DURHAM, N.C. — Cree, Inc. announced revenue of $425.5 million for its first quarter of fiscal 2016, ended September 27, 2015. This represents a 1% decrease compared to revenue of $427.7 million reported for the first quarter of fiscal 2015, and an 11% increase compared to the fourth quarter of fiscal 2015. GAAP net loss for the first quarter was $23.6 million, or $0.23 per diluted share, compared to GAAP net income of $11.1 million, or $0.09 per diluted share, for the first quarter of fiscal 2015. On a non-GAAP basis, net income for the first quarter of fiscal 2016 was $22.1 million, or $0.21 per diluted share, compared to non-GAAP net income for the first quarter of fiscal 2015 of $29.6 million, or $0.24 per diluted share. During the first quarter of fiscal 2016, Cree recognized $15.9 million of costs related to the LED business restructuring that was announced on June 24, 2015. The restructuring charges included factory capacity and overhead cost reductions which are included in the GAAP results only.
“Fiscal 2016 is off to a good start, with Q1 revenue and profits above the middle of our targeted range, driven by strong demand for commercial LED lighting and a solid quarter for our LED business,” stated Chuck Swoboda, Cree Chairman and CEO. “We’re confident in our strategy and optimistic about the future, as the commercial lighting business is growing, the LED results recovered nicely in Q1 and Power and RF design momentum is strong.”
- Gross margin increased from 20.1% in Q4 of fiscal 2015 to 31.0% on a GAAP basis, and increased from 21.0% to 31.7% on a non-GAAP basis.
- Cash and investments decreased by $81.1 million from Q4 of fiscal 2015 to $632.1 million.
- Share repurchases were $70 million and $13 million of net cash was used for the acquisition of Arkansas Power Electronics International, Inc. during Q1 of fiscal 2016.
- Accounts receivable, net increased by $7.6 million from Q4 of fiscal 2015 to $193.8 million, with days sales outstanding of 41.
- Inventory increased by $8.5 million from Q4 of fiscal 2015 to $289.1 million and represents 89 days of inventory.
- Cash from operations was $47 million and free cash flow was ($7) million for Q1 of fiscal 2016.
Recent Business Highlights:
- Expanded its LED downlight portfolio with the introduction of the KR8TM downlight, Cree’s first eight-inch downlight, and the newest generation LR6TM downlight, which provides even better light at a lower price;
- Released its new XLamp® XQ-E High Intensity LEDs, the industry’s first family of high power color LEDs optimized for optical performance;
- Introduced the new Cree® LED bulb, which unlike compromised bulbs, delivers an even better light with better performance, a longer life and more energy savings;
- Announced that the U.S. Air Force has awarded a follow-on contract to Cree that will enable the qualification of a high-performance power electronic module for the F-35 Joint Strike Fighter; and
- Announced that Wolfspeed is the new name for the Power and RF division of Cree. The new name combines important elements of Cree’s culture and expertise, and allows the Power and RF division to build brand equity while operating as a separate business.
For its second quarter of fiscal 2016 ending December 27, 2015, Cree targets revenue in a range of $425 million to $445 million, with GAAP gross margin targeted to be 31.0%+/- and non-GAAP gross margin targeted to be 31.7%+/-. Our GAAP gross margin targets include stock-based compensation expense of approximately $3.1 million, while our non-GAAP targets do not. GAAP operating expenses are targeted to be approximately $129 million, and non-GAAP operating expenses are targeted to be approximately $106 million. The tax rate is targeted at 25.0%+/- for the second quarter of fiscal 2016. GAAP net income is targeted at $1 million to $7 million, or $0.01 to $0.06 per diluted share. Non-GAAP net income is targeted in a range of $21 million to $27 million, or $0.21 to $0.26 per diluted share. The GAAP and non-GAAP per diluted share targets are based on an estimated 103 million diluted weighted average shares. Targeted non-GAAP earnings exclude $0.20 per diluted share of expenses related to stock-based compensation expense, the amortization or impairment of acquisition-related intangibles, net changes associated with our Lextar investment, and charges associated with the LED business restructuring.
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