Cree Announces Financial Results for First Quarter of Fiscal 2017
Cree, Inc. (NASDAQ: CREE) announced that the company's combined revenue for the first quarter of fiscal 2017 was US$371 million, including consolidated revenue of US$321 million from continuing operations and consolidated revenue of US$50 million from discontinued operations. This represents a decrease of 13% compared to combined revenue of US$425 million for the first quarter of fiscal 2016 (including US$381 million from continuing operations and US$44 million from discontinued operations), and a decrease of 4% compared to the fourth quarter of fiscal 2016. On a US GAAP basis, combined net income for the first quarter of fiscal 2017 was US$600,000 (or diluted earnings per share of US$0.00), compared to a combined net loss of US$24 million (or diluted loss per share of US$0.24) for the first quarter of fiscal 2016. On a Non-GAAP basis, combined net income for the first quarter of fiscal 2017 was US$15 million (or diluted earnings per share of US$0.15), compared to combined net income of US$21 million (or diluted earnings per share of US$0.21) for the first quarter of fiscal 2016.
Consolidated revenue from continuing operations for the first quarter of fiscal 2017 was US$321 million, compared to consolidated revenue from continuing operations of US$381 million for the first quarter of fiscal 2016. Loss from continuing operations for the first quarter of fiscal 2017 was US$3 million (or diluted loss per share of US$0.03), compared to loss from continuing operations of US$26 million (or diluted loss per share of US$0.25) for the first quarter of fiscal 2016. On a Non-GAAP basis, income from continuing operations for the first quarter of fiscal 2017 was US$9 million (or diluted earnings per share of US$0.09), compared to income from continuing operations of US$15 million (or diluted earnings per share of US$0.14) for the first quarter of fiscal 2016.
Consolidated revenue from discontinued operations for the first quarter of fiscal 2017 was US$50 million, compared to consolidated revenue from discontinued operations of US$44 million for the first quarter of fiscal 2016. Net after-tax income from discontinued operations for the first quarter of fiscal 2017 was US$3 million (or diluted earnings per share of US$0.03), compared to net after-tax income from discontinued operations of US$1 million (or diluted earnings per share of US$0.01) for the first quarter of fiscal 2016. On a Non-GAAP basis, net after-tax income from discontinued operations for the first quarter of fiscal 2017 was US$6 million (or diluted earnings per share of US$0.06), compared to net after-tax income from discontinued operations of US$7 million (or diluted earnings per share of US$0.07) for the first quarter of fiscal 2016.
Cree, Inc. Chairman and CEO Chuck Swoboda stated: "We achieved solid results in the first quarter of fiscal 2017, with revenue and gross margin for Lighting, LED Products, and Wolfspeed all meeting our targets. We made further progress in transforming toward a more focused LED lighting company and are building a more valuable business by providing better light to our customers."
First Quarter Fiscal 2017 Financial Metrics
(All amounts in thousands of U.S. dollars, except per-share amounts and percentages)
On a GAAP basis, the gross margin for continuing operations increased from 26.4% in the fourth quarter of fiscal 2016 to 26.9%; on a non-GAAP basis, the gross margin for continuing operations decreased from 28.2% in the fourth quarter of fiscal 2016 to 27.7%;
Total combined cash and investments amounted to $589 million, a decrease of $16 million compared with the fourth quarter of fiscal 2016;
Net accounts receivable for continuing operations was $146 million, a net increase of $7 million compared with the fourth quarter of fiscal 2016, with accounts receivable turnover of 41 days;
Inventory for continuing operations was $292 million, an increase of $10 million from the fourth quarter of fiscal 2016, equivalent to 112 days of inventory;
Cash from continuing operations in the first quarter of fiscal 2017 was $18 million;
Share repurchases during the first quarter of fiscal 2017 were $36 million.
Recent Business Highlights
Announces the appointment of Danny Castillo as President of the Lighting Business Unit, effective November 7, 2016
Launches the following new LED products:
- XLamp XP-L2 LED
- XLamp XQ-E and XP-E High Efficiency (HE) Photo Red LEDs
- QLS6A and QLSB6 LEDs
Introduces the following new lighting products:
- Essentia by Cree LED Surface Wrap
- A complete new-generation LED bulb product portfolio
Business Outlook
For the second quarter of fiscal 2017 (ending December 25, 2016), Cree, Inc. targets consolidated revenue of $360 million to $380 million, including both continuing and discontinued operations. On a GAAP basis, consolidated net income target is $10 million to $11 million, or diluted earnings per share of $0.10 to $0.11. On a non-GAAP basis, consolidated net income target is $13 million to $19 million, or diluted earnings per share of $0.13 to $0.19. The non-GAAP consolidated target excludes $21 million of stock-based compensation expense, amortization or impairment of acquisition-related intangibles and transaction expenses related to the sale of the Wolfspeed business. Both GAAP and non-GAAP targets exclude any estimated changes in the fair value of Cree, Inc.'s investment in Lextar Electronics.
For continuing operations, Cree, Inc. targets revenue of $310 million to $330 million. On a GAAP basis, earnings targets for continuing operations range from $2 million to $5 million, or diluted earnings per share of $0.02 to $0.05. On a Non-GAAP basis, earnings targets for continuing operations range from $4 million to $10 million, or diluted earnings per share of $0.04 to $0.10. Non-GAAP earnings targets for continuing operations exclude approximately $18 million of stock-based compensation expense, acquisition-related intangible asset amortization or impairment. Neither the GAAP nor Non-GAAP targets include any estimated changes in the fair value of Cree, Inc.'s investment in Lextar.
For discontinued operations, Cree, Inc. targets revenue of +/- $50 million. On a GAAP basis, net after-tax earnings targets for discontinued operations are +/- $7 million, or diluted earnings per share of +/- $0.07. On a Non-GAAP basis, net after-tax earnings targets for discontinued operations are +/- $9 million, or diluted earnings per share of +/- $0.09. Non-GAAP net after-tax earnings targets for discontinued operations exclude $3 million of stock-based compensation expense, acquisition-related intangible asset amortization or impairment resulting from the sale of the Wolfspeed business, and transaction costs.
Quarterly Conference Call
Cree, Inc. will host a conference call at 5:00 pm Eastern Time on October 18, 2016 to discuss the highlights of its first quarter of fiscal 2017 results and its outlook for the second quarter of fiscal 2017, including the key factors and assumptions underlying the targets mentioned above. The conference call will be available to the public through a live audio webcast via the Internet. For webcast details, please visit the Cree, Inc. website at investor.cree.com/events.cfm. For additional financial information, including a reconciliation of Non-GAAP items accompanying this press release, please refer to the Cree, Inc. website at investor.cree.com/results.cfm.
Non-GAAP Financial Data
This press release highlights the company's U.S. Generally Accepted Accounting Principles (GAAP) and non-GAAP financial results. GAAP results include certain costs, charges, and expenses that are excluded from the non-GAAP results. Management provides non-GAAP data to give investors additional information to further analyze the company's performance, core results, and underlying trends. Cree Inc.'s management will use both the GAAP and non-GAAP data provided in this press release to evaluate performance and make corresponding operational decisions. Non-GAAP data is prepared using procedures different from those used for GAAP and should be considered as supplemental to, but not as a substitute for, GAAP financial statements. We encourage investors and potential investors to review the non-GAAP financial data presented in this press release alongside the directly comparable GAAP data.
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