-- Revenues increase 31% from a year ago and 13% sequentially
to $30.4 million;
-- Company achieves positive EBITDA;
-- Spin-off of GaN power electronics technology raises
$6.0 million for new company
SOMERSET, N.J., May 4, 2005 (PRIMEZONE) -- EMCORE Corporation (Nasdaq:EMKR), a leading provider of compound semiconductor-based components and subsystems for the broadband, fiber optic, satellite, and wireless communications markets, today announced its financial results for the fiscal 2005 second quarter ended March 31, 2005.
Revenues for the second quarter of fiscal 2005 were $30.4 million, an increase of 31% from the $23.2 million reported in the second quarter of fiscal 2004, and an increase of $3.4 million, or 13%, from the $27.0 million in the previous quarter. All three of the Company's operating segments, Fiber Optics, Photovoltaics and Electronic Materials and Devices, posted revenue increases both year-over-year and sequentially. Gross profit for the quarter was $5.5 million or 18%, an increase of 104% from $2.7 million a year earlier. The gross margin of 18% represents an increase of 10 percentage points from the 8% gross margins recorded in the previous quarter. For the six-months ended March 31, 2005, revenues totaled $57.4 million, an increase of 24% or $11.1 million as compared to the $46.3 million recorded for the six months ended March 31, 2004.
Operating expenses of $9.2 million represented a decrease of $2.2 million or 19% from the same quarter last year and were down $1.4 million, or 13% sequentially. For the six-month period, operating expenses fell $2.9 million, or 13% from the same year-ago period. Included in operating expenses were severance charges of $177,000 and $649,000 for the three and six months ended March 31, 2005, respectively. No severance charges were incurred for the three- or six-month periods ending March 31, 2004. The continuing decline in operating expenses is the result of ongoing cost-cutting and increasing efficiencies. The Company expects additional decreases in operating expenses throughout the remainder of Fiscal 2005.
EMCORE reported a loss from continuing operations for the quarter of $4.9 million, or $0.10 per basic and diluted share. Not including the $12.3 million gain from debt extinguishment, this compares to a loss from continuing operations of $10.2 million or $0.24 per basic and diluted share for the same quarter a year ago. Sequentially, the loss from continuing operations decreased $4.2 million or $0.09 per basic and diluted share
EMCORE reported net income for the quarter of $7.6 million, or $0.16 per basic and diluted share, the result of receiving a $13.2 million payment as part of the earn-out from the sale of the capital equipment division in November 2003. This compares to net income of $1.8 million or $0.04 per basic and diluted share for the same quarter a year ago.
Cash, cash equivalents and marketable securities at March 31, 2005 totaled approximately $44.5 million. Income before interest, taxes, depreciation, amortization and other non-cash items (adjusted EBITDA) was approximately $133,000, an improvement of $4.7 million from the previous quarter.
In April, the Company spun-off product technology focused on gallium nitride-based power electronic devices for the power device industry. The new company, named Velox Semiconductor Corporation (Velox) will initially commercialize fast, high-voltage diodes which will address problems of size and efficiency in the power supply industry. Velox raised $6.0 million from three venture capital partnerships including DCM-Doll Capital Management, SAS Investors and DFJ New England. EMCORE contributed intellectual property and equipment receiving an approximate 20% stake in Velox. Five employees also became full-time Velox personnel. Velox named Tom Hierl as Chief Executive Officer. Mr. Hierl founded Quantum Epitaxial Designs, Inc. and served as its CEO until 1999 when he merged it with a British company and then as CEO took the successor company public. EMCORE named Dr. Richard A. Stall, Chief Technology Officer, as EMCORE's designee to serve on Velox's new Board of Directors. EMCORE management estimates that its operating expenses will be reduced approximately $1.2 million annually through the formation and spin-off of Velox.
Management Discussion and Outlook:
"Our second quarter was extremely strong as all three operating segments reported increases in revenues. Manufacturing efficiencies and improved yields generated gross margins of 18%, a 10% point increase from last quarter. Most importantly, we achieved EBITDA positive results one quarter ahead of schedule," commented Mr. Reuben F. Richards Jr., President & CEO. "The formation of Velox Semiconductor will further reduce operating expenses by $1.2 million a year and will allow EMCORE to benefit from the technology by holding a 20% equity stake in the new company," added Mr. Richards. Looking ahead to the third quarter, Mr. Richards stated, "We expect revenue of $30-32 million for the fiscal third quarter. We see continued strength in Fiber Optics, Electronic Materials and Devices and Photovoltaics with the newly announced products from last quarter driving growth."
Company & Quarterly Highlights:
EMCORE announced the first earn-out of $13.2 Million from the Sale of Equipment Division to Veeco in 2003. Net sales of TurboDisc products for the twelve months ended December 31, 2004 amounted to $66.3 million resulting in an earn-out of $13.2 million for year one of the two-year earn-out agreement. EMCORE received a cash payment from Veeco on March 31, 2005. After offsetting this receipt against expenses related to the discontinued operation, EMCORE recorded a net gain from the disposal of discontinued operations of $12.5 million. EMCORE will receive, in either cash or stock, 50% of all calendar year 2005 revenues from the TurboDisc capital equipment business that exceeds $40.0 million, to a maximum second year earn-out payment of $6.8 million.
In April 2005, EMCORE announced the establishment of a modern solar panel manufacturing facility as part of its Albuquerque, NM solar cell fabrication operations. This new operation will provide solar cell assemblies and solar panels for the satellite and terrestrial markets. By consolidating operations into a single location, EMCORE PhotoVoltaics expects to realize annual cost savings in fiscal 2006 and beyond of approximately $3 million, which will enable it to better compete in the terrestrial and space power markets. Production operations at the current City of Industry, CA solar panel operation are expected to be discontinued during the fourth quarter of fiscal 2005, and the facility closed during the first quarter of fiscal 2006.
EMCORE will discuss the results further on a conference call to be held tomorrow, Thursday, May 5, 2005 at 9:00 a.m. ET. To participate in the call, U.S. callers should dial (toll free) 800-683-1525 and international callers should dial 973-935-2100. A replay of the call will be available beginning May 5, 2005 at 11:15 a.m. ET until May 12, 2005 at 11:59 p.m. ET. The replay call-in number for U.S. callers is 877-519-4471, for international callers it is 973-341-3080, and the access code is 5994074 (and then the pound sign). The call also will be Web cast via the Company's Web site at http://www.emcore.com Please go to the site beforehand to download any necessary software.
About EMCORE
EMCORE Corporation offers a broad portfolio of compound semiconductor-based components and subsystems for the broadband, fiber optic, satellite, and wireless communications markets. EMCORE has three operating segments: Fiber Optics, Photovoltaics, and Electronic Materials and Devices. The company's integrated solutions philosophy embodies state-of-the-art technology, material science expertise, and a shared vision of our customer's goals and objectives to be leaders in the transport of voice, data, and video over copper, hybrid fiber/coax (HFC), fiber, satellite, and wireless networks. EMCORE's solutions include: optical components and subsystems for fiber-to-the-premise, cable television, and high speed data and telecommunications networks; solar cells, solar panels, and fiber optic ground station links for global satellite communications; and electronic materials for high bandwidth wireless communications systems, such as Wi-Fi Internet access and cell phones. Through its joint venture participation in GELcore, LLC, EMCORE plays a vital role in developing and commercializing next-generation High-Brightness LED technology for use in the general and specialty illumination markets. For further information about EMCORE, visit http://www.emcore.com.
Disclaimer
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 relating to future events that involve risks and uncertainties. Words such as "expects," "anticipates," "intends," "plans," believes," and "estimates," and variations of these words and similar expressions, identify these forward-looking statements. These forward-looking statements include, without limitation, (a) any statements or implications regarding EMCORE's ability to remain competitive and a leader in its industry, and the future growth of EMCORE, or the industry and the economy in general; (b) statements regarding the expected level and timing of benefits to EMCORE from its current cost reduction efforts, including (i) expected cost reductions and their impact on EMCORE's financial performance, (ii) EMCORE's continued leadership in technology and manufacturing in its markets, and (iii) the belief that the cost reduction efforts will not impact product development or manufacturing execution; (c) any statement or implication that the products described in this press release (i) will be successfully introduced or marketed, (ii) will be qualified and purchased by our customers, or (iii) will perform to any particular specifications or performance or reliability standards; (d) any and all guidance provided by EMCORE regarding its expected financial performance in current or future periods, including, without limitation, with respect to anticipated revenues for the third quarter of fiscal 2005. 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) EMCORE's cost reduction efforts may not be successful in achieving their expected benefits, or may negatively impact EMCORE's operations; (b) reduced revenues resulting from the TurboDisc sale; (c) the failure of the 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 and (d) other risks and uncertainties described in EMCORE's filings with the Securities and Exchange Commission such as cancellations, rescheduling or delays in product shipments; manufacturing capacity constraints; lengthy sales and qualification cycles; difficulties in the production process; changes in semiconductor industry growth; increased competition; delays in developing and commercializing new products; and other factors. The forward-looking statements contained in this news release are made as of the date hereof and EMCORE does not assume any obligation to update the reasons why actual results could differ materially from those projected in the forward-looking statements.
EMCORE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended March 31, 2005 and 2004
(in thousands, except income (loss) per share)
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
-----------------------------------------
2005 2004 2005 2004
-----------------------------------------
Revenue $ 30,430 $ 23,180 $ 57,394 $ 46,305
Cost of revenue 24,901 20,499 49,790 40,444
-----------------------------------------
Gross profit 5,529 2,681 7,604 5,861
Operating expenses:
Selling, general and
administrative 4,950 5,644 10,038 10,951
Research and development 4,069 5,714 9,128 11,760
Severance charges 177 -- 649 --
-----------------------------------------
Total operating expenses 9,196 11,358 19,815 22,711
-----------------------------------------
Operating loss (3,667) (8,677) (12,211) (16,850)
Other (income) expenses:
Interest income (249) (199) (482) (357)
Interest expense 1,202 1,685 2,404 3,710
Gain from debt
extinguishment -- (12,312) -- (12,312)
Equity in net loss (income)
of GELcore 297 51 (75) (216)
-----------------------------------------
Total other expenses
(income) 1,250 (10,775) 1,847 (9,175)
-----------------------------------------
(Loss) income from
continuing operations (4,917) 2,098 (14,058) (7,675)
Discontinued operations:
Loss from discontinued
operations -- (348) -- (2,045)
Gain on disposal of
discontinued operations 12,476 -- 12,476 19,584
-----------------------------------------
Income (loss) from
discontinued operations 12,476 (348) 12,476 17,539
-----------------------------------------
Net income (loss) $ 7,559 $ 1,750 $ (1,582) $ 9,864
=========================================
Per Share Data:
Basic per share data:
(Loss) income from
continuing operations $ (0.10) $ 0.05 $ (0.30) $ (0.19)
Income (loss) from
discontinued operations $ 0.26 $ (0.01) $ 0.27 $ 0.44
-----------------------------------------
Net income (loss) $ 0.16 $ 0.04 $ (0.03) $ 0.25
=========================================
Diluted per share data:
(Loss) income from
continuing operations $ (0.10) $ 0.05 $ (0.30) $ (0.19)
Income (loss) from
discontinued operations $ 0.26 $ (0.01) $ 0.27 $ 0.44
-----------------------------------------
Net income (loss) $ 0.16 $ 0.04 $ (0.03) $ 0.25
=========================================
Weighted average basic
shares outstanding used
in per basic share
calculations 47,265 41,904 47,128 39,872
=========================================
Weighted average diluted
shares outstanding used
in per diluted share
calculations 47,265 43,725 47,128 39,872
=========================================
EMCORE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2005 and September 30, 2004
(in thousands)
(unaudited)
As of As of
March 31, September 30,
2005 2004
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 24,049 $ 19,422
Marketable securities 20,450 32,150
Accounts receivable, net 24,906 20,775
Receivables, related parties 3,867 215
Inventories, net 16,399 14,839
Prepaid expenses and other current assets 2,361 2,496
----------------------
Total current assets 92,032 89,897
Receivables, related parties 169 3,754
Property, plant and equipment, net 61,450 65,354
Goodwill 33,969 33,584
Intangible assets, net 4,425 5,177
Investments in GELcore 10,078 10,003
Other assets, net 6,241 5,474
----------------------
Total assets $ 208,364 $ 213,243
======================
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,658 $ 16,064
Accrued expenses 13,282 15,292
----------------------
Total current liabilities 26,940 31,356
Convertible subordinated notes 96,051 96,051
Other liabilities 13 27
----------------------
Total liabilities 123,004 127,434
Commitments and contingencies
Shareholders' equity:
Preferred stock, $0.0001 par, 5,882 shares
authorized, no shares outstanding -- --
Common stock, no par value, 100,000 shares
authorized, 47,339 shares issued and
47,319 outstanding at March 31, 2005;
46,951 shares issued and 46,931 out-
standing at September 30, 2004 390,738 389,750
Accumulated deficit (304,446) (302,864)
Accumulated other comprehensive loss -- (111)
Shareholders' notes receivable -- (34)
Treasury stock, at cost; 20 shares (932) (932)
----------------------
Total shareholders' equity 85,360 85,809
----------------------
Total liabilities and
shareholders' equity $ 208,364 $ 213,243
======================
In accordance with applicable regulations, a non-GAAP reconciliation
is provided below, which allows investors to reconcile the non-GAAP
measures discussed above to GAAP. A non-GAAP financial measure is a
numerical measure of a company's performance that either excludes or
includes amounts that are not normally excluded or included in the
most directly comparable measure calculated and presented in
accordance with GAAP. EMCORE believes that the additional non-GAAP
measures are useful to investors for financial analysis. Management
also uses these measures internally to evaluate the company's
operating performance, and the measures are used for planning and
forecasting of future periods. However, non-GAAP measures are not in
accordance with, nor are they a substitute for, GAAP measures.
EMCORE CORPORATION
RECONCILIATION OF NON-GAAP NET LOSS (INCOME) FROM
CONTINUING OPERATIONS AND NET LOSS (INCOME) FROM
CONTINUING OPERATIONS PER SHARE
(in thousands, except loss per share)
(unaudited)
Three Months Ended
March 31,
--------------------
2005 2004
--------------------
GAAP (loss) income from continuing operations $(4,917) $ 2,098
Adjustment:
Gain from debt extinguishment -- (12,312)
--------------------
Non-GAAP loss from continuing operations $(4,917) $(10,214)
====================
Non-GAAP loss from continuing operations
per basic and diluted share $ (0.10) $ (0.24)
====================
EMCORE CORPORATION
RECONCILIATION OF NET (LOSS) INCOME AND ADJUSTED EBITDA
FOR THE THREE MONTHS ENDED March 31, 2005 AND December 31, 2004
(in thousands)
(unaudited)
--------------------
March December
2005 2004
--------------------
Net income (loss) $ 7,559 $ (9,141)
Adjustments:
Depreciation and amortization 3,675 3,600
Gain on disposal of discontinued operations (12,476) --
Interest expense, net 953 969
Equity in net loss (income) of GELcore 297 (372)
Compensatory stock issuances 180 181
Reduction of note receivable due for
services received 130 130
Forgiveness of shareholders' notes receivable -- 34
Provision for doubtful accounts (185) 15
--------------------
Total adjustments to net income (loss) (7,426) 4,557
--------------------
Adjusted EBITDA $ 133 $ (4,584)
====================