EXCERPT-TRANSCRIPT2NDQTR EARNINGS RELEASECONFCALL
Published on May 15, 2003
EXHIBIT 99.2
EMCORE Corporation
Excerpt of Second Quarter 2003 Earnings Conference Call
May 8, 2003
Operator: Good morning ladies and gentlemen and welcome to the EMCORE
second quarter 2003 earnings teleconference. At this time all participants have
been placed on a listen-only mode and the floor will be open for questions
following the presentation. If at any point during the presentation you wish to
register a question you may do so by pressing the numbers one followed by four
on your touch-tone phone. It is now my pleasure to introduce your host Mr.
Victor Allgeier. Please go ahead sir.
Victor Allgeier: Thank you and good morning everyone. Yesterday after the
close of markets, EMCORE released its fiscal 2003 second quarter and six-month
results. By now your should have received a copy of the press release. If you
have not received a release, please call our office at (212) 227-0997.
With us today from EMCORE, Reuben F. Richards, Jr.,
President and Chief Executive Officer, and Tom Werthan, Vice President and Chief
Financial Officer. Tom will review the financial results and Reuben will discuss
business highlights before we open the call up to your questions.
Before we begin we would like to remind you that some of
the comments made during the conference call and some of the responses to your
questions by management may contain forward-looking statements that are subject
to risks and uncertainties as described in EMCORE's earnings press release and
filings with the SEC. I will now turn the call over to Tom.
Tom Werthan: Thanks, Vic, and good morning to everybody and thanks for
joining us today as we review our second quarter. Revenues for the quarter came
in at just under $28 million and this is up 19% from our first quarter and 20%
year over year. And let me review the revenue performance by product.
First on systems, revenues came in just under $11 million.
That's down 22% sequentially but up 148% year-over-year. Despite the fact that
we were down sequentially we will experience a pretty healthy increase in Q3 as
our backlog is increased pretty dramatically. I'll review that in a little more
detail later on in the presentation when I discuss backlog.
On RF materials and sensors, revenues were $2 million. That
is down 2% sequentially and 63% year-over-year. On fiber optics, which now
includes Ortel, but to keep it apples to apples our previous fiber optic
products came in at $2.6 million. That is up 12% sequentially and Ortel as we
indicated in the press release contributed about $7.1 million in revenues which
was in line with our expectations. Finally on PhotoVoltaics, revenues were $5.2
million. That's up 3% sequentially and down 52% year-over-year primarily because
last year at this time we had a large Boeing contract that fell in the quarter.
So revenues on the whole were just under $28 million, again a 19% increase
sequentially and 20% year-over-year.
(inaudible) gross margins for the quarter then were 10%,
that was up a couple of basis points from last quarter. Again the fact that
we're operating at a 20% capacity remains the biggest impact on gross margins.
Since the systems margins are in the mid thirties while materials overall are
slightly negative, but on a non GAAP basis, meaning a cash basis if you
eliminate the depreciation charges found in our cost of good sold gross margins
for systems and materials would be 37% and 15% respectively. We did have some
poor yields in our PhotoVoltaics product line in this quarter that also impacted
some gross margins.
SG&A expenses increased from $5.8 million in Q1 to $7.4
million the current quarter the increase of the $1.6 million is entirely related
to the acquisition of Ortel in January. Year-over-year SG&A decreased $2.1
million or 22% and again giving apples to apples comparison with non GAAP
disclosure elimination Ortel from SG&A the decrease year-over-year was $3.7
million or about 39%.
R&D expenses increased from $3.6 million in the first
quarter to $5.4 million in the current quarter, or and increase of $1.8 million.
Again, Ortel's R&D amounted to about 1.1 million or 60% of this increase. The
remaining increase of about $700,000 links to acquisition of Alvesta earlier in
the year and the fiber optic projects they're working on as well as some
PhotoVoltaic projects. Year-over-year R&D decreased $6.2 million or 53% and,
again for non-GAAP disclosure just making it apples to apples by not including
Ortel, R&D did decrease by $7.3 million or about 63%.
Below the line net interest expense was flat sequentially
and year-over-year at about $1.7 million. The loss in GELcore, our joint venture
with GE Lighting was $731,000. That's an increase sequentially of about 160
thousand but a decrease of $120,000 year-over-year. The increase in the loss is
attributable to lower revenues in GELcore's first quarter, however their backlog
has increased and those revenues should increase nicely in the coming quarters.
The net loss is 12.5 million, or ($.0.34) per share. Ortel
contribution in the quarter as previously mentioned was 7.1 million in revenues
and that contributed to our loss of about four cents. Again from a non-GAAP
disclosure not including Ortel to give apples to apples our loss per share would
have been about ($.30) cents. . . .
- --------------------------------------------------------------------------------
NON GAAP RECONCILIATIONS:
- --------------------------------------------------------------------------------
(in thousands)
A) Reconciliation of Non-GAAP cost of revenues, gross profit and gross margins