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EMCORE Reports Fiscal 2022 Second Quarter Results

EMCORE Corporation
EMCORE Corporation

ALHAMBRA, CA, May 04, 2022 (GLOBE NEWSWIRE) -- EMCORE Corporation (Nasdaq: EMKR), a leading provider of advanced mixed-signal products that serve the aerospace and defense, communications, and sensing markets, today announced results for the fiscal 2022 second quarter ended March 31, 2022 (2Q22). Management will host a conference call to discuss financial and business results today at 5:00 p.m. Eastern Time (ET).

For 2Q22, consolidated revenue was $32.7 million, comprised of $9.0 million from the Aerospace and Defense (A&D) segment and $23.6 million from the Broadband segment. Net loss was $(2.2) million and $(0.8) million on a GAAP and non-GAAP basis, respectively. Adjusted EBITDA was $0.3 million. Please refer to the schedules at the end of this press release for GAAP to non-GAAP reconciliations and other information related to non-GAAP financial measures.

“As expected, our Quartz MEMS product line rebounded and the Broadband segment turned in a solid performance, enabling us to deliver 2Q22 revenue within our guidance range. Beyond the top line, working capital improvements during the quarter resulted in a cash increase of $4.9 million,” said Jeff Rittichier, President and Chief Executive Officer of EMCORE. “While our profit margins in 2Q22 were impacted by semiconductor costs and lower overall Aerospace and Defense segment revenue, the momentum in our A&D business is strong, driven by our growing Inertial Navigation product portfolio and customers’ growing requirements for accurate guidance and stabilization systems. In the near term, due largely to a further softening of demand for our CATV product line, we expect revenue for 3Q22 to be in the range of $25 million to $27 million, inclusive of an estimated $3.5 million for a partial quarter of our newly acquired Space and Navigation business,” concluded Rittichier.

Consolidated Results

Three Months Ended

Mar 31, 2022

Dec 31, 2021

+increase/
-decrease

2Q22

1Q22

Revenue

$32.7M

$42.2M

-$9.5M

Gross margin

28%

37%

-9%

Operating expenses (1)

$11.3M

$13.3M

-$2.0M

Operating margin (1)

(7%)

6%

-13%

Net (loss) income (1)

($2.2M)

$2.4M

-$4.6M

Net (loss) income per share diluted (1)

($0.06)

$0.06

-$0.12

Non-GAAP gross margin (2)

30%

38%

-8%

Non-GAAP operating expenses (2)

$10.4M

$10.6M

-$0.2M

Non-GAAP operating margin (2)

(2%)

13%

-15%

Non-GAAP net (loss) income (2)

($0.8M)

$5.3M

-$6.1M

Non-GAAP net (loss) income per share diluted (2)

($0.02)

$0.14

-$0.16

Adjusted EBITDA

$0.3M

$6.3M

-$6.0M

Ending cash and cash equivalents

$80.9M

$76.0M

+$4.9M

(1) 1Q22 includes a $1.3 million charge for severance costs associated with the planned shutdown of manufacturing operations in Beijing, China.

(2) Please refer to the schedules at the end of this press release for GAAP to non-GAAP reconciliations and other information related to non-GAAP financial measures.

Aerospace and Defense Segment

A&D’s sequential-quarter revenue decrease was due to lower sales of Fiber Optic Gyro (FOG) and Defense Optoelectronic products, partly offset by higher Quartz MEMS revenue. A&D segment gross margin decreased primarily as a result of lower revenue.

Three Months Ended

Mar 31, 2022

Dec 31, 2021

+increase/
-decrease

2Q22

1Q22

A&D segment revenue

$9.0M

$9.9M

-$0.9M

A&D segment gross margin

14%

17%

-3%

A&D segment R&D expense (1)

$4.0M

$4.2M

-$0.2M

A&D segment profit (1)

($2.8M)

($2.5M)

-$0.3M

Non-GAAP A&D segment gross margin (2)

15%

18%

-3%

Non-GAAP A&D segment R&D expense (2)

$3.9M

$4.0M

-$0.1M

Non-GAAP A&D segment profit

($2.6M)

($2.3M)

-$0.3M

(1) Individual components may not sum to the total of reported consolidated amounts due to rounding.

(2) Please refer to the schedules at the end of this press release for GAAP to non-GAAP reconciliations and other information related to non-GAAP financial measures.

Broadband Segment

Broadband’s sequential-quarter revenue decrease was primarily due to lower sales of CATV and Sensing products. Broadband segment gross margin decreased primarily as a result of lower revenue, higher material costs, and under-absorption of fixed overhead.

Three Months Ended

Mar 31, 2022

Dec 31, 2021


+increase/
-decrease

2Q22

1Q22

Broadband segment revenue

$23.6M

$32.3M

-$8.7M

Broadband segment gross margin

33%

44%

-11%

Broadband segment R&D expense (1)

$0.5M

$0.5M

$—M

Broadband segment profit (1)

$7.3M

$13.6M

-$6.3M

Non-GAAP Broadband segment gross margin (2)

35%

44%

-9%

Non-GAAP Broadband segment R&D expense (2)

$0.4M

$0.4M

$—M

Non-GAAP Broadband segment profit

$7.9M

$13.8M

-$5.9M

(1) Individual components may not sum to the total of reported consolidated amounts due to rounding.

(2) Please refer to the schedules at the end of this press release for GAAP to non-GAAP reconciliations and other information related to non-GAAP financial measures.

Business Outlook

The Company expects revenue for the fiscal 2022 third quarter ending June 30, 2022 to be in the range of $25 million to $27 million, inclusive of an estimated $3.5 million of partial quarter revenue from the Space & Navigation business that was acquired from L3Harris Technologies, Inc. in April 2022.

Conference Call

The Company will discuss its financial results on May 4, 2022 at 5:00 p.m. ET (2:00 p.m. PT). The call will be available, live, to interested parties by dialing 800-304-0389. For international callers, please dial +1 313-209-5140. The conference passcode number is 6537772. The call will be webcast live via the Company's website at http://www.emcore.com. A webcast will be available for replay following the conclusion of the call.

About EMCORE

EMCORE Corporation is a leading provider of advanced mixed-signal products that serve the aerospace and defense, communications, and sensing markets. Our best-in-class components and systems support a broad array of applications including navigation and inertial sensing, defense optoelectronics, broadband communications, optical sensing, and specialty chips for telecom and data centers. We leverage industry-leading Quartz MEMS, Lithium Niobate, and Indium Phosphide chip-level technology to deliver state-of-the-art component and system-level products across our end-market applications. EMCORE has vertically-integrated manufacturing capability at its wafer fabrication facility in Alhambra, CA, and Quartz MEMS manufacturing facility in Concord, CA. Our manufacturing facilities maintain ISO 9001 quality management certification, and we are AS9100 aerospace quality certified at our facility in Concord. For further information about EMCORE, please 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 margin, operating expenses, research and development expenses, operating margin, and net (loss) income, as well as adjusted EBITDA.

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, including growth expectations in the A&D segment, expected revenue from our recent acquisition of the Space & Navigation business of L3 Harris Technologies, Inc., and statements about our future results of operations and financial position, 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 projected financial results, 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) uncertainties regarding the effects of the COVID-19 pandemic, the length of time it will take for the COVID-19 pandemic to subside, and the impact of measures intended to reduce its spread on our business and operations, which is evolving and beyond our control; (b) the rapidly evolving markets for the Company's products and uncertainty regarding the development of these markets; (c) 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; (d) delays and other difficulties in commercializing new products; (e) 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; (f) uncertainties concerning the availability and cost of commodity materials and specialized product components that we do not make internally; (g) actions by competitors; (h) risks and uncertainties related to applicable laws and regulations, including the impact of changes to applicable tax laws and tariff regulations; (i) acquisition-related risks, including that (i) the revenues and net operating results obtained from our recent acquisitions may not meet our expectations, (ii) there could be losses and liabilities arising from these acquisitions that we will not be able to recover from any source, and (iii) we may not realize sufficient scale from these acquisitions and will need to take additional steps, including making additional acquisitions, to achieve our growth objectives for this product line; (j) risks related to our ability to obtain capital; (k) risks related to the transition of certain of our manufacturing operations from our Beijing facility to a contract manufacturer’s facility; (l) risks and uncertainties related to manufacturing and production capacity and expansion plans related thereto; (m) risks related to the conversion of order backlog into product revenue; and (n) 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, 2021, 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 do not intend 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 Statement of Operations and Comprehensive Income
(in thousands, except for per share data)
(unaudited)

For the Three Months Ended
March 31,

For the Six Months Ended
March 31,

2022

2021

2022

2021

Revenue

$

32,650

$

38,406

$

74,886

$

71,832

Cost of revenue

23,633

23,772

50,072

44,626

Gross profit

9,017

14,634

24,814

27,206

Operating expense:

Selling, general, and administrative

7,563

6,062

14,750

11,860

Research and development

4,535

3,771

9,162

8,067

Severance

20

1,318

(Gain) loss on sale of assets

(788

)

218

(601

)

189

Total operating expense

11,330

10,051

24,629

20,116

Operating (loss) income

(2,313

)

4,583

185

7,090

Other (expense) income:

Interest expense, net

(12

)

(49

)

(23

)

(98

)

Foreign exchange (loss) gain

(17

)

(68

)

25

169

Total other (expense) income

(29

)

(117

)

2

71

(Loss) income before income tax benefit (expense)

(2,342

)

4,466

187

7,161

Income tax benefit (expense)

117

(82

)

2

(208

)

Net (loss) income

$

(2,225

)

$

4,384

$

189

$

6,953

Foreign exchange translation adjustment

2

(11

)

22

(21

)

Comprehensive (loss) income

$

(2,223

)

$

4,373

$

211

$

6,932

Per share data

Net (loss) income per basic share

$

(0.06

)

$

0.13

$

0.01

$

0.22

Weighted-average number of basic shares outstanding

37,217

32,968

37,082

31,219

Net (loss) income per diluted share

$

(0.06

)

$

0.13

$

0.01

$

0.21

Weighted-average number of diluted shares outstanding

37,217

34,451

38,384

32,492



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

As of

March 31,
2022

September 30,
2021

ASSETS

Current assets:

Cash and cash equivalents

$

80,928

$

71,621

Restricted cash

21

61

Accounts receivable, net of credit loss of $225 and $260, respectively

27,203

31,849

Contract assets

491

361

Inventory

28,049

32,309

Prepaid expenses and other current assets

6,543

6,877

Assets held for sale

735

1,241

Total current assets

143,970

144,319

Property, plant, and equipment, net

23,837

22,544

Goodwill

69

69

Operating lease right-of-use assets

19,930

13,489

Other intangible assets, net

149

167

Other non-current assets

213

225

Total assets

$

188,168

$

180,813

LIABILITIES and SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

15,317

$

16,686

Accrued expenses and other current liabilities

10,470

9,936

Operating lease liabilities - current

938

1,198

Total current liabilities

26,725

27,820

Operating lease liabilities - non-current

19,479

12,684

Asset retirement obligations

2,067

2,049

Other long-term liabilities

115

794

Total liabilities

48,386

43,347

Commitments and contingencies

Shareholders’ equity:

Common stock, no par value, 50,000 shares authorized; 44,301 shares issued and 37,395 shares outstanding as of March 31, 2022; 43,890 shares issued and 36,984 shares outstanding as of September 30, 2021

784,371

782,266

Treasury stock at cost; 6,906 shares as of March 31, 2022 and September 30,2021

(47,721

)

(47,721

)

Accumulated other comprehensive income

709

687

Accumulated deficit

(597,577

)

(597,766

)

Total shareholders’ equity

139,782

137,466

Total liabilities and shareholders’ equity

$

188,168

$

180,813



EMCORE CORPORATION
Reconciliations of GAAP to Non-GAAP Financial Measures

Three Months Ended

Mar 31, 2022

Dec 31, 2021

2Q22

1Q22

Gross profit

$

9,017

$

15,797

Gross margin

28

%

37

%

Adjustments:

Stock-based compensation expense

178

151

Asset retirement obligation accretion

9

9

Amortization of acquired intangibles

12

6

CATV transition - shutdown expense

432

Total adjustments

631

166

Non-GAAP gross profit

$

9,648

$

15,963

Non-GAAP gross margin

30

%

38

%


Three Months Ended

Mar 31, 2022

Dec 31, 2021

2Q22

1Q22

Operating expense

$

11,330

$

13,299

Stock-based compensation expense

(966

)

(937

)

Severance expense

(20

)

CATV transition - severance expense

(1,298

)

CATV transition - gain (loss) on sale of assets

788

(187

)

Acquisition-related expense

(456

)

Litigation-related expense

(290

)

(234

)

Non-GAAP operating expense

$

10,386

$

10,643


Three Months Ended

Mar 31, 2022

Dec 31, 2021

2Q22

1Q22

Operating profit

$

(2,313

)

$

2,498

Operating margin

(7

%)

6

%

Adjustments:

Stock-based compensation

1,144

1,088

Asset retirement obligation accretion

9

9

Amortization of acquired intangibles

12

6

Severance expense

20

CATV transition - severance expense

1,298

CATV transition - shutdown expense

432

CATV transition - (gain) loss on sale of assets

(788

)

187

Acquisition-related expense

456

Litigation-related expense

290

234

Total adjustments

1,575

2,822

Non-GAAP operating profit

$

(738

)

$

5,320

Non-GAAP operating margin

(2

%)

13

%

Depreciation expense

1,008

995

Adjusted EBITDA

$

270

$

6,315

Adjusted EBITDA %

1

%

15

%


Three Months Ended

Mar 31, 2022

Dec 31, 2021

2Q22

1Q22

Net (loss) income

$

(2,225

)

$

2,414

Net (loss) income per share basic

$

(0.06

)

$

0.07

Net (loss) income per share diluted

$

(0.06

)

$

0.06

Adjustments:

Stock-based compensation expense

1,144

1,088

Asset retirement obligation accretion

9

9

Amortization of acquired intangibles

12

6

Severance expense

20

CATV transition - severance expense

1,298

CATV transition - shutdown expense

432

CATV transition - (gain) loss on sale of assets

(788

)

187

Acquisition-related expense

456

Litigation-related expense

290

234

Foreign exchange loss (gain)

17

(42

)

Income tax (benefit) expense

(117

)

115

Total adjustments

1,475

2,895

Non-GAAP net (loss) income

$

(750

)

$

5,309

Non-GAAP net (loss) income per share basic

$

(0.02

)

$

0.14

Non-GAAP net (loss) income per share diluted

$

(0.02

)

$

0.14

Interest expense, net

12

11

Depreciation expense

1,008

995

Adjusted EBITDA

$

270

$

6,315

Adjusted EBITDA %

1

%

15

%


Three Months Ended

Three Months Ended

Mar 31, 2022

Dec 31, 2021

Mar 31, 2022

Dec 31, 2021

2Q22

1Q22

2Q22

1Q22

Aerospace and Defense

Broadband

Gross profit

$

1,233

$

1,684

Gross profit

$

7,784

$

14,113

Gross margin

14

%

17

%

Gross margin

33

%

44

%

Adjustments:

Adjustments:

Stock-based compensation expense

96

86

Stock-based compensation expense

82

65

Asset retirement obligation accretion

Asset retirement obligation accretion

9

9

Amortization of acquired intangibles

12

6

Amortization of acquired intangibles

CATV transition - shutdown expense

CATV transition - shutdown expense

432

Total adjustments

108

92

Total adjustments

523

74

Non-GAAP gross profit

$

1,341

$

1,776

Non-GAAP gross profit

$

8,307

$

14,187

Non-GAAP gross margin

15

%

18

%

Non-GAAP gross margin

35

%

44

%

R&D expense

$

4,041

$

4,162

R&D expense

$

494

$

465

Stock-based compensation expense

(118

)

(117

)

Stock-based compensation expense

(67

)

(65

)

Non-GAAP R&D expense

$

3,923

$

4,045

Non-GAAP R&D expense

$

427

$

400

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


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