Cree Updates Q4 FY 2019 Financial Guidance

DURHAM, N.C. – Cree, Inc. (Nasdaq: CREE), the global leader in silicon carbide (SiC) semiconductors, announced an update to its financial guidance for the fourth quarter of fiscal 2019.

This update to the financial guidance, which was previously provided in the company’s third quarter results release on May 1, 2019, is in response to the decision on May 15, 2019 by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce to add Huawei Technologies Co., Ltd. and 68 of its affiliates (collectively, “Huawei”), to the “Entity List” maintained by the U.S. Department of Commerce, and softer than originally expected demand for the company’s LED products.

Revenue for products and materials associated with Huawei’s wireless infrastructure build-out were expected to be up to $15 million in the fourth quarter of fiscal 2019.

Pending any further guidance from BIS, the company does not expect to ship any additional products in the fourth quarter for the Huawei build-out and cannot predict when it will be able to resume such shipments.

The company will continue to monitor and provide updates for the impact of the BIS action on its business, including the company’s ability to apply for and obtain licenses from BIS to allow it to ship products to Huawei going forward.

In addition to the Huawei matter, the company is also updating its financial guidance for its LED Products business due to softer than originally expected demand as global trade uncertainties persist.

For the fourth quarter of fiscal 2019, ending June 30, 2019, Cree now expects:

• Revenue from continuing operations in the range of $245 million to $252 million
• Wolfspeed revenue is expected to be between $132 million to $135 million
• LED Products revenue is expected to be between $113 million to $117 million
• GAAP net loss from continuing operations to be between $(23) million to $(28) million, or $(0.23) to $(0.27) per diluted share
• Non-GAAP net income from continuing operations to be in a range of $8 million to $13 million, or $0.08 to $0.12 earnings per diluted share

Targeted non-GAAP income from continuing operations excludes $36 million of estimated expenses, net of tax, related to stock-based compensation expense, the amortization or impairment of acquisition-related intangibles, interest accretion on our convertible notes' issue costs and fair value adjustments, executive severance and expenses relating to the disposition of the company’s former Lighting Products business. The GAAP and non-GAAP targets from continuing operations do not include any estimated change in the fair value of Cree’s Lextar investment.

Q4 FY2019	Updated (as of June 11, 2019)	Prior (as of May 1, 2019)
Revenue	$245M to $252M	$263M to $271M
Non-GAAP Net Income	$8 million to $13 million	$12 million to $17 million
Non-GAAP Diluted EPS	Between $0.08 and $0.12	Between $0.12 and $0.16