EMCORE Corporation
Aug 3, 2017

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

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:

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 cash423  965 
Accounts receivable, net22,285  18,432 
Inventory26,147  24,150 
Prepaid expenses and other current assets6,633  3,764 
Total current assets121,582  111,216 
Property, plant, and equipment, net15,684  12,213 
Non-current inventory3,115  3,531 
Other non-current assets, net95  251 
Total assets$140,476  $127,211 
LIABILITIES and SHAREHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$12,951  $10,575 
Accrued expenses and other current liabilities8,687  7,684 
Total current liabilities21,638  18,259 
Asset retirement obligations1,620  1,573 
Other long-term liabilities55  62 
Total liabilities23,313  19,894 
Shareholders' equity:   
Common stock729,467  725,666 
Treasury stock(47,721) (47,721)
Accumulated other comprehensive income594  579 
Accumulated deficit(565,177) (571,207)
Total shareholders' equity117,163  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 ExpenseFor 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 administrative824 563 555 1,957 1,163
Research and development143 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