Semiconductor company Cirrus Logic, Inc. (CRUS) reported Wednesday a profit for the third quarter that nearly halved from last year, despite double-digit sales growth, reflecting a significant drop in operating margins and higher charges.
However, both adjusted earnings per share and quarterly revenues topped analysts' expectations. The company also provided revenue guidance for the fourth quarter, well above Street view.
Cirrus Logic develops high-precision, analog and mixed-signal integrated circuits for a range of audio and energy markets.
"Q3 was an excellent quarter for Cirrus Logic, as strength in portable audio fueled revenue growth and operating profit expansion," President and CEO Jason Rhode said in a statement.
The Austin, Texas-based company reported net income of $22.73 million or $0.35 per share for the third quarter, lower than $41.50 million or $0.63 per share in the prior-year quarter.
Excluding special items, adjusted net income for the quarter was $63.31 million or $0.97 per share, compared to $58.10 million or $0.89 per share in the year-ago quarter.
On average, five analysts polled by Thomson Reuters expected the company to report earnings of $0.75 per share for the quarter. Analysts' estimate typically exclude special items.
Net revenues for the quarter grew to $298.61 million, from $218.88 million in the same quarter last year, and topped five Wall Street analysts' consensus estimate of $274.24 million.
Operating margin for the quarter contracted a significant 900 basis points to 15 percent, as gross margin contracted 360 basis points and higher expenses.
Looking ahead to the fourth quarter, the company expects revenues in a range of $220 million to $240 million, with Street currently looking for revenues of $198.82 million. Gross margin is projected between 45 and 47 percent.
"We are very excited about the outlook for Cirrus Logic. We expect to deliver year-over-year revenue growth in Q4 and FY16 driven by a continued strong market for our innovative audio and voice products, a compelling lineup of new product introductions, and significantly improved contributions from the Wolfson acquisition," Rhode added.
CRUS closed Wednesday's regular trading session at $27.55, up $1.52 or 5.84% on a volume of 7.28 million shares. However, the stock lost $0.75 or 2.72% in after hours trading.
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