North Coast Solar Stocks

August 17, 2009

EMCORE Corporation Announces Unaudited Results for Its Third Quarter Ended June 30, 2009

Filed under: EMKR — Tags: , , , , , , — Jason @ 4:00 pm

Company Generates Positive Cash Flow From Operations for the Quarter; Photovoltaics Business Segment Achieves Record Quarterly Profitability; Consolidated Order Backlog Increases by 62% to Approximately $50 Million

Monday August 17, 2009, 4:00 pm EDT

ALBUQUERQUE, NM–(Marketwire – 08/17/09) – EMCORE Corporation (EMKR), a leading provider of compound semiconductor-based components and subsystems for the fiber optics and solar power markets, today announced unaudited financial results for its fiscal third quarter and nine-month periods ended June 30, 2009.

Quarterly Results:

Revenue:

Revenue for the third quarter of fiscal 2009 was $38.5 million, a decrease of $4.8 million, or 11%, from $43.3 million reported in the immediately preceding quarter.

On a segment basis, third quarter revenue for the Photovoltaics segment was $16.1 million, an increase of $1.2 million, or 8%, from $14.9 million reported in the immediately preceding quarter with the increase due to greater demand for satellite solar power products. The Photovoltaics segment accounted for 42% of the Company’s consolidated third quarter revenue compared to 34% in the preceding second fiscal quarter.

Third quarter revenue for the Fiber Optics segment was $22.4 million, a decrease of $6.0 million, or 21%, from $28.4 million reported in the immediately preceding quarter with the decline in revenue concentrated primarily in the telecom and CATV product lines. The Fiber Optics segment accounted for 58% of the Company’s consolidated third quarter revenue compared to 66% in the preceding second fiscal quarter.

Gross Profit / (Loss):

After excluding certain adjustments, as set forth in the attached non-GAAP tables, the third quarter consolidated non-GAAP gross profit was $5.9 million, a $4.5 million improvement from $1.4 million reported in the preceding quarter with the corresponding non-GAAP gross margin increasing to 15.3% from 3.3% in the preceding quarter. On a GAAP basis, the consolidated gross loss for the third quarter was $2.4 million, an improvement of $4.6 million from a $7.0 million gross loss reported in the preceding quarter. During the quarter, the Company recorded approximately $6.4 million in non-cash losses on firm inventory purchase commitments and $1.9 million in non-cash inventory reserve adjustments in its Fiber Optics segment, both of which adversely impacted gross profit and margins.

On a segment basis, third quarter Photovoltaics non-GAAP gross margin was a record 33.9%, a significant increase from a 20.5% gross margin reported in the preceding quarter with the improvement due primarily to increased sales of higher margin satellite solar panels along with improved manufacturing yields on solar cells. The third quarter marks the second consecutive quarter of sequentially improved non-GAAP gross margins in the Photovoltaics segment. On a GAAP basis, the third quarter Photovoltaic gross margin mirrored the non-GAAP gross margin at 33.9% compared to a negative 24.7% gross margin in the preceding quarter.

Third quarter Fiber Optics non-GAAP gross margin was 1.8%, an increase from a negative 5.7% gross margin reported in the preceding quarter with the improvement due primarily to higher margins in the Company’s broadband product lines. On a GAAP basis, third quarter Fiber Optics gross margin was negative 35.2%, a decrease from a negative 11.7% gross margin reported in the preceding quarter with the decline due primarily to non-cash losses recorded on firm inventory purchase commitments which will become excess and/or obsolete, non-cash inventory valuation write-downs and unabsorbed overhead expenses, the result of lower revenue levels.

Operating Expenses:

Sales, general, and administrative expenses for the third quarter totaled $10.9 million, a decrease of $1.1 million, or 9%, from $12.0 million reported in the preceding quarter. Research and development expenses for the third quarter totaled $5.7 million, a decrease of $1.2 million, or 18%, from $6.9 million reported in the preceding quarter. As a result of the Company’s on-going cost reduction initiatives, SG&A expenses declined sequentially in each of the last two fiscal quarters while R&D expenses declined in each of the last four fiscal quarters.

Impairment:

During the three months ended June 30, 2009, the Company performed an evaluation of its Fiber Optics assets for impairment as required by Statement of Financial Accounting Standard No. 144. As a result of the evaluation, it was determined that impairment existed, and a charge of $27.0 million was recorded to write down the long-lived assets to estimated fair value, which was determined based on a combination of guideline public company comparisons and discounted estimated future cash flows.

The current economic and financial market conditions had a significant negative effect on the Company’s assessment of the fair value of the Fiber Optics asset groups. The magnitude of the impairment charge resulted from the effects of recent declines in market values of comparable public companies’ debt and equity securities and the combined effect of the current slowdown in product orders and lower product pricing exacerbated by currently high discount rates used in estimating fair values.

Operating and Net Loss:

After excluding certain non-cash and other adjustments, as set forth in the attached non-GAAP tables, the third quarter consolidated non-GAAP operating loss was $7.2 million, a $7.4 million, or 51%, improvement from a $14.6 million operating loss reported in the preceding quarter. On a GAAP basis, the third quarter consolidated operating loss was $46.0 million, a $20.1 million increase from an operating loss of $25.9 million reported in the preceding quarter.

After excluding certain non-cash and other adjustments, as set forth in the attached non-GAAP tables, the third quarter consolidated non-GAAP net loss was $7.3 million, a $7.4 million, or 50%, improvement from a $14.7 million net loss reported in the preceding quarter. On a GAAP basis, the consolidated net loss for the third quarter was $45.4 million, a $21.6 million increase from a net loss of $23.7 million reported in the preceding quarter.

On a per share basis, the third quarter non-GAAP net loss per share was $0.09, an improvement of $0.10 per share from a $0.19 loss per share reported in the preceding quarter. On a GAAP basis, the third quarter net loss per share was $0.57, an increase of $0.27 per share from a $0.30 net loss per share reported in the preceding quarter.

Cash Flow:

On a consolidated basis, the Company generated positive cash flow from operations during the third quarter due to the combination of a lower cash operating loss and the continuation of improved working capital management.

Order Backlog:

As of June 30, 2009, the Company had a consolidated order backlog of approximately $49.6 million, an $18.9 million, or 62%, increase from a $30.7 million order backlog reported as of the end of the preceding quarter. On a segment basis, the quarter-end Photovoltaics order backlog totaled $36.2 million, a $16.4 million, or 83%, increase from $19.8 million reported as of the end of the preceding quarter. The quarter-end Fiber Optics order backlog totaled $13.4 million, a $2.5 million, or 23% increase from $10.9 million reported as of the end of the preceding quarter. Order backlog is defined as purchase orders or supply agreements accepted by the Company with expected product delivery and / or services to be performed within the next twelve months.

Liquidity and Balance Sheet Highlights:

— As of June 30, 2009, cash, cash equivalents, and restricted cash totaled approximately $9.9 million and working capital totaled $45.3 million.

— During the third quarter, the Company generated positive cash flow from operations and positive free cash flow, net of capital expenditures.

— Over the last two quarters, the Company generated $15.9 million from the reduction in inventory levels and $15.4 million from the collection of accounts receivable while, at the same time, lowering its accounts payable obligations by $23.6 million.

— Over the last two quarters, the Company has reduced the amount of debt outstanding under its line of credit with Bank of America by $10.5 million, to $5.0 million at the end of the third quarter, and is in full compliance with its bank financial covenants.

In addition to continuing to focus on improving profitability and managing its working capital, the Company continues to pursue and evaluate a number of capital raising alternatives including debt and/or equity financings, product joint-venture opportunities and the potential separation or divestiture of certain portions of the Company’s business. Subsequent to the end of the third quarter, the Company filed a Form S-3 Registration Statement with the Securities and Exchange Commission that provides for up to $50 million in debt and/or equity securities.

Business Outlook:

For the fourth quarter of fiscal 2009, ending September 30, 2009, the Company expects consolidated revenue to be in the range of $38 to $42 million and expects to generate positive cash flow from operations.

Conference Call:

EMCORE will discuss its unaudited results for its fiscal third quarter and nine-month period ended June 30, 2009 on a conference call to be held on Monday, August 17, 2009 at 5:00 pm ET. To participate in the conference call, U.S. callers should dial (toll free) 800-930-1344 and international callers should dial 913-312-0847. The access code for the call is 4504248. A replay of the call will be available beginning August 17, 2009 at 8:30p.m. ET until August 24, 2009 at 11:59 p.m. ET. The replay call-in number for U.S. callers is 888-203-1112, for international callers it is 719-457-0820 and the access code is 4504248. 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.

                            EMCORE CORPORATION
              Condensed Consolidated Statements of Operations
        For the three and nine months ended June 30, 2009 and 2008
                  (in thousands, except loss per share)
                                (unaudited)

                              Three Months Ended      Nine Months Ended
                                   June 30,                June 30,
                            ----------------------  ----------------------
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------

Revenue                         38,489      75,502     135,829     178,668

Cost of revenue                 40,917      61,856     143,673     148,271
                            ----------  ----------  ----------  ----------

      Gross (loss) profit       (2,428)     13,646      (7,844)     30,397

Operating expenses:
  Selling, general, and
   administrative               10,914      13,906      35,039      36,032
  Research and development       5,654      11,382      20,655      28,132
  Impairments                   27,000           -      60,781           -
                            ----------  ----------  ----------  ----------
    Total operating
     expenses                   43,568      25,288     116,475      64,164
                            ----------  ----------  ----------  ----------

      Operating loss           (45,996)    (11,642)   (124,319)    (33,767)

Other (income) expense:
  Interest income                   (3)       (124)        (83)       (778)
  Interest expense                 105           -         443       1,580
  Impairment of investment           -           -         366           -
  Loss from conversion of
   subordinated notes                -           -           -       4,658
  Stock-based expense from
   tolled options                    -           -           -       4,316
  Gain from sale of
   investments                       -      (3,692)     (3,144)     (3,692)
  Loss on disposal of
   equipment                         -           -           -          86
  Foreign exchange (gain)
   loss                           (745)       (104)        635        (302)
                            ----------  ----------  ----------  ----------
    Total other (income)
     expense                      (643)     (3,920)     (1,783)      5,868
                            ----------  ----------  ----------  ----------

      Net loss              $  (45,353) $   (7,722) $ (122,536) $  (39,635)
                            ==========  ==========  ==========  ==========

Per share data:
Basic and diluted per share
 data:
      Net loss              $    (0.57) $    (0.10) $    (1.56) $    (0.62)
                            ==========  ==========  ==========  ==========

Weighted-average number of
 basic and diluted shares
 outstanding                    79,700      76,582      78,632      64,155
                            ==========  ==========  ==========  ==========

                            EMCORE CORPORATION
                  Condensed Consolidated Balance Sheets
                As of June 30, 2009 and September 30, 2008
                              (In thousands)
                                (unaudited)

                                                     June 30, September 30,
                                                       2009        2008
                                                    ----------  ----------
                             ASSETS
Current assets:
  Cash and cash equivalents                         $    9,386  $   18,227
  Restricted cash                                          366       1,854
  Available-for-sale securities                          1,400       2,679
  Accounts receivable                                   41,892      60,313
  Inventory, net                                        39,503      64,617
  Prepaid expenses and other current assets              4,424       7,100
                                                    ----------  ----------

     Total current assets                               96,971     154,790

Property, plant, and equipment, net                     57,695      83,278
Goodwill                                                20,384      52,227
Other intangible assets, net                            13,539      28,033
Investments in unconsolidated affiliates                     -       8,240
Available-for-sale securities, non-current                   -       1,400
Long-term restricted cash                                  163         569
Other non-current assets, net                              802         741
                                                    ----------  ----------

        Total assets                                $  189,554  $  329,278
                                                    ==========  ==========

               LIABILITIES and SHAREHOLDERS EQUITY
Current liabilities:
  Line of credit                                    $    4,984  $        -
  Short-term debt                                          889           -
  Accounts payable                                      21,861      52,266
  Accrued expenses and other current liabilities        23,909      23,290
                                                    ----------  ----------

     Total liabilities                                  51,643      75,556

Commitments and contingencies

Shareholders equity:
  Preferred stock, $0.0001 par, 5,882 shares
   authorized, no shares outstanding                         -           -
  Common stock, no par value, 200,000 shares
   authorized, 80,647 shares issued and 80,488
   outstanding at June 30, 2009; 77,920 shares
   issued and 77,761 shares outstanding at
   September 30, 2008                                  686,392     680,020
  Accumulated deficit                                 (547,300)   (424,764)
  Accumulated other comprehensive income                   902         549
  Treasury stock, at cost; 159 shares as of June 30,
   2009 and September 30, 2008                          (2,083)     (2,083)
                                                    ----------  ----------

     Total shareholders equity                        137,911     253,722
                                                    ----------  ----------

        Total liabilities and shareholders equity  $  189,554  $  329,278
                                                    ==========  ==========
Non-GAAP Table
Gross profit (loss) and margin
Unaudited
(in thousands, except
percentages)

                    Three Months Ended             Three Months Ended
                       March 31, 2009                June 30, 2009
                ----------------------------  ----------------------------
                 Fiber   Photovol-            Fiber    Photovol-
                 Optics   taics      Total    Optics    taics     Total
               --------  --------  --------  --------  --------  --------

Gross (loss)
 profit - GAAP $ (3,330) $ (3,675) $ (7,005) $ (7,889) $  5,461  $ (2,428)

Specific
 adjustments:
  Inventory
   valuation      1,468     5,663     7,131     1,919         -     1,919
  Loss on
   commitments        -         -         -     6,380         -     6,380
  Product
   warranty         248     1,056     1,304         -         -         -
               --------  --------  --------  --------  --------  --------

Gross (loss)
 profit -
 Non-GAAP      $ (1,614) $  3,044  $  1,430  $    410  $  5,461  $  5,871
               ========  ========  ========  ========  ========  ========

Gross margin -
 GAAP             (11.7%)   (24.7%)   (16.2%)   (35.2%)    33.9%     (6.3%)
               ========  ========  ========  ========  ========  ========

Gross margin -
 Non-GAAP          (5.7%)    20.5%      3.3%      1.8%     33.9%     15.3%
               ========  ========  ========  ========  ========  ========

Non-GAAP Table                                Three Months    Three Months
Operating Loss                               Ended March 31, Ended June 30,
Unaudited                                          2009          2009
(in thousands)                                -------------  -------------

Operating loss - GAAP                         $     (25,862) $     (45,996)

Specific adjustments:
  Impairments                                             -         27,000
  Provision for doubtful accounts                     1,717          2,112
  Corporate legal expense                               836          1,325
  Severance and restructuring-related expense           294             57
  Inventory valuation adjustments                     7,131          1,919
  Loss on commitments                                     -          6,380
  Product warranty adjustments                        1,304              -
                                              -------------  -------------

  Operating loss - Non-GAAP                   $     (14,580) $      (7,203)
                                              =============  =============

Non-GAAP Table                                Three Months   Three Months
Net Loss                                     Ended March 31, Ended June 30,
Unaudited                                          2009          2009
(in thousands)                                -------------  -------------

Net loss - GAAP                               $     (23,739) $     (45,353)

Specific adjustments:
  Impairments                                             -         27,000
  Provision for doubtful accounts                     1,717          2,112
  Corporate legal expense                               836          1,325
  Severance and restructuring-related expense           294             57
  Inventory valuation adjustments                     7,131          1,919
  Loss on commitments                                     -          6,380
  Product warranty adjustments                        1,304              -
  Gain from sale of investments                      (3,144)             -
  Foreign exchange (gain) loss                          908           (745)
                                              -------------  -------------

  Net loss - Non-GAAP                         $     (14,693) $      (7,305)
                                              =============  =============

  Net loss per basic and diluted share -
   GAAP                                       $       (0.30) $       (0.57)
                                              =============  =============

  Net loss per basic and diluted share -
   Non-GAAP                                   $       (0.19) $       (0.09)
                                              =============  =============

Contact:

Contacts:
EMCORE Corporation
Silvia M. Gentile
Executive Offices
(505) 323-3417
Email Contact
TTC Group
Victor Allgeier
(646) 290-6400
Email Contact
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