Applied Optoelectronics, Inc. (NASDAQ: AAOI), a
leading provider of fiber-optic access network products for the
internet datacenter, cable broadband, telecom and fiber-to-the-home
(FTTH) markets, today announced financial results for its second
quarter 2021 ended June 30, 2021.
“We are pleased with the continued strength we are seeing in our
CATV product sales, which recorded significant year over year and
sequential growth to become our largest product type in the second
quarter,” said Dr. Thompson Lin, Applied Optoelectronics Inc.
Founder, President and Chief Executive Officer. “While we continue
to see softness in the datacenter market as we expected, we are
delighted to report that we secured two design wins for our 400G
products during the second quarter, and expect that increased
contribution from our 400G products will drive a recovery in our
datacenter business.”
Second Quarter 2021 Financial Summary
- GAAP revenue was $54.2 million,
compared with $65.2 million in the second quarter of 2020 and $49.7
million in the first quarter of 2021.
- GAAP gross margin was 19.9%,
compared with 21.1% in the second quarter of 2020 and 21.6% in the
first quarter of 2021. Non-GAAP gross margin was 25.0%, compared
with 23.1% in the second quarter of 2020 and 24.6% in the first
quarter of 2021.
- GAAP net loss was $8.2 million, or
$0.31 per basic share, compared with net loss of $18.6 million, or
$0.89 per basic share in the second quarter of 2020, and a net loss
of $15.6 million, or $0.59 per basic share in the first quarter of
2021.
- Non-GAAP net loss was $4.1 million,
or $0.15 per basic share, compared with non-GAAP net loss of $5.0
million, or $0.24 per basic share in the second quarter of 2020,
and a non-GAAP net loss of $5.5 million, or $0.21 per basic share
in the first quarter of 2021.
A reconciliation between all GAAP and non-GAAP information
referenced above for the second quarters of 2021 and 2020 is
contained in the tables below. Please also refer to “Non-GAAP
Financial Measures” below for a description of these non-GAAP
financial measures.
Third Quarter 2021 Business Outlook
(+)
For the third quarter of 2021, the company currently
expects:
- Revenue in the range of $ 51
million to $ 56 million.
- Non-GAAP gross margin in the range
of 19.5% to 21.5%.
- Non-GAAP net loss in the range of $
6.9 million to $ 9 million, and non-GAAP loss per share in the
range of $0.25 to $0.33 using approximately 27.7 million
shares.
(+) Please refer to the note below on
forward-looking statements and the risks involved with such
statements as well as the note on non-GAAP financial measures.
Conference Call Information
The company will host a conference call and webcast for analysts
and investors on August 5, 2021 to discuss its second quarter 2021
results and outlook for its third quarter 2021 at 4:30 p.m. Eastern
time / 3:30 p.m. Central time. Open to the public, investors may
access the call by dialing 844-890-1794 (domestic) or 412-717-9586
(international). A live audio webcast of the conference call along
with supplemental financial information will also be accessible on
the company's website at investors.ao-inc.com. Following the
webcast, an archived version will be available on the website for
one year. A telephonic replay of the call will be available one
hour after the call and will run for five business days and may be
accessed by dialing 877-344-7529 (domestic) or 412-317-0088
(international) and entering passcode 10157944.
Forward-Looking Information
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. In some cases, you can identify forward-looking statements by
terminology such as "believe," "may," "estimate," "continue,"
"anticipate," "intend," "should," "could," "would," "target,"
"seek," "aim," "predicts," "think," "objectives," "optimistic,"
"new," "goal," "strategy," "potential," "is likely," "will,"
"expect," "plan" "project," "permit" or by other similar
expressions that convey uncertainty of future events or outcomes.
These statements include management’s beliefs and expectations
related to our outlook for the third quarter of 2021. Such
forward-looking statements reflect the views of management at the
time such statements are made. These forward-looking statements
involve risks and uncertainties, as well as assumptions and current
expectations, which could cause the company's actual results to
differ materially from those anticipated in such forward-looking
statements. These risks and uncertainties include but are not
limited to: the impact of the COVID-19 pandemic on our business and
financial results; reduction in the size or quantity of customer
orders; change in demand for the company's products due to industry
conditions; changes in manufacturing operations; volatility in
manufacturing costs; delays in shipments of products; disruptions
in the supply chain; change in the rate of design wins or the rate
of customer acceptance of new products; the company's reliance on a
small number of customers for a substantial portion of its
revenues; potential pricing pressure; a decline in demand for our
customers' products or their rate of deployment of their products;
general conditions in the internet datacenter, cable television
(CATV) broadband, telecom, or fiber-to-the-home (FTTH) markets;
changes in the world economy (particularly in the United States and
China); changes in the regulation and taxation of international
trade, including the imposition of tariffs; changes in currency
exchange rates; the negative effects of seasonality; and other
risks and uncertainties described more fully in the company's
documents filed with or furnished to the Securities and Exchange
Commission, including our Annual Report on Form 10-K for the year
ended December 31, 2020 and our Quarterly Report on Form 10-Q for
the quarter ended June 30, 2021. More information about these and
other risks that may impact the company's business are set forth in
the "Risk Factors" section of the company's quarterly and annual
reports on file with the Securities and Exchange Commission. You
should not rely on forward-looking statements as predictions of
future events. All forward-looking statements in this press release
are based upon information available to us as of the date hereof,
and qualified in their entirety by this cautionary statement.
Except as required by law, we assume no obligation to update
forward-looking statements for any reason after the date of this
press release to conform these statements to actual results or to
changes in the company's expectations.
Non-GAAP Financial Measures
We provide non-GAAP gross margin, non-GAAP net income (loss),
and non-GAAP earnings per share to eliminate the impact of items
that we do not consider indicative of our overall operating
performance. To arrive at our non-GAAP gross margin, we exclude
stock-based compensation expense, expenses associated with
discontinued products, and non-recurring expenses, if any, from our
GAAP gross margin. To arrive at our non-GAAP net income (loss), we
exclude all amortization of intangible assets, stock-based
compensation expense, non-recurring expenses, unrealized foreign
exchange gain (loss), losses from the disposal of idle assets, if
any, non-GAAP tax expenses (benefits), expenses associated with
discontinued products, if any, and the effects of forgiveness of
our PPP loan from our GAAP net income (loss). Included in our
non-recurring expenses in Q2 2021 and Q2 2020 are certain one-time
legal (if any) and consulting fees (if any) and employee severance
expenses (if any). In computing our non-GAAP income tax expense
(benefit), we have applied an estimate of our annual effective
income tax rate and applied it to our net income before income
taxes. Our non-GAAP earnings per share is calculated by
dividing our non-GAAP net income by the fully diluted share count
(for periods in which non-GAAP net income is positive) or basic
share count (for periods in which our non-GAAP net income is
negative). We believe that our non-GAAP measures are useful to
investors in evaluating our operating performance for the following
reasons:
- We believe that elimination of
items such as amortization of intangible assets, stock-based
compensation expense, non-recurring revenue, expenses and other
income, losses from the disposal of idle assets, unrealized foreign
exchange gain or loss, unamortized debt issuance costs associated
with the extinguishment of debt, and depreciation on certain
equipment undergoing reconfiguration is appropriate because
treatment of these items may vary for reasons unrelated to our
overall operating performance;
- We believe that elimination of
expenses associated with discontinued products, including
depreciation and inventory obsolescence is appropriate because
these expenses are not indicative of our ongoing operations;
- We believe that estimating non-GAAP
income taxes allows comparison with prior periods and provides
additional information regarding the generation of potential future
deferred tax assets;
- We believe that non-GAAP measures
provide better comparability with our past financial performance,
period-to-period results and with our peer companies, many of which
also use similar non-GAAP financial measures; and
- We anticipate that investors and
securities analysts will utilize non-GAAP measures as a supplement
to GAAP measures to evaluate our overall operating
performance.
A reconciliation of our GAAP net income (loss) and GAAP earnings
(loss) per share for the quarter ended June 30, 2021 to our
non-GAAP net income (loss) and earnings (loss) per share is
provided below, together with corresponding reconciliations for the
quarter period ended June 30, 2020. A reconciliation of
our GAAP net income (loss) and GAAP earnings (loss) per share for
the quarter ended June 30, 2021 to our non-GAAP net income (loss)
and earnings (loss) per share is provided in our earnings release
dated August 5, 2021, which was filed with the Securities and
Exchange Commission with a Current Report on Form 8-K filed on
August 5, 2021.
Non-GAAP measures should not be considered as an alternative to
net income (loss), earnings (loss) per share, or any other measure
of financial performance calculated and presented in accordance
with GAAP. Our non-GAAP measures may not be comparable to similarly
titled measures of other organizations because other organizations
may not calculate such other non-GAAP measures in the same manner.
We have not reconciled the non-GAAP measures included in our
guidance to the appropriate GAAP financial measures because the
GAAP measures are not readily determinable on a forward-looking
basis. GAAP measures that impact our non-GAAP financial measures
may include stock-based compensation expense, non-recurring
expenses, amortization of intangible assets, unrealized exchange
loss (gain), asset impairment charges, and loss (gain) from
disposal of idle assets. These GAAP measures cannot be reasonably
predicted and may directly impact our non-GAAP gross margin, our
non-GAAP net income and our non-GAAP fully-diluted earnings per
share, although changes with respect to certain of these measures
may offset other changes. In addition, certain of these measures
are out of our control. Accordingly, a reconciliation of the
non-GAAP financial measure guidance to the corresponding GAAP
measures is not available without unreasonable effort.
About Applied Optoelectronics
Applied Optoelectronics Inc. (AOI) is a leading developer and
manufacturer of advanced optical products, including components,
modules and equipment. AOI's products are the building blocks for
broadband fiber access networks around the world, where they are
used in the internet datacenter, CATV broadband, telecom and FTTH
markets. AOI supplies optical networking lasers, components and
equipment to tier-1 customers in all four of these markets. In
addition to its corporate headquarters, wafer fab and advanced
engineering and production facilities in Sugar Land, TX, AOI has
engineering and manufacturing facilities in Taipei, Taiwan and
Ningbo, China. For additional information, visit
www.ao-inc.com.
Investor Relations Contacts:
The Blueshirt Group, Investor RelationsMonica
Gould+1-212-871-3927 ir@ao-inc.com
|
|
Applied Optoelectronics, Inc. |
Preliminary Condensed Consolidated Balance
Sheets |
(In thousands) |
(Unaudited) |
|
June 30, 2021 |
December 31, 2020 |
|
|
|
ASSETS |
|
|
CURRENT ASSETS |
|
|
Cash, Cash Equivalents and Restricted Cash |
$ |
50,499 |
|
$ |
50,114 |
Accounts Receivable, Net |
|
48,404 |
|
|
43,042 |
Notes receivable |
|
3,819 |
|
|
401 |
Inventories |
|
100,399 |
|
|
110,397 |
Prepaid Income Tax |
|
2 |
|
|
2 |
Prepaid Expenses and Other Current Assets |
|
5,101 |
|
|
5,213 |
Total Current Assets |
|
208,224 |
|
|
209,169 |
|
|
|
Property, Plant And Equipment, Net |
|
246,797 |
|
|
252,984 |
Land Use Rights, Net |
|
5,846 |
|
|
5,854 |
Right of Use Asset |
|
7,576 |
|
|
7,817 |
Intangible Assets, Net |
|
3,888 |
|
|
3,999 |
Other Assets |
|
813 |
|
|
982 |
TOTAL ASSETS |
$ |
473,144 |
|
$ |
480,805 |
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
CURRENT LIABILITIES |
|
|
Accounts Payable |
$ |
25,593 |
|
$ |
29,482 |
Accrued Expenses |
|
15,509 |
|
|
18,511 |
Current Lease Liability |
|
1,038 |
|
|
1,030 |
Bank Acceptance Payable |
|
6,469 |
|
|
15,860 |
Current Portion of Notes Payable and Long Term Debt |
|
41,876 |
|
|
38,265 |
Total Current Liabilities |
|
90,485 |
|
|
103,148 |
|
|
|
Notes Payable and Long Term Debt |
|
19,360 |
|
|
13,904 |
Convertible Senior Notes |
|
78,264 |
|
|
77,854 |
Other Long-Term Liabilities |
|
7,744 |
|
|
8,008 |
TOTAL LIABILITIES |
|
195,853 |
|
|
202,914 |
|
|
|
STOCKHOLDERS' EQUITY |
|
|
TOTAL STOCKHOLDERS' EQUITY |
|
277,291 |
|
|
277,891 |
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
473,144 |
|
$ |
480,805 |
|
|
|
Applied Optoelectronics, Inc. |
Preliminary Condensed Consolidated Statements of
Operations |
(In thousands, except per share data) |
(Unaudited) |
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
Revenue |
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
Datacenter |
22,392 |
|
52,533 |
|
|
48,331 |
|
85,797 |
|
CATV |
27,599 |
|
6,141 |
|
|
46,238 |
|
10,364 |
|
Telecom |
3,333 |
|
6,170 |
|
|
7,811 |
|
8,730 |
|
FTTH |
298 |
|
1 |
|
|
722 |
|
1 |
|
Other |
567 |
|
377 |
|
|
788 |
|
797 |
|
Total Revenue |
54,189 |
|
65,222 |
|
|
103,890 |
|
105,689 |
|
|
|
|
|
|
|
Total Cost of Goods Sold |
43,411 |
|
51,486 |
|
|
82,393 |
|
85,615 |
|
|
|
|
|
|
|
Total Gross Profit |
10,778 |
|
13,736 |
|
|
21,497 |
|
20,074 |
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
Research and Development |
10,914 |
|
10,803 |
|
|
21,842 |
|
21,361 |
|
Sales and Marketing |
2,832 |
|
3,430 |
|
|
5,792 |
|
6,366 |
|
General and Administrative |
10,681 |
|
10,611 |
|
|
21,550 |
|
21,249 |
|
Total Operating Expenses |
24,427 |
|
24,844 |
|
|
49,184 |
|
48,976 |
|
|
|
|
|
|
|
Operating Loss |
(13,649 |
) |
(11,108 |
) |
|
(27,687 |
) |
(28,902 |
) |
|
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
|
Interest Income |
16 |
|
47 |
|
|
32 |
|
194 |
|
Interest Expense |
(1,367 |
) |
(1,489 |
) |
|
(2,798 |
) |
(2,944 |
) |
Other Income |
6,370 |
|
861 |
|
|
6,410 |
|
979 |
|
Foreign Exchange Gain (Loss) |
427 |
|
113 |
|
|
218 |
|
252 |
|
Total Other Expense: |
5,446 |
|
(468 |
) |
|
3,862 |
|
(1,519 |
) |
|
|
|
|
|
|
Net loss before Income Taxes |
(8,203 |
) |
(11,576 |
) |
|
(23,825 |
) |
(30,421 |
) |
|
|
|
|
|
|
Income Tax Expense |
- |
|
(7,024 |
) |
|
0 |
|
(4,976 |
) |
|
|
|
|
|
|
Net loss |
(8,203 |
) |
(18,600 |
) |
|
(23,825 |
) |
(35,397 |
) |
Net loss per share attributable to common
stockholders |
basic |
$ |
(0.31 |
) |
$ |
(0.89 |
) |
|
$ |
(0.89 |
) |
$ |
(1.72 |
) |
diluted |
$ |
(0.31 |
) |
$ |
(0.89 |
) |
|
$ |
(0.89 |
) |
$ |
(1.72 |
) |
|
|
|
|
|
|
Weighted-average shares used to compute net loss per share
attributable to common stockholders |
|
|
|
basic |
26,850 |
|
20,858 |
|
|
26,637 |
|
20,533 |
|
diluted |
26,850 |
|
20,858 |
|
|
26,637 |
|
20,533 |
|
|
|
|
|
|
|
Applied Optoelectronics, Inc. |
Reconciliation of Statements of Operations under GAAP and
Non-GAAP |
(In thousands, except per share data) |
(Unaudited) |
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
GAAP total gross profit (a) |
10,778 |
|
13,736 |
|
|
21,497 |
|
20,074 |
|
Non-recurring customer credit |
- |
|
- |
|
|
- |
|
- |
|
Share-based compensation expense |
267 |
|
237 |
|
|
468 |
|
483 |
|
Non-recurring expense |
16 |
|
1 |
|
|
34 |
|
972 |
|
Expenses associated with discontinued products |
2,461 |
|
1,077 |
|
|
3,750 |
|
1,431 |
|
Non-GAAP total gross profit (a) |
13,522 |
|
15,051 |
|
|
25,749 |
|
22,960 |
|
|
|
|
|
|
|
GAAP net loss |
(8,203 |
) |
(18,600 |
) |
|
(23,825 |
) |
(35,397 |
) |
Amortization of intangible assets |
152 |
|
143 |
|
|
303 |
|
285 |
|
Share-based compensation expense |
3,274 |
|
3,302 |
|
|
5,793 |
|
6,540 |
|
Non-recurring (income) expense |
(6,246 |
) |
(463 |
) |
|
(5,744 |
) |
806 |
|
Expenses associated with discontinued products |
2,461 |
|
1,077 |
|
|
3,750 |
|
1,431 |
|
Non-cash expenses associated with discontinued products |
1,213 |
|
953 |
|
|
2,427 |
|
2,210 |
|
Unrealized exchange loss (gain) |
(133 |
) |
43 |
|
|
710 |
|
(127 |
) |
Non-GAAP tax benefit |
3,346 |
|
8,562 |
|
|
6,938 |
|
10,477 |
|
Non-GAAP net loss |
(4,136 |
) |
(4,983 |
) |
|
(9,648 |
) |
(13,775 |
) |
|
|
|
|
|
|
GAAP diluted net loss per share |
(0.31 |
) |
(0.89 |
) |
|
(0.89 |
) |
(1.72 |
) |
Amortization of intangible assets |
0.01 |
|
0.01 |
|
|
0.01 |
|
0.01 |
|
Share-based compensation expense |
0.12 |
|
0.16 |
|
|
0.22 |
|
0.32 |
|
Non-recurring (income) expense |
(0.23 |
) |
(0.02 |
) |
|
(0.22 |
) |
0.04 |
|
Expenses associated with discontinued products |
0.09 |
|
0.05 |
|
|
0.14 |
|
0.07 |
|
Non-cash expenses associated with discontinued products |
0.05 |
|
0.04 |
|
|
0.09 |
|
0.10 |
|
Unrealized exchange loss (gain) |
(0.00 |
) |
0.00 |
|
|
0.03 |
|
(0.01 |
) |
Non-GAAP tax benefit |
0.12 |
|
0.41 |
|
|
0.26 |
|
0.51 |
|
Non-GAAP diluted net loss per share |
(0.15 |
) |
(0.24 |
) |
|
(0.36 |
) |
(0.68 |
) |
|
|
|
|
|
|
Shares used to compute diluted loss per share |
26,850 |
|
20,858 |
|
|
26,637 |
|
20,533 |
|
Shares used to compute diluted earnings per share |
26,850 |
|
20,858 |
|
|
26,637 |
|
20,533 |
|
|
|
|
|
|
|
(a) Provided for the purpose of calculating gross profit as a
percentage of revenue (gross margin). |
|
|
|
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