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NeoPhotonics Reports Second Quarter Financial Results and Outlook for Third Quarter 2014
-
Record Quarterly Revenue of
$77.5 million - Sequential Revenue Growth of 13.6%
- Sequential 40/100G Revenue Growth of 6.7%
“We are pleased to announce the highest quarterly revenue in the history
of
Second Quarter Summary
Following is a summary of certain key financial measures for the second quarter of 2014.
-
Revenue was
$77.5 million , an increase of$9.3 million , or 13.6%, from the first quarter of 2014 and up$2.5 million , or 3.3%, from the second quarter of 2013. - Gross margin on a GAAP basis was 18.8%, down from 20.2% in the first quarter of 2014, and down from 20.8% in the second quarter of 2013.
- Non-GAAP gross margin was 20.8%, down from 22.0% in the first quarter of 2014 and down from 25.1% in the second quarter of 2013.
-
Net loss was
$6.8 million , a decrease from a net loss of$12.6 million in the first quarter of 2014 and a decrease from a net loss of$8.3 million in the second quarter of 2013. Net loss in the second quarter of 2014 included an escrow settlement gain of$3.9 million related to the Santur acquisition. -
Non-GAAP net loss was
$7.5 million , a decrease from a net loss of$9.5 million in the first quarter of 2014 and an increase from a net loss of$3.8 million in the second quarter of 2013. -
Diluted net loss per share was
$0.21 , a decrease from a diluted net loss per share of$0.40 in the first quarter of 2014 and a decrease from a diluted net loss per share of$0.27 in the second quarter of 2013. Diluted net loss per share in the second quarter of 2014 included a$0.12 benefit from an escrow settlement gain related to the Santur acquisition. -
Non-GAAP diluted net loss per share was
$0.24 , a decrease from a diluted net loss per share of$0.30 in the first quarter of 2014 and up from a diluted net loss per share of$0.12 in the second quarter of 2013. -
Adjusted EBITDA was a loss of
$2.6 million , an improvement from a loss of$4.2 million in the first quarter of 2014 and a decrease from$1.4 million positive EBITDA in the second quarter of 2013.
During the second quarter of 2014, the Company executed an amendment to
its term loan agreement with its principal lender in the U.S. that
waived the testing of certain financial covenants for compliance,
provided the Company maintains restricted cash and investments equal to
outstanding amounts under the agreement. At
Non-GAAP and Adjusted EBITDA Measures vs. GAAP Financial Measures
The Company’s Non-GAAP and Adjusted EBITDA measures exclude certain GAAP financial measures, and a reconciliation of the Non-GAAP and Adjusted EBITDA financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion at the end of this press release.
Outlook for the Third Quarter of 2014 Ending
The Company’s outlook for the third quarter of 2014 is:
-
Revenue in the range of
$78 million to $82 million ; - Non-GAAP gross margin in the range of 22% to 26%; and
- Diluted net loss per share in the range of $0.14 to $0.24, and on a Non-GAAP basis in the range of a net loss of $0.04 to $0.14 per diluted share.
The Non-GAAP outlook for the third quarter of 2014 excludes
approximately
Conference Call
The Company will host a conference call today,
A replay of the webcast will be available in the Investor Relations section of the Company’s web site approximately two hours after the conclusion of the call and remain available for approximately 30 calendar days.
About
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: future financial results, and the nature and extent of
macro-economic and industry trends. 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: possible reduction in or volatility
of customer orders or delays in shipments of products to customers;
timing of customer drawdowns of vendor-managed inventory; 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; economic conditions or natural disasters; volatility in
utilization of manufacturing operations and other 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; the Company’s reliance on a
small number of customers for a substantial portion of its revenues;
potential pricing pressure that may arise from changing supply or demand
conditions in the industry; the impact of any previous or future
acquisitions; challenges involving integration of acquired businesses
and utilization of acquired technology, 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
© 2014
| NeoPhotonics Corporation | ||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
| (In thousands) | ||||||||
| As of | ||||||||
|
Jun. 30,
2014 |
Dec. 31,
2013 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 28,043 | $ | 57,101 | ||||
| Short-term investments | - | 17,916 | ||||||
| Restricted cash and investments | 12,386 | 2,138 | ||||||
| Accounts receivable, net | 79,248 | 64,533 | ||||||
| Inventories | 63,992 | 64,908 | ||||||
| Prepaid expenses and other current assets | 13,815 | 9,977 | ||||||
| Total current assets | 197,484 | 216,573 | ||||||
| Property, plant and equipment, net | 66,038 | 68,851 | ||||||
| Restricted cash and investments, non-current | 14,000 | - | ||||||
| Purchased intangible assets, net | 12,956 | 15,005 | ||||||
| Other long-term assets | 1,913 | 1,798 | ||||||
| Total assets | $ | 292,391 | $ | 302,227 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 54,347 | $ | 48,569 | ||||
| Notes payable and short-term borrowing | 20,086 | 9,738 | ||||||
| Current portion of long-term debt | 10,465 | 10,325 | ||||||
| Accrued and other current liabilities | 18,336 | 23,643 | ||||||
| Total current liabilities | 103,234 | 92,275 | ||||||
| Long-term debt, net of current portion | 17,465 | 24,150 | ||||||
| Deferred income tax liabilities | 1,221 | 1,004 | ||||||
| Other noncurrent liabilities | 8,121 | 7,987 | ||||||
| Total liabilities | 130,041 | 125,416 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 81 | 79 | ||||||
| Additional paid-in capital | 453,087 | 447,467 | ||||||
| Accumulated other comprehensive income | 10,971 | 11,687 | ||||||
| Accumulated deficit | (301,789 | ) | (282,422 | ) | ||||
| Total stockholders' equity | 162,350 | 176,811 | ||||||
| Total liabilities and stockholders' equity | $ | 292,391 | $ | 302,227 | ||||
| NeoPhotonics Corporation | ||||||||||||||
| Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||||||
| (In thousands, except percentages and per share data) | ||||||||||||||
| Three Months Ended | ||||||||||||||
|
Jun. 30,
2014 |
Mar. 31,
2014 |
Jun. 30,
2013 |
||||||||||||
| Revenue | $ | 77,451 | $ | 68,168 | $ | 74,990 | ||||||||
| Cost of goods sold (1) | 62,883 | 54,368 | 59,389 | |||||||||||
| Gross profit | 14,568 | 13,800 | 15,601 | |||||||||||
| 18.8 | % | 20.2 | % | 20.8 | % | |||||||||
| Operating expenses: | ||||||||||||||
| Research and development (1) | 12,085 | 12,056 | 11,087 | |||||||||||
| Sales and marketing (1) | 3,571 | 3,411 | 3,349 | |||||||||||
| General and administrative (1) | 8,193 | 8,987 | 7,889 | |||||||||||
| Amortization of purchased intangible assets | 379 | 379 | 426 | |||||||||||
| Escrow settlement gain | (3,886 | ) | - | - | ||||||||||
| Acquisition-related transaction costs | - | - | 681 | |||||||||||
| Total operating expenses | 20,342 | 24,833 | 23,432 | |||||||||||
| Loss from operations | (5,774 | ) | (11,033 | ) | (7,831 | ) | ||||||||
| Interest income | 38 | 65 | 72 | |||||||||||
| Interest expense | (311 | ) | (251 | ) | (342 | ) | ||||||||
| Other expense, net | (635 | ) | (607 | ) | (273 | ) | ||||||||
| Total interest and other expense, net | (908 | ) | (793 | ) | (543 | ) | ||||||||
| Loss before income taxes | (6,682 | ) | (11,826 | ) | (8,374 | ) | ||||||||
| (Provision for) benefit from income taxes | (97 | ) | (762 | ) | 90 | |||||||||
| Net loss | $ | (6,779 | ) | $ | (12,588 | ) | $ | (8,284 | ) | |||||
| Basic and diluted net loss per share | $ | (0.21 | ) | $ | (0.40 | ) | $ | (0.27 | ) | |||||
| Weighted averages shares used to compute basic and diluted net loss per share | 31,790 | 31,610 | 30,780 | |||||||||||
| (1) Includes stock-based compensation expense as follows for the periods presented: | ||||||||||||||
| Cost of goods sold | $ | 455 | $ | 330 | $ | 131 | ||||||||
| Research and development | 408 | 707 | 600 | |||||||||||
| Sales and marketing | 587 | 373 | 344 | |||||||||||
| General and administrative | 273 | 491 | 398 | |||||||||||
| Total stock-based compensation expense | $ | 1,723 | $ | 1,901 | $ | 1,473 | ||||||||
| NeoPhotonics Corporation | |||||||||||||||
| Reconciliation of Consolidated GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited) | |||||||||||||||
| (In thousands, except percentages and per share data) | |||||||||||||||
| Three Months Ended | |||||||||||||||
|
Jun. 30, |
Mar. 31, |
Jun. 30, |
|||||||||||||
| NON-GAAP GROSS PROFIT: | |||||||||||||||
| GAAP gross profit | $ | 14,568 | $ | 13,800 | $ | 15,601 | |||||||||
| Stock-based compensation expense | 455 | 330 | 131 | ||||||||||||
| Amortization of purchased intangible assets | 714 | 714 | 772 | ||||||||||||
| Depreciation of acquisition-related fixed asset step-up | 337 | 122 | 198 | ||||||||||||
| Amortization of acquisition-related inventory step-up | - | - | 2,145 | ||||||||||||
| Non-GAAP gross profit | $ | 16,074 | $ | 14,966 | $ | 18,847 | |||||||||
| Non-GAAP gross margin (% of revenue) | 20.8 | % | 22.0 | % | 25.1 | % | |||||||||
|
NON-GAAP NET LOSS: |
|||||||||||||||
| GAAP net loss | $ | (6,779 | ) | $ | (12,588 | ) | $ | (8,284 | ) | ||||||
| Stock-based compensation expense | 1,723 | 1,901 | 1,473 | ||||||||||||
| Amortization of purchased intangible assets | 1,093 | 1,093 | 1,198 | ||||||||||||
| Depreciation of acquisition-related fixed asset step-up | 658 | 219 | 318 | ||||||||||||
| Amortization of acquisition-related inventory step-up | - | - | 2,145 | ||||||||||||
| Acquisition-related transaction costs | - | (7 | ) | 681 | |||||||||||
| Escrow settlement gain | (3,886 | ) | - | - | |||||||||||
| Income tax effect of Non-GAAP adjustments | (298 | ) | (124 | ) | (1,377 | ) | |||||||||
| Non-GAAP net loss | $ | (7,489 | ) | $ | (9,506 | ) | $ | (3,846 | ) | ||||||
| ADJUSTED EBITDA: | |||||||||||||||
| GAAP net loss | $ | (6,779 | ) | $ | (12,588 | ) | $ | (8,284 | ) | ||||||
| Stock-based compensation expense | 1,723 | 1,901 | 1,473 | ||||||||||||
| Amortization of purchased intangible assets | 1,093 | 1,093 | 1,198 | ||||||||||||
| Depreciation of acquisition-related fixed asset step-up | 658 | 219 | 318 | ||||||||||||
| Amortization of acquisition-related inventory step-up | - | - | 2,145 | ||||||||||||
| Acquisition-related transaction costs | - | (7 | ) | 681 | |||||||||||
| Escrow settlement gain | (3,886 | ) | - | - | |||||||||||
| Interest expense, net | 273 | 186 | 270 | ||||||||||||
| Provision for (benefit from) income taxes | 97 | 762 | (90 | ) | |||||||||||
| Depreciation expense | 4,187 | 4,216 | 3,652 | ||||||||||||
| Adjusted EBITDA | $ | (2,634 | ) | $ | (4,218 | ) | $ | 1,363 | |||||||
| BASIC AND DILUTED NET LOSS PER SHARE: | |||||||||||||||
| GAAP basic and diluted net loss per share | $ | (0.21 | ) | $ | (0.40 | ) | $ | (0.27 | ) | ||||||
| Non-GAAP basic and diluted net loss per share | $ | (0.24 | ) | $ | (0.30 | ) | $ | (0.12 | ) | ||||||
| SHARES USED TO COMPUTE GAAP and NON-GAAP BASIC AND DILUTED NET LOSS PER SHARE: | 31,790 | 31,610 | 30,780 | ||||||||||||
Source:
NeoPhotonics Corporation
Clyde R. Wallin, Chief Financial Officer
+1-408-895-6020
ray.wallin@neophotonics.com
or
Sapphire
Investor Relations, LLC
Erica Mannion, Investor Relations
+1-415-471-2700
ir@neophotonics.com