DURHAM, N.C.–(BUSINESS WIRE)–Cree, Inc. (CREE), a market leader in LED lighting, today announced revenue of $391.0 million for its first quarter of fiscal 2014, ended September 29, 2013. This represents a 24% increase compared to revenue of $315.8 million reported for the first quarter of fiscal 2013, and a 4% increase compared to the fourth quarter of fiscal 2013. GAAP net income for the first quarter was $30.5 million, or $0.25 per diluted share, an increase of 89% year-over-year compared to GAAP net income of $16.1 million, or $0.14 per diluted share, for the first quarter of fiscal 2013. On a non-GAAP basis, net income for the first quarter of fiscal 2014 was $47.3 million, or $0.39 per diluted share, an increase of 49% year-over-year compared to non-GAAP net income for the first quarter of fiscal 2013 of $31.8 million, or $0.27 per diluted share.
“Fiscal 2014 is off to a good start, as we delivered solid Q1 revenue and earnings growth in line with our targets,” stated Chuck Swoboda, Cree chairman and CEO. “The strong performance was primarily due to increased sales of our lighting products, higher gross margins and improved operating leverage across the business. Based on our backlog, current sales activity and project forecasts, we are targeting growth in all product segments in Q2, led by growth in LED fixtures and the Cree® LED Bulb. Even with our success, LED lighting remains a largely untapped opportunity and we remain focused on investing in new products, new channels and building the Cree brand to grow our company and lead the market.”
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Q1 2014 Financial Metrics (in thousands, except per share amounts and percentages) |
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| First Quarter | ||||||||||||||
| 2014 | 2013 | Change | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||
| Revenue, net | $ | 391,006 | $ | 315,753 | $ | 75,253 | 24 | % | ||||||
| GAAP | ||||||||||||||
| Gross margin | 38.6 | % | 36.8 | % | ||||||||||
| Operating margin | 9.4 | % | 5.5 | % | ||||||||||
| Net income | $ | 30,497 | $ | 16,123 | $ | 14,374 | 89 | % | ||||||
| Earnings per diluted share | $ | 0.25 | $ | 0.14 | $ | 0.11 | 79 | % | ||||||
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Non-GAAP |
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| Gross margin | 39.2 | % | 37.5 | % | ||||||||||
| Operating margin | 15.0 | % | 11.9 | % | ||||||||||
| Net income | $ | 47,332 | $ | 31,844 | $ | 15,488 | 49 | % | ||||||
| Earnings per diluted share | $ | 0.39 | $ | 0.27 | $ | 0.12 | 44 | % | ||||||
- Gross margin increased 110 basis points from Q4 of fiscal 2013 to 38.6% on a GAAP basis and increased 100 basis points to 39.2% on a non-GAAP basis.
- Cash and investments increased by $64.9 million from Q4 of fiscal 2013 to $1.1 billion.
- Accounts receivable (net) increased by $16.7 million from Q4 of fiscal 2013 to $209.3 million, with days sales outstanding of 48.
- Inventory increased $20.3 million from Q4 of fiscal 2013 to $217.3 million, with days of inventory of 81 days.
Recent Business Highlights:
- Introduced Cree TW (TrueWhite®) Series LED Bulb, which emits natural LED light with a Color Rendering Index (CRI) of 93, making Cree the first company to meet the California Energy Commission (CEC) LED bulb specification;
- Earned ENERGY STAR® qualification for the game-changing soft-white Cree LED Bulbs;
- Introduced the XLamp® CXA 1520 LED array, the industry’s first High-Density (HD) LED Array. This breakthrough technology delivers double the lumen density to enable the next generation of LED spot lights;
- Launched the XLamp XQ-E LEDs, a new generation of lighting-class LEDs that deliver big performance in a tiny package;
- Announced that the National Aeronautics and Space Administration (NASA) headquarters in Washington, D.C., has been outfitted with energy-saving CR Series LED Troffers by Cree.
Business Outlook:
For its second quarter of fiscal 2014 ending December 29, 2013, Cree targets revenue in a range of $400 million to $420 million with GAAP gross margin targeted to be 37.8%+/- and non-GAAP gross margin targeted to be 38.5%+/-. Our GAAP gross margin targets include stock-based compensation expense of approximately $2.8 million, while our non-GAAP targets do not. Operating expenses are targeted to increase by approximately $5.5 million on both a GAAP basis and non-GAAP basis to promote the Cree LED Bulb and take advantage of ENERGY STAR® qualification and associated utility rebates to drive increased sales momentum. The tax rate is targeted at 23.0%+/- for the second quarter of fiscal 2014. GAAP net income is targeted at $26 million to $32 million, or $0.21 to $0.26 per diluted share. Non-GAAP net income is targeted in a range of $44 million to $50 million, or $0.36 to $0.41 per diluted share. The GAAP and non-GAAP net income per diluted share targets are based on an estimated 123 million diluted weighted average shares. Targeted non-GAAP earnings exclude expenses related to the amortization of acquired intangibles and stock-based compensation expense of $0.15 per diluted share.
Quarterly Conference Call:
Cree will host a conference call at 5:00 p.m. Eastern time today to review the highlights of the fiscal 2014 first quarter results and the fiscal 2014 second quarter business outlook, including significant factors and assumptions underlying the targets noted above.
The conference call will be available to the public through a live audio web broadcast via the Internet. For webcast details, visit Cree’s website at investor.cree.com/events.cfm.
Supplemental financial information, including the non-GAAP reconciliation attached to this press release, is available on Cree’s website at investor.cree.com/results.cfm.
About Cree, Inc.
Cree is leading the LED lighting revolution and making energy-wasting traditional lighting technologies obsolete through the use of energy-efficient, mercury-free LED lighting. Cree is a market-leading innovator of lighting-class LEDs, LED lighting, and semiconductor products for power and radio frequency (RF) applications.
Cree’s product families include LED fixtures and bulbs, blue and green LED chips, high-brightness LEDs, lighting-class power LEDs, power-switching devices and RF devices. Cree’s products are driving improvements in applications such as general illumination, electronic signs and signals, power supplies and inverters.
For additional product and Company information, please refer to www.cree.com.
Non-GAAP Financial Measures:
This press release highlights the Company’s financial results on both a GAAP and a non-GAAP basis. The GAAP results include certain costs, charges and expenses which are excluded from the non-GAAP results. By publishing the non-GAAP measures, management intends to provide investors with additional information to further analyze the Company’s performance, core results and underlying trends. Cree’s management evaluates results and makes operating decisions using both GAAP and non-GAAP measures included in this press release. Non-GAAP results are not prepared in accordance with GAAP and non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures attached to this press release.