Consolidated Q2 GAAP operating loss of $3.9 million and Non-GAAP operating loss of $2.2 million
GAAP pre-tax EPS from continuing operations of $(0.12) and Non-GAAP pre-tax EPS from continuing operations of $(0.08)
ALHAMBRA, Calif., May 03, 2018 (GLOBE NEWSWIRE) -- EMCORE Corporation (NASDAQ:EMKR) - News, a leading provider of advanced Mixed-Signal Optics products that provide the foundation for today's high-speed communications network infrastructures and leading-edge defense systems, today announced financial results for its fiscal second quarter ended March 31, 2018.
Jeffrey Rittichier, EMCORE's President and CEO commented, “Despite solid continued MSO capital expenditures, customer inventory adjustments led to an order shortfall this quarter for our Cable TV business. However, we saw good design win traction with our LEML products, an uptick in demand from our other CATV customers and good performance in line with our expectations in our Chip and Navigation businesses.”
Financial Highlights - Fiscal Second Quarter Ended March 31, 2018
Financial Highlights
For the Three Months Ended
(in thousands)
March 31, 2018
December 31, 2017
March 31, 2017
Revenue
$
18,623
$
24,036
$
32,591
GAAP Gross Profit
$
4,947
$
7,914
$
11,038
Non-GAAP Gross Profit
$
5,078
$
8,070
$
11,202
GAAP Operating (loss) income
$
(3,929
)
$
(812
)
$
1,757
Non-GAAP Operating (loss) income
$
(2,235
)
$
608
$
3,703
GAAP pre-tax (loss) income from continuing operations
$
(3,240
)
$
(415
)
$
1,847
Non-GAAP pre-tax (loss) income from continuing operations
$
(2,072
)
$
719
$
3,749
GAAP pre-tax EPS from continuing operations - per diluted share
$
(0.12
)
$
(0.02
)
$
0.07
Non-GAAP pre-tax EPS from continuing operations - per diluted share
$
(0.08
)
$
0.03
$
0.14
Financial Statement Highlights for the Second Quarter of Fiscal 2018:
Consolidated revenue was $18.6 million, representing a 22.5% decrease from the prior quarter
Consolidated GAAP gross margin was 26.6%, representing a decrease from the 32.9% gross margin in the prior quarter
Consolidated Non-GAAP gross margin was 27.3%, representing a decrease from 33.6% in the prior quarter
Consolidated GAAP operating margin was (21.1)%, representing a decrease from (3.4)% in the prior quarter
Consolidated Non-GAAP operating margin was (12.0)%, representing a decrease from 2.5% in the prior quarter
GAAP diluted pre-tax EPS from continuing operations of $(0.12), representing a decrease from $(0.02) in the prior quarter
Non-GAAP diluted pre-tax EPS from continuing operations of $(0.08), representing a decrease from $0.03 in the prior quarter
Cash and cash equivalents was $65.5 million at the end of the quarter, an increase of $1.3 million when compared to the end of the prior quarter
Business Outlook The Company expects revenue for the fiscal third quarter ending June 30, 2018 to be in the range of $17 to $19 million.
Conference Call The Company will discuss its financial results on May 3, 2018 at 8:00 a.m. EDT (5:00 a.m PDT). The call will be available by dialing 800-239-9838. For international callers, please dial +1 323-794-2551. The conference passcode number is 9781008. The call will be webcast live via the Company's website at http://investor.emcore.com/events.cfm. A webcast will be available for replay beginning Thursday, May 3, 2018 for at least 90 days following the conclusion of the call on the Company's website.
About EMCORE EMCORE Corporation is a leading provider of advanced Mixed-Signal Optics products that provide the foundation for today’s high-speed communication network infrastructures and leading-edge defense systems. Our optical chips, components, subsystems and systems enable broadband and wireless providers to continually enhance their network capacity, speed and coverage to advance the free flow of information that empowers the lives of millions of people daily. The Mixed-Signal Optics technology at the heart of our broadband transmission products is shared with our fiber optic gyros and military communications links to provide the aerospace and defense markets state-of-the-art systems that keep us safe in an increasingly unpredictable world. EMCORE’s performance-leading optical components and systems serve a broad array of applications including cable television, fiber-to-the-premise networks, telecommunications, data centers, wireless infrastructure, satellite RF fiber links, navigation systems and military communications. EMCORE has fully vertically-integrated manufacturing capability through its world-class Indium Phosphide (InP) wafer fabrication facility at our headquarters in Alhambra, California and is ISO 9001 certified in Alhambra and at our facility in Beijing, China. For further information about EMCORE, visit http://www.emcore.com.
Use of Non-GAAP Financial Measures We disclose non-GAAP gross profit, gross margin percentage, operating income (loss), operating margin percentage, pre-tax EPS from continuing operations and pre-tax income (loss) from continuing operations as a supplemental measure to U.S. GAAP gross profit, gross margin percentage, operating income (loss), operating margin percentage, pre-tax EPS from continuing operations and pre-tax income (loss) from continuing operations regarding our operational performance. These financial measures exclude the impact of certain items that we do not believe are indicative of our core operating results; therefore, they have not been calculated in accordance with U.S. GAAP. A reconciliation of non-GAAP pre-tax income from continuing operations to GAAP income from continuing operations, which identifies the items excluded from the non-GAAP measures, are provided in the table below titled "Reconciliation of GAAP to Non-GAAP Financial Measures".
We believe that these additional non-GAAP financial measures are useful to investors in assessing our operating performance. We also use these financial measures 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 measures. We also believe that it is in the best interests of our investors to provide this non-GAAP information.
While we believe that these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of these non-GAAP financial measures. Our non-GAAP financial measures 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 these non-GAAP financial measures as a supplement to U.S. GAAP and by providing a reconciliation of our non-GAAP financial measures to its most comparable U.S. GAAP financial measures.
Non-GAAP financial measures are not in accordance with or an alternative for U.S. GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable U.S. GAAP financial measures and our disclosures of these measures should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.
Forward-Looking Statements The 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 Securities 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, 2017, as updated by our subsequent periodic reports.
Forward-looking statements are based on certain assumptions and analysis made in light of our experience and perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate under the circumstances. While these statements represent our judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results. 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 Securities and Exchange Commission (“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 Six Months Ended
March 31, 2018
December 31, 2017
March 31, 2017
March 31, 2018
March 31, 2017
Revenue
$
18,623
$
24,036
$
32,591
$
42,659
$
62,767
Cost of revenue
13,676
16,122
21,553
29,798
41,686
Gross profit
4,947
7,914
11,038
12,861
21,081
Operating expense:
Selling, general, and administrative
5,644
4,819
5,672
10,463
11,250
Research and development
3,300
3,800
3,141
7,100
5,340
Impairments
—
—
468
—
468
(Gain) loss on sale of assets
(68
)
107
—
39
—
Total operating expense
8,876
8,726
9,281
17,602
17,058
Operating (loss) income
(3,929
)
(812
)
1,757
(4,741
)
4,023
Other income (expense):
Interest income, net
163
111
46
274
69
Foreign exchange gain (loss)
526
286
44
812
(359
)
Total other income (expense)
689
397
90
1,086
(290
)
(Loss) income from continuing operations before income tax benefit (expense)
(3,240
)
(415
)
1,847
(3,655
)
3,733
Income tax benefit (expense)
169
333
8
502
(112
)
(Loss) income from continuing operations
(3,071
)
(82
)
1,855
(3,153
)
3,621
Loss from discontinued operations, net of tax
—
—
(7
)
—
(16
)
Net (loss) income
$
(3,071
)
$
(82
)
$
1,848
$
(3,153
)
$
3,605
Per share data:
Net (loss) income per basic share:
Continuing operations
$
(0.11
)
$
(0.00
)
$
0.07
$
(0.12
)
$
0.14
Discontinued operations
—
—
(0.00
)
—
(0.00
)
Net (loss) income per basic share
$
(0.11
)
$
(0.00
)
$
0.07
$
(0.12
)
$
0.14
Net (loss) income per diluted share:
Continuing operations
$
(0.11
)
$
(0.00
)
$
0.07
$
(0.12
)
$
0.13
Discontinued operations
—
—
(0.00
)
—
(0.00
)
Net (loss) income per diluted share
$
(0.11
)
$
(0.00
)
$
0.07
$
(0.12
)
$
0.13
Weighted-average number of basic shares outstanding
27,197
27,032
26,622
27,113
26,449
Weighted-average number of diluted shares outstanding
27,197
27,032
27,585
27,113
27,366
EMCORE CORPORATION Condensed Consolidated Balance Sheets (in thousands) (unaudited)
As of
As of
March 31, 2018
September 30, 2017
ASSETS
Current assets:
Cash and cash equivalents
$
65,477
$
68,333
Restricted cash
52
421
Accounts receivable, net
17,767
22,265
Inventory
23,726
25,139
Prepaid expenses and other current assets
10,985
8,527
Total current assets
118,007
124,685
Property, plant, and equipment, net
16,728
16,635
Non-current inventory
2,779
2,686
Other non-current assets, net
791
78
Total assets
$
138,305
$
144,084
LIABILITIES and SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
6,848
$
11,818
Accrued expenses and other current liabilities
10,626
9,825
Total current liabilities
17,474
21,643
Asset retirement obligations
1,631
1,638
Other long-term liabilities
56
29
Total liabilities
19,161
23,310
Shareholders’ equity:
Common stock
732,055
730,906
Treasury stock
(47,721
)
(47,721
)
Accumulated other comprehensive income
935
561
Accumulated deficit
(566,125
)
(562,972
)
Total shareholders’ equity
119,144
120,774
Total liabilities and shareholders’ equity
$
138,305
$
144,084
We have provided a reconciliation of our non-GAAP pre-tax income 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 (Loss) Income from Continuing Operations (in thousands, except per share data) (unaudited)
For the Three Months Ended
For the Six Months Ended
March 31, 2018
December 31, 2017
March 31, 2017
March 31, 2018
March 31, 2017
US GAAP net (loss) income
$
(3,071
)
$
(82
)
$
1,848
$
(3,153
)
$
3,605
US GAAP net loss from discontinued operations
—
—
7
—
16
US GAAP (loss) income from Continuing Operations
(3,071
)
(82
)
1,855
(3,153
)
3,621
Income tax (benefit) expense
(169
)
(333
)
(8
)
(502
)
112
Currency exchange (gain) loss
(526
)
(286
)
(44
)
(812
)
359
Total other income & tax related adjustments
(695
)
(619
)
(52
)
(1,314
)
471
Stock based compensation expense - R&D
166
138
119
304
219
Stock based compensation expense - SG&A
652
638
563
1,290
1,133
Litigation related expenses
174
292
96
466
354
Severance and restructuring charges
639
89
536
728
708
Impairments
—
—
468
—
468
(Gain) loss on sale of assets
(68
)
107
—
39
—
Total operating expense adjustments
1,563
1,264
1,782
2,827
2,882
ARO accretion
16
17
17
33
34
Stock based compensation expense - COGS
115
139
147
254
240
Total COGS adjustments
131
156
164
287
274
Non-GAAP pre-tax (loss) income from continuing operations
$
(2,072
)
$
719
$
3,749
$
(1,353
)
$
7,248
GAAP EPS from continuing operations - per diluted share
$
(0.11
)
$
(0.00
)
$
0.07
$
(0.12
)
$
0.13
Other income and tax related adjustments
(0.03
)
(0.02
)
0.00
(0.05
)
0.02
Operating expense adjustments
0.06
0.05
0.06
0.11
0.11
COGS adjustments
0.00
0.00
0.01
0.01
0.00
Non-GAAP pre-tax EPS from continuing operations - per diluted share
$
(0.08
)
$
0.03
$
0.14
$
(0.05
)
$
0.26
GAAP Gross Margin Percentage
26.6
%
32.9
%
33.9
%
30.1
%
33.6
%
Non GAAP Gross Margin Percentage
27.3
%
33.6
%
34.4
%
30.8
%
34.0
%
GAAP Operating Margin Percentage
(21.1
%
(3.4
)%
5.5
%
(11.1
)%
6.5
%
Non GAAP Operating Margin Percentage
(12.0
)%
2.5
%
11.4
%
(3.8
)%
11.4
%
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 Six Months Ended
(in thousands)
March 31, 2018
December 31, 2017
March 31, 2017
March 31, 2018
March 31, 2017
Cost of revenue
$
115
$
139
$
147
$
254
$
240
Selling, general, and administrative
652
638
563
1,290
1,133
Research and development
166
138
119
304
219
Total stock-based compensation expense
$
933
$
915
$
829
$
1,848
$
1,592
Contact: EMCORE Corporation Jikun Kim (626) 293-3400 [email protected]
Sapphire Investor Relations, LLC Erica Mannion or Michael Funari (617) 542-6180 [email protected]
