Emcore reports Q1 revenues of $39.9M, an increase of 48% from the $27M reported in 1Q05

February 2, 2006

4 Min Read

SOMERSET, N.J. -- EMCORE Corporation (NASDAQ:EMKR) , a leading provider of compound semiconductor-based components and subsystems for the broadband, fiber optic, satellite, and wireless communications markets, today announced its financial results for the fiscal 2006 first quarter ended December 31, 2005.

Revenues for the first quarter of fiscal 2006 were $39.9 million, an increase of 48% from the $27.0 million reported in the first quarter of fiscal 2005, and an increase of $2.9 million, or 8%, sequentially from the $37.0 million in the previous quarter. All three of the Company's operating segments; Electronic Materials and Devices, Photovoltaics and Fiber Optics posted revenue increases both sequentially and year over year. Revenues for Electronic Materials and Devices of $4.2 million represented an increase of 18% sequentially and 128% year over year. Photovoltaics revenues of $10.7 million represented an increase of 15% sequentially and 44% year over year. Fiber optic revenues of $25.0 million represented an increase of 4% sequentially and 41% year over year. Gross profit in the first quarter was $7.2 million, or 18%, an increase of 36 basis points sequentially and an increase of 10% points year over year.

Operating expenses of $12.0 million includes $1.1 million of stock-based compensation expense. Operating expenses, excluding stock-based compensation expense were $10.9 million essentially flat both sequentially and year over year. Included in selling, general and administrative expenses during the quarter were approximately $202,000 of idle facility charges associated with the consolidation of the photovoltaics operations. The Company's City of Industry photovoltaics location is scheduled to be closed later this year and relocated to an automated facility in Albuquerque, NM. Similar charges of approximately $684,000 and $472,000 were recorded in the quarters ended September 30, 2005 and December 31, 2004, respectively. Also included in selling, general and administrative expenses were approximately $400,000 related to Sarbanes-Oxley 404 compliance. The Company successfully completed its first year of SOX 404 compliance in December 2005. Going forward, the Company expects SOX related costs to decrease significantly. During the quarter, the Company implemented SFAS 123(R), Share-Based Payments, expensing stock based compensation to employees. EMCORE reported an operating loss of $4.9 million, excluding the $1.1 million of stock-based compensation expense, the operating loss was $3.7 million, an improvement of $500,000 sequentially and $4.8 million year over year.

Interest expense, net for the quarter totaled $967,000. GELcore, the Company's joint venture with General Electric Lighting, provided $547,000 of income. This was offset, in part, by the loss incurred by Velox Semiconductor, Inc., which was spun-off from EMCORE during fiscal 2005. The Company's portion of Velox's net loss totaled $182,000. EMCORE will account for its investment in Velox under the equity method through March 31, 2006, and thereafter under the cost method of accounting.

During the quarter, the Company exchanged approximately $14.4 million of its convertible, subordinated notes, due in May of 2006, for similar notes due in May 2011. As a result of this transaction, the Company incurred a non-cash loss of $1.1 million which is reflected as a 'Loss on Convertible Subordinated Notes' in the other income/(expense) section of the attached financial statements.

Net loss excluding stock-based compensation expense, the loss on convertible subordinated notes, Velox and idle facility costs amounted to $4.0 million, or $0.08 per share. The GAAP net loss was $6.5 million or $0.14 per share.

Management Discussion and Outlook:

"Revenues of $39.9 million exceeded our upward revised guidance of $39 million for the December quarter. In addition we raised fiscal 2006 revenue guidance. All three of our operating segments experienced revenue increases quarter over quarter as well as year over year. Bookings continue to be strong and as a result, we expect revenues to increase to $41-$42 million in the March 2006 quarter," commented Reuben F. Richards, Jr., President and CEO. "In fiscal 2006 we have made three acquisitions to complete our strategic positioning regarding a vertically integrated broadband infrastructure:

  • Phasebridge, rounding out our satellite communications and specialty product lines;

  • Force, increasing our presence in the expanding video transmission market; and

  • K2 Optronics, providing low cost external cavity lasers for use in our CATV product lines.

These acquisitions, at very attractive prices, further strengthen our leading position on broadband infrastructure products," added Mr. Richards.

Emcore Corp. (Nasdaq: EMKR)

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