EMCORE CORP 8-K EX-99.1 PRESS RELEASE
Published on August 3, 2006
EX-99.1
Press
Release
EMCORE
Corporation Reports Fiscal 2006 Third Quarter and Nine-Month
Results
·
Quarterly revenues increase 26% from a year ago to $42
million;
·
Nine month revenues increase 36% from a year ago to $123
million;
·
All 3 operating segments show revenue increases;
SOMERSET,
New Jersey, August 2, 2006 -- EMCORE Corporation (NASDAQ: EMKR), a leading
provider of compound semiconductor-based components and subsystems for the
broadband, fiber optic, satellite, solar power and wireless communications
markets, today announced its financial results for the fiscal 2006 third quarter
ended June 30, 2006.
Revenues
for the third quarter of fiscal 2006 were $42.0 million, an increase of 26%
from
the $33.2 million reported in the third quarter of fiscal 2005, and an increase
of $0.8 million, or 2%, from the $41.2 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 $8.6 million, an increase
of
28% from $6.7 million a year earlier. The gross margin of 21% is flat compared
to the previous quarter. Included in cost of goods sold for the three and
nine-month periods ended June 30, 2006 are $0.3 million and $0.7 million of
stock-based compensation expense, respectively. No stock-based compensation
expense was recognized in the previous year. For the nine months ended June
30,
2006, revenues totaled $123.0 million, an increase of 36%, or $32.4 million
as
compared to the $90.6 million recorded for the nine months ended June 30, 2005.
Operating
expenses totaled $13.3 million for the three months ended June 30, 2006, flat
when compared to the previous quarter after elimination of a non-recurring
charge of $2.7 million. However, the current quarter includes a final
restructuring charge included in selling, general and administrative expenses
of
$0.6 million related to the facility closure in City of Industry, California.
The Company’s Photovoltaics operations are now entirely located in Albuquerque,
New Mexico and annual savings of $3 million are expected. For the nine-month
period ended June 30, 2006, operating expenses totaled $41.0 million, an
increase of $9.2 million from the previous year. Included in operating expenses
for the three and nine-month periods ended June 30, 2006 are $0.7 million and
$2.4 million of stock-based compensation expense, respectively. No stock-based
compensation expense was recognized in the previous year.
The
Company reported an operating loss of $4.7 million for the three months ended
June 30, 2006. Excluding the $1.0 million of stock-based compensation expense
and the final facility shutdown costs of $0.6 million, the operating loss
totaled $3.1 million, or $(0.06) per share. This compares to an operating loss
of $3.4 million, or $(0.07) per share in the prior year after excluding $1.8
of
severance and restructuring expenses, and an operating loss of $3.6 million,
or
$(0.07) per share in the prior quarter after deducting stock- based compensation
expense of $0.9 million and loan forgiveness of $2.7 million.
EMCORE
reported a net loss for the third quarter of fiscal 2006 of $5.9 million or
$(0.12) per basic and diluted share. Excluding the stock-based compensation
expense of $1.0 million, and the final facility shutdown costs of $0.6 million,
the net loss is $4.3 million, or $(0.08) per share. GELcore, the Company’s joint
venture with GE Lighting, incurred a loss for the quarter of $0.1 million,
an
improvement of $0.3 million from the previous quarter’s loss of $0.4 million. In
the previous year, EMCORE’s quarterly net loss was $6.9 million, or $(0.15) per
share. Excluding severance and restructuring expenses of $1.8 million the loss
was $5.1 million, or $(0.11) per share. In the previous quarter, EMCORE’s
quarterly net loss was $6.9 million, or $(0.14) per share. Excluding stock-based
compensation expense of $0.9 million, loan forgiveness of $2.7 million, and
a
$2.0 million final earn-out payment from the sale of the Company’s equipment
division in November 2003, the net loss was $5.3 million or $(0.11) per
share.
Cash,
cash equivalents and marketable securities at June 30, 2006 totaled
approximately $25.3 million, a decrease of $8.6 million from the prior quarter.
The decrease is attributable to the $2.5 million semi-annual interest payment
on
the Company’s outstanding convertible securities, $1.9 million for capital
equipment purchases, $1.4 million related to the maturity of the Company’s 2006
subordinated securities, and unfavorable changes in working capital of
approximately $3.0 million. Income before interest, taxes, depreciation,
amortization and other non-cash items (adjusted EBITDA) was approximately $0.2
million, a decrease of $0.2 million as compared to adjusted EBITDA for the
prior
quarter.
Management
Discussion and Outlook:
“Revenues
of $42 million were in line with our estimate but our gross margins remained
flat as fiber gross margins decreased due to increased revenues in our FTTX
product line which yields a lower gross margin than the division average. Gross
margins for both photovoltaics and electronic materials and devices increased
due to increased volumes, product mix and better yields,” commented Mr. Reuben
F. Richards Jr., President & CEO. “On the terrestrial solar front, there
were a number of key developments, including a contract with Sandia National
Laboratories for the co-development of the next generation of grid-tied, utility
scale, solar power systems. The
sale
of EMD will help increase gross margins and after further consolidation will
save approximately $3 million annually” Mr. Richards stated. “Looking ahead to
the fiscal fourth quarter, we expect total revenues to increase approximately
10% from continuing operations.” Mr. Richards added.
Company
and Quarterly Highlights:
EMCORE
announced the sale of its electronics materials and devices division (EMD)
to
IQE, plc. Closing is scheduled for mid-August and the purchase price is $16.0
million consisting of a $0.2 million deposit previously delivered to EMCORE,
$12.8 million delivered via wire transfer at closing of the transaction, and
$3.0 million in the form of a short term, secured promissory note of IQE and
Purchaser. EMD
has
been an innovator in developing state of the art RF materials for over 10 years.
EMCORE will continue to focus strategy on broadband infrastructure, solar power
and highly-integrated products. The sale of this division will lower EMCORE’s
cost base, improve gross margins company-wide and permit further consolidation
of operations.
EMCORE
and Sandia National Laboratories announced the agreement for the development
of
next generation concentrator photovoltaic power systems. Sandia will provide
technical support for EMCORE’s terrestrial solar systems products. Sandia has
over 25 years in the development of photovoltaics for grid-tied utility scale
power generation and is a pioneer in photovoltaic research. EMCORE is the
leading supplier of gallium arsenide multi-junction solar cell technology for
power generation on satellites. EMCORE is adapting its state-of-the-art solar
cell technology as a base for the development of large scale, concentrator
photovoltaic power systems with the goal of becoming the leader in solar energy
power systems.
EMCORE
will discuss its quarterly results in a conference call on Thursday August
3,
2006, at 9:00 a.m. ET. To participate in the call, U.S.
callers should dial (toll free) 866-710-0179
and
international callers should dial 334-323-9871. The access code for the call
is
17742. A replay of the call will be available beginning August 3, 2006 at 11:00
a.m. ET until August 10, 2006 at 11:59 p.m. ET. The replay call-in number for
U.S. callers is 877-656-8905,
for
international callers it is 334-323-9859,
and the
access code is 10498670.
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 products
for the broadband, fiber optic, satellite, solar power and wireless
communications markets. EMCORE’s Fiber Optic segment offers optical components,
subsystems and systems for high speed data and telecommunications networks,
cable television (CATV) and fiber-to-the-premises (FTTP). EMCORE’s Photovoltaic
segment provides products for both satellite and terrestrial applications.
For
satellite applications, EMCORE offers high efficiency Gallium Arsenide (GaAs)
solar cells, Covered Interconnect Cells (CICs) and panels. For terrestrial
applications, EMCORE is adapting its high-efficiency GaAs solar cells for use
in
solar concentrator systems. Our Electronic Materials and Devices segment
provides radio frequency (RF) transistor materials for high bandwidth wireless
communications systems. Through its joint venture participation in GELcore,
LLC,
EMCORE plays a significant 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. 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 fourth quarter of fiscal 2006, revenues for fiscal 2007, 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 nine months ended June 30, 2006 and 2005
(in
thousands, except (loss) per share)
(unaudited)
|
|
Three
Months Ended June 30,
|
Nine
Months Ended June 30,
|
||
|
2006
|
2005
|
2006
|
2005
|
|
|
Revenue
|
$41,954
|
$33,234
|
$123,007
|
$90,628
|
|
Cost
of revenue
|
33,336
|
26,503
|
98,864
|
76,293
|
|
Gross
profit
|
8,618
|
6,731
|
24,143
|
14,335
|
|
Operating
expenses:
|
||||
|
Selling,
general and administrative
|
8,182
|
7,902
|
26,445
|
18,589
|
|
Research
and development
|
5,152
|
4,061
|
14,550
|
13,189
|
|
Total
operating expenses
|
13,334
|
11,963
|
40,995
|
31,778
|
|
Operating
loss
|
(4,716)
|
(5,232)
|
(16,852)
|
(17,443)
|
|
Other
(income) expenses:
|
||||
|
Interest
expense, net
|
1,068
|
905
|
3,149
|
2,827
|
|
Loss
from convertible subordinated notes exchange offer
|
-
|
-
|
1,078
|
-
|
|
Equity
in net loss of Velox investment
|
-
|
-
|
332
|
-
|
|
Equity
in net loss (income) of GELcore
|
129
|
778
|
(21)
|
703
|
|
Total
other expenses
|
1,197
|
1,683
|
4,538
|
3,530
|
|
Loss
from continuing operations
|
(5,913)
|
(6,915)
|
(21,390)
|
(20,973)
|
|
Discontinued
operations:
|
||||
|
Gain
on disposal of discontinued operations
|
-
|
-
|
2,012
|
12,476
|
|
Income
from discontinued operations
|
-
|
-
|
2,012
|
12,476
|
|
Net
loss
|
$(5,913)
|
$(6,915)
|
$(19,378)
|
$(8,497)
|
|
Per
Share Data:
|
||||
|
Basic
and diluted per share data:
|
||||
|
Loss
from continuing operations
|
$(0.12)
|
$(0.15)
|
$(0.43)
|
$(0.44)
|
|
Income
from discontinued operations
|
-
|
-
|
0.04
|
0.26
|
|
Net
loss
|
$(0.12)
|
$(0.15)
|
$(0.39)
|
$(0.18)
|
|
Weighted
average number of shares outstanding used in basic and diluted share
calculations
|
50,430
|
47,426
|
49,336
|
47,228
|
EMCORE
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
As
of June 30, 2006 and September 30, 2005
(in
thousands)
(unaudited)
|
As
of
June
30,
|
As
of
September
30,
|
|
|
ASSETS
|
2006
|
2005
|
|
Current
assets:
|
||
|
Cash
and cash equivalents
|
$16,138
|
$19,525
|
|
Restricted
cash
|
1,303
|
547
|
|
Marketable
securities
|
7,900
|
20,650
|
|
Accounts
receivable, net
|
27,388
|
22,633
|
|
Receivables,
related parties
|
482
|
4,197
|
|
Inventories,
net
|
24,940
|
18,348
|
|
Prepaid
expenses and other current assets
|
3,224
|
3,638
|
|
Total
current assets
|
81,375
|
89,538
|
|
Property,
plant and equipment, net
|
56,997
|
56,957
|
|
Goodwill
|
40,476
|
34,643
|
|
Intangible
assets, net
|
6,624
|
5,347
|
|
Investments
in unconsolidated affiliates
|
12,388
|
12,698
|
|
Receivables,
related parties
|
169
|
169
|
|
Other
assets, net
|
5,526
|
6,935
|
|
Total
assets
|
$203,555
|
$206,287
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||
|
Current
liabilities:
|
||
|
Accounts
payable
|
$20,692
|
$15,587
|
|
Accrued
expenses and other current liabilities
|
13,540
|
19,078
|
|
Notes
payable, current portion
|
430
|
-
|
|
Convertible
subordinated notes, current portion
|
-
|
1,350
|
|
Total
current liabilities
|
34,662
|
36,015
|
|
Convertible
subordinated notes, long-term
|
95,895
|
94,709
|
|
Notes
payable, long-term
|
277
|
-
|
|
Total
liabilities
|
130,834
|
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, 50,805 shares issued
and
50,646 outstanding at June 30, 2006; 48,023 shares issued and 48,003
outstanding at September 30, 2005
|
410,153
|
392,466
|
|
Accumulated
deficit
|
(335,349)
|
(315,971)
|
|
Treasury
stock, at cost; 159 and 20 shares at June 30, 2006 and September
30, 2005,
respectively
|
(2,083)
|
(932)
|
|
Total
shareholders’ equity
|
72,721
|
75,563
|
|
Total
liabilities and shareholders’ equity
|
$203,555
|
$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 EXPENSES
FOR
THE THREE MONTHS ENDED
(in
thousands)
(unaudited)
|
June
30,
|
March
31,
|
|
|
2006
|
2006
|
|
|
Operating
expenses
|
$13,334
|
$15,965
|
|
Adjustments:
|
||
|
Loan
forgiveness
|
-
|
(2,683)
|
|
Restructuring
charge relocation
|
(614)
|
(42)
|
|
Non-GAAP
operating expenses
|
$12,720
|
$13,240
|
EMCORE
CORPORATION
RECONCILIATION
OF NON-GAAP OPERATING LOSS
FOR
THE THREE MONTHS ENDED
(in
thousands, except loss per share)
(unaudited)
|
June
30,
|
March
31,
|
June
30,
|
|
|
2006
|
2006
|
2005
|
|
|
Loss
from operations
|
$(4,716)
|
$(7,276)
|
$(5,232)
|
|
Adjustments:
|
|||
|
SFAS
123(R), stock-based compensation expense
|
1,023
|
933
|
-
|
|
Loan
forgiveness
|
-
|
2,683
|
-
|
|
Severance
and restructuring
|
614
|
42
|
1,838
|
|
Non-GAAP
loss from operations
|
$(3,079)
|
$(3,618)
|
$(3,394)
|
|
Non-GAAP
loss per share
|
$(0.06)
|
$(0.07)
|
$(0.07)
|
EMCORE
CORPORATION
RECONCILIATION
OF NON-GAAP NET LOSS
FOR
THE THREE MONTHS ENDED
(in
thousands except loss per share)
(unaudited)
|
June
30,
2006
|
March
31,
2006
|
June
30,
2005
|
|
|
Net
loss
|
$(5,913)
|
$(6,924)
|
$(6,915)
|
|
Adjustments:
|
|||
|
SFAS
123(R), stock-based compensation expense
|
1,023
|
933
|
-
|
|
Gain
on disposal of discontinued operations
|
-
|
(2,012)
|
-
|
|
Loan
forgiveness
|
-
|
2,683
|
-
|
|
Severance
and restructuring
|
614
|
42
|
1,838
|
|
Non-GAAP
net loss
|
$(4,276)
|
$(5,278)
|
$(5,077)
|
|
Non-GAAP
loss per share
|
$(0.08)
|
$(0.11)
|
$(0.11)
|
EMCORE
CORPORATION
RECONCILIATION
OF NET (LOSS) TO ADJUSTED EBITDA
FOR
THE THREE MONTHS ENDED
(in
thousands)
(unaudited)
|
June
30,
2006
|
March
31,
2006
|
|
|
Net
(loss)
|
$(5,913)
|
$(6,924)
|
|
Adjustments:
|
||
|
Depreciation
and amortization
|
3,488
|
3,782
|
|
Gain
on disposal of discontinued operations
|
-
|
(2,012)
|
|
Interest
expense, net
|
1,068
|
1,113
|
|
Equity
in net loss of GELcore
|
129
|
397
|
|
Equity
in net loss of Velox
|
-
|
150
|
|
Loan
forgiveness
|
-
|
2,683
|
|
SFAS
123 (R), stock-based compensation expense
|
1,023
|
933
|
|
Other
non-cash items
|
424
|
301
|
|
Total
adjustments
|
6,132
|
7,347
|
|
Adjusted
EBITDA
|
$219
|
$423
|
CONTACT:
EMCORE
Corporation
Tom
Werthan - Chief Financial Officer
(732)
271-9090, info@emcore.com
TTC
Group
Victor
Allgeier
(646)
290-6400, info@ttcominc.com