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EMCORE Reports Fiscal 2021 Third Quarter Results

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ALHAMBRA, CA, Aug. 04, 2021 (GLOBE NEWSWIRE) -- EMCORE Corporation (Nasdaq: EMKR), a leading provider of advanced mixed-signal products that serve the aerospace & defense and broadband communications markets, today announced results for the fiscal 2021 third quarter ended June 30, 2021 (3Q21). Management will host a conference call to discuss financial and business results tomorrow, Thursday, August 5, 2021, at 8:00 AM Eastern Time.

Consolidated revenue for 3Q21 was $42.7 million, comprised of $12.3 million from the Aerospace & Defense segment and $30.3 million from the Broadband segment. Net income was $13.6 million and $7.9 million on a GAAP and non-GAAP basis, respectively. Adjusted EBITDA was $8.9 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.

“The Broadband business segment drove record financial performance for EMCORE. Revenue, up 11% on a sequential quarter basis, and gross margins above 40% drove substantial bottom-line growth on both a GAAP and non-GAAP basis, as well as strong operating cash flow,” said Jeff Rittichier, Chief Executive Officer of EMCORE. “A&D gross margin increased as our Navigation business grew sequentially on stronger QMEMS and FOG revenue.”

Consolidated Results

Three Months Ended

Jun 30, 2021

Mar 31, 2021

+increase/
-decrease

3Q21

2Q21

Revenue

$42.7M

$38.4M

+$4.3M

Gross Margin

40%

38%

+2%

Operating Expenses

$10.8M

$10.1M

+$0.7M

Operating Margin

15%

12%

+3%

Net Income (1)

$13.6M

$4.4M

+$9.2M

Earnings Per Share Diluted (1)

$0.35

$0.13

+$0.22

Non-GAAP Gross Margin (2)

41%

39%

+2%

Non-GAAP Operating Expenses (2)

$9.6M

$8.9M

+0.7M

Non-GAAP Operating Margin (2)

19%

15%

+4%

Non-GAAP Net Income (2)

$7.9M

$5.9M

+$2.0M

Non-GAAP Earnings Per Share Diluted (2)

$0.20

$0.17

+$0.03

Adjusted EBITDA

$8.9M

$6.9M

+$2.0M

Ending Cash and Cash Equivalents

$68.3M

$65.3M

+$3.0M

(1) 3Q21 includes $7.4M of non-recurring gains related to extinguishment of debt and expiring tax-related liabilities.

(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 (A&D) Segment

A&D’s sequential-quarter revenue decrease was due to lower sales of Defense Optoelectronics products, partly offset by increased Navigation revenue. The higher A&D gross margin was driven primarily by improved QMEMS margins. R&D expense was higher as a result of increased project material costs and lower revenue-related engineering labor recorded as cost of goods sold.

Three Months Ended

Jun 30, 2021

Mar 31, 2021

+increase/
-decrease

3Q21

2Q21

A&D Segment Revenue (1)

$12.3M

$13.1M

-$0.8M

A&D Segment Gross Margin

31%

29%

+2%

A&D Segment R&D Expense

$3.6M

$3.2M

+$0.4M

A&D Segment Profit (1)

$0.3M

$0.6M

-$0.3M

Non-GAAP A&D Segment Gross Margin (2)

33%

30%

+3%

Non-GAAP A&D Segment R&D Expense (2)

$3.5M

$3.0M

+$0.5M

Non-GAAP A&D Segment Profit

$0.6M

$0.9M

-$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 increase was driven by record sales of Cable TV products, which also drove a slightly better gross margin. R&D expense increased due to higher project material costs.

Three Months Ended

Jun 30, 2021

Mar 31, 2021

+increase/
-decrease

3Q21

2Q21

Broadband Segment Revenue (1)

$30.3M

$25.3M

+$5.0M

Broadband Segment Gross Margin

44%

43%

+1%

Broadband Segment R&D Expense

$0.9M

$0.6M

+$0.3M

Broadband Segment Profit (1)

$12.5M

$10.2M

+$2.3M

Non-GAAP Broadband Segment Gross Margin (2)

44%

43%

+1%

Non-GAAP Broadband Segment R&D Expense (2)

$0.8M

$0.5M

+$0.3M

Non-GAAP Broadband Segment Profit

$12.6M

$10.4M

+$2.2M

(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 2021 fourth quarter ending September 30, 2021 to be in the range of $42 million to $44 million.

Conference Call

The Company will discuss its financial results on August 5, 2021 at 8:00 a.m. ET (5:00 a.m. PT). The call will be available, live, to interested parties by dialing 800-353-6461. For international callers, please dial +1 334-323-0501. The conference passcode number is 9771183. The call will be webcast live via the Company's website at http://www.emcore.com. A webcast will be available for replay beginning Thursday, August 5, 2021 following the conclusion of the call.

About EMCORE

EMCORE Corporation is a leading provider of advanced mixed-signal products that serve the aerospace & defense and broadband communications markets. Our best-in-class components and systems support a broad array of applications including navigation and inertial sensing, defense optoelectronics, broadband transport, 5G wireless infrastructure, optical sensing, and cloud 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 profit margin, operating expenses, operating profit margin, net income, and earnings per share, 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, 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 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 acquisition of the Systron Donner Inertial ("SDI") business may not meet our expectations, (ii) there could be losses and liabilities arising from the acquisition of SDI that we will not be able to recover from any source, and (iii) 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; (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, 2020, 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 (Loss)
(in thousands, except for per share data)
(unaudited)

For the three months ended
June 30,

For the nine months ended
June 30,

2021

2020

2021

2020

Revenue

$

42,658

$

27,266

$

114,490

$

76,598

Cost of revenue

25,433

18,048

70,059

53,479

Gross profit

17,225

9,218

44,431

23,119

Operating expense:

Selling, general, and administrative

6,081

5,936

17,941

18,962

Research and development

4,500

4,807

12,567

14,033

Loss (gain) on sale of assets

250

(312)

439

(2,229)

Total operating expense

10,831

10,431

30,947

30,766

Operating income (loss)

6,394

(1,213)

13,484

(7,647)

Other income (expense):

Gain on extinguishment of debt

6,561


6,561

Interest income (expense), net

579

(40)

481

(54)

Foreign exchange gain (loss)

87

(20)

256

(29)

Total other income (expense)

7,227

(60)

7,298

(83)

Income (loss) before income tax (expense) benefit

13,621

(1,273)

20,782

(7,730)

Income tax (expense) benefit

(6)

(14)

(214)

27

Net income (loss)

$

13,615

$

(1,287)

$

20,568

$

(7,703)

Foreign exchange translation adjustment

(5)

2

(26)

(5)

Comprehensive income (loss)

$

13,610

$

(1,285)

$

20,542

$

(7,708)

Per share data

Net income (loss) per basic share

$

0.37

$

(0.04)

$

0.62

$

(0.27)

Weighted-average number of basic shares outstanding

36,768

29,295

33,069

29,052

Net income (loss) per diluted share

$

0.35

$

(0.04)

$

0.59

$

(0.27)

Weighted-average number of diluted shares outstanding

38,893

29,295

34,777

29,052


EMCORE CORPORATION

Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

As of

June 30,
2021

September 30,
2020

ASSETS

Current assets:

Cash and cash equivalents

$

67,191

$

30,390

Restricted cash

1,106

148

Accounts receivable, net of credit loss of $192 and $227, respectively

31,536

25,324

Contract assets

220

1,566

Inventory

33,362

25,525

Prepaid expenses and other current assets

6,295

5,589

Assets held for sale

1,404

1,568

Total current assets

141,114

90,110

Property, plant, and equipment, net

21,847

21,052

Goodwill

69

69

Operating lease right-of-use assets

13,744

14,566

Other intangible assets, net

175

202

Other non-current assets

243

242

Total assets

$

177,192

$

126,241

LIABILITIES and SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

19,184

$

16,484

Accrued expenses and other current liabilities

9,961

11,577

Operating lease liabilities - current

1,153

992

Total current liabilities

30,298

29,053

PPP liability - non-current

6,488

Operating lease liabilities - non-current

12,954

13,735

Asset retirement obligations

2,040

2,022

Other long-term liabilities

794

794

Total liabilities

46,086

52,092

Commitments and contingencies

Shareholders’ equity:

Common stock, no par value, 50,000 shares authorized; 43,787 shares issued and 36,881 shares outstanding as of June 30, 2021; 36,461 shares issued and 29,551 shares outstanding as of September 30, 2020

780,776

744,361

Treasury stock at cost; 6,906 shares as of June 30, 2021 and 6,910 shares as of September 30, 2020

(47,721)

(47,721)

Accumulated other comprehensive income

892

918

Accumulated deficit

(602,841)

(623,409)

Total shareholders’ equity

131,106

74,149

Total liabilities and shareholders’ equity

$

177,192

$

126,241


EMCORE CORPORATION

Reconciliations of GAAP to Non-GAAP Financial Measures

Three Months Ended

Jun 30, 2021

Mar 31, 2021

3Q21

2Q21

Gross Profit

$

17,225

$

14,634

Gross Margin

40%

38%

Adjustments:

Stock-based compensation

220

203

Asset retirement obligation (ARO) accretion

11

8

Amortization of acquired intangibles

9

9

Total adjustments

240

220

Non-GAAP Gross Profit

$

17,465

$

14,854

Non-GAAP Gross Margin

41%

39%


Three Months Ended

Jun 30, 2021

Mar 31, 2021

3Q21

2Q21

Operating Expenses

$

10,831

$

10,051

Stock-based compensation

(956)

(719)

Severance and restructuring charges


(14)

CATV transition - (loss) gain on sale of assets

(250)

164

Loss on sale of assets


(382)

Litigation-related expenses

(70)

(169)

Non-GAAP Operating Expenses

$

9,555

$

8,931


Three Months Ended

Jun 30, 2021

Mar 31, 2021

3Q21

2Q21

Operating Profit

$

6,394

$

4,583

Operating Margin

15%

12%

Adjustments:

Stock-based compensation

1,176

922

Asset retirement obligation (ARO) accretion

11

8

Amortization of acquired intangibles

9

9

Severance and restructuring charges

14

CATV transition - loss (gain) on sale of assets

250

(164)

Loss on sale of assets

382

Litigation-related expenses

70

169

Total adjustments

1,516

1,340

Non-GAAP Operating Profit

7,910

5,923

Non-GAAP Operating Margin

19%

15%

Depreciation

1,016

976

Adjusted EBITDA

$

8,926

$

6,899

Adjusted EBITDA %

21%

18%


Three Months Ended

Jun 30, 2021

Mar 31, 2021

3Q21

2Q21

Net Income

$

13,615

$

4,384

Earnings Per Share Basic

0.37

0.13

Earnings Per Share Diluted

0.35

0.13

Non-recurring gains, tax effected:

Gain on extinguishment of debt

(6,417)

Release of uncertain tax reserve and related interest

(1,007)

Total non-recurring gains, tax effected

(7,424)

Net Income, excluding non-recurring gains tax effected

$

6,191

$

4,384

Earnings Per Share Basic, excluding non-recurring gains tax effected

0.17

0.13

Earnings Per Share Diluted, excluding non-recurring gains tax effected

0.16

0.13

Adjustments:

Stock-based compensation

1,176

922

Asset retirement obligation (ARO) accretion

11

8

Amortization of acquired intangibles

9

9

Severance and restructuring charges

14

CATV transition - gain on sale of assets

250

(164)

Loss on sale of assets

382

Litigation-related expenses

70

169

Foreign exchange (gain) loss

(87)

68

Income tax expense

265

82

Total adjustments

1,694

1,490

Non-GAAP Net Income

7,885

5,874

Non-GAAP Earnings Per Share Basic

0.21

0.18

Non-GAAP Earnings Per Share Diluted

0.20

0.17

Interest expense, net

25

49

Depreciation

1,016

976

Adjusted EBITDA

$

8,926

$

6,899

Adjusted EBITDA %

21 %

18 %


Three Months Ended

Three Months Ended

Jun 30, 2021

Mar 31, 2021

Jun 30, 2021

Mar 31, 2021

3Q21

2Q21

3Q21

2Q21

Aerospace and Defense

Broadband

Gross Profit

$

3,872

$

3,775

Gross Profit

$

13,353

$

10,859

Gross Margin

31 %

29 %

Gross Margin

44 %

43 %

Adjustments:

Adjustments:

Stock-based compensation

129

120

Stock-based compensation

91

83

Asset retirement obligation (ARO) accretion

Asset retirement obligation (ARO) accretion

11

8

Amortization of acquired intangibles

9

9

Amortization of acquired intangibles

Total adjustments

138

129

Total adjustments

102

91

Non-GAAP Gross Profit

$

4,010

$

3,904

Non-GAAP Gross Profit

$

13,455

$

10,950

Non-GAAP Gross Margin

33 %

30 %

Non-GAAP Gross Margin

44 %

43 %

Aerospace and Defense

Broadband

R&D Expenses

$

3,598

$

3,157

R&D Expenses

$

902

$

614

Stock-based compensation

(139)

(136)

Stock-based compensation

(65)

(73)

Non-GAAP R&D Expenses

$

3,459

$

3,021

Non-GAAP R&D Expenses

$

837

$

541

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


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