FY10 Q1 EARNINGS PRESS RELEASE
Published on February 10, 2010
EXHIBIT
99.1
PRESS
RELEASE
EMCORE
Corporation Announces Unaudited Results for Its First Quarter Ended December 31,
2009
·
|
Consolidated
revenue increased for the second consecutive
quarter
|
·
|
Gross
margins improved significantly sequentially and
year-over-year
|
·
|
Guidance
- approximately 10% increase in sequential quarterly
revenue
|
ALBUQUERQUE,
New Mexico, February 9, 2010 – EMCORE Corporation (NASDAQ: EMKR – News), a leading
provider of compound semiconductor-based components, subsystems, and systems for
the fiber optics and solar power markets, today announced unaudited financial
results for its first quarter ended December 31, 2009.
Revenue:
Revenue for the first quarter
of fiscal 2010 ended December 31, 2009 was $42.4 million, an increase of $1.9
million, or 5%, from $40.5 million reported in the immediately preceding quarter
ended September 30, 2009.
On a
segment basis, revenue for the Photovoltaics
segment was $16.8 million, an increase of $0.4 million, or 3%, from $16.4
million reported in the immediately preceding quarter with the increase due to a
14% increase in revenue from satellite solar power products offset by a decrease
in revenue from terrestrial concentrated photovoltaic (CPV)
products. The Photovoltaics segment accounted for 40% of the
Company's consolidated quarterly revenue for both the three months ended
December 31, 2009 and September 30, 2009.
Revenue
for the Fiber Optics segment was $25.6 million, an increase of $1.5 million, or
6%, from $24.1 million reported in the immediately preceding quarter with the
increase concentrated primarily in the Company’s cable television (CATV) product
lines. The Fiber Optics segment accounted for 60% of the Company's
consolidated quarterly revenue for both the three months ended December 31, 2009
and September 30, 2009.
Gross
Profit:
On a GAAP
basis, the consolidated gross profit was $8.0 million, an
improvement of $3.9 million, or 97%, from a $4.1 million gross profit reported
in the immediately preceding quarter and an improvement of $6.4 million when
compared to the prior year period. This represents the Company’s best
gross profit performance since the quarter ended June 30, 2008.
On a
segment basis, the first quarter Photovoltaics GAAP gross margin was 22.1%, a
decrease from the 28.5% GAAP gross margin reported in the preceding quarter, but
an increase from the 13.6% GAAP gross margin reported in the prior year period.
After excluding certain adjustments, as set forth in the attached non-GAAP
tables, the Photovoltaics first quarter non-GAAP gross margin of 22.1% improved
when compared to the 10.6% non-GAAP gross margin in the preceding
quarter. As indicated in the attached non-GAAP tables, the
Company reversed $2.9 million of inventory reserves in the preceding quarter
relating to legacy CPV products that were sold during that period.
The Fiber
Optics GAAP gross margin was 16.7%, a significant improvement from a negative
2.5% GAAP gross margin reported in the preceding quarter and a negative 1.1%
GAAP gross margin reported in the prior year period. The improvement
in the Fiber Optics gross margin was due to improved gross margins across the
majority of the Company’s product lines as well as lower inventory excess and
obsolescence charges when compared to the preceding and prior year
quarters.
Operating
Loss:
On a GAAP
basis, the consolidated operating loss was $11.9 million, an improvement of $2.0
million from an operating loss of $13.9 million reported in the preceding
quarter. This represents the Company’s best operating
performance since the quarter ended June 30, 2008. During the
quarter, the Company incurred approximately $4.2 million in legal expenses
related to patent litigation and other corporate legal charges arising
principally from two trials held in the first quarter and $1.3 million in
non-cash stock-based compensation expense from the surrender of stock
options. After excluding these expenses and certain other non-cash
and other adjustments as set forth in the attached non-GAAP tables, the first
quarter consolidated non-GAAP operating loss was $7.0 million, an improvement of
$2.0 million, or 23%, from the non-GAAP operating loss of $9.0 million reported
in the preceding quarter.
Net
Loss:
On a GAAP
basis, the consolidated net loss was $13.6 million, slightly above the net loss
of $13.5 million reported in the preceding quarter. On October
1, 2009, the Company entered into a $25 million equity line of credit
arrangement that met all the criteria of a financial derivative
instrument. Non-cash costs incurred to enter into this derivative
instrument of $1.4 million were expensed as incurred. After excluding
this expense and certain other non-cash and other adjustments as set forth in
the attached non-GAAP tables, the first quarter consolidated non-GAAP net loss
was $7.1 million, a $2.0 million improvement from the $9.1 million non-GAAP net
loss reported in the preceding quarter.
On a GAAP
basis, the first quarter net loss per share was $0.17, representing no change
from the $0.17 net loss per share reported in the preceding
quarter. On a non-GAAP basis, the net loss per share was $0.09, an
improvement of $0.02 per share from the $0.11 non-GAAP loss per share reported
in the preceding quarter.
Order
Backlog:
As of
December 31, 2009, the Company had a consolidated order backlog of approximately
$61.2 million, a $1.4 million, or 2%, decrease from the $62.6 million order
backlog reported as of the end of the preceding quarter. On a segment
basis, the quarter-end Photovoltaics order backlog totaled $42.3 million, a $5.4
million, or 11%, decrease from $47.7 million reported as of the end of the
preceding quarter with the decrease due entirely to the rescheduling of a
portion of a major customer’s shipments beyond the Company’s twelve month
backlog reporting horizon. The quarter-end Fiber Optics order backlog
totaled $18.9 million, a $4.0 million, or 26%, increase from $14.9 million
reported as of the end of the preceding quarter with the increase being
broad-based across customers and products. The order backlog is
defined as purchase orders or supply agreements accepted by the Company with
expected product delivery and / or services to be performed within the next
twelve months.
Liquidity
Update:
As of
December 31, 2009, cash, cash equivalents, current restricted cash, and
available-for sale securities totaled approximately $16.5 million which
represents a $0.4 million, or 2%, decrease from $16.9 million as of the end of
the preceding quarter. As of December 31, 2009, net working capital
totaled $32.0 million.
During
the three months ended December 31, 2009, the Company consumed $1.2 million in
cash from operations and, over the last three quarters, consumed only $189,000
in cash from operations due primarily to improved working capital
management. The first quarter represents the fourth consecutive
quarter that the Company has generated cash from the reduction of
inventory. During the last twelve months, the Company monetized
approximately $25.5 million of inventory, generated $16.9 million in cash from
lowering its accounts receivable balances and achieved positive cash flow from
operations during the quarters ended June 30, 2009 and September 30,
2009.
The
Company maintains a $14 million credit facility with Bank of America and, on
October 1, 2009, closed a two-year $25 million committed equity line of credit
facility with the Commerce Court Small Cap Value Fund, Ltd. In
addition, the Company continues to evaluate its capital requirements and
alternative sources of capital. With respect to the separation of its
Fiber Optics and Photovoltaics businesses, the Company announced on February 3,
2010 that it has entered into an agreement to sell 60% of its Fiber Optics
business to and enter into a joint venture with the Tangshan Caofeidian
Investment Corporation.
Business
Outlook:
For the
second quarter of fiscal 2010 ending March 31, 2010, the Company expects
consolidated revenue to be in the range of $45 to $47 million with increases in
both the Photovoltaics and Fiber Optics segments.
Conference
Call:
EMCORE
will discuss its unaudited results for its first quarter ended December 31, 2009
on a conference call to be held on Wednesday, February 10, 2010 at 4:30 pm
ET. To participate in the conference call, U.S. callers should dial
(toll free) 888-587-0613 and international callers should dial
719-325-2352. The access code for the call is 7863504. A
replay of the call will be available beginning February 10, 2010 at 8:00 p.m.
EST until February 17, 2010 at 11:59 p.m. EST. The replay call-in
number for U.S. callers is 888-203-1112, for international callers it is
719-457-0820, and the access code is 7863504. 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 optics, satellite and solar power markets. EMCORE's
Fiber Optics 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 Photovoltaics segment provides products
for both satellite and terrestrial applications. For satellite
applications, EMCORE offers high efficiency gallium arsenide (GaAs) solar cells,
covered interconnected cells (CICs) and panels. For terrestrial
applications, EMCORE is adapting its high-efficiency GaAs solar cells for use in
solar concentrator systems. For further information about EMCORE, visit
http://www.emcore.com.
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. 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. Management cautions 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 current domestic and international economic and financial
market conditions; (b) the success of our cost reduction efforts in achieving
their expected benefits, 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; (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; and (f) other risks and uncertainties described in our
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.
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 Annual Report on
Form 10-K. Certain information included in this press release may
supersede or supplement forward-looking statements in our other Exchange Act
reports filed with the Securities and Exchange Commission. 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
For
the three months ended December 31, 2009 and 2008
(in
thousands, except loss per share)
(unaudited)
For
the Three Months Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Revenue
|
$
|
42,401
|
$
|
54,056
|
||||
Cost
of revenue
|
34,397
|
52,467
|
||||||
Gross
profit
|
8,004
|
1,589
|
||||||
Operating
expenses:
|
||||||||
Selling,
general, and administrative
|
12,423
|
12,159
|
||||||
Research
and development
|
7,513
|
8,110
|
||||||
Impairments
|
-
|
33,781
|
||||||
Total operating expenses
|
19,936
|
54,050
|
||||||
Operating
loss
|
(11,932
|
)
|
(52,461
|
)
|
||||
Other
(income) expense:
|
||||||||
Interest
income
|
(2
|
)
|
(50
|
)
|
||||
Interest
expense
|
116
|
195
|
||||||
Foreign
exchange loss
|
232
|
472
|
||||||
Loss
from financing derivative instrument
|
1,360
|
-
|
||||||
Impairment
of investment
|
-
|
367
|
||||||
Total other expense
|
1,706
|
984
|
||||||
Net
loss
|
$
|
(13,638
|
)
|
$
|
(53,445
|
)
|
||
Per
share data:
|
||||||||
Net
loss per basic and diluted share
|
$
|
(0.17
|
)
|
$
|
(0.69
|
)
|
||
Weighted-average
number of basic and diluted shares outstanding
|
81,113
|
77,816
|
EMCORE
CORPORATION
Condensed
Consolidated Balance Sheets
As
of December 31, 2009 and September 30, 2009
(in
thousands)
(unaudited)
As
of
December
31,
2009
|
As
of
September
30,
2009
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$
|
15,138
|
$
|
14,028
|
||||
Restricted
cash
|
4
|
1,521
|
||||||
Available-for-sale
securities
|
1,350
|
1,350
|
||||||
Accounts
receivable, net of allowance of $6,640 and $7,125,
respectively
|
40,726
|
39,417
|
||||||
Inventory,
net
|
31,454
|
34,221
|
||||||
Prepaid
expenses and other current assets
|
4,550
|
4,712
|
||||||
Total
current assets
|
93,222
|
95,249
|
||||||
Property,
plant and equipment, net
|
52,719
|
55,028
|
||||||
Goodwill
|
20,384
|
20,384
|
||||||
Other
intangible assets, net
|
12,424
|
12,982
|
||||||
Long-term
restricted cash
|
163
|
163
|
||||||
Other
non-current assets, net
|
720
|
753
|
||||||
Total
assets
|
$
|
179,632
|
$
|
184,559
|
||||
LIABILITIES
and SHAREHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Borrowings
from credit facility
|
$
|
10,678
|
$
|
10,332
|
||||
Short-term
debt
|
843
|
842
|
||||||
Accounts
payable
|
28,632
|
24,931
|
||||||
Accrued
expenses and other current liabilities
|
21,042
|
21,687
|
||||||
Total
current liabilities
|
61,195
|
57,792
|
||||||
Warrant
liability
|
1,132
|
-
|
||||||
Other
long-term liabilities
|
103
|
104
|
||||||
Total
liabilities
|
62,430
|
57,896
|
||||||
Commitments
and contingencies
|
||||||||
Shareholders’
equity:
|
||||||||
Preferred
stock, $0.0001 par, 5,882 shares authorized; no shares
outstanding
|
-
|
-
|
||||||
Common
stock, no par value, 200,000 shares authorized;
81,900
shares issued and 81,741 shares outstanding as of December 31,
2009;
80,982
shares issued and 80,823 shares outstanding as of September 30,
2009
|
692,942
|
688,844
|
||||||
Accumulated
deficit
|
(574,471
|
)
|
(560,833
|
)
|
||||
Accumulated
other comprehensive income
|
814
|
735
|
||||||
Treasury
stock, at cost; 159
shares as of December 31, 2009 and September 30, 2009
|
(2,083
|
)
|
(2,083
|
)
|
||||
Total
shareholders’ equity
|
117,202
|
126,663
|
||||||
Total
liabilities and shareholders’ equity
|
$
|
179,632
|
$
|
184,559
|
Use
of Non-GAAP Measures
The
Company provides non–GAAP gross profit and gross margin, non–GAAP operating
loss, and non–GAAP net loss and net loss per share as supplemental measures to
GAAP regarding our operational performance. These financial measures exclude the
impact of certain items and, therefore, have not been calculated in accordance
with GAAP. This press release also contains a reconciliation of each of these
non–GAAP financial measures to its most comparable GAAP financial
measure.
The
Company believes that the additional non–GAAP measures are useful to investors
in assessing the Company’s financial condition and performance. In particular,
management believes it is appropriate in evaluating the Company’s operations to
exclude gains or losses from specific accounts receivable and inventory
write-downs, loss from firm purchase commitments, patent litigation and other
corporate legal–related charges; impairment charges; foreign exchange gains and
losses, losses from financial derivative instruments, and warranty, severance
and restructuring–related expenses because these items would make results less
comparable between periods. 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. In addition, financial analysts that
follow our Company may focus on and publish both historical results and future
projections based on non–GAAP financial measures. We also believe that it is in
the best interest of our investors to provide non-GAAP information.
While
management believes that these non–GAAP financial measures provide useful
supplemental information to investors, there are limitations associated with the
use of these non–GAAP financial measures. Our non-GAAP financial
measures may not be reported by all of the Company's competitors and they may
not be directly comparable to similarly titled measures of other companies due
to potential differences in calculation. The Company compensates for these
limitations by using these non–GAAP financial measures as supplements to GAAP
financial measures and by providing reconciliations of the non–GAAP financial
measures to their most comparable GAAP financial measures.
Non–GAAP
financial measures are not in accordance with, or an alternative for, generally
accepted accounting principles in the United States. The Company's non–GAAP
financial measures are not meant to be considered in isolation or as a
substitute for comparable GAAP financial measures, and should be read only in
conjunction with the Company's consolidated financial statements prepared in
accordance with GAAP.
The
Company has provided a reconciliation of the non–GAAP financial measures to the
most directly comparable GAAP financial measures as indicated in the tables
below:
Non-GAAP
Table
Gross
profit and margin
Unaudited
(in
thousands, except percentages)
|
For
the Three Months Ended
December 31,
2009
|
For
the Three Months Ended
September 30,
2009
|
|||||||||||||||||
Fiber
Optics
|
Photovoltaics
|
Total
|
Fiber
Optics
|
Photovoltaics
|
Total
|
||||||||||||||
Gross
profit (loss) – GAAP
|
$
|
4,288
|
$
|
3,716
|
$
|
8,004
|
(598
|
)
|
$
|
4,668
|
$
|
4,070
|
|||||||
Specific
adjustments:
|
|||||||||||||||||||
Inventory
valuation
|
-
|
-
|
-
|
1,985
|
(2,937
|
)
|
(952
|
)
|
|||||||||||
Product
warranty
|
-
|
-
|
-
|
(245
|
)
|
-
|
(245
|
)
|
|||||||||||
Loss
on commitments
|
-
|
-
|
-
|
1,991
|
-
|
1,991
|
|||||||||||||
Gross
profit – Non-GAAP
|
$
|
4,288
|
$
|
3,716
|
$
|
8,004
|
3,133
|
$
|
1,731
|
$
|
4,864
|
||||||||
Gross
margin – GAAP
|
16.7%
|
22.1%
|
18.9%
|
(2.5%
|
)
|
28.5%
|
10.0%
|
||||||||||||
Gross
margin – Non-GAAP
|
16.7%
|
22.1%
|
18.9%
|
13.0%
|
10.6%
|
12.0%
|
Non-GAAP
Table
Operating
Loss
Unaudited
(in
thousands)
|
For
the
Three
Months Ended
December
31, 2009
|
For
the
Three
Months Ended
September
30, 2009
|
|||||
Operating
loss – GAAP
|
$
|
(11,932
|
)
|
$
|
(13,915
|
)
|
|
Specific
adjustments:
|
|||||||
Surrender of stock options
|
1,252
|
-
|
|||||
Provision for doubtful accounts
|
(450
|
)
|
225
|
||||
Corporate legal expense
|
4,163
|
2,779
|
|||||
Severance and restructuring-related expense
|
8
|
1,082
|
|||||
Inventory valuation
|
-
|
(952
|
)
|
||||
Product warranty
|
-
|
(245
|
)
|
||||
Loss on commitments
|
-
|
1,991
|
|||||
Operating
loss – Non-GAAP
|
$
|
(6,959
|
)
|
$
|
(9,035
|
)
|
Non-GAAP
Table
Net
Loss
Unaudited
(in
thousands)
|
For
the
Three
Months Ended
December
31, 2009
|
For
the
Three
Months Ended
September
30, 2009
|
|||||
Net
loss – GAAP
|
$
|
(13,638
|
)
|
$
|
(13,532
|
)
|
|
Specific
adjustments:
|
|||||||
Surrender of stock options
|
1,252
|
-
|
|||||
Provision for doubtful accounts
|
(450
|
)
|
225
|
||||
Corporate legal expense
|
4,163
|
2,779
|
|||||
Severance and restructuring-related expense
|
8
|
1,082
|
|||||
Inventory valuation
|
-
|
(952
|
)
|
||||
Product warranty
|
-
|
(245
|
)
|
||||
Loss on commitments
|
-
|
1,991
|
|||||
Foreign exchange loss (gain)
|
232
|
(481
|
)
|
||||
Loss from financing derivative instrument
|
1,360
|
-
|
|||||
Net
loss – Non-GAAP
|
$
|
(7,073
|
)
|
(9,133
|
)
|
||
Net
loss per basic and diluted share – GAAP
|
$
|
(0.17
|
)
|
$
|
(0.17
|
)
|
|
Net
loss per basic and diluted share – Non-GAAP
|
$
|
(0.09
|
)
|
$
|
(0.11
|
)
|
Contacts:
EMCORE
Corporation
Silvia M.
Gentile
Executive
Offices
(505)
332-5000
info@emcore.com
TTC
Group
Victor
Allgeier
(646)
290-6400
info@ttcominc.com