Cree Inc (CREE) 10-Q Quarterly Report January 2021

DURHAM, N.C. January 27, 2021 -- Cree, Inc. (Nasdaq: CREE) today announced revenue from continuing operations of $127.0 million for its second quarter of fiscal 2021, ended December 27, 2020. This represents a 5% increase compared to revenue from continuing operations of $120.7 million reported for the second quarter of fiscal 2020, and a 10% increase compared to the first quarter of fiscal 2021. GAAP net loss from continuing operations for the second quarter of fiscal 2021 was $54.3 million, or $0.49 per diluted share, compared to GAAP net loss from continuing operations of $57.9 million, or $0.54 per diluted share, for the second quarter of fiscal 2020. On a non-GAAP basis, net loss from continuing operations for the second quarter of fiscal 2021 was $26.6 million, or $0.24 per diluted share, compared to non-GAAP net loss from continuing operations for the second quarter of fiscal 2020 of $21.8 million, or $0.20 per diluted share.

As previously announced, on October 18, 2020, Cree executed a definitive agreement to sell the LED Products business unit to SMART Global Holdings, Inc. (SMART) for up to $300 million, including fixed upfront and deferred payments and contingent consideration. The transaction is subject to satisfaction of customary closing conditions, and is targeted to close in the first calendar quarter of 2021.

“We delivered strong results for the second quarter, including sequential growth in revenue from continuing operations, underscoring the momentum we continue to see for our silicon carbide solutions,” said Cree CEO, Gregg Lowe. “While we continue to confront some of the challenges associated with the broader macroenvironment, we continue to invest for the future to support several growth opportunities across multiple sectors."

Business Outlook:

For its third quarter of fiscal 2021, Cree targets revenue from continuing operations in a range of $127 million to $133 million. GAAP net loss from continuing operations is targeted at $66 million to $71 million, or $0.59 to $0.64 per diluted share. Non-GAAP net loss from continuing operations is targeted to be in a range of $23 million to $28 million, or $0.21 to $0.25 per diluted share. Targeted non-GAAP net loss from continuing operations 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 from continuing operations do not include any estimated change in the fair value of Cree’s ENNOSTAR (formerly Lextar) investment.

Quarterly Conference Call:

Cree will host a conference call at 5:00 p.m. Eastern time today to review the highlights of the second quarter results and the fiscal third quarter 2021 business outlook, including significant factors and assumptions underlying the targets noted above.

The following information was filed by Cree Inc (CREE) on Wednesday, January 27, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Cree Inc's 10-Q Quarterly Report:

Financial - Earnings Highlight
36 Table of Contents Gross Profit and Gross Margin Gross profit and gross margin were as follows: Gross Profit and Gross Margin The increase in gross profit and gross margin for the three months ended December 27, 2020 compared to the three months ended December 29, 2019 are primarily due to increased revenues in the current period and the impact of higher inventory reserves related to product originally manufactured for Huawei Technologies Co., Ltd. and its affiliates (collectively, "Huawei") in the prior period that the Company was prevented from selling to Huawei, partially offset by unfavorable product mix shift.

M & A - Other Highlight
However, new technologies or standards could emerge or improvements could be made in existing technologies that could reduce or limit the demand for our products in certain markets.
Financial - Expense Highlight
The potential effects of COVID-19 could affect us in a number of ways including, but not limited to, the impact on employees becoming ill, quarantined, or otherwise unable to work or travel due to illness or governmental restriction, the impact on customers and their related demand and/or purchases, the impact on our suppliers' ability to fulfill our orders, and the overall impact of the aforementioned items that could cause output challenges and increased costs.
Other - Other Highlight
However, given the speed and frequency of continuously evolving developments with respect to this pandemic, we cannot reasonably estimate the magnitude of the impact to our results of operations, and, if the outbreak continues on its current trajectory, such impacts could grow and become material to our liquidity or financial position.
M & A - Other Highlight
Amortization or Impairment of Acquisition-Related Intangibles As a result of our acquisitions, we have recognized various amortizable intangible assets, including customer relationships, developed technology, non-compete agreements and trade names.
Other - Other
The increase in our cash...Read more
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37 Table of Contents Sales,...Read more
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These costs consisted primarily of...Read more
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We record losses related to...Read more
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Given our current cash position,...Read more
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39 Table of Contents The...Read more
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Critical Accounting Policies and Estimates...Read more
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We believe these efforts will...Read more
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43 Table of Contents Recent...Read more
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38 Table of Contents Other...Read more
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To remain competitive, market participants...Read more
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To the extent our suppliers...Read more
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Additionally, our travel costs decreased...Read more
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Non-Operating (Income) Expense, net Non-operating...Read more
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c)Days in accounts payable (DPO)...Read more
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We expect to invest approximately...Read more
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Further losses could have a...Read more
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Factory optimization start-up costs are...Read more
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Amortization of intangible assets related...Read more
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Effective January 6, 2021, we...Read more
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If the investment recovers its...Read more
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41 Table of Contents The...Read more
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Our potential for growth depends...Read more
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Changes in trade policy such...Read more
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Project, transformation and transaction costs...Read more
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42 Table of Contents For...Read more
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If a receivable does not...Read more
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Research and Development Research and...Read more
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Income tax benefit Income tax...Read more
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See Note 14, "Restructuring," to...Read more
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Expected credit losses are recorded...Read more
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Allowance for Doubtful Accounts (updated...Read more
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Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Cree Inc provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Exhibit 32.2: Section 1350 Certification

Ticker: CREE
CIK: 895419
Form Type: 10-Q Quarterly Report
Accession Number: 0000895419-21-000018
Submitted to the SEC: Thu Jan 28 2021 4:02:21 PM EST
Accepted by the SEC: Thu Jan 28 2021
Period: Sunday, December 27, 2020
Industry: Semiconductors And Related Devices