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22 February 2013

Emcore’s increased solar shipments drive return to profit

Emcore Corp of Albuquerque, NM, USA, which manufacturers compound semiconductor-based systems for fiber-optic and solar power applications, has reported generally improved financial results for fiscal first-quarter 2013 (to end-December 2012). Consolidated revenue was $49.3m, up 31.7% on $37.5m a year ago and up 3.8% on $47.5m last quarter, due mainly to higher solar revenue (driven by increased shipments).

Fiscal Q1/2012 Q2/2012 Q3/2012 Q4/2012 Q1/2013
Revenue $37.5m $37.8m $41.1m $47.5m $49.3m

Photovoltaics segment revenue was $19.6m (40% of total revenue), up 2.5% on a year and 12.8% on $17.4m last quarter. Fiber-optics segment revenue was $29.7m (60% of total revenue), up 62.1% on a year ago but a drop of 1.4% on $30.1m last quarter.

Gross margin has risen from 9.3% a year ago and 9.7% last quarter to 22.2%. In particular, Fiber Optics’ gross margin was 16.7%, rebounding from 2.4% last quarter and negative 4.8% a year ago. Photovoltaics’ gross margin was 30.5%, up from 22.7% a year ago and 22.2% last quarter, driven by higher revenue and the divesting of the lower-margin terrestrial systems product lines.

Operating income was $2.8m, improving by $14.5m on a year ago and by $9.1m on last quarter. Quarter-over-quarter variance was primarily due to “lower expenses associated with the company's realignment efforts previously announced – and improved results within the business segments.”

On a non-GAAP basis, net income was $0.1m, an improvement on a net loss of $7.4m a year ago and $6.3m last quarter.

Photovoltaics order backlog was $35.3m, an 18% drop from the $43.3m last quarter. “Order backlog as of 31 December 2012 and 30 September 2012 included $3.4m and $1.9m, respectively, of terrestrial solar cell orders from our Suncore joint venture,” the firm noted. “Product sales from our Fiber Optics segment are made pursuant to purchase orders, often with short lead-times”.

In the associated analysts’ conference, CEO Hong Hou gave more details of the performance and his expectations for the two segments: “Gross margin for both our solar photovoltaics and broadband fiber optics business improved [in the latest quarter performance] significantly to approximately 30%, and overall operating expenses were well under control, thanks to the business realignment completed.” Returning a net profit for the quarter demonstrates “the positive outcome of restructuring and the flood recovery that the company has been focusing on over the last year”.

Solar photovoltaics revenue demonstrated a substantial sequential increase due to strong demand in space programs, noted Hou. “With some CapEx investment early in the year, manufacturing process was further improved. As a result, the gross profit margin for this division recovered to over 30%.”

Order backlog for solar business showed a sequential decline of $8m to $35.3m. “We have, however, received a notice of award from an international customer recently, with a total contract value in excess of $20m, which will significantly add to our order backlog,” Hou said. “Several other smaller value new awards are also expected in the near term.”

Considering Emcore’s market position and business outlook for the Fiber Optics business segment, Hou added, “In the broadband cable TV business, during the September quarter, our revenue recovered to pre-flood levels and the gross margin recovered to the high-20s”. The broadband Fiber Optics business generated positive operating income in the December quarter for the first time since the Thailand flooding.

For fiscal Q2/2013 (to end-March), Emcore expects revenue of $45-49m (including revenue from the Suncore joint venture). The sequential revenue decline is primarily due to seasonal demand softness in cable TV and the delay in revenue contribution from tunable XFP. “However, the impact to the bottom line will be very manageable, as we cut the loss through restructuring and recovering of our Fiber Optics manufacturing to a variable cost basis,” believes Hou. “We have worked hard to establish that profitability-focused culture, and we are seeing the benefit of that hard work now.”

See related items:

Emcore reports revenue of $47.5m, down 9% year-on-year but up 16% quarter-to-quarter

Emcore reports higher-than-expected quarterly growth of 9%, as Fiber Optics revenue rises a further 18%

Emcore reports quarterly Fiber Optics revenue up 20% sequentially

Emcore’s quarterly revenue falls 28% due to Thailand flood

Tags: Emcore


Author: Matthew Peach, Contributing Editor

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