Cree Reports Financial Results for the Fourth Quarter and Fiscal Year 2011
Annual Revenue increased 14% to a record $988 Million
Annual Net Income was $147 Million
DURHAM, N.C., August 9, 2011 - Cree, Inc. (Nasdaq: CREE), a market leader in LED lighting, today announced revenue of $243.0 million for its fourth quarter of fiscal 2011, ended June 26, 2011. This represents an 8% decrease compared to revenue of $264.6 million reported for the fourth fiscal quarter last year and an 11% increase compared to the third quarter of fiscal 2011. GAAP net income for the fourth quarter of $19.8 million, or $0.18 per diluted share, decreased 63% year-over-year compared to GAAP net income of $52.8 million, or $0.48 per diluted share, for the fourth quarter of fiscal 2010. On a non-GAAP basis, net income for the fourth quarter of fiscal 2011 of $30.6 million, or $0.28 per diluted share, decreased 49% year-over-year compared to non-GAAP net income for the fourth quarter of fiscal 2010 of $60.1 million, or $0.55 per diluted share.
For fiscal year 2011, Cree reported revenue of $987.6 million, which represents a 14% increase compared to revenue of $867.3 million for fiscal 2010. GAAP net income of $146.5 million, or $1.33 per diluted share, decreased 4%, compared to $152.3 million, or $1.45 per diluted share for fiscal 2010. On a non-GAAP basis, net income for fiscal year 2011 of $186.8 million, or $1.70 per diluted share, increased 4%, compared to $179.2 million, or $1.71 per diluted share, for fiscal 2010. Cree generated $251.4 million of operating cash flow and $14.3 million of free cash flow (cash flow from operations less capital expenditures) during fiscal 2011.
"Q4 results were in-line with our targets, and we are encouraged by the 11% sequential growth in quarterly revenue," stated Chuck Swoboda, Cree chairman and CEO. "Over the last fiscal year, we continued to have success leading the LED lighting revolution and growing our LED lighting business, while at the same time managing through a challenging business cycle for our LED component and LED chip product lines. As we look ahead to Q1, demand has improved from earlier in the calendar year, and we are well positioned to continue to lead the LED lighting revolution."
- Cash and investments ended the quarter at $1,085.8 million, which was an increase of $12.7 million from Q3 of fiscal 2011.
- Accounts receivable (net) decreased $7.4 million from Q3 of fiscal 2011 to $118.5 million, with days sales outstanding of 44, a decrease of 8 days from Q3 of fiscal 2011.
- Inventory increased $6.9 million from Q3 of fiscal 2011 to $176.5 million and represents 106 days of inventory, a decrease of 13 days from Q3 of fiscal 2011.
Recent Business Highlights:
- Revolutionized commercial lighting with the release of the Cree CR family of LED troffers, which deliver shorter payback, better light quality and better efficacy than comparable fluorescents.
- Achieved another industry-best efficacy record of 231 lumens per watt for a white high-power LED in R&D.
- Unveiled a concept LED light bulb that exceeds the DOE's 21st Century Lamp L PrizeSM requirements by delivering more than 1,300 lumens at 152 lumens per watt using Cree TrueWhite® Technology.
- Launched patent licensing program for remote-phosphor applications.
For its first quarter of fiscal 2012 ending September 25, 2011, Cree targets revenue in a range of $245 million to $255 million with GAAP and non-GAAP gross margin targeted to be in a similar range as Q4 at 38-39%. GAAP operating expenses are targeted to increase by approximately $2.0 million to $75 million, or $62 million on a non-GAAP basis. The tax rate is targeted at 20% for fiscal Q1. GAAP net income is targeted at $16 million to $19 million, or $0.14 to $0.17 per diluted share. Non-GAAP net income is targeted in a range of $28 million to $31 million, or $0.25 to $0.28 per diluted share. The GAAP and non-GAAP net income targets are based on an estimated 110.2 million diluted weighted average shares. Targeted non-GAAP earnings exclude expenses related to the amortization of acquired intangibles of $0.02 per diluted share, and stock-based compensation expense of $0.09 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 fourth quarter 2011 results and the fiscal first quarter 2012 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. Log on to Cree's website at www.cree.com and go to "Investor Relations - Financial Events and Presentations" for webcast details. The call will be archived and available on the website through August 23rd, 2011.
Supplemental financial information, including the non-GAAP reconciliation attached to this press release, is available in the "Investor Relations" section of Cree's website, under "Financial Information," "Quarterly Results," at www.cree.com.
About Cree, Inc.
Cree is leading the LED lighting revolution and making energy-wasting traditional lighting technologies obsolete through the use of energy-efficient, environmentally friendly LED lighting. Cree is a market-leading innovator of lighting-class LEDs, LED lighting, and semiconductor solutions for wireless and power 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 radio-frequency/wireless devices. Cree solutions are driving improvements in applications such as general illumination, electronic signs and signals, variable-speed motors and wireless systems.
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 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.
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. 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 given that our current backlog has remained at relatively low levels for the revenue targets and our ability to forecast orders is limited; increasing price competition in key markets; the risk that we or our distributors 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; risks associated with the ramp-up of production of our new products, including production at our Huizhou facility that opened in 2010 and our entry into new business channels different from those in which we have historically operated; the risk that we may experience production delays that preclude us from shipping sufficient quantities to meet customer orders or that result in higher production costs and lower margins; 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; 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; our ability to lower costs; 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; 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 27, 2010, and subsequent reports filed with the SEC. Except as required under the U.S. federal securities laws and the rules and regulations of the SEC, Cree disclaims any 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 and TrueWhite are registered trademarks, and Cree TrueWhite is a trademark, of Cree, Inc.
Director, Investor Relations