Form: 8-K

Current report filing

August 3, 2005


EX-99.1
 
 
Press Release
EMCORE Corporation Reports Fiscal 2005 Third Quarter and Nine-Month Results
  • Revenues increase 57% from a year ago and 9% sequentially to $33.2 million;
  • Gross margins improve to 20%;
  • Company increases revenue guidance for fourth quarter to $34-$35 million

SOMERSET, New Jersey, August 2, 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 third quarter ended June 30, 2005.

Revenues for the third quarter of fiscal 2005 were $33.2 million, an increase of 57% from the $21.2 million reported in the third quarter of fiscal 2004, and an increase of $2.8 million, or 9%, from the $30.4 million in the previous quarter. All three of the Company’s operating segments; Fiber Optics, Photovoltaics and Electronic Materials and Devices, posted revenue increases year over year. Sequentially, Fiber Optics and Photovoltaics increased, while Electronic Materials and Devices decreased marginally by $250,000. Gross profit for the quarter was $6.7 million, an increase of $6.3 million from the $400,000 gross profit reported a year earlier. Gross margins of 20% increased 2 percentage points from the 18% gross margins recorded in the previous quarter. For the nine-months ended June 30, 2005, revenues totaled $90.6 million, an increase of 34% or $23.1 million, as compared to the $67.5 million recorded for the nine months ended June 30, 2004.

Operating expenses, excluding $2.4 million of restructuring and severance charges, totaled $10.1 million, a decrease of $2.1 million or 17% from the same quarter last year. Sequentially, operating expenses, excluding restructuring and severance charges increased by $1.1 million. For the nine-month period, operating expenses, excluding restructuring and severance charges totaled $29.3 million, a decrease of $5.7 million or 16%, as compared to the same period a year ago. During the quarter the Company incurred $1.8 million of restructuring charges and $600,000 in severance charges predominantly in connection with the April 2005 announcement of the closing of its City of Industry, CA photovoltaics operation and relocation to Albuquerque, NM. Additional restructuring charges of approximately $1.3 million are expected until the relocation is completed sometime in the fourth quarter of calendar 2005. All severance charges related to the facility closure have been accrued for in the current quarter.

EMCORE reported an operating loss, excluding the aforementioned restructuring and severance charges, of $3.4 million, a decrease of $8.4 million as compared to the same period last year. Sequentially, the operating loss, excluding severance and restructuring charges, decreased by $100,000. For the nine month period, the operating loss, excluding restructuring and severance charges was $14.9 million, a decrease of $13.7 million from the same period a year ago.

EMCORE reported a net loss for the quarter of $7.4 million, or $(0.16) per basic and diluted share. Excluding restructuring and severance, the net loss amounted to $5.1 million, or ($0.11) per basic and diluted share. This compares to a net loss of $12.5 million, or ($0.27) per basic and diluted share for the same quarter a year ago.

Cash, cash equivalents and marketable securities at June 30, 2005 totaled approximately $36.5 million. Income before interest, taxes, depreciation, amortization, other non-cash items, and prior to the restructuring and severance charges (adjusted EBITDA) was approximately $541,000, an improvement of $231,000 from the previous quarter.
 

Management Discussion and Outlook
 
“We are continuing to improve on our strong second quarter results as revenues increased this quarter by 9%. Gross margins also improved to 20%, an increase of 16 percentage points since the beginning of the fiscal year and 2 percentage points higher than last quarter. For the second consecutive quarter we achieved EBITDA positive results, net of restructuring and severance charges and other non-cash items,” commented Mr. Reuben F. Richards Jr., President & CEO. “The acquisition of JDS Uniphase’s CATV operation, provides EMCORE with the most complete CATV product line in the industry and also helps us in the emerging FTTX marketplace,” added Mr. Richards. Looking ahead, Mr. Richards stated, “We are increasing revenue guidance for our fourth quarter to approximately $34-$35 million. Total annual revenues are expected to exceed $120 million for fiscal 2005 representing a 34% increase over fiscal 2004. Continued strength in our Fiber Optics segment, and the emergence of FTTX products are driving growth and profitability.”
 
 
Company & Quarterly Highlights
 
EMCORE acquired the assets of JDS Uniphase’s CATV business which had revenues of approximately $20 million over the prior completed four quarters. EMCORE paid JDS Uniphase $1.5 million at closing and has agreed to purchase between $2.5 million and $3.5 million of components and parts for use in the manufacture of the acquired products over the next two years. EMCORE will also assume some open purchase orders for inventory components, and will pay JDS Uniphase a royalty on licensed intellectual property. The acquired businesses will be a part of EMCORE’s fiber optic operating segment. EMCORE management anticipates that this transaction will increase the Company’s projected fiscal 2006 revenues by $10 million to $15 million.
 
EMCORE will discuss the results further on a conference call to be held tomorrow, Wednesday, August 3, 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 August 3, 2005 at 11:15 a.m. ET until August 10, 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 6224906#. 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 nine months ended June 30, 2005 and 2004
(in thousands, except income (loss) per share)
(unaudited)
 
   
Three Months Ended June 30,
 
 Nine Months Ended June 30,
 
     
2005
   
2004
   
2005
   
2004
 
                           
Revenue
 
$
33,234
 
$
21,225
 
$
90,628
 
$
67,530
 
Cost of revenue
   
26,503
   
20,811
   
76,293
   
61,255
 
Gross profit
   
6,731
   
414
   
14,335
   
6,275
 
                           
Operating expenses:
                         
Selling, general and administrative
   
6,064
   
5,723
   
16,102
   
16,674
 
Research and development
   
4,061
   
6,535
   
13,189
   
18,295
 
Severance charges
   
559
   
-
   
1,208
   
-
 
Restructuring charges
   
1,759
   
-
   
1,759
   
-
 
Total operating expenses
   
12,443
   
12,258
   
32,258
   
34,969
 
Operating loss
   
(5,712
)
 
(11,844
)
 
(17,923
)
 
(28,694
)
                           
Other (income) expenses:
                         
Interest income
   
(297
)
 
(201
)
 
(779
)
 
(558
)
Interest expense
   
1,202
   
1,205
   
3,606
   
4,915
 
Gain from debt extinguishment
   
-
   
-
   
-
   
(12,312
)
Equity in net loss (income) of GELcore
   
778
   
(341
)
 
703
   
(557
)
Total other expenses (income)
   
1,683
   
663
   
3,530
   
(8,512
)
Loss from continuing operations
   
(7,395
)
 
(12,507
)
 
(21,453
)
 
(20,182
)
                           
Discontinued operations:
                         
Loss from discontinued operations
   
-
   
-
   
-
   
(2,045
)
Gain on disposal of discontinued operations
   
-
   
-
   
12,476
   
19,584
 
Income from discontinued operations
   
-
   
-
   
12,476
   
17,539
 
                           
Net loss
 
$
(7,395
)
$
(12,507
)
$
(8,977
)
$
(2,643
)
                           
Per Share Data:
                         
Basic and diluted per share data:
                         
Loss from continuing operations
 
$
(0.16
)
$
(0.27
)
$
(0.45
)
$
(0.48
)
Income from discontinued operations
   
-
   
-
   
0.26
   
0.42
 
Net loss
 
$
(0.16
)
$
(0.27
)
$
(0.19
)
$
(0.06
)
                           
Weighted average shares outstanding used in
per basic and diluted share calculations
   
47,426
   
46,598
   
47,228
   
42,106
 
 
 

 
EMCORE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2005 and September 30, 2004
(in thousands)
(unaudited)
 
   
As of
June 30,
   
As of
September 30,
 
 
   
2005
   
2004
 
 ASSETS
             
Current assets:
             
Cash and cash equivalents
 
$
16,037
 
$
19,422
 
Marketable securities
   
20,500
   
32,150
 
Accounts receivable, net
   
27,273
   
20,775
 
Receivables, related parties
   
4,117
   
215
 
Inventories, net
   
21,050
   
14,839
 
Prepaid expenses and other current assets
   
1,555
   
2,496
 
Total current assets
   
90,532
   
89,897
 
               
Property, plant and equipment, net
   
58,103
   
65,354
 
Goodwill
   
34,167
   
33,584
 
Intangible assets, net
   
5,917
   
5,177
 
Investments in unconsolidated affiliates
   
12,364
   
10,003
 
Receivables, related parties
   
169
   
3,754
 
Other assets, net
   
6,722
   
5,474
 
Total assets
 
$
207,974
 
$
213,243
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
             
Current liabilities:
             
Accounts payable
 
$
13,994
 
$
16,064
 
Accrued expenses
   
18,853
   
15,292
 
Convertible subordinated note, current portion
   
15,775
   
-
 
Total current liabilities
   
48,622
   
31,356
 
               
Convertible subordinated note
   
80,276
   
96,051
 
Other liabilities
   
11
   
27
 
Total liabilities
   
128,909
   
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,
47,768 shares issued and 47,748 outstanding at June 30, 2005;
46,951 shares issued and 46,931 outstanding at September 30, 2004
   
391,838
   
389,750
 
Accumulated deficit
   
(311,841
)
 
(302,864
)
Accumulated other comprehensive loss
   
-
   
(111
)
Shareholders’ notes receivable
   
-
   
(34
)
Treasury stock, at cost; 20 shares
   
(932
)
 
(932
)
Total shareholders’ equity
   
79,065
   
85,809
 
Total liabilities and shareholders’ equity
 
$
207,974
 
$
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 AND NET LOSS PER SHARE
(in thousands, except loss per share)
(unaudited)
 
Three Months Ended June 30,
     
2005
   
2004
 
               
Net loss
 
$
(7,395
)
$
(12,507
)
Adjustments:
   
       
Severance charges
   
559
   
-
 
Restructuring charges
   
1,759
   
-
 
Non GAAP net loss
 
$
(5,077
)
$
(12,507
)
               
Non-GAAP net loss per basic and diluted share
 
$
(0.11
)
$
(0.27
)
               
 
 
EMCORE CORPORATION
RECONCILIATION OF NET LOSS (INCOME) AND ADJUSTED EBITDA
(in thousands)
(unaudited)
 
For the Three Months Ended
 
 
June 30,
2005
   
March 31,
2005
 
               
Net (loss) income
 
$
(7,395
)
$
7,559
 
Adjustments:
             
Depreciation and amortization
   
3,586
   
3,675
 
Gain on disposal of discontinued operations
   
-
   
(12,476
)
Severance charges
   
559
   
177
 
Restructuring charges
   
1,759
   
-
 
Interest expense, net
   
905
   
953
 
Equity in net loss (income) of GELcore
   
778
   
297
 
Compensatory stock issuances
   
218
   
180
 
Reduction of note receivable due for services received
   
130
   
130
 
Provision for doubtful accounts
   
1
   
(185
)
Total adjustments to net (loss) income
   
(7,936
)
 
(7,249
)
               
Adjusted EBITDA
 
$
541
 
$
310
 
 
 
EMCORE CORPORATION
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
(in thousands)
(unaudited)
 
Three Months Ended June 30,
     
2005
   
2004
 
               
Operating expenses
 
$
12,443
 
$
12,258
 
Adjustments:
   
       
Severance charges
   
(559
)
 
-
 
Restructuring charges
   
(1,759
)
 
-
 
               
Non GAAP operating expenses
 
$
10,125
 
$
12,258
 
 
 
EMCORE CORPORATION
RECONCILIATION OF NON-GAAP OPERATING LOSS
(in thousands)
(unaudited)
 
 
Three Months Ended June 30,
     
2005
   
2004
 
               
Operating loss
 
$
(5,712
)
$
(11,844
)
Adjustments:
   
       
Severance charges
   
559
   
-
 
Restructuring charges
   
1,759
   
-
 
               
Non GAAP operating loss
 
$
(3,394
)
$
(11,844
)
 
 

 
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