Press Releases
NeoPhotonics Announces Preliminary Financial Results for the Fourth Quarter
SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 14, 2019--
NeoPhotonics Corporation (NYSE: NPTN), a leading designer and
manufacturer of optoelectronic solutions for the highest speed
communications networks in telecom and datacenter applications, today
announced preliminary fourth quarter results which reflect recent
developments including the end-of-life of certain client transceiver
modules, a legal settlement and the signing of a definitive agreement to
sell its manufacturing operations in Russia.
The Company has announced the end-of-life of certain client transceiver
modules and therefore will discontinue the manufacture and sale of those
products after completing last time production runs through May 2019.
This will result in approximately $3.5 million in charges for inventory
and asset write-downs in the fourth quarter of 2018 and accelerated
depreciation of approximately $3.0 million, to be amortized over the
final production during the first and second quarters of 2019. These
products contributed approximately $10 million of revenue in 2018.
Further, the Company has entered into an agreement to settle its lawsuit
with Lestina International, Ltd. with a cash payment of $2.2 million.
The expense will be recognized in the fourth quarter of 2018. As
disclosed in the Company’s recent 10-Q filings, the lawsuit is pursuant
to a purchase commitment for materials related to the product assets
sold by one of our foreign subsidiaries to APAT Optoelectronics
Components Co., Ltd. in January 2017.
Additionally, the Company has entered into a definitive agreement to
sell its manufacturing operations in Russia for approximately book
value. This is consistent with the financials disclosed in the Company’s
10-Q filing for the quarter ended September 30, 2018.
Taken together, these actions are expected to reduce cost of goods sold
by an amount approximately equivalent to one percentage point of
non-GAAP gross margin beginning in the first quarter of 2019.
Including these factors, preliminary results for the quarter ended
December 31, 2018 are anticipated as follows:
-
Revenue is expected to be in the range of $90 to $92 million, compared
to the previously announced expectation of $87 to $92 million
-
Gross margin of approximately 24%-25%, compared to the previous
expectation of 22%-26%
-
Non-GAAP gross margin of 27% to 29%, compared to a previous
expectation of 24%-28%
-
Total restructuring and other charges of approximately $5.7 million,
including restructuring costs, inventory write-downs and legal
settlement expenses
-
Diluted Net loss per share of $0.18 to $0.15, inclusive of
restructuring charges
-
Non-GAAP earnings per share in the range of $0.00 to earnings of $0.04.
“As a Company, we remain committed to our core capabilities, including
our industry leading coherent components and solutions for data center
interconnect and telecommunications systems,” said Tim Jenks, Chairman
and CEO of NeoPhotonics. “These actions will complete our move from
module to component level solutions for client network applications and
will further increase our focus on our more profitable, industry leading
platforms for 400 Gigabits/sec to beyond 1 Terabit/sec on a single
wavelength, in which our advanced hybrid photonic integration technology
provides the highest value,” concluded Mr. Jenks.
Revised Outlook for the Quarter Ending December 31, 2018
| | | GAAP | | | Non-GAAP |
Revenue | | |
$90 to $92 million |
| Gross Margin | | |
24%-25% | | |
27%-29% |
| Earnings per share | | |
Net loss $0.18 to $0.15 | | |
Net Income $0.00 to $0.04 |
The Non-GAAP revised outlook for the fourth quarter of 2018 excludes the
impact of the litigation settlement of $2.2 million, the expected
restructuring charges of $1.0 million of assets, end-of-life inventory
write-downs of $2.6 million, the anticipated impact of stock-based
compensation of approximately $3.6 million, of which $0.8 million is
estimated for cost of goods sold, amortization of acquisition related
intangibles and other disposition related costs of $0.3 million.
Non-GAAP and Adjusted EBITDA Measures vs. GAAP Financial Measures
The Company’s non-GAAP and adjusted EBITDA measures exclude certain GAAP
financial measures. These non-GAAP financial measures differ from GAAP
measures with the same captions and may differ from non-GAAP financial
measures with the same or similar captions that are used by other
companies. As such, these non-GAAP measures should be considered as a
supplement to, and not as a substitute for, or superior to, financial
measures calculated in accordance with GAAP. For forward-looking
information, the Company provides reconciliations to comparable GAAP
measures in relation to non-GAAP financial measures to the extent
available unless to do so would require unreasonable efforts. For the
projected improvement to non-GAAP gross margin beginning in the first
quarter of 2019 referenced above, a reconciliation to the comparable
forward-looking GAAP measure is not available without unreasonable
effort. This is due to the inherent difficulty of forecasting the timing
or amount of various items that would impact the most directly
comparable forward-looking GAAP measure, that have not yet occurred, are
out of the Company’s control and/or cannot be reasonably predicted. For
the same reasons, the Company is unable to address the probable
significance of the unavailable information.
The Company uses these non-GAAP financial measures to analyze its
operating performance and future prospects, develop internal budgets and
financial goals, and to facilitate period-to-period comparisons.
NeoPhotonics believes that these non-GAAP financial measures reflect an
additional way of viewing aspects of its operations that, when viewed
with its GAAP results, provide a more complete understanding of factors
and trends affecting its business.
About NeoPhotonics
NeoPhotonics is a leading designer and manufacturer of optoelectronic
solutions for the highest speed communications networks in telecom and
datacenter applications. The Company’s products enable cost-effective,
high-speed data transmission and efficient allocation of bandwidth over
communications networks. NeoPhotonics maintains headquarters in San
Jose, California and ISO 9001:2000 certified engineering and
manufacturing facilities in Silicon Valley (USA), Japan and China. For
additional information visit www.neophotonics.com.
Safe Harbor Statement Under the Private Securities Litigation Reform
Act of 1995
This press release includes statements that qualify as forward-looking
statements under the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include statements about the following
topics: final fourth quarter financial results, future financial
results, benefits of the restructuring actions, demand for the Company’s
high-speed products, and the Company’s market position. Forward-looking
statements are subject to certain risks and uncertainties that could
cause the actual results to differ materially. Those risks and
uncertainties include, but are not limited to, such factors as: the
Company’s reliance on a small number of customers for a substantial
portion of its revenues; market growth in China and other key countries;
U.S.-China trade relations, possible reduction in or volatility of
customer orders or delays in shipments of products to customers; timing
of customer drawdowns of vendor-managed inventory; potential
governmental trade actions; possible disruptions in the supply chain or
in demand for the Company’s products due to industry developments; the
ability of the Company's vendors and subcontractors to supply or
manufacture the Company's products in a timely manner; ability of the
Company to meet customer demand; volatility in utilization of
manufacturing operations and manufacturing costs; reductions in the
Company’s rate of new design wins, and/or the rate at which design wins
go into production, and the rate of customer acceptance of new product
introductions; potential pricing pressure that may arise from changing
supply or demand conditions in the industry; the impact of any previous
or future acquisitions or divestitures of assets and related product
lines; challenges involving integration of acquired businesses and
utilization of acquired technology; the discontinuance or end of life of
certain other products; market adoption, revenue growth and margins of
acquired products; changes in demand for the Company's products; the
impact of competitive products and pricing and alternative technological
advances; the accuracy of estimates used to prepare the Company's
financial statements and forecasts; the timely and successful
development and market acceptance of new products and upgrades to
existing products; the difficulty of predicting future cash needs; the
nature of other investment opportunities available to the Company from
time to time; the Company’s operating cash flow; changes in economic and
industry projections; a decline in general conditions in the
telecommunications equipment industry or the world economy generally;
and the effects of seasonality. For further discussion of these risks
and uncertainties, please refer to the documents the Company files with
the SEC from time to time, including the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2018. All forward-looking
statements are made as of the date of this press release, and the
Company disclaims any duty to update such statements.
©2019 NeoPhotonics Corporation. All rights reserved. NeoPhotonics and
the red dot logo are trademarks of NeoPhotonics Corporation. All other
marks are the property of their respective owners.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190114005256/en/
Source: NeoPhotonics Corporation
NeoPhotonics Corporation
Beth Eby, Chief Financial Officer
+1-408-895-6086
ir@neophotonics.com
Sapphire Investor Relations, LLC
Erica Mannion, Investor Relations
+1-617-542-6180
ir@neophotonics.com
