EMCORE Corporation (Nasdaq: EMKR), the world’s largest independent
provider of inertial navigation solutions to the aerospace and
defense industry, today announced results for the fiscal 2024 third
quarter (3Q24) ended June 30, 2024. Management will host a
conference call to discuss 3Q24 financial and business results on
August 7, 2024 at 8:00 a.m. Eastern Time (ET).
“Revenue came in strong at $20.4 million for 3Q24,
driven by record high shipments from our Concord site and a solid
performance at our Tinley Park operation,” said Matt Vargas,
interim Chief Executive Officer. “On the expense side, we continue
to work through the previously announced restructuring actions,
which have started to produce results in 3Q24, including an
improved gross margin, lower non-GAAP operating expenses, and
reduced cash use. Looking ahead, we expect continued improvement
with 4Q24 revenue anticipated to be in the range of $20 million to
$22 million combined with ongoing cost reductions and an additional
quarter of strong bookings.”
|
Three Months Ended |
|
|
Jun 30, 2024 |
Mar 31, 2024 |
+increase/ |
|
3Q24 |
2Q24 |
-decrease |
Revenue |
$20.4M |
$19.6M |
+$0.8M |
Gross margin |
25% |
17% |
+8% |
Operating expenses (a) |
$14.3M |
$10.9M |
+$3.4M |
Net loss on continuing operations |
($14.5M) |
($7.8M) |
-$6.7M |
Net loss on continuing operations per share, basic and diluted |
($1.60) |
($0.87) |
-$0.73 |
Non-GAAP gross margin (b) |
24% |
15% |
+9% |
Non-GAAP operating expenses (b) |
$9.1M |
$9.8M |
-$0.7M |
Non-GAAP net loss on continuing operations (b) |
($4.4M) |
($7.0M) |
+$2.6M |
Non-GAAP net loss on continuing operations per share, basic and
diluted (a) |
($0.49) |
($0.78) |
+$0.29 |
Adjusted EBITDA |
($3.6M) |
($5.8M) |
+$2.2M |
Ending cash and cash equivalents |
$9.0M |
$12.0M |
-$3.0M |
Line of credit and loan payable |
$8.4M |
$8.3M |
+$0.1M |
(a) 3Q24 includes restructuring and asset impairment charges
totaling $4.3M. (b) 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. |
Conference Call
The Company will host a conference call to discuss
its financial results on Wednesday, August 7, 2024 at 8:00 a.m. ET
(5:00 a.m. PT). The call will be available, live, to interested
parties. In the U.S. and Canada, call toll-free by dialing
800-715-9871. For international callers, please dial +1
646-307-1963. The conference passcode number is 5757406. The call
will be webcast live via the Company’s investor website at
https://investor.emcore.com. Please go to the site beforehand to
register and download any necessary software. Or, go directly to
https://event.choruscall.com/mediaframe/webcast.html?webcastid=aKN7qMUF a
few minutes before the start of the call. The webcast will be
available on the Company’s website for replay beginning Wednesday,
August 7, 2024, following the conclusion of the call.
About EMCORE
EMCORE Corporation is a leading provider of
inertial navigation products for the aerospace and defense markets.
We leverage industry-leading Photonic Integrated Chip (PIC), Quartz
MEMS, and Lithium Niobate 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 facilities in Budd Lake, NJ,
Concord, CA, and Tinley Park, IL. Our manufacturing facilities all
maintain ISO 9001 quality management certification, and we are
AS9100 aerospace quality certified at our facilities in Budd Lake
and Concord. For further information about EMCORE, please visit
https://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,
including for gross profit, gross margin, operating expenses, and
net loss, as well as adjusted EBITDA. The Company has, regardless
of result, applied consistent rationale and methods when presenting
supplemental non-GAAP measures.
Management believes these supplemental non-GAAP
measures reflect the Company’s core ongoing operating performance
and facilitate 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: (a) they are unusual and the Company
does not expect them to recur in the ordinary course of its
business, (b) they do not involve the expenditure of cash, (c) they
are unrelated to the ongoing operation of the business in the
ordinary course, or (d) their magnitude and timing is largely
outside of the Company’s control. All of these items meet one or
more of the characteristics listed above. The criteria that must be
met for litigation-related expense to qualify as a non-GAAP measure
is that it must be directly connected to active litigation that the
Company infrequently encounters and is unrelated to the ongoing
operations of the business in the ordinary course. All legal
expenses related to the ordinary course of business are included in
the non-GAAP results consistently for all reporting periods. The
Company has, for all reporting periods disclosed in this press
release, applied consistent rationale, method, and adjustments in
reconciling non-GAAP measures to the most directly comparable GAAP
measure, reflecting the Company’s core ongoing operating
performance and facilitating comparisons across reporting periods
that the Company uses when evaluating its financial results,
planning and forecasting future periods, and that are useful to
investors in assessing our performance.
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
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, business outlook including expected revenue for 4Q24,
our strategy and focus, goals of our restructuring committee, 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 the
development of new products, future growth, 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) risks related to our ability to obtain capital and the terms of
any financing transaction that may be available to us, if at all,
and our ability to manage existing cash resources for operations;
(b) risks related to the Company’s restructuring activities,
including costs and expenses incurred in connection with such
activities and anticipated operational and cash cost savings,
including with respect to gross margin and operating expenses
arising from the restructuring actions; (c) risks related to the
Company’s compliance with the terms of the Forbearance Agreement
with Hale Capital, including, potential consequences of failure to
comply and third party costs incurred by the Company related to the
Forbearance Agreement; (d) risks related to the loss of personnel,
including changes in management; (e) risks related to the
conversion of order backlog into product revenue and the timing
thereof; (f) risks related to the recent sale of our Chips business
and Alhambra InP wafer fab assets, including without limitation (i)
the failure to achieve or fully realize the anticipated benefits of
the transaction, (ii) third party costs incurred by the Company
related to the transaction, and (iii) risks associated with
liabilities related to the transaction that were retained by the
Company in transaction; (g) risks related to the recent sale of our
Broadband and defense optoelectronics businesses, including without
limitation (i) the failure to fully realize the anticipated
benefits of such transaction, (ii) third party costs incurred by
the Company related to any such transaction, (iii) risks associated
with liabilities related to the transaction that were retained by
the Company, and (iv) risks and uncertainties related to the
transfer to the buyer of our manufacturing support and engineering
center in China; (h) rapidly evolving markets for the Company’s
products and uncertainty regarding the development of these
markets; (i) 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; (j) delays and other difficulties in
commercializing new products; (k) 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; (l) uncertainties
concerning the availability and cost of commodity materials and
specialized product components that we do not make internally; (m)
actions by competitors; (n) risks and uncertainties related to the
outcome of legal proceedings; (o) risks and uncertainties related
to applicable laws and regulations; (p) acquisition-related risks,
including that (i) the revenues and net operating results obtained
from our recent acquisitions may not meet our expectations, (ii)
the costs and cash expenditures for integration of our recent
acquisitions may be higher than expected, may take longer than
expected to implement and may result in fewer efficiencies and
improvements to the operation of our business and our financial
results than currently expected, (iii) we may not recognize the
anticipated synergies from our recent acquisitions, (iv) there
could be losses and liabilities arising from these acquisitions
that we will not be able to recover from any source, and (v) 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; and (q) 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,
2023, 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
Balance Sheets (unaudited) |
|
|
June 30, |
|
September 30, |
(in thousands) |
|
2024 |
|
|
|
2023 |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
8,477 |
|
|
$ |
26,211 |
|
Restricted cash |
|
495 |
|
|
|
495 |
|
Accounts receivable, net of credit loss of $309 and $356,
respectively |
|
14,531 |
|
|
|
15,575 |
|
Contract assets |
|
8,063 |
|
|
|
8,402 |
|
Inventory |
|
29,205 |
|
|
|
28,905 |
|
Prepaid expenses |
|
6,640 |
|
|
|
4,612 |
|
Other current assets |
|
318 |
|
|
|
922 |
|
Assets held for sale |
|
— |
|
|
|
7,264 |
|
Total current assets |
|
67,729 |
|
|
|
92,386 |
|
Property, plant, and equipment, net |
|
8,969 |
|
|
|
15,517 |
|
Operating lease right-of-use assets |
|
18,836 |
|
|
|
21,564 |
|
Other intangible assets, net |
|
10,772 |
|
|
|
12,245 |
|
Other non-current assets |
|
2,135 |
|
|
|
2,201 |
|
Total assets |
$ |
108,441 |
|
|
$ |
143,913 |
|
LIABILITIES and SHAREHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
10,016 |
|
|
$ |
9,683 |
|
Accrued expenses and other current liabilities |
|
7,821 |
|
|
|
8,471 |
|
Contract liabilities |
|
891 |
|
|
|
1,630 |
|
Financing payable |
|
888 |
|
|
|
460 |
|
Loan payable - current |
|
852 |
|
|
|
852 |
|
Operating lease liabilities - current |
|
3,056 |
|
|
|
3,033 |
|
Liabilities held for sale |
|
— |
|
|
|
4,662 |
|
Total current liabilities |
|
23,524 |
|
|
|
28,791 |
|
Line of credit |
|
— |
|
|
|
6,418 |
|
Loan payable - non-current |
|
7,548 |
|
|
|
3,330 |
|
Operating lease liabilities - non-current |
|
18,641 |
|
|
|
20,882 |
|
Asset retirement obligations |
|
4,376 |
|
|
|
4,194 |
|
Other long-term liabilities |
|
— |
|
|
|
8 |
|
Total liabilities |
|
54,089 |
|
|
|
63,623 |
|
Commitments and contingencies |
|
|
|
Shareholders’ equity: |
|
|
|
Common stock, no par value, 100,000 shares authorized; 9,755 shares
issued and 9,064 shares outstanding as of June 30, 2024; 8,401
shares issued and 7,711 shares outstanding as of September 30,
2023 |
|
830,295 |
|
|
|
825,119 |
|
Treasury stock at cost; 691 shares as of June 30, 2024 and
September 30, 2023 |
|
(47,721 |
) |
|
|
(47,721 |
) |
Accumulated other comprehensive income |
|
350 |
|
|
|
350 |
|
Accumulated deficit |
|
(728,572 |
) |
|
|
(697,458 |
) |
Total shareholders’ equity |
|
54,352 |
|
|
|
80,290 |
|
Total liabilities and shareholders’ equity |
$ |
108,441 |
|
|
$ |
143,913 |
|
|
EMCORE CORPORATION Condensed Consolidated
Statements of Operations (unaudited) |
|
|
Three Months EndedJune 30, |
|
Nine Months Ended June 30, |
(in thousands, except for per share data) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Revenue |
$ |
20,435 |
|
|
$ |
26,718 |
|
|
$ |
64,192 |
|
|
$ |
70,947 |
|
Cost of revenue |
|
15,422 |
|
|
|
19,458 |
|
|
|
49,844 |
|
|
|
54,447 |
|
Gross profit |
|
5,013 |
|
|
|
7,260 |
|
|
|
14,348 |
|
|
|
16,500 |
|
Operating expense: |
|
|
|
|
|
|
|
Selling, general, and administrative |
|
4,624 |
|
|
|
5,714 |
|
|
|
17,270 |
|
|
|
24,092 |
|
Research and development |
|
3,530 |
|
|
|
4,345 |
|
|
|
10,865 |
|
|
|
13,442 |
|
Restructuring |
|
1,347 |
|
|
|
— |
|
|
|
1,347 |
|
|
|
— |
|
Severance |
|
1,856 |
|
|
|
11 |
|
|
|
3,086 |
|
|
|
27 |
|
Impairment |
|
2,919 |
|
|
|
— |
|
|
|
3,007 |
|
|
|
— |
|
Gain on sale of assets |
|
— |
|
|
|
— |
|
|
|
(31 |
) |
|
|
(1,147 |
) |
Total operating expense |
|
14,276 |
|
|
|
10,070 |
|
|
|
35,544 |
|
|
|
36,414 |
|
Operating loss |
|
(9,263 |
) |
|
|
(2,810 |
) |
|
|
(21,196 |
) |
|
|
(19,914 |
) |
Other expense: |
|
|
|
|
|
|
|
Loss on extinguishment of debt |
|
(5,069 |
) |
|
|
— |
|
|
|
(5,069 |
) |
|
|
— |
|
Interest expense, net |
|
(179 |
) |
|
|
(194 |
) |
|
|
(255 |
) |
|
|
(604 |
) |
Other (expense) income |
|
(16 |
) |
|
|
4 |
|
|
|
(31 |
) |
|
|
128 |
|
Total other expense |
|
(5,264 |
) |
|
|
(190 |
) |
|
|
(5,355 |
) |
|
|
(476 |
) |
Loss from continuing operations before income tax expense |
|
(14,527 |
) |
|
|
(3,000 |
) |
|
|
(26,551 |
) |
|
|
(20,390 |
) |
Income tax expense from continuing operations |
|
— |
|
|
|
(28 |
) |
|
|
(114 |
) |
|
|
(176 |
) |
Net loss from continuing operations |
$ |
(14,527 |
) |
|
$ |
(3,028 |
) |
|
$ |
(26,665 |
) |
|
$ |
(20,566 |
) |
Loss from discontinued operations |
$ |
(2,413 |
) |
|
$ |
(6,829 |
) |
|
$ |
(4,449 |
) |
|
$ |
(13,212 |
) |
Net loss |
$ |
(16,940 |
) |
|
$ |
(9,857 |
) |
|
$ |
(31,114 |
) |
|
$ |
(33,778 |
) |
Per share data: |
|
|
|
|
|
|
|
Net loss on continuing operations per share, basic and diluted |
$ |
(1.60 |
) |
|
$ |
(0.56 |
) |
|
$ |
(2.96 |
) |
|
$ |
(4.52 |
) |
Net loss on discontinued operations per share, basic and
diluted |
$ |
(0.27 |
) |
|
$ |
(1.27 |
) |
|
$ |
(0.49 |
) |
|
$ |
(2.90 |
) |
Net loss per share, basic and diluted |
$ |
(1.87 |
) |
|
$ |
(1.83 |
) |
|
$ |
(3.45 |
) |
|
$ |
(7.42 |
) |
Weighted-average number of shares outstanding, basic and
diluted |
|
9,044 |
|
|
|
5,393 |
|
|
|
9,006 |
|
|
|
4,555 |
|
|
EMCORE CORPORATION Reconciliations of GAAP
to Non-GAAP Financial Measures
(unaudited) |
|
|
Three Months Ended |
|
Jun 30, 2024 |
|
Mar 31, 2024 |
(in thousands, except for percentages) |
3Q24 |
|
2Q24 |
Gross profit |
$ |
5,013 |
|
|
$ |
3,247 |
|
Gross margin |
|
25 |
% |
|
|
17 |
% |
Stock-based compensation expense |
|
70 |
|
|
|
(341 |
) |
Asset retirement obligation accretion |
|
61 |
|
|
|
61 |
|
Intangible asset amortization |
|
486 |
|
|
|
494 |
|
Compensation accrual adjustment |
|
(806 |
) |
|
|
(599 |
) |
Non-GAAP gross profit |
$ |
4,824 |
|
|
$ |
2,862 |
|
Non-GAAP gross margin |
|
24 |
% |
|
|
15 |
% |
|
Three Months Ended |
|
Jun 30, 2024 |
|
Mar 31, 2024 |
(in thousands) |
3Q24 |
|
2Q24 |
Operating expense |
$ |
14,276 |
|
|
$ |
10,870 |
|
Stock-based compensation expense |
|
1,182 |
|
|
|
(754 |
) |
Impairment expense |
|
(2,919 |
) |
|
|
(88 |
) |
Severance expense |
|
(1,856 |
) |
|
|
(1,019 |
) |
Restructuring expense |
|
(1,347 |
) |
|
|
— |
|
Compensation accrual adjustment |
|
506 |
|
|
|
874 |
|
Transition/M&A-related expense |
|
(615 |
) |
|
|
(98 |
) |
Litigation-related expense |
|
(156 |
) |
|
|
— |
|
Non-GAAP operating expense |
$ |
9,071 |
|
|
$ |
9,785 |
|
|
Three Months Ended |
|
Jun 30, 2024 |
|
Mar 31, 2024 |
(in thousands, except for per share data and percentages) |
3Q24 |
|
2Q24 |
Net loss from continuing operations |
$ |
(14,527 |
) |
|
$ |
(7,775 |
) |
Net loss from continuing operations per share, basic and
diluted |
$ |
(1.60 |
) |
|
$ |
(0.87 |
) |
Stock-based compensation expense |
|
(1,112 |
) |
|
|
413 |
|
Asset retirement obligation accretion |
|
61 |
|
|
|
61 |
|
Intangible asset amortization |
|
486 |
|
|
|
494 |
|
Impairment expense |
|
2,919 |
|
|
|
88 |
|
Severance expense |
|
1,856 |
|
|
|
1,019 |
|
Restructuring expense |
|
1,347 |
|
|
|
— |
|
Compensation accrual adjustment |
|
(1,312 |
) |
|
|
(1,473 |
) |
Transition/M&A-related expense |
|
615 |
|
|
|
98 |
|
Litigation-related expense |
|
156 |
|
|
|
— |
|
Loss on extinguishment of debt |
|
5,069 |
|
|
|
— |
|
Other (income) expense |
|
16 |
|
|
|
(1 |
) |
Income tax expense |
|
— |
|
|
|
86 |
|
Non-GAAP net loss from continuing operations |
$ |
(4,426 |
) |
|
$ |
(6,990 |
) |
Non-GAAP net loss from continuing operations per share, basic and
diluted |
$ |
(0.49 |
) |
|
$ |
(0.78 |
) |
Interest expense, net |
|
179 |
|
|
|
67 |
|
Depreciation expense |
|
670 |
|
|
|
1,154 |
|
Adjusted EBITDA |
$ |
(3,577 |
) |
|
$ |
(5,769 |
) |
Adjusted EBITDA % |
|
(18 |
%) |
|
|
(29 |
%) |
Contact: EMCORE Corporation Tom Minichiello Chief
Financial Officer investor@emcore.com
EMCORE (NASDAQ:EMKR)
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