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EMCORE Corporation (EMKR)

F3Q10 (Qtr End 06/30/10) Earnings Call

August 16, 2010 5:00 pm ET


Victor Allgeier - IR, TTC Group

Dr. Hong Hou - President and CEO

Reuben Richards - Executive Chairman and Interim CFO


Al Shams - Midsouth Capital

Michael Intrator - Natsource Asset Management



Good day, ladies and gentlemen and welcome to this Emcore business update. (Operator Instructions)

I would now like to turn the call over to Mr. Victor Allgeier.

Victor Allgeier

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Thank you and good evening, everyone. Today after the close of market Emcore released a press release and related Form 8-K announcing that it would delay its quarterly report on Form 10-Q for the period ended June 30, 2010.

With us today from Emcore are Dr. Hong Hou, President and Chief Executive Officer; and Reuben Richards, Executive Chairman and Interim Chief Financial Officer.

Reuben will provide revenue guidance for the fiscal 2010 fourth quarter, and Hong will provide a general business update before we open the call up to questions. Unfortunately, because of the delay in the filing of the Form 10-Q, the company will not be able to answer questions regarding its fiscal 2010 third quarter.

Before we begin, we would like to remind you that some of the comments made during the conference call and some of the responses to your questions by management may contain forward-looking statements that are subject to various risks and uncertainties as described in Emcore's earnings press release and filings with the SEC.

I'll now turn the call over to Reuben.

Reuben Richards

Thank you, Vic. Good morning everybody. As we stated in the press release, Emcore is currently revealing accounting for certain inventory write-downs in the allowance against a specific account receivable that Emcore has determined should be recorded. Emcore is considering the effect and significance of these adjustments with respect to prior periods.

These issues must be completed in order for Emcore to be in a position to file its quarterly report. In addition, during the quarter, Emcore identified material weaknesses in connection with those inventory and revenue cutoff transactions as of June 30. The company intends to file its quarterly report as soon as reasonably practicable.

For the fourth quarter, which is a quarter we're going to talk about, and Hong will give us a business update, the forecast for the period ending September 30, the Company expects consolidated revenue to be in the range of $54 million to $56 million with increases in both Photovoltaics and Fiber Optics segments.

In Fiber, we expect revenues of $33 million or $34 million, up sequentially quarter-over-quarter from Q3 and Q2, and solar will be in the $21 million to $22 million range, again, showing the second sequential quarterly increase, up $54 million to $56 million.

In terms of liquidity in capital resources, for the quarter we expect our operations performance will continue to improve from previous quarters, and cash will be generated through profit margin improvement and working capital management. The delay in filing the quarter will not affect the availability of any credit facility on the Bank of America current terms.

Furthermore, on an operational strategic standpoint, Hong will describe the San'an transaction as well as the TCIC update. And San'an will create a low cost manufacturing capability, allowing the company to launch its CPV business in China without significant demand on our capital. Further, we are working to structure a similar deal with TCIC for low cost manufacturing capability in China on similar terms.

And with that, I will turn it over to Hong.

Hong Hou

As Reuben discussed, due to the delay of our filing of 10-Q, we are not in a position to discuss the details of financial performance of our Q3 results ended June 30. We're working very hard to resolving the accounting issues and get a Q filed as soon as reasonably practical.

However, we found it very important to give you an update on our strategy and business outlook. First, let me address some significant corporate events that happened in the last four months. As you know, the Emcore community experienced a terrible shock when domestic violence erupted in front of our building in Albuquerque on Monday, July 12, 2010.

A senseless act of violence occurred when a former employee, who had children with a current employee, came to the facility (inaudible). Police and the employees responded heroically, but not before two of our own were killed in the attack. We honor and remember Sharon Cunningham and Michelle Turner whose lives were tragically taken on July 12. Our prayers and hearts are with the mourning families and friends of the sad loss.

Emcore thanks the first responders for their rapid response to this tragedy. We specifically thank the local police and the city employees, the Mayor of Albuquerque and the fire department. We acknowledge the courageous efforts of many Emcore employees who saved and assisted their colleagues. Emcore had received an outpouring of support from the community. And we thank everyone for their kind words and the encouragement. Your messages of support and prayer have helped us through this terrible time so far, and we intend to properly honor those we have lost and to demonstrate that our spirit is greater than the tragedy by moving forward together.

Emcore has taken action to ensure that the needs of our victims' families are met and addressed. In addition, we established memorial funds for Michelle Turner and Sharon Cunningham at Bank of America branches. We're building a community who had expressed a desire to donate.

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