News

Cree Reports Q2 Revenue Flat Income Down 66%

January 21, 2015 by Jeff Shepard

Cree, Inc. announced revenue of $413.2 million for its second quarter of fiscal 2015, ended December 28, 2014, which is similar to revenue of $415.1 million reported for the second quarter of fiscal 2014. GAAP net income for the second quarter was $12.2 million, or $0.10 per diluted share, a decrease of 66% year-over-year compared to GAAP net income of $35.7 million, or $0.29 per diluted share, for the second quarter of fiscal 2014.

On a non-GAAP basis, net income for the second quarter of fiscal 2015 was $37.9 million, or $0.33 per diluted share, a decrease of 33% year-over-year compared to non-GAAP net income for the second quarter of fiscal 2014 of $56.8 million, or $0.46 per diluted share. The second quarter of fiscal 2015 GAAP and non-GAAP earnings benefited from the retroactive reinstatement of the U.S. R&D tax credit at the end of December. Excluding the R&D tax credit benefit, GAAP and non-GAAP earnings per diluted share for the second quarter of fiscal 2015 would have been $0.08 and $0.25, respectively.

“We made solid progress in Q2 with operating margin higher than targeted due to an improvement in gross margins in our lighting business,” stated Chuck Swoboda, Cree Chairman and CEO. “The market for LED lighting is still in the early stages, our new product pipeline is strong, sales momentum is building and our brand is growing in the market. As evidenced by our significant share repurchases in Q2, we believe we are on the right track to continue to grow the company and increase profits over the next several years.”

Highlights included: Gross margin increased 130 basis points from Q1 of fiscal 2015 to 33.1% on a GAAP basis, and increased 150 basis points to 33.9% on a non-GAAP basis. Cash and investments decreased by $274.9 million from Q1 of fiscal 2015 to $829.9 million. Accounts receivable, net decreased by $18.0 million from Q1 of fiscal 2015 to $219.0 million, with days sales outstanding of 48. And inventory increased by $21.8 million from Q1 of fiscal 2015 to $332.5 million and represents 108 days of inventory.

For its third quarter of fiscal 2015 ending March 29, 2015, Cree targets revenue in a range of $395 million to $415 million with GAAP gross margin targeted to be 32.6%+/- and non-GAAP gross margin targeted to be 33.5%+/-. Operating expenses are targeted to be similar to fiscal Q2. The tax rate is targeted at 17.0%+/- for the third quarter of fiscal 2015. GAAP net income is targeted at $3 million to $8 million, or $0.03 to $0.07 per diluted share. Non-GAAP net income is targeted in a range of $23 million to $28 million, or $0.21 to $0.25 per diluted share.