Cree reports 11 percent increase in revenue
Cree has announced revenue of $425.5 million for its first quarter of fiscal 2016, ended September 27, 2015. This represents an 11 percent increase compared to Q4 but a 1 percent decrease compared to revenue of $427.7 million Q1 fiscal 2015.
GAAP net loss for the first quarter was $23.6 million, compared to GAAP net income of $11.1 million for Q1 2015. On a non-GAAP basis, net income for the first quarter of fiscal 2016 was $22.1 million, compared to non-GAAP net income for the Q1 2015 of $29.6 million. During Q1 fiscal 2016, Cree recognised $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 percent in Q4 of fiscal 2015 to 31.0 percent on a GAAP basis, and increased from 21.0 percent to 31.7 percent on a non-GAAP basis. Share repurchases were $70 million and $13 million of net cash was used for the acquisition of Arkansas Power Electronics International during Q1 of fiscal 2016.
Accounts receivable, net increased by $7.6 million from Q4 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 include news that the US 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 the announcement that Wolfspeed is the new name for the Power and RF division of Cree. T
Business Outlook
For Q2 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 around 31.0 percent and non-GAAP gross margin targeted to be 31.7 percent.
GAAP gross margin targets include stock-based compensation expense of approximately $3.1 million, while 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.
GAAP net income is targeted at $1 million to $7 million. Non-GAAP net income is targeted in a range of $21 million to $27 million.
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