Cirrus Logic : TranscriptPDF 244 KB

Corrected Transcript

29-Apr-2021

Cirrus Logic, Inc. (CRUS)

Q4 2021 Earnings Call

	Total Pages: 10
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Cirrus Logic, Inc. (CRUS)	Corrected Transcript
Q4 2021 Earnings Call	29-Apr-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, Chief Executive Officer & Director, Cirrus Logic, Inc.

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OTHER PARTICIPANTS

Matthew D. Ramsay	Christopher Rolland
Analyst, Cowen and Co. LLC	Analyst, Susquehanna Financial Group LLLP
Blayne Curtis	Derek Soderberg
Analyst, Barclays Capital, Inc.	Analyst, Colliers Securities LLC

Tore Egil Svanberg

Analyst, Stifel, Nicolaus & Co., Inc.

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MANAGEMENT DISCUSSION SECTION

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic Fourth Quarter and Full 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 fourth quarter and full fiscal year of 2021 at approximately 4 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 are all available at the company's Investor Relations website at investor.cirrus.com. This call will feature questions from our analysts covering our company as well as questions submitted to us via e-mail at [e-mail].

Please note that during this session, we may make projections and other forward-looking statements that are subject to risk and uncertainties that may cause actual results to differ materially from projections. By providing

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Cirrus Logic, Inc. (CRUS)	Corrected Transcript
Q4 2021 Earnings Call	29-Apr-2021

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 shareholder letter issued today, which are available on the Cirrus Logic website, and the latest Form 10-K, 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 it over to John.

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John Forsyth

President, Chief Executive Officer & Director, Cirrus Logic, Inc.

Thank you, Thurman, and thank you, everyone, for joining the call today. In the past years, Cirrus Logic made excellent progress on the key growth factors and strategic initiatives that we believe will contribute to our continued success in the quarters and years ahead. We increased the penetration of our audio solutions in smart phones. We gained momentum with audio and haptic solutions in exciting categories beyond smartphones, and we've brought innovative products to market in new technology domains, expanding the range of product areas was a risk is recognized for its leadership.

We are particularly pleased with the progress we've made in driving product diversification in the high- performance mixed-signal areas which we have highlighted as a key pillar of our strategic vision for the company's future. The introduction of our first camera controllers contributed to 55% year-on-year revenue growth in the high-performancemixed-signal category.

I feel it's also especially important to take a moment to thank our employees for everything that they have done over the past year amid many, many challenges they have shown extraordinary dedication both to supporting our customers with their current products and keeping on track to many important development programs that we believe will be central to our and our customers' future success.

Turning now to our results, Cirrus Logic delivered FY 2021 revenue of $1.37 billion, up 7% year-on-year and non- GAAP EPS of $4.58, up 27% year-on-year driven largely by content gains and higher unit volumes. Like many in the semiconductor industry, we have been experiencing strong demand in excess of supply. And while capacity constraints have not meaningfully affected the largest parts of our business, they did have some impact on our revenue for the last quarter as well as on our outlook for the first quarter of FY 2022.

Today we still see demand in excess of supply in some areas of our business most typically in older products and in some cases in parts of our audio business that we've added during the supply constraint period, and our experienced team is working closely with our supply chain partners to meet that demand as rapidly as possible.

In the coming months, we'll begin shipping new technologies to our customers across a range of end devices including important new content in the high-performancemixed-signal category. And based on these factors, we expect to accelerate revenue growth in FY 2022. With this pipeline of new products and the R&D investments we are making to further strengthen our road map of compelling audio and high-performancemixed-signal solutions, we're extremely excited about the coming year.

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

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Cirrus Logic, Inc. (CRUS)	Corrected Transcript
Q4 2021 Earnings Call	29-Apr-2021
Operator, we are now ready to take questions.

QUESTION AND ANSWER SECTION

Operator: [Operator Instructions] And our first question comes from the line of Matt Ramsay of Cowen. Please go ahead. Your line is open.

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Matthew D. Ramsay

Analyst, Cowen and Co. LLC

Q

Thanks very much. Good afternoon, guys. John, in light of the results and some of the stock action tonight, I think it's appropriate to ask a question. You guys have talked a bit openly to the extent that you can about content expansion expected in premium devices both in the power domain for coming this fall and also in work that you've been doing on the 22-nanometer codec for future products.

And maybe - I know you can't give you a ton of details and all of us always have lots of questions about those things, but maybe if you could just talk about if any of those expectations changed in terms of penetration content, ASP's visibility on those programs from the update you might have given us a quarter ago? Thanks.

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John Forsyth

President, Chief Executive Officer & Director, Cirrus Logic, Inc.

A

Thanks for your question, Matt. Yes, I obviously will stress that we don't disclose details of our customers' product but you are absolutely asking about some of the things we're most excited about. So I do want to provide a little about more color as we are a little further along the road than we were one quarter ago. So, specifically there you're referring in part to the power conversion and control IC that we've talked about. We're very excited about that. It's an expansion again into another high-performancemixed-signal area for us.

We have said, as I've said previously, that we think that device will trend towards an attach rate of 1 that it's kind of in a nature state, I think, and we believe there's a compelling case for being 1 in every phone. And we believe it's going to have a pretty healthy attach rate straight out of the gate.

We're obviously still early in the year to say more from that but we're very excited about it also because of its value in the ASP terms which I've previously said was meaningfully higher from the closed-loop controller. So, indicatively I think it's best to think of the value of that as being about $1.

You also asked about 22-nanometer. Again, we've made really good progress there. I previously talked about seeing silicon that we're really happy with and being deeply engaged with customers. We don't have a product vehicle that we're ready to talk about there yet, but we do see multiple applications for that technology on our road map that we are really excited about.

As a reminder, the reason you would invest in 22 nanometers is either to pack in more digital processing close to the analog and/or to make something that is radically smaller and more power efficient. So, we can see multiple applications for that IP investment across different device categories and products. We have some particular routes to market that we're obviously working on that that we've alluded to previously but nothing more specific to say today.

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Cirrus Logic, Inc. (CRUS)	Corrected Transcript
Q4 2021 Earnings Call	29-Apr-2021
Matthew D. Ramsay	Q
Analyst, Cowen and Co. LLC

Got it. Thanks, John. I appreciate the color and then also the sensitivity on it. For my follow-up question, Thurman, I wanted to ask about the printed results for the March quarter. I think most of us that follow the company realize that the June quarter is always transitional and seasonally down and it's a little bit of a throwing darts from the outside to see if we can model that right.

But I think the concerns that I've gotten in my calls in my inbox tonight are around the March quarter prints given the upside that your largest customers showed in their results last night. I would have imagined back in the December quarter and in and in January when you were giving the guide for March, you guys would have been able to understand the units that you had shift in to support from their phones and other devices and calibrate the guidance accordingly if you had over shipped versus what they had sold through.

So maybe you can give us some color there about how you guys are thinking about that with the March quarter results and then if there is any other factors that you mentioned, supply constraints, et cetera, that might have affected the March quarter? Thanks.

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John Forsyth

President, Chief Executive Officer & Director, Cirrus Logic, Inc.

A

You know, Matt, maybe I'll just chime in quickly with a couple of thoughts on that because the last time I spoke a little bit about the difficulty of drawing a straight line between what we ship and recognize versus what our peers or customers ships. In particular, the closed-loop controller content with the module assembly phase that that's got. We talked to that time about the possibility that that just put things a little out of sync on the on the scheduling of our revenue versus customers and so on. I think we're seeing that. That' pretty visible now. If you look at our Q3, we were 30% up year-on-year. We took a lot of success there on the back of that, that content and I think that's obviously been treating product for our customers for some time since.

In the March quarter, I think you - and you may be alluding to at least the possibility of this so I'll clarify, we've been able to serve all the demand from our large customers, our largest customers that we've had. So supply constraints having impeded us there, that's really just affected our ability to grab upside in some of the smaller areas of our business.

Thurman, if you have any additional content or color you want to add to that, please go ahead.

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Thurman Klay Case

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

A

Well, and also as we noted, we were able to service our largest customers but we were constrained on some of our general market customers in the quarter, but again we fulfilled most of that and that really didn't - none of those were factors in our results for the quarter.

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Operator: Our next question comes from the line of Blayne Curtis of Barclays. Please go ahead. Your line is open.

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Blayne Curtis

Analyst, Barclays Capital, Inc.

Q

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