Cirrus Logic Inc.
) reported third-quarter fiscal 2014 adjusted earnings of 79
cents per share, surpassing the Zacks Consensus Estimate of 68
cents. Earnings declined from $1.55 per share reported in the
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Total revenue for the third quarter of 2014 declined 29.4% from
the year-ago quarter to $218.9 million. However, it managed to
beat the Zacks Consensus Estimate of $212.0 million. The year
over decline was primarily due to lower revenues from Audio
During the quarter, the company witnessed significant expansion
in the custom and general market product portfolios, which
include portable audio and LED lighting.
As per revenue segments, Audio Product revenues declined 31.2%
year over year to $206.4 million, while Energy product revenues
were up 23.4% year over year to $12.5 million.
Adjusted gross margin in the quarter was 47.4% versus 50.9% in
the year-ago quarter. Gross margin declined primarily due to
lower revenue base.
Higher-than-expected operating expenses (up 4.3% year over year)
led to a decline in operating margins. Moreover, as a percentage
of revenues, operating expenses increased 750 basis points,
thereby impacting margins. Adjusted operating margin came in at
24.3%, down from 35.3% in the year-ago quarter.
Adjusted net income (excluding amortization of
acquisition-related intangible assets and all one-time items but
including stock-based compensation expense) came in at $52.1
million or 79 cents per share compared with $106.8 million or
$1.55 per share in the year-ago quarter.
Cirrus exited the quarter with cash and marketable securities of
$290.5 million versus $268.3 million in the previous quarter. The
company has no long-term debt.
For the fourth quarter of fiscal 2014, the company expects
revenues in the range of $130.0 million to $150.0 million, down
sequentially. The Zacks Consensus Estimate is pegged at $175.0
million. Apart from this, gross margin is expected between 47.0%
and 49.0%, while combined research & development (R&D)
and selling, general & administrative (SG&A) expenses are
expected to range between $51.0 million and $55.0 million.
Although Cirrus Logic's top and bottom line beat the Zacks
Consensus Estimate in the third quarter, yet year over year
comparisons remained dismal. Margins were impacted due to
higher-than-expected operating expenses. Moreover, the company
provided a tepid fourth-quarter guidance.
Nonetheless, continued investments in the audio segment are
expected to positively impact the company in the long run.
Additionally, synergies from acquisitions and expansion in the
LED market continue to drive growth.
We remain cautious about the company as the current global
economic downturn might affect its business potential, going
forward. Moreover, the company faces competition from the likes
Texas Instruments Inc.
Cirrus Logic carries a Zacks Rank #1 (Strong Buy).