Cree 2Q profit up 75 percent

Jan. 21, 2014 @ 06:48 PM

Durham-based Cree Inc.’s profits were up 75 percent year-over-year in the second quarter of the company’s fiscal year to $35.7 million, the company reported Tuesday.

Revenues were up 20 percent to $415.1 million. The revenue total beat the average analyst estimate of more than $412 million, as compiled by Thomson Reuters I/B/E/S.

“Fiscal Q2 was another strong quarter as revenue increased to a record $415 million, driven by strong growth in LED fixtures and LED bulbs,” said Chuck Swoboda, the company’s chairman and CEO, in a statement. “Our strategy is working, the business is growing and we’ve made great initial progress building the Cree brand.”

Cree is a maker of LED, or light-emitting diode, lighting fixtures, bulbs, chips, and other products. Mike McDevitt, the company’s executive vice president and chief financial officer, said Cree saw strong revenue growth from both LED fixtures and bulbs in the quarter.

McDevitt said the company also was able to see tax benefits as a result of a U.S. Department of Energy federal tax credit award for a manufacturing operations expansion.

For the third quarter, the company is targeting bringing in revenues of between $390 million and $420 million, and net income of between $24 million and $32 million. In a conference call with analysts, Swoboda said the company is expected to go through a “rebalancing” in its sales channels for LED bulbs.

He said later that the company started about 10 months ago with a new product launch – consumer-targeted LED bulbs sold in Home Depot stores – and sales have grown quickly. Last year, the company announced LED blubs for consumers that included a warm white replacement for a 40-watt incandescent light bulb priced at $9.97. The bulb consumes 6 watts of energy and produces 450 lumens of light.

Swobodoa said Home Depot had what best could be described as “buffer” inventory on their shelves and, at this point, the company also has scaled up factory operations so it can respond to demand.

“We, both Cree and The Home Depot, want to get to the right level,” he said.

Swoboda said the company expects to continue to work with Home Depot to sell the product in the next year, describing the relationship as “successful.” He also said the company may look at other “complementary” sales outlets that may give the company access to customers elsewhere.

Cree’s stock was priced at $64.08 in after-hours trading on Tuesday, up nearly 2 percent.