NeoPhotonics Announces Preliminary Financial Results for the Fourth Quarter
January 14 2019 - 7:30AM
Business Wire
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 preliminary fourth quarter results which reflect
recent developments including the end-of-life of certain client
transceiver modules, a legal settlement and the signing of a
definitive agreement to sell its manufacturing operations in
Russia.
The Company has announced the end-of-life of certain client
transceiver modules and therefore will discontinue the manufacture
and sale of those products after completing last time production
runs through May 2019. This will result in approximately $3.5
million in charges for inventory and asset write-downs in the
fourth quarter of 2018 and accelerated depreciation of
approximately $3.0 million, to be amortized over the final
production during the first and second quarters of 2019. These
products contributed approximately $10 million of revenue in
2018.
Further, the Company has entered into an agreement to settle its
lawsuit with Lestina International, Ltd. with a cash payment of
$2.2 million. The expense will be recognized in the fourth quarter
of 2018. As disclosed in the Company’s recent 10-Q filings, the
lawsuit is pursuant to a purchase commitment for materials related
to the product assets sold by one of our foreign subsidiaries to
APAT Optoelectronics Components Co., Ltd. in January 2017.
Additionally, the Company has entered into a definitive
agreement to sell its manufacturing operations in Russia for
approximately book value. This is consistent with the financials
disclosed in the Company’s 10-Q filing for the quarter ended
September 30, 2018.
Taken together, these actions are expected to reduce cost of
goods sold by an amount approximately equivalent to one percentage
point of non-GAAP gross margin beginning in the first quarter of
2019.
Including these factors, preliminary results for the quarter
ended December 31, 2018 are anticipated as follows:
- Revenue is expected to be in the range
of $90 to $92 million, compared to the previously announced
expectation of $87 to $92 million
- Gross margin of approximately 24%-25%,
compared to the previous expectation of 22%-26%
- Non-GAAP gross margin of 27% to 29%,
compared to a previous expectation of 24%-28%
- Total restructuring and other charges
of approximately $5.7 million, including restructuring costs,
inventory write-downs and legal settlement expenses
- Diluted Net loss per share of $0.18 to
$0.15, inclusive of restructuring charges
- Non-GAAP earnings per share in the
range of $0.00 to earnings of $0.04.
“As a Company, we remain committed to our core capabilities,
including our industry leading coherent components and solutions
for data center interconnect and telecommunications systems,” said
Tim Jenks, Chairman and CEO of NeoPhotonics. “These actions will
complete our move from module to component level solutions for
client network applications and will further increase our focus on
our more profitable, industry leading platforms for 400
Gigabits/sec to beyond 1 Terabit/sec on a single wavelength, in
which our advanced hybrid photonic integration technology provides
the highest value,” concluded Mr. Jenks.
Revised Outlook for the Quarter Ending December 31,
2018
GAAP Non-GAAP
Revenue
$90 to $92 million
Gross Margin
24%-25% 27%-29%
Earnings per share
Net loss $0.18 to $0.15 Net Income $0.00 to
$0.04
The Non-GAAP revised outlook for the fourth quarter of 2018
excludes the impact of the litigation settlement of $2.2 million,
the expected restructuring charges of $1.0 million of assets,
end-of-life inventory write-downs of $2.6 million, the anticipated
impact of stock-based compensation of approximately $3.6 million,
of which $0.8 million is estimated for cost of goods sold,
amortization of acquisition related intangibles and other
disposition related costs of $0.3 million.
Non-GAAP and Adjusted EBITDA Measures vs. GAAP Financial
Measures
The Company’s non-GAAP and adjusted EBITDA measures exclude
certain GAAP financial measures. 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. For forward-looking information, the Company provides
reconciliations to comparable GAAP measures in relation to non-GAAP
financial measures to the extent available unless to do so would
require unreasonable efforts. For the projected improvement to
non-GAAP gross margin beginning in the first quarter of 2019
referenced above, a reconciliation to the comparable
forward-looking GAAP measure is not available without unreasonable
effort. This is due to the inherent difficulty of forecasting the
timing or amount of various items that would impact the most
directly comparable forward-looking GAAP measure, that have not yet
occurred, are out of the Company’s control and/or cannot be
reasonably predicted. For the same reasons, the Company is unable
to address the probable significance of the unavailable
information.
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.
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: final fourth quarter
financial results, future financial results, benefits of the
restructuring actions, demand for the Company’s high-speed
products, and the Company’s market position. 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; U.S.-China trade relations, possible reduction
in or volatility of customer orders or delays in shipments of
products to customers; timing of customer drawdowns of
vendor-managed inventory; potential governmental trade actions;
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; volatility in utilization of manufacturing
operations and manufacturing 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 of assets and
related product lines; challenges involving integration of acquired
businesses and utilization of acquired technology; 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 Quarterly Report on Form 10-Q for the quarter ended
September 30, 2018. All forward-looking statements are made as of
the date of this press release, and the Company disclaims any duty
to update such statements.
©2019 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20190114005256/en/
NeoPhotonics CorporationBeth Eby, Chief Financial
Officer+1-408-895-6086ir@neophotonics.com
Sapphire Investor Relations, LLCErica Mannion, Investor
Relations+1-617-542-6180ir@neophotonics.com
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