Form: 8-K

Current report filing

May 6, 2011

Documents

 
EXHIBIT 99.1
PRESS RELEASE                                           

EMCORE Corporation Announces Financial Results for its Second Quarter Ended March 31, 2011

·  
Revenue for Q2 was $47.2 million, in line with guidance
·  
Revenue for Q3 is projected to be in the range of $48 to $50 million


ALBUQUERQUE, New Mexico, May 5, 2011 – 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 its financial results for its second quarter ended March 31, 2011.


Financial Results

Revenue:
Consolidated revenue for the second quarter ended March 31, 2011 was $47.2 million, which represents a 2% decrease compared to the prior year and a 9% decrease compared to the immediate preceding quarter.  On a segment basis, revenue for the Fiber Optics segment was $30.0 million, which represents a 1% decrease compared to the prior year and a 5% decrease compared to the immediate preceding quarter.  Revenue for the Photovoltaics segment was $17.2 million, which represents a 4% decrease compared to the prior year and a 17% decrease compared to the immediate preceding quarter.

Gross Profit:
Consolidated gross profit was $10.6 million, which represents a 33% decrease compared to the prior year and a 17% decrease compared to the immediate preceding quarter. Consolidated gross margin was 22.4%, which represents a decrease from both the 32.7% gross margin reported in the prior year and the 24.3% gross margin reported in the immediate preceding quarter.  On a segment basis, Fiber Optics gross margin was 18.0%, which represents a decrease from the 24.4% gross margin reported in the prior year and a decrease from the 18.4% gross margin reported in the immediate preceding quarter.   Photovoltaics gross margin was 30.2%, which represents a decrease from both the 46.6% gross margin reported in the prior year and the 33.3% gross margin reported in the immediate preceding quarter.

Operating loss:
The consolidated operating loss was $4.2 million, which represents a $3.3 million increase in operating loss when compared to the prior year and a $1.4 million increase in operating loss when compared to the immediate preceding quarter.  During the second quarter ended March 31, 2011, the Company recorded a $2.6 million litigation settlement gain related to a patent infringement award associated with the Company’s Fiber Optics segment.

Net loss:
The consolidated net loss was $5.2 million, which represents a $3.7 million increase in net loss when compared to the prior year and a $1.6 million increase in net loss when compared to the immediate preceding quarter.  The consolidated net loss per share was $0.06, which represents a $0.04 increase in net loss per share when compared to the prior year and a $0.02 increase in net loss per share when compared to the immediate preceding quarter.  During the second quarter ended March 31, 2011, the Company recorded $0.6 million of non-operating expense related to the Company’s Suncore joint venture.
 
Adjusted EBITDA:
After excluding certain non-cash and other adjustments as set forth in the attached non-GAAP table, adjusted EBITDA for the second quarter ended March 31, 2011 was negative $2.3 million, which represents an additional loss of $5.6 million from the adjusted EBITDA reported for the prior year and an additional loss of $3.2 million from the adjusted EBITDA reported for the immediate preceding quarter.

 
Order Backlog
As of March 31, 2011, the Company had a consolidated order backlog of approximately $50.5 million, a 12% decrease from the $57.3 million order backlog reported as of December 31, 2010.  On a segment basis, the Photovoltaics order backlog totaled $26.4 million, a 27% decrease from $36.1 million reported as of December 31, 2010.  The Fiber Optics order backlog totaled $24.1 million, a 14% increase from $21.2 million reported as of December 31, 2010.  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.  As announced in a press release today, the Company received a large purchase contract from Space System/Loral for satellite solar cells. With this and other orders that we have received since March 31, 2011, our order backlog has increased significantly.
 

 
Balance Sheet Update
As of March 31, 2011, cash and cash equivalents and restricted cash was approximately $17.0 million.  In April 2011, the Company announced a common stock private placement of $9.6 million.  The closing of the private placement is subject to the completion of customary closing conditions for transactions of this type, including approval of applicable Chinese government agencies.


Business Outlook
For the third quarter ending June 30, 2011, the Company expects consolidated revenue to be $48 to $50 million.


Conference Call
Management will discuss the Company’s fiscal 2011 second quarter results for the period ended March 31, 2011 on Thursday, May 5, 2011 at 4:30 p.m. EST.  The call will be webcast via the Company's web site at http://www.emcore.com.  Please go to the site beforehand to download any necessary software.  To participate in the conference call dial 480-629-9856. The access code for the call is 4436555.  A webcast will be available for replay following the conclusion of the call on the Company’s website.


Investor Conference
Management will present at the 12th Annual B. Riley & Co. Investor Conference on Wednesday, May 25th at 3:00pm PT at the Loews Santa Monica Beach Hotel in Southern California.


About EMCORE
EMCORE Corporation offers a broad portfolio of compound semiconductor-based products for the broadband, fiber optics, space 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 space and terrestrial applications.  For space 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 transfer of business and operations into joint ventures may be more difficult and/or take longer than anticipated, may be more costly than anticipated and may have unanticipated adverse effects relating to the Company’s remaining businesses; (b) the challenge of joint ventures retaining key employees; (c) the impact on the Company, our customers and our suppliers from the current domestic and international economic and financial market conditions; (d) 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; (e) delays and other difficulties in commercializing new products; (f) 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; (g) we may not be successful in undertaking the steps currently planned in order to increase our liquidity; and (h) 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 filings with the U.S. Securities and Exchange Commission ("SEC") that are available on the SEC's web site located at www.sec.gov, including the sections entitled "Risk Factors" in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.  Certain information included in this press release may supersede or supplement forward-looking statements in our other Exchange Act reports filed with the SEC.  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.


Use of Non-GAAP Financial Measure
The Company provides a non–GAAP adjusted EBITDA disclosure as a supplemental measure to U.S. GAAP regarding our operational performance.  This financial measure excludes the impact of certain items and, therefore, has not been calculated in accordance with U.S. GAAP.  This press release also contains a reconciliation of the non–GAAP financial measure to its most comparable U.S. GAAP financial measure.

The Company believes that the additional non–GAAP financial measure is useful to investors in assessing the Company’s operating performance.  Management also uses this measure internally to evaluate the Company's operating performance, and the measure is 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 our non–GAAP financial measure.  We also believe that it is in the best interest of our investors to provide this non-GAAP information.

While management believes that this non–GAAP financial measure provides useful supplemental information to investors, there are limitations associated with the use of this non–GAAP financial measure.  Our non-GAAP financial measure may not be reported by all of the Company's competitors and it 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 this non–GAAP financial measure as a supplement to U.S. GAAP and by providing a reconciliation of the non–GAAP financial measure to its most comparable U.S. GAAP financial measure.

Non–GAAP financial measures are not in accordance with or an alternative for U.S. GAAP.  The Company's non–GAAP financial measure is not meant to be considered in isolation or as a substitute for comparable U.S. GAAP financial measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with U.S. GAAP.



 
 
 

EMCORE CORPORATION
Condensed Consolidated Statements of Operations
 (in thousands, except loss per share)
(unaudited)


   
Three Months Ended
  
Six Months Ended
   
March 31,
  
December 31,
  
March 31,
  
March 31,
  
March 31,
     
2010
      
2010
      
2011
      
2010
      
2011
  
                                         
Revenue
  
$
48,194
    
$
52,107
    
$
47,218
    
$
90,596
    
$
99,325
  
                                         
Cost of revenue
  
 
32,436
    
 
39,427
    
 
36,638
    
 
65,525
    
 
76,065
  
                                         
Gross profit
  
 
15,758
    
 
12,680
    
 
10,580
    
 
25,071
    
 
23,260
  
                                         
Operating expenses:
  
 
      
 
      
 
      
 
      
 
    
   Selling, general, and administrative
  
 
9,023
    
 
8,264
    
 
9,380
    
 
21,250
    
 
17,644
  
   Research and development
  
 
7,596
    
 
7,191
    
 
7,984
    
 
15,109
    
 
15,175
  
   Litigation settlement
    
-
      
-
      
(2,590
)
    
-
      
(2,590
)
      Total operating expenses
  
 
16,619
    
 
15,455
    
 
14,774
    
 
36,359
    
 
30,229
  
                                         
Operating loss
  
 
(861
)
  
 
(2,775
)
  
 
(4,194
)
  
 
(11,288
)
  
 
(6,969
)
                                         
Other expense (income):
  
 
      
 
      
 
      
 
      
 
    
   Interest income
  
 
(17
)
  
 
-
    
 
-
    
 
(19
)
  
 
-
  
   Interest expense
  
 
103
    
 
258
    
 
130
    
 
219
    
 
388
  
   Foreign exchange loss (gain)
    
729
      
335
      
(749
)
    
961
      
(414
)
   Loss from equity method investment
    
-
      
-
      
587
      
-
      
587
  
   Change in fair value of financial instruments
    
(322
)
    
272
      
1,038
      
810
      
1,310
  
   Cost of financing instruments
    
108
      
5
      
5
      
336
      
10
  
      Total other expense
  
 
601
    
 
870
    
 
1,011
    
 
2,307
    
 
1,881
  
 
  
 
      
 
      
 
      
 
      
 
    
Net loss
  
$
(1,462
)
  
$
(3,645
)
  
$
(5,205
)
  
$
(13,595
)
  
$
(8,850
)
                                         
                                         
Per share data:
  
 
      
 
      
 
      
 
      
 
    
   
 
      
 
      
 
      
 
      
 
    
Net loss per basic and diluted share
  
$
(0.02
)
  
$
(0.04
)
  
$
(0.06
)
  
$
(0.17
)
  
$
(0.10
)
 
  
 
      
 
      
 
      
 
      
 
    
Weighted-average number of basic and diluted
shares outstanding
  
 
82,459
    
 
85,250
    
 
87,216
    
 
81,758
    
 
86,221
  
                                         




 
 
 

EMCORE CORPORATION
Condensed Consolidated Balance Sheets
 (in thousands)
(unaudited)
   
As of
March 31,
2011
  
As of
September 30,
2010
ASSETS
                
                 
Current assets:
                
Cash and cash equivalents
  
$
14,338
    
$
19,944
  
Restricted cash
    
2,635
      
1,298
  
Accounts receivable
    
38,088
      
40,125
  
Inventory
    
31,361
      
32,056
  
Prepaid expenses and other current assets
    
5,972
      
5,312
  
                 
Total current assets
    
92,394
      
98,735
  
                 
Property, plant and equipment, net
    
44,827
      
46,990
  
Goodwill
    
20,384
      
20,384
  
Other intangible assets, net
    
9,734
      
10,738
  
Other non-current assets, net
    
3,904
      
991
  
                 
Total assets
  
$
171,243
    
$
177,838
  
                 
LIABILITIES and SHAREHOLDERS’ EQUITY
                
                 
Current liabilities:
                
Borrowings from credit facility
  
$
13,710
    
$
10,573
  
Accounts payable
    
24,399
      
26,156
  
Warrant liability
    
1,981
      
-
  
Equity method investment
    
1,195
      
-
  
Accrued expenses and other current liabilities
    
22,206
      
27,115
  
                 
Total current liabilities
    
63,491
      
63,844
  
                 
Warrant liability
    
-
      
475
  
Other long-term liabilities
    
38
      
87
  
                 
Total liabilities
    
63,529
      
64,406
  
                 
Commitments and contingencies
                
                 
Shareholders’ equity:
                
Preferred stock
    
-
      
-
  
   Common stock
    
697,415
      
701,997
  
Accumulated deficit
    
(588,087
)
    
(587,259
)
Accumulated other comprehensive income
    
469
      
777
  
Treasury stock
    
(2,083
)
    
(2,083
)
Total shareholders’ equity
    
107,714
      
113,432
  
                 
Total liabilities and shareholders’ equity
  
$
171,243
    
$
177,838
  



 
 
 

The Company has provided a reconciliation of the non–GAAP adjusted EBITDA financial measure to its most directly comparable U.S. GAAP financial measure as indicated in the table below:

Non-GAAP Table
Adjusted EBITDA
Unaudited
(in thousands)
  
Three Months Ended
  
Six Months Ended
   
March 31,
  
December 31,
  
March 31,
  
March 31,
  
March 31,
     
2010
      
2010
      
2011
      
2010
      
2011
  
                                         
Net loss – GAAP
  
$
(1,462
)
  
$
(3,645
)
  
$
(5,205
)
  
$
(13,595
)
  
$
(8,850
)
                                         
Adjustments:
                                        
   Depreciation
    
2,404
      
2,323
      
2,312
      
4,800
      
4,635
  
   Amortization
    
714
      
684
      
651
      
1,435
      
1,335
  
   Interest expense
    
103
      
258
      
130
      
219
      
388
  
   FAS123(R) stock-based compensation
    
2,064
      
817
      
1,207
      
5,250
      
2,024
  
   Compensatory stock issuances
    
284
      
305
      
282
      
528
      
587
  
   Corporate legal expense
    
344
      
101
      
295
      
4,507
      
396
  
   Reversal of accounts receivable reserve
    
(1,185
)
    
-
      
-
      
(1,635
)
    
-
  
   Litigation settlement
    
-
      
-
      
(2,590
)
    
-
      
(2,590
)
   Loss from equity method investment
    
-
      
-
      
587
      
-
      
587
  
        Total adjustments
    
4,728
      
4,488
      
2,874
      
15,104
      
7,362
  
 
                                        
Adjusted EBITDA – Non-GAAP
  
$
3,266
    
$
843
    
$
(2,331
)
  
$
1,509
    
$
(1,488
)



Stock-based compensation expense
by expense category:
(in thousands)
  
Three Months Ended
  
Six Months Ended
   
March 31,
  
December 31,
  
March 31,
  
March 31,
  
March 31,
     
2010
      
2010
      
2011
      
2010
      
2011
  
                                         
Cost of revenue
  
$
387
    
$
114
    
$
143
    
$
876
    
$
256
  
Selling, general, and administrative
    
1,386
      
506
      
817
      
3,676
      
1,324
  
Research and development
    
291
      
197
      
247
      
698
      
444
  
                                         
Total stock-based compensation expense
  
$
2,064
    
$
817
    
$
1,207
    
$
5,250
    
$
2,024
  
                                         
Net effect on net loss per basic and diluted share
  
$
(0.03
)
  
$
(0.01
)
  
$
(0.01
)
  
$
(0.06
)
  
$
(0.02
)



Contact:
Mark Weinswig
Chief Financial Officer
(505) 332-5000
investor@emcore.com

TTC Group
Victor Allgeier
(646) 290-6400
vic@ttcominc.com