Opnext, Inc. (OPXT)
F1Q11 (Qtr End 06/30/10) Earnings Call Transcript
August 5, 2010 4:30 pm ET
Steve Pavlovich – VP, IR
Gill Bouchard – President and CEO
Bob Nobile – CFO & SVP
Ajit Pai – Stifel Nicolaus
Paul Bonenfant – Morgan Keegan
Rahul Khanwalkar – Jefferies
Previous Statements by OPXT
» Opnext Inc. F4Q10 (Qtr End 03/31/2010) Earnings Call Transcript
» Opnext, Inc. F3Q10 (Qtr Ending 12/31/09) Earnings Call Transcript
» Opnext, Inc. Q3 2009 Earnings Call Transcript
My name is Sonia and I will be your conference operator today.
At this time, I would like to welcome everyone to the Opnext, Inc. Q1 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator instructions)
At this time, I would like to turn the call over to your presenter, Mr. Steve Pavlovich. Sir, you may begin.
Thank you, Sonia. Good afternoon and thanks for joining us everyone. Today, we will discuss our financial results for the first fiscal quarter ended June 30, 2010. We’ll begin with Gill Bouchard, our President and Chief Executive Officer, for an overview of the quarter followed by Bob Nobile, our Chief Financial Officer, who will provide additional detail on the financial results. Then Gill will talk about operational plans and guidance and, of course then, followed by Q&A.
As a reminder, the matters we will be discussing today include forward-looking statements, and as such are subject to the risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Such risks and uncertainties are discussed in the company’s filings with the SEC, including the press release filed today and our most recent annual report on Form 10-K, quarterly report on Form 10-Q and any applicable amendments.
Please refer to the Safe Harbor language contained therein in providing forward-looking statements. The company expressly disclaims any obligation to update these statements.
Also let me mention that throughout this conference call, we will be referencing both GAAP and non-GAAP financial measures. A complete reconciliation of the non-GAAP financial measure to the applicable GAAP financial measure, including a reconciliation of adjusted EBITDA to EBITDA can be found in the press release we issued today, which is available on our Web site in the Investor Relations section.
With that, I will turn it over to Gill.
Thank you, Steve, and good afternoon, everyone. Today we reported mixed results for our first quarter. On the revenue side, we came in about $1 million below the bottom end of our guidance. Here we had a contrasted picture. Sales of 10G and below products grew 14% and sales of 40G and above modules were up 31%. On the other hand, 40G subsystems continue to be very challenging. Sales were down 60%, which was a primary reason for the shortfall versus guidance.
While module revenue was strong, deliveries continue to be negatively impacted by supply constraints. Backlog has doubled in the past two quarters and book-to-bill ratio is well above 1. We also are very pleased to have Huawei as a 10% customer for the first time this quarter.
The industrial and commercial business, again, turned in a solid performance this quarter with 10% revenue growth versus the quarter ended March 2010. Revenues were well above pre-downturn levels.
Moving on to bottom-line results, gross margin was flat versus the quarter ended March 2010 and R&D expenses declined. As a result, our non-GAAP loss per fully diluted share was $0.13, a $0.03 improvement compared to last quarter. Cash used was high in part of the result of increased working capital and continued investments in new capacity to support growth and new products.
Now, let me turn it over to Bob to discuss the financial results in more detail.
Thanks, Gill, and good afternoon, everyone. We generated total revenue of $78.9 million representing an increase of approximately $2.1 million compared to the March quarter. Revenue from sales of our 10G and below products increased 14% to $55.8 million primarily as a result of increased sales of 300 pin tunables, XFP, and SFP+ modules, partially offset by a decrease in sales of Xenpak modules.
On the other hand, our 40G and above revenues decreased 25% to $16.3 million. This decrease was driven by weak 40G subsystem sales, partially offset by strong growth in 40G and above module sales. While revenue growth was strong for both 10G and below products and 40G and above modules, product delivers continue to be delayed as supply constraints continued.
Revenue from industrial and commercial product sales increased 10% to $6.7 million, representing the fourth consecutive quarter of I&C growth. Compared to the first quarter ended in June 2009, revenue decreased $6.4 million from $85.3 million. Revenue from 10G and below products increased $7.8 million, or 16.3%, while revenue from 40G and above products decreased $18.6 million or 53% compared to the prior year. This decrease was caused by an almost 90% decline in 40G subsystem sales, partially offset by higher 40G and 100G module sales.
Revenue from sales of industrial and commercial products increased $4.4 million, or 191%, from $2.3 million in the June 2009 quarter, a historical low point for I&C revenue.
For the quarter ended in June 2010, Cisco Systems, Alcatel-Lucent, and Huawei each represented 10% or more of total revenues. Combined, these three customers represented approximately 51% of total revenues compared to 44% in the quarter ended June 2009. This past quarter was the first quarter that Huawei has represented 10% or more of total revenues.