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EMCORE Reports Fiscal 2019 Fourth Quarter and Year-End Results

ALHAMBRA, Calif., Dec. 04, 2019 (GLOBE NEWSWIRE) -- EMCORE Corporation (NASDAQ: EMKR - News), a leading provider of advanced Mixed-Signal Optics products that provide the foundation for today's leading-edge defense systems and high-speed communications network infrastructures, today announced financial results for its fiscal fourth quarter (4Q19) and year ended September 30, 2019 (FY19). Management will host a conference call to discuss financial and business results tomorrow, Thursday, December 5, 2019 at 8:00 a.m. Eastern Time.

“Revenue increased to $24.3 million in the fourth fiscal quarter, reflecting the first full quarter of contribution from the SDI acquisition. Together with the continued strength in demand for EMCORE’s Aerospace and Defense products, for the first time this end market represented nearly 60% of our total revenue,” said Jeff Rittichier, EMCORE’s President and CEO. “While there is still much work to be done, our strategic focus is clear. We must drive further operating leverage in our business while continuing to make the investments necessary to maintain growth in Aerospace and Defense.”

  Three Months Ended  
  Sep 30, 2019 Jun 30, 2019 Increase/
(in millions) 4Q19 3Q19 (Decrease)
Revenue $ 24.3   $ 17.2   $ 7.1  
Gross Margin (1) (1 )% 22 % (23 )%
Operating Expenses (1) $ 14.4   $ 13.9   $ 0.5  
Operating Margin (1) (60 )% (59 )% (1 )%
Net Income (Loss) (1) $ (15.0 ) $ (10.5 ) $ (4.5 )
Earnings (Loss) per share (1) $ (0.52 ) $ (0.37 ) $ (0.15 )
Non-GAAP Gross Margin (2) 19 % 23 % (4 )%
Non-GAAP Operating Expenses (2) $ 12.4   $ 9.1   $ 3.3  
Non- GAAP Operating Margin (2) (32 )% (30 )% (2.0 )%
Non-GAAP Net Income (Loss) (2) $ (7.7 ) $ (5.0 ) $ (2.7 )
Non-GAAP Earnings (Loss) Per share (2) $ (0.27 ) $ (0.18 ) $ (0.09 )
Adjusted EBITDA (2) $ (5.7 ) $ (3.3 ) $ (2.4 )
Ending Cash, cash equivalents and restricted cash $ 22.0   $ 20.7   $ 1.3  
Current Borrowings from Credit Facility $ 5.5   $ 0.0   $ 5.5  
(1) 4Q19 includes $4.8M of net charges related to the transitioning of the CATV product line
(2) Please refer to the schedules at the end of this press release for complete GAAP to non-GAAP reconciliations and other information related to non-GAAP financial measures


  Twelve Months Ended  
  Sep 30, 2019 Sep 30, 2018 Increase/
(in millions) FY19 FY18 (Decrease)
Revenue $ 87.3   $ 85.6   $ 1.7  
Gross Margin (1) 17 % 22 % (5 )%
Operating Expenses (1) $ 51.2   $ 36.8   $ 14.4  
Operating Margin (1) (41 )% (21 )% (20 )%
Net Income (Loss) (1) $ (36.0 ) $ (17.5 ) $ (18.5 )
Earnings (Loss) per share (1) $ (1.29 ) $ (0.64 ) $ (0.65 )
Non-GAAP Gross Margin (2) 23 % 23 % 0 %
Non-GAAP Operating Expenses (2) $ 38.1   $ 31.2   $ 6.9  
Non- GAAP Margin (2) (20 )% (14 )% (6 )%
Non-GAAP Net Income (Loss) (2) $ (17.0 ) $ (11.2 ) $ (5.8 )
Non-GAAP Earnings (Loss) Per Share (2) $ (0.61 ) $ (0.41 ) $ (0.20 )
Adjusted EBITDA (2) $ (10.6 ) $ (6.4 ) $ (4.2 )
Ending Cash, cash equivalents and restricted cash $ 22.0   $ 63.2   $ (41.2 )
Current Borrowings from Credit Facility $ 5.5   $ 0.0   $ 5.5  
(1) FY19 includes $4.8M of net charges recorded in 4Q19 related to the transitioning of the CATV product line
(2) Please refer to the schedules at the end of this press release for complete GAAP to non-GAAP reconciliations and other information related to non-GAAP financial measures

Business Outlook
The Company expects revenue for the fiscal first quarter ending December 31, 2019 (1Q20) to be in the range of $25 to $27 million.

Conference Call
The Company will discuss its financial results on December 5, 2019 at 8:00 a.m. ET (5:00 a.m. PT). The call will be available by dialing 800-367-2403. For international callers, please dial +1 334-777-6978. The conference passcode number is 2374375. 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, December 5, 2019 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 leading-edge aerospace & defense systems and high-speed broadband communication networks. Our optical chips, components, subsystems and systems enable broadband and wireless service 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, data centers, wireless infrastructure, satellite RF fiber links, navigation systems, and military communications.  EMCORE has 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 facility in Beijing, China.  For further information about EMCORE, visit http://www.emcore.com.

Use of Non-GAAP Financial Measures
The Company conforms to U.S. Generally Accepted Accounting Principles (GAAP) in the preparation of its financial statements.  We disclose supplemental non-GAAP earnings measures for gross profit margin, operating expenses, operating profit margin, net income, and earnings per share.  We also disclose adjusted EBITDA, a non-earnings measure.

Management believes these supplemental non-GAAP measures reflect the Company’s core ongoing operating performance and facilitates comparisons across reporting periods.  The Company uses these measures when evaluating its financial results and for planning and forecasting of future periods.  We believe that these supplemental non-GAAP measures are also useful to investors in assessing our operating performance.  While we believe in the usefulness of these supplemental non-GAAP measures, there are limitations.  Our non-GAAP measures may not be reported by other companies in our industry and/or 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 measures as a supplement to GAAP and by providing the reconciliations to the most comparable GAAP measure.

The schedules at the end of this press release reconcile the Company’s non-GAAP measures to the most directly comparable GAAP measure.  The adjustments share one or more of the following characteristics: they are unusual and the Company does not expect them to recur in the ordinary course of its business, they do not involve the expenditure of cash, they are unrelated to the ongoing operation of the business in the ordinary course, or their magnitude and timing is largely outside of the Company’s control.  For all reporting periods disclosed, the Company has applied consistent rationale, method, and adjustments in reconciling non-GAAP measures to the most directly comparable GAAP measure.

Non-GAAP measures are not in accordance with or an alternative to GAAP, nor are they meant to be considered in isolation or as a substitute for comparable GAAP measures.  Our disclosures of these measures should be read only in conjunction with our financial statements prepared in accordance with GAAP.  Non-GAAP measures should not be viewed as a substitute for the Company’s GAAP results.

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 (“Exchange Act”). 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; (g) risks and uncertainties related to applicable laws and regulations, including the impact of changes to applicable tax laws and tariff regulations; (h) acquisition-related risks, including that (i) the revenues and net operating results obtained from the Systron Donner Inertial ("SDI") business may not meet our expectations, (ii) the costs and cash expenditures for integration of the SDI business operations may be higher than expected, (iii) there could be losses and liabilities arising from the acquisition of SDI that we will not be able to recover from any source, and (iv) we may not realize sufficient scale in our navigation systems product line from the SDI acquisition and will need to take additional steps, including making additional acquisitions, to achieve our growth objectives for this product line; (i) risks related to our ability to obtain capital; (j) risks related to the transition of certain of our manufacturing operations from our Beijing facility to a contract manufacturer’s facility; and (k) 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, 2018, 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 Twelve Months Ended
    September
30, 2019
  June
30, 2019
  September
30, 2018
  September
30, 2019
  September
30, 2018
Revenue   $ 24,300     $ 17,219     $ 25,241     $ 87,265     $ 85,617  
Cost of revenue   24,532     13,515     20,813     72,176     67,130  
Gross profit   (232 )   3,704     4,428     15,089     18,487  
Operating expense:                    
Research and development   6,435     4,629     4,372     19,443     15,387  
Selling, general, and administrative   8,217     9,288     5,532     32,094     21,232  
Loss (gain) from change in estimate on ARO obligation   26         145     (14 )   145  
(Gain) loss on sale of assets   (302 )       (5 )   (302 )   34  
Total operating expense   14,376     13,917     10,044     51,221     36,798  
Operating profit (loss)   (14,608 )   (10,213 )   (5,616 )   (36,132 )   (18,311 )
Other income (expense):                    
Interest income, net   39     99     243     629     733  
Foreign exchange gain (loss)   (396 )   (349 )   (570 )   (427 )   (434 )
Other income           110         110  
Total other income (expense)   (357 )   (250 )   (217 )   202     409  
Income (loss) before income tax (expense) benefit   (14,965 )   (10,463 )   (5,833 )   (35,930 )   (17,902 )
Income tax (expense) benefit   (10 )   (14 )   (53 )   (54 )   449  
Net income (loss)   $ (14,975 )   $ (10,477 )   $ (5,886 )   $ (35,984 )   $ (17,453 )
Per share data:                    
Net income (loss) per basic and diluted share   $ (0.52 )   $ (0.37 )   $ (0.21 )   $ (1.29 )   $ (0.64 )
                     
                     
Weighted-average number of basic and diluted shares outstanding   28,734     28,005     27,424     27,983     27,266  



 
EMCORE CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
   As of
September 30,
2019
  As of
September 30,
2018
ASSETS      
Current assets:      
Cash and cash equivalents $ 21,574     $ 63,117  
Restricted cash 403     78  
Total cash, cash equivalents and restricted cash 21,977     63,195  
Accounts receivable, net 19,552     19,275  
Inventory 24,051     20,850  
Prepaid expenses and other current assets 6,389     12,730  
Total current assets 71,969     116,050  
Property, plant, and equipment, net 37,223     18,216  
Goodwill 69      
Intangible assets, net 239      
Non-current inventory     1,433  
Other non-current assets, net 62     199  
Total assets $ 109,562     $ 135,898  
LIABILITIES and SHAREHOLDERS’ EQUITY      
Current liabilities:      
Borrowings from credit facility $ 5,497     $  
Accounts payable $ 10,701     $ 12,997  
Accrued expenses and other current liabilities 14,521     14,205  
Total current liabilities 30,719     27,202  
Asset retirement obligations 1,890     1,809  
Other long-term liabilities 207     82  
Total liabilities 32,816     29,093  
Shareholders’ equity:      
Common stock 739,926     734,066  
Treasury stock (47,721 )   (47,721 )
Accumulated other comprehensive income 950     885  
Accumulated deficit (616,409 )   (580,425 )
Total shareholders’ equity 76,746     106,805  
Total liabilities and shareholders’ equity $ 109,562     $ 135,898  



 
EMCORE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)
 
    Three Months Ended Twelve Months Ended
    Sep 30, 2019 Jun 30, 2019 Sep 30, 2019 Sep 30, 2018
    4Q19 3Q19 FY 19 FY 18
Gross Profit (Loss)   $ (232 ) $ 3,705   $ 15,090   $ 18,486  
Gross Margin   (1 )% 22 % 17 % 22 %
           
Adjustments:          
Stock-based compensation   128   121   468   451  
Asset retirement obligation (ARO) accretion   14   14   14   206  
Amortization of acquired intangibles   11     11    
Severance and restructuring charges     137   118   168  
CATV transition - inventory adjustment   4,714     4,714    
 Total adjustments   4,867   272   5,325   825  
           
Non-GAAP Gross Profit   $ 4,635   $ 3,977   $ 20,415   $ 19,311  
Non-GAAP Gross Margin   19 % 23 % 23 % 23 %


    Three Months Ended Twelve Months Ended
    Sep 30, 2019 Jun 30, 2019 Sep 30, 2019 Sep 30, 2018
    4Q19 3Q19 FY 19 FY 18
Operating Expenses   $ 14,376   $ 13,917   $ 51,221   $ 36,797  
Stock-based compensation   (655 ) (557 ) (2,138 ) (3,199 )
Acquisition related expenses   (146 ) (335 ) (819 ) (84 )
Severance and restructuring charges   (86 )   (86 ) (416 )
CATV transition - severance charges   (388 )   (445 )  
CATV transition - gain on sale of asset   302     302    
Litigation related expenses and arbitration ruling   (1,022 ) (3,931 ) (9,961 ) (1,679 )
Gain/loss due to change in ARO estimate   (26 )   14   (145 )
Gain/loss on sale of assets       4   (34 )
 Non-GAAP Operating Expenses   $ 12,355   $ 9,094   $ 38,092   $ 31,240  


    Three Months Ended Twelve Months Ended
    Sep 30, 2019 Jun 30, 2019 Sep 30, 2019 Sep 30, 2018
    4Q19 3Q19 FY 19 FY 18
Operating Profit (Loss)   $ (14,608 ) $ (10,212 ) $ (36,132 ) $ (18,311 )
Operating Margin   (60 )% (59 )% (41 )% (21 )%
           
Adjustments:          
Stock-based compensation   783   677   2,606   3,649  
Asset retirement obligation (ARO) accretion   14   14   14   206  
Acquisition related expenses   146   335   819   84  
Amortization of acquired intangibles   11     11    
Severance and restructuring charges   86   137   260   584  
CATV transition - severance charges   388     388    
CATV transition - inventory adjustment   4,714     4,714    
CATV transition - gain on sale of asset   (302 )   (302 )  
Litigation related expenses and arbitration ruling   1,022   3,931   9,961   1,679  
Gain/loss due to change in ARO estimate   26     (14 ) 145  
Gain/loss on sale of assets       (4 ) 34  
  Total adjustments   6,888   5,094   18,453   6,381  
           
Non-GAAP Operating Profit (Loss)   (7,720 ) (5,118 ) (17,679 ) (11,930 )
Non-GAAP Operating Margin   (32 )% (30 )% (32 )% (30 )%
           
Depreciation   2,070   1,770   7,040   5,550  
Adjusted EBITDA   $ (5,650 ) $ (3,348 ) $ (10,639 ) $ (6,380 )
Adjusted EBITDA %   (23 )% (19 )% (12 )% (7 )%


    Three Months Ended Twelve Months Ended
    Sep 30, 2019 Jun 30, 2019 Sep 30, 2019 Sep 30, 2018
    4Q19 3Q19 FY 19 FY 18
Net Income (Loss)   $ (14,975 ) $ (10,477 ) $ (35,984 ) $ (17,453 )
Earnings (Loss) Per Share   $ (0.52 ) $ (0.37 ) $ (1.29 ) $ (0.64 )
           
Adjustments:          
Stock-based compensation   783   677   2,606   3,649  
Asset retirement obligation (ARO) accretion   14   14   14   206  
Acquisition related expenses   146   335   819   84  
Amortization of acquired intangibles   11     11    
Severance and restructuring charges   86   137   260   584  
CATV transition - severance charges   388     388    
CATV transition - inventory adjustment   4,714     4,714    
CATV transition - gain on sale of asset   (302 )   (302 )  
Litigation related expenses and arbitration ruling   1,022   3,931   9,961   1,679  
Gain/loss due to change in ARO estimate   26     (14 ) 145  
Gain/loss on sale of assets       (4 ) 34  
Foreign currency gain/loss   396   349   427   434  
Non-operating income/(expense)         (110 )
Income tax (benefit)/expense   10   15   54   (449 )
  Total adjustments   7,294   5,458   18,934   6,256  
           
Non-GAAP Net Income (Loss)   (7,681 ) (5,019 ) (17,050 ) (11,197 )
Non-GAAP Earnings (Loss) Per Share   (0.27 ) (0.18 ) (0.61 ) (0.41 )
           
Interest income/expense   (39 ) (99 ) (630 ) (733 )
Depreciation   2,070   1,770   7,040   5,550  
Adjusted EBITDA   $ (5,650 ) $ (3,348 ) $ (10,640 ) $ (6,380 )
Adjusted EBITDA %   (23 )% (19 )% (12 )% (7 )%

Contact:
EMCORE Corporation
Tom Minichiello
(626) 293-3400
investor@emcore.com

Sapphire Investor Relations, LLC
Erica Mannion or Michael Funari
(617) 542-6180
investor@emcore.com