Cree Q1 Profit Down 64%, Results Miss View; Outlook Disappoints

(RTTNews) - LED and lighting products maker Cree, Inc. (CREE) on Tuesday reported a 64 percent decline in profit for the first quarter from last year, reflecting lower sales of LED products due to weaker than expected global demand.

Both revenue and adjusted earnings per share for the quarter missed analysts' expectations. Looking ahead, the company forecast second-quarter financial results also below Street estimates. Shares of Cree tumbled 11 percent in extended trades.

Chuck Swoboda, Cree Chairman and CEO said, "We have good momentum in our Lighting and Power & RF segments, although fiscal Q1 results were below our targeted levels due primarily to lower than expected LED demand. While the LED industry conditions are challenging, we're confident that innovation is still the key to leading the market and driving growth in all of our businesses."

Durham, North Carolina-based Cree's net income for the first quarter was $11.13 million or $0.09 per share, down from $30.50 million or $0.25 per share in the year-ago period.

Excluding items, adjusted net income for the first quarter was $29.55 million or $0.24 per share, compared to $47.33 million or $0.39 per share in the prior year quarter. On average, eighteen analysts polled by Thomson Reuters expected the company to earn $0.36 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the first quarter grew 9 percent to $427.67 million from $391.01 million in the year-ago period, but missed analysts' consensus revenue estimate of $432.63 million.

LED products revenue for the quarter declined 20 percent from the year-ago period to $173.59 million, while lighting products revenue surged 51 percent to $223.09 million. Power and RF products revenue rose 9 percent to $31.00 million.

Gross margin for the quarter narrowed 680 points to 31.8 percent, while operating margin narrowed 670 points to 2.7 percent.

Cree had earlier said that it expects overall gross margin for the quarter to be below its previously announced targets, primarily due to lower LED Products revenue and higher than targeted LED bulb revenue.

Looking ahead to the second quarter, Cree forecasts revenue in a range of $400 million to $420 million, net income of $6 million to $10 million, or $0.05 to $0.09 per share, and adjusted net income of $24 million to $29 million, or $0.20 to $0.24 per share.

Analysts currently expect the company to earn $0.39 per share for the quarter on revenue of $452.04 million.

CREE closed Monday's trading at $33.15, up $0.25 or 0.76 percent on a volume of 4.51 million shares. However, in after-hours, the stock declined $3.65 or 11.01 percent to $29.50.