Cirrus Logic Reports Record Revenue of $619.0 Million for Fiscal Third Quarter

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 third quarter fiscal year 2024, which ended December 30, 2023 , as well as the company’s current business outlook. “Cirrus Logic delivered record revenue and earnings per share in the December quarter,” said John Forsyth , Cirrus Logic president and chief executive officer. “In addition to our outstanding financial results, we achieved key milestones in the production of our next-generation audio components while also making exciting advances in our process technology and foundry strategy. Furthermore, customer engagement with our laptop solutions was strong, and we made excellent progress on a number of R&D programs in our high-performance mixed-signal business. With a compelling roadmap of products and an amazing track record of execution, we believe we are well-positioned to grow long-term shareholder value.” Reported Financial Results – Third Quarter FY24 Revenue of $619.0 million ; GAAP gross margin of 51.3 percent and non-GAAP gross margin of 51.4 percent; GAAP operating expenses of $149.9 million and non-GAAP operating expenses of $125.6 million ; GAAP earnings per share of $2.50 and non-GAAP earnings per share of $2.89 ; and Cash and cash equivalents balance of $587.0 million . A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release. Business Outlook – Fourth Quarter FY24 Revenue is expected to range between $290 million and $350 million ; GAAP gross margin is expected to be between 49 percent and 51 percent; and Combined GAAP R&D and SG&A expenses are anticipated to range between $138 million and $144 million , including approximately $22 million in stock-based compensation expense and $2 million in amortization of acquisition intangibles, resulting in a non-GAAP operating expense range between $114 million and $120 million . Cirrus Logic will host a live Q&A session at 5 p.m. EST 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). 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, 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 grow long-term shareholder value; and our estimates for the fourth quarter fiscal year 2024 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, and amortization of acquisition 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 level and timing of orders and shipments during the fourth quarter of fiscal year 2024, customer cancellations of orders, or the failure to place orders consistent with forecasts; changes with respect to our current expectations of future smartphone unit volumes; any delays in the timing and/or success of customers’ new product ramps; and 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 Nine Months Ended Dec. 30 , Sep. 23 , Dec. 24 , Dec. 30 , Dec. 24 , 2023 2023 2022 2023 2022 Q3'24 Q2'24 Q3'23 Q3'24 Q3'23 Audio $ 378,597 $ 282,855 $ 347,297 $ 857,258 $ 939,604 High-Performance Mixed-Signal 240,387 198,208 243,285 559,805 585,191 Net sales 618,984 481,063 590,582 1,417,063 1,524,795 Cost of sales 301,520 234,467 293,877 693,616 754,170 Gross profit 317,464 246,596 296,705 723,447 770,625 Gross margin 51.3 % 51.3 % 50.2 % 51.1 % 50.5 % Research and development 112,672 104,205 118,063 323,092 343,250 Selling, general and administrative 37,604 34,323 37,262 107,306 115,502 Restructuring costs (360 ) 2,319 — 1,959 — Total operating expenses 149,916 140,847 155,325 432,357 458,752 Income from operations 167,548 105,749 141,380 291,090 311,873 Interest income 4,889 3,729 2,777 13,218 4,367 Other expense (337 ) (70 ) (3,716 ) (30 ) (2,915 ) Income before income taxes 172,100 109,408 140,441 304,278 313,325 Provision for income taxes 33,377 34,001 36,964 74,548 82,953 Net income $ 138,723 $ 75,407 $ 103,477 $ 229,730 $ 230,372 Basic earnings per share $ 2.57 $ 1.38 $ 1.87 $ 4.22 $ 4.13 Diluted earnings per share: $ 2.50 $ 1.34 $ 1.83 $ 4.09 $ 4.02 Weighted average number of shares: Basic 54,016 54,503 55,239 54,449 55,748 Diluted 55,592 56,278 56,583 56,160 57,280 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 Nine Months Ended Dec. 30 , Sep. 23 , Dec. 24 , Dec. 30 , Dec. 24 , 2023 2023 2022 2023 2022 Net Income Reconciliation Q3'24 Q2'24 Q3'23 Q3'24 Q3'23 GAAP Net Income $ 138,723 $ 75,407 $ 103,477 $ 229,730 $ 230,372 Amortization of acquisition intangibles 1,972 2,170 8,807 6,312 24,429 Stock-based compensation expense 23,067 21,331 20,487 67,113 59,108 Restructuring costs (360 ) 2,319 — 1,959 — Acquisition-related costs — 939 3,176 4,105 9,504 Investment write off — — 2,746 — 2,746 Adjustment to income taxes (2,769 ) (604 ) (2,936 ) (9,001 ) (11,371 ) Non-GAAP Net Income $ 160,633 $ 101,562 $ 135,757 $ 300,218 $ 314,788 Earnings Per Share Reconciliation GAAP Diluted earnings per share $ 2.50 $ 1.34 $ 1.83 $ 4.09 $ 4.02 Effect of Amortization of acquisition intangibles 0.04 0.04 0.15 0.11 0.43 Effect of Stock-based compensation expense 0.41 0.38 0.36 1.20 1.03 Effect of Restructuring costs (0.01 ) 0.04 — 0.04 — Effect of Acquisition-related costs — 0.01 0.06 0.07 0.17 Effect of Investment write off — — 0.05 — 0.05 Effect of Adjustment to income taxes (0.05 ) (0.01 ) (0.05 ) (0.16 ) (0.20 ) Non-GAAP Diluted earnings per share $ 2.89 $ 1.80 $ 2.40 $ 5.35 $ 5.50 Operating Income Reconciliation GAAP Operating Income $ 167,548 $ 105,749 $ 141,380 $ 291,090 $ 311,873 GAAP Operating Profit 27.1 % 22.0 % 23.9 % 20.5 % 20.5 % Amortization of acquisition intangibles 1,972 2,170 8,807 6,312 24,429 Stock-based compensation expense - COGS 395 361 309 1,041 898 Stock-based compensation expense - R&D 16,771 15,472 14,710 48,195 41,530 Stock-based compensation expense - SG&A 5,901 5,498 5,468 17,877 16,680 Restructuring costs (360 ) 2,319 — 1,959 — Acquisition-related costs — 939 3,176 4,105 9,504 Non-GAAP Operating Income $ 192,227 $ 132,508 $ 173,850 $ 370,579 $ 404,914 Non-GAAP Operating Profit 31.1 % 27.5 % 29.4 % 26.2 % 26.6 % Operating Expense Reconciliation GAAP Operating Expenses $ 149,916 $ 140,847 $ 155,325 $ 432,357 $ 458,752 Amortization of acquisition intangibles (1,972 ) (2,170 ) (8,807 ) (6,312 ) (24,429 ) Stock-based compensation expense - R&D (16,771 ) (15,472 ) (14,710 ) (48,195 ) (41,530 ) Stock-based compensation expense - SG&A (5,901 ) (5,498 ) (5,468 ) (17,877 ) (16,680 ) Restructuring costs 360 (2,319 ) — (1,959 ) — Acquisition-related costs — (939 ) (3,176 ) (4,105 ) (9,504 ) Non-GAAP Operating Expenses $ 125,632 $ 114,449 $ 123,164 $ 353,909 $ 366,609 Gross Margin/Profit Reconciliation GAAP Gross Profit $ 317,464 $ 246,596 $ 296,705 $ 723,447 $ 770,625 GAAP Gross Margin 51.3 % 51.3 % 50.2 % 51.1 % 50.5 % Stock-based compensation expense - COGS 395 361 309 1,041 898 Non-GAAP Gross Profit $ 317,859 $ 246,957 $ 297,014 $ 724,488 $ 771,523 Non-GAAP Gross Margin 51.4 % 51.3 % 50.3 % 51.1 % 50.6 % Three Months Ended Nine Months Ended Dec. 30 , Sep. 23 , Dec. 24 , Dec. 30 , Dec. 24 , 2023 2023 2022 2023 2022 Effective Tax Rate Reconciliation Q3'24 Q2'24 Q3'23 Q3'24 Q3'23 GAAP Tax Expense $ 33,377 $ 34,001 $ 36,964 $ 74,548 $ 82,953 GAAP Effective Tax Rate 19.4 % 31.1 % 26.3 % 24.5 % 26.5 % Adjustments to income taxes 2,769 604 2,936 9,001 11,371 Non-GAAP Tax Expense $ 36,146 $ 34,605 $ 39,900 $ 83,549 $ 94,324 Non-GAAP Effective Tax Rate 18.4 % 25.4 % 22.7 % 21.8 % 23.1 % Tax Impact to EPS Reconciliation GAAP Tax Expense $ 0.60 $ 0.60 $ 0.65 $ 1.33 $ 1.45 Adjustments to income taxes 0.05 0.01 0.05 0.16 0.20 Non-GAAP Tax Expense $ 0.65 $ 0.61 $ 0.70 $ 1.49 $ 1.65 CONSOLIDATED CONDENSED BALANCE SHEET (in thousands; unaudited) Dec. 30 , Mar. 25 , Dec. 24 , 2023 2023 2022 ASSETS Current assets Cash and cash equivalents $ 483,931 $ 445,784 $ 434,544 Marketable securities 32,842 34,978 28,373 Accounts receivable, net 217,269 150,473 270,493 Inventories 256,675 233,450 152,426 Prepaid wafers 84,854 60,638 — Other current assets 109,814 92,533 127,649 Total current Assets 1,185,385 1,017,856 1,013,485 Long-term marketable securities 70,260 36,509 44,784 Right-of-use lease assets 140,993 128,145 150,938 Property and equipment, net 167,579 162,972 156,602 Intangibles, net 31,677 38,876 133,032 Goodwill 435,936 435,936 435,936 Deferred tax asset 34,116 35,580 8,630 Long-term prepaid wafers 73,492 134,363 154,575 Other assets 77,675 73,729 67,907 Total assets $ 2,217,113 $ 2,063,966 $ 2,165,889 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 56,231 $ 81,462 $ 117,406 Accrued salaries and benefits 44,352 50,606 42,187 Lease liability 19,906 18,442 14,024 Acquisition-related liabilities — 21,361 18,195 Other accrued liabilities 58,105 44,469 36,737 Total current liabilities 178,594 216,340 228,549 Non-current lease liability 138,415 122,631 143,252 Non-current income taxes 52,247 59,013 72,267 Other long-term liabilities 47,097 7,700 5,501 Total long-term liabilities 237,759 189,344 221,020 Stockholders' equity: Capital stock 1,735,824 1,670,141 1,639,056 Accumulated earnings (deficit) 66,633 (9,320 ) 80,865 Accumulated other comprehensive loss (1,697 ) (2,539 ) (3,601 ) Total stockholders' equity 1,800,760 1,658,282 1,716,320 Total liabilities and stockholders' equity $ 2,217,113 $ 2,063,966 $ 2,165,889 Prepared in accordance with Generally Accepted Accounting Principles CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (in thousands; unaudited) Three Months Ended Dec. 30 , Dec. 24 , 2023 2022 Q3'24 Q3'23 Cash flows from operating activities: Net income $ 138,723 $ 103,477 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 12,732 18,624 Stock-based compensation expense 23,067 20,487 Deferred income taxes 9,723 10,886 Loss on retirement or write-off of long-lived assets 10 3 Other non-cash charges 668 2,832 Restructuring costs (360 ) — Net change in operating assets and liabilities: Accounts receivable, net 54,048 34,053 Inventories 72,257 12,145 Prepaid wafers 15,596 — Other assets 17,973 6,458 Accounts payable and other accrued liabilities (32,123 ) (20,521 ) Income taxes payable 1,378 (10,656 ) Acquisition-related liabilities — 3,160 Net cash provided by operating activities 313,692 180,948 Cash flows from investing activities: Maturities and sales of available-for-sale marketable securities 5,176 3,691 Purchases of available-for-sale marketable securities (32,334 ) (3,433 ) Purchases of property, equipment and software (9,813 ) (6,777 ) Investments in technology — (831 ) Net cash used in investing activities (36,971 ) (7,350 ) Cash flows from financing activities: Payment of acquisition-related holdback — (30,949 ) Issuance of common stock, net of shares withheld for taxes 50 393 Repurchase of stock to satisfy employee tax withholding obligations (13,722 ) (13,541 ) Repurchase and retirement of common stock (56,923 ) (50,000 ) Net cash used in financing activities (70,595 ) (94,097 ) Net increase in cash and cash equivalents 206,126 79,501 Cash and cash equivalents at beginning of period 277,805 355,043 Cash and cash equivalents at end of period $ 483,931 $ 434,544 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 Dec. 30 , Dec. 30 , Sep. 23 , Jun. 24 , Mar. 25 , 2023 2023 2023 2023 2023 Q3'24 Q3'24 Q2'24 Q1'24 Q4'23 Net cash provided by (used in) operating activities (GAAP) $ 299,414 $ 313,692 $ (22,731 ) $ (39,813 ) $ 48,266 Capital expenditures (42,285 ) (9,813 ) (8,527 ) (12,310 ) (11,635 ) Free Cash Flow (Non-GAAP) $ 257,129 $ 303,879 $ (31,258 ) $ (52,123 ) $ 36,631 Cash Flow from Operations as a Percentage of Revenue (GAAP) 17 % 51 % (5 )% (13 )% 13 % Capital Expenditures as a Percentage of Revenue (GAAP) 2 % 2 % 2 % 4 % 3 % Free Cash Flow Margin (Non-GAAP) 14 % 49 % (6 )% (16 )% 10 % RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION (in millions; unaudited) (not prepared in accordance with GAAP) Q4 FY24 Guidance Operating Expense Reconciliation GAAP Operating Expenses $138 - 144 Stock-based compensation expense (22) Amortization of acquisition intangibles (2) Non-GAAP Operating Expenses $114 - 120 View source version on businesswire.com : https://www.businesswire.com/news/home/20240206115787/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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