DURHAM, N.C., October 22, 2013 - Cree, Inc. (Nasdaq: 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."
Recent Business Highlights:
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.
Forward Looking Statements:
The schedules attached to this release are an integral part of the release. This press release contains forward-looking statements involving risks and uncertainties, both known and unknown, that may cause actual results to differ materially from those indicated in the forward-looking statements. Actual results, including with respect to our targets and prospects, could differ materially due to a number of factors, including the risk that we may not obtain sufficient orders to achieve our targeted revenues; price competition in key markets; the risk that we or our channel partners are not able to develop and expand customer bases and accurately anticipate demand from end customers, which can result in increased inventory and reduced orders as we experience wide fluctuations in supply and demand; the risk that our results will suffer if we are unable to balance fluctuations in customer demand and capacity; product mix; risks associated with the ramp-up of production of our new products, and our entry into new business channels different from those in which we have historically operated; the risk that we may experience production difficulties that preclude us from shipping sufficient quantities to meet customer orders or that result in higher production costs and lower margins; our ability to lower costs; ongoing uncertainty in global economic conditions, infrastructure development or customer demand that could negatively affect product demand, collectability of receivables and other related matters as consumers and businesses may defer purchases or payments, or default on payments; the risk we may be required to record a significant charge to earnings if our goodwill or amortizable assets become impaired; our ability to complete development and commercialization of products under development, such as our pipeline of improved LED chips, LED components and LED lighting products; risks resulting from the concentration of our business among few customers, including the risk that customers may reduce or cancel orders or fail to honor purchase commitments; risks related to our multi-year warranty periods for LED lighting products; risks associated with acquisitions; the rapid development of new technology and competing products that may impair demand or render our products obsolete; the potential lack of customer acceptance for our products; risks associated with ongoing litigation; and other factors discussed in our filings with the Securities and Exchange Commission (SEC), including our report on Form 10-K for the fiscal year ended June 30, 2013, and subsequent reports filed with the SEC. These forward-looking statements represent Cree's judgment as of the date of this release. Except as required under the U.S. federal securities laws and the rules and regulations of the SEC, Cree disclaims any intent or obligation to update any forward-looking statements after the date of this release, whether as a result of new information, future events, developments, changes in assumptions or otherwise.
Cree®, the Cree logo, TrueWhite® and XLamp® are registered trademarks of Cree, Inc. ENERGY STAR® is a registered trademark of the U.S. Environmental Protection Agency.
Director, Investor Relations