Rubicon Technology, Inc. (NASDAQ:RBCN), a leading provider of
optical and industrial sapphire products, today reported financial
results for its third quarter ended September 30, 2016.
The Company’s third quarter results were impacted by the
decision made in the quarter to close its Malaysia facility. On
September 12, 2016, the Company announced its plans to cease all
production activities and shut down its Penang, Malaysia
facility. Production activities at the Penang facility are
expected to cease by November 30, 2016, with the shutdown of the
facility to be completed by the end of the year. The Company’s
Malaysia facility has been primarily engaged in producing polished
and patterned substrates for the LED market and the decision was
made in order for the Company to focus on the optical and
industrial sapphire market for the foreseeable future.
Bill Weissman, the Company’s CEO, said, “While margin pressure
in the LED and mobile device segments of the sapphire market
continue to be severe, there remains good margin opportunity in the
optical and industrial segments. We believe that the actions we are
taking will improve our operating results, strengthen our cash
position and allow us to grow in strategic markets that are better
aligned with our strengths while offering stronger margin
potential. Once the changes are fully implemented, our revenue will
be smaller for a period of time, but the optical and industrial
sapphire markets are growing with potential new applications for
sapphire emerging.”
The Company reported third quarter revenue of $7.1 million, $3.6
million higher than the prior quarter revenue. Revenue from wafer
sales in the third quarter was $5.5 million as compared with $1.8
million in the prior quarter. The higher wafer revenue was the
result of increased orders from a key patterned wafer customer
along with that customer drawing down all wafers in consignment
inventory. Once our Malaysia facility ceases production activities,
our wafer revenue will significantly decrease beginning in the
fourth quarter of 2016 and into future periods.
One-time charges in the quarter related to the decision to exit
the LED market and close the Malaysia facility included; a $10.2
million asset impairment for writing the Malaysia assets down to
liquidation value, a write-down of $4.0 million in excess raw
material inventory, and $900 thousand in accrued severance. In
addition, the Company recorded a write-down of $2.3 million of
excess two-inch core inventory, which is sold primarily into the
mobile device market, and severance of $180 thousand for reduction
of staffing in the U.S.
The Company’s third quarter loss per share was $0.94 as compared
with a loss per share of $0.31 in the prior quarter.
About Rubicon Technology, Inc.
Rubicon Technology, Inc. is a vertically integrated advanced
materials provider specializing in monocrystalline sapphire
for applications in optical and industrial systems. Rubicon
has a proprietary technology platform and expertise extending from
the preparation of raw aluminum oxide through sapphire crystal
growth and fabrication, enabling Rubicon to supply custom sapphire
products with superior quality and precision. Rubicon is ISO 9001
certified and ITAR registered.
Further information is available at
http://www.rubicontechnology.com.
Forward-Looking Statements
Certain of the statements in this release, particularly those
preceded by, followed by or including the words “believes,”
“expects,” “anticipates,” “intends,” “should,” “estimates,” or
similar expressions, or those relating to or anticipating financial
results for periods beyond the end of the third quarter of 2016,
constitute “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. For those
statements, the Company claims the protection of the safe harbor
for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
based on management’s current expectations, estimates and
projections about our industry, management's beliefs and certain
assumptions made by management. These statements are subject to
risks and uncertainties that could cause actual results to differ
materially from those expressed in, or implied by, the statements.
These risks and uncertainties include our ability to shut down the
Malaysia facility without significant delays or obstacles, our
ability to sell certain assets, including those in Malaysia and
underutilized assets in the U.S., and the prices we receive
therefor, the outcome of alternatives we pursue to provide greater
value to our stockholders, changes in demand or the average selling
prices of sapphire products, the adoption of sapphire as a material
in new applications, our successful development and the market’s
acceptance of new products, dependence on key customers, our
ability to secure new business and retain customers, our ability to
successfully qualify our products with customers and potential
customers, the outcome of the testing of new products and processes
or the testing of our existing products for new applications, our
ability to reduce wafer, crystal and other costs, our ability to
reduce capital expenditures, potential disruptions in our supply of
electricity, changes in our product mix, our ability to protect our
intellectual property rights, the competitive environment, the
availability and cost of raw materials, the cost of compliance with
environmental standards, the ability to make effective acquisitions
and successfully integrate newly acquired businesses into existing
operations, and other risks and uncertainties described in the
Company's 2015 Form 10-K as amended, for the year ended December
31, 2015, Form 10-Q for the quarter ended March 31, 2016, Form 10-Q
for the quarter ended June 30, 2016, Form 10-Q for the quarter
ended September 30, 2016 and other filings with the Securities and
Exchange Commission. For these reasons, readers are cautioned not
to place undue reliance on the Company's forward-looking
statements. Any forward-looking statement that the Company makes
speaks only as of the date of such statement, and the Company
undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
Comparisons of results for current and any prior periods are not
intended to express any future trends or indications of future
performance, unless expressed as such, and should only be viewed as
historical data.
Rubicon Technology, Inc. Condensed Consolidated
Balance Sheets (in thousands)
September 30, September 30, 2016 2015
Assets (unaudited) (unaudited) Cash and cash equivalents $ 16,370 $
21,428 Restricted cash 176 167 Short-term investments - 12,676
Accounts receivable, net 1,978 3,276 Inventories 10,644 23,112
Other current assets 6,809 7,723 Total current assets
35,977 68,382 Property and equipment, net 41,119 59,079
Other assets 624 1,492 Total assets $ 77,720 $
128,953 Liabilities and Stockholders' Equity Accounts
payable $ 2,263 $ 2,563 Accrued and other current liabilities
2,727 1,993 Total current liabilities 4,990 4,556
Deferred tax liability - 9 Total liabilities
4,990 4,565 Stockholders' equity 72,730
124,388 Total liabilities and stockholders’ equity $ 77,720 $
128,953
Rubicon Technology, Inc. Condensed
Consolidated Statements of Operations (unaudited) (in
thousands except share and per share amounts)
Three
months ended September 30, Nine months ended September 30,
2016 2015 2016 2015 Revenue $ 7,086 $ 5,346 $
14,908 $ 21,362 Cost of goods sold 18,732
9,237 36,024 35,517 Gross loss
(11,646 ) (3,891 ) (21,116 ) (14,155 ) General and
administrative expenses 1,709 3,037 6,171 7,293 Sales and marketing
expenses 395 287 1,147 979 Research and development expenses 803
558 2,034 1,594 Loss on disposal of assets - - 126 22
Long-lived asset impairment charge
10,216 39,597 10,481
39,597 Total operating expenses 13,123
43,479 19,959 49,485 Loss
from operations (24,769 ) (47,370 ) (41,075 ) (63,640 )
Other (expense) income: Interest income, expense and other, net
(248 ) (1,489 ) 191 (2,060 )
Loss before income taxes (25,017 ) (48,859 ) (40,884 ) (65,700 )
Income tax benefit 216 663 541
576 Net loss $ (24,801 ) $ (48,196 ) $ (40,343
) $ (65,124 ) Net loss per common share: Basic $ (0.94 ) $
(1.84 ) $ (1.53 ) $ (2.49 ) Diluted $ (0.94 ) $ (1.84 ) $ (1.53 ) $
(2.49 ) Weighted average common shares outstanding used in
computing net loss per common share: Basic 26,374,516 26,160,308
26,374,516 26,143,948 Diluted 26,374,516 26,160,308 26,374,516
26,143,948
Rubicon Technology, Inc. Condensed
Consolidated Statements of Cash Flows (unaudited) (in
thousands) Three months ended September 30,
Nine months ended September 30, 2016 2015 2016
2015 Cash flows from operating activities Net
loss $ (24,801 ) $ (48,196 ) $ (40,343 ) $ (65,124 )
Adjustments to reconcile net loss to net cash used in operating
activities Depreciation and amortization 1,628 3,178 4,919 9,780
Long-lived asset impairment charges 10,216 39,597 10,481 39,597
Other 350 292 1,207 961 Deferred taxes (217 ) (663 ) (554 ) (584 )
Changes in operating assets and liabilities Accounts receivable 759
4,668 (240 ) 5,047 Inventories 10,338 (2,301 ) 11,031 (2,177 )
Other assets 880 206 2,276 1,450 Accounts payable (1,375 ) 259
(1,045 ) (910 ) Accrued expenses and other current liabilities
1,736 143 789 55
Net cash used in operating activities (486 )
(2,817 ) (11,479 ) (11,905 ) Cash flows from
investing activities Purchases of property and equipment, net of
disposal of assets 65 (459 ) (405 ) (801 ) Proceeds from sales of
investments, net of purchases 1,006 537
8,900 7,901 Net cash provided by
investing activities 1,071 78
8,495 7,100 Cash flows from financing
activities Loan payable (1,500 ) - (1,500 ) - Other financing
activities 6 28 (7 ) 12
Net cash (used in) provided by financing activities
(1,494 ) 28 (1,507 ) 12
Net effect of currency translation 212 1,395 (355 ) 1,868
Net decrease in cash and cash equivalents (697 ) (1,316 ) (4,846 )
(2,925 ) Cash and cash equivalents, beginning of period
17,067 22,744 21,216
24,353 Cash and cash equivalents, end of period $ 16,370
$ 21,428 $ 16,370 $ 21,428
Rubicon Technology, Inc. Revenue by Product Group
(in thousands)
Three months ended Three months ended Three months
ended September 30, June 30, September 30, 2016 2016 2015 Core 2
Inch $ 3 $ - $ 551 4 Inch 421 689 1,233 6 Inch - -
40 Total Core 424 689 1,824 Wafers
Polished 994 488 763 PSS 4,513 1,342 1,373
Total Wafers 5,507 1,830 2,136 R&D 80 112
270 Optical and other 1,075 904 1,116 $ 7,086
$ 3,535 $ 5,346
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version on businesswire.com: http://www.businesswire.com/news/home/20161109006144/en/
Rubicon Technology, Inc.Mardel GraffyChief Financial
Officer847-457-3461
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