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NeoPhotonics Reports Third Quarter 2012 Financial Results Including Record Quarterly Revenue
- NeoPhotonics Returns to Profitability with Record Revenue
- Gross Margin Continues Rise to 31.2%
- Revenue Grows 54% Compared to Year-Ago Period
- Continued Growth from 40/100G Products
“We are very pleased with our performance in the third quarter
delivering 54% year-over-year revenue growth, and returning to
profitability ahead of our initial projection schedule made at the time
of the Santur acquisition,” said
Highlights for the Third Quarter of 2012
-
Revenue was
$66.2 million , up$3.1 million , or 5%, from the prior quarter & up$23.3 million , or 54%, from the third quarter 2011 - Gross margin was 31.2%, up from 24.8% in the prior quarter & 28.1% in the third quarter 2011
- Non-GAAP gross margin was 32.9%, up from 26.5% in the prior quarter & 27.8% in the third quarter 2011
-
Income from continuing operations was
$0.7 million , up$4.4 million from the prior quarter’s loss of$3.7 million and up from a loss of$4.2 million in the third quarter 2011 -
Non-GAAP income from continuing operations was
$2.7 million , up$4.4 million from the prior quarter’s loss of$1.7 million and up from a loss of$3.2 million in the third quarter 2011 -
Diluted income per share from continuing operations was
$0.02 , up from a loss of$0.13 in the prior quarter & a loss of$0.17 in the third quarter 2011 -
Non-GAAP diluted income per share from continuing operations was
$0.08 , up from a loss of$0.06 in the prior quarter & a loss of$0.13 in the third quarter 2011 -
Adjusted EBITDA was
$6.4 million , up from$1.8 million in the prior quarter & an adjusted EBITDA loss of$0.5 million in the third quarter 2011
Total cash, cash equivalents and short-term investments was
A reconciliation of GAAP financial measures to Non-GAAP financial measures is attached to this press release. See “Use of Non-GAAP Financial Information” below for a description of these Non-GAAP financial measures.
Outlook for the Quarter Ending
The company’s current expectations for the fourth quarter 2012 are:
-
Revenue in the range of
$58 million to $62 million , primarily reflecting seasonality in the business - Non-GAAP gross margin in the range of 29% to 31%, primarily depending on product mix and the impact of pricing negotiations that take place in the quarter
-
Diluted loss per share from continuing operations in the range of
$0.06 to $0.13 , and on a Non-GAAP basis in the range of break-even to plus or minus$0.05 per share.
The Non-GAAP outlook excludes the expected amortization of intangibles
and other assets of approximately
The company’s current expectations for the full year of 2013 are for revenue growth in the range of 8% to 10% over 2012, and with that level of growth, profitability on an annual basis.
Conference Call
The Company will discuss these financial results in a conference call at
About
© 2012
Forward Looking Statements
The statements in this press release under the heading “Outlook for the
Quarter Ending
Use of Non-GAAP Financial Information
The Company provides Non-GAAP gross margin, Non-GAAP net income (loss), Non-GAAP diluted net income (loss) per share and adjusted EBITDA, as supplemental information. In computing certain of these Non-GAAP financial measures, the company excludes certain items included under GAAP, including stock-based compensation expense, amortization of purchased intangible assets, amortization of acquisition-related fixed asset set-up, acquisition-related costs, restructuring charges, fair value adjustment to contingent consideration, and the related tax effects of Non-GAAP adjustments. In computing adjusted EBITDA, the company also excludes interest income and expense, provision for income taxes and depreciation expense.
Management uses these Non-GAAP financial measures to evaluate the operating performance of the business and aid in the period-to-period comparability. Management also uses the Non-GAAP financial measures for planning and forecasting and measuring results against its forecast. Using several measures to evaluate the business allows the company and investors to assess the company’s relative performance and ultimately monitor the company’s capacity to generate returns for its stockholders. The Non-GAAP financial measures provided herein may not provide information that is directly comparable to that provided by other companies in the company’s industry, as other companies may calculate such financial results differently. The company’s Non-GAAP financial measures are not measurements of financial performance under GAAP, and should not be considered as alternatives to the financial measures derived in accordance with GAAP. The company does not consider these Non-GAAP financial measures to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of the Non-GAAP financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion of this press release.
| NeoPhotonics Corporation | ||||||||||||
| Consolidated Statements of Operations (Unaudited) | ||||||||||||
| (In thousands, except percentages, share and per share data) | ||||||||||||
| Three Months Ended | ||||||||||||
| Sep. 30, | Jun. 30, | Sep. 30, | ||||||||||
| 2012 | 2012 | 2011 | ||||||||||
| Revenue | $ | 66,152 | $ | 63,025 | $ | 42,848 | ||||||
| Cost of goods sold (1) | 45,536 | 47,420 | 30,827 | |||||||||
| Gross profit | 20,616 | 15,605 | 12,021 | |||||||||
| 31.2 | % | 24.8 | % | 28.1 | % | |||||||
| Operating expenses: | ||||||||||||
| Research and development (1) | 9,893 | 9,322 | 7,059 | |||||||||
| Sales and marketing (1) | 3,354 | 3,406 | 3,103 | |||||||||
| General and administrative (1) | 6,770 | 6,721 | 5,877 | |||||||||
| Amortization of purchased intangible assets | 321 | 321 | 104 | |||||||||
| Adjustment to fair value of contingent consideration | (850 | ) | (1,303 | ) | - | |||||||
| Total operating expenses | 19,488 | 18,467 | 16,143 | |||||||||
| Income (loss) from operations | 1,128 | (2,862 | ) | (4,122 | ) | |||||||
| Interest income | 147 | 145 | 76 | |||||||||
| Interest expense | (135 | ) | (145 | ) | (52 | ) | ||||||
| Other income (expense), net | 154 | (417 | ) | 191 | ||||||||
| Total interest and other income (expense), net | 166 | (417 | ) | 215 | ||||||||
| Income (loss) before income taxes | 1,294 | (3,279 | ) | (3,907 | ) | |||||||
| Provision for income taxes | (571 | ) | (377 | ) | (258 | ) | ||||||
| Income (loss) from continuing operations | 723 | (3,656 | ) | (4,165 | ) | |||||||
| Income from discontinued operations, net of tax | - | - | 75 | |||||||||
| Net income (loss) | $ | 723 | $ | (3,656 | ) | $ | (4,090 | ) | ||||
| Net income (loss) per share—Basic: | ||||||||||||
| Continuing operations | $ | 0.02 | $ | (0.13 | ) | $ | (0.17 | ) | ||||
| Discontinued operations | $ | - | $ | - | $ | 0.00 | ||||||
| Net income (loss) | $ | 0.02 | $ | (0.13 | ) | $ | (0.17 | ) | ||||
| Net income (loss) per share—Diluted: | ||||||||||||
| Continuing operations | $ | 0.02 | $ | (0.13 | ) | $ | (0.17 | ) | ||||
| Discontinued operations | $ | - | $ | - | $ | 0.00 | ||||||
| Net income (loss) | $ | 0.02 | $ | (0.13 | ) | $ | (0.17 | ) | ||||
| Weighted average shares used to compute net income (loss) per share: | ||||||||||||
| Basic | 30,215,144 | 28,402,929 | 24,744,417 | |||||||||
| Diluted | 30,611,304 | 28,402,929 | 24,744,417 | |||||||||
| (1) Includes stock-based compensation expense (credit) as follows for the periods presented: | ||||||||||||
| Cost of goods sold | $ | 228 | $ | 136 | $ | (133 | ) | |||||
| Research and development | 404 | 395 | 216 | |||||||||
| Sales and marketing | 242 | 205 | 173 | |||||||||
| General and administrative | 408 | 273 | 224 | |||||||||
| Total stock-based compensation expense | $ | 1,282 | $ | 1,009 | $ | 480 | ||||||
| NeoPhotonics Corporation | ||||||||
| Consolidated Balance Sheets (Unaudited) | ||||||||
| (In thousands) | ||||||||
| As of | ||||||||
| Sep. 30, | Dec. 31, | |||||||
| 2012 | 2011 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash, cash equivalents and short-term investments | $ | 105,875 | $ | 86,384 | ||||
| Restricted cash | 2,739 | 3,227 | ||||||
| Accounts receivable, net | 68,816 | 68,877 | ||||||
| Inventories | 44,092 | 35,341 | ||||||
| Prepaid expenses and other current assets | 7,927 | 5,882 | ||||||
| Current assets held-for-sale | - | 1,687 | ||||||
| Total current assets | 229,449 | 201,398 | ||||||
| Long-term investments | 162 | 92 | ||||||
| Property, plant and equipment, net | 54,016 | 56,344 | ||||||
| Other intangible assets, net | 15,148 | 17,999 | ||||||
| Other long-term assets | 1,043 | 1,049 | ||||||
| Long-term assets held-for-sale | - | 167 | ||||||
| Total assets | $ | 299,818 | $ | 277,049 | ||||
| LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 37,683 | $ | 37,599 | ||||
| Notes payable | 11,098 | 14,620 | ||||||
| Current portion of long-term debt | 5,000 | 5,000 | ||||||
| Accrued and other current liabilities | 22,323 | 18,299 | ||||||
| Current liabilities held-for-sale | - | 1,681 | ||||||
| Total current liabilities | 76,104 | 77,199 | ||||||
| Long-term debt, net of current portion | 18,417 | 22,166 | ||||||
| Deferred income tax liabilities | 650 | 927 | ||||||
| Other noncurrent liabilities | 1,720 | 3,103 | ||||||
| Total liabilities | 96,891 | 103,395 | ||||||
| Redeemable common stock | 5,000 | - | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 76 | 62 | ||||||
| Additional paid-in capital | 431,730 | 392,792 | ||||||
| Accumulated other comprehensive income | 11,215 | 11,353 | ||||||
| Accumulated deficit | (245,094 | ) | (230,553 | ) | ||||
| Total stockholders' equity | 197,927 | 173,654 | ||||||
| Total liabilities, redeemable common stock and stockholders' equity | $ | 299,818 | $ | 277,049 | ||||
| NeoPhotonics Corporation | ||||||||||||
| Reconciliation of Consolidated GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited) | ||||||||||||
| (In thousands, except percentages, share and per share data) | ||||||||||||
| Three Months Ended | ||||||||||||
| Sep. 30, | Jun. 30, | Sep. 30, | ||||||||||
| 2012 | 2012 | 2011 | ||||||||||
| NON-GAAP GROSS PROFIT: | ||||||||||||
| GAAP gross profit | 20,616 | 15,605 | 12,021 | |||||||||
| Stock-based compensation expense | 228 | 136 | (133 | ) | ||||||||
| Amortization of purchased intangible assets | 616 | 616 | 7 | |||||||||
| Amortization of acquisition-related fixed asset step-up | 243 | 259 | - | |||||||||
| Acquisition-related costs | 40 | 70 | - | |||||||||
| Non-GAAP gross profit | $ | 21,743 | $ | 16,686 | $ | 11,895 | ||||||
| Non-GAAP gross margin (% of revenue) | 32.9 | % | 26.5 | % | 27.8 | % | ||||||
| NON-GAAP INCOME (LOSS) FROM CONTINUING OPERATIONS: | ||||||||||||
| GAAP income (loss) from continuing operations | 723 | (3,656 | ) | (4,165 | ) | |||||||
| Stock-based compensation expense | 1,282 | 1,009 | 480 | |||||||||
| Amortization of purchased intangible assets | 937 | 937 | 111 | |||||||||
| Amortization of acquisition-related fixed asset step-up | 386 | 420 | - | |||||||||
| Acquisition-related costs | 240 | 858 | 336 | |||||||||
| Restructuring charges | 2 | 27 | - | |||||||||
| Fair value adjustment to contingent consideration | (850 | ) | (1,303 | ) | - | |||||||
| Income tax effect of Non-GAAP adjustments | (67 | ) | (31 | ) | (6 | ) | ||||||
| Non-GAAP income (loss) from continuing operations | $ | 2,653 | $ | (1,739 | ) | $ | (3,244 | ) | ||||
| ADJUSTED EBITDA: | ||||||||||||
| GAAP income (loss) from continuing operations | 723 | (3,656 | ) | (4,165 | ) | |||||||
| Stock-based compensation expense | 1,282 | 1,009 | 480 | |||||||||
| Amortization of purchased intangible assets | 937 | 937 | 111 | |||||||||
| Amortization of acquisition-related fixed asset step-up | 386 | 420 | - | |||||||||
| Acquisition-related costs | 240 | 858 | 336 | |||||||||
| Restructuring charges | 2 | 27 | - | |||||||||
| Fair value adjustment to contingent consideration | (850 | ) | (1,303 | ) | - | |||||||
| Interest (income) expense, net | (12 | ) | - | (24 | ) | |||||||
| Provision for income taxes | 571 | 377 | 258 | |||||||||
| Depreciation expense | 3,151 | 3,117 | 2,514 | |||||||||
| Adjusted EBITDA | $ | 6,430 | $ | 1,786 | $ | (490 | ) | |||||
| NON-GAAP DILUTED INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS: | ||||||||||||
| GAAP diluted income (loss) per share from continuing operations | $ | 0.02 | $ | (0.13 | ) | $ | (0.17 | ) | ||||
| Non-GAAP diluted income (loss) per share from continuing operations | $ | 0.08 | $ | (0.06 | ) | $ | (0.13 | ) | ||||
| SHARES USED TO COMPUTE NON-GAAP DILUTED INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS: | ||||||||||||
| Shares used to compute GAAP diluted income (loss) per share from continuing operations | 30,611,304 | 28,402,929 | 24,744,417 | |||||||||
| Shares used to compute non-GAAP diluted income (loss) per share from continuing operations | 31,393,431 | 28,402,929 | 24,744,417 | |||||||||
Source:
NeoPhotonics Corporation
JD Fay, Chief Financial Officer,
408-895-6086
or
Sapphire Investor Relations, LLC
Erica
Mannion, Investor Relations, 415-471-2700
ir@neophotonics.com