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EMCORE Corporation Announces Financial Results for Fourth Quarter and Fiscal Year Ended September 30, 2016

  • Consolidated Q4 revenue of $25.6 million 
  • Consolidated Q4 GAAP income from continuing operations of $1.7 million and Non-GAAP pre-tax income from continuing operations of $2.6 million  
  • Consolidated revenue for Fiscal Year 2016 of $92.0 million 
  • Consolidated net income for Fiscal Year 2016 of $8.3 million after taking into effect income from discontinued operations of $5.6 million 
  • Expected Q1 revenue of $28 to $30 million

ALHAMBRA, Calif., Dec. 07, 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 fourth quarter and fiscal year ended September 30, 2016.

"A combination of strength in customer orders and improved manufacturing efficiency drove significant income generation in the fourth quarter and allowed us to finish the year strongly", said Jeffrey Rittichier, President and CEO of EMCORE.  "We have good visibility into demand at this time and see continued growth in DOCSIS 3.1 product deployments as well as growing momentum with our Fiber Optic Gyro and Inertial Measurement Unit products", concluded Mr. Rittichier.

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, California; Ivyland, Pennsylvania; Beijing, China; and Langfang, China. For further information about EMCORE, visit http://www.emcore.com.

Financial Highlights - Fourth Quarter Ended September 30, 2016

Financial Highlights For the Three Months Ended
(in thousands) September 30,
2016
 June 30,
2016
 September 30,
2015
Revenue $25,600  $22,376  $23,018 
Gross Profit $9,119  $7,412  $9,450 
Operating income $1,764  $1,522  $1,214 
Consolidated net income, including discontinued operations $1,996  $1,301  $1,480 
Income from continuing operations - GAAP $1,737  $1,178  $1,350 
Pre-tax income from continuing operations - Non-GAAP $2,593  $599  $2,711 

Financial Statement Highlights for the Fourth Quarter of Fiscal 2016:

  • Consolidated revenue was $25.6 million, representing a 14.4% increase from the immediately preceding quarter
  • Consolidated gross margin was 35.6%, an increase from the 33.1% gross margin reported in the immediately preceding quarter
  • GAAP income from continuing operations was $1.7 million, an increase of approximately $0.6 million over the immediately preceding quarter
  • Consolidated net income of $2.0 million, is a $0.7 million increase compared to the immediately preceding quarter, which included $2.6 million related to the recovery of fees and expense associated with the SEI arbitration ruling
  • Consolidated net income per share was $0.08 compared to net income per share of $0.05 in the immediately preceding quarter
  • Non-GAAP pre-tax income from continuing operations was $2.6 million, a $2.0 million increase compared to the immediately preceding quarter
  • Cash and cash equivalents was $63.9 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

Financial Highlights - Fiscal Year Ended September 30, 2016

Financial Highlights For the Fiscal Years Ended
(in thousands) September 30,
2016
  September 30,
2015
Revenue $91,998   $81,685 
Gross Profit $30,954   $28,691 
Operating income (loss) $2,939   $(4,522)
Consolidated net income, including discontinued operations $8,266   $63,100 
Income (loss) from continuing operations - GAAP $2,619   $(2,272)
Pre-tax income from continuing operations - Non-GAAP $5,076   $4,158 

Financial Statement Highlights for the Fiscal Year Ended September 30, 2016:

  • Consolidated revenue was $92.0 million, representing a 12.6% increase from the prior year
  • Consolidated gross margin was 33.6%, a decrease from the 35.1% gross margin reported in the prior year
  • GAAP income from continuing operations was $2.6 million, an increase of approximately $4.9 million over the prior year 
  • Consolidated net income, including income from discontinued operations of $5.6 million, was $8.3 million, a $54.8 million decrease when compared to the prior year due primarily to net income recorded from discontinued operations in the prior year from the Photovoltaics and Digital Products businesses sold in fiscal year 2015
  • Consolidated net income per share was $0.32 compared to net income per share of $2.10 reported in the prior year
  • Non-GAAP pre-tax income from continuing operations was $5.1 million, an improvement of approximately $0.9 million over the prior year
  • Cash and cash equivalents was $63.9 million at the end of the year, a decrease of $48.0 million when compared to the prior year primarily due to the payment of a special dividend in July 2016 of $39.2 million and purchases of equipment of $5.8 million

Business Outlook
The Company expects revenue for the first quarter ended December 31, 2016 to be in the range of $28 to $30 million.

Conference Call
The Company will discuss its financial results today at 8:00 a.m. EST. The call will be available, live, to interested parties by dialing 866-428-9517. For international callers, please dial +1 224-357-2194. 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.

Use of Non-GAAP Financial Measures
We disclose non-GAAP pre-tax 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 pre-tax 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 interests 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.

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 Fiscal Years Ended
  September
30, 2016
 June
30, 2016
 September
30, 2015
 September
30, 2016
 September
30, 2015
Revenue $25,600  $22,376  $23,018  $91,998  $81,685 
Cost of revenue 16,481  14,964  13,568  61,044  52,994 
Gross profit 9,119  7,412  9,450  30,954  28,691 
Operating expense (income):          
Selling, general, and administrative 4,963  6,125  5,587  20,734  24,711 
Research and development 2,392  2,405  2,649  9,921  9,119 
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 7,355  5,890  8,236  28,015  33,213 
Operating income (loss) 1,764  1,522  1,214  2,939  (4,522)
Other income (expense):          
Interest income, net 48  32  36  88  75 
Foreign exchange (loss) gain (83) (201) (239) (394) (138)
Change in fair value of financial instruments         122 
Total other (expense) income (35) (169) (203) (306) 59 
Income (loss) from continuing operations before income tax (expense) benefit 1,729  1,353  1,011  2,633  (4,463)
Income tax benefit (expense) 8  (175) 339  (14) 2,191 
Income (loss) from continuing operations 1,737  1,178  1,350  2,619  (2,272)
Income from discontinued operations, net of tax 259  123  130  5,647  65,372 
Net income $1,996  $1,301  $1,480  $8,266  $63,100 
Per share data:          
Net income (loss) per basic share:          
Continuing operations $0.07  $0.05  $0.05  $0.10  $(0.08)
Discontinued operations 0.01    0.01  0.22   2.18 
Net income per basic and diluted share $0.08  $0.05  $0.06  $0.32  $2.10 
           
Net income (loss) per diluted share:          
Continuing operations $0.06  $0.05  $0.05  $0.10  $(0.08)
Discontinued operations 0.01    0.01  0.21  2.18 
Net income per diluted share $0.07  $0.05  $0.06  $0.31  $2.10 
           
Weighted-average number of basic shares outstanding 26,177  26,103  25,615  25,979  30,012 
Weighted-average number of diluted shares outstanding 26,674  26,269  25,896  26,518  30,012 


 
EMCORE CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 As of As of
 September 30,
 2016
 September 30,
 2015
ASSETS   
Current assets:   
Cash and cash equivalents$63,905  $111,885 
Restricted cash965  375 
Accounts receivable, net18,432  17,319 
Inventory24,150  17,130 
Prepaid expenses and other current assets3,764  4,976 
Total current assets111,216  151,685 
Property, plant, and equipment, net12,213  8,925 
Non-current inventory3,531   
Other non-current assets, net251  297 
Total assets$127,211  $160,907 
LIABILITIES and SHAREHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$10,575  $7,189 
Deferred gain associated with sale of assets  3,400 
Accrued expenses and other current liabilities  7,684  13,102 
Total current liabilities18,259  23,691 
Asset retirement obligations1,573  1,774 
Other long-term liabilities62   
Total liabilities19,894  25,465 
Shareholders' equity:   
Common stock725,880  762,003 
Treasury stock(47,721) (47,721)
Accumulated other comprehensive income579  847 
Accumulated deficit(571,421) (579,687)
Total shareholders' equity107,317  135,442 
Total liabilities and shareholders' equity$127,211  $160,907 


We have provided a reconciliation of our non-GAAP 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 Fiscal Years
Ended
  September
30, 2016
 June 30,
2016
 September
30, 2015
 September
30, 2016
 September
30, 2015
Income (loss) from continuing operations - US GAAP $1,737  $1,178  $1,350  $2,619  $(2,272)
Adjustments:          
Amortization expense     63    81 
Stock-based compensation expense 459  727  411  2,162  3,620 
Income tax (benefit) expense (8) 175  (339) 14  (2,191)
Accretion expense 21  15  21  66  111 
Gain from change in estimate on ARO obligation         (845)
Compensation expense associated with sale of Businesses         2,471 
Specific severance and restructuring charges   678  118  678  1,083 
Foreign exchange loss 83  201  239  394  138 
(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 301  265  848  1,783  1,856 
Total adjustments 856  (579) 1,361  2,457  6,430 
Pre-tax income from continuing operations - Non-GAAP $2,593  $599  $2,711  $5,076  $4,158 
Pre-tax income from continuing operations - Non-GAAP per basic share $0.10  $0.02  $0.11  $0.20  $0.14 
Pre-tax income from continuing operations - Non-GAAP per diluted share $0.10  $0.02  $0.10  $0.19  $0.14 
Weighted average number of basic shares outstanding 26,177  26,103  25,615  25,979  30,012 
Weighted average number of diluted shares outstanding 26,674  26,269  25,896  26,518  30,012 

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

Stock-based Compensation ExpenseFor the Three Months Ended For the Fiscal Years Ended
(in thousands)September
30, 2016
 June 30,
2016
 September
30, 2015
 September
30, 2016
 September
30, 2015
Cost of revenue$82  $81  $68  $345  $341 
Selling, general, and administrative282  555  238  1,445  2,847 
Research and development95  91  105  372  432 
Total stock-based compensation expense  $459  $727  $411  $2,162  $3,620 
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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