- Quarterly Revenue of $71.1
Million
- High Speed Products Climb to Highest
Mix at 84% of Total Revenue
- Restructuring Actions Taken to
Improve Profitability while Focusing Investment and Developments on
Key Growth Opportunities
NeoPhotonics Corporation (NYSE: NPTN), a leading designer and
manufacturer of optoelectronic solutions for the highest speed
communications networks in telecom and datacenter applications,
today announced financial results for its third quarter ended
September 30, 2017.
“We are focused on growth initiatives in telecom, data center
and cloud markets, as well as operational execution to lower our
breakeven level as China continues with steady though muted
demand,” said Tim Jenks, Chairman and CEO of NeoPhotonics. “Growth
drivers in our markets include Metro deployments across the globe,
China high speed build-outs in advance of 5G wireless, and data
centers and big data applications that are embracing our higher
speed technologies and leverage NeoPhotonics’ core strengths,”
concluded Mr. Jenks.
Third Quarter Summary
- Revenue was $71.1 million, in
comparison to $73.2 million in the prior quarter
- Gross margin was 14.8%, compared to
22.9% in the prior quarter
- Non-GAAP Gross margin was 18.6%,
compared to 23.9% in the prior quarter
- Net loss was $18.2 million, compared to
a net loss of $9.3 million in the prior quarter
- Non-GAAP net loss was $10.9 million,
compared to a net loss of $6.6 million in the prior quarter
- Diluted net loss per share was $0.42,
in comparison to a net loss of $0.22 per share in the prior
quarter
- Non-GAAP diluted net loss per share was
$0.25, compared to a net loss of $0.15 in the prior quarter
- Adjusted EBITDA was negative $4.5
million, compared to positive $48,000 in the prior quarter
Non-GAAP results in the third quarter of 2017 exclude $0.4
million of asset sale related costs and amortization of
acquisition-related intangibles, $1.9 million of stock-based
compensation expense, $2.0 million of end-of-life related inventory
write-downs and $3.1 million of restructuring charges. A
reconciliation of the Non-GAAP and Adjusted EBITDA financial
measures to the most directly comparable GAAP financial measures is
provided in the financial schedules portion at the end of this
press release.
As of September 30, 2017, cash and cash equivalents, short-term
investments and restricted cash, together totaled $73.7 million,
compared to $79.0 million at June 30, 2017. Restricted cash as of
September 30, 2017 was $2.9 million, down from $3.3 million at June
30, 2017.
Outlook for the Quarter Ending December 31, 2017
GAAP Non-GAAP Revenue
$69 to $74 million
Gross Margin 19% to 22%
20% to 23%
Operating Expenses $25 to $26
million $23 to $24 million
Earnings per share
$0.29 to $0.19 net loss $0.23 to $0.13 net loss
The Non-GAAP outlook for the fourth quarter of 2017 excludes the
impact of expected amortization of intangibles of approximately
$0.3 million, the anticipated impact of stock-based compensation of
approximately $1.9 million, of which $0.3 million is estimated for
cost of goods sold and $0.7 million for the expected impact of
restructuring charges.
Non-GAAP and Adjusted EBITDA Measures vs. GAAP Financial
Measures
The Company’s non-GAAP and adjusted EBITDA measures exclude
certain GAAP financial measures. A reconciliation of the Non-GAAP
and Adjusted EBITDA financial measures to the most directly
comparable GAAP financial measures is provided in the financial
schedules portion at the end of this press release. These non-GAAP
financial measures differ from GAAP measures with the same captions
and may differ from non-GAAP financial measures with the same or
similar captions that are used by other companies. As such, these
non-GAAP measures should be considered as a supplement to, and not
as a substitute for, or superior to, financial measures calculated
in accordance with GAAP.
The Company uses these non-GAAP financial measures to analyze
its operating performance and future prospects, develop internal
budgets and financial goals, and to facilitate period-to-period
comparisons. NeoPhotonics believes that these non-GAAP financial
measures reflect an additional way of viewing aspects of its
operations that, when viewed with its GAAP results, provide a more
complete understanding of factors and trends affecting its
business.
Conference Call
The Company will host a conference call today, Monday, November
6, 2017, at 4:30 P.M. Eastern Time (1:30 P.M. Pacific Time). The
call will be available, live, to interested parties by dialing
800-239-9838. For international callers, please dial
+1-323-794-2551. The Conference ID number is 9384833. A live
webcast will be available in the Investor Relations section of
NeoPhotonics’ website at:
http://ir.neophotonics.com/phoenix.zhtml?c=236218&p=irol-calendar.
A replay of the webcast will be available in the Investor
Relations section of the Company’s web site approximately two hours
after the conclusion of the call and remain available for
approximately 30 calendar days.
About NeoPhotonics
NeoPhotonics is a leading designer and manufacturer of
optoelectronic solutions for the highest speed communications
networks in telecom and datacenter applications. The Company’s
products enable cost-effective, high-speed data transmission and
efficient allocation of bandwidth over communications networks.
NeoPhotonics maintains headquarters in San Jose, California and ISO
9001:2000 certified engineering and manufacturing facilities in
Silicon Valley (USA), Japan and China. For additional information
visit www.neophotonics.com.
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995
This press release includes statements that qualify as
forward-looking statements under the Private Securities Litigation
Reform Act of 1995. These forward-looking statements include
statements about the following topics: future financial results,
demand for the Company’s high-speed products, the Company’s market
position, the outlook for the China market, and industry trends.
Forward-looking statements are subject to certain risks and
uncertainties that could cause the actual results to differ
materially. Those risks and uncertainties include, but are not
limited to, such factors as: the Company’s reliance on a small
number of customers for a substantial portion of its revenues;
market growth in China and other key countries; possible reduction
in or volatility of customer orders or delays in shipments of
products to customers; timing of customer drawdowns of
vendor-managed inventory; possible disruptions in the supply chain
or in demand for the Company’s products due to industry
developments; the ability of the Company's vendors and
subcontractors to supply or manufacture the Company's products in a
timely manner; ability of the Company to meet customer demand;
economic conditions or natural disasters; volatility in utilization
of manufacturing operations, supporting utility services and other
manufacturing costs; the savings anticipated from cost reduction
actions and the impact of severance costs; reductions in the
Company’s rate of new design wins, and/or the rate at which design
wins go into production, and the rate of customer acceptance of new
product introductions; potential pricing pressure that may arise
from changing supply or demand conditions in the industry; the
impact of any previous or future acquisitions or divestitures;
challenges involving integration of acquired businesses and
utilization of acquired technology or divestitures of assets and
related product lines; the impact of the sale of the low speed
transceiver product lines and the discontinuance or end of life of
certain other products; market adoption, revenue growth and margins
of acquired products; changes in demand for the Company's products;
the impact of competitive products and pricing and alternative
technological advances; the accuracy of estimates used to prepare
the Company's financial statements and forecasts; the timely and
successful development and market acceptance of new products and
upgrades to existing products; the difficulty of predicting future
cash needs; the nature of other investment opportunities available
to the Company from time to time; the Company’s operating cash
flow; changes in economic and industry projections; a decline in
general conditions in the telecommunications equipment industry or
the world economy generally; and the effects of seasonality. For
further discussion of these risks and uncertainties, please refer
to the documents the Company files with the SEC from time to time,
including the Company's Annual Report on Form 10-K for the year
ended December 31, 2016 and its Form 10-Q for the six months ended
June 30, 2017. All forward-looking statements are made as of the
date of this press release, and the Company disclaims any duty to
update such statements.
©2017 NeoPhotonics Corporation. All rights reserved.
NeoPhotonics and the red dot logo are trademarks of NeoPhotonics
Corporation. All other marks are the property of their respective
owners.
NeoPhotonics Corporation Condensed Consolidated
Balance Sheets (Unaudited) (In thousands)
As of Sept. 30,
2017
Dec. 31,
2016
ASSETS Current assets: Cash and cash equivalents $ 58,528 $
82,500 Short-term investments 12,281 19,015 Restricted cash 2,917
4,085 Accounts receivable, net 67,003 80,610 Inventories, net
82,809 48,237 Assets held for sale - 13,953 Prepaid expenses and
other current assets 34,568 22,396
Total current assets 258,106 270,796 Property, plant and equipment,
net 127,316 106,867 Purchased intangible assets, net 4,594 5,562
Goodwill 1,115 1,115 Other long-term assets 6,858
6,547 Total assets $ 397,989 $ 390,887
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 69,771 $ 84,766 Notes payable and
short-term borrowing 19,630 30,190 Current portion of long-term
debt 5,740 747 Accrued and other current liabilities 44,743
30,625 Total current liabilities 139,884
146,328 Long-term debt, net of current portion 41,029 10,215 Other
noncurrent liabilities 14,959 8,939
Total liabilities 195,872 165,482
Stockholders' equity: Common stock 110 106 Additional
paid-in capital 542,029 532,378 Accumulated other comprehensive
loss (2,294 ) (8,401 ) Accumulated deficit (337,728 )
(298,678 ) Total stockholders' equity 202,117
225,405 Total liabilities and stockholders' equity $ 397,989
$ 390,887
NeoPhotonics Corporation
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except percentages and per share data)
Three Months Ended Nine
Months Ended Sept. 30,
2017
June. 30,
2017
Sept. 30,
2016
Sept. 30,
2017
Sept. 30,
2016
Revenue $ 71,121 $ 73,214 $ 103,312 $ 216,023 $ 301,586 Cost
of goods sold (1) 60,608 56,437
75,863 170,230 215,486 Gross
profit 10,513 16,777 27,449 45,793 86,100 Gross margin 14.8 % 22.9
% 26.6 % 21.2 % 28.5 % Operating expenses: Research and development
(1) 14,662 14,206 17,474 44,412 42,206 Sales and marketing (1)
4,071 3,910 5,936 12,913 13,674 General and administrative (1)
7,637 7,729 9,822 26,792 26,747 Amortization of purchased
intangible assets 119 118 462 355 1,375 Acquisition and asset sale
related costs 78 21 148 229 923 Restructuring charges 2,829 494 -
3,550 - Gain on asset sale - - -
(2,000 ) - Total operating expenses
29,396 26,478 33,842
86,251 84,925 Income (loss) from
operations (18,883 ) (9,701 ) (6,393 )
(40,458 ) 1,175 Interest income 37 31 95 141 227
Interest expense (495 ) (111 ) (103 ) (743 ) (304 ) Other income
(expense), net (41 ) (11 ) 18
197 (828 ) Total interest and other income (expense),
net (499 ) (91 ) 10 (405 )
(905 ) Income (loss) before income taxes (19,382 ) (9,792 )
(6,383 ) (40,863 ) 270 Income tax (provision) benefit 1,195
451 (804 ) 1,813
(2,471 ) Net loss $ (18,187 ) $ (9,341 ) $ (7,187 ) $ (39,050 ) $
(2,201 ) Basic net loss per share $ (0.42 ) $ (0.22 ) $ (0.17 ) $
(0.90 ) $ (0.05 ) Diluted net loss per share $ (0.42 ) $ (0.22 ) $
(0.17 ) $ (0.90 ) $ (0.05 ) Weighted average shares used to compute
basic net loss per share 43,790 43,219
42,038 43,212 41,589
Weighted average shares used to compute diluted net loss per share
43,790 43,219 42,038
43,212 41,589 (1) Includes stock-based
compensation expense as follows for the periods presented: Cost of
goods sold $ 340 $ 324 $ 297 $ 811 $ 1,605 Research and development
606 511 2,981 1,779 4,508 Sales and marketing 393 313 2,352 1,170
3,604 General and administrative 595 738
3,146 1,932 4,728
Total stock-based compensation expense $ 1,934 $ 1,886
$ 8,776 $ 5,692 $ 14,445
NeoPhotonics Corporation Reconciliation of Condensed
Consolidated GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited) (In thousands, except percentages and per share
data)
Three Months Ended
Nine Months Ended Sept. 30,
2017
June. 30,
2017
Sept. 30,
2016
Sept. 30,
2017
Sept. 30,
2016
NON-GAAP GROSS PROFIT: GAAP gross profit $ 10,513 $
16,777 $ 27,449 $ 45,793 $ 86,100 Stock-based compensation expense
340 324 297 811 1,605 Amortization of purchased intangible assets
202 203 853 667 2,542 Depreciation of acquisition-related fixed
asset step-up (68 ) (68 ) (68 ) (202 ) (194 ) End-of-life related
inventory write-down 1,975 - - 1,975 - Restructuring charges
285 240 - 564
- Non-GAAP gross profit $ 13,247 $ 17,476
$ 28,531 $ 49,608 $ 90,053 Non-GAAP
gross margin as a % of revenue 18.6 % 23.9 % 27.6 % 23.0 % 29.9 %
NON-GAAP TOTAL OPERATING EXPENSES: GAAP total
operating expenses $ 29,396 $ 26,478 $ 33,842 $ 86,251 $ 84,925
Stock-based compensation expense (1,594 ) (1,562 ) (8,479 ) (4,881
) (12,840 ) Amortization of purchased intangible assets (119 ) (118
) (462 ) (355 ) (1,375 ) Depreciation of acquisition-related fixed
asset step-up (71 ) (72 ) (79 ) (216 ) (255 ) Acquisition and asset
sale related costs (78 ) (21 ) (148 ) (229 ) (923 ) Restructuring
charges (2,829 ) (494 ) - (3,550 ) - Litigation - - - 64 - Gain on
asset sale - - -
2,000 - Non-GAAP total operating expenses $
24,705 $ 24,211 $ 24,674 $ 79,084 $
69,532 Non-GAAP total operating expenses as a % of revenue
34.7 % 33.1 % 23.9 % 36.6 % 23.1 %
NON-GAAP OPERATING
INCOME (LOSS): GAAP income (loss) from operations $ (18,883 ) $
(9,701 ) $ (6,393 ) $ (40,458 ) $ 1,175 Stock-based compensation
expense 1,934 1,886 8,776 5,692 14,445 Amortization of purchased
intangible assets 321 321 1,315 1,022 3,917 Depreciation of
acquisition-related fixed asset step-up 3 4 11 14 61 Acquisition
and asset sale related costs 78 21 148 229 923 End-of-life related
inventory write-down 1,975 - - 1,975 - Restructuring charges 3,114
734 - 4,114 - Litigation - - - (64 ) - Gain on asset sale -
- - (2,000 ) -
Non-GAAP income (loss) from operations $ (11,458 ) $ (6,735
) $ 3,857 $ (29,476 ) $ 20,521 Non-GAAP operating
margin as a % of revenue (16.1 )% (9.2 )% 3.7 % (13.6 )% 6.8 %
NeoPhotonics Corporation Reconciliation of
Condensed Consolidated GAAP Financial Measures to Non-GAAP
Financial Measures (Unaudited) (Continued) (In thousands,
except percentages and per share data)
Three Months Ended Nine Months Ended Sept.
30,
2017
June. 30,
2017
Sept. 30,
2016
Sept. 30,
2017
Sept. 30,
2016
NON-GAAP NET INCOME (LOSS): GAAP net loss $ (18,187 ) $
(9,341 ) $ (7,187 ) $ (39,050 ) $ (2,201 ) Stock-based compensation
expense 1,934 1,886 8,776 5,692 14,445 Amortization of purchased
intangible assets 321 321 1,315 1,022 3,917 Depreciation of
acquisition-related fixed asset step-up 3 4 11 14 61 Acquisition
and asset sale related costs 78 21 148 229 923 End-of-life related
inventory write-down 1,975 - - 1,975 - Restructuring charges 3,114
734 - 4,114 - Litigation - - - (64 ) - Gain on asset sale - - -
(2,000 ) - Income tax effect of Non-GAAP adjustments (114 )
(192 ) (140 ) (117 ) (399 ) Non-GAAP
net income (loss) $ (10,876 ) $ (6,567 ) $ 2,923 $ (28,185 )
$ 16,746 Non-GAAP net income (loss) as a % of revenue (15.3
)% (9.0 )% 2.8 % (13.0 )% 5.6 %
ADJUSTED EBITDA: GAAP
net loss $ (18,187 ) $ (9,341 ) $ (7,187 ) $ (39,050 ) $ (2,201 )
Stock-based compensation expense 1,934 1,886 8,776 5,692 14,445
Amortization of purchased intangible assets 321 321 1,315 1,022
3,917 Depreciation of acquisition-related fixed asset step-up 3 4
11 14 61 Acquisition and asset sale related costs 78 21 148 229 923
End-of-life related inventory write-down 1,975 - - 1,975 -
Restructuring charges 3,114 734 - 4,114 - Litigation - - - (64 ) -
Gain on asset sale - - - (2,000 ) - Interest expense, net 458 80 8
602 77 Provision (benefit) for income taxes (1,195 ) (451 ) 804
(1,813 ) 2,471 Depreciation expense 7,016
6,794 4,457 19,608 12,942
Adjusted EBITDA $ (4,483 ) $ 48 $ 8,332 $
(9,671 ) $ 32,635 Adjusted EBITDA as a % of revenue (6.3 )%
0.1 % 8.1 % (4.5 )% 10.8 %
BASIC AND DILUTED NET INCOME
(LOSS) PER SHARE: GAAP basic net loss per share $ (0.42 ) $
(0.22 ) $ (0.17 ) $ (0.90 ) $ (0.05 ) GAAP diluted net loss per
share $ (0.42 ) $ (0.22 ) $ (0.17 ) $ (0.90 ) $ (0.05 ) Non-GAAP
basic net income (loss) per share $ (0.25 ) $ (0.15 ) $ 0.07
$ (0.65 ) $ 0.40 Non-GAAP diluted net income (loss) per
share $ (0.25 ) $ (0.15 ) $ 0.06 $ (0.65 ) $ 0.37
SHARES USED TO COMPUTE GAAP AND NON-GAAP BASIC NET INCOME
(LOSS) PER SHARE 43,790 43,219
42,038 43,212 41,589
SHARES USED TO COMPUTE GAAP DILUTED NET LOSS PER SHARE
43,790 43,219 42,038
43,212 41,589
SHARES USED TO COMPUTE
NON-GAAP DILUTED NET INCOME (LOSS) PER SHARE 43,790
43,219 46,745 43,212
45,612
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171106006295/en/
NeoPhotonics CorporationBeth Eby, +1-408-895-6086Chief Financial
Officerir@neophotonics.comorSapphire Investor Relations, LLCErica
Mannion, +1-617-542-6180Investor Relationsir@neophotonics.com
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