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EMCORE Corporation Announces Financial Results for Fiscal Third Quarter

  • Consolidated Q3 revenue of $22.4 million
  • Consolidated Q3 GAAP net income of $1.3 million after taking into effect income from discontinued operations of $0.1 million
  • GAAP Q3 income from continuing operations of $1.2 million and Non-GAAP income from continuing operations of $0.6 million
  • $1.50 per share special dividend paid on July 29, 2016 resulting in approximately $85 million of total cash returned to investors since June 2015
  • Expected Q4 revenue of $23 to $25 million

/EIN News/ -- ALHAMBRA, Calif., Aug. 04, 2016 (GLOBE NEWSWIRE) -- EMCORE Corporation (NASDAQ:EMKR), a leading provider of Indium Phosphide (InP) optical chips, components, subsystems, and systems for the broadband and specialty fiber optics market, today announced financial results for its third quarter ended June 30, 2016.

Financial Highlights - Third Quarter Ended June 30, 2016

Financial Highlights   For the Three Months Ended
(in thousands)   June 30, 2016
  March 31, 2016
   June 30, 2015
                         
Revenue   $   22,376   $ 21,532     $ 21,194  
                         
Gross Profit   $   7,412   $ 7,022     $ 7,683  
                         
Operating income (loss)   $   1,522   $ (367 )   $ 866  
Consolidated net income, including discontinued operations   $   1,301   $ 3,982     $ 2,440  
Income (loss) from continuing operations -                        
GAAP   $   1,178   $ (162 )   $ 464  
Pre-tax income from continuing operations -                        
Non-GAAP   $   599   $ 599     $ 2,030  
                         

Financial Statement Highlights for the Third Quarter of Fiscal 2016:

  • Consolidated revenue was $22.4 million, representing a 3.9% increase from the immediately preceding quarter
  • Consolidated gross margin was 33.1%, an increase from the 32.6% gross margin reported in the immediately preceding quarter
  • GAAP income from continuing operations was $1.2 million, an increase of approximately $1.3 million over the immediately preceding quarter
  • Consolidated net income of $1.3 million, which includes $2.6 million related to the recovery of fees and expense associated with the SEI arbitration ruling, is a $2.7 million decrease compared to the immediately preceding quarter which included $3.8 million of gains related to the SEI ruling
  • Consolidated net income per share was $0.05 compared to net income per share of $0.15 in the immediately preceding quarter
  • Non-GAAP pre-tax income from continuing operations was $0.6 million, consistent with the immediately preceding quarter
  • Cash and cash equivalents was $105.0 million at the end of the quarter
  • On July 29, the Company paid a special dividend of $1.50 per share, or a total of $39.2 million, to shareholders of record as of July 18

Business Outlook
The Company expects revenue for the fourth quarter ended September 30, 2016 to be in the range of $23 to $25 million.

Conference Call
The Company will discuss its financial results today at 5:00 p.m. EDT. The call will be webcast at http://investor.emcore.com/events.cfm. A webcast will be available for replay for at least 90 days following the conclusion of the call on the Company's website.

Conferences
Management will participate in the upcoming conferences:

  • Jefferies Semiconductors, Hardware and Communications Infrastructure Summit in Chicago, IL on August 30, 2016

About EMCORE
EMCORE Corporation designs and manufactures Indium Phosphide (InP) optical chips, components, subsystems and systems for the broadband and specialty fiber optics market. EMCORE was the pioneer in linear fiber optic transmission technology, and today is a leader in optical components, as well as a provider of complete end-to-end solutions for high-speed communications network infrastructures, enabling systems and service providers to meet growing demand for bandwidth and connectivity. EMCORE’s advanced optical technologies are designed for cable television (CATV) and fiber-to-the-premise (FTTP) networks, telecommunications and data centers, satellite communications, aerospace and defense, wireless networks, and broadcast and professional audio/video systems. With its world-class InP semiconductor wafer fabrication facility, EMCORE has fully vertically-integrated manufacturing capability and also provides contract design, foundry and component packaging services. EMCORE is headquartered in Alhambra, California with InP wafer fabrication operations in Alhambra, and ISO 9001 certified manufacturing in Alhambra and Langfang, China. For further information about EMCORE, visit http://www.emcore.com

Use of Non-GAAP Financial Measures
We disclose non-GAAP income from continuing operations as a supplemental measure to U.S. GAAP income from continuing operations regarding our operational performance. This financial measure excludes the impact of certain items that we do not believe are indicative of our core operating results; therefore, it has not been calculated in accordance with U.S. GAAP. A reconciliation of non-GAAP income from continuing operations to GAAP income (loss) from continuing operations, which identifies the items excluded from the non-GAAP measure, is provided in the table below titled "Reconciliation of GAAP to Non-GAAP Financial Measures".

We believe that this additional non-GAAP financial measure is useful to investors in assessing our operating performance. We also use this financial measure internally to evaluate our operating performance and for planning and forecasting of future periods. In addition, financial analysts that follow us 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 we believe 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 our competitors and it may not be directly comparable to similarly titled measures of other companies due to potential differences in calculation. We compensate for these limitations by using this non-GAAP financial measure as a supplement to U.S. GAAP and by providing a reconciliation of our 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. Our non-GAAP financial measure is not meant to be considered in isolation or as a substitute for comparable U.S. GAAP financial measures and it should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.

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. We caution 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 rapidly evolving markets for the Company's products and uncertainty regarding the development of these markets; (b) the Company's historical dependence on sales to a limited number of customers and fluctuations in the mix of products and customers in any period; (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) uncertainties concerning the availability and cost of commodity materials and specialized product components that we do not make internally; (f) actions by competitors; and (g) other risks and uncertainties discussed under Item 1A - Risk Factors in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015, as updated by our subsequent periodic reports.

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 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.

EMCORE CORPORATION
Condensed Consolidated Statements of Operations 
(in thousands, except per share data) (unaudited)
             
    For the Three Months Ended
  For the Nine Months
Ended
    June 30,
2016

  March 31,
2016

  June 30,
2015

  June 30,
2016

  June 30,
2015

Revenue   $ 22,376     $ 21,532     $ 21,194     $ 66,398     $ 58,667  
Cost of revenue     14,964       14,510       13,511       44,563       39,426  
Gross profit     7,412       7,022       7,683       21,835       19,241  
                                         
Operating expense (income):                                        
Selling, general, and administrative     6,125       4,825       4,543       15,771       19,124  
Research and development     2,405       2,564       2,274       7,529       6,470  
Recovery of previously incurred litigation related fees and expenses from arbitration award     (2,599 )                 (2,599 )      
Gain from change in estimate on ARO obligation                             (845 )
(Gain) loss on sale of assets     (41 )                 (41 )     228  
Total operating expense     5,890       7,389       6,817       20,660       24,977  
Operating income (loss)     1,522       (367 )     866       1,175       (5,736 )
Other income (expense):                                        
Interest income, net     32       25       4       40       39  
Foreign exchange (loss) gain     (201 )     25       50       (311 )     101  
Change in fair value of financial instruments                             122  
Total other (expense) income     (169 )     50       54       (271 )     262  
Income (loss) from continuing operations before income tax (expense) benefit     1,353       (317 )     920       904       (5,474 )
Income tax (expense) benefit     (175 )     155       (456 )     (22 )     1,852  
Income (loss) from continuing operations     1,178       (162 )     464       882       (3,622 )
Income from discontinued operations, net of tax     123       4,144       1,976       5,388       65,242  
Net income   $ 1,301     $ 3,982     $ 2,440     $ 6,270     $ 61,620  
                                         
Per share data:                                        
Net income (loss) per basic share:                                        
Continuing operations   $ 0.05     ($ 0.01 )   $ 0.02     $ 0.04     ($ 0.11 )
Discontinued operations           0.16       0.06       0.20       2.07  
Net income per basic and diluted share   $ 0.05     $ 0.15     $ 0.08     $ 0.24     $ 1.96  
                                         
Net income (loss) per diluted share:                                        
Continuing operations   $ 0.05     ($ 0.01 )   $ 0.02     $ 0.04     ($ 0.11 )
Discontinued operations           0.16       0.06       0.20       2.07  
Net income per diluted share   $ 0.05     $ 0.15     $ 0.08     $ 0.24     $ 1.96  
                                         
Weighted-average number of basic shares outstanding     26,103       25,942       31,203       25,913       31,494  
Weighted-average number of diluted shares outstanding     26,269       25,942       31,432       26,186       31,494  
             


EMCORE CORPORATION
Condensed Consolidated Balance Sheets
(in thousands) 
(unaudited)
       
    As of
June 30, 
2016

  As of
September 30, 
2015

ASSETS                
                 
Current assets:                
Cash and cash equivalents   $ 105,046     $ 111,885  
Restricted cash     1,219       375  
Accounts receivable, net     21,630       17,319  
Inventory     18,976       17,130  
Prepaid expenses and other current assets     3,778       4,976  
                 
Total current assets     150,649       151,685  
Property, plant, and equipment, net     11,001       8,925  
Non-current inventory     4,270        
Other non-current assets, net     319       297  
                 
Total assets   $ 166,239     $ 160,907  
                 
LIABILITIES and SHAREHOLDERS’ EQUITY                
                 
Current liabilities:                
Accounts payable   $ 9,581     $ 7,189  
Deferred gain associated with sale of assets           3,400  
Accrued expenses and other current liabilities     11,205       13,102  
                 
Total current liabilities     20,786       23,691  
                 
Asset retirement obligations     1,589       1,774  
Other long-term liabilities     61        
                 
Total liabilities     22,436       25,465  
       
Shareholders’ equity:      
Common stock     764,324       762,003  
Treasury stock     (47,721 )     (47,721 )
Accumulated other comprehensive income     617       847  
Accumulated deficit     (573,417 )     (579,687 )
                 
Total shareholders’ equity     143,803       135,442  
                 
Total liabilities and shareholders’ equity   $ 166,239     $ 160,907  
                 

We have provided a reconciliation of our non-GAAP income (loss) from continuing operations financial measure to its most directly comparable U.S. GAAP financial measure as indicated in the table below:

EMCORE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
Income (Loss) from Continuing Operations
(in thousands, except per share data) 
(unaudited) 
     
    For the Three Months Ended
  For the Nine Months
Ended

    June 30,
2016

  March 31,
2016

  June 30,
2015

  June 30,
2016

  June 30,
2015

 
Income (loss) from continuing operations - US GAAP   $ 1,178     $ (162 )   $ 464     $ 882     $ (3,622 )
Adjustments:                                        
Amortization expense                 6             18  
Stock-based compensation expense     727       613       401       1,703       3,209  
Income tax expense (benefit)     175       (155 )     456       22       (1,852 )
Accretion expense     15       15       22       45       90  
Gain from change in estimate on ARO obligation                             (845 )
Compensation expense associated with sale of Businesses                             2,471  
Specific severance and restructuring charges     678                   678       965  
Foreign exchange loss (gain)     201       (25 )     (50 )     311       (101 )
(Gain) Loss on sale of assets     (41 )                 (41 )     228  
Change in fair value of financial instruments                             (122 )
Recovery of previously incurred litigation related fees and expenses associated with arbitration award     (2,599 )                 (2,599 )      
Expenses associated with the legal arbitration and lawsuit     265       313       731       1,482       1,008  
                                         
Total adjustments     (579 )     761       1,566       1,601       5,069  
Pre-tax income from continuing operations - Non-GAAP   $ 599     $ 599     $ 2,030     $ 2,483     $ 1,447  
Pre-tax income from continuing operations - Non-GAAP per basic share   $ 0.02     $ 0.02     $ 0.07     $ 0.09     $ 0.05  
Pre-tax income from continuing operations - Non-GAAP per diluted share   $ 0.02     $ 0.02     $ 0.06     $ 0.09     $ 0.05  
Weighted average number of basic shares outstanding     26,103       25,942       31,203       25,913       31,494  
Weighted average number of diluted shares outstanding     26,269       25,942       31,432       26,186       31,494  
                                         

Stock-based compensation expense

The effect of recording stock-based compensation expense was as follows:

                                                

Stock-based Compensation Expense For the Three Months Ended    For the Nine Months Ended
 (in thousands)  June 30, 2016     March 31,
2016
   June 30, 2015    June 30, 2016   June 30, 2015
                                       
Cost of revenue $  81     $  113     $   88     $   263     $   273  
Selling, general, and administrative   555       420       195       1,163       2,609  
Research and development   91       80       118       277       327  
Total stock-based compensation expense $  727     $ 613     $   401     $  1,703     $   3,209  
                                       
Contact:
                    EMCORE Corporation
                    Jikun Kim
                    (626) 293-3400 
                    investor@emcore.com
                    
                    Sapphire Investor Relations, LLC
                    Erica Mannion or Michael Funari
                    (617) 542-6180
                    investor@emcore.com

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