Exhibit 99.1
NeoPhotonics Reports Record Fourth Quarter and
Fiscal Year 2015 Financial Results
| · | | Record Revenue of $89.1 million for the quarter; $339.4 million for the year |
| · | | Non-GAAP Gross Margin of 32.4%for the quarter; 31.5% for the year |
| · | | Adjusted EBITDA of $11.8 million for the quarter; $43.2 million for the year |
| · | | Non-GAAP Net income of $6.9 million for the quarter; $21.1 million for the year |
SAN JOSE, Calif. — March 1, 2016 - NeoPhotonics Corporation (NYSE: NPTN), a leading designer and manufacturer of advanced hybrid photonic integrated optoelectronic modules and subsystems for bandwidth-intensive, high-speed communications networks, today announced financial results for its fourth quarter and year ended December 31, 2015.
“We are pleased to report record results for the fourth quarter and the full fiscal year of 2015. For the quarter, we reported record revenue, non-GAAP gross profit and net income. And for the year we reported both record revenue and record non-GAAP earnings, making it the best year in the Company’s history”, said Tim Jenks, CEO of NeoPhotonics. “The market for 100G and beyond optical networks is growing very robustly and NeoPhotonics’ leading product positions coupled with our new product introductions for coherent transport and data center applications places us in an advantageous position for the coming year. We are currently expecting full year revenue growth for 2016 to be in the range of 15% overall,” concluded Mr. Jenks.
Fourth Quarter Summary
| · | | Revenue was $89.1 million, up $10.1 million, or 12.8%, from the fourth quarter of 2014, and up $5.6 million, or 6.7%, from the prior quarter |
| · | | GAAP Gross margin was 28.2%, down from 28.7% in the fourth quarter of 2014, and down from 28.4% in the prior quarter |
| · | | Non-GAAP Gross margin was 32.4%, up from 30.3% in the fourth quarter of 2014, and up from 29.8% in the prior quarter |
| · | | GAAP Net income was $0.4 million, down from $1.6 million in the fourth quarter of 2014, and down from $1.4 million in the prior quarter |
| · | | Non-GAAP Net income was $6.9 million, compared with earnings of $6.3 million in the fourth quarter of 2014, and up from $4.6 million in the prior quarter |
| · | | GAAP Diluted earnings per share was $0.01, down from earnings of $0.05 in the fourth quarter of 2014, and down from $0.03 in the prior quarter |
| · | | Non-GAAP Diluted earnings per share was $0.16, down from $0.19 in the fourth quarter of 2014, and up from earnings of $0.11 in the prior quarter |
| · | | Adjusted EBITDA was $11.8 million, up from $11.6 million in the fourth quarter of 2014, and up from $10.2 million in the prior quarter |
| · | | Non-GAAP results exclude $2.8 million of end-of-life inventory write-down charges, $1.3 million of amortization of acquisition-related intangibles, inventory and fixed asset step-up costs, $2.3 million of stock based compensation expenses and $0.5 million of acquisition-related costs |
At December 31, 2015, cash and cash equivalents, short-term investments and restricted cash and investments, together totaled $102.0 million, down from $103.6 million at September 30, 2015. Restricted cash and investments at December 31, 2015 was $2.7 million, down from $3.1 million at September 30, 2015.
Annual Summary
| · | | Revenue in 2015 was $339.4 million, an increase of $33.3 million, or 10.9%, from $306.2 million in 2014 |
| · | | GAAP Gross margin was 29.2%, a six percentage point increase from 2014 |
| · | | Non-GAAP Gross margin was 31.5%, up 6.5 percentage points from 2014 |
| · | | GAAP Net income for the full year was $3.7 million, a major improvement from the net loss of $19.7 million in 2014 |
| · | | Non-GAAP Net income for the full year was $21.1 million, a strong improvement from the net loss of $9.2 million in 2014 |
| · | | GAAP Diluted net income per share was $0.09, compared to a diluted net loss per share of $0.61 in 2014 |
| · | | Non-GAAP Diluted net income per share was $0.53, a solid improvement from the diluted net loss per share of $0.29 in 2014 |
| · | | Adjusted EBITDA was $43.2 million, up from $12.0 million in 2014 |
Outlook for the Quarter Ending March 31, 2016
The Company’s expectations for the first quarter 2016 are:
| · | | Revenue in the range of $92 million to $98 million |
| · | | Non-GAAP Gross margin in the range of 30% to 33% |
| · | | Diluted earnings per share in the range of 1 cent to 10 cents, and |
| · | | Non-GAAP diluted earnings per share in the range of 10 cents to 18 cents |
The Non-GAAP outlook for the first quarter of 2016 excludes the impact of expected amortization of intangibles of approximately $1.4 million and the anticipated impact of stock-based compensation of approximately $2.8 million, of which $0.6 million is estimated for cost of goods sold.
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, March 1, 2016, at 4:30 P.M. Eastern Time (1:30 p.m. Pacific Time). The call will be available, live, to interested parties by dialing +1 844-809-8111. For international callers, please dial +1 541-797-7255. The Conference ID number is 30757442. A live webcast will be available in the Investor Relations section of NeoPhotonics website at: www.neophotonics.com.
A replay of the webcast will be available in the Investor Relations section of the Company’s web site after the conclusion of the call and remain available for approximately 30 calendar days.
About NeoPhotonics
NeoPhotonics is a leading designer and manufacturer of advanced hybrid photonic integrated optoelectronic modules and subsystems for bandwidth-intensive, high-speed communications networks. The Company’s products enable cost-effective, high-speed data transmission and efficient allocation of bandwidth over communications networks. NeoPhotonics maintains headquarters in San Jose, California and ISO 9001:2000 certified engineering and manufacturing facilities in Silicon Valley (USA), Japan and China. For additional information visit www.neophotonics.com.
© 2016 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.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
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, the Company’s market position and industry trends. 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: possible reduction in or volatility of customer orders or delays in shipments of products to customers; timing of customer drawdowns of vendor-managed inventory; 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; economic conditions or natural disasters; volatility in utilization of manufacturing operations, supporting utility services and other 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; the Company’s reliance on a small number of customers for a substantial portion of its revenues; potential pricing pressure that may arise from changing supply or demand conditions in the industry; the impact of any previous or future acquisitions; challenges involving integration of acquired businesses and utilization of acquired technology, including the acquisition of EMCORE’s tunable laser product line and EigenLight’s precision optical power monitor business in 2015; market adoption, revenue growth and margins of acquired products; 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; the nature of other investment opportunities available to the Company from time to time; the Company’s operating cash flow; 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 for the year ended December 31, 2014 as well as the Company’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2015. All forward-looking statements are made as of the date of this press release, and the Company disclaims any duty to update such statements.
NeoPhotonics Corporation
Clyde R. Wallin, +1-408-678-1852
Chief Financial Officer
ray.wallin@neophotonics.com
Sapphire Investor Relations, LLC
Erica Mannion, +1-617-542-6180
Investor Relations
ir@neophotonics.com
NeoPhotonics Corporation
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
| | | | | |
| | | As of |
| | | Dec. 31,
2015 | | Dec. 31,
2014 |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | | $ 76,088 | | $ 43,035 |
Short-term investments | | | 23,294 | | - |
Restricted cash and investments | | | 2,660 | | 5,504 |
Accounts receivable, net | | | 83,161 | | 77,597 |
Inventories, net | | | 65,602 | | 57,347 |
Prepaid expenses and other current assets | | | 12,393 | | 15,540 |
Total current assets | | | 263,198 | | 199,023 |
Property, plant and equipment, net | | | 62,618 | | 57,657 |
Restricted cash and investments, non-current | | | - | | 15,750 |
Purchased intangible assets, net | | | 9,852 | | 10,263 |
Goodwill | | | 1,115 | | - |
Other long-term assets | | | 5,095 | | 3,591 |
Total assets | | | $ 341,878 | | $ 286,284 |
| | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | |
Current liabilities: | | | | | |
Accounts payable | | | $ 50,620 | | $ 48,949 |
Notes payable and short-term borrowing | | | 32,657 | | 22,771 |
Current portion of long-term debt | | | 760 | | 2,445 |
Accrued and other current liabilities | | | 27,950 | | 22,728 |
Total current liabilities | | | 111,987 | | 96,893 |
Long-term debt, net of current portion | | | 10,759 | | 20,891 |
Deferred income tax liabilities | | | 88 | | 1,818 |
Other noncurrent liabilities | | | 7,388 | | 7,226 |
Total liabilities | | | 130,222 | | 126,828 |
| | | | | |
Stockholders' equity: | | | | | |
Common stock | | | 102 | | 82 |
Additional paid-in capital | | | 511,750 | | 456,189 |
Accumulated other comprehensive (loss) income | | | (1,723) | | 5,326 |
Accumulated deficit | | | (298,473) | | (302,141) |
Total stockholders' equity | | | 211,656 | | 159,456 |
Total liabilities and stockholders' equity | | | $ 341,878 | | $ 286,284 |
NeoPhotonics Corporation
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except percentages and per share data)
| | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| | Dec. 31,
2015 | | Sept 30,
2015 | | Dec. 31,
2014 | | Dec. 31,
2015 | | Dec. 31,
2014 |
| | | | | | | | | | |
Revenue | | $ 89,123 | | $ 83,560 | | $ 78,982 | | $ 339,439 | | $ 306,177 |
Cost of goods sold (1) | | 64,013 | | 59,788 | | 56,296 | | 240,358 | | 235,059 |
Gross profit | | 25,110 | | 23,772 | | 22,686 | | 99,081 | | 71,118 |
Gross margin | | 28.2% | | 28.4% | | 28.7% | | 29.2% | | 23.2% |
Operating expenses: | | | | | | | | | | |
Research and development (1) | | 11,831 | | 10,763 | | 9,976 | | 44,533 | | 45,959 |
Sales and marketing (1) | | 4,384 | | 3,789 | | 3,668 | | 15,823 | | 13,725 |
General and administrative (1) | | 8,636 | | 7,384 | | 7,671 | | 31,635 | | 31,570 |
Amortization of purchased intangible assets | | 447 | | 447 | | 366 | | 1,791 | | 1,502 |
Acquisition-related costs | | 467 | | 180 | | 622 | | 934 | | 615 |
Restructuring charges | | - | | 18 | | 158 | | 44 | | 662 |
Asset impairment charge | | - | | 368 | | 1,130 | | 368 | | 1,130 |
Escrow settlement gain | | - | | - | | (1,027) | | - | | (4,913) |
Total operating expenses | | 25,765 | | 22,949 | | 22,564 | | 95,128 | | 90,250 |
Income (loss) from operations | | (655) | | 823 | | 122 | | 3,953 | | (19,132) |
Interest income | | 37 | | 31 | | 34 | | 121 | | 189 |
Interest expense | | (110) | | (171) | | (332) | | (1,243) | | (1,269) |
Other income, net | | 1,533 | | 1,852 | | 2,519 | | 3,941 | | 3,012 |
Total interest and other income, net | | 1,460 | | 1,712 | | 2,221 | | 2,819 | | 1,932 |
Income (loss) before income taxes | | 805 | | 2,535 | | 2,343 | | 6,772 | | (17,200) |
Provision for income taxes | | (406) | | (1,157) | | (758) | | (3,104) | | (2,519) |
Net income (loss) | | $ 399 | | $ 1,378 | | $ 1,585 | | $ 3,668 | | $ (19,719) |
Basic net income (loss) per share | | $ 0.01 | | $ 0.03 | | $ 0.05 | | $ 0.10 | | $ (0.61) |
Diluted net income (loss) per share | | $ 0.01 | | $ 0.03 | | $ 0.05 | | $ 0.09 | | $ (0.61) |
Weighted averages shares used to compute basic net income (loss) per share | | 40,739 | | 40,367 | | 32,640 | | 37,421 | | 32,109 |
Weighted averages shares used to compute diluted net income (loss) per share | | 42,668 | | 42,217 | | 32,710 | | 38,686 | | 32,109 |
(1) Includes stock-based compensation expense as follows for the periods presented: | | | | | | | | | | |
Cost of goods sold | | $ 216 | | $ 339 | | $ 160 | | $ 1,335 | | $ 1,148 |
Research and development | | 692 | | 363 | | 557 | | 2,049 | | 2,269 |
Sales and marketing | | 619 | | 275 | | 554 | | 1,794 | | 1,429 |
General and administrative | | 818 | | 459 | | 758 | | 2,585 | | 1,995 |
Total stock-based compensation expense | | $ 2,345 | | $ 1,436 | | $ 2,029 | | $ 7,763 | | $ 6,841 |
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 | | Year Ended |
| | Dec. 31,
2015 | | Sept 30,
2015 | | Dec. 31,
2014 | | Dec. 31,
2015 | | Dec. 31,
2014 |
| | | | | | | | | | |
NON-GAAP GROSS PROFIT: | | | | | | | | | | |
GAAP gross profit | | $ 25,110 | | $ 23,772 | | $ 22,686 | | $ 99,081 | | $ 71,118 |
Stock-based compensation expense | | 216 | | 339 | | 160 | | 1,335 | | 1,148 |
Amortization of purchased intangible assets | | 837 | | 836 | | 696 | | 3,349 | | 2,833 |
Depreciation of acquisition-related fixed asset step-up | | (61) | | (55) | | 289 | | 13 | | 1,071 |
Amortization of acquisition-related inventory step-up | | (5) | | 31 | | - | | 182 | | - |
End-of-life related inventory write-down | | 2,768 | | - | | - | | 2,768 | | - |
Restructuring charges | | - | | - | | 132 | | 125 | | 424 |
Non-GAAP gross profit | | $ 28,865 | | $ 24,923 | | $ 23,963 | | $ 106,853 | | $ 76,594 |
Non-GAAP gross margin as a % of revenue | | 32.4% | | 29.8% | | 30.3% | | 31.5% | | 25.0% |
| | | | | | | | | | |
NON-GAAP TOTAL OPERATING EXPENSES: | | | | | | | | | | |
GAAP Total operating expenses | | $ 25,765 | | $ 22,949 | | $ 22,564 | | $ 95,128 | | $ 90,250 |
Stock-based compensation expense | | (2,129) | | (1,097) | | (1,869) | | (6,428) | | (5,693) |
Amortization of purchased intangible assets | | (447) | | (447) | | (366) | | (1,791) | | (1,502) |
Depreciation of acquisition-related fixed asset step-up | | (101) | | (106) | | (272) | | (620) | | (994) |
Acquisition-related costs | | (467) | | (180) | | (622) | | (934) | | (615) |
Restructuring charges | | - | | (18) | | (158) | | (44) | | (662) |
Asset Impairment charges | | - | | (368) | | (1,130) | | (368) | | (1,130) |
Litigation | | - | | - | | - | | (278) | | - |
Escrow settlement gain | | - | | - | | 1,027 | | - | | 4,913 |
Non-GAAP total operating expenses | | $ 22,621 | | $ 20,733 | | $ 19,174 | | $ 84,665 | | $ 84,567 |
Non-GAAP total operating expenses as a % of revenue | | 25.4% | | 24.8% | | 24.3% | | 24.9% | | 27.6% |
| | | | | | | | | | |
NON-GAAP OPERATING INCOME (LOSS): | | | | | | | | | | |
GAAP operating income (loss) | | $ (655) | | $ 823 | | $ 122 | | $ 3,953 | | $ (19,132) |
Stock-based compensation expense | | 2,345 | | 1,436 | | 2,029 | | 7,763 | | 6,841 |
Amortization of purchased intangible assets | | 1,284 | | 1,283 | | 1,063 | | 5,140 | | 4,335 |
Depreciation of acquisition-related fixed asset step-up | | 40 | | 51 | | 560 | | 633 | | 2,065 |
Amortization of acquisition-related inventory step-up | | (5) | | 31 | | - | | 182 | | - |
Acquisition-related costs | | 467 | | 180 | | 622 | | 934 | | 615 |
End-of-life related inventory write-down | | 2,768 | | - | | - | | 2,768 | | - |
Restructuring charges | | - | | 18 | | 290 | | 169 | | 1,086 |
Asset Impairment charges | | - | | 368 | | 1,130 | | 368 | | 1,130 |
Litigation | | - | | - | | - | | 278 | | - |
Escrow settlement gain | | - | | - | | (1,027) | | - | | (4,913) |
Non-GAAP operating income (loss) | | $ 6,244 | | $ 4,190 | | $ 4,789 | | $ 22,188 | | $ (7,973) |
Non-GAAP operating margin as a % of revenue | | 7.0% | | 5.0% | | 6.1% | | 6.5% | | (2.6)% |
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 | | Year Ended |
| | Dec. 31,
2015 | | Sept 30,
2015 | | Dec. 31,
2014 | | Dec. 31,
2015 | | Dec. 31,
2014 |
NON-GAAP NET INCOME (LOSS): | | | | | | | | | | |
GAAP net income (loss) | | $ 399 | | $ 1,378 | | $ 1,585 | | $ 3,668 | | $ (19,719) |
Stock-based compensation expense | | 2,345 | | 1,436 | | 2,029 | | 7,763 | | 6,841 |
Amortization of purchased intangible assets | | 1,284 | | 1,283 | | 1,063 | | 5,140 | | 4,335 |
Depreciation of acquisition-related fixed asset step-up | | 40 | | 51 | | 560 | | 633 | | 2,065 |
Amortization of acquisition-related inventory step-up | | (5) | | 31 | | - | | 182 | | - |
Acquisition-related costs | | 467 | | 180 | | 622 | | 934 | | 615 |
End-of-life related inventory write-down | | 2,768 | | - | | - | | 2,768 | | - |
Restructuring charges | | - | | 18 | | 290 | | 169 | | 1,086 |
Asset Impairment charges | | - | | 368 | | 1,130 | | 368 | | 1,130 |
Litigation | | - | | - | | - | �� | 278 | | - |
Escrow settlement gain | | - | | - | | (1,027) | | - | | (4,913) |
Income tax effect of Non-GAAP adjustments | | (375) | | (107) | | 85 | | (840) | | (680) |
Non-GAAP net income (loss) | | $ 6,923 | | $ 4,638 | | $ 6,337 | | $ 21,063 | | $ (9,240) |
Non-GAAP net income (loss) as a % of revenue | | 7.8% | | 5.6% | | 8.0% | | 6.2% | | (3.0)% |
| | | | | | | | | | |
ADJUSTED EBITDA: | | | | | | | | | | |
GAAP net income (loss) | | $ 399 | | $ 1,378 | | $ 1,585 | | $ 3,668 | | $ (19,719) |
Stock-based compensation expense | | 2,345 | | 1,436 | | 2,029 | | 7,763 | | 6,841 |
Amortization of purchased intangible assets | | 1,284 | | 1,283 | | 1,063 | | 5,140 | | 4,335 |
Depreciation of acquisition-related fixed asset step-up | | 40 | | 51 | | 560 | | 633 | | 2,065 |
Amortization of acquisition-related inventory step-up | | (5) | | 31 | | - | | 182 | | - |
Acquisition-related costs | | 467 | | 180 | | 622 | | 934 | | 615 |
End-of-life related inventory write-down | | 2,768 | | - | | - | | 2,768 | | - |
Restructuring charges | | - | | 18 | | 290 | | 169 | | 1,086 |
Asset Impairment charges | | - | | 368 | | 1,130 | | 368 | | 1,130 |
Litigation | | - | | - | | - | | 278 | | - |
Escrow settlement gain | | - | | - | | (1,027) | | - | | (4,913) |
Interest expense, net | | 73 | | 140 | | 298 | | 1,122 | | 1,080 |
Provision for income taxes | | 406 | | 1,157 | | 758 | | 3,104 | | 2,519 |
Depreciation expense | | 4,040 | | 4,131 | | 4,277 | | 17,102 | | 17,003 |
Adjusted EBITDA | | $ 11,817 | | $ 10,173 | | $ 11,585 | | $ 43,231 | | $ 12,042 |
Adjusted EBITDA as a % of revenue | | 13.3% | | 12.2% | | 14.7% | | 12.7% | | 3.9% |
| | | | | | | | | | |
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE: | | | | | | | | | | |
GAAP basic net income (loss) per share | | $ 0.01 | | $ 0.03 | | $ 0.05 | | $ 0.10 | | $ (0.61) |
GAAP diluted net income (loss) per share | | $ 0.01 | | $ 0.03 | | $ 0.05 | | $ 0.09 | | $ (0.61) |
Non-GAAP basic net income (loss) per share | | $ 0.17 | | $ 0.11 | | $ 0.19 | | $ 0.56 | | $ (0.29) |
Non-GAAP diluted net income (loss) per share | | $ 0.16 | | $ 0.11 | | $ 0.19 | | $ 0.53 | | $ (0.29) |
| | | | | | | | | | |
SHARES USED TO COMPUTE GAAP AND NON-GAAP BASIC NET INCOME (LOSS) PER SHARE | | 40,739 | | 40,367 | | 32,640 | | 37,421 | | 32,109 |
SHARES USED TO COMPUTE GAAP DILUTED NET INCOME (LOSS) PER SHARE | | 42,668 | | 42,217 | | 32,710 | | 38,686 | | 32,109 |
SHARES USED TO COMPUTE NON-GAAP DILUTED NET INCOME (LOSS) PER SHARE | | 44,289 | | 42,914 | | 32,821 | | 39,445 | | 32,109 |
