) reported third-quarter fiscal year 2013 earnings per share of
24 cents, missing the Zacks Consensus Estimate of 25 cents.
The company reported revenues of $348.9 million, up 22.5% year
over year and 0.75% sequentially and toward the high end of the
management's revised guidance of $335.0 million to $350.0
million. The increase was due to strong sales of lighting
products and lower cost per lumen at the LED chip, package and
Revenues by Product Line Segments
LED Products segment
comprised 56% of Cree's sales in the last quarter, up 8.0% from
the year-ago quarter to $195.6 million. This segment includes LED
chips, LED components, and SiC materials.
Lighting Products segment
generated 37% of its sales, up 51% from the year-ago quarter to
$130.7 million due to strong sales of commercial indoor fixtures
and lighting products. This segment consists of both LED and
traditional lighting systems, with its primary focus on LED
Power and RF Products
segment generated the remaining 7% of its sales, up 31% from the
year-ago quarter to $22.7 million. This segment includes power
devices and RF devices.
Reported gross margin for the quarter was 38.1%, up 320 basis
points (bps) year over year and within the management guidance,
driven by higher volumes and cost reduction activities.
Operating expenses (SG&A and R&D) of $101.1 million were
up 17.4% from $86.1 million in the year-ago quarter. The reported
operating margin was 6.7%, up 490 bps from 1.8% in the year-ago
quarter. Research and development (R&D) expenses decreased as
a percentage of sales but selling, general and administrative
The quarter's GAAP net income was $21.2 million or earnings per
share of 19 cents compared with $9.5 million or 8 cents in the
comparable quarter last year. Excluding special items but
including stock-based compensation expenses, adjusted net income
was $28.8 million or earnings per share of 24 cents compared with
$14.7 million or 13 cents a share in the year-ago quarter.
The company ended the third quarter with cash, cash equivalents
and short-term investments balance of $937.1 million, up from
$885.8 million in the year-ago quarter. Trade receivables were
$181.9 million, up from $144.6 million in the prior quarter.
Cash flow from operations was $45.8 million, down from $48.3
million in the year-ago quarter. Capex was $24.9 million versus
$22.2 million in the year-ago quarter. Total free cash flow was
$15.0 million versus $22.3 million in the year-ago quarter.
For the fiscal fourth quarter of 2013, Cree expects total revenue
in the range of $365-$385 million, representing a sequential
increase of 9.5% at the mid-point.
GAAP gross margins are likely to be approximately of 39%
whereas non-GAAP gross margin is likely to be around 39.5%. GAAP
operating expenses are expected to increase by approximately $4
million and non-GAAP operating expenses by $5 million. The tax
rate is expected to be 20.0%.
APPLD MATLS INC (AMAT): Free Stock Analysis
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GAAP earnings per share are expected in the range of 20 to 26
cents, while non-GAAP earnings per share are likely to be in the
range of 34 to 40 cents.
Light emitting diode (LED) manufacturer Cree's earnings missed
the Zacks Consensus Estimate by a penny. However, both revenues
and earnings were above the year-ago quarter.
Management gave a strong fourth quarter revenue guidance, which
reflects solid demand for its products and global growth in LED
lighting adoption. Additionally, the company expects better gross
margin in the near term led by improvements across product lines
due to cost reductions, increased volume and lower cost of new
The company's focus on product innovation to drive growth is
quite encouraging. Last month, Cree introduced three LED light
bulbs, available through T
he Home Depot, Inc.
) outlets throughout the country. Management stated that prices
will range from $9.97 to $13.97 and the bulb will be 84% more
energy efficient than a traditional light bulb.
We believe that the increasing use of LED technology, its
penetration into the domestic market and global push toward
energy conservation will increase sales of the Cree LED bulbs,
helping revenue growth in the near future.
Currently, Cree has a Zacks Rank #2 (Buy). Investors should look
out for some other stocks with positive Zacks Rank and Expected
Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
Applied Materials, Inc.
), Earnings ESP of +7.69% and Zacks Rank #2 (Buy)
), with an ESP of +3.79% and a Zacks Rank #2 (Buy)