EMCORE Corporation (EMKR) F4Q2010 Earnings Call Transcript December 21, 2010 4:30 pm ET Executives Victor Allgeier – IR, TTC Group Inc. Mark Weinswig – CFO Hong Hou – CEO Analysts Michael Intrator – Natsource Presentation Operator
We caution you not to rely on these statements without also considering the risks and uncertainties associated with these statements and EMCORE’s business that are addressed in its filings with the US Securities and Exchange Commission that are available on the SEC's website located at www.sec.gov, including the sections entitled Risk Factors in its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. EMCORE assumes no obligation to update any forward-looking statement to conform such statements to actual results or to change in its expectations, except as required by applicable law or regulation.With us today from EMCORE are Dr. Hong Hou, President and Chief Executive Officer; and Mark Weinswig, Chief Financial Officer. Mark will review the financial results and Hong will discuss business highlights before we open the call up to questions. I'll now turn the call over to Mark. Mark Weinswig Thank you, Vic, and good afternoon everyone. Before we begin our review of the quarterly results, I would like to express how exciting I am to be at EMCORE. EMCORE is a dynamic company with tremendous potential and a great team. I look forward to contributing to its future success. Now let me turn to the highlights of our fourth fiscal quarter operating results. Consolidated revenue for our fourth fiscal quarter totaled $54.1 million, which is an increase of $7.5 million or 16% over the previous quarter. On a segment basis, our Photovoltaics business accounted for $19.7 million or 36% of the company’s total revenue, which represents an increase of approximately $4.5 million or 30% from the prior quarter. The increase in revenue was primarily driven by our base solar power generation products. The Fiber Optics segment accounted for $34.4 million or 64% of the company’s total revenue, which represents an increase of roughly $3 million or 9% from the prior quarter, with the increase primarily driven by higher sales of ITLA, active optical cable, and CATV products. We are pleased with our results, especially considering the fact that this includes the effects of the ITC ruling on our parallel optics device products. I will discuss this in more detail later on in the call.
Consolidated gross margins fell to 23.6% from 27.5% in the prior quarter. On a segment basis, Photovoltaics gross margin was 29.3%, which is a decrease from 30.7% reported in the prior quarter, primarily due to higher manufacturing expenses and certain contract losses, partially offset by leverage from higher volume.Fiber Optics gross margin was 20.4%, a 5.5 percentage point reduction from the prior quarter, primarily due to an unfavorable mix shift and higher material costs. The company’s Fiber Optics division is beginning to experience a product mix shift as customers migrate towards newer technology platform. We believe that this will cause margins in the Fiber Optics division to be under pressure until our new products begin to ramp in the latter part of this year. Operating expenses fell $6.6 million from the prior quarter to $14.6 million primarily due to charges realized in the third quarter for the establishment of a bad debt reserve for a solar customer and the Tangshan joint venture termination fee. On a GAAP basis, the consolidated net loss for the fourth quarter was $0.9 million, an improvement of $8.3 million from a net loss of $9.2 million in the prior quarter. On a non-GAAP operating loss basis, after excluding certain adjustments such as certain corporate legal expenses associated with patent litigation, the provision for doubtful accounts established for a solar customer and the Tangshan termination fee, all of which are set forth in the non-GAAP table, was $1.9 million, which represents an almost $1 million improvement over the preceding quarter. Our GAAP net loss per share was $0.01 versus $0.11 in the prior quarter. Read the rest of this transcript for free on seekingalpha.com