EMCORE Corporation (Nasdaq: EMKR), a leading provider of compound semiconductor-based components and subsystems for the broadband, fiber optic, satellite, solar power and wireless communications markets, has announced its financial results for the fiscal 2006 third quarter ended June 30, 2006.
Revenues for the third quarter of fiscal 2006 were $42.0 million, an increase of 26% from the $33.2 million reported in the third quarter of fiscal 2005, and an increase of $0.8 million, or 2%, from the $41.2 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 $8.6 million, an increase of 28% from $6.7 million a year earlier. The gross margin of 21% is flat compared to the previous quarter. Included in cost of goods sold for the three and nine-month periods ended June 30, 2006 are $0.3 million and $0.7 million of stock-based compensation expense, respectively. No stock-based compensation expense was recognized in the previous year.
For the nine months ended June 30, 2006, revenues totaled $123.0 million, an increase of 36%, or $32.4 million as compared to the $90.6 million recorded for the nine months ended June 30, 2005.
Operating expenses totaled $13.3 million for the three months ended June 30, 2006, flat when compared to the previous quarter after elimination of a non-recurring charge of $2.7 million. However, the current quarter includes a final restructuring charge included in selling, general and administrative expenses of $0.6 million related to the facility closure in City of Industry, California.
The Company’s Photovoltaics operations are now entirely located in Albuquerque, New Mexico and annual savings of $3 million are expected. For the nine-month period ended June 30, 2006, operating expenses totaled $41.0 million, an increase of $9.2 million from the previous year. Included in operating expenses for the three and nine-month periods ended June 30, 2006 are $0.7 million and $2.4 million of stock-based compensation expense, respectively. No stock-based compensation expense was recognized in the previous year.
The Company reported an operating loss of $4.7 million for the three months ended June 30, 2006. Excluding the $1.0 million of stock-based compensation expense and the final facility shutdown costs of $0.6 million, the operating loss totaled $3.1 million, or $(0.06) per share. This compares to an operating loss of $3.4 million, or $(0.07) per share in the prior year after excluding $1.8 of severance and restructuring expenses, and an operating loss of $3.6 million, or $(0.07) per share in the prior quarter after deducting stock-based compensation expense of $0.9 million and loan forgiveness of $2.7 million.
EMCORE reported a net loss for the third quarter of fiscal 2006 of $5.9 million or $(0.12) per basic and diluted share. Excluding the stock-based compensation expense of $1.0 million, and the final facility shutdown costs of $0.6 million, the net loss is $4.3 million, or $(0.08) per share. GELcore, the Company’s joint venture with GE Lighting, incurred a loss for the quarter of $0.1 million, an improvement of $0.3 million from the previous quarter’s loss of $0.4 million. In the previous year, EMCORE’s quarterly net loss was $6.9 million, or $(0.15) per share. Excluding severance and restructuring expenses of $1.8 million the loss was $5.1 million, or $(0.11) per share. In the previous quarter, EMCORE’s quarterly net loss was $6.9 million, or $(0.14) per share. Excluding stock-based compensation expense of $0.9 million, loan forgiveness of $2.7 million, and a $2.0 million final earn-out payment from the sale of the Company’s equipment division in November 2003, the net loss was $5.3 million or $(0.11) per share.
Cash, cash equivalents and marketable securities at June 30, 2006 totaled approximately $25.3 million, a decrease of $8.6 million from the prior quarter. The decrease is attributable to the $2.5 million semi-annual interest payment on the Company’s outstanding convertible securities, $1.9 million for capital equipment purchases, $1.4 million related to the maturity of the Company’s 2006 subordinated securities, and unfavorable changes in working capital of approximately $3.0 million. Income before interest, taxes, depreciation, amortization and other non-cash items (adjusted EBITDA) was approximately $0.2 million, a decrease of $0.2 million as compared to adjusted EBITDA for the prior quarter.
Management Discussion and Outlook:
“Revenues of $42 million were in line with our estimate but our gross margins remained flat as fiber gross margins decreased due to increased revenues in our FTTX product line which yields a lower gross margin than the division average. Gross margins for both photovoltaics and electronic materials and devices increased due to increased volumes, product mix and better yields,” commented Mr. Reuben F. Richards Jr., President & CEO.
“On the terrestrial solar front, there were a number of key developments, including a contract with Sandia National Laboratories for the co-development of the next generation of grid-tied, utility scale, solar power systems. The sale of EMD will help increase gross margins and after further consolidation will save approximately $3 million annually,” Mr. Richards stated. “Looking ahead to the fiscal fourth quarter, we expect total revenues to increase approximately 10% from continuing operations,” Mr. Richards added.
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