principles CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (in thousands; unaudited) Three Months Ended Jun. 24 , Jun. 25 , 2023 2022 Q1'24 Q1'23 Cash flows from operating activities: Net income $ 15,600 $ 39,707 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 11,941 16,515 Stock-based compensation expense 22,715 18,138 Deferred income taxes (9,411 ) (5,860 ) Loss on retirement or write-off of long-lived assets 6 292 Other non-cash charges 1,334 99 Net change in operating assets and liabilities: Accounts receivable, net (35,560 ) 33,992 Inventories (67,506 ) (35,934 ) Other assets 8,101 549 Accounts payable and other accrued liabilities (10,278 ) (20,327 ) Income taxes payable 20,079 24,030 Acquisition-related liabilities 3,166 3,164 Net cash provided by (used in) operating activities (39,813 ) 74,365 Cash flows from investing activities: Maturities and sales of available-for-sale marketable securities 11,048 4,694 Purchases of available-for-sale marketable securities (13,372 ) (5,186 ) Purchases of property, equipment and software (12,310 ) (6,776 ) Investments in technology — (448 ) Net cash used in investing activities (14,634 ) (7,716 ) Cash flows from financing activities: Issuance of common stock, net of shares withheld for taxes 560 120 Repurchase of stock to satisfy employee tax withholding obligations (1,047 ) (866 ) Repurchase and retirement of common stock (38,504 ) (56,382 ) Net cash used in financing activities (38,991 ) (57,128 ) Net increase (decrease) in cash and cash equivalents (93,438 ) 9,521 Cash and cash equivalents at beginning of period 445,784 369,814 Cash and cash equivalents at end of period $ 352,346 $ 379,335 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 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. 24 , Jun. 24 , Mar. 25 , Dec. 24 , Sep. 24 , 2023 2023 2023 2022 2022 Q1'24 Q1'24 Q4'23 Q3'23 Q2'23 Net cash provided by (used in) operating activities (GAAP) $ 225,390 $ (39,813 ) $ 48,266 $ 180,948 $ 35,989 Capital expenditures (41,800 ) (12,310 ) (11,635 ) (7,608 ) (10,247 ) Free Cash Flow (Non-GAAP) $ 183,590 $ (52,123 ) $ 36,631 $ 173,340 $ 25,742 Cash Flow from Operations as a Percentage of Revenue (GAAP) 12 % (13 )% 13 % 31 % 7 % Capital Expenditures as a Percentage of Revenue (GAAP) 2 % 4 % 3 % 1 % 2 % Free Cash Flow Margin (Non-GAAP) 10 % (16 )% 10 % 29 % 5 % View source version on businesswire.com : https://www.businesswire.com/news/home/20230803298638/en/ Investor Contact: Chelsea Heffernan Vice President, Investor Relations Cirrus Logic, Inc. (512) 851-4125 [email protected] Source: Cirrus Logic, Inc.

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