- Q4 revenue was $52.1 million, representing 5%
sequential increase and in line with guidance
- Management provides update on operations related to
impact from floods in Thailand
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 fourth quarter and fiscal year ended September 30,
2011.
Quarterly Financial Results
Revenue:
Consolidated revenue for the fourth quarter ended September 30,
2011 was $52.1 million, which represents a 4% decrease 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 $30.9 million, which represents a 10% decrease compared
to the prior year and a 7% decrease compared to the immediate
preceding quarter. Revenue for the Photovoltaics segment was $21.2
million, which represents an 8% increase compared to the prior year
and a 31% increase compared to the immediate preceding quarter.
Gross Profit:
Consolidated gross profit was $10.0 million, which represents a
22% decrease compared to the prior year and a 6% increase compared
to the immediate preceding quarter. Consolidated gross margin was
19.2%, which represents a decrease from the 23.6% gross margin
reported in the prior year and an increase from the 19.1% gross
margin reported in the immediate preceding quarter. On a segment
basis, Fiber Optics gross margin was 18.0%, which represents a
decrease from the 20.4% gross margin reported in the prior year and
a decrease from the 19.4% gross margin reported in the immediate
preceding quarter. Photovoltaics gross margin was 21.0%, which
represents a decrease from the 29.3% gross margin reported in the
prior year and an increase from the 18.6% gross margin reported in
the immediate preceding quarter.
Operating loss:
The consolidated operating loss was $14.4 million, which
represents a $12.6 million increase in operating loss when compared
to the prior year and a $3.2 million increase in operating loss
when compared to the immediate preceding quarter. The
quarter-over-quarter variance was primarily due to the $8.0
impairment charge recorded on the long-lived assets of our Fiber
Optics segment offset slightly by the change in litigation
settlements totaling $1.5 million and a decrease in non-cash
stock-based compensation expense of $1.1 million.
After excluding certain non-cash and other adjustments as set
forth in the attached non-GAAP table, adjusted operating loss for
the fourth quarter ended September 30, 2011 was $1.4 million, which
represents an additional operating loss of $4.1 million from the
loss reported for the prior year and a decrease in operating loss
of $2.3 million from the loss reported for the immediate preceding
quarter.
Net loss:
The consolidated net loss was $14.3 million, which represents a
$13.4 million increase in net loss when compared to the prior year
and a $3.2 million increase in net loss when compared to the
immediate preceding quarter. The consolidated net loss per
share was $0.15, which represents a $0.14 increase in net loss per
share when compared to the prior year and a $0.03 increase in net
loss per share when compared to the immediate preceding
quarter. During the fourth quarter ended September 30, 2011,
we recorded $1.0 million of non-operating expense related to our
Suncore joint venture.
Annual Financial Results
Revenue:
Consolidated revenue for fiscal 2011 was $200.9 million, which
represents a 5% increase compared to the prior year. On a
segment basis, revenue for the Fiber Optics segment was $125.6
million, which represents a 3% increase compared to the prior
year. Revenue for the Photovoltaics segment was $75.3 million,
which represents an 8% increase compared to the prior year.
Gross Profit:
Consolidated gross profit was $42.8 million, which represents a
16% decrease compared to the prior year. Consolidated gross
margin was 21.3%, which represents a decrease from the 26.5% gross
margin reported in the prior year. On a segment basis, Fiber
Optics gross margin was 18.5%, which represents a decrease from the
23.1% gross margin reported in the prior year. Photovoltaics
gross margin was 26.0%, which represents a decrease from the 32.3%
gross margin reported in the prior year.
Operating loss:
The consolidated operating loss was $32.5 million, which
represents an $11.1 million increase in operating loss when
compared to the prior year. The year-over-year variance was
primarily due to the decrease in gross profit and the $8.0
impairment charge recorded on the long-lived assets of our Fiber
Optics segment, offset slightly by lower stock-based compensation
expense of $2.4 million and the net gain related to litigation
settlements totaling $1.1 million.
After excluding certain non-cash and other adjustments as set
forth in the attached non-GAAP table, adjusted operating loss for
the fiscal year ended September 30, 2011 was $5.7 million, which
represents an additional operating loss of $14.6 million from the
adjusted operating loss reported for the prior year.
Net loss:
The consolidated net loss was $34.2 million, which represents a
$10.5 million increase in net loss when compared to the prior
year. The consolidated net loss per share was $0.38, which
represents a $0.10 increase in net loss per share when compared to
the prior year. During fiscal 2011, we recorded $1.8 million
of non-operating expense related to our Suncore joint venture.
Balance Sheet Update
As of September 30, 2011, cash, cash equivalents, and restricted
cash totaled approximately $16.1 million. With respect to
measures taken to improve liquidity, in December 2011, we amended
the Wells Fargo credit facility, which included adding new classes
of assets into the borrowing base calculation and reducing the
excess availability covenant requirements. As a result of this
amendment, we can increase our potential borrowings by up to $14
million. In addition, we entered into an equity line of credit
arrangement with Commerce Court Small Cap Value Fund, Ltd. in
August 2011, pursuant to which, we may sell up to $50 million in
shares of our common stock over the 24-month term.
Business Outlook and Commentary
As previously disclosed on October 24, 2011, flood waters
infiltrated the offices and manufacturing floorspace of our primary
contract manufacturer in Thailand. The areas used to manufacture
our fiber optic products and our process and test equipment were
submerged in several feet deep flood water for more than a month.
As a result, the manufacturing infrastructure that supports
approximately 50% of our Fiber Optics segment revenue was damaged.
This has had a significant impact on our operations and our ability
to meet customer demand for fiber optics products.
Production capabilities for three major product lines were
impacted: these include Telecom products, such as tunable lasers
and our high-volume tunable XFP line (our low-volume TXFP
production line is in the Bay Area and producing products), Cable
television (CATV) laser components and transmitters, and other
legacy products. Over the past two months, we have been developing
and implementing alternative manufacturing plans in our own
facilities in China and the U.S. to meet short-term customer
demand. Concurrently, we have been focusing on rebuilding the
high-volume production infrastructure for impacted product lines in
other locations owned by our primary contract manufacturer in
Thailand, as well as our own facility in China. Our focus during
the rebuild is on a quick recovery and strategies to better
configure the equipment for efficiency, reduce our cost structure,
and provide manufacturing diversification in order to turn this
crisis into an opportunity.
Purchase orders have been issued to replace the damaged process
and test equipment and new equipment is now being received. Between
our own facilities and our contract manufacturer, we expect to
rebuild our production capacity for our CATV business by the end of
March 2012, and rebuild the production capacity of our Telecom
production lines before the end of May 2012. We are working closely
with customers on our recovery manufacturing plan to align with
their needs.
As for the inventory materials, we were able to move a
significant portion of our finished goods inventory to the second
story of the facility right before the flood waters reached the
manufacturing floor. This has allowed us to serve the near-term
demands of some key customers. The major focus is to work with
our customers to meet their near-term needs and to ascertain that
the demand will still be there for our products when we are back to
full capacity. We are pleased that many of our key customers for
Telecom products have stepped up and committed their demand through
non-cancelable purchase orders and pre-payments. As a result, our
production capacity for tunable lasers in calendar 2012, when it is
fully recovered, is almost fully booked with the existing
commitments from customers. This illustrates the differentiation of
our product and the strong relationships with our customers.
We have entered into agreements with our key contract
manufacturing partner and Wells Fargo Business Credit. These
agreements significantly improved the Company's liquidity position
while we process and receive proceeds from insurance
claims. We believe that we have a solid plan in place to
rebuild our impacted business.
As we have noted previously, our manufacturing infrastructure in
our Photovoltaics segment was not impacted by the flooding.
The Company expects the revenues for its first quarter of fiscal
year 2012 ending December 2011 to be in a range of $36 to $38
million with the sequential revenue decline primarily attributable
to the flood impact to its Fiber Optics business.
Conference Call
We will discuss our financial results today at 4:30 p.m.
ET. The call will be webcast via our website at
http://www.emcore.com and will be archived for one year following
the conclusion of the call. Please go to this site beforehand
to download any necessary software. To
participate in the call, U.S. callers should dial (866) 428-9517
and international callers should dial (224) 357-2194. The
Conference ID is 39596306.
Investor Conferences
Management will present at the 14th Annual Needham Growth
Conference in New York City on January 12th at 10:40 a.m.
ET.
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 operating loss 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. Such
forward-looking statements also include statements regarding the
ability of our contract manufacturer to resume production, the
expected impact of the flooding on our supply chain, and our
ability to meet customer demand for our fiber optics products.
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 impact on the Company, our customers and our suppliers
from the effects of the floods in Thailand; (b) the success of our
cost reduction efforts in achieving their expected benefits; (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) we may not be successful in undertaking the
steps currently planned in order to increase our liquidity; (f)
uncertainties concerning the extent of damage to our contract
manufacturer's facilities and the Company's and our contract
manufacturer's equipment; uncertainties about the timeframe for the
flood waters receding and the restoration of operations and
associated costs with such restoration; the effectiveness of flood
prevention efforts at our contract manufacturer's campus;
uncertainties concerning the availability and cost of commodity
materials and specialized product components that we do not make
internally; actions by competitors; and (g) 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 |
Fiscal Year
Ended |
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
2010 |
2011 |
2011 |
2010 |
2011 |
|
|
|
|
|
|
Revenue |
$ 54,076 |
$ 49,480 |
$ 52,123 |
$ 191,278 |
$ 200,928 |
|
|
|
|
|
|
Cost of revenue |
41,295 |
40,010 |
42,090 |
140,617 |
158,165 |
|
|
|
|
|
|
Gross profit |
12,781 |
9,470 |
10,033 |
50,661 |
42,763 |
|
|
|
|
|
|
Operating expenses (income): |
|
|
|
|
|
Selling, general, and
administrative |
7,295 |
9,657 |
8,281 |
42,549 |
35,582 |
Research and
development |
7,282 |
9,549 |
8,129 |
29,538 |
32,853 |
Impairments |
-- |
-- |
8,000 |
-- |
8,000 |
Litigation settlements,
net |
-- |
1,465 |
(20) |
-- |
(1,145) |
Total operating
expenses |
14,577 |
20,671 |
24,390 |
72,087 |
75,290 |
|
|
|
|
|
|
Operating loss |
(1,796) |
(11,201) |
(14,357) |
(21,426) |
(32,527) |
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
Interest income |
2 |
-- |
2 |
24 |
2 |
Interest expense |
(109) |
(132) |
(122) |
(439) |
(642) |
Foreign exchange gain
(loss) |
881 |
625 |
(304) |
(1,008) |
735 |
Loss from equity method
investment |
-- |
(259) |
(996) |
-- |
(1,842) |
Change in fair value of
financial instruments |
159 |
(107) |
1,487 |
(475) |
70 |
Other expense |
(22) |
(5) |
-- |
(370) |
(15) |
Total other income
(expense) |
911 |
122 |
67 |
(2,268) |
(1,692) |
|
|
|
|
|
|
Net loss |
$(885) |
$(11,079) |
$(14,290) |
$ (23,694) |
$(34,219) |
|
|
|
|
|
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
Net loss per basic and diluted share |
$(0.01) |
$(0.12) |
$(0.15) |
$(0.28) |
$(0.38) |
|
|
|
|
|
|
Weighted-average number of basic and diluted
shares outstanding |
85,009 |
89,843 |
93,305 |
83,166 |
88,910 |
|
|
|
EMCORE
CORPORATION |
Condensed Consolidated
Balance Sheets |
(in
thousands) |
(unaudited) |
|
|
|
|
As of |
As of |
|
September 30, |
September 30, |
|
2011 |
2010 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 15,598 |
$ 19,944 |
Restricted cash |
544 |
1,298 |
Accounts receivable, net |
34,875 |
40,125 |
Inventory |
33,166 |
32,056 |
Prepaid expenses and other
current assets |
7,168 |
5,312 |
|
|
|
Total current assets |
91,351 |
98,735 |
|
|
|
Property, plant and equipment, net |
46,786 |
46,990 |
Goodwill |
20,384 |
20,384 |
Other intangible assets, net |
5,866 |
10,738 |
Equity method investment |
2,374 |
-- |
Other non-current assets, net |
3,537 |
991 |
|
|
|
Total assets |
$ 170,298 |
$ 177,838 |
|
|
|
LIABILITIES and SHAREHOLDERS'
EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
Borrowings from credit
facility |
$ 17,557 |
$ 10,573 |
Accounts payable |
26,581 |
26,156 |
Warrant liability |
601 |
-- |
Accrued expenses and other
current liabilities |
22,319 |
27,115 |
|
|
|
Total current liabilities |
67,058 |
63,844 |
|
|
|
Warrant liability |
-- |
475 |
Asset retirement obligations |
4,800 |
-- |
Other long-term liabilities |
4 |
87 |
|
|
|
Total liabilities |
71,862 |
64,406 |
|
|
|
Commitments and contingencies |
|
|
|
|
|
Shareholders' equity: |
|
|
Preferred stock |
-- |
-- |
Common stock |
713,063 |
701,997 |
Accumulated deficit |
(613,456) |
(587,259) |
Accumulated other comprehensive
income |
912 |
777 |
Treasury stock |
(2,083) |
(2,083) |
Total shareholders' equity |
98,436 |
113,432 |
|
|
|
Total liabilities and shareholders' equity |
$ 170,298 |
$ 177,838 |
We have provided a reconciliation of our non–GAAP operating loss
financial measure to its most directly comparable U.S. GAAP
financial measure as indicated in the table below:
Non-GAAP Table Adjusted Operating
Loss Unaudited (in thousands) |
|
|
|
|
|
|
Three Months
Ended |
Fiscal Year
Ended |
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
2010 |
2011 |
2011 |
2010 |
2011 |
|
|
|
|
|
|
Operating Loss – GAAP |
$ (1,796) |
$ (11,201) |
$ (14,357) |
$ (21,426) |
$ (32,527) |
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
Depreciation |
2,286 |
2,285 |
2,375 |
9,389 |
9,295 |
Amortization |
736 |
648 |
695 |
2,899 |
2,678 |
Stock-based compensation
expense |
1,632 |
2,961 |
1,856 |
9,860 |
7,428 |
Corporate legal
expense |
(154) |
137 |
65 |
4,701 |
598 |
Specific A/R reserve
adjustments |
-- |
-- |
-- |
1,950 |
-- |
Specific inventory
reserve adjustments |
-- |
-- |
-- |
(1,185) |
-- |
Tangshan termination
fee |
-- |
-- |
-- |
2,775 |
-- |
Impairments |
-- |
-- |
8,000 |
-- |
8,000 |
Litigation
settlements |
-- |
1,465 |
(20) |
-- |
(1,145) |
Total adjustments |
4,500 |
7,496 |
12,971 |
30,389 |
26,854 |
|
|
|
|
|
|
Adjusted Operating Loss –
Non-GAAP |
$ 2,704 |
$(3,705) |
$ (1,386) |
$ 8,963 |
$ (5,673) |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense by
expense category: (in thousands) |
Three Months
Ended |
Fiscal Year
Ended |
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
2010 |
2011 |
2011 |
2010 |
2011 |
|
|
|
|
|
|
Cost of revenue |
$449 |
$614 |
$345 |
$2,086 |
$1,412 |
Selling, general, and administrative |
776 |
1,342 |
1,029 |
5,874 |
3,928 |
Research and development |
407 |
1,005 |
482 |
1,900 |
2,088 |
|
|
|
|
|
|
Total stock-based compensation expense |
$1,632 |
$2,961 |
$1,856 |
$9,860 |
$7,428 |
|
|
|
|
|
|
Net effect on net loss per basic and diluted
share |
$(0.02) |
$(0.03) |
$(0.02) |
$(0.12) |
$(0.08) |
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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