“Globally, we continue to see the overall environment for 100G and
beyond products very robust across both telecom and datacenter
applications. In spite of PON market softness, we delivered solid
financial results in the second quarter including strong profitability
at
Second Quarter Summary
Non-GAAP results exclude
At
Outlook for the Quarter Ending
GAAP | Non-GAAP | |||
Revenue | $100 to $106 million | |||
Gross Margin | 28% to 30% | 29% to 31% | ||
Operating Expenses | $26 to $28 million | $23 to $25 million | ||
Earnings per share | $0.01 to $0.09 | $0.09 to $0.17 | ||
The Non-GAAP outlook for the third quarter of 2016 excludes the impact
of expected amortization of intangibles of approximately
The Company announced that it will end of life the sales of PON products
within a year. Revenue for PON products for the last four quarters was
Non-GAAP and Adjusted EBITDA Measures vs. GAAP Financial Measures
The Company’s non-GAAP and adjusted EBITDA measures exclude certain GAAP financial measures. 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. 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.
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.
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 after the conclusion of the call and remain available for approximately 30 calendar days.
About
© 2016
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, the Company’s market position 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; ability
of the Company to meet customer demand; economic conditions or natural
disasters; volatility in utilization of manufacturing operations,
supporting utility services 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,; the impact of the discontinuance or end of life of certain
products, including certain tunable laser and PON 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
NeoPhotonics Corporation | ||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
(In thousands) | ||||||||
As of | ||||||||
Jun. 30, |
Dec. 31, |
|||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 82,476 | $ | 76,088 | ||||
Short-term investments | 28,427 | 23,294 | ||||||
Restricted cash | 2,580 | 2,660 | ||||||
Accounts receivable, net | 86,859 | 83,161 | ||||||
Inventories, net | 61,515 | 65,602 | ||||||
Prepaid expenses and other current assets | 13,410 | 12,393 | ||||||
Total current assets | 275,267 | 263,198 | ||||||
Property, plant and equipment, net | 76,625 | 62,618 | ||||||
Purchased intangible assets, net | 7,528 | 9,852 | ||||||
Goodwill | 1,115 | 1,115 | ||||||
Other long-term assets | 4,888 | 5,095 | ||||||
Total assets | $ | 365,423 | $ | 341,878 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 64,133 | $ | 50,620 | ||||
Notes payable and short-term borrowing | 32,389 | 32,657 | ||||||
Current portion of long-term debt | 892 | 760 | ||||||
Accrued and other current liabilities | 21,919 | 27,950 | ||||||
Total current liabilities | 119,333 | 111,987 | ||||||
Long-term debt, net of current portion | 12,144 | 10,759 | ||||||
Other noncurrent liabilities | 8,456 | 7,476 | ||||||
Total liabilities | 139,933 | 130,222 | ||||||
Stockholders' equity: | ||||||||
Common stock | 104 | 102 | ||||||
Additional paid-in capital | 520,249 | 511,750 | ||||||
Accumulated other comprehensive loss | (1,376 | ) | (1,723 | ) | ||||
Accumulated deficit | (293,487 | ) | (298,473 | ) | ||||
Total stockholders' equity | 225,490 | 211,656 | ||||||
Total liabilities and stockholders' equity | $ | 365,423 | $ | 341,878 | ||||
NeoPhotonics Corporation | ||||||||||||||||||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||||||||||||
(In thousands, except percentages and per share data) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
Jun. 30,
2016 |
Mar. 31,
2016 |
Jun. 30,
2015 |
Jun. 30,
2016 |
Jun. 30, 2015 |
||||||||||||||||
Revenue | $ | 99,129 | $ | 99,145 | $ | 85,372 | $ | 198,274 | $ | 166,756 | ||||||||||
Cost of goods sold (1) | 71,600 | 68,023 | 59,226 | 139,623 | 116,557 | |||||||||||||||
Gross profit | 27,529 | 31,122 | 26,146 | 58,651 | 50,199 | |||||||||||||||
Gross margin | 27.8 | % | 31.4 | % | 30.6 | % | 29.6 | % | 30.1 | % | ||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development (1) | 11,780 | 12,952 | 11,457 | 24,732 | 21,939 | |||||||||||||||
Sales and marketing (1) | 3,807 | 3,931 | 3,906 | 7,738 | 7,650 | |||||||||||||||
General and administrative (1) | 7,841 | 9,084 | 7,419 | 16,925 | 15,615 | |||||||||||||||
Amortization of purchased intangible assets | 460 | 453 | 448 | 913 | 897 | |||||||||||||||
Acquisition-related costs | 775 | - | 147 | 775 | 287 | |||||||||||||||
Restructuring charges | - | - | 20 | - | 26 | |||||||||||||||
Total operating expenses | 24,663 | 26,420 | 23,397 | 51,083 | 46,414 | |||||||||||||||
Income from operations | 2,866 | 4,702 | 2,749 | 7,568 | 3,785 | |||||||||||||||
Interest income | 77 | 55 | 23 | 132 | 53 | |||||||||||||||
Interest expense | (99 | ) | (102 | ) | (456 | ) | (201 | ) | (962 | ) | ||||||||||
Other income (expense), net | 458 | (1,304 | ) | 602 | (846 | ) | 556 | |||||||||||||
Total interest and other income (expense), net | 436 | (1,351 | ) | 169 | (915 | ) | (353 | ) | ||||||||||||
Income before income taxes | 3,302 | 3,351 | 2,918 | 6,653 | 3,432 | |||||||||||||||
Provision for income taxes | (626 | ) | (1,041 | ) | (1,127 | ) | (1,667 | ) | (1,541 | ) | ||||||||||
Net income attributable to NeoPhotonics Corporation common stockholders | $ | 2,676 | $ | 2,310 | $ | 1,791 | $ | 4,986 | $ | 1,891 | ||||||||||
Basic net income per share | $ | 0.06 | $ | 0.06 | $ | 0.05 | $ | 0.12 | $ | 0.06 | ||||||||||
Diluted net income per share | $ | 0.06 | $ | 0.05 | $ | 0.05 | $ | 0.11 | $ | 0.05 | ||||||||||
Weighted averages shares used to compute basic net income per share | 41,603 | 41,121 | 35,684 | 41,362 | 34,240 | |||||||||||||||
Weighted averages shares used to compute diluted net income per share | 44,320 | 43,648 | 37,294 | 44,042 | 35,128 | |||||||||||||||
(1) Includes stock-based compensation expense as follows for the periods presented: | ||||||||||||||||||||
Cost of goods sold | $ | 719 | $ | 589 | $ | 410 | $ | 1,308 | $ | 780 | ||||||||||
Research and development | 556 | 971 | 501 | 1,527 | 994 | |||||||||||||||
Sales and marketing | 365 | 887 | 447 | 1,252 | 900 | |||||||||||||||
General and administrative | 590 | 992 | 568 | 1,582 | 1,308 | |||||||||||||||
Total stock-based compensation expense | $ | 2,230 | $ | 3,439 | $ | 1,926 | $ | 5,669 | $ | 3,982 | ||||||||||
NeoPhotonics Corporation | ||||||||||||||||||||
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited) | ||||||||||||||||||||
(In thousands, except percentages and per share data) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
Jun. 30,
2016 |
Mar. 31,
2016 |
Jun. 30,
2015 |
Jun. 30,
2016 |
Jun. 30,
2015 |
||||||||||||||||
NON-GAAP GROSS PROFIT: | ||||||||||||||||||||
GAAP gross profit | $ | 27,529 | $ | 31,122 | $ | 26,146 | $ | 58,651 | $ | 50,199 | ||||||||||
Stock-based compensation expense | 719 | 589 | 410 | 1,308 | 780 | |||||||||||||||
Amortization of purchased intangible assets | 848 | 841 | 837 | 1,689 | 1,676 | |||||||||||||||
Depreciation of acquisition-related fixed asset step-up | (64 | ) | (62 | ) | (43 | ) | (126 | ) | 129 | |||||||||||
Amortization of acquisition-related inventory step-up | - | - | 78 | - | 156 | |||||||||||||||
Restructuring charges | - | - | 125 | - | 125 | |||||||||||||||
Non-GAAP gross profit | $ | 29,032 | $ | 32,490 | $ | 27,553 | $ | 61,522 | $ | 53,065 | ||||||||||
Non-GAAP gross margin as a % of revenue | 29.3 | % | 32.8 | % | 32.3 | % | 31.0 | % | 31.8 | % | ||||||||||
NON-GAAP TOTAL OPERATING EXPENSES: | ||||||||||||||||||||
GAAP total operating expenses | $ | 24,663 | $ | 26,420 | $ | 23,397 | $ | 51,083 | $ | 46,414 | ||||||||||
Stock-based compensation expense | (1,511 | ) | (2,850 | ) | (1,516 | ) | (4,361 | ) | (3,202 | ) | ||||||||||
Amortization of purchased intangible assets | (460 | ) | (453 | ) | (448 | ) | (913 | ) | (897 | ) | ||||||||||
Depreciation of acquisition-related fixed asset step-up | (83 | ) | (93 | ) | (123 | ) | (176 | ) | (413 | ) | ||||||||||
Acquisition-related costs | (775 | ) | - | (147 | ) | (775 | ) | (287 | ) | |||||||||||
Restructuring charges | - | - | (20 | ) | - | (26 | ) | |||||||||||||
Litigation | - | - | - | - | (278 | ) | ||||||||||||||
Non-GAAP total operating expenses | $ | 21,834 | $ | 23,024 | $ | 21,143 | $ | 44,858 | $ | 41,311 | ||||||||||
Non-GAAP total operating expenses as a % of revenue | 22.0 | % | 23.2 | % | 24.8 | % | 22.6 | % | 24.8 | % | ||||||||||
NON-GAAP OPERATING INCOME: | ||||||||||||||||||||
GAAP income from operations | $ | 2,866 | $ | 4,702 | $ | 2,749 | $ | 7,568 | $ | 3,785 | ||||||||||
Stock-based compensation expense | 2,230 | 3,439 | 1,926 | 5,669 | 3,982 | |||||||||||||||
Amortization of purchased intangible assets | 1,308 | 1,294 | 1,285 | 2,602 | 2,573 | |||||||||||||||
Depreciation of acquisition-related fixed asset step-up | 19 | 31 | 80 | 50 | 542 | |||||||||||||||
Amortization of acquisition-related inventory step-up | - | - | 78 | - | 156 | |||||||||||||||
Acquisition-related costs | 775 | - | 147 | 775 | 287 | |||||||||||||||
Restructuring charges | - | - | 145 | - | 151 | |||||||||||||||
Litigation | - | - | - | - | 278 | |||||||||||||||
Non-GAAP income from operations | $ | 7,198 | $ | 9,466 | $ | 6,410 | $ | 16,664 | $ | 11,754 | ||||||||||
Non-GAAP operating margin as a % of revenue | 7.3 | % | 9.5 | % | 7.5 | % | 8.4 | % | 7.0 | % | ||||||||||
NeoPhotonics Corporation | ||||||||||||||||||||
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited) (Continued) | ||||||||||||||||||||
(In thousands, except percentages and per share data) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
Jun. 30,
2016 |
Mar. 31,
2016 |
Jun. 30,
2015 |
Jun. 30,
2016 |
Jun. 30,
2015 |
||||||||||||||||
NON-GAAP NET INCOME: | ||||||||||||||||||||
GAAP net income | $ | 2,676 | $ | 2,310 | $ | 1,791 | $ | 4,986 | $ | 1,891 | ||||||||||
Stock-based compensation expense | 2,230 | 3,439 | 1,926 | 5,669 | 3,982 | |||||||||||||||
Amortization of purchased intangible assets | 1,308 | 1,294 | 1,285 | 2,602 | 2,573 | |||||||||||||||
Depreciation of acquisition-related fixed asset step-up | 19 | 31 | 80 | 50 | 542 | |||||||||||||||
Amortization of acquisition-related inventory step-up | - | - | 78 | - | 156 | |||||||||||||||
Acquisition-related costs | 775 | - | 147 | 775 | 287 | |||||||||||||||
Restructuring charges | - | - | 145 | - | 151 | |||||||||||||||
Litigation | - | - | - | - | 278 | |||||||||||||||
Income tax effect of Non-GAAP adjustments | (135 | ) | (124 | ) | (109 | ) | (259 | ) | (358 | ) | ||||||||||
Non-GAAP net income | $ | 6,873 | $ | 6,950 | $ | 5,343 | $ | 13,823 | $ | 9,502 | ||||||||||
Non-GAAP net income as a % of revenue | 6.9 | % | 7.0 | % | 6.3 | % | 7.0 | % | 5.7 | % | ||||||||||
ADJUSTED EBITDA: | ||||||||||||||||||||
GAAP net income | $ | 2,676 | $ | 2,310 | $ | 1,791 | $ | 4,986 | $ | 1,891 | ||||||||||
Stock-based compensation expense | 2,230 | 3,439 | 1,926 | 5,669 | 3,982 | |||||||||||||||
Amortization of purchased intangible assets | 1,308 | 1,294 | 1,285 | 2,602 | 2,573 | |||||||||||||||
Depreciation of acquisition-related fixed asset step-up | 19 | 31 | 80 | 50 | 542 | |||||||||||||||
Amortization of acquisition-related inventory step-up | - | - | 78 | - | 156 | |||||||||||||||
Acquisition-related costs | 775 | - | 147 | 775 | 287 | |||||||||||||||
Restructuring charges | - | - | 145 | - | 151 | |||||||||||||||
Litigation | - | - | - | - | 278 | |||||||||||||||
Interest expense, net | 22 | 47 | 433 | 69 | 909 | |||||||||||||||
Provision for income taxes | 626 | 1,041 | 1,127 | 1,667 | 1,541 | |||||||||||||||
Depreciation expense | 4,357 | 4,128 | 4,375 | 8,485 | 8,931 | |||||||||||||||
Adjusted EBITDA | $ | 12,013 | $ | 12,290 | $ | 11,387 | $ | 24,303 | $ | 21,241 | ||||||||||
Adjusted EBITDA as a % of revenue | 12.1 | % | 12.4 | % | 13.3 | % | 12.3 | % | 12.7 | % | ||||||||||
BASIC AND DILUTED NET INCOME PER SHARE: | ||||||||||||||||||||
GAAP basic net income per share | $ | 0.06 | $ | 0.06 | $ | 0.05 | $ | 0.12 | $ | 0.06 | ||||||||||
GAAP diluted net income per share | $ | 0.06 | $ | 0.05 | $ | 0.05 | $ | 0.11 | $ | 0.05 | ||||||||||
Non-GAAP basic net income per share | $ | 0.17 | $ | 0.17 | $ | 0.15 | $ | 0.33 | $ | 0.28 | ||||||||||
Non-GAAP diluted net income per share | $ | 0.15 | $ | 0.15 | $ | 0.14 | $ | 0.31 | $ | 0.26 | ||||||||||
SHARES USED TO COMPUTE GAAP AND NON-GAAP BASIC NET INCOME PER SHARE | 41,603 | 41,121 | 35,684 | 41,362 | 34,240 | |||||||||||||||
SHARES USED TO COMPUTE GAAP DILUTED NET INCOME PER SHARE | 44,320 | 43,648 | 37,294 | 44,042 | 35,128 | |||||||||||||||
SHARES USED TO COMPUTE NON-GAAP DILUTED NET INCOME PER SHARE | 45,393 | 45,113 | 38,465 | 45,246 | 36,054 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160808006152/en/
Source:
NeoPhotonics Corporation
Clyde R. Wallin, +1-408-678-1852
Chief
Financial Officer
ray.wallin@neophotonics.com
or
Sapphire
Investor Relations, LLC
Erica Mannion, +1-617-542-6180
Investor
Relations
ir@neophotonics.com