Press Releases
NeoPhotonics Announces Restructuring Actions and Preliminary Financial Results for the Third Quarter
SAN JOSE, Calif.--(BUSINESS WIRE)--Oct. 5, 2017--
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 that as a part of its continuing actions to improve
profitability and cash flow, the Company has implemented certain
restructuring actions. The actions include a reduction in force, real
estate consolidation, a write down of inventory for certain programs and
assets and a write-down of idle assets.
These actions are intended to accelerate the Company's goal of a return
to profitability by implementing specific and sustainable measures
designed to lower the Company’s breakeven revenue levels for
profitability and free cash flow, while maintaining the Company’s focus
on its core capabilities, including its industry leading coherent
components and solutions for datacenter interconnect and
telecommunications systems. The actions being taken are expected to
reduce quarterly operating expenses with immediate impact and achieve an
approximately two-million-dollar reduction when fully realized in the
first quarter of 2018.
The costs to implement these actions are expected to be approximately
$4.8 million, with $4.2 million in asset-write off costs and $0.6
million in severance costs. The Company expects to incur approximately
$4.6 million of these costs in the third quarter with the remainder to
be incurred in the fourth quarter.
“Lacking a clear indication of increased demand in China in the third
quarter, we initiated several operational changes with the goal of
expediting our return to profitability, including implementing certain
restructuring initiatives designed to align our business with the
current demand environment and lowering manufacturing output to manage
inventory levels,” said Tim Jenks, Chairman and CEO of NeoPhotonics. “In
taking these actions, we have maintained our research and development
focus on products for next generation coherent systems, operating at 400
Gigabits/sec to beyond 1 Terabit/sec, wherein our advanced hybrid
photonic integration provides the highest value,” concluded Mr. Jenks.
In addition to these restructuring activities, the Company provided
preliminary estimated financial results for the third quarter of 2017.
Revenue is expected to be in the range of $69 to $71 million, with GAAP
gross margin of approximately 10% to 13% and GAAP loss per share of
$0.50 to $0.40, inclusive of restructuring charges. Excluding
restructuring charges, and other regularly excluded items, the Company
expects non-GAAP gross margin to be in the range of 14% to 17% and
non-GAAP loss per share in the range of $0.35 to $0.27. A reconciliation
of the non-GAAP financial measures to the most directly applicable GAAP
financial measures is provided at the end of this press release.
These preliminary results compare to a previously provided forecast for
third quarter revenue of $70 to $76 million, GAAP gross margin of 23% to
26%, and GAAP net loss per share of $0.21 to $0.11 and non-GAAP gross
margin of 24% to 27% and non-GAAP loss of $0.17 to $0.07. In addition to
restructuring charges, non-GAAP gross margin and non-GAAP net loss were
negatively impacted by the Company’s decision to reduce production
levels during the quarter resulting from a lack of visibility into
future demand levels in China. While this reduction impacted overall
capacity utilization and gross margin respectively in the third quarter,
the Company anticipates these actions will help reduce inventory levels
in the fourth quarter.
Cash, cash equivalents and restricted cash totaled approximately $74
million at the end of the third quarter.
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Revised Outlook for the Quarter Ending September 30, 2017 |
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GAAP |
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Non-GAAP |
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Revenue |
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$69 to $71 million |
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Gross Margin |
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10% to 13% |
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14% to 17% |
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Earnings per share |
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$0.50 to $0.40 net loss |
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$0.35 to $0.27 net loss |
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The Non-GAAP outlook for the third quarter of 2017 excludes the impact
of expected restructuring charges and end-of-life inventory write-downs
of approximately $4.6 million, acquisition related costs of $0.2
million, amortization of intangibles of approximately $0.3 million and
the anticipated impact of stock-based compensation of approximately $1.9
million, of which $0.3 million is estimated for cost of goods sold.
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, demand for the Company’s high speed
products, the Company’s market position, the outlook for the China
market, 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: 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; 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; the savings anticipated from cost reduction actions
and the impact of severance 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; challenges involving integration
of acquired businesses and utilization of acquired technology or
divestitures of assets and related product lines; the impact of the sale
of the low speed transceiver product lines and 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 Annual Report on Form
10-K for the year ended December 31, 2016 and its Form 10-Q for the
three months ended June 30, 2017. All forward-looking statements are
made as of the date of this press release, and the Company disclaims any
duty to update such statements.
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.
©2017 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: http://www.businesswire.com/news/home/20171005005429/en/
Source: NeoPhotonics Corporation
NeoPhotonics Corporation
Beth Eby +1-408-895-6086
Chief
Financial Officer
ir@neophotonics.com
or
Sapphire
Investor Relations, LLC
Erica Mannion +1-617-542-6180
Investor
Relations
ir@neophotonics.com
