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EMCORE Corporation Announces Financial Results for Third Quarter Ended June 30, 2017

  • Consolidated Q3 revenue of $31 million 
  • Consolidated Q3 GAAP operating income of $2.0 million and Non-GAAP operating income of $3.6 million
  •  GAAP EPS from continuing operations of $0.09 and Non-GAAP pre-tax EPS from continuing operations of $0.13
  • Expected Q4 revenue of $29 to $31 million

/EIN News/ -- ALHAMBRA, Calif., Aug. 03, 2017 (GLOBE NEWSWIRE) --  EMCORE Corporation (NASDAQ:EMKR), a leading provider of advanced Mixed-Signal Optics products that provide the foundation for today's high-speed communications network infrastructures and leading-edge defense systems, today announced financial results for its third quarter ended June 30, 2017.

Jeffrey Rittichier, EMCORE's President and CEO remarked, “EMCORE completed important operational transition milestones and delivered a solid quarter financially.” Rittichier went on to say, “We made strong investments in R&D in the quarter and announced the new EMCORE-OrionTM family of Inertial Navigation Systems. In addition, we received major design wins from our CATV customers for new linear transmission products based on our industry leading L-EML technology, positioning us for future growth.”

Financial Highlights - Third Quarter Ended June 30, 2017

Financial Highlights   For the Three Months Ended
(in thousands)   June 30, 2017   March 31, 2017   June 30, 2016
Revenue   $ 30,952     $ 32,591     $ 22,376  
GAAP Gross Profit   $ 10,842     $ 11,038     $ 7,412  
Non-GAAP Gross Profit   $ 10,972     $ 11,202     $ 7,508  
GAAP Operating income   $ 2,009     $ 1,757     $ 1,522  
Non-GAAP Operating Income   $ 3,565     $ 3,703     $ 567  
GAAP pre-tax EPS from continuing operations - per diluted share   $ 0.09     $ 0.07     $ 0.05  
Non-GAAP pre-tax EPS from continuing operations - per diluted share
  $ 0.13     $ 0.14     $ 0.02  

Financial Statement Highlights for the Third Quarter of Fiscal 2017:

  • Consolidated revenue was $31.0 million, representing an 5.0% decrease from the prior quarter
  • Consolidated GAAP gross margin was 35.0%, representing an increase from the 33.9% gross margin reported in the prior quarter
  • Consolidated Non-GAAP gross margin was 35.4%, representing an increase from 34.4% reported in the prior quarter
  • Consolidated GAAP operating margin was 6.5%, representing an increase from 5.5% in the prior quarter
  • Consolidated Non-GAAP operating margin was 11.5%, representing an increase from 11.4% in the prior quarter
  • GAAP diluted pre-tax EPS from continuing operations of $0.09, representing an increase from $0.07 in the prior quarter
  • Non-GAAP diluted pre-tax EPS from continuing operations of $0.13, representing a decrease from $0.14 in the prior quarter
  • Cash and cash equivalents was $66.1 million at the end of the quarter

Business Outlook
The Company expects revenue for the fourth quarter ended September 30, 2017 to be in the range of $29 to $31 million.

Conference Call
The Company will discuss its financial results August 3 at 8:00 a.m. EST (5:00 a.m PST). The call will be available, live, to interested parties by dialing 866-428-9517. For international callers, please dial +1 224-357-2194. The conference passcode number is 50681906. The call will be webcast live via the Company's website at http://investor.emcore.com/events.cfm. A webcast will be available for replay beginning Thursday, August 3, 2017 for at least 90 days following the conclusion of the call on the Company's website.

About EMCORE
EMCORE Corporation is a leading provider of advanced Mixed-Signal Optics products that provide the foundation for today’s high-speed communication network infrastructures and leading-edge defense systems. Our optical chips, components, subsystems and systems enable broadband and wireless providers to continually enhance their network capacity, speed and coverage to advance the free flow of information that empowers the lives of millions of people daily. The Mixed-Signal Optics technology at the heart of our broadband transmission products is shared with our fiber optic gyros and military communications links to provide the aerospace and defense markets state-of-the-art systems that keep us safe in an increasingly unpredictable world. EMCORE’s performance-leading optical components and systems serve a broad array of applications including cable television, fiber-to-the-premise networks, telecommunications, wireless infrastructure, satellite RF fiber links, navigation systems and military communications. EMCORE has fully vertically-integrated manufacturing capability through its world-class Indium Phosphide (InP) wafer fabrication facility at our headquarters in Alhambra, California and is ISO 9001 certified in Alhambra, and at our facilities in Warminster, Pennsylvania and China. For further information about EMCORE, visit http://www.emcore.com.

Use of Non-GAAP Financial Measures
We disclose non-GAAP gross margin percentage, operating margin percentage, pre-tax EPS and income from continuing operations as a supplemental measure to U.S. GAAP income from continuing operations regarding our operational performance. These financial measures exclude 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 pre-tax income from continuing operations to GAAP income from continuing operations, which identifies the items excluded from the non-GAAP measures, are provided in the table below titled "Reconciliation of GAAP to Non-GAAP Financial Measures".

We believe that these additional non-GAAP financial measures are useful to investors in assessing our operating performance. We also use these financial measures 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 measures. We also believe that it is in the best interests of our investors to provide this non-GAAP information.

While we believe 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 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 these non-GAAP financial measures as a supplement to U.S. GAAP and by providing a reconciliation of our non-GAAP financial measures to its most comparable U.S. GAAP financial measures.

Non-GAAP financial measures are not in accordance with or an alternative for U.S. GAAP. Our non-GAAP financial measures are 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 Securities 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, 2016, as updated by our subsequent periodic reports.

Forward-looking statements are based on certain assumptions and analysis made in light of our experience and perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate under the circumstances. While these statements represent our judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results. 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 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.

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, 2017   March 31, 2017   June 30, 2016   June 30, 2017   June 30, 2016
Revenue   $ 30,952     $ 32,591     $ 22,376     $ 93,719     $ 66,398  
Cost of revenue   20,110     21,553     14,964     61,796     44,563  
Gross profit   10,842     11,038     7,412     31,923     21,835  
Operating expense:                    
Selling, general, and administrative   5,815     5,672     6,125     17,065     15,771  
Research and development   3,340     3,141     2,405     8,680     7,529  
Impairments       468         468      
Recovery of previously incurred litigation related fees and expenses from arbitration award           (2,599 )       (2,599 )
Gain on sale of assets   (322 )       (41 )   (322 )   (41 )
Total operating expense   8,833     9,281     5,890     25,891     20,660  
  Operating income   2,009     1,757     1,522     6,032     1,175  
Other income (expense):                    
Interest income, net   77     46     32     146     40  
Foreign exchange gain (loss)   53     44     (201 )   (306 )   (311 )
Other income   316             316      
Total other income (expense)   446     90     (169 )   156     (271 )
  Income from continuing operations before income tax (expense) benefit   2,455     1,847     1,353     6,188     904  
Income tax (expense) benefit   (19 )   8     (175 )   (131 )   (22 )
Income (loss) from continuing operations   2,436     1,855     1,178     6,057     882  
(Loss) income from discontinued operations, net of tax   (11 )   (7 )   123     (27 )   5,388  
Net income   $ 2,425     $ 1,848     $ 1,301     $ 6,030     $ 6,270  
Per share data:                    
Net income (loss) per basic share:                    
  Continuing operations   $ 0.09     $ 0.07     $ 0.05     $ 0.23     $ 0.04  
  Discontinued operations   (0.00 )   (0.00 )   0.00     (0.00 )   0.20  
Net income per basic share   $ 0.09     $ 0.07     $ 0.05     $ 0.23     $ 0.24  
                     
Net income (loss) per diluted share:                    
  Continuing operations   $ 0.09     $ 0.07     $ 0.05     $ 0.22     $ 0.04  
  Discontinued operations   (0.00 )   (0.00 )   0.00     (0.00 )   0.20  
Net income per diluted share   $ 0.09     $ 0.07     $ 0.05     $ 0.22     $ 0.24  
                     
Weighted-average number of basic shares outstanding   26,833     26,622     26,103     26,577     25,913  
Weighted-average number of diluted shares outstanding   27,816     27,585     26,269     27,548     26,186  



EMCORE CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

  As of   As of
  June 30,
 2017
  September 30,
 2016
ASSETS      
Current assets:      
Cash and cash equivalents $ 66,094     $ 63,905  
Restricted cash 423     965  
Accounts receivable, net 22,285     18,432  
Inventory 26,147     24,150  
Prepaid expenses and other current assets 6,633     3,764  
Total current assets 121,582     111,216  
Property, plant, and equipment, net 15,684     12,213  
Non-current inventory 3,115     3,531  
Other non-current assets, net 95     251  
Total assets $ 140,476     $ 127,211  
LIABILITIES and SHAREHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 12,951     $ 10,575  
Accrued expenses and other current liabilities 8,687     7,684  
Total current liabilities 21,638     18,259  
Asset retirement obligations 1,620     1,573  
Other long-term liabilities 55     62  
Total liabilities 23,313     19,894  
Shareholders’ equity:      
Common stock 729,467     725,666  
Treasury stock (47,721 )   (47,721 )
Accumulated other comprehensive income 594     579  
Accumulated deficit (565,177 )   (571,207 )
Total shareholders’ equity 117,163     107,317  
Total liabilities and shareholders’ equity $ 140,476     $ 127,211  


We have provided a reconciliation of our non-GAAP pre-tax income 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, 2017   March 31, 2017   June 30, 2016   June 30, 2017   June 30, 2016
US GAAP net income   $ 2,425     $ 1,848     $ 1,301     $ 6,030     $ 6,270  
US GAAP net loss (income) from discontinued operations   11     7     (123 )   27     (5,388 )
US GAAP net income from Continuing Operations   2,436     1,855     1,178     6,057     882  
                     
Income tax expense (benefit)   19     (8 )   175     131     22  
Other income   (316 )           (316 )    
Currency exchange (gain) loss   (53 )   (44 )   201     306     311  
Total other income & tax related adjustments   (350 )   (52 )   376     121     333  
                     
Stock based compensation expense - R&D   143     119     91     362     277  
Stock based compensation expense - SG&A   824     563     555     1,957     1,163  
Litigation related expenses   7     96     265     361     1,482  
Severance charges   774     536     678     1,482     678  
Impairments       468         468      
Recovery of previously incurred litigation related fees and expenses associated with arbitration award           (2,599 )       (2,599 )
Gain on sale of assets   (322 )       (41 )   (322 )   (41 )
Total operating expense adjustments   1,426     1,782     (1,051 )   4,308     960  
                     
ARO accretion   17     17     15     51     45  
Stock based compensation expense - COGS   113     147     81     353     263  
Total COGS adjustments   130     164     96     404     308  
Non-GAAP pre-tax income from continuing operations   $ 3,642     $ 3,749     $ 599     $ 10,890     $ 2,483  
                     
GAAP EPS from continuing operations - per diluted share   $ 0.09     $ 0.07     $ 0.05     $ 0.22     $ 0.04  
Other income and tax related adjustments   (0.01 )   0.00     0.01     0.00     0.01  
Operating expense adjustments   0.05     0.06     (0.04 )   0.16     0.03  
COGS adjustments   0.00     0.01     0.00     0.01     0.01  
Non-GAAP pre-tax EPS from continuing operations - per diluted share   $ 0.13     $ 0.14     $ 0.02     $ 0.39     $ 0.09  
GAAP Gross Margin Percentage   35.0 %   33.9 %   33.1 %   34.1 %   32.9 %
Non GAAP Gross Margin Percentage   35.4 %   34.4 %   33.6 %   34.5 %   33.3 %
GAAP Operating Margin Percentage   6.5 %   5.5 %   6.8 %   6.4 %   1.8 %
Non GAAP Operating Margin Percentage   11.5 %   11.4 %   2.5 %   11.5 %   3.7 %

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, 2017   March 31, 2017   June 30, 2016   June 30, 2017   June 30, 2016
Cost of revenue $ 113   $ 147   $ 81   $ 353   $ 263
Selling, general, and administrative 824   563   555   1,957   1,163
Research and development 143   119   91   362   277
Total stock-based compensation expense $ 1,080   $ 829   $ 727   $ 2,672   $ 1,703

 

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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