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CRUS Beats Earnings Est, Outlook Modest

Zacks Equity Research

Cirrus Logic Inc. (CRUS) reported fourth-quarter 2013 adjusted earnings of 50 cents per share, surpassing the Zacks Consensus Estimate of 48 cents.


Total revenue for the fourth quarter soared 87.0% from the year-ago quarter to $206.9 million. This apart, the Cirrus also expanded its footprint in the portable audio segment and launched the company’s new LED lighting products.

Segment wise, Audio Product revenues surged 116.6% year over year to $196.1 million, while Energy product revenues came in at $10.8 million, down 46.4% year over year.

Operating Results

Reported gross margin in the quarter was 40.4% versus 56.4% in the year-ago quarter as a result of higher costs.

Operating margin was 16.3% versus 18.9% in the year-ago quarter. The company’s total operating expenses increased 20.1% on a year-over-year basis. Higher operating expenses were mainly due to 24.8% and 14.3% year-over-year increases in selling, general and administrative (SG&A) expenses, and research and development (R&D), respectively.

Net income on a GAAP basis was $26.3 million or 39 cents per share compared with $50.9 million or 75 cents in the year-ago quarter.

Excluding the amortization of acquisition-related intangible assets but including stock-based compensation expense, non-GAAP net income for the third quarter was 50 per share compared with 31 cents in the year-ago quarter.

Balance Sheet

Cash and short-term investments were $66.4 million versus $87.5 million in the previous quarter. The company has no long-term debt.


For the first quarter of fiscal 2014, the company expects revenues in the range of $150 million and $170 million. This apart, gross margin is expected between 50.0% and 52.0%, while the combined R&D and SG&A expenses are expected to range between $51.0 million and $55.0 million.

Our Take

Cirrus posted a decent fourth quarter, with the bottom line comprehensively beating the Zacks Consensus Estimate. Although revenues were good for the quarter, gross and operating margin took a hit, as the company was not able to control expenses in the long run. We remain cautious about the company, as the current global economic downturn might affect its business potential going forward. Moreover, the company is faced with stiff competition from the likes of Texas Instruments Inc. (TXN), STMicroelectronics (STM), ON Semiconductor (ONNN) having Zacks Rank#2.

The company has a Zacks Rank #5 (Strong Sell).

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