Cree, Inc. (Nasdaq: CREE) today announced revenue from
continuing operations of $137.3 million for its third quarter of
fiscal 2021, ended March 28, 2021. This represents a 21% increase
compared to revenue from continuing operations of $113.9 million
reported for the third quarter of fiscal 2020, and an 8% increase
compared to the second quarter of fiscal 2021. GAAP net loss from
continuing operations for the third quarter of fiscal 2021 was
$66.5 million, or $0.59 per diluted share, compared to GAAP net
loss from continuing operations of $56.2 million, or $0.52 per
diluted share, for the third quarter of fiscal 2020. On a non-GAAP
basis, net loss from continuing operations for the third quarter of
fiscal 2021 was $24.7 million, or $0.22 per diluted share, compared
to non-GAAP net loss from continuing operations for the third
quarter of fiscal 2020 of $18.4 million, or $0.17 per diluted
share.
On March 1, 2021, Cree completed the previously announced sale
of certain assets and subsidiaries comprising its former LED
Products segment to SMART Global Holdings, Inc. (SGH) and its
wholly owned acquisition subsidiary CreeLED, Inc. (CreeLED and
collectively with SGH, SMART) for up to $300 million, including
fixed upfront and deferred payments and contingent
consideration.
“We are building solid momentum and during our fiscal third
quarter we continued to execute and drive our strategy, delivering
strong top line performance as customers continue to realize the
benefits of silicon carbide,” said Cree CEO, Gregg Lowe. “With the
sale of our LED business now complete, we accomplished a critical
milestone in our journey to becoming a pure-play semiconductor
powerhouse and have an even greater focus on converting
opportunities in our pipeline and expanding our manufacturing
capacity."
Business Outlook:
For its fourth quarter of fiscal 2021, Cree targets revenue in a
range of $142 million to $148 million. GAAP net loss is targeted at
$68 million to $73 million, or $0.59 to $0.63 per diluted share.
Non-GAAP net loss is targeted to be in a range of $25 million to
$30 million, or $0.22 to $0.26 per diluted share. Targeted non-GAAP
net loss excludes $43 million of estimated expenses, net of tax,
related to stock-based compensation expense, amortization or
impairment of acquisition-related intangibles, factory optimization
restructuring and start-up costs, net accretion on convertible
notes and project, transformation, transaction and transition
costs. The GAAP and non-GAAP targets do not include any estimated
change in the fair value of Cree’s ENNOSTAR (formerly Lextar)
investment, which was liquidated earlier this month.
Quarterly Conference Call:
Cree will host a conference call at 5:00 p.m. Eastern time today
to review the highlights of the third quarter results and the
fiscal fourth quarter 2021 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 an innovator of Wolfspeed® power and radio frequency
(RF) semiconductors. Cree’s Wolfspeed product families include
silicon carbide materials, power-switching devices and RF devices
targeted for applications such as electric vehicles, fast charging
inverters, power supplies, telecom and military and aerospace.
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 that 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.
Presentation:
The Company revised income tax expense for the three months
ended March 29, 2020 to correct the income tax provision
calculation for the third quarter of fiscal 2020. The Company
decreased income tax expense for the three months ended March 29,
2020, resulting in a net decrease to net loss of $1.5 million for
the three months ended March 29, 2020. No revision was made to
income tax expense for the nine months ended March 29, 2020. The
Company concluded this error was not material individually or in
the aggregate.
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 Cree’s actual results to differ materially from those
indicated in the forward-looking statements. Forward-looking
statements by their nature address matters that are, to different
degrees, uncertain, such as statements about our plans to grow the
Wolfspeed business and our ability to achieve our targets for the
fourth quarter of fiscal 2021. Actual results could differ
materially due to a number of factors, including but not limited
to, issues, delays or complications in completing required
transition activities to allow the LED Products business to operate
under the SMART portfolio of businesses after the closing,
including incurring unanticipated costs to complete such
activities; risks relating to the COVID-19 pandemic, the risk of
new and different government restrictions that limit our ability to
do business, the risk of infection in our workforce and subsequent
impact on our ability to conduct business, the risk that our supply
chain or customer demand may continue to be negatively impacted,
the risk that the COVID-19 pandemic will lead to a global recession
and the potential for costs associated with our operations during
the fiscal 2021 fourth quarter and future quarters to be greater
than we anticipate as a result of all of these factors; the risk
that we may not obtain sufficient orders to achieve our targeted
revenues; price competition in key markets; 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, lower yields 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,
including bringing on additional capacity on a timely basis to meet
customer demand; the risk that longer manufacturing lead times may
cause customers to fulfill their orders with a competitor's
products instead; 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; risks associated with our factory optimization plan and
construction of a new fabrication facility, including design and
construction delays and cost overruns, issues in installing and
qualifying new equipment and ramping production, poor production
process yields and quality control, and potential increases to our
restructuring costs; 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 the economic and political
uncertainty caused by the tariffs imposed by the United States on
Chinese goods, and corresponding Chinese tariffs and currency
devaluation in response, may negatively impact demand for our
products; risks related to international sales and purchases,
including the risk that U.S. government actions with respect to
Huawei Technologies Co. and its affiliates or other foreign
customers or vendors may have a greater impact on our business and
results of operations than our expectations; 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;
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 risk that our
investments may experience periods of significant stock price
volatility causing us to recognize fair value losses on our
investment; the risk posed by managing an increasingly complex
supply chain that has the ability to supply a sufficient quantity
of raw materials, subsystems and finished products with the
required specifications and quality; the risk we may be required to
record a significant charge to earnings if our remaining goodwill
or amortizable assets become impaired; risks relating to
confidential information theft or misuse, including through
cyber-attacks or cyber intrusion; our ability to complete
development and commercialization of products under development;
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; 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; risks associated with strategic
transactions, including the possibility that we may not realize the
full purchase price contemplated in connection with the sale of our
former LED Products or Lighting Products business units; 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 28, 2020, 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® and Wolfspeed® are registered trademarks of Cree, Inc.
CREE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
Three months ended
Nine months ended
(in millions of U.S. Dollars, except per
share data)
March 28, 2021
March 29, 2020
March 28, 2021
March 29, 2020
Revenue, net
$137.3
$113.9
$379.8
$362.3
Cost of revenue, net
93.3
72.6
259.0
232.9
Gross profit
44.0
41.3
120.8
129.4
Gross margin percentage
32
%
36
%
32
%
36
%
Operating expenses:
Research and development
46.0
38.6
132.7
112.5
Sales, general and administrative
44.2
41.7
135.0
135.7
Amortization or impairment of
acquisition-related intangibles
3.7
3.7
10.9
10.9
Loss on disposal or impairment of other
assets
0.1
0.1
0.8
1.7
Other operating expense
11.4
5.2
22.6
22.2
Operating loss
(61.4)
(48.0)
(181.2)
(153.6)
Operating loss percentage
(45)
%
(42)
%
(48)
%
(42)
%
Non-operating expense, net
8.1
14.7
18.9
8.1
Loss before income taxes
(69.5)
(62.7)
(200.1)
(161.7)
Income tax benefit
(3.0)
(6.5)
(4.0)
(8.3)
Net loss from continuing
operations
(66.5)
(56.2)
(196.1)
(153.4)
Net (loss) income from discontinued
operations
(41.6)
(3.7)
(178.8)
1.7
Net loss
(108.1)
(59.9)
(374.9)
(151.7)
Net income from discontinued operations
attributable to noncontrolling interest
0.8
0.2
1.4
0.5
Net loss attributable to controlling
interest
($108.9)
($60.1)
($376.3)
($152.2)
Basic and diluted loss per
share
Continuing operations
($0.59)
($0.52)
($1.75)
($1.42)
Net loss attributable to controlling
interest
($0.96)
($0.56)
($3.35)
($1.41)
Weighted average shares - basic and
diluted (in thousands)
112,891
108,115
112,330
107,718
CREE, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in millions of U.S. Dollars)
March 28, 2021
June 28, 2020
Assets
Current assets:
Cash, cash equivalents, and short-term
investments
$1,293.3
$1,239.7
Accounts receivable, net
84.1
72.4
Inventories
147.5
121.9
Income taxes receivable
9.1
6.6
Prepaid expenses
23.8
26.2
Other current assets
38.5
8.7
Current assets held for sale
2.0
1.3
Current assets of discontinued
operations
—
116.0
Total current assets
1,598.3
1,592.8
Property and equipment, net
1,165.1
770.8
Goodwill
359.2
349.7
Intangible assets, net
144.6
156.9
Long-term receivables
137.8
—
Other long-term investments
67.2
55.9
Deferred tax assets
1.2
1.2
Other assets
33.0
33.6
Long-term assets of discontinued
operations
1.3
270.1
Total assets
$3,507.7
$3,231.0
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable and accrued expenses
$319.5
$189.8
Accrued contract liabilities
24.5
14.2
Income taxes payable
—
1.2
Finance lease liabilities
0.4
3.6
Other current liabilities
37.8
22.2
Current liabilities of discontinued
operations
0.6
60.2
Total current liabilities
382.8
291.2
Long-term liabilities:
Convertible notes, net
813.7
783.8
Deferred tax liabilities
2.3
1.8
Finance lease liabilities - long-term
10.1
11.4
Other long-term liabilities
51.1
43.8
Long-term liabilities of discontinued
operations
0.7
9.8
Total long-term liabilities
877.9
850.6
Shareholders’ equity:
Common stock
0.1
0.1
Additional paid-in-capital
3,658.9
3,106.2
Accumulated other comprehensive income
3.5
16.0
Accumulated deficit
(1,415.5)
(1,039.2)
Total shareholders’ equity
2,247.0
2,083.1
Noncontrolling interest from discontinued
operations
—
6.1
Total equity
2,247.0
2,089.2
Total liabilities and shareholders’
equity
$3,507.7
$3,231.0
CREE, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited)
Nine months ended
(in millions of U.S. Dollars)
March 28, 2021
March 29, 2020
Operating activities:
Net loss
($374.9)
($151.7)
Net (loss) income from discontinued
operations
(178.8)
1.7
Net loss from continuing operations
(196.1)
(153.4)
Adjustments to reconcile net loss from
continuing operations to net cash used in operating activities:
Depreciation and amortization
88.6
73.7
Amortization of debt issuance costs and
discount, net of capitalized interest
26.1
17.2
Stock-based compensation
40.3
36.9
Loss on disposal or impairment of
long-lived assets
3.7
1.7
Amortization of premium/discount on
investments
4.9
0.5
Realized gain on sale of investments
(0.3)
(1.0)
(Gain) loss on equity investment
(7.9)
9.2
Foreign exchange gain on equity
investment
(3.4)
(1.2)
Deferred income taxes
0.5
(0.8)
Changes in operating assets and
liabilities:
Accounts receivable, net
(11.7)
(31.7)
Inventories
(25.4)
2.2
Prepaid expenses and other assets
(28.2)
0.9
Accounts payable, trade
27.2
(6.3)
Accrued salaries and wages and other
liabilities
12.5
(18.7)
Accrued contract liabilities
10.3
5.9
Net cash used in operating activities of
continuing operations
(58.9)
(64.9)
Net cash (used in) provided by operating
activities of discontinued operations
(16.6)
25.4
Cash used in operating
activities
(75.5)
(39.5)
Investing activities:
Purchases of property and equipment
(394.0)
(166.9)
Purchases of patent and licensing
rights
(3.6)
(2.8)
Proceeds from sale of property and
equipment
0.2
1.8
Purchases of short-term investments
(342.1)
(421.2)
Proceeds from maturities of short-term
investments
335.6
342.5
Proceeds from sale of short-term
investments
28.1
96.4
Proceeds from sale of business, net
36.6
—
Net cash used in investing activities of
continuing operations
(339.2)
(150.2)
Net cash used in investing activities of
discontinued operations
(0.3)
(2.0)
Cash used in investing
activities
(339.5)
(152.2)
Financing activities:
Proceeds from long-term debt
borrowings
30.0
—
Payments on long-term debt borrowings,
including finance lease obligations
(30.3)
(0.4)
Proceeds from issuance of common stock
530.1
31.0
Tax withholding on vested equity
awards
(31.7)
(16.2)
Commitment fee on long-term incentive
agreement
(0.5)
—
Cash provided by financing
activities
497.6
14.4
Effects of foreign exchange changes on
cash and cash equivalents
0.2
(0.2)
Net change in cash and cash
equivalents
82.8
(177.5)
Cash and cash equivalents:
Cash and cash equivalents, beginning of
period
448.8
500.5
Cash and cash equivalents, end of
period
$531.6
$323.0
Cree, Inc. Non-GAAP Measures of Financial
Performance
To supplement the Company's consolidated financial statements
presented in accordance with generally accepted accounting
principles, or GAAP, Cree uses non-GAAP measures of certain
components of financial performance. These non-GAAP measures
include non-GAAP gross margin, non-GAAP operating (loss) income,
non-GAAP non-operating income (expense), net, non-GAAP net (loss)
income, non-GAAP diluted (loss) earnings per share from continuing
operations and free cash flow.
Reconciliation to the nearest GAAP measure of all historical
non-GAAP measures included in this press release can be found in
the tables included with this press release. Both our GAAP targets
and non-GAAP targets do not include any estimated changes in the
fair value of our ENNOSTAR (formerly Lextar) investment, which was
liquidated earlier this month.
Non-GAAP measures presented in this press release are not in
accordance with or an alternative to measures prepared in
accordance with GAAP and may be different from non-GAAP measures
used by other companies. In addition, these non-GAAP measures are
not based on any comprehensive set of accounting rules or
principles. Non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with Cree's results of
operations as determined in accordance with GAAP. These non-GAAP
measures should only be used to evaluate Cree's results of
operations in conjunction with the corresponding GAAP measures.
Cree believes that these non-GAAP measures, when shown in
conjunction with the corresponding GAAP measures, enhance
investors' and management's overall understanding of the Company's
current financial performance and the Company's prospects for the
future, including cash flows available to pursue opportunities to
enhance shareholder value. In addition, because Cree has
historically reported certain non-GAAP results to investors, the
Company believes the inclusion of non-GAAP measures provides
consistency in the Company's financial reporting.
For its internal budgeting process, and as discussed further
below, Cree's management uses financial statements that do not
include the items listed below and the income tax effects
associated with the foregoing. Cree's management also uses non-GAAP
measures, in addition to the corresponding GAAP measures, in
reviewing the Company's financial results.
Cree excludes the following items from one or more of its
non-GAAP measures when applicable:
Stock-based compensation expense. This expense consists of
expenses for stock options, restricted stock, performance stock
awards and employee stock purchases through its Employee Stock
Purchase Program. Cree excludes stock-based compensation expenses
from its non-GAAP measures because they are non-cash expenses that
Cree does not believe are reflective of ongoing operating
results.
Amortization or impairment of acquisition-related intangibles.
Cree incurs amortization or impairment of acquisition-related
intangibles in connection with acquisitions. Cree excludes these
items because they arise from Cree's prior acquisitions and have no
direct correlation to the ongoing operating results of Cree's
business.
Factory optimization restructuring. In May 2019, the Company
started a significant, multi-year factory optimization plan to be
anchored by a state-of-the-art, automated 200mm silicon carbide
fabrication facility. In September 2019, the Company announced the
intent to build the new fabrication facility in Marcy, New York to
complement the factory expansion underway at its U.S. campus
headquarters in Durham, North Carolina. As part of the plan, the
Company will incur restructuring costs associated with the movement
of equipment as well as disposals on certain long-lived assets.
Because these charges relate to assets which had been retired prior
to the end of their estimated useful lives, Cree does not believe
these costs are reflective of ongoing operating results. Similarly,
Cree does not consider the realized net losses on sale of assets
relating to the restructuring to be reflective of ongoing operating
results.
Severance and other restructuring. These costs relate to the
Company's realignment of certain resources as part of the Company's
transition to a more focused semiconductor company. Cree does not
believe these costs are reflective of ongoing operating
results.
Project, transformation and transaction costs. The Company has
incurred professional services fees and other costs associated with
completed and potential acquisitions and divestitures, as well as
internal transformation programs focused on optimizing the
Company's administrative processes. Cree excludes these items
because Cree believes they are not reflective of the ongoing
operating results of Cree's business.
Factory optimization start-up costs. The Company has incurred
and will incur start-up costs as part of the factory optimization
plan. Cree does not believe these costs are reflective of ongoing
operating results.
Non-restructuring related executive severance. The Company has
incurred costs in conjunction with the termination of key executive
personnel. Cree excludes these items because Cree believes they
have no direct correlation to the ongoing operating results of
Cree's business.
Transition service agreement costs. As a result of the sale of
the Lighting Products business unit, the Company is providing
certain information technology services under a transition services
agreement which will not be reimbursed. Cree excludes the costs of
these services because Cree believes they are not reflective of the
ongoing operating results of Cree's business.
Asset impairment. In fiscal 2020, the Company incurred
impairment charges in conjunction with the sale of the Lighting
Products business unit for assets excluded from the purchase
agreement. Cree excludes these items because Cree believes they are
not reflective of the ongoing operating results of Cree's
business.
Net changes in fair value of our ENNOSTAR (formerly Lextar)
investment. In January 2021, Lextar Electronics Corporation
(Lextar) completed its previously announced restructuring under a
holding company named ENNOSTAR Inc. (ENNOSTAR) with EPISTAR
Corporation via a share swap pursuant to which the Company received
0.275 shares of common stock of ENNOSTAR for each of share of
Lextar common stock. The Company's common stock ownership
investment in ENNOSTAR is accounted for utilizing the fair value
option. As such, changes in fair value are recognized in income,
including fluctuations due to the exchange rate between the New
Taiwan Dollar and the United States Dollar. Cree excludes the
impact of these gains or losses from its non-GAAP measures because
they are non-cash impacts that Cree does not believe are reflective
of ongoing operating results. Additionally, Cree excludes the
impact of dividends received on its ENNOSTAR investment as Cree
does not believe it is reflective of ongoing operating results.
From March 29, 2021 to April 16, 2021, the Company liquidated its
common stock ownership interest in ENNOSTAR.
Gain on arbitration proceedings. In the third quarter of fiscal
2020, the Company won an arbitration proceeding for which we were
awarded damages for a claim by us against a contract manufacturer.
The arbitration victory resulted in a cash settlement beyond the
legal fees incurred and was recognized as a gain in other income.
Cree excludes this item because Cree believes it is not reflective
of the ongoing operating results of Cree's business.
Accretion on convertible notes, net of capitalized interest. The
issuance of the Company's convertible senior notes in August 2018
and April 2020 results in interest accretion on the convertible
notes' issue costs and discount. Cree considers these items as
either limited in term or having no impact on the Company's cash
flows, and therefore has excluded such items to facilitate a review
of current operating performance and comparisons to the Company's
past operating performance.
Loss on Wafer Supply Agreement. In connection with the completed
sale of the LED Products business unit to SMART, the Company
entered into a Wafer Supply and Fabrication Services Agreement (the
Wafer Supply Agreement), pursuant to which the Company will supply
CreeLED with certain silicon carbide materials and fabrication
services for up to four years. Cree excludes the financial impact
of this agreement because Cree believes it is not reflective of the
ongoing operating results of Cree's business.
Income tax adjustment. This amount reconciles GAAP tax (benefit)
expense to a calculated non-GAAP tax (benefit) expense utilizing a
non-GAAP tax rate. The non-GAAP tax rate estimates an appropriate
tax rate if the listed non-GAAP items were excluded. This
reconciling item adjusts non-GAAP net (loss) income to the amount
it would be if the calculated non-GAAP tax rate was applied to
non-GAAP (loss) income before taxes.
Cree may incur some of these same expenses, including income
taxes associated with these expenses, in future periods. In
addition to the non-GAAP measures discussed above, Cree also uses
free cash flow as a measure of operating performance and liquidity.
Free cash flow represents operating cash flows from continuing
operations less net purchases of property and equipment and patent
and licensing rights. Cree considers free cash flow to be an
operating performance and a liquidity measure that provides useful
information to management and investors about the amount of cash
generated by the business after the purchases of property and
equipment, a portion of which can then be used to, among other
things, invest in Cree's business, make strategic acquisitions and
strengthen the balance sheet. A limitation of the utility of free
cash flow as a measure of operating performance and liquidity is
that it does not represent the residual cash flow available to the
company for discretionary expenditures, as it excludes certain
mandatory expenditures such as debt service.
CREE, INC.
Reconciliation of GAAP to
Non-GAAP Measures
(in millions of U.S. Dollars,
except per share amounts and percentages)
(unaudited)
Non-GAAP Gross Margin
Three months ended
Nine months ended
March 28, 2021
March 29, 2020
March 28, 2021
March 29, 2020
GAAP gross profit
$44.0
$41.3
$120.8
$129.4
GAAP gross margin percentage
32
%
36
%
32
%
36
%
Adjustments:
Stock-based compensation expense
4.1
2.7
11.2
7.1
Factory optimization restructuring
—
—
1.0
—
Non-GAAP gross profit
$48.1
$44.0
$133.0
$136.5
Non-GAAP gross margin percentage
35
%
39
%
35
%
38
%
Non-GAAP Operating Loss
Three months ended
Nine months ended
March 28, 2021
March 29, 2020
March 28, 2021
March 29, 2020
GAAP operating loss
($61.4)
($48.0)
($181.2)
($153.6)
GAAP operating loss percentage
(45)
%
(42)
%
(48)
%
(42)
%
Adjustments:
Stock-based compensation expense:
Cost of revenue, net
4.1
2.7
11.2
7.1
Research and development
2.1
1.9
6.7
6.0
Sales, general and administrative
6.7
5.2
22.4
23.8
Total stock-based compensation expense
12.9
9.8
40.3
36.9
Amortization or impairment of
acquisition-related intangibles
3.7
3.7
10.9
10.9
Factory optimization restructuring
3.8
1.1
7.7
3.5
Severance and other restructuring
0.6
—
3.4
0.8
Project, transformation and transaction
costs
3.7
1.4
6.7
10.8
Factory optimization start-up costs
1.8
2.1
6.0
5.0
Non-restructuring related executive
severance
2.8
0.6
2.8
2.1
Transition service agreement costs
0.1
2.5
5.0
10.7
Asset impairment
—
—
—
0.2
Non-GAAP operating loss
($32.0)
($26.8)
($98.4)
($72.7)
Non-GAAP operating loss percentage
(23)
%
(24)
%
(26)
%
(20)
%
Non-GAAP Non-Operating (Expense)
Income, net
Three months ended
Nine months ended
March 28, 2021
March 29, 2020
March 28, 2021
March 29, 2020
GAAP non-operating expense, net
($8.1)
($14.7)
($18.9)
($8.1)
Adjustments:
Net changes in the fair value of ENNOSTAR
(formerly Lextar) investment
(1.1)
19.2
(11.3)
8.0
Gain on arbitration proceedings
—
(8.0)
—
(8.0)
Accretion on convertible notes, net of
capitalized interest
8.0
5.8
26.1
17.2
Loss on Wafer Supply Agreement
0.1
—
0.1
—
Non-GAAP non-operating (expense) income,
net
($1.1)
$2.3
($4.0)
$9.1
Non-GAAP Net Loss
Three months ended
Nine months ended
March 28, 2021
March 29, 2020
March 28, 2021
March 29, 2020
GAAP net loss from continuing
operations
($66.5)
($56.2)
($196.1)
($153.4)
Adjustments:
Stock-based compensation expense
12.9
9.8
40.3
36.9
Amortization or impairment of
acquisition-related intangibles
3.7
3.7
10.9
10.9
Factory optimization restructuring
3.8
1.1
7.7
3.5
Severance and other restructuring
0.6
—
3.4
0.8
Project, transformation and transaction
costs
3.7
1.4
6.7
10.8
Factory optimization start-up costs
1.8
2.1
6.0
5.0
Non-restructuring related executive
severance
2.8
0.6
2.8
2.1
Transition service agreement costs
0.1
2.5
5.0
10.7
Asset impairment
—
—
—
0.2
Net changes in the fair value of ENNOSTAR
(formerly Lextar) investment
(1.1)
19.2
(11.3)
8.0
Gain on arbitration proceedings
—
(8.0)
—
(8.0)
Accretion on convertible notes, net of
capitalized interest
8.0
5.8
26.1
17.2
Loss on Wafer Supply Agreement
0.1
—
0.1
—
Total adjustments to GAAP net loss from
continuing operations before provision for income taxes
36.4
38.2
97.7
98.1
Income tax adjustment - benefit
(expense)
5.4
(0.4)
20.6
7.6
Non-GAAP net loss from continuing
operations
($24.7)
($18.4)
($77.8)
($47.7)
Non-GAAP diluted loss per share from
continuing operations
($0.22)
($0.17)
($0.69)
($0.44)
Non-GAAP weighted average shares (in
thousands)
112,891
108,115
112,330
107,718
Free Cash Flow
Three months ended
Nine months ended
March 28, 2021
March 29, 2020
March 28, 2021
March 29, 2020
Net cash used in operating activities from
continuing operations
($26.8)
($25.3)
($58.9)
($64.9)
Less: PP&E spending
(136.5)
(66.6)
(394.0)
(166.9)
Less: Patents spending
(1.7)
(1.4)
(3.6)
(2.8)
Total free cash flow
($165.0)
($93.3)
($456.5)
($234.6)
CREE, INC.
Business Outlook Unaudited
GAAP to Non-GAAP Reconciliation
Three Months Ended
(in millions of U.S. Dollars)
June 27, 2021
GAAP net loss outlook range
($73) to ($68)
Adjustments:
Stock-based compensation expense
13
Amortization or impairment of
acquisition-related intangibles
4
Factory optimization restructuring and
start-up costs
5
Accretion on convertible notes, net of
capitalized interest
8
Project, transformation, transaction and
transition costs
1
Total adjustments to GAAP net loss before
provision for income taxes
31
Income tax adjustment
12
Non-GAAP net loss outlook range
($30) to ($25)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428006005/en/
Tyler Gronbach Cree, Inc. Vice President, Investor Relations
Phone: 919-407-4820 investorrelations@cree.com
Cree (NASDAQ:CREE)
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