Cirrus Logic (CRUS) Conference August 12, 2025 12:30 PM ET Company ParticipantsCarl Alberty - EVP - Mixed-Signal ProductsJeff Woolard - EVP & CFOConference Call ParticipantsJohn Vinh - MD & Senior Research AnalystJohn VinhOkay. Good morning, everybody. My name is John Vin. I cover semis here at KeyBanc Capital Markets. We're pleased to have Cirrus Logic with us this morning.We have Jeff Willard, CFO and Kala Birligi, VP of Mixed Signal. Welcome guys.Carl AlbertyThank you.Jeff WoolardThank you. Thanks for ha ...

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Financial Data and Key Metrics Changes - For the full year of 2024, revenue increased to $56 million from $44.5 million in 2023, while cost of goods sold rose to $52 million from $45.8 million [40] - GAAP gross margin for 2024 was a profit of $4 million (7.1%) compared to a loss of $1.3 million (-2.9%) in 2023, and non-GAAP gross margin was a profit of $10 million (18%) compared to a loss of $2.3 million (-5.2%) in 2023 [40] - In Q4, revenue was $11.5 million, down from $15.8 million in Q3, with cost of goods sold increasing to $15.2 million from $12.9 million in Q3 [41][42] - Q4 GAAP gross margin was a loss of $3.7 million (-32.4%) compared to a profit of $2.9 million (18.1%) in Q3, significantly impacted by inventory reserves and write-offs [42] Business Line Data and Key Metrics Changes - In Q4, the company delivered 51 units, reflecting a 27.3% decline in top-line revenue compared to Q3 due to seasonal challenges in the parcel delivery segment [11][16] - The step-van business is expected to shift positively towards strip chassis deliveries, which could reduce inventory turnover by two to three months [17] - The powertrain business made significant progress, with the first powertrain product delivered for a Bluebird electric school bus, and commercial production deliveries expected to begin in early 2025 [18] Market Data and Key Metrics Changes - The company has secured major commercial orders, including nearly 200 strip chassis for UPS and 20 hub units for Caltrans, indicating strong demand across various sectors [14] - The hub product has seen increased demand, with customers including Waymo and Duke Energy, and production rates reached approximately two hub units per week [20][32] Company Strategy and Development Direction - The company aims to continue top-line growth, margin expansion, and improved product diversity, positioning itself as the most efficient public commercial EV company [9] - Strategic partnerships with Bluebird and Winnebago are expected to drive growth in the Powered by XS segment [19] - The company is focused on reducing operational expenses and improving liquidity, with a goal of achieving positive free cash flow [27][28] Management's Comments on Operating Environment and Future Outlook - Management remains resilient despite economic changes and potential cost impacts from new tariffs, having prepared for these shifts over the past year [10] - The outlook for 2025 anticipates revenue between $50.2 million and $65.8 million, with unit deliveries expected to range from 320 to 420 units [48] - Management believes that the evolving regulatory landscape presents opportunities to differentiate the company in the market [50] Other Important Information - The company closed a significant transaction that added over $40 million in liquidity to its balance sheet [15] - Inventory decreased to $36.6 million from $37.8 million at the end of 2023, attributed to strategic purchasing and inventory management [47] Q&A Session Summary Question: Can you help us understand what's going right in delivering strong margin results despite lower volume? - Management attributed the strong margins to a shifting product mix, particularly with specialty products like the XS Hub, which have higher margins [56][57] Question: Do you expect to operate near production capacity for the hub business this year? - Management indicated plans to increase capabilities of the hub to offer broader market applications, but will not expand production capacity until market validation is achieved [60][63] Question: Can you provide insight into the powertrain business and FMVSS certification? - The powertrain business requires deep partnerships for engineering validation and testing, with production units expected to be shipped to end-user customers this year [66][68] Question: How much room is there to continue improving working capital? - Management emphasized a focus on sustainable business practices, improving working capital usage, and proactive measures to ensure timely delivery and cash collection [71][74] Question: Will gross margins remain positive throughout 2025? - Management anticipates continued positive gross margins for 2025, with expectations for year-over-year growth on an adjusted basis [79][80] Question: Did you have any environmental credit revenue in Q4? - Management confirmed that there was no credit revenue in Q4, unlike in the previous quarter [89] Question: Can you provide details on the unit mix for Q4 and guidance for 2025? - Management noted an increased mix of hubs in Q4, which are higher ASP products, and expects this trend to positively impact margins in 2025 [91][92]