- Q4 revenue of $47.5 million, representing 15.6%
sequential increase and in line with guidance
- Operations related to impact from floods in Thailand
fully restored
- Revenue for the quarter ending December 31, 2012
expected to be $49 to $51 million
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,
2012.
Quarterly Financial Results
Revenue:
Consolidated revenue for the fourth quarter ended September 30,
2012 was $47.5 million, which represents an 8.9% decrease compared
to the prior year and a 15.6% increase compared to the immediate
preceding quarter. On a segment basis, revenue for the Fiber Optics
segment was $30.1 million, which represents a 2.7% decrease
compared to the prior year and a 16.5% increase compared to the
immediate preceding quarter. Revenue for the Photovoltaics segment
was $17.4 million, which represents a 17.9% decrease compared to
the prior year and a 14.2% increase compared to the immediate
preceding quarter.
Gross Profit:
Consolidated gross profit was $4.6 million, which represents a
54.2% decrease compared to the prior year and a 4.8% increase
compared to the immediate preceding quarter. Consolidated gross
margin was 9.7%, which represents a decrease from the 19.2% gross
margin reported in the prior year and a decrease from the 10.7%
gross margin reported in the immediate preceding quarter. On a
segment basis, Fiber Optics gross margin was 2.4%, which represents
a decrease from the 18.0% gross margin reported in the prior year
and a decrease from the 9.3% gross margin reported in the immediate
preceding quarter. Photovoltaics gross margin was 22.2%, which
represents an increase from the 21.0% gross margin reported in the
prior year and an increase from the 13.0% gross margin reported in
the immediate preceding quarter.
Operating loss:
The consolidated operating loss was $6.3 million, which
represents an $8.1 million improvement in operating loss when
compared to the prior year and a $2.5 million improvement in
operating loss when compared to the immediate preceding quarter.
The quarter-over-quarter variance was primarily due to the $4.0
million of insurance recoveries relating to the Thailand flood
partially offset by higher severance-related costs from corporate
restructuring.
Net loss:
The consolidated net loss was $6.6 million, which represents a
$7.7 million improvement in net loss when compared to the prior
year and a $2.5 million improvement in net loss when compared to
the immediate preceding quarter. The consolidated net loss per
share was $0.27 compared to $0.61 in the prior year and $0.38 in
the immediate preceding quarter.
Non-GAAP Net Loss:
After excluding certain non-cash and other infrequent
transactions as set forth in the attached non-GAAP table, our
non-GAAP net loss for the fourth quarter ended September 30, 2012
was $6.6 million, which represents an additional loss of
approximately $2.6 million from that reported for the prior year
and a lower loss of approximately $0.9 million from the loss
reported for the immediate preceding quarter. The consolidated
non-GAAP net loss per share was $0.28, which represents an increase
from the $0.17 loss per share reported in the prior year and an
improvement from the $0.32 loss per share reported in the immediate
preceding quarter.
Annual Financial Results
Revenue:
Consolidated revenue for fiscal 2012 was $163.8 million, which
represents an 18.5% decrease compared to the prior year. On a
segment basis, revenue for the Fiber Optics segment was $96.2
million, which represents a 23.5% decrease compared to the prior
year primarily due to the Thailand flood in October 2011. Revenue
for the Photovoltaics segment was $67.6 million, which represents a
10.2% decrease compared to the prior year primarily due to lower
sales to an international customer.
Gross Profit:
Consolidated gross profit was $17.8 million, which represents a
58.3% decrease compared to the prior year. Consolidated gross
margin was 10.9%, which represents a decrease from the 21.3% gross
margin reported in the prior year. On a segment basis, Fiber Optics
gross margin was 4.5%, which represents a decrease from the 18.5%
gross margin reported in the prior year. Photovoltaics gross margin
was 20.0%, which represents a decrease from the 26.0% gross margin
reported in the prior year.
During fiscal 2012, lower fiber optics revenues due to the
impact from the Thailand flood resulted in higher manufacturing
overhead as a percentage of revenue. Manufacturing of certain fiber
optics components was moved to Company-owned facilities in the
U.S., which involved higher labor and other related costs. Instead
of completely rebuilding all flood-damaged manufacturing lines,
management decided to realign the Company's fiber optics product
portfolio and focus on business areas with strong technology
differentiation and growth opportunities. During the year ended
September 30, 2012, management identified $1.6 million of inventory
on order related to manufacturing product lines that were destroyed
by the Thailand flood and will not be replaced. This expense was
recorded within cost of revenues on our statement of operations and
comprehensive loss. Photovoltaics gross margins declined when
compared to prior periods primarily due to lower revenues with
unfavorable product mix changes, as well as lower manufacturing
yields on new products.
Operating loss:
The consolidated operating loss was $35.6 million, which
represents a $3.1 million increase in operating loss when compared
to the prior year.
Net loss:
The consolidated net loss was $39.2 million, which represents a
$5.0 million increase in net loss when compared to the prior year.
The consolidated net loss per share was $1.66, which represents a
$0.12 increase in net loss per share when compared to the prior
year.
Non-GAAP Net Loss:
After excluding certain non-cash and other infrequent
transactions as set forth in the attached non-GAAP table, our
non-GAAP net loss for the fiscal year ended September 30, 2012 was
$27.0 million, which represents an additional loss of approximately
$10.8 million when compared to the prior year. The consolidated
non-GAAP net loss per share was $1.15, which represents an increase
from the $0.73 loss per share reported in the prior year.
Order Backlog
As of September 30, 2012, order backlog for our Photovoltaics
segment totaled $43.3 million, which represents a 6.3% decrease
from $46.2 million reported as of June 30, 2012. The order backlog
as of September 30, 2012 and June 30, 2012 included $1.9 million
and $5.1 million, respectively, of terrestrial solar cell orders
from our Suncore joint venture. 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. Product sales from our Fiber Optics segment are made
pursuant to purchase orders, often with short lead times, and
revenue from this segment is still limited by the rebuilding of our
production capacity.
Business Outlook
On a consolidated basis, we expect revenue for our first quarter
ended December 31, 2012 to be in the range of $49 to $51 million,
which includes revenue from our joint venture Suncore that was
previously deferred.
Conference Call
We will discuss our financial results today at 4:30 p.m. ET. The
call will be webcast via the Company's website at
http://www.emcore.com. Please go to the site beforehand to register
and download any necessary software. A webcast will be available
for replay beginning December 6, 2012 following the conclusion of
the call on the Company's website.
Conferences
Management will present at the 2013 Needham Conference in New
York City on Thursday, January 17 at 10:00 a.m. ET.
About EMCORE
EMCORE Corporation offers a broad portfolio of compound
semiconductor-based products for the fiber optics and solar power
markets. EMCORE's Fiber Optics business segment provides optical
components, subsystems and systems for high-speed
telecommunications, Cable Television (CATV) and
Fiber-To-The-Premise (FTTP) networks, as well as products for
satellite communications, video transport and specialty photonics
technologies for defense and homeland security applications.
EMCORE's Solar Photovoltaics business segment provides products for
space power applications including high-efficiency multi-junction
solar cells, Covered Interconnect Cells (CICs) and complete
satellite solar panels. For further information about EMCORE, visit
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 impact on the Company
related to the asset sale transaction with SEI and Suncore; (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 our insurance recovery from
damage to our contract manufacturer's facilities and the Company's
and our contract manufacturer's equipment; restoration of
operations and associated costs with such restoration related to
flood-damaged facilities; 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) |
|
|
|
|
|
|
|
For the Three
Months Ended |
Fiscal Year
Ended |
|
September 30,
2012 |
June 30, 2012 |
September 30,
2011 |
September 30,
2012 |
September 30,
2011 |
Revenue |
$ 47,488 |
$ 41,062 |
$ 52,123 |
$ 163,781 |
$ 200,928 |
Cost of revenue |
42,891 |
36,677 |
42,090 |
145,955 |
158,165 |
Gross profit |
4,597 |
4,385 |
10,033 |
17,826 |
42,763 |
|
|
|
|
|
|
Operating expense (income): |
|
|
|
|
|
Selling, general, and administrative |
10,258 |
8,758 |
8,281 |
34,861 |
35,582 |
Research and development |
4,581 |
4,996 |
8,129 |
22,338 |
32,853 |
Impairment |
— |
1,425 |
8,000 |
1,425 |
8,000 |
Litigation settlements, net |
— |
1,050 |
(20) |
1,050 |
(1,145) |
Flood-related loss (recovery) |
— |
(293) |
— |
5,519 |
— |
Flood-related insurance proceeds |
(4,000) |
— |
— |
(9,000) |
— |
Loss (Gain) on sale of assets |
51 |
(2,793) |
— |
(2,742) |
— |
Total operating expense |
10,890 |
13,143 |
24,390 |
53,451 |
75,290 |
|
|
|
|
|
|
Operating loss |
(6,293) |
(8,758) |
(14,357) |
(35,625) |
(32,527) |
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
Interest expense, net |
(281) |
(146) |
(120) |
(677) |
(640) |
Foreign exchange gain (loss) |
(15) |
(196) |
(304) |
45 |
735 |
Loss from equity method investment |
— |
— |
(996) |
(1,201) |
(1,842) |
Change in fair value of financial
instruments |
21 |
61 |
1,487 |
(69) |
70 |
Other expense |
— |
— |
— |
— |
(15) |
Total other income (expense) |
(275) |
(281) |
67 |
(1,902) |
(1,692) |
|
|
|
|
|
|
Loss before income tax expense |
(6,568) |
(9,039) |
(14,290) |
(37,527) |
(34,219) |
|
|
|
|
|
|
Foreign income tax expense on capital
distributions |
— |
— |
— |
(1,644) |
— |
|
|
|
|
|
|
Net loss |
$ (6,568) |
$ (9,039) |
$ (14,290) |
$ (39,171) |
$ (34,219) |
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
Net loss per basic and diluted share |
$ (0.27) |
$ (0.38) |
$ (0.61) |
$ (1.66) |
$ (1.54) |
|
|
|
|
|
|
Weighted-average number of basic and diluted
shares outstanding |
23,892 |
23,686 |
23,326 |
23,559 |
22,228 |
EMCORE
CORPORATION Condensed Consolidated Balance
Sheets (in thousands)
(unaudited) |
|
|
|
|
As of |
As of |
|
September 30,
2012 |
September 30,
2011 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 9,047 |
$ 15,598 |
Restricted cash |
82 |
544 |
Accounts receivable, net |
36,939 |
34,875 |
Inventory |
35,192 |
33,166 |
Prepaid expenses and other current
assets |
14,146 |
7,168 |
|
|
|
Total current assets |
95,406 |
91,351 |
|
|
|
Property, plant, and equipment, net |
47,896 |
46,786 |
Goodwill |
20,384 |
20,384 |
Other intangible assets, net |
3,428 |
5,866 |
Equity method investment |
— |
2,374 |
Other non-current assets, net |
2,752 |
3,537 |
|
|
|
Total assets |
$ 169,866 |
$ 170,298 |
|
|
|
LIABILITIES and SHAREHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Borrowings from credit facility |
$ 19,316 |
$ 17,557 |
Accounts payable |
38,814 |
26,581 |
Warrant liability |
670 |
601 |
Accrued expenses and other current
liabilities |
32,635 |
22,319 |
|
|
|
Total current liabilities |
91,435 |
67,058 |
|
|
|
Asset retirement obligations |
5,004 |
4,800 |
Deferred gain associated with sale of
assets |
3,400 |
— |
Other long-term liabilities |
1,004 |
4 |
|
|
|
Total liabilities |
100,843 |
71,862 |
|
|
|
Shareholders' equity: |
|
|
Common stock |
722,345 |
713,063 |
Treasury stock |
(2,071) |
(2,083) |
Accumulated other comprehensive
income |
1,376 |
912 |
Accumulated deficit |
(652,627) |
(613,456) |
|
|
|
Total shareholders' equity |
69,023 |
98,436 |
|
|
|
Total liabilities and shareholders'
equity |
$ 169,866 |
$ 170,298 |
|
|
|
|
|
|
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:
|
For the Three
Months Ended |
Fiscal Year
Ended |
|
September 30,
2012 |
June 30, 2012 |
September 30,
2011 |
September 30,
2012 |
September 30,
2011 |
Net Loss -- US GAAP |
$ (6,568) |
$ (9,039) |
$ (14,290) |
$ (39,171) |
$ (34,219) |
Adjustments: |
|
|
|
|
|
Amortization expense |
317 |
383 |
695 |
1,645 |
2,678 |
Stock-based compensation expense |
1,760 |
1,275 |
1,856 |
7,756 |
7,428 |
Asset retirement obligations - accretion
expense |
53 |
51 |
— |
225 |
— |
Specific severance charges |
1,090 |
— |
— |
1,090 |
— |
Impairment |
— |
1,425 |
8,000 |
1,425 |
8,000 |
Litigation settlements, net |
— |
1,050 |
(20) |
1,050 |
(1,145) |
Flood-related loss (recovery) |
— |
(293) |
— |
5,519 |
— |
Flood-related insurance proceeds |
(4,000) |
— |
— |
(9,000) |
— |
Loss (Gain) on sale of assets |
51 |
(2,793) |
— |
(2,742) |
— |
Losses on inventory purchase
commitments |
723 |
278 |
— |
2,344 |
— |
Foreign exchange gain (loss) |
16 |
196 |
304 |
(45) |
(735) |
Loss from equity method investment |
— |
— |
996 |
1,201 |
1,842 |
Change in fair value of financial
instruments |
(21) |
(61) |
(1,487) |
69 |
(70) |
Foreign income tax expense on capital
distributions |
— |
— |
— |
1,644 |
— |
|
|
|
|
|
|
Total adjustments |
(11) |
1,511 |
10,344 |
12,181 |
17,998 |
|
|
|
|
|
|
Net Loss - Non-GAAP |
$ (6,579) |
$ (7,528) |
$ (3,946) |
$ (26,990) |
$ (16,221) |
|
|
|
|
|
|
Net loss - GAAP per basic and diluted
share |
$ (0.27) |
$ (0.38) |
$ (0.61) |
$ (1.66) |
$ (1.54) |
|
|
|
|
|
|
Net loss - Non-GAAP per basic and
diluted share |
$ (0.28) |
$ (0.32) |
$ (0.17) |
$ (1.15) |
$ (0.73) |
|
|
|
|
|
|
Weighted average number of basic and diluted
shares outstanding |
23,892 |
23,686 |
23,326 |
23,559 |
22,228 |
EMCORE
Corporation Stock-based Compensation
Expense (in thousands, except per share
data) (unaudited) |
|
|
|
|
|
|
|
For the Three
Months Ended |
Fiscal Year
Ended |
|
September 30,
2012 |
June 30, 2012 |
September 30,
2011 |
September 30,
2012 |
September 30,
2011 |
Cost of revenue |
$ 278 |
$ 220 |
$ 345 |
$ 1,566 |
$ 1,412 |
Selling, general, and administrative |
935 |
708 |
1,029 |
3,889 |
3,927 |
Research and development |
547 |
347 |
482 |
2,301 |
2,089 |
Total stock-based compensation
expense |
$ 1,760 |
$ 1,275 |
$ 1,856 |
$ 7,756 |
$ 7,428 |
|
|
|
|
|
|
Net effect on net loss per basic and
diluted share |
$ (0.07) |
$ (0.05) |
$ (0.08) |
$ (0.33) |
$ (0.33) |
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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