EMCORE CORP. 8-K EX-99.1 PRESS RELEASE
Published on May 4, 2006
EX-99.1
Press
Release
EMCORE
Corporation Reports Fiscal 2006 Second Quarter and Six-Month
Results
-
Quarterly revenues increase 35% from a year ago to $41.2 million;
-
Six-month revenues increase 41% from a year ago to $81.1 million;
-
Gross margins increase 4% points sequentially to 21%
SOMERSET,
New
Jersey, May 3, 2006 -- 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 2006 second quarter ended March 31,
2006.
Revenues
for the
second quarter of fiscal 2006 were $41.2 million, an increase of 35% from
the
$30.4 million reported in the second quarter of fiscal 2005, and an increase
of
$1.3 million, or 3%, from the $39.9 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 Electronic Materials and Devices revenues increased, while
Photovoltaics experienced a marginal revenue decrease of 4%. Gross profit
for
the quarter was $8.7 million or 21%, an increase of 57% from $5.5 million
a year
earlier. The gross margin of 21% represents an increase of 4 percentage
points
from the 17% gross margin recorded in the previous quarter. Included in
cost of
goods sold for the three and six-month periods ended March 31, 2006 are
$0.1
million and $0.3 million of stock-based compensation expense, respectively.
No
stock-based compensation expense was recognized in the previous year. For
the
six months ended March 31, 2006, revenues totaled $81.1 million, an increase
of
41% or $23.7 million as compared to the $57.4 million recorded for the
six
months ended March 31, 2005.
Operating
expenses
totaled $16.0 million for the three months ended March 31, 2006. Excluding
the
one-time $2.7 million expense relating to loan forgiveness (as described
in the
Company’s Form 8-K filed on March 1, 2006 and Form 8-K/A filed on March 6,
2006), operating expenses for the second quarter of fiscal 2006 totaled
$13.3
million, an increase of $1.6 million from the previous quarter. The increase
was
primarily attributable to the operating expenses of the three businesses
acquired by the Company during the past four months. As the Company completes
the integration of these recent acquisitions, it expects the operating
expenses
related to the acquisitions to decrease. For the six-month period ended
March
31, 2006, operating expenses totaled $27.7 million, an increase of $7.8
million
from the previous year. Included in operating expenses for the three and
six-month periods ended March 31, 2006 are $0.9 million and $1.6 million
of
stock-based compensation expense, respectively, and $2.7 million of loan
forgiveness. No stock-based compensation expense was recognized in the
previous
year.
The
Company
reported an operating loss of $7.3 million for the three months ended March
31,
2006. Excluding the $2.7 million in loan forgiveness and the $0.9 million
of
stock-based compensation expense, the operating loss totaled $3.7 million,
or
$(0.07) per share. This compares to an operating loss of $3.7 million,
or
$(0.08) per share in the prior year and $3.7 million, or $(0.08) per share
in
the prior quarter after deducting stock- based compensation expense of
$1.1
million.
EMCORE
reported a
net loss for the second quarter of fiscal 2006 of $6.9 million or $(0.14)
per
basic and diluted share. Excluding the stock-based compensation expense
of $0.9
million, the loan forgiveness of $2.7 million, and the final earn-out payment
from the sale of the Company’s equipment division in November 2003 of $2.0
million, the net loss is $5.3 million, or $(0.11) per share. GELcore, the
Company’s joint venture with GE Lighting, incurred a loss for the quarter of
$0.4 million as compared to a profit of $0.5 million in the previous quarter,
representing a $(0.02) impact on earnings per share. In the previous year,
EMCORE’s quarterly net loss was $4.9 million, or $(0.10) per share, after
excluding the $12.5 million first earn-out payment from the sale of the
Company’s equipment division in November 2003. In the previous quarter, EMCORE’s
net loss was $4.3 million, or $(0.09) per share, excluding stock-based
compensation expense of $1.1 million and the loss on convertible subordinated
notes of $1.1 million.
Cash,
cash
equivalents and marketable securities at March 31, 2006 totaled approximately
$33.9 million, essentially the same as the prior quarter ended balance.
Income
before interest, taxes, depreciation, amortization and other non-cash items
(adjusted EBITDA) was approximately $0.4 million, an improvement of $0.3
million
and $0.8 million as compared to adjusted EBITDA for the prior year and
prior
quarter, respectively.
Management Discussion and Outlook
“Revenues
of $41.2
million were in line with our estimate and our gross margins improved,
increasing 4 percentage points to 21% this quarter. All three operating
segments
experienced gross margin increases this quarter. We incurred approximately
$1.3
million of operating expenses related to the acquisitions of Phasebridge,
Force
and K2 Optronics in the last 120 days. These expenses should be reduced
as we
complete the integration of these recent acquisitions. We believe these
acquisitions will add $10-$11 million of revenue over the next twelve
months,”
commented Mr. Reuben F. Richards Jr., President & CEO. “On the terrestrial
solar front, we are excited about our prospects. We have bids out on
approximately 40 megawatts of installations with contracts to be awarded
in 2006
for installations beginning in 2007. Meanwhile, we are presently working
with
other customers and have made initial shipments of terrestrial based
solar cells
to 5 solar concentrator companies, including the 2 major system manufacturers
in
Europe and Asia,” Mr. Richards stated. “Looking ahead to the fiscal third
quarter, we expect total revenue of $42-$44 million,” Mr. Richards
added.
Company
& Quarterly Highlights
EMCORE
recorded the
final earn-out from the sale of the equipment division to Veeco Instruments,
Inc. in 2003. Net sales of TurboDisc products for the twelve months
ended December 31, 2005 amounted to $44.0 million resulting in an earn-out
of
$2.0 million for year two of the two-year earn-out agreement. EMCORE
recorded a
net gain from the disposal of discontinued operations of $2.0 million.
EMCORE
received a cumulative two-year earn-out of $15.2 million, or 76% of a
total
potential earn-out of $20 million.
The
K2 Optronics,
Inc. acquisition was completed on January 12, 2006. K2 specializes in
designing,
developing and manufacturing analog and digital transmission lasers for
the
cable television, telecommunications, sensing, and test and measurement
industries.
EMCORE
will discuss
the results further on a conference call to be held tomorrow, Thursday,
May 4,
2006 at 9:00 a.m. EDT. To participate in the call, U.S, callers should
dial
(toll free) 1-877-691-0878 and international callers should dial 1-973-935-8599.
A replay of the call will be available beginning May 4, 2006 at 11:15
a.m. EDT
until May 11, 2006 at 11:59 p.m. EDT. The replay call-in number for U.S.
callers
is 1-877-519-4471, for international callers it is 1-973-341-3080, and
the
access code is 7274525#. 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 customers’ goals and objectives to be
leaders in the transport of video, voice, and data, 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 3G mobile handsets
and
PDA devices. Through its joint venture participation in GELcore, LLC,
EMCORE
plays a vital role in providing next-generation High-Brightness LED products
and
solutions to 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. Such forward-looking statements include but are not limited
to
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 also
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 ability to reduce operating
expenses associated with its recent acquisitions (iii) EMCORE’s continued
leadership in technology and manufacturing in its markets, and (iv) 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 future periods, including, without limitation, with respect to anticipated
revenues for the third quarter of fiscal 2006 or expected revenues from
recent
acquisitions. 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, (including,
among
other things, cost structure, gross margin and other profitability
improvements), 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; (b) EMCORE may encounter difficulties
in
integrating its recent acquisitions and as a result may sustain increased
operating expenses, delays in commercializing new products, production
difficulties associated with transferring products to EMCORE’s manufacturing
facilities and disruption of customer relationships (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, 2006 and 2005
(in
thousands, except income (loss) per share)
(unaudited)
|
Three
Months Ended
March
31,
|
Six
Months Ended
March
31,
|
|||||||||||||||||
|
2006
|
2005
|
2006
|
2005
|
|||||||||||||||
|
Revenue
|
$
|
41,162
|
$
|
30,430
|
$
|
81,053
|
$ |
57,394
|
||||||||||
|
Cost
of
revenue
|
32,473
|
24,901
|
65,528
|
49,790
|
||||||||||||||
|
Gross
profit
|
8,689
|
5,529
|
15,525
|
7,604
|
||||||||||||||
|
Operating
expenses:
|
||||||||||||||||||
|
Selling,
general and administrative
|
11,001
|
5,127
|
18,264
|
10,687
|
||||||||||||||
|
Research
and
development
|
4,964
|
4,069
|
9,398
|
9,128
|
||||||||||||||
|
Total
operating expenses
|
15,965
|
9,196
|
27,662
|
19,815
|
||||||||||||||
|
Operating
loss
|
(7,276
|
)
|
(3,667
|
)
|
(12,137
|
)
|
(12,211
|
) | ||||||||||
|
Other
(income) expenses:
|
||||||||||||||||||
|
Interest
expense, net
|
1,113
|
953
|
2,080
|
1,922
|
||||||||||||||
|
Loss
from
convertible subordinated notes exchange offer
|
-
|
-
|
1,078
|
-
|
||||||||||||||
|
Equity
in net
loss of Velox investment
|
150
|
-
|
332
|
-
|
||||||||||||||
|
Equity
in net
loss (income) of GELcore
|
397
|
297
|
(150
|
)
|
(75
|
) | ||||||||||||
|
Total
other
expenses
|
1,660
|
1,250
|
3,340
|
1,847
|
||||||||||||||
|
Loss
from
continuing operations
|
(8,936
|
)
|
(4,917
|
)
|
(15,477
|
)
|
(14,058
|
) | ||||||||||
|
Discontinued
operations:
|
||||||||||||||||||
|
Gain
on
disposal of discontinued operations
|
2,012
|
12,476
|
2,012
|
12,476
|
||||||||||||||
|
Income
from
discontinued operations
|
2,012
|
12,476
|
2,012
|
12,476
|
||||||||||||||
|
Net
(loss)
income
|
$
|
(6,924
|
)
|
$
|
7,559
|
$
|
(13,465
|
)
|
$ |
(1,582
|
) | |||||||
|
Per
Share Data:
|
||||||||||||||||||
|
Basic
per
share data:
|
||||||||||||||||||
|
Loss
from
continuing operations
|
$
|
(0.18
|
)
|
$
|
(0.10
|
)
|
$
|
(0.32
|
)
|
$ |
(0.30
|
) | ||||||
|
Income
from
discontinued operations
|
0.04
|
0.26
|
0.04
|
0.27
|
||||||||||||||
|
Net
(loss)
income
|
$
|
(0.14
|
)
|
$
|
0.16
|
$
|
(0.28
|
)
|
$ |
(0.03
|
) | |||||||
|
Diluted
per
share data:
|
||||||||||||||||||
|
Loss
from
continuing operations
|
$
|
(0.18
|
)
|
$
|
(0.10
|
)
|
$
|
(0.32
|
)
|
$ |
(0.30
|
) | ||||||
|
Income
from
discontinued operations
|
0.04
|
0.26
|
0.04
|
0.27
|
||||||||||||||
|
Net
(loss)
income
|
$
|
(0.14
|
)
|
$
|
0.16
|
$
|
(0.28
|
)
|
$ |
(0.03
|
) | |||||||
|
Weighted
average basic shares outstanding used in
per
basic
share calculations
|
49,409
|
47,265
|
48,788
|
47,128
|
||||||||||||||
|
Weighted
average diluted shares outstanding used in
per
diluted
share calculations
|
49,409
|
47,265
|
48,788
|
47,128
|
||||||||||||||
EMCORE
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
As
of March
31, 2006 and September 30, 2005
(in
thousands)
(unaudited)
|
As
of
March
31,
2006
|
As
of
September
30, 2005
|
||||||
|
ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash
equivalents
|
$
|
23,048
|
$
|
19,525
|
|||
|
Restricted
cash
|
698
|
547
|
|||||
|
Marketable
securities
|
10,150
|
20,650
|
|||||
|
Accounts
receivable, net
|
24,707
|
22,633
|
|||||
|
Receivables,
related parties
|
276
|
4,197
|
|||||
|
Inventories,
net
|
22,166
|
18,348
|
|||||
|
Prepaid
expenses and other current assets
|
3,145
|
3,638
|
|||||
|
Total
current
assets
|
84,190
|
89,538
|
|||||
|
Property,
plant and equipment, net
|
57,378
|
56,957
|
|||||
|
Goodwill
|
40,424
|
34,643
|
|||||
|
Intangible
assets, net
|
7,741
|
5,347
|
|||||
|
Investments
in unconsolidated affiliates
|
12,517
|
12,698
|
|||||
|
Receivables,
related parties
|
169
|
169
|
|||||
|
Other
assets,
net
|
5,364
|
6,935
|
|||||
|
Total
assets
|
$
|
207,783
|
$
|
206,287
|
|||
|
LIABILITIES
& SHAREHOLDERS’ EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
$
|
16,492
|
$
|
15,587
|
|||
|
Accrued
expenses and other current liabilities
|
17,333
|
19,078
|
|||||
|
Notes
payable, current portion
|
407
|
-
|
|||||
|
Convertible
subordinated note, current portion
|
1,350
|
1,350
|
|||||
|
Total
current
liabilities
|
35,582
|
36,015
|
|||||
|
Convertible
subordinated notes
|
95,846
|
94,701
|
|||||
|
Notes
payable, long-term
|
394
|
-
|
|||||
|
Other
liabilities
|
-
|
8
|
|||||
|
Total
liabilities
|
131,822
|
130,724
|
|||||
|
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,
50,453,
shares issued and 50,294 outstanding at March 31, 2006;
48,023
shares
issued and 48,003 outstanding at September 30, 2005
|
407,480
|
392,466
|
|||||
|
Accumulated
deficit
|
(329,436
|
)
|
(315,971
|
)
|
|||
|
Treasury
stock, at cost; 159 and 20 shares at March 31, 2006 and
September 30,
2005, respectively
|
(2,083
|
)
|
(932
|
)
|
|||
|
Total
shareholders’ equity
|
75,960
|
75,563
|
|||||
|
Total
liabilities and shareholders’ equity
|
$
|
207,783
|
$
|
206,287
|
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. In
particular, management believes it is appropriate in evaluating EMCORE's
operations to exclude gains or losses from one-time items such as loan
forgiveness and gains (losses) on disposal of discontinued operations
because these items would make results less comparable between periods.
Because EMCORE implemented stock option expensing recently, we have
also
provided a non-GAAP measure so that our investors can more easily
compare our
performance to periods prior to implementation of expensing. Management
believes
adjusting for stock-based compensation expense is appropriate, as
it is a
non-cash expense, and adjusting is consistent with the practice of
most of our
competitors. 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 OPERATING LOSS
FOR
THE
THREE MONTHS ENDED
(in
thousands, except loss per share)
(unaudited)
|
March
31,
2006
|
March
31,
2005
|
December
31, 2005
|
||||||||
|
Loss
from
operations
|
$
|
(7,276
|
)
|
$
|
(3,667
|
)
|
$
|
(4,861
|
)
|
|
|
Adjustments:
|
||||||||||
|
Loan
forgiveness
|
2,683
|
-
|
-
|
|||||||
|
SFAS
123(R),
stock-based compensation expense
|
933
|
-
|
1,130
|
|||||||
|
Non-GAAP
loss
from operations
|
$
|
(3,660
|
)
|
$
|
(3,667
|
)
|
$
|
(3,731
|
)
|
|
|
Non-GAAP
loss
from operations per basic and diluted share
|
$
|
(0.07
|
)
|
$
|
(0.08
|
)
|
$
|
(0.08
|
)
|
EMCORE
CORPORATION
RECONCILIATION
OF NON-GAAP NET LOSS
FOR
THE
THREE MONTHS ENDED
(in
thousands except loss per share)
(unaudited)
|
March
31,
2006
|
March
31,
2005
|
December
31,
2005
|
||||||||
|
Net
(loss)
income
|
$
|
(6,924
|
)
|
$
|
7,559
|
$
|
(6,541
|
)
|
||
|
Adjustments:
|
||||||||||
|
SFAS
123(R),
stock-based compensation expense
|
933
|
-
|
1,130
|
|||||||
|
Gain
on
disposal of discontinued operations
|
(2,012
|
)
|
(12,476
|
)
|
-
|
|||||
|
Loan
forgiveness
|
2,683
|
-
|
-
|
|||||||
|
Loss
on
convertible subordinated notes exchange offer
|
-
|
-
|
1,078
|
|||||||
|
Sub-total
adjusted loss
|
(5,320
|
)
|
(4,917
|
)
|
(4,333
|
)
|
||||
|
GELcore
loss
(income)
|
397
|
297
|
(547
|
)
|
||||||
|
Non-GAAP
net
loss
|
$
|
(4,923
|
)
|
$
|
(4,620
|
)
|
$
|
(4,880
|
)
|
|
|
Non-GAAP
loss
per share
|
$
|
(0.10
|
)
|
$
|
(0.10
|
)
|
$
|
(0.10
|
)
|
|
EMCORE
CORPORATION
RECONCILIATION
OF NET (LOSS) INCOME TO ADJUSTED EBITDA
FOR
THE
THREE MONTHS ENDED
(in
thousands)
(unaudited)
|
March
31,
2006
|
March
31,
2005
|
December
31,
2005
|
||||||||
|
Net
(loss)
income
|
$
|
(6,924
|
)
|
$
|
7,559
|
$
|
(6,541
|
)
|
||
|
Adjustments:
|
||||||||||
|
Depreciation
and amortization
|
3,782
|
3,675
|
3,050
|
|||||||
|
Gain
on
disposal of discontinued operations
|
(2,012
|
)
|
(12,476
|
)
|
-
|
|||||
|
Interest
expense, net
|
1,113
|
953
|
967
|
|||||||
|
Equity
in net
loss (income) of GELcore
|
397
|
297
|
(547
|
)
|
||||||
|
Equity
in net
loss of Velox
|
150
|
-
|
182
|
|||||||
|
Loan
forgiveness
|
2,683
|
-
|
-
|
|||||||
|
Loss
on
convertible subordinated notes
|
-
|
-
|
1,078
|
|||||||
|
SFAS
123 (R),
stock-based compensation expense
|
933
|
-
|
1,130
|
|||||||
|
Other
non-cash items
|
301
|
125
|
265
|
|||||||
|
Total
adjustments
|
7,347
|
(7,426
|
)
|
6,125
|
||||||
|
Adjusted
EBITDA
|
$
|
423
|
$
|
133
|
$
|
(416
|
)
|
|||
CONTACT
EMCORE
Corporation
Tom
Werthan - Chief
Financial Officer
(732)
271-9090
info@emcore.com
TTC
Group
Victor
Allgeier
(212)
227-0997
info@ttcominc.com