EMCORE Corporation (NASDAQ:EMKR), a leading provider of Indium
Phosphide (InP) optical chips, components, subsystems, and systems
for the broadband and specialty fiber optics market, today
announced financial results for its third quarter ended June 30,
2016.
Financial Highlights - Third Quarter Ended June 30,
2016
Financial Highlights |
|
For the Three Months Ended |
(in
thousands) |
|
June 30,
2016 |
|
March
31, 2016 |
|
June 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
|
22,376 |
|
$ |
21,532 |
|
|
$ |
21,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
$ |
|
7,412 |
|
$ |
7,022 |
|
|
$ |
7,683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
|
1,522 |
|
$ |
(367 |
) |
|
$ |
866 |
|
Consolidated net income, including discontinued operations |
|
$ |
|
1,301 |
|
$ |
3,982 |
|
|
$ |
2,440 |
|
Income
(loss) from continuing operations - |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
$ |
|
1,178 |
|
$ |
(162 |
) |
|
$ |
464 |
|
Pre-tax
income from continuing operations - |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
|
599 |
|
$ |
599 |
|
|
$ |
2,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Statement Highlights for the Third Quarter of
Fiscal 2016:
- Consolidated revenue was $22.4 million, representing a 3.9%
increase from the immediately preceding quarter
- Consolidated gross margin was 33.1%, an increase from the 32.6%
gross margin reported in the immediately preceding quarter
- GAAP income from continuing operations was $1.2 million, an
increase of approximately $1.3 million over the immediately
preceding quarter
- Consolidated net income of $1.3 million, which includes $2.6
million related to the recovery of fees and expense associated with
the SEI arbitration ruling, is a $2.7 million decrease compared to
the immediately preceding quarter which included $3.8 million
of gains related to the SEI ruling
- Consolidated net income per share was $0.05 compared to net
income per share of $0.15 in the immediately preceding quarter
- Non-GAAP pre-tax income from continuing operations was $0.6
million, consistent with the immediately preceding quarter
- Cash and cash equivalents was $105.0 million at the end of the
quarter
- On July 29, the Company paid a special dividend of $1.50 per
share, or a total of $39.2 million, to shareholders of record as of
July 18
Business Outlook The Company expects revenue
for the fourth quarter ended September 30, 2016 to be in the range
of $23 to $25 million.
Conference CallThe Company will
discuss its financial results today at 5:00 p.m. EDT. The call will
be webcast at http://investor.emcore.com/events.cfm. A webcast will
be available for replay for at least 90 days following the
conclusion of the call on the Company's website.
ConferencesManagement will participate in the
upcoming conferences:
- Jefferies Semiconductors, Hardware and Communications
Infrastructure Summit in Chicago, IL on August 30, 2016
About EMCOREEMCORE Corporation designs and
manufactures Indium Phosphide (InP) optical chips, components,
subsystems and systems for the broadband and specialty fiber optics
market. EMCORE was the pioneer in linear fiber optic transmission
technology, and today is a leader in optical components, as well as
a provider of complete end-to-end solutions for high-speed
communications network infrastructures, enabling systems and
service providers to meet growing demand for bandwidth and
connectivity. EMCORE’s advanced optical technologies are designed
for cable television (CATV) and fiber-to-the-premise (FTTP)
networks, telecommunications and data centers, satellite
communications, aerospace and defense, wireless networks, and
broadcast and professional audio/video systems. With its
world-class InP semiconductor wafer fabrication facility, EMCORE
has fully vertically-integrated manufacturing capability and also
provides contract design, foundry and component packaging
services. EMCORE is headquartered in Alhambra, California with InP
wafer fabrication operations in Alhambra, and ISO 9001 certified
manufacturing in Alhambra and Langfang, China. For further
information about EMCORE, visit http://www.emcore.com.
Use of Non-GAAP Financial MeasuresWe disclose
non-GAAP income from continuing operations as a supplemental
measure to U.S. GAAP income from continuing operations regarding
our operational performance. This financial measure excludes the
impact of certain items that we do not believe are indicative of
our core operating results; therefore, it has not been calculated
in accordance with U.S. GAAP. A reconciliation of non-GAAP income
from continuing operations to GAAP income (loss) from continuing
operations, which identifies the items excluded from the non-GAAP
measure, is provided in the table below titled "Reconciliation of
GAAP to Non-GAAP Financial Measures".
We believe that this additional non-GAAP financial measure is
useful to investors in assessing our operating performance. We also
use this financial measure internally to evaluate our operating
performance and for planning and forecasting of future periods. In
addition, financial analysts that follow us may focus on and
publish both historical results and future projections based on our
non-GAAP financial measure. We also believe that it is in the best
interest of our investors to provide this non- GAAP
information.
While we believe that this non-GAAP financial measure provides
useful supplemental information to investors, there are limitations
associated with the use of this non-GAAP financial measure. Our
non-GAAP financial measure may not be reported by all of our
competitors and it may not be directly comparable to similarly
titled measures of other companies due to potential differences in
calculation. We compensate for these limitations by using this
non-GAAP financial measure as a supplement to U.S. GAAP and by
providing a reconciliation of our non-GAAP financial measure to its
most comparable U.S. GAAP financial measure.
Non-GAAP financial measures are not in accordance with or an
alternative for U.S. GAAP. Our non-GAAP financial measure is not
meant to be considered in isolation or as a substitute for
comparable U.S. GAAP financial measures and it should be read only
in conjunction with our consolidated financial statements prepared
in accordance with U.S. GAAP.
Forward-Looking StatementsThe information
provided herein may include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Exchange Act of 1934. These forward-looking statements
are largely based on our current expectations and projections about
future events and financial trends affecting the financial
condition of our business. Such forward-looking statements include,
in particular, projections about our future results included in our
Exchange Act reports, statements about our plans, strategies,
business prospects, changes and trends in our business and the
markets in which we operate.
These forward-looking statements may be identified by the use of
terms and phrases such as “anticipates”, “believes”, “can”,
“could”, “estimates”, “expects”, “forecasts”, “intends”, “may”,
“plans”, “projects”, “targets”, “will”, and similar expressions or
variations of these terms and similar phrases. Additionally,
statements concerning future matters such as the development of new
products, enhancements or technologies, sales levels, expense
levels and other statements regarding matters that are not
historical are forward-looking statements. We caution that these
forward-looking statements relate to future events or our future
financial performance and are subject to business, economic, and
other risks and uncertainties, both known and unknown, that may
cause actual results, levels of activity, performance or
achievements of our business or our industry to be materially
different from those expressed or implied by any forward-looking
statements.
These forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from those
projected, including without limitation, the following: (a) the
rapidly evolving markets for the Company's products and uncertainty
regarding the development of these markets; (b) the Company's
historical dependence on sales to a limited number of customers and
fluctuations in the mix of products and customers in any period;
(c) delays and other difficulties in commercializing new products;
(d) the failure of new products: (i) to perform as expected without
material defects, (ii) to be manufactured at acceptable volumes,
yields, and cost, (iii) to be qualified and accepted by our
customers, and (iv) to successfully compete with products offered
by our competitors; (e) uncertainties concerning the availability
and cost of commodity materials and specialized product components
that we do not make internally; (f) actions by competitors; and (g)
other risks and uncertainties discussed under Item 1A - Risk
Factors in our Annual Report on Form 10-K for the fiscal year ended
September 30, 2015, as updated by our subsequent periodic
reports.
Neither management nor any other person assumes responsibility
for the accuracy and completeness of the forward-looking
statements. All forward-looking statements in this press release
are made as of the date hereof, based on information available to
us as of the date hereof, and subsequent facts or circumstances may
contradict, obviate, undermine, or otherwise fail to support or
substantiate such statements. We caution you not to rely on these
statements without also considering the risks and uncertainties
associated with these statements and our business that are
addressed in our filings with the SEC that are available on the
SEC's web site located at www.sec.gov, including the sections
entitled "Risk Factors" in our Annual Report on Form 10- K and our
Quarterly Reports on Form 10-Q. Certain information included in
this press release may supersede or supplement forward-looking
statements in our other Exchange Act reports filed with the SEC. We
assume no obligation to update any forward-looking statement to
conform such statements to actual results or to changes in our
expectations, except as required by applicable law or
regulation.
EMCORE
CORPORATION |
Condensed
Consolidated Statements of Operations |
(in thousands,
except per share data) (unaudited) |
|
|
|
|
|
|
|
|
|
For the
Three Months Ended |
|
For the
Nine Months Ended |
|
|
June 30,
2016 |
|
March 31,
2016 |
|
June 30,
2015 |
|
June 30,
2016 |
|
June 30,
2015 |
Revenue |
|
$ |
22,376 |
|
|
$ |
21,532 |
|
|
$ |
21,194 |
|
|
$ |
66,398 |
|
|
$ |
58,667 |
|
Cost of
revenue |
|
|
14,964 |
|
|
|
14,510 |
|
|
|
13,511 |
|
|
|
44,563 |
|
|
|
39,426 |
|
Gross profit |
|
|
7,412 |
|
|
|
7,022 |
|
|
|
7,683 |
|
|
|
21,835 |
|
|
|
19,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative |
|
|
6,125 |
|
|
|
4,825 |
|
|
|
4,543 |
|
|
|
15,771 |
|
|
|
19,124 |
|
Research and development |
|
|
2,405 |
|
|
|
2,564 |
|
|
|
2,274 |
|
|
|
7,529 |
|
|
|
6,470 |
|
Recovery of previously incurred
litigation related fees and expenses from arbitration award |
|
|
(2,599 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2,599 |
) |
|
|
— |
|
Gain from change in estimate on ARO
obligation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(845 |
) |
(Gain) loss on sale of assets |
|
|
(41 |
) |
|
|
— |
|
|
|
— |
|
|
|
(41 |
) |
|
|
228 |
|
Total operating expense |
|
|
5,890 |
|
|
|
7,389 |
|
|
|
6,817 |
|
|
|
20,660 |
|
|
|
24,977 |
|
Operating income (loss) |
|
|
1,522 |
|
|
|
(367 |
) |
|
|
866 |
|
|
|
1,175 |
|
|
|
(5,736 |
) |
Other
income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
32 |
|
|
|
25 |
|
|
|
4 |
|
|
|
40 |
|
|
|
39 |
|
Foreign exchange (loss) gain |
|
|
(201 |
) |
|
|
25 |
|
|
|
50 |
|
|
|
(311 |
) |
|
|
101 |
|
Change in fair value of financial
instruments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
122 |
|
Total other (expense) income |
|
|
(169 |
) |
|
|
50 |
|
|
|
54 |
|
|
|
(271 |
) |
|
|
262 |
|
Income (loss) from continuing
operations before income tax (expense) benefit |
|
|
1,353 |
|
|
|
(317 |
) |
|
|
920 |
|
|
|
904 |
|
|
|
(5,474 |
) |
Income
tax (expense) benefit |
|
|
(175 |
) |
|
|
155 |
|
|
|
(456 |
) |
|
|
(22 |
) |
|
|
1,852 |
|
Income (loss) from continuing
operations |
|
|
1,178 |
|
|
|
(162 |
) |
|
|
464 |
|
|
|
882 |
|
|
|
(3,622 |
) |
Income from discontinued
operations, net of tax |
|
|
123 |
|
|
|
4,144 |
|
|
|
1,976 |
|
|
|
5,388 |
|
|
|
65,242 |
|
Net income |
|
$ |
1,301 |
|
|
$ |
3,982 |
|
|
$ |
2,440 |
|
|
$ |
6,270 |
|
|
$ |
61,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per basic share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.05 |
|
|
($ |
0.01 |
) |
|
$ |
0.02 |
|
|
$ |
0.04 |
|
|
($ |
0.11 |
) |
Discontinued operations |
|
|
— |
|
|
|
0.16 |
|
|
|
0.06 |
|
|
|
0.20 |
|
|
|
2.07 |
|
Net
income per basic and diluted share |
|
$ |
0.05 |
|
|
$ |
0.15 |
|
|
$ |
0.08 |
|
|
$ |
0.24 |
|
|
$ |
1.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per diluted share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.05 |
|
|
($ |
0.01 |
) |
|
$ |
0.02 |
|
|
$ |
0.04 |
|
|
($ |
0.11 |
) |
Discontinued operations |
|
|
— |
|
|
|
0.16 |
|
|
|
0.06 |
|
|
|
0.20 |
|
|
|
2.07 |
|
Net
income per diluted share |
|
$ |
0.05 |
|
|
$ |
0.15 |
|
|
$ |
0.08 |
|
|
$ |
0.24 |
|
|
$ |
1.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of basic shares outstanding |
|
|
26,103 |
|
|
|
25,942 |
|
|
|
31,203 |
|
|
|
25,913 |
|
|
|
31,494 |
|
Weighted-average number of diluted shares outstanding |
|
|
26,269 |
|
|
|
25,942 |
|
|
|
31,432 |
|
|
|
26,186 |
|
|
|
31,494 |
|
|
|
|
|
|
|
|
EMCORE CORPORATION |
Condensed Consolidated Balance
Sheets |
(in
thousands) |
(unaudited) |
|
|
|
|
|
|
As of June
30, 2016 |
|
As of
September 30, 2015 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
105,046 |
|
|
$ |
111,885 |
|
Restricted cash |
|
|
1,219 |
|
|
|
375 |
|
Accounts receivable, net |
|
|
21,630 |
|
|
|
17,319 |
|
Inventory |
|
|
18,976 |
|
|
|
17,130 |
|
Prepaid expenses and other current
assets |
|
|
3,778 |
|
|
|
4,976 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
150,649 |
|
|
|
151,685 |
|
Property, plant, and
equipment, net |
|
|
11,001 |
|
|
|
8,925 |
|
Non-current
inventory |
|
|
4,270 |
|
|
|
— |
|
Other
non-current assets, net |
|
|
319 |
|
|
|
297 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
166,239 |
|
|
$ |
160,907 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES and SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
9,581 |
|
|
$ |
7,189 |
|
Deferred gain associated with sale
of assets |
|
|
— |
|
|
|
3,400 |
|
Accrued expenses and other current
liabilities |
|
|
11,205 |
|
|
|
13,102 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
20,786 |
|
|
|
23,691 |
|
|
|
|
|
|
|
|
|
|
Asset retirement
obligations |
|
|
1,589 |
|
|
|
1,774 |
|
Other long-term
liabilities |
|
|
61 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
22,436 |
|
|
|
25,465 |
|
|
|
|
|
Shareholders’
equity: |
|
|
|
Common stock |
|
|
764,324 |
|
|
|
762,003 |
|
Treasury stock |
|
|
(47,721 |
) |
|
|
(47,721 |
) |
Accumulated other comprehensive
income |
|
|
617 |
|
|
|
847 |
|
Accumulated deficit |
|
|
(573,417 |
) |
|
|
(579,687 |
) |
|
|
|
|
|
|
|
|
|
Total shareholders’ equity |
|
|
143,803 |
|
|
|
135,442 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’
equity |
|
$ |
166,239 |
|
|
$ |
160,907 |
|
|
|
|
|
|
|
|
|
|
We have provided a reconciliation of our non-GAAP income (loss)
from continuing operations financial measure to its most directly
comparable U.S. GAAP financial measure as indicated in the table
below:
EMCORE
CORPORATION |
RECONCILIATION
OF GAAP TO NON-GAAP FINANCIAL MEASURES |
Income (Loss)
from Continuing Operations |
(in thousands,
except per share data) |
(unaudited) |
|
|
|
|
|
For the
Three Months Ended |
|
For the
Nine Months Ended |
|
|
June 30,
2016 |
|
March 31,
2016 |
|
June 30,
2015 |
|
June 30,
2016 |
|
June 30,
2015 |
|
Income (loss) from continuing operations - US
GAAP |
|
$ |
1,178 |
|
|
$ |
(162 |
) |
|
$ |
464 |
|
|
$ |
882 |
|
|
$ |
(3,622 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense |
|
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
|
18 |
|
Stock-based compensation
expense |
|
|
727 |
|
|
|
613 |
|
|
|
401 |
|
|
|
1,703 |
|
|
|
3,209 |
|
Income tax expense (benefit) |
|
|
175 |
|
|
|
(155 |
) |
|
|
456 |
|
|
|
22 |
|
|
|
(1,852 |
) |
Accretion expense |
|
|
15 |
|
|
|
15 |
|
|
|
22 |
|
|
|
45 |
|
|
|
90 |
|
Gain from change in estimate on ARO
obligation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(845 |
) |
Compensation expense associated
with sale of Businesses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,471 |
|
Specific severance and
restructuring charges |
|
|
678 |
|
|
|
— |
|
|
|
— |
|
|
|
678 |
|
|
|
965 |
|
Foreign exchange loss (gain) |
|
|
201 |
|
|
|
(25 |
) |
|
|
(50 |
) |
|
|
311 |
|
|
|
(101 |
) |
(Gain) Loss on sale of assets |
|
|
(41 |
) |
|
|
— |
|
|
|
— |
|
|
|
(41 |
) |
|
|
228 |
|
Change in fair value of financial
instruments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(122 |
) |
Recovery of previously incurred
litigation related fees and expenses associated with arbitration
award |
|
|
(2,599 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2,599 |
) |
|
|
— |
|
Expenses associated with the legal
arbitration and lawsuit |
|
|
265 |
|
|
|
313 |
|
|
|
731 |
|
|
|
1,482 |
|
|
|
1,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjustments |
|
|
(579 |
) |
|
|
761 |
|
|
|
1,566 |
|
|
|
1,601 |
|
|
|
5,069 |
|
Pre-tax income
from continuing operations - Non-GAAP |
|
$ |
599 |
|
|
$ |
599 |
|
|
$ |
2,030 |
|
|
$ |
2,483 |
|
|
$ |
1,447 |
|
Pre-tax income
from continuing operations - Non-GAAP per basic share |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
0.07 |
|
|
$ |
0.09 |
|
|
$ |
0.05 |
|
Pre-tax income
from continuing operations - Non-GAAP per diluted
share |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
0.06 |
|
|
$ |
0.09 |
|
|
$ |
0.05 |
|
Weighted average number
of basic shares outstanding |
|
|
26,103 |
|
|
|
25,942 |
|
|
|
31,203 |
|
|
|
25,913 |
|
|
|
31,494 |
|
Weighted average number
of diluted shares outstanding |
|
|
26,269 |
|
|
|
25,942 |
|
|
|
31,432 |
|
|
|
26,186 |
|
|
|
31,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
The effect of recording stock-based compensation expense was as
follows:
Stock-based
Compensation Expense |
For the
Three Months Ended |
|
For the
Nine Months Ended |
(in thousands) |
June 30,
2016 |
|
|
March
31,2016 |
|
June 30, 2015 |
|
June 30, 2016 |
|
June 30,
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
$ |
81 |
|
|
$ |
113 |
|
|
$ |
88 |
|
|
$ |
263 |
|
|
$ |
273 |
|
Selling, general, and
administrative |
|
555 |
|
|
|
420 |
|
|
|
195 |
|
|
|
1,163 |
|
|
|
2,609 |
|
Research and
development |
|
91 |
|
|
|
80 |
|
|
|
118 |
|
|
|
277 |
|
|
|
327 |
|
Total stock-based compensation
expense |
$ |
727 |
|
|
$ |
613 |
|
|
$ |
401 |
|
|
$ |
1,703 |
|
|
$ |
3,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
EMCORE Corporation
Jikun Kim
(626) 293-3400
investor@emcore.com
Sapphire Investor Relations, LLC
Erica Mannion or Michael Funari
(617) 542-6180
investor@emcore.com
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