Cirrus Logic : TranscriptPDF 266 KB

Corrected Transcript

01-Feb-2021

Cirrus Logic, Inc. (CRUS)

Q3 2021 Earnings Call

	Total Pages: 13
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Cirrus Logic, Inc. (CRUS)	Corrected Transcript
Q3 2021 Earnings Call	01-Feb-2021

CORPORATE PARTICIPANTS

Thurman Klay Case	Chelsea Heffernan
Chief Financial Officer & Vice President-Finance, Cirrus Logic, Inc.	Director-Investor Relations, Cirrus Logic, Inc.
John Forsyth
President and Chief Executive Officer, Cirrus Logic, Inc.

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OTHER PARTICIPANTS

Tore Egil Svanberg	Rajvindra S. Gill
Analyst, Stifel, Nicolaus & Co., Inc.	Analyst, Needham & Co. LLC
Ruben Roy	Vivek Arya
Analyst, The Benchmark Co. LLC	Analyst, BofA Securities, Inc.
Matthew D. Ramsay	Christopher Rolland
Analyst, Cowen and Company LLC	Analyst, Susquehanna Financial Group LLLP
Blayne Curtis	Andrew Hummel
Analyst, Barclays Capital, Inc.	Analyst, Oppenheimer & Co., Inc.

Derek Soderberg

Analyst, Colliers Securities LLC

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MANAGEMENT DISCUSSION SECTION

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic Third Quarter Fiscal Year 2021 Financial Results Q&A Session. At this time, all participants are in a listen-only mode. After a brief statement, we will open up the call for questions from analysts. Instructions for queuing up will be provided at that time. As a reminder, this conference call is being recorded for replay purposes.

I would now like to turn the conference call over to Mr. Thurman Case, Chief Financial Officer. Mr. Case, you may begin.

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Thurman Klay Case

Chief Financial Officer & Vice President-Finance, Cirrus Logic, Inc.

Thank you and good afternoon. Joining me on today's call is John Forsyth, Cirrus Logic's Chief Executive Officer; and Chelsea Heffernan, our Director of Investor Relations.

Today, we announced our financial results for the third quarter fiscal year 2021 at approximately 4:00 PM Eastern. The shareholder letter discussing our financial results, the earnings press release, including a reconciliation of non-GAAP financial information to the most important directly comparable GAAP information along with the webcast of this Q&A session are all available on the company's Investor Relations website at investor.cirrus.com. This call will feature questions from the analysts covering our company as well as questions submitted to us via email at [e-mail].

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Cirrus Logic, Inc. (CRUS)	Corrected Transcript
Q3 2021 Earnings Call	01-Feb-2021

Please note that during this session, we may make projections and other forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from projections. By providing this information, the company expressly disclaims any obligation to update or revise any projections or forward- looking statements, whether as a result of new developments or otherwise.

Please refer to the press release and the shareholder letter issued today, which are available on the Cirrus Logic website, and the latest Form 10-K and 10-Q, as well as other corporate filings made with the Securities and Exchange Commission for additional discussion of risk factors that could cause actual results to differ materially from the current expectations.

Now I'll turn the call over to John.

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John Forsyth

President and Chief Executive Officer, Cirrus Logic, Inc.

Thank you, Thurman. Cirrus Logic delivered Q3 FY 2021 revenue of $485.8 million, above the high end of our guidance as we experienced strong demand for certain products shipping in recently introduced smartphones. During the quarter, we were especially pleased with customer evaluations and design-in activity across our product lines. We expect a variety of new end products utilizing our boosted amplifiers, truly wireless headsets smart codecs and haptic solutions to be in the first half of this calendar year.

In reflecting on what is really an incredible set of results for the quarter, I'd like to acknowledge and express our thanks to Jason Rhode and to Al Schuele, who were, of course, CEO and Chair of the Board of Directors respectively for period and his leadership played such an instrumental role in building the company that we are today.

In the December quarter, the company also completed our annual strategic review and we are truly excited about the three growth vectors that we believe will contribute to our long-term success. First, we anticipate strengthening our position as the leading audio supplier in smart phones. Second, we are focused on increasing sales of audio components in certain applications beyond smart phones. And third, we are drawing on our extensive mixed-signal engineering expertise to develop technology in new development areas that we believe will drive diversification beyond the audio demand.

In the last quarter, we took an important step along that path with the introduction of a closed loop controller product. And in the last two earnings calls, we have also signaled that we're currently investing heavily in a product in another new area relating to power that we are aiming to introduce later this calendar year.

While we won't go into details on these products, I will report that our engineering progress continues to be really positive and that we continue to be very excited about the journey we are on with our customer. With the rich portfolio of products available today and a pipeline of innovative new components in development, we are optimistic about our ability to execute on this strategic plan and we believe that this will drive both revenue growth opportunities and product diversification in the coming years.

Before we begin the Q&A, I'd also like to note that while we understand there is intense interest related to our largest customer, in accordance with our policy, we do not discuss specifics about our business relationship.

Operator, we're now ready to take questions.

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Cirrus Logic, Inc. (CRUS)	Corrected Transcript
Q3 2021 Earnings Call	01-Feb-2021

QUESTION AND ANSWER SECTION

Operator: Thank you. [Operator Instructions] And your first question comes from the line of Tore Svanberg from Stifel. Your line is open.

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Tore Egil Svanberg

Analyst, Stifel, Nicolaus & Co., Inc.

Q

Yes, thank you and congratulations on the results. First question, John, could you calibrate a little bit your visibility right now - obviously, your largest customer didn't offer any public guidance, but would you say you have sort of the same visibility right now as you had in previous years? Or is it better or worse?

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John Forsyth

President and Chief Executive Officer, Cirrus Logic, Inc.

A

I think it's always difficult to read across from what we see happening with our own orders to what's happening with our customer products, just given the fact we ship to contract manufacturers, in some cases, module vendors. What we do see generally is really strong demand. So in the macro sense, what we hear in the very positive and very bullish outlook from our largest customers, we see reflected in our order book. It's obviously a time of lot of capacity constraints in the supply chain. And we certainly see that same pattern of demand exceeding supply. It's definitely a quality problem to have, but, yeah, I think the outlook is for continued strength of the market.

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Tore Egil Svanberg

Analyst, Stifel, Nicolaus & Co., Inc.

Q

Very good. Second question. And you mentioned this a little bit in your prepared remarks. It does sound like the company is probably going to be a bit more aggressive targeting non-smartphone applications. I know historically the company has always kind of viewed those as opportunities, but perhaps a bit more opportunistic. So should we think that is going to be a more concerted effort to really diversify into wearables, laptops, and so on?

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John Forsyth

President and Chief Executive Officer, Cirrus Logic, Inc.

A

We certainly think there are really good opportunities there, Tore. That is something that we - we've been talking about it gradually turning up the volume on over the past couple of years. In the last year, we thought we passed a lot of meaningful milestones on getting into some key wearable products at some big tablet launches across customers. And we want to keep that momentum going across those product categories.

And as we've indicated, we believe other important product categories hold opportunity as well. You mentioned laptops there. From my perspective, really when it's something that is battery-dependent device, really power- constrained, where either haptics, or audio, or some other area of mixed-signal expertise is required then, I think, it could be a very good fit for us. So for sure, as we've been able to grow in scale our engineering capability over the past few years, it's not for one second that we're taking our eye off the ball. Regarding smartphones, you can see that's kind of mission number one. As I said, we continue to lead the field there, but yes, you'll see us I think continue to make progress in these other categories.

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Operator: And your next question comes from the line of Ruben Roy from Benchmark Company. Your line is open.

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