DURHAM, N.C.--(BUSINESS WIRE)-- Cree, Inc. (Nasdaq: CREE), a market
leader in LED lighting, today announced consolidated revenue of $347 million
from continuing operations, and $54 million from discontinued operations, for a
combined revenue of $401 million for its second quarter of fiscal 2017.
This represents an 8% decrease compared to combined revenue of $436
million ($394 million from continuing operations and $42 million from
discontinued operations) for the second quarter of fiscal 2016 and an 8%
increase compared to the first quarter of fiscal 2017. Combined GAAP net income
for the second quarter of fiscal 2017 was $6 million, or $0.06 per diluted
share, compared to combined GAAP net income of $13 million, or $0.13 per
diluted share, for the second quarter of fiscal 2016. On a non-GAAP basis,
combined net income for the second quarter of fiscal 2017 was $30 million, or
$0.30 per diluted share, compared to combined non-GAAP net income for the
second quarter of fiscal 2016 of $28 million, or $0.28 per diluted share.
Revenue from continuing operations was $347 million in the second
quarter of 2017 compared to revenue from continuing operations of $394 million
in the second quarter of fiscal 2016. Loss from continuing operations for the
second quarter of fiscal 2017 was $1 million, or $0.01 per diluted share,
compared to income from continuing operations of $9 million or $0.09 per
diluted share for the second quarter of 2016. On a non-GAAP basis, income from
continuing operations for the second quarter of fiscal 2017 was $20 million, or
$0.20 per diluted share, compared to non-GAAP income from continuing operations
of $22 million or $0.21 per diluted share, for the second quarter of 2016.
Revenue from discontinued operations was $54 million in the second
quarter of 2017 compared to revenue from discontinued operations of $42 million
in the second quarter of 2016. Income from discontinued operations, net of tax
for the second quarter of fiscal 2017 was $7 million, or $0.07 per diluted
share, compared to income from discontinued operations, net of tax of $4
million, or $0.04 per diluted share, for the second quarter of 2016. On a
non-GAAP basis, income from discontinued operations, net of tax for the second
quarter of fiscal 2017 was $10 million, or $0.10 per diluted share, compared to
non-GAAP income from discontinued operations, net of tax of $7 million, or
$0.07 per diluted share, for the second quarter of 2016.
"We delivered very good results in fiscal Q2, as revenue and
non-GAAP earnings were significantly above our targeted range due to the
settlement of our patent infringement and false advertising lawsuit with Feit
Electric," stated Chuck Swoboda, Cree Chairman and CEO. "The
fundamentals in our business have improved over the last several quarters, and
we remain focused on building a larger and more valuable LED lighting company
by bringing better light to our customers."
Business Outlook:
For its third quarter of fiscal 2017 ending March 26, 2017, Cree targets
combined revenue, which includes both continuing and discontinued operations,
in a range of $340 million to $370 million. Combined GAAP net income is
targeted at a $1 million loss to $3 million income, or a $0.01 loss to $0.03
income per diluted share. Combined non-GAAP net income is targeted in a range
of $10 million to $18 million, or $0.10 to $0.18 per diluted share. Targeted
combined non-GAAP income excludes $23 million of pre-tax expenses related to
stock-based compensation expense, the amortization or impairment of
acquisition-related intangibles and transaction costs associated with the sale
of the Wolfspeed business. The GAAP and non-GAAP targets do not include any
estimated change in the fair value of Cree's Lextar investment.
For continuing operations, revenue is targeted in a range of $285
million to $315 million. GAAP loss from continuing operations is targeted at $3
million to $6 million, or $0.03 to $0.06 per diluted share. Non-GAAP income
from continuing operations is targeted in a range of $1 million to $9 million,
or $0.01 to $0.09 per diluted share. Targeted non-GAAP income from continuing
operations excludes $17 million of pre-tax expenses related to stock-based
compensation expense and the amortization or impairment of acquisition-related
intangibles. The GAAP and non-GAAP targets do not include any estimated change
in the fair value of Cree's Lextar investment.
For discontinued operations, revenue is targeted at $55 million +/-.
GAAP income from discontinued operations, net of tax is targeted at $5 million
+/-, or $0.05 per diluted share +/-. Non-GAAP income from discontinued
operations, net of tax is targeted at $9 million +/-, or $0.09 per diluted
share +/-. Targeted non-GAAP income from discontinued operations, net of tax
excludes $4 million of expenses related to stock-based compensation expense,
the amortization or impairment of acquisition-related intangibles and
transaction costs associated with the sale of the Wolfspeed business.
About Cree, Inc.
Cree is a market-leading innovator of lighting-class LEDs, lighting
products and semiconductor products for power and radio frequency (RF)
applications. Cree believes in better light experiences and is delivering new
innovative LED technology that transforms the way people experience light
through high-quality interior and exterior LED lighting solutions.
Cree's product families include LED lighting systems 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
Sale of Wolfspeed to Infineon Update
As previously announced, Cree reached an agreement to sell the Wolfspeed
business to Infineon Technologies AG. The parties are continuing to work
together to obtain the customarily required regulatory approvals in various
jurisdictions, including foreign and domestic antitrust approvals, as well as
CFIUS approval. The Company targets closing the transaction within its third
quarter of fiscal 2017.
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.
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 commercial
Lighting results will continue to suffer if new issues arise regarding the new
ERP system we implemented in the third quarter of fiscal 2016 for this
business; 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; 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
customers do not maintain their favorable perception of our brand and products,
resulting in lower demand for our products; the risk that our products fail to
perform or fail to meet customer requirements or expectations, resulting in
significant additional costs, including costs associated with warranty returns
or the potential recall of our products; the risk that retail customers may
alter promotional pricing, increase promotion of a competitor's products over
our products or reduce their inventory levels, all of which could negatively
affect product demand; the risk that the sale of our Wolfspeed business to
Infineon may be delayed or may not occur; the ability to obtain regulatory
approval or the possibility that such regulatory approval may result in the
imposition of conditions that could cause the parties to abandon the Wolfspeed
transaction; the risk that one or more of the conditions to closing of the
Wolfspeed transaction may not be satisfied; the possibility that anticipated
benefits of the proposed Wolfspeed transaction will not be realized, including
the amount of cash to be realized by Cree from the transaction or our resulting
ability to pursue select strategic transactions and stock repurchases;
potential business uncertainty, including changes to existing business
relationships during the pendency before closing that could affect our
financial performance; the risk that our investments may experience periods of
significant stock price volatility causing us to recognize fair value losses on
our investment; the risk that we have an increasingly complex supply chain and
its ability to scale to enable maintaining a sufficient supply of raw
materials, subsystems and finished products with the required specifications
and quality; 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, divestitures or investments
generally; 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 26, 2016, 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® is a registered trademark and Wolfspeed™ is a trademark of Cree,
Inc.
