EMCORE Announces Sale of CATV Production Assets and Transfer of Operations to Hytera
ALHAMBRA, Calif., Oct. 30, 2019 (GLOBE NEWSWIRE) -- EMCORE Corporation (NASDAQ: EMKR), a leading provider of advanced Mixed-Signal Optics products that provide the foundation for today’s leading-edge defense systems and high-speed communication network infrastructures, announced today the sale of its Cable TV (CATV) production equipment and transfer of its CATV manufacturing operations from the Company’s Beijing facility to Hytera Communications (Hong Kong) Company Limited and Shenzhen Hytera Communications Co., Ltd. (collectively, “Hytera”) . The sale price for the equipment is approximately $5.5 million and is expected to be received by EMCORE beginning in the December 2019 quarter and continuing through the September 2020 quarter. Hytera will use the equipment to manufacture CATV components and subsystems from its facility in Southeast Asia.
On its fiscal third quarter 2019 earnings call, EMCORE discussed plans to take four actions to improve profitability and cash flow while eliminating exposure to tariffs associated with the import of products manufactured in China. With the execution of this agreement and subsequent production transfer to Hytera, EMCORE will complete the first of these actions -- streamlining operations and moving to a variable cost model in EMCORE’s CATV product lines. Additionally, EMCORE completed two other actions in the quarter by reducing the size of its CATV team and reducing the capacity of EMCORE’s wafer fab to one shift. These actions incurred one-time costs of $0.4 million in the quarter ended September 30, 2019 and are expected to result in annual cash savings of approximately $3.0 million beginning in the December 2019 quarter. These operational changes in CATV also fulfill a strategic objective of positioning the CATV product lines to generate positive cash flow to help fund the other growth areas of EMCORE in Aerospace and Defense.
“We’ve been working to transition to a true EMS (electronics manufacturing services) model for our Cable TV products since 2015 when we launched the automation initiatives in our Beijing facility. Insertion of automation into Beijing dramatically improved yields and reduced cycle times, clearing the way for the final move to an EMS model. Hytera has been with us during our entire transformation and this agreement with them finalizes the realization of our strategy,” said Jeffrey Rittichier, President and CEO at EMCORE. “We are pleased that Hytera agreed to take this next step in our relatonship and are looking forward to many years of success together. Along with our other improvements in operational efficiencies, we expect this agreement to enable EMCORE to steadily improve gross margins over the coming quarters,” added Mr. Rittichier.
Erica Mannion or Mike Funari