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Cree Increases Quarterly Revenue By 8 Percent

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Earnings above targeted range due to settlement of patent infringement lawsuit with Feit Electric

US LED firm Cree has 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 percent decrease compared to combined revenue of $436 million ($394 million from continuing operations and $42 million from discontinued operations) in Q2 2016 and an 8 percent increase compared to Q1 2017.

Combined GAAP net income for Q2 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 Q2 2016. On a non-GAAP basis, combined net income for Q2 2017 was $30 million, or $0.30 per diluted share, compared to combined non-GAAP net income for Q2 2016 of $28 million, or $0.28 per diluted share.

"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."

Revenue from continuing operations was $347 million in Q2 2017 compared to revenue from continuing operations of $394 million in Q2 2016. Loss from continuing operations for Q2 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 Q2 2016.

On a non-GAAP basis, income from continuing operations for Q2 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 Q2 2016.

Revenue from discontinued operations was $54 million in Q2 2017 compared to revenue from discontinued operations of $42 million in Q2 2016. Income from discontinued operations, net of tax for Q2 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 Q2 2016.

On a non-GAAP basis, income from discontinued operations, net of tax for Q2 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 Q2 2016.

Business Outlook

For its Q3 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. 

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.



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