CREE’s Q4 Earnings and Revenues Surpass Estimates, Rise Y/Y

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Cree (CREE Quick QuoteCREE ) reported fourth-quarter fiscal 2021 non-GAAP loss of 23 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 25 cents. The company had reported a loss of 27 cents per share in the year-ago quarter.

Revenues of $145.8 million surpassed the consensus mark by 0.27% and grew 34.5% year over year.

Quarter Details

Cree witnessed strong demand for its power product line in the reported quarter. Power device revenues jumped 46% year over year.

Revenues suffered from supply constraints due to COVID-19-induced temporary closure of a contract manufacturing facility Cree uses in Malaysia.
 

Cree, Inc. Price, Consensus and EPS Surprise Cree, Inc. Price, Consensus and EPS Surprise

Cree, Inc. price-consensus-eps-surprise-chart | Cree, Inc. Quote

 

RF revenues increased due to heightened 5G activity as communications infrastructure providers continue to support the rollout by carriers.

Production shutdown in Malaysia weighed on non-GAAP gross margin, which came at 32.2%, expanding 230 basis points (bps) on a year-over-year basis, but was in the low-end of management’s 32-34% guidance range.

Non-GAAP operating loss during the quarter was $35.4 million compared with operating loss of $39.9 million in the year-ago quarter.

Balance Sheet & Cash Flow

Cree had cash, cash equivalents & short-term investments of $1.15 billion as of Jun 27, 2021 compared with $1.29 billion as of Mar 28, 2021.

During the fiscal fourth quarter, cash utilized by operating activities was $112.5 million compared with $26.8 million used in the previous quarter.

Free cash outflow was $221.7 million, compared with free cash outflow of $165 million in the previous quarter.

Guidance

For first-quarter fiscal 2022, Cree expects revenues in the range of $144 million to $154 million.

Non-GAAP gross ! margin is expected between 31.5% and 33.5%. Non-GAAP operating expenses are expected to be $85 million.

Non-GAAP operating loss is expected between $34 million and $40 million. Non-GAAP loss is projected to be 21-25 cents per share.

For fiscal 2022, Cree anticipates start-up costs to be approximately $80 million, of which $60 million will be cash-related costs. The company anticipates that more than 50% of these costs will be incurred in the second half of fiscal year 2022.

Zacks Rank & Stocks to Consider

Cree currently has a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Apple (AAPL Quick QuoteAAPL ) , Avnet (AVT Quick QuoteAVT ) and Carrier Global (CARR Quick QuoteCARR ) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Apple, Avnet and Carrier Global is 12.7%, 25.4% and 14.5%, respectively.

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