NeoPhotonics Reports Second Quarter 2020 Financial Results

Nachrichtenquelle: Business Wire (engl.)
04.08.2020, 22:07  |  113   |   |   

NeoPhotonics Corporation (NYSE: NPTN), a leading developer of silicon photonics and advanced hybrid photonic integrated circuit-based lasers, modules and subsystems for bandwidth-intensive, high speed communications networks, today announced financial results for its second quarter ended June 30, 2020.

“The second quarter was another strong quarter, with revenue up 26% compared to last year and continued gross margin expansion to 32.5%. This was our fourth straight quarter of profitability. Non-GAAP EPS was 16 cents and GAAP EPS was 11 cents per share,” said Tim Jenks, Chairman and CEO of NeoPhotonics. “With increasing momentum in 400G and above product design wins across almost all of the major network equipment manufacturers globally, and with increasing momentum in 400ZR opportunities, we remain optimistic about the growth prospects for NeoPhotonics,” concluded Mr. Jenks.

Second Quarter Summary

  • Revenue was $103.2 million, up 6% quarter-over-quarter and up 26% year-over-year
  • Gross margin was 32.5%, up from 30.5% in the prior quarter and from 19.2% in the prior year
  • Non-GAAP gross margin was 33.2%, up from 31.2% in the prior quarter and up from 25.6% in the prior year
  • Diluted net income per share was $0.11, in comparison to $0.12 in the prior quarter and to a net loss per share of $0.16 in the same period last year
  • Non-GAAP diluted net income per share was $0.16, in comparison to $0.17 in the prior quarter and to a net loss of $0.03 in the same period last year
  • Cash generated from operations was $9.6 million, down from $24.9 million in the prior quarter and up from $0.7 million in the same period last year
  • Adjusted EBITDA was $16.9 million, in comparison to $17.8 million in the prior quarter and to $6.8 million in the same period last year.

Non-GAAP results in the second quarter of 2020 exclude $3.8 million of stock-based compensation expense and $0.3 million of amortization of acquisition-related intangibles and other costs. 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.

As of June 30, 2020 cash and cash equivalents, short-term investments and restricted cash, together totaled $113 million, up $4 million compared to March 31, 2020.

Outlook for the Quarter Ending September 30, 2020

 

GAAP

Non-GAAP

Revenue

$97 to $105 million

Gross Margin

29% to 33%

30% to 34%

Operating Expenses

$28 to $29 million

$25 to $26 million

Earnings per share

$0.03 loss to $0.07 profit

$0.03 to $0.13

The third quarter EPS outlook includes an expected $1.0 million unfavorable impact for foreign exchange.

The non-GAAP outlook for the third quarter of 2020 excludes the expected impact of stock-based compensation expense of approximately $3.4 million, of which $0.7 million is estimated for cost of goods sold, and the impact of expected amortization of acquisition-related intangibles and other costs of approximately $0.3 million.

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. NeoPhotonics believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

Conference Call

The Company will host a conference call today, Tuesday, August 4, 2020 at 4:30 PM Eastern Time (1:30 PM Pacific Time). The call will be available, live, to interested parties by dialing 800-353-6461. For international callers, please dial 334-323-0501. The Conference ID number is 8588151. Please dial into the conference call 5-10 minutes prior to the scheduled start time.

A live webcast will be available in the Investor Relations section of NeoPhotonics’ website at: http://ir.neophotonics.com/phoenix.zhtml?c=236218&p=irol-calendar.

A replay of the webcast will be available in the Investor Relations section of the Company’s website approximately two hours after the conclusion of the call and remain available for approximately 30 calendar days.

About NeoPhotonics

NeoPhotonics is a leading developer and manufacturer of lasers and optoelectronic solutions that transmit, receive and switch high-speed digital optical signals for Cloud and hyper-scale data center internet content provider and telecom networks. The Company’s products enable cost-effective, high-speed over distance data transmission and efficient allocation of bandwidth in optical networks. NeoPhotonics maintains headquarters in San Jose, California and ISO 9001:2015 certified engineering and manufacturing facilities in Silicon Valley (USA), Japan and China. For additional information visit www.neophotonics.com.

Legal Notice Regarding Forward-Looking Statements

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, and the Company’s market position. 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; potential impacts of the Covid-19 pandemic; possible reduction in or volatility of customer orders or delays in shipments of products to customers; potential governmental trade actions; 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; volatility in utilization of manufacturing operations and 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; potential pricing pressure that may arise from changing supply or demand conditions in the industry; 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; 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/A for the year ended December 31, 2019. All forward-looking statements are made as of the date of this press release, and the Company disclaims any duty to update such statements.

2020 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.

NeoPhotonics Corporation

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

 

 

 

As of

 

 

Jun. 30, 2020

 

Dec. 31, 2019

 

 

 

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

94,536

 

 

$

70,467

 

Short-term investments

 

7,665

 

 

7,638

 

Restricted cash

 

11,055

 

 

10,972

 

Accounts receivable, net

 

61,223

 

 

68,890

 

Inventories

 

50,449

 

 

46,930

 

Prepaid expenses and other current assets

 

29,268

 

 

25,851

 

Total current assets

 

254,196

 

 

230,748

 

Property, plant and equipment, net

 

73,052

 

 

81,133

 

Operating lease right-of-use assets

 

14,662

 

 

15,603

 

Purchased intangible assets, net

 

1,771

 

 

2,151

 

Goodwill

 

1,115

 

 

1,115

 

Other long-term assets

 

3,838

 

 

3,929

 

Total assets

 

$

348,634

 

 

$

334,679

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

61,636

 

 

$

58,554

 

Current portion of long-term debt

 

3,083

 

 

3,044

 

Accrued and other current liabilities

 

45,354

 

 

47,481

 

Total current liabilities

 

110,073

 

 

109,079

 

Long-term debt, net of current portion

 

33,235

 

 

39,237

 

Operating lease liabilities, noncurrent

 

15,471

 

 

16,543

 

Other noncurrent liabilities

 

10,827

 

 

9,614

 

Total liabilities

 

169,606

 

 

174,473

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

Common stock

 

124

 

 

121

 

Additional paid-in capital

 

590,800

 

 

582,504

 

Accumulated other comprehensive loss

 

(9,380

)

 

(7,871

)

Accumulated deficit

 

(402,516

)

 

(414,548

)

Total stockholders’ equity

 

179,028

 

 

160,206

 

Total liabilities and stockholders’ equity

 

$

348,634

 

 

$

334,679

 

NeoPhotonics Corporation

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except percentages and per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

Jun. 30, 2020

 

Mar. 31, 2020

 

Jun. 30, 2019

 

Jun. 30, 2020

 

Jun. 30, 2019

Revenue

 

$

103,171

 

 

$

97,401

 

 

$

81,690

 

 

$

200,572

 

 

$

161,056

 

Cost of goods sold (1)

 

69,669

 

 

67,675

 

 

66,015

 

 

137,344

 

 

129,644

 

Gross profit

 

33,502

 

 

29,726

 

 

15,675

 

 

63,228

 

 

31,412

 

Gross margin

 

32.5

%

 

30.5

%

 

19.2

%

 

31.5

%

 

19.5

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Research and development (1)

 

13,689

 

 

11,884

 

 

13,793

 

 

25,573

 

 

28,476

 

Sales and marketing (1)

 

4,279

 

 

3,659

 

 

3,623

 

 

7,938

 

 

8,226

 

General and administrative (1)

 

8,803

 

 

6,789

 

 

7,174

 

 

15,592

 

 

14,927

 

Amortization of purchased intangible assets

 

 

 

 

 

 

 

 

 

119

 

Asset sale related costs

 

120

 

 

12

 

 

47

 

 

132

 

 

376

 

Restructuring charges

 

 

 

 

 

79

 

 

 

 

258

 

Gain on asset sale

 

 

 

 

 

(817

)

 

 

 

(817

)

Total operating expenses

 

26,891

 

 

22,344

 

 

23,899

 

 

49,235

 

 

51,565

 

Income (loss) from operations

 

6,611

 

 

7,382

 

 

(8,224

)

 

13,993

 

 

(20,153

)

Interest income

 

22

 

 

98

 

 

99

 

 

120

 

 

198

 

Interest expense

 

(301

)

 

(378

)

 

(496

)

 

(679

)

 

(989

)

Other income (expense), net

 

(195

)

 

1,198

 

 

1,090

 

 

1,003

 

 

(508

)

Total interest and other income (expense), net

 

(474

)

 

918

 

 

693

 

 

444

 

 

(1,299

)

Income (loss) before income taxes

 

6,137

 

 

8,300

 

 

(7,531

)

 

14,437

 

 

(21,452

)

Income tax (provision) benefit

 

(412

)

 

(1,993

)

 

205

 

 

(2,405

)

 

35

 

Net income (loss)

 

$

5,725

 

 

$

6,307

 

 

$

(7,326

)

 

$

12,032

 

 

$

(21,417

)

Basic net income (loss) per share

 

$

0.12

 

 

$

0.13

 

 

$

(0.16

)

 

$

0.25

 

 

$

(0.46

)

Diluted net income (loss) per share

 

$

0.11

 

 

$

0.12

 

 

$

(0.16

)

 

$

0.24

 

 

$

(0.46

)

Weighted average shares used to compute basic net income (loss) per share

 

49,077

 

 

48,615

 

 

46,754

 

 

48,846

 

 

46,585

 

Weighted average shares used to compute diluted net income (loss) per share

 

51,661

 

 

50,617

 

 

46,754

 

 

51,124

 

 

46,585

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes stock-based compensation expense as follows for the periods presented:

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

$

621

 

 

$

537

 

 

$

609

 

 

$

1,158

 

 

$

1,210

 

Research and development

 

999

 

 

758

 

 

787

 

 

1,757

 

 

1,668

 

Sales and marketing

 

738

 

 

530

 

 

599

 

 

1,268

 

 

1,277

 

General and administrative

 

1,429

 

 

693

 

 

1,010

 

 

2,122

 

 

2,188

 

Total stock-based compensation expense

 

$

3,787

 

 

$

2,518

 

 

$

3,005

 

 

$

6,305

 

 

$

6,343

 

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, 2020

 

Mar. 31, 2020

 

Jun. 30, 2019

 

Jun. 30, 2020

 

Jun. 30, 2019

NON-GAAP GROSS PROFIT:

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

33,502

 

 

$

29,726

 

 

$

15,675

 

 

$

63,228

 

 

$

31,412

 

Stock-based compensation expense

 

621

 

 

537

 

 

609

 

 

1,158

 

 

1,210

 

Amortization of purchased intangible assets

 

184

 

 

184

 

 

184

 

 

368

 

 

368

 

Depreciation of acquisition-related fixed asset step-up

 

(8

)

 

(12

)

 

(66

)

 

(20

)

 

(132

)

End-of-life related inventory write-down

 

 

 

 

 

3,553

 

 

 

 

3,553

 

Accelerated depreciation

 

 

 

 

 

950

 

 

 

 

2,265

 

Non-GAAP gross profit

 

$

34,299

 

 

$

30,435

 

 

$

20,905

 

 

$

64,734

 

 

$

38,676

 

Non-GAAP gross margin as a % of revenue

 

33.2

%

 

31.2

%

 

25.6

%

 

32.3

%

 

24.0

%

 

 

 

 

 

 

 

 

 

 

 

NON-GAAP TOTAL OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

GAAP total operating expenses

 

$

26,891

 

 

$

22,344

 

 

$

23,899

 

 

$

49,235

 

 

$

51,565

 

Stock-based compensation expense

 

(3,166

)

 

(1,981

)

 

(2,396

)

 

(5,147

)

 

(5,133

)

Amortization of purchased intangible assets

 

 

 

 

 

 

 

 

 

(119

)

Depreciation of acquisition-related fixed asset step-up

 

(28

)

 

(29

)

 

(67

)

 

(57

)

 

(133

)

Asset sale related costs

 

(120

)

 

(12

)

 

(47

)

 

(132

)

 

(376

)

Restructuring charges

 

 

 

 

 

(79

)

 

 

 

(258

)

Gain on asset sale

 

 

 

 

 

817

 

 

 

 

817

 

Non-GAAP total operating expenses

 

$

23,577

 

 

$

20,322

 

 

$

22,127

 

 

$

43,899

 

 

$

46,363

 

Non-GAAP total operating expenses as a % of revenue

 

22.9

%

 

20.9

%

 

27.1

%

 

21.9

%

 

28.8

%

 

 

 

 

 

 

 

 

 

 

 

NON-GAAP OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) from operations

 

$

6,611

 

 

$

7,382

 

 

$

(8,224

)

 

$

13,993

 

 

$

(20,153

)

Stock-based compensation expense

 

3,787

 

 

2,518

 

 

3,005

 

 

6,305

 

 

6,343

 

Amortization of purchased intangible assets

 

184

 

 

184

 

 

184

 

 

368

 

 

487

 

Depreciation of acquisition-related fixed asset step-up

 

20

 

 

17

 

 

1

 

 

37

 

 

1

 

Asset sale related costs

 

120

 

 

12

 

 

47

 

 

132

 

 

376

 

End-of-life related inventory write-down

 

 

 

 

 

3,553

 

 

 

 

3,553

 

Accelerated depreciation

 

 

 

 

 

950

 

 

 

 

2,265

 

Restructuring charges

 

 

 

 

 

79

 

 

 

 

258

 

Gain on asset sale

 

 

 

 

 

(817

)

 

 

 

(817

)

Non-GAAP income (loss) from operations

 

$

10,722

 

 

$

10,113

 

 

$

(1,222

)

 

$

20,835

 

 

$

(7,687

)

Non-GAAP operating margin as a % of revenue

 

10.4

%

 

10.4

%

 

(1.5

)%

 

10.4

%

 

(4.8

)%

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, 2020

 

Mar. 31, 2020

 

Jun. 30, 2019

 

Jun. 30, 2020

 

Jun. 30, 2019

NON-GAAP NET INCOME (LOSS):

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

5,725

 

 

$

6,307

 

 

$

(7,326

)

 

$

12,032

 

 

$

(21,417

)

Stock-based compensation expense

 

3,787

 

 

2,518

 

 

3,005

 

 

6,305

 

 

6,343

 

Amortization of purchased intangible assets

 

184

 

 

184

 

 

184

 

 

368

 

 

487

 

Depreciation of acquisition-related fixed asset step-up

 

20

 

 

17

 

 

1

 

 

37

 

 

1

 

Asset sale related costs

 

120

 

 

12

 

 

47

 

 

132

 

 

376

 

End-of-life related inventory write-down

 

 

 

 

 

3,553

 

 

 

 

3,553

 

Accelerated depreciation

 

 

 

 

 

950

 

 

 

 

2,265

 

Restructuring charges

 

 

 

 

 

79

 

 

 

 

258

 

Gain on asset sale

 

 

 

 

 

(817

)

 

 

 

(817

)

Income tax effect of Non-GAAP adjustments

 

(1,160

)

 

26

 

 

(895

)

 

(1,134

)

 

(1,272

)

Non-GAAP net income (loss)

 

$

8,676

 

 

$

9,064

 

 

$

(1,219

)

 

$

17,740

 

 

$

(10,223

)

Non-GAAP net income (loss) as a % of revenue

 

8.4

%

 

9.3

%

 

(1.5

)%

 

8.8

%

 

(6.3

)%

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED EBITDA:

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

5,725

 

 

$

6,307

 

 

$

(7,326

)

 

$

12,032

 

 

$

(21,417

)

Stock-based compensation expense

 

3,787

 

 

2,518

 

 

3,005

 

 

6,305

 

 

6,343

 

Amortization of purchased intangible assets

 

184

 

 

184

 

 

184

 

 

368

 

 

487

 

Depreciation of acquisition-related fixed asset step-up

 

20

 

 

17

 

 

1

 

 

37

 

 

1

 

Asset sale related costs

 

120

 

 

12

 

 

47

 

 

132

 

 

376

 

End-of-life related inventory write-down

 

 

 

 

 

3,553

 

 

 

 

3,553

 

Accelerated depreciation

 

 

 

 

 

950

 

 

 

 

2,265

 

Restructuring charges

 

 

 

 

 

79

 

 

 

 

258

 

Gain on asset sale

 

 

 

 

 

(817

)

 

 

 

(817

)

Interest expense, net

 

279

 

 

280

 

 

397

 

 

559

 

 

791

 

Income tax (provision) benefit

 

412

 

 

1,993

 

 

(205

)

 

2,405

 

 

(35

)

Depreciation expense

 

6,414

 

 

6,473

 

 

6,956

 

 

12,887

 

 

14,189

 

Adjusted EBITDA

 

$

16,941

 

 

$

17,784

 

 

$

6,824

 

 

$

34,725

 

 

$

5,994

 

Adjusted EBITDA as a % of revenue

 

16.4

%

 

18.3

%

 

8.4

%

 

17.3

%

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE:

 

 

 

 

 

 

 

 

 

 

GAAP basic net income (loss) per share

 

$

0.12

 

 

$

0.13

 

 

$

(0.16

)

 

$

0.25

 

 

$

(0.46

)

GAAP diluted net income (loss) per share

 

$

0.11

 

 

$

0.12

 

 

$

(0.16

)

 

$

0.24

 

 

$

(0.46

)

Non-GAAP basic net income (loss) per share

 

$

0.18

 

 

$

0.19

 

 

$

(0.03

)

 

$

0.36

 

 

$

(0.22

)

Non-GAAP diluted net income (loss) per share

 

$

0.16

 

 

$

0.17

 

 

$

(0.03

)

 

$

0.33

 

 

$

(0.22

)

 

 

 

 

 

 

 

 

 

 

 

SHARES USED TO COMPUTE GAAP AND NON-GAAP BASIC NET INCOME (LOSS) PER SHARE

 

49,077

 

 

48,615

 

 

46,754

 

 

48,846

 

 

46,585

 

SHARES USED TO COMPUTE GAAP DILUTED NET INCOME

(LOSS) PER SHARE

 

51,661

 

 

50,617

 

 

46,754

 

 

51,124

 

 

46,585

 

SHARES USED TO COMPUTE NON-GAAP DILUTED NET INCOME

(LOSS) PER SHARE

 

54,303

 

 

52,406

 

 

46,754

 

 

53,338

 

 

46,585

 

 

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