News Article
Finisar Reports Record Revenues & Return to Profitability
The firm has announced second fiscal year quarterly revenues of $240.9 million and net income from continuing operations were a record at $33.8 million.
Finisar Corporation, a global technology leader for subsystems and components for fiber optics communications, has announced financial results for its second quarter ended October 31, 2010.
"In our just completed second quarter, we reached our previously announced target for non-GAAP operating margin of 17.0%, upwardly revised just last quarter, substantially earlier than we had predicted. Achieving this level of operating margin was driven by our strong revenue growth combined with minimal increases in operating expenses," said Jerry Rawls, Finisar's executive Chairman of the Board. "We achieved new company records for quarterly revenues, operating income and net income."
"Furthermore, the market environment continued to be very strong for Finisar, driven by increased demand for a broad range of LAN/SAN and metro/telecom products," said Eitan Gertel, Finisar's Chief Executive Officer. "The company continued to gain market share, including in the WSS/ROADM line card segment where revenues grew 27.3% over the previous quarter. We expect revenues for WSS/ROADM line cards to grow another 20% to 30% sequentially in our fiscal third quarter."
Highlights for the second quarter of fiscal 2011 under GAAP:
Revenues increased to $240.9 million, up $33.1 million, or 15.9%, from $207.9 million in the preceding quarter and up $95.2 million, or 65.3%, from $145.7 million in the second quarter of the prior year.
Compared to the preceding quarter, the sale of 10 Gbps or faster products increased $13.3 million, or 14.1%, the sale of less than 10 Gbps products increased $12.1 million, or 15.4%, the sale of ROADM related products, including wavelength selective switches (WSS) increased $8.3 million, or 27.3%, and the sale of products for analog and cable television (CATV) applications decreased $0.7 million, or (15.6)%.
Compared to the second quarter of 2009, the sale of 10 Gbps or faster products increased $52.0 million, or 94.0%, the sale of less than 10 Gbps products increased $21.3 million, or 30.5%, the sale of ROADM related products increased $23.3 million, or 151.0%, and the sale of products for CATV applications decreased $1.4 million, or (28.6)%.
Gross margin increased to 34.2% from 34.1% in the preceding quarter and 27.3% in the second quarter of the prior year. Operating income increased to $36.1 million, or 15.0% of revenues, compared to $23.7 million, or 11.4% of revenues, in the preceding quarter and an operating loss of $(2.0) million, or (1.3)% of revenues, in the second quarter of the prior year.
Net income from continuing operations was $33.8 million, or $0.39 per diluted share, compared to $19.4 million, or $0.24 per diluted share, in the preceding quarter and a loss of $(31.4) million, or $(0.49) per share, in the second quarter of the prior year.
Cash generated during the second quarter, after working capital adjustments and capital expenditures, excluding the items described in the next paragraph, totaled $18.0 million. Accounts receivable and inventory increased $20.8 million and $12.4 million, respectively.
The increase in accounts receivable was driven by increased revenue levels as days sales outstanding, or DSOs, were 66 days compared to 67 days in the prior quarter. The increase in inventory was due in part to planned inventory build-up in anticipation of further revenue growth in the third quarter. Capital expenditures were $13.4 million compared to $12.1 million in the preceding quarter and $7.6 million in the second quarter of the prior year.
In addition during the quarter, the Company received $11.3 million in cash, net of related legal fees, under a settlement and cross license agreement with Source Photonics, Inc. This settlement resolved a lawsuit brought by Finisar claiming infringement of Finisar patents.
Finisar also paid $29.6 million in cash to retire convertible subordinated notes which matured on October 15, 2010 and made scheduled principal payments of an additional $1.0 million on its Malaysian debt.
Finally, the Company used $5.9 million in cash to make a strategic minority investment in a small opto-electronics company.
Cash and cash equivalents totaled $184.9 million at the end of the second quarter compared to $192.2 million at the end of the preceding quarter.
Under Finisar's $70.0 million secured credit facility with Wells Fargo Foothill, LLC, no borrowings were outstanding and $66.6 million was available to borrow at the end of the second quarter.
