EMCORE Corporation (NASDAQ: EMKR), a leading provider of compound
semiconductor-based components, subsystems, and systems for the
fiber optics and solar power markets, today announced its financial
results for its third quarter ended June 30, 2011.
Financial Results
Revenue: Consolidated revenue for the third quarter ended June
30, 2011 was $49.5 million, which represents a 6% increase compared
to the prior year and a 5% increase compared to the immediate
preceding quarter. On a segment basis, revenue for the Fiber Optics
segment was $33.3 million, which represents a 6% increase compared
to the prior year and an 11% increase compared to the immediate
preceding quarter. Revenue for the Photovoltaics segment was $16.2
million, which represents a 7% increase compared to the prior year
and a 6% decrease compared to the immediate preceding quarter.
Gross Profit: Consolidated gross profit was $9.5 million, which
represents a 26% decrease compared to the prior year and a 10%
decrease compared to the immediate preceding quarter. Consolidated
gross margin was 19.1%, which represents a decrease from both the
27.5% gross margin reported in the prior year and the 22.4% gross
margin reported in the immediate preceding quarter. On a segment
basis, Fiber Optics gross margin was 19.4%, which represents a
decrease from the 25.9% gross margin reported in the prior year and
an increase from the 18.0% gross margin reported in the immediate
preceding quarter. Photovoltaics gross margin was 18.6%, which
represents a decrease from both the 30.7% gross margin reported in
the prior year and the 30.2% gross margin reported in the immediate
preceding quarter.
Operating loss: The consolidated operating loss was $11.2
million, which represents a $2.9 million increase in operating loss
when compared to the prior year and a $7.0 million increase in
operating loss when compared to the immediate preceding quarter.
The quarter-over-quarter variance was primarily due to the change
in litigation settlements totaling $4.1 million, an increase in
non-cash stock-based compensation expense of $1.4 million, and an
increase in research and development expense associated with the
March 2011 Soliant Energy, Inc. asset acquisition and our Fiber
Optics segment.
Net loss: The consolidated net loss was $11.1 million, which
represents a $1.9 million increase in net loss when compared to the
prior year and a $5.9 million increase in net loss when compared to
the immediate preceding quarter. The consolidated net loss per
share was $0.12, which represents a $0.01 increase in net loss per
share when compared to the prior year and a $0.06 increase in net
loss per share when compared to the immediate preceding quarter.
During the third quarter ended June 30, 2011, we recorded $0.3
million of non-operating expense related to our Suncore joint
venture.
Adjusted EBITDA: After excluding certain non-cash and other
adjustments as set forth in the attached non-GAAP table, adjusted
EBITDA for the third quarter ended June 30, 2011 was negative $3.2
million, which represents an additional loss of $5.1 million from
the adjusted EBITDA reported for the prior year and an additional
loss of $0.9 million from the adjusted EBITDA reported for the
immediate preceding quarter.
Order Backlog As of June 30, 2011, we had
a consolidated order backlog of approximately $66.2 million, a 31%
increase from the $50.5 million order backlog reported as of March
31, 2011. On a segment basis, the Photovoltaics order backlog
totaled $39.6 million, a 50% increase from $26.4 million reported
as of March 31, 2011. The Fiber Optics order backlog totaled $26.6
million, a 10% increase from $24.1 million reported as of March 31,
2011. Order backlog is defined as purchase orders or supply
agreements accepted by us with expected product delivery and/or
services to be performed within the next twelve months.
Balance Sheet Update As of June 30, 2011,
cash, cash equivalents, and restricted cash totaled approximately
$21.1 million. In May 2011, we completed a common stock private
placement of $9.7 million. In June 2011, we paid our remaining
capital contribution obligation to our Suncore joint venture. We
are not required to contribute additional funds in excess of our
initial $12 million investment, and at this time, we do not
anticipate contributing any additional funds to Suncore.
Business Outlook For the fourth quarter
ending September 30, 2011, we expect consolidated revenue to be $51
to $55 million.
Conference Call We will discuss our
financial results for the quarter ended June 30, 2011 on Wednesday,
August 3, 2011 at 4:30 p.m. ET. The call will be webcast via our
website at http://www.emcore.com. Please go to this site beforehand
to download any necessary software. To participate in the
conference call dial (480) 629-9856. The access code for the call
is 4459229. A webcast will be available on our website beginning
August 3, 2011 following the conclusion of the call.
Investor Conferences Management will
present at the Morgan Keegan Technology Conference on Tuesday,
August 9th at 4:25pm ET at the New York Palace Hotel and at the
Citi Technology Conference on Thursday, September 8th at 1:35pm ET
at the Hilton New York Hotel in New York City.
About EMCORE EMCORE Corporation is a
leading provider of compound semiconductor-based components and
subsystems for the fiber optics and solar power markets. EMCORE's
Fiber Optics segment offers optical components, subsystems, and
systems that enable the transmission of video, voice, and data over
high-capacity fiber optic cables for high-speed data and
telecommunications, cable television (CATV), and
fiber-to-the-premises (FTTP) networks. EMCORE's Photovoltaics
segment provides solar products for satellite and terrestrial
applications. For satellite applications, EMCORE offers
high-efficiency compound semiconductor-based gallium arsenide
(GaAs) solar cells, covered interconnect cells, and fully
integrated solar panels. For terrestrial applications, EMCORE
offers concentrating photovoltaic (CPV) systems for utility scale
solar applications as well as offering its high-efficiency GaAs
solar cells and CPV components for use in solar power concentrator
systems. For specific information about our Company, our products,
and the markets we serve, please visit our website at
http://www.emcore.com.
Use of Non-GAAP Financial Measure We
provide a non-GAAP adjusted EBITDA disclosure as a supplemental
measure to U.S. GAAP regarding our operational performance. This
financial measure excludes the impact of certain items; therefore,
it has not been calculated in accordance with U.S. GAAP.
We believe that the additional non-GAAP financial measure is
useful to investors in assessing our operating performance. We also
use this measure internally to evaluate our operating performance
and this measure is used 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 measure. We also believe that it is in
the best interest of our investors to provide this non-GAAP
information.
While we believe that this non-GAAP financial measure provides
useful supplemental information to investors, there are limitations
associated with the use of this non-GAAP financial measure. Our
non-GAAP financial measure 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 this
non-GAAP financial measure as a supplement to U.S. GAAP and by
providing a reconciliation of the non-GAAP financial measure to its
most comparable U.S. GAAP financial measure.
Non-GAAP financial measures are not in accordance with or an
alternative for U.S. GAAP. Our non-GAAP financial measure is not
meant to be considered in isolation or as a substitute for
comparable U.S. GAAP financial measures and it 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 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
transfer of business and operations into joint ventures may be more
difficult and/or take longer than anticipated, may be more costly
than anticipated and may have unanticipated adverse effects
relating to our remaining businesses; (b) the challenge of joint
ventures retaining key employees; (c) the impact on the Company,
our customers and our suppliers from the current domestic and
international economic and financial market conditions; (d) the
success of our cost reduction efforts in achieving their expected
benefits, due to, among other things, shifts in product mix,
selling price pressures, costs and delays related to product
transfers to lower cost manufacturing locations and associated
facility closures, integration difficulties, and execution
concerns; (e) delays and other difficulties in commercializing new
products; (f) 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; (g) we may not be successful
in undertaking the steps currently planned in order to increase our
liquidity; and (h) other risks and uncertainties described in our
filings with the Securities and Exchange Commission ("SEC") such as
cancellations, rescheduling or delays in product shipments;
manufacturing capacity constraints; lengthy sales and qualification
cycles; difficulties in the production process; changes in
semiconductor industry growth; increased competition; delays in
developing and commercializing new products; and other factors.
Neither management nor any other person assumes responsibility
for the accuracy and completeness of the forward-looking
statements. 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 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 loss per share)
(unaudited)
Three Months Ended Nine Months Ended
---------------------------- ---------------------
June 30, March 31, June 30, June 30, June 30,
2010 2011 2011 2010 2011
-------- --------- --------- ---------- ----------
Revenue $46,606 $ 47,218 $ 49,480 $ 137,202 $ 148,805
Cost of revenue 33,797 36,638 40,010 99,322 116,075
-------- --------- --------- ---------- ----------
Gross profit 12,809 10,580 9,470 37,880 32,730
Operating expenses
(income):
Selling, general, and
administrative 14,004 9,380 9,657 35,254 27,301
Research and development 7,147 7,984 9,549 22,256 24,724
Litigation settlements,
net - (2,590) 1,465 - (1,125)
-------- --------- --------- ---------- ----------
Total operating
expenses 21,151 14,774 20,671 57,510 50,900
Operating loss (8,342) (4,194) (11,201) (19,630) (18,170)
Other expense (income):
Interest income (3) - - (22) -
Interest expense 111 130 132 330 520
Foreign exchange loss
(gain) 928 (749) (625) 1,889 (1,039)
Loss from equity method
investment - 587 259 - 846
Change in fair value of
financial instruments (176) 1,038 107 634 1,417
Other expense 12 5 5 348 15
-------- --------- --------- ---------- ----------
Total other expense
(income) 872 1,011 (122) 3,179 1,759
-------- --------- --------- ---------- ----------
Net loss $(9,214) $ (5,205) $(11,079) $ (22,809) $ (19,929)
======== ========= ========= ========== ==========
Per share data:
Net loss per basic and
diluted share $ (0.11) $ (0.06) $ (0.12) $ (0.28) $ (0.23)
======== ========= ========= ========== ==========
Weighted-average number of
basic and diluted shares
outstanding 84,117 87,216 89,843 82,544 87,429
======== ========= ========= ========== ==========
EMCORE CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
As of As of
June 30, September 30,
2011 2010
----------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 18,829 $ 19,944
Restricted cash 2,226 1,298
Accounts receivable, net 37,858 40,125
Inventory 32,506 32,056
Prepaid expenses and other current assets 7,161 5,312
----------- -------------
Total current assets 98,580 98,735
Property, plant and equipment, net 44,155 46,990
Goodwill 20,384 20,384
Other intangible assets, net 9,231 10,738
Equity method investment 2,758 -
Other non-current assets, net 3,768 991
----------- -------------
Total assets $ 178,876 $ 177,838
=========== =============
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
Borrowings from credit facility $ 14,359 $ 10,573
Accounts payable 26,997 26,156
Warrant liability 2,088 -
Accrued expenses and other current liabilities 26,485 27,115
----------- -------------
Total current liabilities 69,929 63,844
Warrant liability - 475
Other long-term liabilities 6 87
----------- -------------
Total liabilities 69,935 64,406
Commitments and contingencies
Shareholders' equity:
Preferred stock - -
Common stock 710,023 701,997
Accumulated deficit (599,164) (587,259)
Accumulated other comprehensive income 165 777
Treasury stock (2,083) (2,083)
----------- -------------
Total shareholders' equity 108,941 113,432
----------- -------------
Total liabilities and shareholders'
equity $ 178,876 $ 177,838
=========== =============
We have provided a reconciliation of the non-GAAP adjusted EBITDA financial
measure to its most directly comparable U.S. GAAP financial measure as
indicated in the table below:
Non-GAAP Table
Adjusted EBITDA
Unaudited
(in thousands) Three Months Ended Nine Months Ended
---------------------------- -------------------
June 30, March 31, June 30, June 30, June 30,
2010 2011 2011 2010 2011
-------- --------- --------- --------- ---------
Net loss - GAAP $(9,214) $ (5,205) $(11,079) $(22,809) $(19,929)
Adjustments:
Depreciation 2,303 2,312 2,285 7,103 6,920
Amortization 728 651 648 2,163 1,983
Interest expense 111 130 132 330 520
Stock-based compensation
expense 2,095 1,207 2,643 7,344 4,667
Other compensatory stock
issuances 356 282 318 884 905
Corporate legal expense 348 295 137 4,855 533
Specific A/R reserve
adjustments 2,400 - - 1,950 -
Specific inventory reserve
adjustments - - - (1,185) -
Tangshan termination fee 2,775 - - 2,775 -
Litigation settlements - (2,590) 1,465 - (1,125)
Loss from equity method
investment - 587 259 - 846
-------- --------- --------- --------- ---------
Total adjustments 11,116 2,874 7,887 26,219 15,249
-------- --------- --------- --------- ---------
Adjusted EBITDA - Non-GAAP $ 1,902 $ (2,331) $ (3,192) $ 3,410 $ (4,680)
======== ========= ========= ========= =========
Stock-based compensation
expense by expense
category:
(in thousands) Three Months Ended Nine Months Ended
------------------------------ -------------------
June 30, March 31, June 30, June 30, June 30,
2010 2011 2011 2010 2011
--------- ---------- --------- --------- ---------
Cost of revenue $ 474 $ 143 $ 498 $ 1,349 $ 754
Selling, general, and
administrative 1,026 817 1,247 4,702 2,571
Research and development 595 247 898 1,293 1,342
--------- ---------- --------- --------- ---------
Total stock-based
compensation expense $ 2,095 $ 1,207 $ 2,643 $ 7,344 $ 4,667
========= ========== ========= ========= =========
Net effect on net loss per
basic and diluted share $ (0.02) $ (0.01) $ (0.03) $ (0.09) $ (0.05)
========= ========== ========= ========= =========
Contact: Mark Weinswig Chief Financial Officer (505)
332-5000 investor@emcore.com TTC Group Victor Allgeier (646)
290-6400 vic@ttcominc.com
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