) fourth-quarter fiscal 2014 earnings per share of 33 cents
exceeded the Zacks Consensus Estimate by 2 cents driven by strong
demand for lighting products.
The company reported revenues of $436.3 million, up 7.6%
sequentially and 16.3% year over year. The increase was due to
strong sales of LED (Light emitting diode) fixtures and LED bulbs.
However, revenues were at the lower end of management's guidance of
$430.0 to $460.0 million and missed the Zacks Consensus Estimate of
Revenues by Product Line Segments
segment comprised 46% of Cree's sales in the last quarter, up 8%
from the year-ago quarter to $199.5 million. This segment includes
LED chips, LED components and SiC materials.
segment generated 48% of sales, up 56% from the year-ago quarter to
$208.2 million attributable to strong sales of LED fixtures and
lighting products. This segment includes both LED and traditional
lighting systems, but focuses primarily on LED lighting.
Cree's Power and RF Products
segment generated the remaining 6% of sales, up 19% from the
year-ago quarter to $28.6 million. This segment includes power
devices and RF devices.
Reported gross margin for the quarter was 37.2%, up 20 basis
points (bps) sequentially but down 30 bps year over year. The
sequential increase was due to higher revenues and a favorable
Total operating expenses of $130.5 million were up 18.8% from
$109.9 million in the year-ago quarter. As a percentage of sales,
research & development expenses increased, while selling,
general & administrative expenses decreased. The net result was
an operating margin of 7.3%, down 90 bps from 8.2% in the year-ago
Cree, Inc - Earnings Surprise | FindTheBest
The quarter's GAAP net income was $29.8 million or earnings per
share of 24 cents compared with $28.2 million or 23 cents in the
comparable quarter last year. Excluding special items but including
stock-based compensation expenses, adjusted net income was $37.8
million compared with $34.7 million in the year-ago quarter.
The company ended the fourth quarter with cash, cash equivalents
and short-term investments balance of $1.16 billion, down from
$1.22 billion in the prior quarter. Trade receivables were $225.2
million, up from $222.3 million in the prior quarter.
Cash flow from operations was $91.1 million, up from $60.2
million in the prior quarter. Capex was $58.9 million versus $36.2
million in the prior quarter. Free cash flow was $26.8 million
versus $19.3 million in the prior quarter.
For fiscal first-quarter 2015, Cree expects total revenue in the
range of $440-$465 million, representing a sequential increase of
3.7% at the mid-point.
GAAP gross margin is likely to be near 36.9%, whereas non-GAAP
gross margin is likely to be around 37.5%. Operating expenses are
expected to be flat sequentially and the tax rate to be 21.5%.
GAAP earnings per share are expected in the range of 25 to 30
cents, while non-GAAP earnings per share are likely to be in the
range of 40 to 45 cents. The Zacks Consensus Estimate for the
upcoming quarter is pegged at 37 cents.
LED manufacturer Cree's top-line numbers exceeded our
expectations and also compared favorably on a year-over-year
Cree's focus on product innovation to drive growth is quite
encouraging. In the quarter, Cree ramped up many new lighting
products including the CXB High-Bay, OSQ parking, LED T8
replacement and SmartCast light fixtures. The company also
implemented a series of cost reduction measures to improve the
We believe that the increasing use of LED technology, its
penetration into the domestic market and the global push toward
energy conservation will increase the sales of Cree's LED bulbs,
boosting revenues in the near future.
Currently, Cree has a Zacks Rank #3 (Hold). Stocks that have
been performing well and are worth a look include Analog Devices (
), Agilent Technologies (
) and Garmin Ltd. (
). All these stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
GARMIN LTD (GRMN): Free Stock Analysis Report
AGILENT TECH (A): Free Stock Analysis Report
ANALOG DEVICES (ADI): Free Stock Analysis
CREE INC (CREE): Free Stock Analysis Report
To read this article on Zacks.com click here.