Cirrus Logic Reports Q3 FY21 Revenue of $485.8 Million

Smartphone Demand Fueled 30 Percent Year-Over-Year Revenue Growth

AUSTIN, Texas–(BUSINESS WIRE)–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 2021, which ended Dec. 26, 2020, as well as the company’s current business outlook.

“Cirrus Logic delivered revenue above the high end of guidance in the December quarter, as we experienced strong demand for products shipping in recently introduced smartphones,” said John Forsyth, chief executive officer. “We are delighted with our customer engagement and design-in activity during the quarter, and remain focused on developing a roadmap of innovative products that will enable the company to capitalize on growing demand for audio and high-performance mixed-signal solutions. Given the strength of the current smartphone market cycle, and the new product introductions in the pipeline, we are excited about the outlook for the company.”

Reported Financial Results – Third Quarter FY21

Revenue of $485.8 million;
GAAP and non-GAAP gross margin of 51.8 percent;
GAAP operating expenses of $121.8 million and non-GAAP operating expenses of $105.7 million; and
GAAP earnings per share of $1.91 and non-GAAP earnings per share of $2.13.

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

Business Outlook – Fourth Quarter FY21

Revenue is expected to range between $280 million and $320 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 $121 million and $127 million, including approximately $15 million in stock-based compensation expense and $3 million in amortization of acquired intangibles.

Share Repurchase Authorization

The company also announced that its Board of Directors recently authorized the repurchase of up to an additional $350 million of the company’s common stock, in addition to the $55 million remaining from the Board’s previous share repurchase authorization in January 2019. The repurchases will be funded from working capital and anticipated cash 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. 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. 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 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: 5791509).

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 ability to develop a robust pipeline of innovative products that will enable us to capitalize on growing demand for audio and high-performance mixed-signal solutions in the markets we serve, along with estimates for the fourth quarter fiscal year 2021 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 fourth quarter of fiscal year 2021, 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, 2020 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. 26,			Sep. 26,			Dec. 28,			Dec. 26,			Dec. 28,
	2020			2020			2019			2020			2019
	Q3’21			Q2’21			Q3’20			Q3’21			Q3’20
Portable products	$	450,305		$	312,911		$	344,870		$	973,877		$	897,187
Non-portable and other products		35,490			34,414			29,798			101,816			104,646
Net sales		485,795			347,325			374,668			1,075,693			1,001,833
Cost of sales		234,295			167,115			177,163			516,511			473,901
Gross profit		251,500			180,210			197,505			559,182			527,932
Gross margin		51.8	%		51.9	%		52.7	%		52.0	%		52.7	%

Research and development		89,435			84,810			88,713			252,986			265,782
Selling, general and administrative		32,415			31,247			36,113			93,366			98,651
Restructuring costs		–			–			–			352			–
Total operating expenses		121,850			116,057			124,826			346,704			364,433

Income from operations		129,650			64,153			72,679			212,478			163,499

Interest income		1,206			1,378			2,392			4,160			6,927
Other income (expense)		(207	)		784			(563	)		688			(1,509	)
Income before income taxes		130,649			66,315			74,508			217,326			168,917
Provision for income taxes		16,281			6,829			5,996			25,263			19,577
Net income	$	114,368		$	59,486		$	68,512		$	192,063		$	149,340

Basic earnings per share:	$	1.97		$	1.02		$	1.18		$	3.30		$	2.56
Diluted earnings per share:	$	1.91		$	0.99		$	1.13		$	3.20		$	2.47

Weighted average number of shares:
Basic		58,024			58,191			58,188			58,176			58,247
Diluted		59,963			60,127			60,492			60,101			60,395

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. 26,			Sep. 26,			Dec. 28,			Dec. 26,			Dec. 28,
	2020			2020			2019			2020			2019
Net Income Reconciliation	Q3’21			Q2’21			Q3’20			Q3’21			Q3’20
GAAP Net Income	$	114,368		$	59,486		$	68,512		$	192,063		$	149,340
Amortization of acquisition intangibles		2,998			2,998			6,470			8,994			20,420
Stock-based compensation expense		13,287			15,476			14,160			42,069			39,705
Restructuring costs		–			–			1,323			352			1,323
Adjustment to income taxes		(2,897	)		(2,293	)		(4,871	)		(8,172	)		(11,091	)
Non-GAAP Net Income	$	127,756		$	75,667		$	85,594		$	235,306		$	199,697

Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	1.91		$	0.99		$	1.13		$	3.20		$	2.47
Effect of Amortization of acquisition intangibles		0.05			0.05			0.11			0.15			0.34
Effect of Stock-based compensation expense		0.22			0.26			0.23			0.70			0.66
Effect of Restructuring costs		–			–			0.02			0.01			0.02
Effect of Adjustment to income taxes		(0.05	)		(0.04	)		(0.08	)		(0.14	)		(0.18	)
Non-GAAP Diluted earnings per share	$	2.13		$	1.26		$	1.41		$	3.92		$	3.31

Operating Income Reconciliation
GAAP Operating Income	$	129,650		$	64,153		$	72,679		$	212,478		$	163,499
GAAP Operating Profit		26.7	%		18.5	%		19.4	%		19.8	%		16.3	%
Amortization of acquisition intangibles		2,998			2,998			6,470			8,994			20,420
Stock-based compensation expense – COGS		236			197			200			640			695
Stock-based compensation expense – R&D		9,526			9,235			9,343			27,414			24,413
Stock-based compensation expense – SG&A		3,525			6,044			4,617			14,015			14,597
Restructuring costs		–			–			1,323			352			1,323
Non-GAAP Operating Income	$	145,935		$	82,627		$	94,632		$	263,893		$	224,947
Non-GAAP Operating Profit		30.0	%		23.8	%		25.3	%		24.5	%		22.5	%

Operating Expense Reconciliation
GAAP Operating Expenses	$	121,850		$	116,057		$	124,826		$	346,704		$	364,433
Amortization of acquisition intangibles		(2,998	)		(2,998	)		(6,470	)		(8,994	)		(20,420	)
Stock-based compensation expense – R&D		(9,526	)		(9,235	)		(9,343	)		(27,414	)		(24,413	)
Stock-based compensation expense – SG&A		(3,525	)		(6,044	)		(4,617	)		(14,015	)		(14,597	)
Restructuring costs		–			–			(1,201	)		(352	)		(1,201	)
Non-GAAP Operating Expenses	$	105,801		$	97,780		$	103,195		$	295,929		$	303,802

Gross Margin/Profit Reconciliation
GAAP Gross Profit	$	251,500		$	180,210		$	197,505		$	559,182		$	527,932
GAAP Gross Margin		51.8	%		51.9	%		52.7	%		52.0	%		52.7	%
Stock-based compensation expense – COGS		236			197			200			640			695
Restructuring costs – COGS		–			–			122			–			122
Non-GAAP Gross Profit	$	251,736		$	180,407		$	197,827		$	559,822		$	528,749
Non-GAAP Gross Margin		51.8	%		51.9	%		52.8	%		52.0	%		52.8	%

Effective Tax Rate Reconciliation
GAAP Tax Expense	$	16,281		$	6,829		$	5,996		$	25,263		$	19,577
GAAP Effective Tax Rate		12.5	%		10.3	%		8.0	%		11.6	%		11.6	%
Adjustments to income taxes		2,897			2,293			4,871			8,172			11,091
Non-GAAP Tax Expense	$	19,178		$	9,122		$	10,867		$	33,435		$	30,668
Non-GAAP Effective Tax Rate		13.1	%		10.8	%		11.3	%		12.4	%		13.3	%

Tax Impact to EPS Reconciliation
GAAP Tax Expense	$	0.27		$	0.11		$	0.10		$	0.42		$	0.32
Adjustments to income taxes		0.05			0.04			0.08			0.14			0.18
Non-GAAP Tax Expense	$	0.32		$	0.15		$	0.18		$	0.56		$	0.50

CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands

		Dec. 26,			Mar. 28,			Dec. 28,
		2020			2020			2019
ASSETS
Current assets
	Cash and cash equivalents	$	327,294		$	292,119		$	342,301
	Marketable securities		43,289			22,008			13,098
	Accounts receivable, net		244,803			153,998			175,937
	Inventories		142,689			146,725			137,920
	Other current assets		45,469			35,346			45,345
	Total current Assets		803,544			650,196			714,601

Long-term marketable securities			326,491			283,573			250,162
Right-of-use lease assets			135,719			141,274			141,348
Property and equipment, net			154,312			158,244			174,390
Intangibles, net			24,322			34,430			47,133
Goodwill			287,518			287,088			285,904
Deferred tax asset			7,277			10,052			9,183
Other assets			86,446			27,820			24,819
	Total assets	$	1,825,629		$	1,592,677		$	1,647,540

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
	Accounts payable	$	90,814		$	78,412		$	98,835
	Accrued salaries and benefits		39,367			42,439			34,228
	Lease liability		14,539			13,580			13,863
	Other accrued liabilities		40,135			24,206			31,385
	Total current liabilities		184,855			158,637			178,311

Non-current lease liability			129,583			129,312			133,993
Non-current income taxes			70,866			71,143			72,422
Other long-term liabilities			39,968			3,806			2,934

Stockholders’ equity:
	Capital stock		1,483,567			1,434,929			1,417,646
	Accumulated deficit		(88,238	)		(201,681	)		(157,869	)
	Accumulated other comprehensive income (loss)		5,028			(3,469	)		103
	Total stockholders’ equity		1,400,357			1,229,779			1,259,880
	Total liabilities and stockholders’ equity	$	1,825,629		$	1,592,677		$	1,647,540

Prepared in accordance with Generally Accepted Accounting Principles

Contacts

Investor Contact:
Thurman K. Case

Chief Financial Officer

Cirrus Logic, Inc.

(512) 851-4125

Investor@cirrus.com