Cirrus Logic's (CRUS) Q1 Earnings Beat Estimates, Up Y/Y

Cirrus Logic CRUS delivered better-than-expected first-quarter fiscal 2021 results. The company’s quarterly non-GAAP earnings per share of 53 cents handily outpaced the Zacks Consensus Estimate of 30 cents, surging approximately 51% year on year.

This year-over-year growth was mainly driven by higher revenues and reduced operating expenses. However, the company’s bottom-line results dipped nearly 22% sequentially mainly on lower revenues compared with the fourth-quarter fiscal 2020 figure.

Revenues

Total revenues of $242.6 million also surpassed the Zacks Consensus Estimate of $226 million and improved 2% year over year as well. Increased component shipments and higher content in tablets primarily aided the top line.

However, on a sequential basis, revenues declined 13% due to reduction in unit volumes for certain components shipping in flagship smartphones. Nonetheless, increased component shipments for the recently-launched lower-cost smartphone model partially offset this sequential decline in revenues.

Cirrus Logic, Inc. Price and Consensus

Cirrus Logic, Inc. Price and Consensus

Cirrus Logic, Inc. price-consensus-chart | Cirrus Logic, Inc. Quote

Segment wise, portable audio product revenues (87% of total revenues) came in at $210.7 million, up 3.8% year over year. However, non-portable audio and other products (13%) decreased 9.6% to $31.9 million. Sequentially, the audio product segment’s revenues slid 15.6%, while non-portable and other products sales increased 8%.

Profits & Margins

Non-GAAP gross profit of $127.7 million increased 4% on a year-over-year basis. Non-GAAP gross margin expanded 110 basis points (bps) to 52.6%, chiefly on supply-chain efficiencies. Favorable product mix and cost reductions on certain products were also positives.

Non-GAAP gross profit decreased 12.8% sequentially. However, non-GAAP gross margin improved 20 bps to 52.6%. The sequential improvement in gross margin mainly reflects supply-chain efficiencies.

Cirrus Logic’s non-GAAP operating expenses dropped 7.3% year over year to $92.3 million. Operating expenses also declined 6.4% sequentially.

Non-GAAP operating income of $35.3 million too surged 52.6% year on year. However, it dropped 25.8% sequentially. Non-GAAP operating margin of 14.6% expanded 490 bps from the year-ago quarter but shrunk 250 bps from the previous quarter.

Balance Sheet and Cash Flow

The company exited the fiscal first quarter with cash and marketable securities of $315.9 million compared with the $314.1 million witnessed at the end of the prior quarter.

Accounts receivables were $136.5 million compared with the $154 million recorded in fourth-quarter fiscal 2020. Notably, the company did not have any long-term debt as of Jun 27, 2020.

Cash flow from operations was $0.5 million in the fiscal first quarter. As of Jun 27, 2020, Cirrus Logic has $120 million remaining under its share-repurchase authorization.

Second-Quarter Outlook

For the second quarter of fiscal 2021, the company projects revenues between $290 million and $330 million. At the mid-point, the guidance reflects a 20% year-over-year decline but an improvement of 28% sequentially. Furthermore, the mid-point of the revenue guidance lies above the Zacks Consensus Estimate of $307.5 million.

Zacks Rank and Key Picks

Currently, Cirrus Logic carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector include Benefitfocus BNFT,Cogent Communications Holdings CCOI and Synaptics SYNA, all carrying Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Benefitfocus, Cogent and Synaptics is currently pegged at 30%, 10.6%, and 10%, respectively.

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