SUNNYVALE, Calif., April 24, 2014 (GLOBE NEWSWIRE) -- Alliance Fiber Optic Products, Inc. (Nasdaq:AFOP), an innovative supplier of fiber optic components, subsystems and integrated modules for the fiber optic communication market, today reported its financial results for the first quarter ended March 31, 2014.
Revenues for the first quarter of 2014 were $24,882,000, a 105% increase from revenues of $12,153,000 reported in the first quarter of 2013, and a 14% increase from revenues of $21,804,000 reported in the fourth quarter of 2013.
Net income for the quarter ended March 31, 2014 rose to $5,015,000, or $0.27 per share, compared to net income of $1,850,000, or $0.11 per share, for the first quarter of 2013, and net income of $7,055,000, or $0.38 per share, for the fourth quarter of 2013. Included in net income for the fourth quarter of 2013 was a one-time tax benefit of approximately $2.3 million. Excluding this tax benefit, net income was $4,720,000, or $0.26 per share, in the fourth quarter of 2013.
Gross margin for the quarter ended March 31, 2014 increased to 40%, compared to 36% in the year ago quarter and 39% in the fourth quarter of 2013. Operating margin for the quarter ended March 31, 2014 increased to 26%, compared to 14.5% in the year ago quarter and 24% in the fourth quarter of 2013.
Non-GAAP net income for the quarter ended March 31, 2014 was $6,391,000, or $0.35 per share, compared to non-GAAP net income of $2,130,000, or $0.12 per share, for the first quarter of 2013, and non-GAAP net income of $5,383,000, or $0.29 per share, for the fourth quarter of 2013.
Non-GAAP gross margin for the quarter ended March 31, 2014 was 41%, compared to 37% in the year ago quarter and 40% in the fourth quarter of 2013. Non-GAAP operating margin for the quarter ended March 31, 2014 was 29%, compared to 17% in the year ago quarter and 27% in the fourth quarter of 2013.
Peter Chang, President and Chief Executive Officer, commented, "Thanks to the support of our customers and the effort by our Asia operations, we were able to deliver record quarterly revenue, which exceeded our previous guidance, during a normally slower season which includes the Chinese New Year holiday. In addition to the record quarterly revenue, we continued to improve our quarterly financial performance with record gross margin, operating margin and profits."
"While data bandwidth demands continue to increase and the next growth cycle in the fiber optics industry is emerging, we are encouraged by the prospect of business growth in the coming years, and with the progress we made serving our customers and extending our product technology in recent quarters. Based on input from our customers and current orders, we expect revenues in the coming quarter to be above $25 million, which will be a new record for quarterly sales and will represent a 31% increase from the year ago quarter." concluded Mr. Chang.
Conference Call
Management will host a conference call at 1:30 p.m. PT on April 24, 2014 to discuss AFOP's first quarter 2014 financial results as well as the outlook for the second quarter of 2014. Please call 877-675-3572 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 19751761. AFOP will also provide a live webcast of its first quarter 2014 conference call at AFOP's website: www.afop.com. The webcast replay will be available on AFOP's website 90 minutes after the live conference call.
About AFOP
Founded in 1995, Alliance Fiber Optic Products, Inc. designs, manufactures and markets a broad range of high performance fiber optic components and integrated modules. AFOP's products are used by leading and emerging communications equipment manufacturers to deliver optical networking systems to the long-haul, enterprise, data center, metropolitan and last mile access segments of the communications network. AFOP offers a broad product line of passive optical components including interconnect systems, splitters, thin film CWDM and DWDM components and modules, and optical attenuators. AFOP is headquartered in Sunnyvale, California, with manufacturing and product development capabilities in the United States, Taiwan and China. AFOP's website is located at http://www.afop.com.
Except for the historical information contained herein, the matters set forth in this press release, including statements as to our expectations regarding future revenue levels and the time periods thereof, our business prospects, demand for our products and sources of demand, and our expectations for growth in the fiber optic industry, are forward looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, but not limited to general economic conditions and trends, trends in demand for bandwidth, the impact of competitive products and pricing, timely introduction of new technologies, timely design acceptance by our customers, the acceptance of new products and technologies by our customers, customer demand for our products, the timing of customer orders, loss of key customers or customer orders, our ability to ramp new products into volume production, the mix of products sold and product pricing, the costs associated with running our operations, industry-wide shifts in supply and demand for optical components and modules, industry overcapacity and demand for bandwidth, the success of cost control initiatives, our ability to obtain and maintain operational efficiencies, financial stability in foreign markets, and other risks detailed from time to time in our SEC reports, including AFOP's Annual Report on Form 10-K for the year ended December 31, 2013. These forward-looking statements speak only as of the date hereof. AFOP disclaims any intention or obligation to update or revise any forward-looking statements.
| ALLIANCE FIBER OPTIC PRODUCTS, INC. | |||
| Condensed Consolidated Statements of Operations | |||
| (In thousands, except per share amounts) | |||
| (Unaudited) | |||
| Three Months Ended | |||
| Mar. 31, | Dec. 31, | Mar. 31, | |
| 2014 | 2013 | 2013 | |
| Revenues | $ 24,882 | $ 21,804 | $ 12,153 |
| Cost of revenues | 14,968 | 13,230 | 7,745 |
| Gross profit | 9,914 | 8,574 | 4,408 |
| Operating expenses: | |||
| Research and development | 1,108 | 1,006 | 813 |
| Selling, marketing and administrative | 2,336 | 2,337 | 1,828 |
| Total operating expenses | 3,444 | 3,343 | 2,641 |
| Income from operations | 6,470 | 5,231 | 1,767 |
| Interest and other income, net | 147 | 239 | 133 |
| Income before benefit (provision) for income taxes | $ 6,617 | $ 5,470 | $ 1,900 |
| Benefit (provision) for income taxes | (1,602) | 1,585 | (50) |
| Net income | $ 5,015 | $ 7,055 | $ 1,850 |
| Net income per share | |||
| Basic | $ 0.27 | $ 0.38 | $ 0.11 |
| Diluted | $ 0.26 | $ 0.37 | $ 0.10 |
| Weighted average shares outstanding | |||
| Basic | 18,422 | 18,382 | 17,190 |
| Diluted | 19,070 | 19,198 | 17,812 |
| Included in costs and expenses above: | |||
| Stock-based compensation expense | |||
| Cost of revenue | $ 176 | $ 158 | $ 35 |
| Research and development | 83 | 83 | 33 |
| Selling, marketing and administrative | 458 | 422 | 212 |
| Total | $ 717 | $ 663 | $ 280 |
| ALLIANCE FIBER OPTIC PRODUCTS, INC. | ||
| Condensed Consolidated Balance Sheets | ||
| (in thousands) | ||
| (Unaudited) | ||
| Mar. 31, | Dec. 31, | |
| 2014 | 2013 | |
| ASSETS | ||
| Current assets: | ||
| Cash and short-term investments | $ 51,350 | $ 46,679 |
| Accounts receivable, net | 13,961 | 11,566 |
| Inventories | 10,330 | 10,630 |
| Deferred tax asset | 5,378 | 6,036 |
| Other current assets | 1,815 | 1,745 |
| Total current assets | 82,834 | 76,656 |
| Long-term investments | 10,498 | 10,453 |
| Property and equipment, net | 13,069 | 13,258 |
| Other assets | 178 | 198 |
| Total assets | $ 106,579 | $ 100,565 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 11,761 | $ 11,657 |
| Accrued expenses and other current liabilities | 7,649 | 7,134 |
| Total current liabilities | 19,410 | 18,791 |
| Long-term liabilities | 601 | 600 |
| Total liabilities | 20,011 | 19,391 |
| Stockholders' equity | 86,568 | 81,174 |
| Total liabilities and stockholders' equity | $ 106,579 | $ 100,565 |
| ALLIANCE FIBER OPTIC PRODUCTS, INC. | |||
| Reconciliations from GAAP to Non-GAAP | |||
| (In thousands, except per share amounts) | |||
| (Unaudited) | |||
| Three Months Ended | |||
| Mar. 31, | Dec. 31, | Mar. 31, | |
| 2014 | 2013 | 2013 | |
| Gross Profit Reconciliation | |||
| GAAP gross profit | $ 9,914 | $ 8,574 | $4,408 |
| Stock-based compensation expense | 176 | 158 | 35 |
| Adjusted (non-GAAP) gross profit | $ 10,090 | $ 8,732 | $ 4,443 |
| Adjusted (non-GAAP) gross margin | 40.6% | 40.0% | 36.6% |
| Operating Expense Reconciliation | |||
| GAAP operating expenses | $ 3,444 | $ 3,343 | $ 2,641 |
| Stock-based compensation expense | 541 | 505 | 245 |
| Adjusted (non-GAAP) operating expenses | $ 2,903 | $ 2,838 | $ 2,396 |
| Income from Operations Reconciliation | |||
| GAAP income from operations | $ 6,470 | $ 5,231 | $ 1,767 |
| Adjustments related to gross profit | 176 | 158 | 35 |
| Adjustments related to operating expense | 541 | 505 | 245 |
| Adjusted (non-GAAP) income from operations | $ 7,187 | $ 5,894 | $ 2,047 |
| Adjusted (non-GAAP) operating margin | 28.9% | 27.0% | 16.8% |
| Net Income Reconciliation | |||
| GAAP net income | $ 5,015 | $ 7,055 | $ 1,850 |
| Adjustments related to gross profit | 176 | 158 | 35 |
| Adjustments related to operating expense | 541 | 505 | 245 |
| Income tax provision adjustments | 659 | (2,335) | -- |
| Adjusted (non-GAAP) net income | $ 6,391 | $ 5,383 | $ 2,130 |
| Weighted average shares outstanding | |||
| Basic | 18,422 | 18,382 | 17,190 |
| Diluted | 19,070 | 19,198 | 17,812 |
| Net Income per Common Share - Basic: | |||
| GAAP as reported | $ 0.27 | $ 0.38 | $ 0.11 |
| Non-GAAP as adjusted | $ 0.35 | $ 0.29 | $ 0.12 |
| Net Income per Common Share - Diluted: | |||
| GAAP as reported | $ 0.26 | $ 0.37 | $ 0.10 |
| Non-GAAP as adjusted | $ 0.34 | $ 0.28 | $ 0.12 |
| Non-GAAP EBITDA | |||
| Non-GAAP net income | $ 6,391 | $ 5,383 | $ 2,130 |
| Depreciation expense | 684 | 662 | 452 |
| Interest income | (178) | (178) | (159) |
| Income tax expense | 944 | 750 | 50 |
| Non-GAAP EBITDA | $ 7,841 | $ 6,617 | $ 2,473 |
Use of Non-GAAP Financial Information
The company provides Non-GAAP gross margin, Non-GAAP net income, Non-GAAP basic and diluted net income per share and EBITDA, as supplemental information. In computing these non-GAAP financial measures, the company excludes certain items included under GAAP, including stock-based compensation expense and income tax provision adjustments. In computing EBITDA, the company also excludes interest income, provision for (benefit from) income taxes and depreciation expense.
Management uses these Non-GAAP financial measures to evaluate the operating performance of the business and aid in the period-to-period comparability. Management also uses the Non-GAAP financial measures for planning and forecasting and measuring results against its forecast. Using several measures to evaluate the business allows the company and investors to assess the company's relative performance. The Non-GAAP financial measures provided herein may not provide information that is directly comparable to that provided by other companies in the company's industry, as other companies may calculate such financial results differently. The company's Non-GAAP financial measures are not measurements of financial performance under GAAP, and should not be considered as alternatives to the financial measures derived in accordance with GAAP. The company does not consider these Non-GAAP financial measures to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of the Non-GAAP financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion of this press release.