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TRANSCRIPT
Cirrus Logic Investor Presentation As of July 30, 2012
Safe Harbor Statement Except for historical information contained herein, the matters set forth in this presentation contain forward-looking statements, including industry market projections; our revenue growth opportunities; future product releases; projected inventory ramps; and forecasted revenue, gross margin, and R&D and SG&A expenses. These forward-looking statements are based on our current expectations, estimates and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially from our current expectations, estimates and assumptions and the forward-looking statements made in this presentation. These risks and uncertainties include, but are not limited to, the risk factors listed in our Form 10-K for the year ended March 31, 2012, and in other filings with the Securities and Exchange Commission. The foregoing information concerning our business outlook represents our outlook as of the date of this presentation, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.
More than 3,000 active customers with 700 innovative products
737 Worldwide
1984 – Headquartered in Austin, Texas
~$167 Million in cash
~1,100 Issued and pending U.S. patents
Founded
Fabless pioneer since early ’80s
Cirrus Logic at a Glance (NASDAQ: CRUS)
Cirrus Logic Vision
First Choice in High-Performance Analog and Mixed-Signal
Components
Focus on Key Tier One Customers
Tablets
Media Players
Media PCs Home Theater
Music Instruments
Car Amplifiers
Weigh Scale
Motor Control
LED Lights
Soundbars
Home Audio
Pro & Auto
Audio
Digital Energy Control
Energy Industrial
Meas. Seismic Sensors
Portable Audio Smart
Phones
Power Meters & Monitors
Applications
Camcorders Ultrabooks
Our Strategy
Best in Class IP
(Product)
1st Gen. Custom
2nd & 3rd Gen.
Customs
Tier-1 Key Customer Interest
More Content & More Boxes!
Higher value with more functionality, higher
integration and better performance
Our #1 Customer
As Percentage of Total Revenue
Q2 FY12
Q4 FY12
Q1 FY13
§ More Content Every Generation § Each generation of custom IC offers more functionality
and integration § Multiple custom ICs to date and growing
§ More Boxes § Critical audio component in almost every device
§ Expanded from an initial single design win in 2006
§ Strong Engineering Relationship § Track record of execution § Currently working multiple new custom projects
Q3 FY12
63% 59%
70%
59%
Focus on Tier One Customers § Best in Class IP
§ Highly innovative custom ICs § Building strong engineering relationships § Focus on more boxes and more content
§ Proven Success with Custom ICs § 1st generation LED controller shipping in volume § 100% share at Itron for US power meters § 2nd generation audio CODEC for Japanese consumer
company § Automotive amplifier custom chipset shipping in volume
§ Best Long-Term Growth Opportunity § Focus on the best customers in select key
growth markets
+78%
CY2010 Revenue Growth Y/Y
CY2011 Revenue Growth Y/Y
+20%
Semiconductor Industry*
Analog & Mixed Signal Peers+
31%
34% 1%
1%
+ Average of the following peers: WLF.L, VLTR, HITT, TUNE, SMTC, SLAB, NSM, MXIM, LLTC, SMSC, AATI, AMS.s, DLG.F, ELGG.DE, EXAR, IDTI, ISIL, MELE.BR, MCRL, MSCC, MPWR, OIIM, PSEM, POWI, ADI, SUPX, ONNN
* Gartner 2010/2011
Industry Leading Revenue Growth
Revenue Growth Continues in 2H CY2012
More Content & More Boxes in Portable
Audio
Higher Value with More Functionality, Higher Integration
and Better Performance with the Existing Tier-1 Customer Base
New Digital Energy
LED Lights, Motor Control and
Power Meters
New Portable Customers
Audio CODEC, Amplifier and DSP
Ensuring Rapid Ramp Capacity
§ Multiple New Custom ICs Ramping in CY2012 § Majority have moved into volume production § Expected to contribute significantly to revenue growth in CY2012 and CY2013
§ Inventory Build and Backend Capacity § Q1 ending inventory increased 73% Q/Q to $96.8M § Expect value of Q2 inventory to grow by more than 50% § $10M investment in back-end capacity in 1H CY2012
§ Secured $100M Credit Facility in April 2012 § Flexibility for additional working capital needs in next 12 months
“Best Place to Work” § Cirrus is one of only 25
companies in US (medium sized business)
§ #1 Company to work for in Austin, TX
Great Place to Work – Employee Survey Results 2008-2012
Unique Corporate Culture
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Credibility
Respect
Fairness
Pride
Camaraderie
2012 2011 2010 2009 2008
Audio CODECs
Audio Amplifiers
Audio DSP
Our Ultra Lower Power Audio Products
SMARTPHONE TABLETS VIDEO CAMERAS
MEDIA PLAYERS
Portable Audio Applications
Enhancing the Voice Experience Key Technology Investments
Ac[ve Noise Canceling (ANC)
Echo Cancella[on
Boosted Speaker
Noise Suppression
Louder speakerphone
and ringer
They can hear you better in a
loud environment
You can hear better in a loud
environment
Enabling high quality voice experience
HOME THEATER
Technology: Audio DSP, Audio Converters,
and Audio Amplifier
Tier-1 Customers: Bose, Ford, Harman, LG,
Samsung, Sirius XM, Sony, Vizio
SOUNDBARS CAR AMPLIFIERS
MEDIA PCS
General Audio Applications
Key Customer Focused
Innovation
Deep Applications Knowledge
On Time Execution
~1,100 Patents & Over 25 Years of Mixed-Signal Innovation
Meeting Customer Schedules is Key
More Functionality, Higher Integration and
Better Performance
Sustainable Advantage
Digital Energy Control with Best-in-Class IP
90 U.S. issued and pending patents in the area of energy management
POWER METERS & MONITORS
LED LIGHTING
MOTOR CONTROL
Digital Energy Control Applications
LED Strategy: Solving Dimmer Compatibility
“Intelligent” controller in the bulb recognizes type of dimmer
3-year focus on TRIAC interface algorithms and tested on over 200 dimmers
Strong IP protection
Tier-‐1 Key Customer Focus
Tier-1 Bulb in Production
Ramping at Tier-‐1 Customer since January 2012
DIGITAL LED CONTROLLER
Goal - “Works with every dimmer - every time”
Key Issue: LED Dimmer Compatibility
Installed Base: Worldwide
Standards: None
Different types: 200+
Incompa[bility Issues:
High Product Returns: Impact OEM Brand
Slows Market Adopbon
Flickering Light No Light No Dimming
Limited Dimming Range Inability to Turn On and Off
* Based on 230 V, tested with over 40+ different dimmers: dimming funcbonality & smoothness, dimming range, flicker free on transient and steady state
47
57
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98
IR
IFX
NXP
iwae
Cirrus
Company A
Company B
Company C
Company D
Testing Dimmer Compatibility* vs. Competition
2011 2012 2016
140Mu
1.2Bu
Source: Datapoint Research 2012
Lead Tier 1 Customer
Shipping in Producbon
Expanding Beyond Lead Customer
In Progress
Target Shipments FY2013: 5-‐10Mu
Targebng Consumer and Professional Lighbng
Markets
LED Lighting Market is Emerging
2014
700Mu
250Mu
Focus on Key Customers Expanding Internabonal
Footprint
Energy Measurement ICs (ADC) Since 1999
New CS5484 Highest Accuracy AFE
Cirrus Logic in Smart Meters
Motor Control
Cirrus Logic Solution: § Improved Reliability
§ Fewer field repairs and warranty returns
§ Smoother and Quieter Operation § End user enjoyment and perceived quality
§ Lower System Cost
Global Market DC Brushless Motors - Non-Industrial ~1.4Bu Initial Target Market: E-Bikes ~43.3Mu Source: IMS Research
Deficiencies in the Current Solution: § Start-Up Requires Hall Sensors
§ Most common failure component in the motor
§ Operation of the Motor is Rough and Noisy § High System Cost
Key Balance Sheet Items
§ $167M in cash § $139 deferred tax asset remaining § Q1 ending inventory $96.8M
§ Up 73% Q/Q § Resulting in an $37M increase in accounts payable
§ $100M credit facility in place § Provides added flexibility to working capital § Do not anticipate using revolver at this time
Ramping Investment in Operating Expenses
Ope
rabn
g Expe
nses in $Millions
-‐
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Q1/FY11
Q2/FY11
Q3/FY11
Q4/FY11
Q1/FY12
Q2/FY12
Q3/FY12
Q4/FY12
Q1/FY13
SG&A
R&D
549 534 525
570
676
631 636
608
737
Headcount
Q3 FY12
Operating Margins*
Q1 FY12
GAAP Non-GAAP FY12 Q1 16% 19% FY12 Q2 18% 22% FY12 Q3 22% 24%
FY12 Q4 19% 23%
FY13 Q1 11% 15%
* GAAP to non-GAAP reconciliations available on slide 31 and at www.cirrus.com
Q2 FY12
Q4 FY12
Q1 FY13
Earnings and Operating Profit
$0.13
$0.24
$0.17
$0.33
$0.25
$0.43
$0.75
$0.36
$0.10
$0.22
§ June Quarter (Q1) § Revenue: $99M
§ Up 7% Y/Y
§ Gross Margin: 54% § R&D/SGA: $43M
(incl. $4.4M in stock comp and other)
§ September Guidance (Q2)**
§ Revenue: $170-$190M
§ Gross Margin: 52%-54% § R&D and SG&A: $49M-$53M
(incl. $6M in stock comp and other)
**Forecast as of July 30, 2012
Financial Results and Outlook
52% 53% 54% 56% 54% 53%*
Q1/FY12 Q2/FY12 Q3/FY12 Q4/FY12 Q1/FY13 Q2/FY13 Gross Margin *Midpoint of guidance as of July 30, 2012
Q1/FY12 Q2/FY12 Q3/FY12 Q4/FY12 Q1/FY13 Q2/FY13
$92 $102 $122 $111 $99
$180*
Revenue *Midpoint of guidance as of July 30, 2012
GAAP to Non-GAAP Reconciliation
Jun. 30, Mar. 31, Dec. 31, Sep. 24, Jun. 25, Mar. 26, Dec. 25, Sep. 25, Jun. 26,2012 2012 2011 2011 2011 2011 2010 2010 2010
Net Income Reconciliation Q1'13 Q4'12 Q3'12 Q2'12 Q1'12 Q4'11 Q3'11 Q2'11 Q1'11GAAP Net Income 6,927$ 50,827$ 16,731$ 11,247$ 9,178$ 130,406$ 24,621$ 30,874$ 17,602$ Amortization and other acquisition related items 353 353 353 353 353 353 353 353 370 Stock based compensation expense 4,173 3,451 2,769 3,517 2,442 2,294 1,467 3,025 1,356 Other expenses (proceeds) ** - 263 - 622 - 57 (425) (3,199) 929 Provision (benefit) for income taxes 3,355 (30,310) 8,992 6,163 4,984 (117,078) (1,847) (2,229) - Non-GAAP Net Income (Loss) 14,808$ 24,584$ 28,845$ 21,902$ 16,957$ 16,032$ 24,169$ 28,824$ 20,257$
Earnings Per Share reconciliation *GAAP Diluted income per share 0.10$ 0.75$ 0.25$ 0.17$ 0.13$ 1.80$ 0.34$ 0.42$ 0.25$ Effect of Amortization and other acquisition related items 0.01 0.01 0.01 0.01 0.01 - - - 0.01 Effect of Stock based compensation expense 0.06 0.05 0.04 0.05 0.03 0.03 0.02 0.04 0.02 Effect of Other expenses (proceeds) ** - - - 0.01 - - - (0.03) 0.01 Effect of Provision (benefit) for income taxes 0.05 (0.45) 0.13 0.09 0.07 (1.61) (0.02) (0.03) -
Non-GAAP Diluted income (loss) per share 0.22$ 0.36$ 0.43$ 0.33$ 0.24$ 0.22$ 0.34$ 0.40$ 0.29$
Operating Income ReconciliationGAAP Operating Income (Loss) 10,471$ 20,888$ 26,399$ 17,913$ 14,336$ 13,665$ 23,108$ 29,057$ 17,497$ GAAP Operating Margin 11% 19% 22% 18% 16% 15% 24% 29% 21%Amortization and other acquisition related items 353 353 353 353 353 353 353 353 370 Stock compensation expense - COGS 118 113 92 104 89 78 46 64 55 Stock compensation expense - R&D 2,243 1,753 1,613 1,181 1,043 924 579 617 521 Stock compensation expense - SG&A 1,812 1,585 1,064 2,232 1,310 1,292 842 2,344 780 Other expenses (proceeds) ** - 263 - 622 - 57 (425) (3,199) 929 Non-GAAP Operating Income (Loss) 14,997$ 24,955$ 29,521$ 22,405$ 17,131$ 16,369$ 24,503$ 29,236$ 20,152$ Non-GAAP Operating Margin 15% 23% 24% 22% 19% 18% 26% 29% 25%
Operating Expense ReconciliationGAAP Operating Expenses 42,969$ 41,459$ 39,631$ 36,442$ 33,373$ 32,353$ 29,354$ 27,723$ 29,238$ Amortization and other acquisition related items (353) (353) (353) (353) (353) (353) (353) (353) (370) Stock compensation expense - R&D (2,243) (1,753) (1,613) (1,181) (1,043) (924) (579) (617) (521) Stock compensation expense - SG&A (1,812) (1,585) (1,064) (2,232) (1,310) (1,292) (842) (2,344) (780) Other expenses (proceeds) ** - (263) - (622) - (57) 425 3,199 (929) Non-GAAP Operating Expenses 38,561$ 37,505$ 36,601$ 32,054$ 30,667$ 29,727$ 28,005$ 27,608$ 26,638$ * Certain YTD numbers may not tie to individual quarter presentation due to YTD share count dilution** Other expenses (proceeds) may contain certain items such as litigation expenses , proceeds from a patent agreement, restructuring items, and impairments of non-marketable securities.
We use these Non-GAAP financial numbers to assist us in the management of the Company because we believe that this information provides a more consistent and complete understanding of the underlying results and trends of the ongoing business due to the uniqueness of these charges.
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION(unaudited, in thousands, except per share data)
(not prepared in accordance with GAAP)
CIRRUS LOGIC, INC.