Emcore Announces Record Operating Profit and Sixth Consecutive Quarter of Record Revenues
August 8, 2001
SOMERSET, N.J, EMCORE Corporation (NASDAQ: EMKR - news), a leader in compound semiconductor technologies for global communications applications, today announced financial results for its fiscal third quarter ended June 30, 2001.
Revenues for the quarter ended June 30, 2001 reached a sixth consecutive record of $53 million, up 76% compared to revenues of $30 million for the corresponding quarter of fiscal 2000 and up 10% sequentially compared to revenues of $48 million for the quarter ended March 31, 2001. The increase in revenues is the direct result of new material technologies being introduced in the datacom and telecom markets to relieve data congestion and expand network capacity.
Gross profit for the quarter ended June 30, 2001 reached $22 million, an increase of 75% compared to $12 million for the corresponding quarter of fiscal 2000, and an increase of 12% sequentially compared to gross profit of $20 million for the quarter ended March 31, 2001. Gross margin percentages also increased sequentially from 40.9% in the prior quarter to 41.4% in the quarter ended June 30, 2001.
EMCORE also achieved its second consecutive quarter of increased operating income. Operating income for the quarter ended June 30, 2001 was $915,000, or $0.03 per share, excluding goodwill amortization, compared to operating income of $31,000, or $0.00 per share, excluding goodwill amortization, for the quarter ended March 31, 2001.
During the quarter, EMCORE expanded its optical device and fiber optic product lines and began commercial production of its 15 Gbps parallel optical interconnect for very short reach datacom and telecom networks, which marks the first offering from EMCORE s Fiber Optic group. The transceiver module from EMCORE exemplifies the new age of optical interconnects for switches and routers for datacom and telecom equipment manufacturers. EMCORE also recently announced the commercial availability of an 850 nm, 10 Gbps gallium arsenide (GaAs) photodetector to pair with EMCORE s 10 Gbps oxide Vertical Cavity Surface Emitting Laser (VCSEL). This combination enables the Company to provide a matched solution for transmit and receive functionality.
Reuben F. Richards, Jr., President and CEO commented, ``We had an outstanding quarter with record revenue and record operating performance, which reflects the strength of and demand for the new products we have introduced in the past two fiscal quarters. By offering these innovative products, EMCORE is able to provide its customers with a single supply source for manufacturer-friendly solutions to the broadband communications markets.
Mr. Richards added, ``We are successfully coping with the economic downturn affecting most areas of technology. Our goal now is to position ourselves to meet the challenges of the current economic environment and increase our market share in the critical broadband and fiberoptic segments. We have increased operational efficiencies that will allow us to take full advantage of any market opportunities. We believe that our diversified product portfolio helps us in this challenging environment. Although sales in some product lines have decreased, other product lines have increased both in terms of dollar amount and market share. We feel market demand is sufficient to continue to grow our business as we execute against our product opportunities.
General and administrative expenses decreased approximately $500,000 from the prior quarter due to cost control programs enacted during the quarter. Research and development expenses increased 16% from prior quarter as EMCORE finalizes the development and commercialization of new fiber optic products, including long wavelength VCSELs (vertical cavity surface emitting lasers), optical subassemblies and modules. Excluding non-recurring items and goodwill amortization, net loss for
the quarter decreased 39% sequentially to $1.7 million or $(0.05) per share, compared to a net loss of $2.8 million, or $(0.08) per share for the quarter ended March 31, 2001.
Recent Developments and Highlights of the Quarter:
On August 6, 2001, EMCORE announced the commercial production of its new 15 Gbps parallel optical interconnect for high-speed data links, very short reach OC-192 optical links, and board-to-board and shelf-to-shelf high-speed interconnects for optical backplanes. The modules perform logic-to-light and light-to-logic conversions for data transmission over multimode fiber ribbon cable, at a wavelength of 850nm and a power consumption of typically just 2 watts for the pair. EMCORE also announced the development of a VSR transponder that is pluggable and compliant with the industry-wide 300 pin multi-source agreement and with the Optical Internetworking Forum s Implementation Agreements for SERDES-framer interface (SFI-4) and VSR OC-192 interfaces. The transponder is anticipated to be in commercial production in September 2001.
On August 2, 2001, EMCORE sold its minority ownership position in the Uniroyal Optoelectronics, LLC joint venture to Uniroyal Technology Corporation, (NMS: UTCI) and received 2.0 million shares of UTCI common stock as consideration for the transaction. EMCORE will continue to be an important vendor of MOCVD equipment to Uniroyal Optoelectronics, LLC. EMCORE will report a gain on the transaction in the fourth quarter of fiscal 2001.
On May 7, 2001, EMCORE completed the private placement of $175 million aggregate principal amount of 5% convertible subordinated notes due 2006. The notes are convertible into EMCORE common stock at a conversion price of $48.76 per share. The Company is using the proceeds from this offering for general corporate purposes, including capital expenditures, working capital, funding its joint venture and research and development. In addition, the Company may use a portion of the proceeds of the offering to strategically acquire or invest in complementary businesses, products or technology, either directly or through its joint venture.
Blaze Network Products and Cognet MicroSystems, a division of Intel, selected EMCORE s Coarse Wavelength Division Multiplexing (CWDM) VCSELs for high-speed data communications. With these VCSELs, Blaze plans to be the first to market with the smallest pluggable 10 Gigabit transceiver in the industry. Cognet will use the short wavelength VCSELs for extending the reach of multimode fibers.
EMCORE expanded its production technology offerings with the addition of the Enterprise 300LDM for datacom and telecom applications and the Enterprise 450 series for wireless communications and solid state lighting applications. These new tools serve as the enabling technology for EMCORE s electronic materials and optical device product offerings and will enhance the Company s ability to significantly improve device-manufacturing economics. The tools decrease the cost of ownership by maximizing the efficiency of material usage, reducing cycle times and achieving materials quality that enables next generation devices.
EMCORE s Electronic Materials Division achieved two significant milestones as a high volume supplier of HBT and pHEMT transistor materials for high-speed wireless communications. EMCORE reported the shipment of a record 15,000 6-inch HBT and pHEMT transistor wafers in a 12-month period. The Electronic Materials Division also earned the prestigious QS-9000 certification for its wafer manufacturing activities based on its commitment to quality products and services.
As announced earlier, EMCORE will discuss results on a conference call to be held , at 9:00 a.m. ET. To participate in the call, local and international callers can dial (719)-457-2657. A replay will be available beginning 12:00 p.m. ET on August 9, 2001 until 12:00 a.m. ET on August 13, 2001. The replay number is 888-203-1112, passcode: ``792085 .
The conference call will also be available via the Internet by accessing the EMCORE web site at www.emcore.com. Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software. A replay of the conference call will also be available via the EMCORE web site.
EMCORE Corporation offers a versatile portfolio of compound semiconductor products for the rapidly expanding broadband and wireless communications and solid-state lighting markets. The Company s integrated solutions philosophy embodies state of the art technology, material science expertise and a shared vision of our customer s goals and objectives to be leaders and pioneers in the rapidly growing world of compound semiconductors. EMCORE s solutions include: optical components for high speed data and telecommunications; solar cells for global satellite communications; electronic materials for high bandwidth communications systems, such as Internet access and wireless telephones; MOCVD tools for the growth of GaAs, AlGaAs, InP, InGaP, InGaAlP, InGaAsP, GaN, InGaN, AlGaN, and SiC epitaxial materials used in numerous applications, including data and telecommunications modules, cellular telephones, solar cells and high brightness LEDs. For further information about EMCORE, visit http://www.emcore.com.
The information provided herein may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events that involve risks and uncertainties. Words such as ``expects, ``anticipates, ``intends, ``plans, believes,`` and estimates,`` and variations of these words and similar expressions, identify these forward looking statements. Actual operating results may differ materially from such forward-looking statements and are subject to certain risks, including risks arising from: cancellations, rescheduling or delays in product shipments; manufacturing capacity constraints; lengthy sales and qualification cycles; difficulties in the production process; changes in semiconductor industry growth, increased competition, delays in developing and commercializing new products, and other factors described in EMCORE s filings with the Securities and Exchange Commission. The forward-looking statements contained in this news release are made as of the date hereof and EMCORE does not assume any obligation to update the reasons why actual results could differ materially from those projected in the forward-looking statements.
EMCORE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
Three Months Ended Nine Months Ended June 30, June 30,
2001 2000 2001 2000
Revenues: Systems-related $ 38,949 $ 17,561 $ 98,209 $ 42,908 Materials-related 13,941 12,462 42,652 27,541
Total revenues 52,890 30,023 140,861 70,449
Cost of revenues 30,990 17,537 82,852 41,304
Gross profit 21,900 12,486 58,009 29,145
Operating expenses: Selling, general and administrative 7,096 5,919 21,631 15,914 Goodwill amortization 155 1,098 992 3,294 Research and development 13,889 5,984 39,066 15,354
Total operating expenses 21,140 13,001 61,689 34,562
Operating income 760 (515) (3,680) (5,417)
Total other expense (income) (2,657) 945 (2,281) 6,908
Net loss $(1,897) $(1,460) $(5,961) $(12,325)
Per share data:
Net loss per basic and diluted share $ (0.06) $ (0.04) $ (0.17) $ (0.41)
Weighted average basic and diluted shares outstanding used in per share data calculations 34,452 33,058 34,256 30,164
Operations excluding goodwill amortization:
Operating income (loss) $ 915 $ 583 $(2,688) $ (2,123) Net loss $(1,742) $ (362) $(4,969) $ (9,031) Net loss per basic and diluted share $ (0.05) $ (0.01) $ (0.15) $ (0.30)
EMCORE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)
At June 30, At September 30, 2001 2000 (unaudited) ASSETS
Current assets: Cash and cash equivalents $ 81,717 $ 50,849 Marketable securities 77,914 50,896 Accounts receivable, net 48,010 20,574 Inventories, net 53,232 30,724 Prepaid expenses and other current assets 5,878 1,829
Total current assets 266,751 154,872
Property, plant and equipment, net 139,391 69,701 Goodwill, net 2,841 734 Investments in unconsolidated affiliates 13,255 17,015 Other assets, net 10,913 1,580
Total assets $ 433,151 $ 243,902
LIABILITIES & SHAREHOLDERS EQUITY
Current liabilities: Accounts payable $ 24,441 $ 16,512 Accrued expenses 12,780 6,083 Advanced billings 13,677 20,278 Other current liabilities 405 412
Total current liabilities 51,303 43,285
Convertible subordinated debt 175,000 - Other liabilities 1,627 1,295
Total liabilities 227,930 44,580
Shareholders Equity: Common stock, no par value 321,445 314,780 Accumulated deficit (115,177) (108,864) Other equity (1,047) (6,594)
Total shareholders equity 205,221 199,322
Total liabilities & shareholders equity $ 433,151 $ 243,902
Contact:
EMCORE Corporation Tom Werthan, 732/271-9090 or T.T. Communications Victor Allgeier, 212/962-3690
EMCORE Corporation Tom Werthan,
732/271-9090 or T.T. Communications Victor Allgeier, 212/962-3690
