Form: 8-K

Current report filing

May 5, 2005

Documents

EX-99.1
 

Press Release
EMCORE Corporation Reports Fiscal 2005 Second Quarter and Six-Month Results

  • Revenues increase 31% from a year ago and 13% sequentially to $30.4 million;
  • Company achieves positive EBITDA;
  • Spin-off of GaN power electronics technology raises $6.0 million for new company
SOMERSET, New Jersey, May 4, 2005 -- EMCORE Corporation (NASDAQ: EMKR), a leading provider of compound semiconductor-based components and subsystems for the broadband, fiber optic, satellite, and wireless communications markets, today announced its financial results for the fiscal 2005 second quarter ended March 31, 2005.

Revenues for the second quarter of fiscal 2005 were $30.4 million, an increase of 31% from the $23.2 million reported in the second quarter of fiscal 2004, and an increase of $3.4 million, or 13%, from the $27.0 million in the previous quarter. All three of the Company’s operating segments, Fiber Optics, Photovoltaics and Electronic Materials and Devices, posted revenue increases both year over year and sequentially. Gross profit for the quarter was $5.5 million or 18%, an increase of 104% from $2.7 million a year earlier. The gross margin of 18% represents an increase of 10 percentage points from the 8% gross margins recorded in the previous quarter. For the six-months ended March 31, 2005, revenues totaled $57.4 million, an increase of 24% or $11.1 million as compared to the $46.3 million recorded for the six months ended March 31, 2004.

Operating expenses of $9.2 million represented a decrease of $2.2 million or 19% from the same quarter last year and were down $1.4 million, or 13% sequentially. For the six-month period, operating expenses fell $2.9 million, or 13% from the same year ago period. Included in operating expenses were severance charges of $177,000 and $649,000 for the three and six months ended March 31, 2005, respectively. No severance charges were incurred for the three or six month periods ending March 31, 2004. The continuing decline in operating expenses is the result of ongoing cost cutting and increasing efficiencies. The Company expects additional decreases in operating expenses throughout the remainder of Fiscal 2005.

EMCORE reported a loss from continuing operations for the quarter of $4.9 million, or $0.10 per basic and diluted share. Not including the $12.3 million gain from debt extinguishment, this compares to a loss from continuing operations of $10.2 million or $0.24 per basic and diluted share for the same quarter a year ago.  Sequentially, the loss from continuing operations decreased $4.2 million or $0.09 per basic and diluted share.

EMCORE reported net income for the quarter of $7.6 million, or $0.16 per basic and diluted share, the result of receiving a $13.2 million payment as part of the earn-out from the sale of the capital equipment division in November 2003. This compares to net income of $1.8 million or $0.04 per basic and diluted share for the same quarter a year ago.

Cash, cash equivalents and marketable securities at March 31, 2005 totaled approximately $44.5 million. Income before interest, taxes, depreciation, amortization and other non-cash items (adjusted EBITDA) was approximately $133,000, an improvement of $4.7 million from the previous quarter.

In April, the Company spun-off product technology focused on gallium nitride based power electronic devices for the power device industry. The new company, named Velox Semiconductor Corporation (Velox) will initially commercialize fast, high voltage diodes which will address problems of size and efficiency in the power supply industry. Velox raised $6.0 million from three venture capital partnerships including DCM-Doll Capital Management, SAS Investors and DFJ New England. EMCORE contributed intellectual property and equipment receiving an approximate 20% stake in Velox. Five employees also became full time Velox personnel. Velox named Tom Hierl as Chief Executive Officer. Mr. Hierl founded Quantum Epitaxial Designs, Inc. and served as its CEO until 1999 when he merged it with a British company and then as CEO took the successor company public. EMCORE named Dr. Richard A. Stall, Chief Technology Officer, as EMCORE’s designee to serve on Velox’s new Board of Directors. EMCORE management estimates that its operating expenses will be reduced approximately $1.2 million annually through the formation and spin-off of Velox.

Management Discussion and Outlook

“Our second quarter was extremely strong as all three operating segments reported increases in revenues. Manufacturing efficiencies and improved yields generated gross margins of 18%, a 10% point increase from last quarter. Most importantly, we achieved EBITDA positive results one quarter ahead of schedule,” commented Mr. Reuben F. Richards Jr., President & CEO. “The formation of Velox Semiconductor will further reduce operating expenses by $1.2 million a year and will allow EMCORE to benefit from the technology by holding a 20% equity stake in the new company,” added Mr. Richards. Looking ahead to the third quarter, Mr. Richards stated, “We expect revenue of $30-32 million for the fiscal third quarter. We see continued strength in Fiber Optics, Electronic Materials and Devices and Photovoltaics with the newly announced products from last quarter driving growth.”
 
Company/Industry Highlights
 
EMCORE announced the first earn-out of $13.2 Million from the Sale of Equipment Division to Veeco in 2003. Net sales of TurboDisc products for the twelve months ended December 31, 2004 amounted to $66.3 million resulting in an earn-out of $13.2 million for year one of the two-year earn-out agreement. EMCORE received a cash payment from Veeco on March 31, 2005. After offsetting this receipt against expenses related to the discontinued operation, EMCORE recorded a net gain from the disposal of discontinued operations of $12.5 million. EMCORE will receive, in either cash or stock, 50% of all calendar year 2005 revenues from the TurboDisc capital equipment business that exceeds $40.0 million, to a maximum second year earn-out payment of $6.8 million.
 
In April 2005, Emcore announced the establishment of a modern solar panel manufacturing facility as part of its Albuquerque, NM solar cell fabrication operations. This new operation will provide solar cell assemblies and solar panels for the satellite and terrestrial markets. By consolidating operations into a single location, EMCORE PhotoVoltaics expects to realize annual cost savings in fiscal 2006 and beyond of approximately $3 million, which will enable it to better compete in the terrestrial and space power markets. Production operations at the current City of Industry, CA solar panel operation are expected to be discontinued during the fourth quarter of fiscal 2005, and the facility closed during the first quarter of fiscal 2006.

EMCORE will discuss the results further on a conference call to be held tomorrow, Thursday, May 5, 2005 at 9:00 a.m. ET. To participate in the call, U.S. callers should dial (toll free) 800-683-1525 and international callers should dial 973-935-2100. A replay of the call will be available beginning May 5, 2005 at 11:15 a.m. ET until May 12, 2005 at 11:59 p.m. ET. The replay call-in number for U.S. callers is 877-519-4471, for international callers it is 973-341-3080, and the access code is 5994074#. The call also will be web cast via the Company's web site at http://www.emcore.com. Please go to the site beforehand to download any necessary software.
 
About EMCORE

EMCORE Corporation offers a broad portfolio of compound semiconductor-based components and subsystems for the broadband, fiber optic, satellite, and wireless communications markets. EMCORE has three operating segments: Fiber Optics, Photovoltaics, and Electronic Materials and Devices.  The company's integrated solutions philosophy embodies state-of-the-art technology, material science expertise, and a shared vision of our customer's goals and objectives to be leaders in the transport of voice, data, and video over copper, hybrid fiber/coax (HFC), fiber, satellite, and wireless networks. EMCORE's solutions include: optical components and subsystems for fiber-to-the-premise, cable television, and high speed data and telecommunications networks; solar cells, solar panels, and fiber optic ground station links for global satellite communications; and electronic materials for high bandwidth wireless communications systems, such as Wi-Fi Internet access and cell phones. Through its joint venture participation in GELcore, LLC, EMCORE plays a vital role in developing and commercializing next-generation High-Brightness LED technology for use in the general and specialty illumination markets. For further information about EMCORE, visit http://www.emcore.com.

Disclaimer
 
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 relating to future events that involve risks and uncertainties. Words such as "expects," "anticipates," "intends," "plans," believes," and "estimates," and variations of these words and similar expressions, identify these forward-looking statements. These forward-looking statements include, without limitation, (a) any statements or implications regarding EMCORE’s ability to remain competitive and a leader in its industry, and the future growth of EMCORE, or the industry and the economy in general; (b) statements regarding the expected level and timing of benefits to EMCORE from its current cost reduction efforts, including (i) expected cost reductions and their impact on EMCORE’s financial performance, (ii) EMCORE’s continued leadership in technology and manufacturing in its markets, and (iii) the belief that the cost reduction efforts will not impact product development or manufacturing execution; (c) any statement or implication that the products described in this press release (i) will be successfully introduced or marketed, (ii) will be qualified and purchased by our customers, or (iii) will perform to any particular specifications or performance or reliability standards; (d) any and all guidance provided by EMCORE regarding its expected financial performance in current or future periods, including, without limitation, with respect to anticipated revenues for the third quarter of fiscal 2005. 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) EMCORE’s cost reduction efforts may not be successful in achieving their expected benefits, or may negatively impact EMCORE’s operations; (b) reduced revenues resulting from the TurboDisc sale; (c) the failure of the 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 and (d) other risks and uncertainties described in EMCORE's filings with the Securities and Exchange Commission 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. The forward-looking statements contained in this news release are made as of the date hereof and EMCORE does not assume any obligation to update the reasons why actual results could differ materially from those projected in the forward-looking statements.
 
 
EMCORE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended March 31, 2005 and 2004
(in thousands, except income (loss) per share)
(unaudited)
   
Three Months Ended March 31,
    
Six Months Ended March 31, 
  
     
2005
    
2004
    
2005
    
2004
  
                           
Revenue
  
$
30,430
  
$
23,180
  
$
57,394
  
$
46,305
  
                           
Cost of revenue
    
24,901
    
20,499
    
49,790
    
40,444
  
                           
Gross profit
    
5,529
    
2,681
    
7,604
    
5,861
  
                           
Operating expenses:
                          
Selling, general and administrative
    
4,950
    
5,644
    
10,038
    
10,951
  
Research and development
    
4,069
    
5,714
    
9,128
    
11,760
  
Severance charges
    
177
    
-
    
649
    
-
  
Total operating expenses
   
9,196
    
11,358
    
19,815
    
22,711
  
                           
Operating loss
    
(3,667
)
  
(8,677
)
  
(12,211
)
  
(16,850
)
                           
Other (income) expenses:
                          
Interest income
    
(249
)
  
(199
)
  
(482
)
  
(357
)
Interest expense
    
1,202
    
1,685
    
2,404
    
3,710
  
Gain from debt extinguishment
    
-
    
(12,312
)
  
-
    
(12,312
)
Equity in net loss (income) of GELcore
    
297
    
51
    
(75
)
  
(216
)
Total other expenses (income)
   
1,250
    
(10,775
)
  
1,847
    
(9,175
)
                           
(Loss) income from continuing operations
    
(4,917
)
  
2,098
    
(14,058
)
  
(7,675
)
                           
Discontinued operations:
                          
Loss from discontinued operations
    
-
    
(348
)
  
-
    
(2,045
)
Gain on disposal of discontinued operations
    
12,476
    
-
    
12,476
    
19,584
  
                           
Income (loss) from discontinued operations
    
12,476
    
(348
)
  
12,476
    
17,539
  
                           
Net income (loss)
  
$
7,559
  
$
1,750
  
$
(1,582
)
$
9,864
  
                           
Per Share Data:
                          
Basic per share data:
                          
(Loss) income from continuing operations   $ (0.10  )  $  0.05   $  (0.30 )  $  (0.19 ) 
Income (loss) from discontinued operations     0.26      (0.01  )    0.27     0.44   
Net income (loss)
   $  0.16    $  0.04    $  (0.03 )  $  0.25   
                           
Diluted per share data:
                          
(Loss) income from continuing operations
  
$
(0.10
)
$
0.05
  
$
(0.30
)
$
(0.19
)
Income (loss) from discontinued operations
  
 
0.26
  
 
(0.01
)
 
0.27
  
 
0.44
  
Net income (loss)
  
$
0.16
  
$
0.04
  
$
(0.03
)
$
0.25
  
                           
Weighted average basic shares outstanding used in per basic share calculations
   
47,265
    
41,904
    
47,128
    
39,872
  
Weighted average diluted shares outstanding used in per diluted share calculations
    
47,265
    
43,725
    
47,128
    
39,872
  
 
 
EMCORE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2005 and September 30, 2004
(in thousands)
(unaudited)

 
    
As of  March 31, 2005 
    
As of September 30, 2004
  
ASSETS
              
Current assets:
              
Cash and cash equivalents
  
$
24,049
  
$
19,422
  
Marketable securities
    
20,450
    
32,150
  
Accounts receivable, net
    
24,906
    
20,775
  
Receivables, related parties
    
3,867
    
215
  
Inventories, net
    
16,399
    
14,839
  
Prepaid expenses and other current assets
    
2,361
    
2,496
  
               
Total current assets
   
92,032
    
89,897
  
               
Receivables, related parties
    
169
    
3,754
  
Property, plant and equipment, net
    
61,450
    
65,354
  
Goodwill
    
33,969
    
33,584
  
Intangible assets, net
    
4,425
    
5,177
  
Investments in GELcore
    
10,078
    
10,003
  
Other assets, net
    
6,241
    
5,474
  
Total assets
  
$
208,364
  
$
213,243
  
               
LIABILITIES and SHAREHOLDERS’ EQUITY
              
               
Current liabilities:
              
Accounts payable
  
$
13,658
  
$
16,064
  
Accrued expenses
    
13,282
    
15,292
  
               
Total current liabilities
   
26,940
    
31,356
  
               
Convertible subordinated notes
    
96,051
    
96,051
  
Other liabilities
    
13
    
27
  
Total liabilities
    
123,004
    
127,434
  
               
Commitments and contingencies
              
 
              
Shareholders’ equity:
              
Preferred stock, $0.0001 par, 5,882 shares authorized, no shares outstanding
    
-
    
-
  
Common stock, no par value, 100,000 shares authorized, 47,339 shares issued and 47,319 outstanding at March 31, 2005; 46,951 shares issued and 46,931 outstanding at September 30, 2004
    
390,738
    
389,750
  
Accumulated deficit
    
(304,446
)
  
(302,864
)
Accumulated other comprehensive loss
    
-
    
(111
)
Shareholders’ notes receivable
    
-
    
(34
)
Treasury stock, at cost; 20 shares
    
(932
)
  
(932
)
Total shareholders’ equity
   
85,360
    
85,809
  
Total liabilities and shareholders’ equity
 
$
208,364
  
$
213,243
  
               
 
 
In accordance with applicable regulations, a non-GAAP reconciliation is provided below, which allows investors to reconcile the non-GAAP measures discussed above to GAAP.  A non-GAAP financial measure is a numerical measure of a company's performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.  EMCORE believes that the additional non-GAAP measures are useful to investors for financial analysis.  Management also uses these measures internally to evaluate the company's operating performance, and the measures are used for planning and forecasting of future periods.  However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures.
 
 
EMCORE CORPORATION
RECONCILIATION OF NON-GAAP NET LOSS (INCOME) FROM CONTINUING OPERATIONS
AND NET LOSS (INCOME) FROM CONTINUING OPERATIONS PER SHARE
(in thousands, except loss per share)
(unaudited)
 
   
Three Months Ended March 31,
  
     
2005
    
2004
  
               
GAAP (loss) income from continuing operations
  
$
(4,917
)
$
2,098
  
Adjustment:
              
Gain from debt extinguishment
    
-
    
(12,312
)
Non-GAAP loss from continuing operations
 
$
(4,917
)
$
(10,214
)
               
Non-GAAP loss from continuing operations per basic and diluted share
  
$
(0.10
)
$
(0.24
)

 
EMCORE CORPORATION
RECONCILIATION OF NET (LOSS) INCOME AND ADJUSTED EBITDA
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND DECEMBER 31, 2004
(in thousands)
(unaudited)

 
March 2005
   
December 2004
 
               
Net income (loss)
 
$
7,559
  
$
(9,141
)
Adjustments:               
Depreciation and amortization
    
3,675
    
3,600
  
Gain on disposal of discontinued operations
    
(12,476
)
  
-
  
Interest expense, net
     953     969  
Equity in net loss (income) of GELcore
   
297
    
(372
)
Compensatory stock issuances
   
180
    
181
  
Reduction of note receivable due for services received
   
130
    
130
  
Forgiveness of shareholders’ notes receivable
   
-
    
34
  
Provision for doubtful accounts
   
(185
)
  
15
  
Total adjustments to net income (loss)
    
(7,426
)
  
4,557
  
               
Adjusted EBITDA
  
$
133
  
$
(4,584
)
               
 
 
CONTACT
 
EMCORE Corporation 
Tom Werthan - Chief Financial Officer
(732) 271-9090
info@emcore.com
 
or
 
TTC Group 
Victor Allgeier
(212) 227-0997
info@ttcominc.com